Up for an eighth straight day. The mega cap tech names making the new milestones josh, the big five as we say amazon, apple, facebook, alphabet, microsoft all but alphabet hitting the new highs today crossing 6 trillion as you flag end market cap for the first time ever. They, amazingly, are now equal to the next 24 largest s p 500 stocks combined. You flag that. Yeah. What do you make of it . Yeah, so my research. We put this up last night. Just incredible when you think about the companies that make up that next 24 were not talking about small potatoes were talking about jpmorgan which is a 300 million cap and pepsi, coke, mcdonalds. Its really wild and these stocks now are just going parabolic. I think i want to maketwo points very quickly. The first is that this is not unprecedented. In the mid 1960s just two stocks General Motors and at t made up 14. 5 of the total market cap of the s p 500. And the top ten names in the mid 60s made up about 50 of the market cap so, we have seen this before that was the era of conglomerates and arguably these companies that we were talking about, judge, they are not single Product Companies they are all conglomerates we just dont call them that they are in many lines of business and many of which are complimenting each other that is an important thing to point out. The second thing is this is not just about those five stocks spotify is up 36 in the last five trading days. Youre looking at moves in zoom, shopify. These are parabolic moves to the upside in all sorts of Technology Names and as evidence of that, you take a look at the qqew, this is equal weight tech etf. I have been talking about it for months now just like were seeing an alltime high in the nasdaq, were seeing that index, which equal weights everything in the nasdaq 0. 5 away from an alltime high. Kweb which is chinese large cap tech thats all at alltime highs so, the isis is not just about e fed and what the fed is doing to u. S. Stocks or something that is u. S. Centric Technology Companies around the world are exploding higher i could point to latin america and on and on. I wonder, rich saperstein another f word and thats froth. I get the reason why the big five are all up, but this incredible parabolic move as josh points out in spotify, shopify, some of these other things, is this a warning sign or is it just simply a sign of where the money is going, momentum is with these names and its not going away any time soon and it can keep going on. No, this is a function of the Fourth Industrial Revolution that really is upon us remember that from 1940 to 2006, value outperformed growth. And growth has been outperforming ever since then. In the last three years, growth has outperformed value by 16 . And year to date by 25 . Why is that happening . Because there is scarcity value amongst these stocks many have high levels of Free Cash Flow. Theyre returning it to shareholders in a slowed growth environment, investors are going to pay up and theyll achieve higher multiples for these names. Now, one thing that is really, really interesting is that theyre actually exhibiting a lower beta than the value stocks think about whats happened this year the value stocks are more correlated with the big drop and the increase in the marketplace. So, at this point, Growth Stocks are here to stay i dont view them as being overvalued and they should be part of every investor portfolio. It really is amazing, jon lets put up that wall, again. The big five versus the next 24. And as the reform broker points out, were not talking about slouches on the righthand side of this wall disney and netflix and intel and exxon and cocacola and berkshire, verizon, visa, walmart. Those five on the left are equal to the 24 next in the s p. The divergence in the nasdaq year to date nasdaq plus 13 dow down eight according to the wall street journal the nasdaq advantage over the dow and s p is the biggest since 1983 is this all good well, it was as josh also said fairly predictable here, judge. Rich sapperstein, as well. The reason for it is the cash flow and the diversified cash flow that these companies can bring in is startling. I mean, on an off quarter were looking at 51 billion revenue thats what apple is projected to bring in in the july 28th earnings report. You look at the microsoft report due on the 16th of july. And thats going to be, you know, similarly massive dollars coming in. And when you look, also, scott were going to work on jons sorry, jon, were going to work on your audio because its breaking up and i think we can make it better than that lets go to jenny. Pick up on the thought of the other three. As we look at that wall, the big five new record highs for every one of them today other than alphabet the moves are stunning apple at 368 and 73 as i look at it now moments ago setting a high of 368. 