Does seem to be pretty good between now and the end of the year. Well, i mean, look, just from a Bigger Picture, we talk about trend a lot and i think you have to respect the primary trend, and so from that standpoint lets review what went on last week, a holidayshortened week but so what. A new record alltime high in the nasdaq and the dow, and then you had the canary in the coal mine that was supposed to be down and a new 50week high in the lts so you can look at all these things and say im going to go the other way of things. Youll be on the wrong side of history of over 100 years of market data that we have Bigger Picture the trend is still higher doesnt mean that you cant have a deterioration in the internals and get a correction of course, you could, but im just pointing out thats not whats happening now get a day like today, the market hits new alltime highs at the open and people pull back and whats the reason . Is it north korea . Welcome to sell on that news if you want, but big picture this market is still under accumulation until proven otherwise. Kevin griffin of citadel was on the halftime with the with leseley picker and says where he sees the stock market at here and now. Were clearly at valuations at more stretched than typical and at a very constructive level for prices extremely low inflation and Interest Rates and those create strong underpaces for increased valuations. The point josh is making as well. Thats the setup not only seasonally, as people point to, but fundamentally the stock market is still in a pretty good position. And thats been the story of the market right there where else are you going to put money is in the interpretation of what they said. Youve got low inflation and low rates so put it into equities, and i do think that continues. What well have coming up though is some volatility from the tax plan, right . Youll see it go both ways as the senate going to vote on it maybe they approve it, and maybe they dont and if you do you have to have the two parts of congress get together, and i think that will croat volatility. Is that the only wild card in between now and the end of the year, the determination factor as to whether stocks have a classic year end santa claus rally and then some . Thats the only predictable wild card. North korea does something stupider than another test thats a wild card and predictable wild card is when you get volatility which means thats good volatility because you can buy you can buy when the market trades down, thats how you make money you absolutely need volatility to generate return in terms of secretariors, look, were coming in front of what probably is a hike in december, december fed meeting and that will help drive financials higher through the end of the year i dont expect the testimony to be anything different than what weve seen but thats an opportunity. Financials are right in the middle of the pack year to date where deck has led up the and financials up 12. 5 year to date, and whats whats really to make the case though that over the next five weeks were finally going to get this pick up because Interest Rates financials . Specifically for financials i dont know if youll have enough concrete evidence over the next five weeks to justify that and we can say, okay, its going to be the moment they appreciate. Language along with the expected rate hike. Had that all week. Havent had language accompanied by a hike. Keep in mind for the bert part of a year the hikes have come with tenyear yields continuing to fall and the 2 to 10 spread going below 50 basis points financials have actually performed relatively well in that environment i would just say to what josh and steve are pointing out, sometimes the best trade is no trade and you might be entering that period for the time of the year where really whats your incentive sell without some visibility on what that tax plan is going to be i thought, kevin ollie, late last week you were taking chips off the table in some of your positions and maybe get hag little more cautious and expecting there could be some sort of a wreck. Are you at odds with josh brown and ken griffin . No, im not i see the same issue its all about competition where else do you put capital to work i dont see any value in fixed income i dont see value in high yield or in government bonds so im also biased to equities but would i add this you know, you talk about issues that could hurt the market in the short and midterm no one is focused on an inverted yield curve yet. 60 to 70 basis points between the two and the tenyear that gets a little concerning. Its wide open everybody can see it get the fed hike in december and everybody worries about an inverted yield curve which is never a good idea for markets. Can you try to come up with ideas why that does happen that does worry me i look at it this way. If im deploying more money, im more led towards small midcappish now because im a buyer into the tax reform of some kind. I think they will benefit more than the s p i ask everybody this question. I talk every day about this to people offering me ideas every morning. Are we going to get 20 of the s p index next year . I dont think so, so at some point youve got to pick sectors or stocks or gearing physical. Theres better value in europe right now. Asia beat europe this year you know, were expensive. Were not cheap. Were not inexpensive where the rates, are but im deploying more money domestically in small and mid and staying on my european theme for next year and, yes, i took some off the table on fangs. What about the notion that ken griffin says were in the seventh inning of this this bull market . Right, so you still have some time to go, and then if you look at the sure. Sure, stocks may not be cheap, but by a number of different metrix they are not exactly ridiculously expensive nor is there a level of euphoria you would normally see in the