Participating. We show where people are moving their money around and how fast these rotations actually occur bank of america, wells fargo, a name that a lot of people wanted to keep to the side, continue to move further and further up. Part of it is the rates, a lot of it is where people think were going to see more gains, the financials paused for a long period of time, they had a big bump after trump was actually the winner and suddenly it been in this flat moving around, somewhat volatile, it seems like financials are really on the verge or wanting to break out. By the way, i bought one today, im going to leave that as a tease because we have got unusual activity later on. The plan is out, although lacking in details that people are waiting to see, but what do you think it means for the way the markets are reacting today a lot of what came out has been advertised, number one. Number two, when you take a look at what happened in alabama last night and you couldnt get trumps guy elected i think that puts a pal over any policies or reforms that he might get through. But that was hope recently because he acted more president ial, supposedly and he actually stepped across the aisle in other words Mitch Mcconnell has been useless to this president and hes the guy that supported this guy strange but hes their leader, so thats the way you have to look at it. These guys couldnt move anything through congress. Cowan has a note out today that says tax reform is not coming this year, and oh, by the way, it aint coming next year either so youve got nine pages out now. It took reagan with a much less divisive congress three years to get it done to overpromise and under deliver with this president , the good news is theres nothing in the market for any of that so if it does happen, or if mark believes theres a realistic chance of it happening. Wells fargo says youre going to get a 4 to 8 slide in the market before the end of the year. Everybodys been calling this slide for the last six months. Forget the numbers, but they say that stocks are going through between now and the end of the year. Stocks will not be as strong as we expect them to be, the reason the market is where it is today is because of the earnings if that for some reason falters then i think you get that pullback rates are, the 10year is the highest since 08. Rate rate we have no idea if this tax plan is going to come to fruition or if and when it does, what the final plan is going to look like, so im not surprised that the market isnt reacting more to a blueprint put out today, obviously politically, they want to get something done, but what you want to get done and what you can get agreement on and get through, aretwo Different Things for now im focusing more to what you just said on the earnings and also whats going on with economic growth, the u. S. Continues to be chugging along okay, we continue to get pretty good data out of europe today we got some very strong Italian Consumer confidence data and we get some important data out of china at the end of the week, and thats going to be important to watch, if china can hold up okay, europe has some momentum, i think stocks can be supported. Im with pete and sarat as far as the banks, because i believe you guys are both financial fans here. Look at whats being born out here, judge, almost the last month, the s p 500, virtually flat its up by 1 . We have had a couple of triple digit days in there, but at these levels its barely 1 . But then you take a look at the banks. Theyre up between 7, even wells fargo. Since september 8. Citi 6. 5 , j. P. Morgan up 5, and bank of america is up 2. Its right up against 95 right now, its not a huge run for them to get over 100 and theyre virtually all up against their 52week high right now. Jpmorgan, bank of america and i believe citi as well youll see a breakout because essentially they have already said trading revenues are down, so if the rest of the businesses are strong, these stocks are off to the races because thats when you want to buy them but youre banking on rates to continue to decline. I think a lot of people are banking on that. Hyv, the high yield bond market. Its 200 to one puts to calls in that particular etf, watch that, also watch whats going on with the xlf as its breaking out, this is the highest level we have seen on the xlf, its just breaking to the up side. Thats why i say, steve, if that keeps going, youre saying it might not. I dont think it does, im just saying i dont need rates to get there youre telling me the xlf is going to continue to go up if rates dont move any higher from here im not talking about rates, im talking about the tenyear lets focus on the tenyear thats what im really talking about as well. Itch t if the tenyear moves up three, maybe 10 basis points at the most. It will hold where it is, and it will work over time because rates are still too low. When the 10year was trading, everybody thought it was going to 2 . But banks didnt trade higher, they essentially held where they were so the sensitivity on a shortterm basis has been a little bit disengaged so i think financials are reasonably valued yeah, the s p is up 1 , but if you take a look at some of the carnage, some of the moves, we talked about early on, thats been incredible. We saw a tech disaster, everybody thought that google was going at 800 for a second there. But correction is a real, not mathematical corrections at 10 , but you saw some volunteatility there, you have those rolling corrections or selloffs which is what you got while the market stays on top. Still look at Something Like citi, just last week we were talking about, you said hey, peter have you done anything i said yeah, i bought citi calls. Stock at another new high today, the book value is above where it is right now i think its in the 72 range i think theres blechbt ees p side if these stocks can return to normal levels and they can continue to put up the earnings and the revenue, yes, 2. 