Doc, they draw the live. You get taxes through and go to 2850 on the s p. Okay. You dont, you get an air pocket pretty quickly of 5 to the downside that sound all right with you . I think that when we hit the new year, when we ring in the new year, if we dont have a tax plan passed, judge, we will see an air pocket. Dont know if its 3 , 5 . I doubt if its much more than that, but thats, like i say, a little over a month from now what im looking at if it doesnt pass, so not this week, but i think they will do it into the new year if that doesnt pass. Jim lebenthal, this goldman prediction about where things go they see the market continue to go up over the next couple of years, not nearly as much as they do in 18 they are lacking for a nice doubledigit gain. Things slow and multiples plateau and theres the price targets and wellknown by many viewers on this network of where they think this stock will go. David is a very, very smart strategist i worked with him 15 years ago and is extremely intelligent theres a couple of comments would i make about it. One, this is a little bit of a capitulation, a little bit because he had lower targets until today. In fact, i think he had a year end target for the s p 500 thats below where it is right now so hes given up on that and i think thats the right call. The second thing would i point out here is theres no way that this is going to grow in a Straight Line to those numbers, all right . All of us have been talking about this since the middle of the summer were due for a correction nothing insightful in my saying that if i can tell you when thats going to happen that would be insightful and fortunately thats not something analysis can bring forward. If you do get this tax plan, youll get another 5 higher, and then youll Start Talking about florida from a if you dont, as doc said youll get a 5 selloff to get something more than that, to get a real correction you need a growth scare but weve all been talking about this synchronized economic recovery across the globe if you get one tremor in that, one region that says maybe we wont have are the Economic Growth we expected then you could get in a correction. Wouldnt we get sniffs in inverted yield curve as Rick Santelli was just talking about in the last hour you look at where the 7s are compared to the 10s and all along the curve. You get that, even though you may not be worried immediately about a recession. You start to get a pileon effect in terms of talking about it and the impact often sentiment and what that can do youre likely to see the yield curve flatten as we move through 2018 unless we get a real fiscal expansive tax stimulus plan which would materially raise the longterm growth rates, but i still do think that baseline case, especially with whats been proposed today by congress, were likely to see the yield curve continue to flatten. I dont think its going to invert next year though. You still have 50 to 60 basis points to go i dont think that youre going to flatten through zero and into inversion territory next year. The other point i think thats important to realize though is whats driving the yield curve flattening typically we see it mostly driven by the long end, meaning the long end selling off this year we havent had any Movement Really in the long end of the yield curve its predominantly been driven by a raising of yields in the front end and thats caused the yield curve flattening and when you look at the long end yield today, its still at really low levels and still very supportive for Economic Growth, so i dont think that an inversion of the yield curve today given whats driving it is going to have the same impact that weve seen during historical periods where its led to a recession over the next 3 to 18 months so even after the inversion, there is a lag in terms of when you actually start to see the data rolling over it. Joe, what about the notion of pulling forward some of 2018s gains because of so much optimism about tax reform . S p goes above 2,600 for the First Time Ever within the last hour, so if you get a seasonal runup into the end of the year, which history says you probably will, barring some unforeseen circumstance, does that take a little bit of the steam out of what could happen next year . At least in the early part of the year. Its interesting because, and i always hate disappointing you, scott, but with my answer a year ago there was nobody who was talking about having a lower u. S. Dollar or having outside geographically the United States, that would be the catalyst were talking about tax policy s p 500 companies with a high tax rate, they are up 8 year to date s p 500 companies with a low tax rate, they are up 20 . S p companies that sell to the brcs, they are up 30 and S P Companies that sell to western europe up 24 so to me the challenge right now is that so many are now embracing europe and embracing the emerging markets and coming forth and saying, hey, thats the theme for 2018 thats whats going to keep us going. From a sentiment standpoint, that concerns me slightly because they were wrong last year why wouldnt they be wrong this year pete . You know, its interesting that we sit on the desk and sit here and talk about the yield curve constantly, and its happened since the beginning, since january we talk about the yield curve and here we are approaching december, still worried about the yield curve and wheres the stock market its been about the facts of whats going on with the earnings and the growth and also obviously economics outside of the United States has been a huge benefit take a look at whats really driving on the outside of the s p right now. Take a look at j. D. And look at bapa and all the chinese stocks and look at wynn for crying out loud. All the tech stocks. Not just tech. Tech is leading the way today. No doubt about it and when you look at a lot of the names, scott,bled a you start to say, a, they have growth and, b, still have valuations that are very probably on the lower end. Some of them are starting to move up had a little bit, but overall these are names that actually could go higher, and yet theres always the concerns. Everybody is looking at the yield curve