80 the march just keeps going on. What do you make of this so, i took a peek at the last time that the Top Five Companies in the s p 500 made up this amount of the total market cap that was in 2001 and i think this is, i know this is a little cliche this is where i think about that mark twain quote that history doesnt often repeat, it doesnt repeat but it often rhymes i think thats true. I think we need to remember that valuation will matter at some point. Rich is right when he says there is scarcity value and driving people into these big five you look at that other, the next 24 or 25 stocks and the valuation divide just becomes too wide so, i cant make a negative argument against the big five, but i can make a positive argument for the rest of the market and i can make a positive argument for the valuation gap to narrow. I dont know if that narrowing comes from the big five plateauing for the next five years. Letting the earnings consolidate into the multiples and the next 25 or the next 495 coming up and closing that multiple gap a little bit or if it means the big five do come down. I suspect a plateau for the big five and the bottom of the market starts to come up but i think the valuation gap has to close every time we thought that, though, jenny, we thought that not too long ago a few weeks ago, maybe a month ago. These names have plateaued for me, its been three years. Theyve gone up too high and too fast and now those value stocks have slumped back down. I mean, theyrestill, obviously, having a decent day today. But these stocks picked up right where they left off and the leadership group, again. We talked about on friday i used the word wrestle away. They wrestled away the market, yet again, from that reopen trade and however you want to call it. But there will be competition to some degree i thought it was so interesting in the segment just before this where Frank Holland said Ecommerce Companies like amazon and walmart even six months ago we werent using that phrasing i think weve seen in the past three months walmart crush it and companies will come in and pick up the slack and maybe they deserve larger multiples maybe thats what closes the gap. Josh, lets look at history for some perspective and trying to do that today when he suggests party like its 1999. A lot of comparisons that people try to make. They may not be accurate he goes through some of these. For march 23rd through fridays close the s p 500 is up 38. 5 led by a 44. 7 increase in the tech sector. Nasdaq is up 45 over that same time he goes back and says during the melt up of the 90s, the s p jumped 59. 6 and led by an astonishing 234. 7 increase in tech right. So, theyre not even close even though you could make some comparisons perhaps like you maybe did in the spotifies up 8 to 10 every day, it seems like. Other stocks as kramer pointed out today, square and pay pal which both missed yet those stocks keep going up day after day after day. Yeah, look, you know that there is a day out there somewhere out there brewing where all these stocks could hit 10 , 12 a day, a week. Because they do get overbought and we do see a situation where people just, they feel perpetially rewarded by rise in prices and then all of a sudden youll get a few days where prices dont rise or good news as we acted too negatively and a lot of the money that is piled in will pile right back out. So you know there will be days like this, like that along the way. Very few and far between you cant predict the timing of them and you dont know how long those situations will last where we connect through price you dont know if thats a oneday process these days or a threeweek process, which it used to be when i first started in the industry in the late 1990s. We seem to be doing these corrections so quickly there are investors who dont log in in time to even see the damage i think that people have grown immune to the corrections and its dangerous so, i agree. I also agree with jennys point that maybe the answer is not necessarily these stocks all of a sudden collapsing in valuation, but the stocks in the next rung down being appreciated more and if youre a value investor, thats what you have to believe, right . Thats what you want to see have happen i would point out the case of google, though when you say what is going to end this it makes it really hard. Alphabet, google, the suearch engine gets 11 of annual revenue from travel. Its one of the most important verticals for a Search Engine revenue. A huge percentage. There is none. Travel advertising budgets are out the window for this year and probably not coming back theyre all reevaluating how they spend their ad dollars. The two biggest players in the space. Facebook and alphabet is only 3 , 4 alphabet is only 3 , 4 away so, right now, lets say youre an investor and you want to have exposure to travel all right, well, if things are not going well in travel, alphabet will just shift theyll take more add dollars from political campaigns this quarter and theyll make up for it the travel company only, like expedia, it is what it is. If the travel industry sucks, their quarter is going to suck no way around it so, you look at facebook and you look at google they have this optionality by vu virtue of the fact that their tentacles are in every pie in town and not a lot of companies in the world that you can say that about you mentioned paypal and square. Regardless of how people are spending their money, paypal and square are capturing their portion of it. Doesnt matter what industry so, i think investors are looking at companies with that breath and that scale and scope and theyre saying, these companies are worth a higher multiple because they have that ability to shift from one industry to another and follow the consumer jon, i think we got your audio back to 100 or close enough okay. Yes, you sound great. Maybe you tell me now what do you think has more risk in it right now . Growth, mega cap growth or value . Well, i got to go with mega cap growth has more risk, scott, just because of where it is. But