3, thats fine, theyll explode you have to look through, its not just rates, its Economic Data, if i would tell you that the dax is off today. And the durable goods status, because the stocks are going to lead in this case the fed. The details are out on the president s ambitious tax reform plan here are the breakdown of the numbers in that plan the corporate rate will go down to 20 the plan also allows for at least five years and full and immediate expensing, one of the tradeoffs for that bill is the ability to deduct interest will be partially limited but theres not a lot on what that exactly means, there are two provisions that will indeed benefit businesses but the deduction for domestic production, that one is important for manufacturers and it gets the ax under this frame work, the plan would but the rate for illiquid act sets would be lower than the one for cash. On the individual side, the new streamlined rates would be 12 , 25 and 35 the alternative minimum tax, the estate tax and the transfer tax, all of those would go away under this plan. The only personal deductions that the plan promises to keep are for mortgage interest and charitable donations, what happens to the estate Tax Deduction arent clear all indications that i have gotten is that that one is a big target as well. And thats controversial, steve, in and of it. Larry kudlow called that a back breaker, ending the state and local deductiodeductions. We have four states that have no state tax, so youve got 48, or 46, and puerto rico, actually theres no state tax there, 36 that are going to go and say forget it. Those constituencies are going to go to their senators and say this is a deal killer. That will not pass, maybe hes using this as a negotiation to get it through, because nobody can think that will pass. What about the raif it does not just hedge fund owners, youll see new york become illinois, teetering on bankruptcy. Youll see california move to inn nev nevada they cant deduct the 15 tax, where theyre paying a 15 estate tax, meanwhile youve got nevada right next oor. Youre going to see multinationals that are located in these high tax states rebecca, you have thoughts on that you have just summed up why this thing is not going through, looking at the house of representatives, i think you have over 50 members who are republicans who are tied to those states that would be negatively impacted and theyre going to lose their seats if they support this. So i think its a negotiating tactic, i think thats right on, i think theyre looking for easy areas of revenue to help fund some of this stuff, that would be a lot of revenue, but at the end of the day, theyre going to have to keep looking. Just real quick, as far as what the impact of this has been and how its being expressed in the markets. This is the goietf thats track the euro we have seen peak euro this year and were about to see it roll over we have talked all year about how surprised we all re, now you see perhaps some very big money betting that the euro at least has stopped out. And scott, if i can jump in on that, its interesting, since the last fomc, since the september 20th fed meeting, we have seen the euro fall about 2. 3 against the dollar, so the fed is going to raise rates in december, regardless of whether the fed is moving towards its 2 target right now. Repatriation would be this tax stuff has not been discounted in the market so if it were to go through, this would be another dollar positive, at least at the margin you got a dollar index at a onemonth high as we speak speaker of the house paul ryan by the way will be on squawk box at 8 30 in the morning, to discuss all of this, tax reform and of course much more, its an interview you will see first on cnbc another big story for investors, what will the incoming earnings season look like theres a debate on whether we have hit peak earnings or not. And what impact could that have on all of that scottie, the big debate is this, are we at peak earnings are or not after Earnings Growth declined in 2015 and 2016. But is that growth spurt over right now . The short answer is, it doesnt appear that way. Earnings are still growing, but a slightly lower rate here overall earnings, expected to grow 6 in the First Quarter why the slowdown some of the sectors that had big moves up are hitting tougher comparisons, this is principally Energy Stocks and tech stocks. Its had this huge boost in this Second Quarter of this year, so the comps are getting a lot tougher for energy, but the estimates for the Fourth Quarter in 2018 are still much higher. First the economy is continuing to grow, and earnings estimates are still growing, so for example, this year Analysts Expect the s p 500 to earn roughly 131 thats th but this quote doesnt have any tax cut assumptions in it because no one knows what they are. But today were getting closer to an answer, so theres some stabs at estimates and so forth. So what the tax cormses pay is about 27 . Each 1 in Corporate Tax cuts generates roughly 2 in earnings, so lets say the rate goes down four percentage points, that would add 8 to estimates. That is a big boost, thats 6 more on top of the 7 thats expected without tax cuts and thats why the markets keep holding up, the combination of expected improvement in the economy and the tax cuts gives indication that we are not yet at an earnings peak, that whats the market believes at this time dont give me peak earnings without knowing what the future of tax reform is, riley cooperman here said 10 bucks, bobs numbers say 8 but the point is, earnings go up a lot if you get tax reform. Based on the quarterly earnings, youre going to get the effects of the the hurricanes the things is, you cant envision whats going to be negative on the earnings calls from the