and saying, you know what whats going to happen this thing is flattening out we wont be able to make money and the recession and everything else. Makes sense, you know, if you want to talk about the banks. Sure, lets talk about the banks. They came out with some great numbers, and weve had some nice moves because people embraced, that and then all of a sudden it goes back to the yield curve and they go towards earnings again that earnings number we start to see what will happen when we start to get back into the banks, the s p and we start to see some of the names come back, because were through earnings season. I mean, now, this is the very, you know, the end of what we normally are looking at, but when we get back towards the banks and start getting the big industrials after that this past quarter gave us a little peek at whats happening for next year. How much of this is buybacks because this historically is the strongest buyback period and authorizations were 18 higher and actual purchases were much lower year on year coming into this quarter so how much of what were seeing right somehow Companies Buying back their stock ahead of the year . I would tend to believe a lot of it. What is interesting about david costps call is he actually downgraded technology from overweight, and he has an overweight in the financials as well as in the industrial sector, so i think thats probably the most controversial point which is the downgrade to Technology Given how well they have perform it seems to be its mostly a valuation play as well as a leadership transition. Do you think theres going to be a change in leadership . I think its hard because what youre seeing, and he actually brings this up later in the note what youre seeing in terms of the leadership this year, particularly with regards to the tech sectors, the reason why they are doing well is because they continue to deliver earnings in excess of Market Expectations they are the disrupter to all other sectors within the economy right now, and as a result of that, they are gaining market share from nontraditional tech players, and they are also continuing to deliver innovation and growth, and so i think its hard to sell them given the fact that they are going to continue to be able to innovate and disrupt. Keep giving reasons to own them. Exactly. Other reasons, merkel she has trouble forge the coalition that she tried to form, basically tossed it aside and now might be calling for a new election, right, judge what is that market . Its that far from a high of multiyears right now. Yes, it had about a 7 correction midyear this year which we havent seen in our country, but the german daxx im referring to, of course, as far as that measure, but today its just shy of lets say 14,000, Something Like that. The german daxx, and it looks like even if merkel cant do and cant be the hammer anymore in europe that they dont really care it went right back to work, and the the german market, french market, uk rallies haul rallied even in the face of that. Jon, see if it comes back in the first and second quarter. It could, depending on what the coalition looked like. The markets totally ignored that on monday, totally ignored it. Well, we did see a move in the euro pretty fast. Did you. But then it came right back. The stock market has ignored it listen, when were talking about the stock market as a whole, i think were missing a little bit of the trees in the forest here. Intrastock correlation within the s p 500 is the lowest its been in decades. What that has been telling you can pick stocks here hand in glove with that is that within Industry Sectors correlations are very tight. What that is telling you is sector rotation is going on, and i think you asked a second ago, scott, youll see leadership rotation, its already possible that youre seeing it. Think about the xle and which was dead four months ago when oil broke out the 40 to 50 range. It has stalled, and if you get in excess of west texas intermediate going to 60 youll get another breakout there thats an area to look for opportunities. Theres good yields in the xle you can get paid to wait. Let me ask you up more Bigger Picture question before we look at a couple of stocks within the industrial sector. The headline of costps note is rational exuberance. What is irrational exuberance in this stage of the game look like what does that feel likeing . Is that another 10 up from here well, i talked excessive leverage in the system, and pete gave a great answer to that yesterday. He said, well, the leverage is in the option market f. Volatility is below 10 im very comfortable with the leverage being in the option market because thats managed risk if leverage comes very high in 2018 in certain as et classes or certain grow graphic pockets then thats a possible ill go back to something jimmy just said and i think the bigger question becomes is the rotation, scott, that youre looking possibly for in 2018 Revenue Growth companies up 25 plus do we finally go away from growth into value . No. And what does the market look like at that point pete, i agree with you. Im just saying no because thats an easy question to answer for me. What does the market look like if we do go from growth to value. You know im chomping at the bit here. Im glad you mentioned this earlier you talked about how at the beginning of the year nobody saw a lower dollar, right . It was unanimous the dollar was going lower and what a head fake and when the pendulum swings in one direction you know its going the other way. Every strategist i say says equities are overvalued. Literally every one i see. That to me is as much of a tell and im not talking my value book, thats has much of a tell saying the dollar is going higher. Lets go back to the people with the counterintuitive play i think tony dwyer was one of them who sat right here on this set and thought that the dollar was actually going to go the opposite direction. Im willing to bet you tore him apart. No. Inwas surprised to hear him say it. Okay. I was making a joke. Sort of the point youre making but the point is well taken. Almost nobody saw it there were a few people. Josh. Always a few. Its going to help with the value sectors. Yeah. If you get the tax reform. People have been looking for help in the value sectors. They better keep looking. Give me growth, man give me growth. A couple of stocks in the value sector, two calls on industrial stocks. Deutsche bank cutting the expectations for General Electric and deere up. They reiterate a sell, cut the price target they said to 15 bucks. Is it going 15 yes, it, and i think weve said that, and ive said that in the last couple of weeks im not happy about it look, you just dont have the growth in earnings to justify a multiple higher than that. Weve talked about it ad nauseum. You look at the hoppywells of the world, comparable dhaps are growing better margins and have dividend excuse me, that have multiples that are where ge should be today. Its going to is a i dont think theres any question. Why is the stock up in the reiteration of a sell . 