to joshs wellfounded point about shopify and some of these, who could possibly believe, scott, that shopify could have a deal with facebook and then a deal with walmart. Two absolute in the space and not see a jump of 20 or even 30 . I mean, i know that this stock was at the depths back to november lows. Back to 300 some odd dollars a share. Now its triple that its over 900. But who gets to do deals like that these are two monstrous deals that you dont just see every day. So, i think that its understandable when youve got stocks that are cutting deals like this. Like walmart already had jet and now they have shopify. I mean, great for both side. Great for shopify. Great for walmart. So, is it as surprising that we see dollars flowing into these companies that are making these gargantuan deals, especially if apple pays borrows 8 billion and basically pays 1 on the cheapest end of that, who else can borrow with that you can look at the airlines that josh was just talking about, you know, with the travel industry americans just paying 12 coupon apples borrowing at 1 so, again, the rich get richer and the others are just, you know, sort of twisting out there waiting for walmart shut down jet. Com they wrote off the value of the investment and the stock went up because nobody even cares and to that earlier point, it was because of this ecommerce. All commerce is ecommerce. So, right. Walmart partnering with shopify. Like it almost is not, it almost is not even relevant i remember when they did the jet deal, all the Value Investors were like clutching their pearls how could they spend 1 billion, 2 billion, whatever it was on and totally missed the point it was transformative and they shed it like old skin. They dont even need jet. Com any more now theyre in the game. Is it rich at all 99 in a certain segment of the nasdaq. Its too broad to say what is happening in tech is like 99 all over again lays out good reasons why its not. We can look at the average and we can look at the big five and suggest theres legitimate reasons why those stocks have done what they have and why we have 6 trillion in market cap its theyre worthy of it, right . But are there others within the nasdaq and with intech that are worrisome and some of the names we put forth on the screen today that we need to keep our eye on and watch out for. Well, certainly there are unintended consequences as a result of the zero Interest Rate policy the feds pursuing and the massive liquidity that were seeing the question really becomes what are investors going to pay up for in terms of growth and Free Cash Flow. And were seeing it across the naz, and across really a lot of Different Industries you see it with nicola so, a lot of exuberance out there. In the end, when you look at the russell 1,000 growth and the russell 1,000 value, the p e ratio of the growth over value its 1. 5 times historically, thats been only around 1. 35 times. Growth is not terribly overvalued relative to value right now. And when you have, you know, strong Balance Sheets and a lot of Free Cash Flow, its going to get more demand. These stocks are going to continue to move higher until that event which josh mentioned where investors realize that potentially 2021 earnings are not going to be what the market is expecting lets dive a little deeper if we could into this move by apple. Another new high today we bring in the number one analyst tony saganaki joins us on the phone welcome back thanks, scaott. You do not upgrade the stock. You better call me when you upgrade this stock, tony you better promise me if you do that, youre going to call me. Now, you may never call because you may never upgrade based on your history here. What is the story with the stock . It keeps going up. Look its a perfect storm, i think. Positive storm for the stock of forces at work here. So, one, the stock is anticipatory of new product announcements. Historically in the three months prior to new iphone announcements and the stock has outperformed the market by over 1,000 basis points or 10 during that threemonth period and over a sixmonth period its closer to 15 some anticipation about that second, the data points that are coming out of the supply chain are generally positive the new iphone se is selling relatively well. And appears to be stabilizing and improving and, you know, the data that we get on application downloads for the app store is also good. And, the prevailing Business Sentiment around apple is also good and then you have this sort of comparison versus the market i just think that the market is trading at 25 times earnings because 21 earnings are still relatively depressed apple is trading at 22 times earnings for a company with a sta stallworth Balance Sheet that is buying back 5 of its shares and earnings are going to be flat this year in arguably the toughest economic climate in at least a generation and, so, collectively, all those things are, you know, giving people reasons to continue to own or even add to positions in apple. I feel like we have and i dont want to, frankly, tony, i want to have the same conversation that we always do you make it such a strong case for this company and its leadership that theyve been able to perform how they have in the face of the strongest headwinds and maybe 100 years. And the stock continues to go up, fresh money continues to go into it whenever the stock has had a pull back. Its scooped up like nobodys business we still remember