ceo you have had positive economics data from the u. S. , youve had great Economic Data from europe. Ive got to believe that theyre going to be very positive on how they push it assad getting a third term, which is very impressive right now all that matters is not the 6 , all that matters is meeting what the expectations are and exceeding them. The point is, getting to negatives going into earnings that are expected to be pretty good and figuring if we get any kind of, whether its tax reform or a lower level of tax cuts, all of thats positive rebecca . Sorry, you know, we stay constructive on the market one thing that i would keep an eye out for during this season, more on the commentary than the data, is whats going on with wages and are companies able to pass through any wage increases they need to make to the final price or are they going to have to eat it in the margins i saw just this week, i think it was target that announced theyre going to be raising their minimum wage we have seen more wage presser in some areas of the narcotmarket if wages do finally go up, which is one of the things the fed is watching, are we going to be able to see that go through to final prices or not. I think thats a really interesting angle on earnings season because thats going to effect profit margin and what the fed is able to get done. Heres what else is coming up on the Halftime Report wall street negativity on nike its got to be the shoes. Just tdid it, how much troube is the stock in . Or is this the time to squowoop and buy it if you took their advice and g ught mi micron, you would be p bitoday. Find out whats happening with scott wapner and the raiders is back in two minutes. Where to get in. Where to get out. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. Were back heres neike down 1. 7 . How about these price target cuts jp, citi, cowen, all put their prices based on nike some of them are a little bit lower, but some of them are up in the stratospherstratosphere quarterly growth sales in eight years. Pricing on stuff they never thought they would see in their lifetime depends on what you want to focus on right now, this was a 60 stock that today was trading at 51 i bought it today. Why did i buy it today because china, those numbers were outstanding, i know its a smaller segment, i get that. In the u. S. , the places theyre struggling most, they have the number one shoe in that category of 150 and above. So they are battling with and losing right now, but theyre battling with adidas, who is coming in and is actually starting to take market share. And lower price points. But i also think that the growth point, how fast do we lose focus on, its 60 of their revenue, shoes are a monster percentage of their revenue if theyre going that well in the shoe market and they are in the last few months, i think that is being overlooked, the growth that were seeing in china, 9 , and i know were slipping here in the u. S. , this is an opportunity to buy. This looks like a short term gain longterm pain type of a story. I think you pick it up cheaper. Normally it would be pete that would be saying hold off and it would be me thats saying im buying with both hands here. First of all the dip isnt big enough for me today, judge and when you look at foot locker and nike, whenyou look at how all of its down, and basketball shoes in particular are down 18 . But then we got this scandal, pete heres the advantage, theyre restructuring. The division is restructuring and going online and building that to a much bigger level than they already are are you talking about 20 years from now the reason they let go of 2,400 people and the restructuring theyre doing in the United States right now. To be a part of amazon and be part of the e commerce world. Were off a lot more than just 3 today, im talking a 60 stock a month ago, in august, is now trading at 51 down about 5 in a month. But couldnt it be, when you take a look at foot locker, when you take a look at retailers, that consumers are not consuming as much as they used to. When you talk about viewing being down for the major sports, that buying up of athletic gear, thats down, so i dont think its just the internet versus bricks and mortar, i think that the consumer appetite for buying goods has turned conservative. I think thats going down, theres no catalyst Going Forward. But people seem to be buying less on performance. Because attendance is down, viewer ship is down, and adidas is the new style, its the new fashion and its lower price points and the examination that these guys are all going to be under the microscope i understand that it was adidas was the one that was charged yesterday and executives that worked there and or coaches at these schools and those guys, it wasnt nike. But all these companies are going to be under the microscope, judge, and for that reason, its going to be interesting. Unusual activity with john and pete, how theyre using the Options Market to play a couple of stocks, but first a check on the s p sectors today. We mentioned how well the financials were doing, tthas why theyre leading the way. Back after this. Think again. This is the new new york. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov can i kick it . Yes you can can i kick it . Yes you can can i kick it . Yes you can well im gone welcome back new developments today in the federal fraud and bribery case against several ncaa basketball coaches and a Marketing Executive from adidas. According to reports, louisville has now fired its coach, rick bettino along with the schools athletic director. A press conference is scheduled at 1 30 p. M. At louisville the schools Media Relations director is telling cnbc that mr. Bettino has not yet been fired. He said that the newso outlets are reporting wrongly on this. Jay Williams Joins us by phone to discuss what all of this means, jay, welcome