175point rally in the dow is why its up. Its managed to hold four cents. Im one of the guys wishing that it would go, jumping, just like jim, go to the upside by not 15. Theres just a weight on this stock. Should be. And, you know, when when we saw when nygren and others said i like it here at 22 or whatever, and as i said i bought it at 21, and now thats 18 and im not happy about that trade at all, and i dont see why it stops. I dont see why it stops until it gets more oversold. And, again, the reason why it doesnt go up and i keep talking about this and find me companies in the s p 5 up that have similar pension liability problems this is going to be a problem in the next couple of years, that these older companies are going to have to deal with, and its the reason why they wont see significant appreciation relative to other companies. I dont disagree with that, but i still think it comes down to right now do they have any core growth . Thats what funds im talking about now why is it now . Why is it probably going to 15. Thats the funds liability. Not like every piece of business in a ge has. Not everything is crap, youre right. Not even close. Well, they have some the pendulum side that have is really getting them pulled down. Have you flown on a plane lately yeah. They got some stuff out there, no doubt about it. They have areas that they actually do perform, right im not saying that this is a complete trash, but when you look over and see the rest any competitors out there in industrial space, what do they have that they dont have . They have growth they have core growth. Medtronic, just to throw out another one of these names, a minnesota names, had core growth look how they did on their earnings absolutely crushed t. Guidance was decent enough, and this stock is up 4 , 5 today why . Because theres growth there not a value play thats about growth. We talked about that stock about two weeks ago, and we mentioned the momentum, the term that you were getting, but going back to ge, okay, theres this other company that continues to go higher, and i know jim cramer and stephanie have spoken about it when they are on the show with us, and thats honeywell, and i dont understand why people dont talk enough about the positive story thats occurring at honeywell because its the complete an at this time sis to whats going on at ge. People have been talking about that and people have been look at honeywell and some of the other industrials relative to ge, one that has perform and one that has not you guys are telling me if ge goes is a, lets say the analysts are right everybody is going to jump in and say is a. Thats not what were saying here. Exactly youll come back and tell me, its falling knife going 13. I dont even want it at 15. I just think its going to 15 i didnt say i would buy it at 15. Tell me what happens to honey fwhel that scenario. Shake me how the of my honeywell and maybe ill take a look at ge. How about some emerson. How about some 3m. Theres alternatives. In are names that are much better no price at which you would buy ge not true. This is a turnaround story takes longer than one quarter. I bet you in the First Quarter youre at 15 i hate to the make a bet like that you dont buy it then because it will take all of 2018 to turn the ship around and if i do it, youll make fun of me the whole time jimmy is in ge at is a and it will be december of 2018. Ill give you props for getting in there. No, you wont. Ill give you props for getting in. You say that now. I may hammer you on the way down how about the other up, deere. Didnt talk about that up. Upgraded to outperform. Buy the momentum, buy the growth. 155 is the new price target. They have been upside calls in here, jufnlt as you know, well talk about a couple of them that we were lucky enough to be on the right side of and pippa wrote them up and put them on cnbc. Com. This is one of those three, and they were buying big upside calls in there name. I know thats a favorite of josh, and this one has continued to work to the upside. Hes owned it for a while. Yeah. And im one of those guys who rent i dont boy, so im ive rented longs in this one i like it. I think its going to break out again. All right dominic chu is with us today working on a couple of baskets of stocks for us he ran a screen showing the stocks that have far surpassed their 200Day Moving Averages. The stocks are now vastly underperforming their 200Day Moving Average i know what youre trying to say. Not saying it very eloquently and you look at ones that have exceed it had on the upside and downside. This flows from your whole growth, the momentum of where its been and hasnt been. The momentum plays have been to the upside and downside for different stocks and sectors in the market overall talked a lot about the Technology Side of things. Lets take you through some of the names because we looked at the s p 500 and look for the stocks that are really above their longterm trading average price and the ones really below. Well start with the good news first. Those ones doing really well energy, energy one of those storks. Up 41 from its 200day average price, the longer term trend line one stock to watch paypal, another high today, up 41 over the long average price and nvidia and align technology, 64 above its 200day ave