the stock sub 150 and now its at 368 and change what would it take for you to change your rating on the stock . Yeah, so, look, i think there are two things that we look at one is valuation and i think in light of near term, the stock looks attractively valued. But part of that is because were going to have big sectors of the s p these value segments that you were all talking about before that have very depressed earnings may have very depressed earnings next year. But on a more normalized basis, you know, the earnings recovery in those stocks, lets say, by 2022 might be much higher in which case apples valuation may not look quite as compelling one thing we look at is valuation and right now certainly over this year and next year, apples valuation looks attractive but it doesnt look particularly attractive potentially if you see more normalized earnings, lets say, s p earnings at 180 or 190 or 200 in 2022. If we saw a pull back in the stock and valuation got more compelling that would be something that would change our minds. I think the more important thing for us is that you still have a big part of this business, which is highly cyclical which is the phone. Where we believe structurally over time replacement cycles will elongate, which means that people will buy les phos phonesd services will offset that. But it is unclear to us that apple is going to grow 2 , 3 per year over time and in light of that, the valuation, you know, on a normalized basis is not compelling so, we either need to see, you know, a much lower entry price or we need to get more confident about the Sustainable Growth trajectory of the company and part of the challenge this is 250 billion revenue and the biggest product which is the iphone is not growing. When was the last time you did have a buy rating on the stock . We had about, we had a buy rating for nine years on the stocks, scott. Consecutive years. I hear you, toni. But the point im trying to make, im not suggesting you never liked apple but youre waiting for a more attractive entry point. Did you have a buy rating on it when it did go down to 150 no, we did not. Well, look, it depends so, i think we changed our rating when the stock was about 200 and our fear was that things would get worse before they got better and they got better much more quickly than we thought and the stock is taken out from there and shame on us for missing that move there may be another situation where we do get another entrenchment that will create that opportunity again with the wwdc you say the Financial Impact is going to be limited. I heard some other projections that this is going to be a really nice boost to earnings. The move, i should say, in chips is going to be a significant boost to earnings thats being underappreciated by some and maybe you if you dont think there is much of a Financial Impact no. I really dont think that is the case the case is that the mac business is 10 of apples revenues even if you can improve margins fairly substantially, you may be looking at 50 basis points so half a point of gross margin improvement assuming youre saving 50 to 100 per machine which is a big savings and, so, if they captured all of that you would be looking at Gross Margins going up half a percentage point i think more likely and when we sort of saw this with intel is, you know, apple may give that back in the form of better Price Performance to consumers which may help it share marginally again, youre talking about small numbers whenever youre talking about a business that is only 10 of total apple. Toni, i appreciate it, as always you know, you accept all the questions that i ask and we have a good conversation every time youre on. I appreciate that. Thanks for having me, scott talk to you soon that is Toni Sacconaghi biotech hitting new high today. Hi, scott both the xbi are at alltime highs and also on track for their Third Straight month of gains. Getting a nod from Atlantic Equities and sees multiple new product cycles the less Downside Risk if a democrat takes washington in november because only 30 of u. S. Sales for the company come via government sources also in that weighted ibb one of the ten largest components moderna also on a tear showing a bit of weakness but you can see its down 2 and 3 , 2. 3 today but, again, it is up for the quarter about 1 er and 110 . Inovio up almost 33 we got some news that the Company Received 71 million in funding from the department of defense to support manufacturing a device with the covid19 vaccine. Scott, a couple things about that device. A handheld device and it could be used to deliver that vaccine into the skin. Apparently, its portable and runs on double a batteries this stock is up more than 500 year to date scott . Ill send it back to you my goodness doesnt take much to get these stocks up. Stay with us a couple different ways we can take this one. Jenny, you first lets jump off on the overweighted Atlantic Equities take that first and well broaden it out sure, we bought it just before the alergan and the fact that it was misunderstood as a company that was a onetrick pony and then they got and we sat patiently and its done a lot of nothing until the last few weeks. I love highlighting this because it reminds people that patience pays off i was talking to a good friend of mine yesterday who was talking about her bragging and im sure my phone will ring soon with her 500 return i think abbvie longterm holding and still have doubledigit having a problem with the audio. Xbi and the ibb that she was telling us about, as well. Im low on both and i do think it is the answer to a riddle you say to yourself, okay, probably going to have low growth in the world for quite some time given all the headwinds but investors prize growth more than any other attribute when they build portfolios these days. Where will they find high growth in a lowgrowth world where valuations are somewhat reasonable and a return of cash to shareholders and the answer is largecap biotech and pharma and health care in general ill give you a couple stocks that are breaking out right now. You dont have to wait for them. Breakout in progress i am not in these names yet. But abc. We never talk about this stock on the show. Its fairly boring for the space, the stock is anything but. So this is a wholesale distributor of both generic and private label branded drugs. Its exploding through 100 bucks a share. Back in january of 2018 is the last time we traded at these levels its breaking above. Its about to break a fiveyear high go look at a decades long chart. You can see a fiveyear consolidation and now this thing is ready to go 1. 6 dividend yield and 13 times earnings this is the type of stock that is working if youre a value if youre on the growth side look at idxe look at, you know, look at insight. Incy these stocks a s are breaking t right now. If youre a trader, what do you do look at levels that used to be resistance and should act as support. Look for lowvolume pull backs to those support levels and below there is where your stops go youre getting into companies that are going up to the right with a very defined Downside Risk you dont have to be an overnight expert about all their clinical trials. These are Growth Stocks working their way higher and you can manage risk before you can pull the trigger on the buy let me do a couple things hope well hear from you before were done on the xpi and biotech. Lets talk about some other moves. Rich saperstein you bought cisco and adp. Talk to me well, boeing is the quintessential vaccine story as we look at it. People are afraid to fly they have problems with the max and its all well documented they raised 25 billion. They got adequate luquiddy we think the plane gets in the air by year end and if there is a vaccine and we resume flying, theyre going to accelerate deliveries and stock will do very well. Cisco on the other hand is an interesting story because first of all we think there will be ach a ratcheting up with china and cisco is our National Champion when that occurs. The companys got a 7 Free Cash Flow yield theyre returning most of it to shareholders theyre going to benefit from cloud and software as service. Very low 3 dividend yield so, again, another staple that we view we can get into the tech sector with a low exposure and low multiple can you give me a little more detail on when you got into boeing i only ask that because the stock feels like its up 1 million percent off the lows. Probably around three weeks ago, three, four weeks ago cisco at the same time we had an elevated cash position we brought it down and we added those three names i remember you were more cautious, perhaps, than the others were the last time that we spoke on this show. What sort of changed in your mind that told you now is the time to put some of that cash you have to hawork its really impossible to fight the fed here just such a massive amount of liquidity that is going into the market right now so, you know, our clients have eight to ten Equity Strategies and were running one of them. They really are fully invested and have been since 2016 the strategy that we run, were very cautious because we still feel that 2021 earnings are suboptimal were not getting back to 116 a share on the s p in 2021 were going to have higher unemployment and low productivity and disappointing earnings year. At some point the market will have to come to terms with that. Plus we have the china situation and the election the election could be bad or bad. So, if trump wins were going to have Greater China hostilities if biden wins, higher taxes. So, the market is going to have to reconcile a lot of this in q4. Right now tunnel vision for sure just looking straight ahead. Were going to take a quick break and straight ahead rick reider joins us on the half. Lets get a check of the major averages well call it the highs of the day. Dow is up 240. S p right at a 1 gain and nasdaq blowing everybody else away 10,198 new highs for the big five except for alphabet. Were back itwmiten o nus. I got an oriole here. Eh. Common bird. Ooh look over here something much better. There it is. Peacock, included with xfinity x1. Remarkable. Fascinating. Very. It streams tons of your favorite shows and movies, plus the latest in sports news and. Huh run the newest streaming app has landed on xfinity x1. Now thats. Simple. Easy. Awesome. Xfinity x1 just got even better with peacock premium included at no additional cost. No strings attached. Just say peacock into your voice remote to start watching today. Were back lets get to headlines now with Frank Holland. Hey, scott. Cnbc news update at this hour. A major earthquake has hit the Southern Coast of mexico the 7. 2 magnitude quake was centered in the state. Make buildings sway hundreds of miles away in mexico city. No immediate reports on injuries or the extent of the damage. Chuck schumer and other Top Senate Democrats say the Republican Police bill is, quote, not salvageable a new bipartisan reform bill. A Missouri Appeals Court has sharply reduced the damage award against johnson johnson. A 4. 7 billion judgment was lowered by more than 2. 5 million. The case was brought by 22 women who claim that asbestos in j j products caused their Ovarian Cancer that is our update for this hour scott, back over to you. Thanks, appreciate it. Another market voice and a big one rick reider black rock chief Investment Officer he oversees more than 2 trillion in investment and the head of Global Allocation Team youhave to have so many titles rick i cant even get them all out without stumbling over them. Sorry for making it hard, scott. Give up one or two. Youre still the bond king, all right. Trying to generate return every day. I hear you. You do a good job of it. Global Allocation Fund 62 equities versus 25 fixed income theres really no competition for stocks right now, is there no, you framed it right in your conversation earlier about Free Cash Flow, were dying for Free Cash Flow in the fixed income market and i think as richard said, the fed is not going to let us have any for a while. Not just in the treasury market, but you look at the credit markets. I mean, companies are funding today is extraordinary so, we think all equities are not chief almost by any metric although i would argue if you take Free Cash Flow, we use a metric discounted by forward Interest Rates and by the forecast curve in Interest Rate. Equities by that metric and if you believe that the feds not moving rates as powell has said for two to three years has Free Cash Flow and, b, it is certainly companies can fund themselves at incredibly attractive levels for a long time you go as far to say that it is uninvestable. Other than holding cash you know, if you think about the five years, youre getting 33 basis points and the fed is not going to go to negative rates. If youre going to sit in cash, you might as well sit in cash. Rates arent going higher. The only part of the yield curve that makes some sense for balance in a portfolio is seven years or longer. The tenyear treasury at 72 basis points is not exciting and by the way the long end of the Treasury Curve at 1. 5 is not that exciting. But if the economy stumbles and if the fed has to do more, they will pull down they will use yield curve control either directly or incorrei indire indirectly theyll pull the rates down. Owning some loan in a balanced portfolio makes some sense but you, also, rick, agree with the group forgive me, your audio went out. I thought you had finished talking. I apologize for stepping on your toes there you agree with our group in terms of where you want to be invested its not Rocket Science in the market these days. Its mega cap tech so, i mean, i think and ive talked about it on your show a bunch of times i think commerce of the world is changing faster than people think. We can talk about what is coronavirus. What has it done for spring boarding that dynamic. Its clearly done a lot. Scott, ive never seen it in my career we talk about Different Companies and different businesses the ability to create scale and the ability to create because the data simulation and data storage and your conversation about apple and the Free Cash Flow generation. Has anybody seen anything like that in our careers. The ability to create scale is just extraordinary and so the debate of value versus growth, i think is a tough one because in where you get growth, in where technology lives today and your ability to create skill not just domestically, but globally is impressive by the way, not just tech. Companies that utilize those same technologies in the form of logistics and in the form of the way they run their businesses realtime inventory management, et cetera. That if youre not aligned that way, i think youre missing it rick pretty much puts it. This is a growth versus no growth market. Looking at growth versus value is maybe the wrong way to look at things. Yeah. So, i think like what ricks comments about, you know, apples ability to generate Free Cash Flow. I almost dont think theyre good historical comps for how good apple is in its segment you have to look at the British East India Company which lasted 250 years and had that much of a stranglehold on its market arguably like ios and android. That in mobile is more dominant than anything even close to what windows was for the pc era and nobody is even disturbing them about that so, its really hard to value what those franchises could be worth for ten years. But, rick, i want to ask you, what do you do with reits in this environment i understand the pros and cons but arguably that is a place you can go that is not large cap tech with decent yields. We all know what the head winds are put thbut they seem to have special attribute that youre not getting in bonds which is a yield above inflation. Josh, you may have been reading the work we were doing this morning there are, there are interesting reits tough to categorize them all in one lump sum because of the Different Levels they use and the different business lines that are in and how they actually do it but actually i think some reits today that have actually reduced some of the assets that were tricky and are in the spaces like residential you know, we like home builders. We like owning Residential Real Estate in a multitude of forms and actually theres some interesting reits that get you there that are not overlevered that get you some pretty good yields look, we dont have there is actually a couple also in warehouse that weve done some work that are not terribly levered that i also think are interesting. Its funny you bring that up but something we have been spending more time on and doing something recently i read your stuff, not a coincidence i read all your stuff, rick. Can i throw one last thing out . Yeah, go ahead. The other place that is different is europe is a place that we havent gone in a really long time is europe is now really interesting but for years it was more about no growth and actually some companies in europe that actually are in and around the tech space and with the euro zone Recovery Fund and the stimulus for the first time, a real fiscal stimulus coming in, there are some places in europe that are interesting some of the financials that traded at a fraction of book value are interesting there. Rick rieder and his 27 titles well talk to you soon thanks for having me. Jenny, you like reits, you just bought one. Sure do we always had reits as a big part of the portfolio and added one as National Retail properties in fact, we originally bought this ten years ago and sold it a year ago fast forward a year later and the stock is down about 40 with a 5. 5 yield what they do is theyre like that store capital that josh talked about in the past what they are, triple net lease reit company so the tenants cover everything, taxes, improvements and all that. What they own are things like Convenience Stores and camping world and car washes they do own fast food restaurants. They also own some casual dining because of things like casual dining in theaters that they own, the stock has been really badly punished but if you look at the Free Cash Flows and the consistency of those, even with all that has gone on, as we start to get out and start to get out conservatively and safely, i think theyll have really significant recovery in their rent collection and occupancy will probably stay in the 90 range. We entered this stock last week. Rick brings up a couple interesting points about the use of technology. Ten years ago this company was able to own 1,000 properties today they own over 3,000 and im certain that the use and facility of technology has allowed them to grow that way. If you look at the selfstorage reits the entire reason they boomed is because of the way they have been able to use technology to grow their businesses so, i think reits are a great place to look. Rick brought up another point. Dont paint them with a broad brush. Look at the apartments and look at the selfstorage and look at the Industrial Warehousing and look at the triple net lease reits. You can get way better than bonds right now and have tangible assets underlying them. Really cheap valuations. Coming up, jon is following the moves in the options markets, as always his trades in unusual activities and we have a stock that got downgraded and it is up. Well tell you what that is and joining jim cramer tonight on mad money do not miss pat brown. Cnbc exclusive interview 6 00 p. Etem. Asrn time. Lots still ahead were back after this. I geh. Common bird. E. Ooh look over here something much better. There it is. Peacock, included with xfinity x1. Remarkable. Fascinating. Very. It streams tons of your favorite shows and movies, plus the latest in sports news and. Huh run the newest streaming app has landed on xfinity x1. Now thats. Simple. Easy. Awesome. Xfinity x1 just got even better with peacock premium included at no additional cost. No strings attached. Just say peacock into your voice remote to start watching today. Were back lets bring in dr. J unusual activity started with oracle, doc. Exactly, scott. Some 10,000 of the august 60 calls but right away as soon as we open the trading, scott, these calls were bought. Trading for about 70 cents with the stock below 56 so, in other words, 4 pop projected there. Ill be in these probably close to two months, scott second one, intra cellular this is a 26 stock. Theyre buying the 30 strike calls. Big numbers here, as well, scott. And these are august 30s so, both these two trades august ill be in both of them. About two months good stuff, doc appreciate that. New calls on the street. Lets bring her back in. Last i checked it was up. Did downgrade mastercard the firm noted that it expects visa to take mastercard. Mastercard is up 1. 1 . They expect visa to take market share especially in europe they also expect cross border spent and one of the last metrics to recover from the coronavirus and, scott, even there they still see visa beating out mastercard we should also mention the note mentioned a flurry of smaller size ama and mastercard announced it is acquiring. Josh brown, you own mastercard, huh. I do. Historically visa and mastercard at the margin have been able to pull the share from either but both stocks have worked extraordinarily well i would fade this call and im staying with the stock i think its important to keep in mind, also, on valuation people say that mastercard is not cheap and they are right but the stock is up 1,300 the last ten years and it has never been cheap relative to the overall s p. Lastly, everyone thinks of it as a financial stock, but its actually in the tech index thats how s p classifies it so, this is a financial, though. This is a much better financial than, you know, the banks with marble lobbies that most people consider to be financials. So, im staying with this name my Biggest Holding in financials and i think its going to do really well. Interesting to get negative on mastercard now. I was listening to i was interested in hearing jim and the gang this morning talk about it, cramer, talk about it as one of the major reopening stocks if you get a vaccine, you get a v, mastercard takes off, doesnt it and jenny, you own amex got downgraded yesterday, and rick saperstone, you own visa visa and mastercard, rahel talks about both of them today, but whats your take on stocks i think in a world where well have less currency and more Electronic Payments and also more Economic Activity post the reopenings, you know, investors should own one of the two. Payment processing is here to stay, and its only going to get more valuable. Again, its part of our strategy of sort of a bricks to clicks theme where we like defense because theres technology infused into defense payment processing, we like visa but visa or mastercard, either one of them will likely work going forward. Appreciate that from rahel again. Jenny, as i said, amex, yesterday we talked about this stock, it got downgraded to a sell right so our take is a little bit different in that we think that as the Consumer Returns and as things reopen and we see people actually paying off their credit card bills that a little bit of love will come back in for amex. I think amex falls in a no mans land where they are a little bit of both. You see amex with 40 times multiples, visa and mastercard with 30 times multiples, and it gets back to our conversation that probably that gap should narrow its not a wild positive on amex, but amex should be able to grow its earnings in the 15 range going forward. Thats pretty solid in this market with a 14 times multiple. Crude oil training at a 3month ghhi how future traders are playing it well find out next. music wherever you may go, lexus will welcome you back with exceptional offers on exceptional vehicles. Get zero percent financing and make no payments for up to 90 days on all 2020 lexus models. Experience amazing at your lexus dealer. Experience amazing were committed to making college more affordable. , thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Welcome back time now for the futures outlook. Crude oil is trading near its highest level since march. Wti has rallied near 16 this month, so on more of how to trade that, lets bring in scott nations of nations indexes scotty, good to see you again. Good to see you, man. Give us your view on trades for viewers. We had a huge rally on crude, and earlier we filled the gap from march 9, but we just barel filled it. Now its a little overbought to get long on crude oil here, momentum, trade, everything has to be right for that to work out. I dont want to do that, but i dont want to pick a top, either so how do you trade this well, sometimes patience is the most important virtue in trading, so i want to wait for i a pu so i want to wait for a pullback, to i want a pullback for the longest crude oil contract 30 centsa dip. Once im in, my stock will be 35. 90 and once im in it will be 49. 50. This is the hot trade. Scott, prteapecia it. See you soon thatfutures trading ahead. Where will you go first . Wherever you make go, lexus will welcome you back with exceptional offers. Get zero percent financing and make no payments for up to 90 days on all 2020 lexus models. Experience amazing at your lexus dealer. Opportunity tonight for our special crisis in america, 7 00 p. M. Eastern. Ill see all of you then tell me what and tell me why. Jenny, you go first. Sure. Seagate. The more data we use, the more storage we need. This trades at a 7 times multiple with a 5 yield okay. Rich saperstein . Lockheed martin its the marriage between defense and technology 100 billion market cap, 2. 5 yield, generating Free Cash Flow of about 6 a year and returning about 4 a year to shareholders. You can pretty much take that to the bank for many years because their order backlog is 240 of sal sales. So we like the company okay. Josh brown just reiterate what i said on mastercard this is a global toll booth, taking a piece of transactions in every country all over the world. Berkshire hathaway has been blowing out of its Traditional Bank stocks but holding ma mastercard, and im doing the same jon scott, astrozeneca. For the reason dr. Fauci was saying, its not a question of if but when as far as the vaccine. These guys have two shots at it, astrozeneca does im not saying it comes this week, but theres an aggressive call buying this week in the 54 calls, so during the show i bought those calls a lot of Companies Taking a lot of shots on goal with that vaccine, doc all you need is one score. We appreciate it thanks for watching. New highs today for the nasdaq, new record highs for apple and amazon and microsoft and facebook, and that does it for us kelly picks it up right now. Thank you, scott, and heres whats ahead, everybody. It is the valuation debate with those new records scott was just talking about, its the nasdaq, the tech etf, the software etf is this whole sector getting too expensive . Plus its the balloon that just keeps growing rising corporate debt levels could be a threat to the global economy. Well look at the biggest threat and who is most at risk. A real winner for the state trade. Game on for baseball and the ivy league says no to testing