absolute latest stages of a cycle. I love wall of worry. I do like that, but i had my research guys do a little work this morning, and i said go back and look at the s p index versus the aristocrats dividend index and give me the last 20 years n. 2016 the dividend stocks outperformed the s p 2017, they got slaughtered its a flipflop back and forth. If you really think youre going to get 70 return out of the s p next year, which would be historically more a norm after a run weve had in 16, where do you want that to come from all Capital Appreciation you want to derisk your portfolio bit looking back at what history teaches you and go more towards conservative stocks that will give you some Capital Appreciation but maybe get 3 of cash returned in the form of capital returns and dividends. Thats where uncle kevin is going. Im going into a more conservative mode because i think im going to get a repeat of 2016 and take a little off the table on the high pe flyers now and put them into more conservative names in the s p. Hey, kevin, its joe. So by derisking, the obvious place would look would have to be in technology and clearly thats got the strongest fundamentals, is that what youre suggesting should be done i Like Technology with a lot of cash on the Balance Sheet which kind of gets me to an Apple Microsoft kind of mood which is where i am right now. Pulling out of some of the real high flyers that returned us too much this year, the nvidias of the year and all that that was great. I feel warm and fuzz beit, but when i think about downside now, i ask myself wheres the market going to take so li s if theres a correction less levered and cash rich and dividendpaying stocks and theres dyno text returning that way. Capital hasnt been a bad thing for apple or microsoft those are the winners in my portfolio that im overweight and i pulled a lot off the table on the high fliers its kind of interesting that this is something you see flipflopping back every 24 months. Tech is up 24 year to date its not as if everybody thinks this goes up unabated, right Morgan Stanley has a note wondering whether its time for a pause, especially in the chip names. The problem is the fundamentals are so strong in technology right now now geffen brings up a point, highly levered tech right now is actually getting punished on the debt side, but those companies are few and mar fine. Right. Most tech companies, the Chip Companies arent as badly leveled and theres time to take money off the table and i agree. Some of the cashrich companies. Oracle has a ton of cash on its Balance Sheet hand will benefit whether you get tax reform or not and they will increase their dividend and its a pe thats market multipast its not at 30, 40 times. The senate could vote on the republican tax plan as early as this week. Our eamon javers at the white house with the latest on how the vote count is shaping up eamon . Yeah, scott thats right with the president back from thanksgiving break last night hes here hat the white house, and now its a flat sprint from here until christmas when they think that they can have tax reform passed by the end of the year, so take a look at whats on the december agenda and youll see how packed this agenda s. Today it starts in half han hour had the president will be having lunch with the Vice President and several members of the Senate Finance committee tomorrow the president is the going to the Senate Policy lunch. Hes also going to meet with the bipartisan congressional leadership so hell have one event with republicans and one event with bipartisan leaders and then came an eye on december the 8th, the day where we expect we could have a debate about the Government Shutdown because government funding expires that day, so that will add to the mix, some very blizzard policy, including daca, the immigration measure which democrat suggest they might throw into that debate so that could swirl everything in a way thats very up predictable heres where we go from here we expect there will be a vote in the senate and if that happens the senate will pass the tax bill and then it goes to the house and senate and back to a conference they have to reconcile these two versions of the bill that are out there, the house bill and the senate bit as i say they hope to have all of this done by christmas. What are the big stumbling blocks theres big moving parts here, scott, including the individual mandate on obamacare thats something that could be a real difficult negotiation it is in the senate bill but not in the house bill. Theres some moderate republican senators that could be a Sticking Point for them though i talked to a senior white house officials who said he doesnt believe theres any firm no vote at all in the senate right now also youve got the difficulty of reconciling the individual tax brackets remember, there are a Different Number of brackets four bracket in the house bill and seven in the senate bill and they have to figure that out the oneyear delate 20 Corporate Tax rate and the elimination of s. A. L. T both bills treat the state and local taxes differently and whether or not you can deduct them so all of that has to be ironed out in that conference committee, and then they got to have the votes for final passage which they expect to be able to do before christmas, scott a lot on the plate here. I talked to that Senior Administration official here at the white house today who said that even if the vote in the senate slips until next week, they still are optimistic they can have it done by christmas but its getting very, very tight. Lots to get done. Eamon javers, north lawn of the white house for us among the sectors likely to get and expected to get a benefit from a change in the corporate rate is technology, especially a stock like apple bernsteins Tony Sacconaghi says that company could get an 18 jump in earnings tony joins us by phone welcome back. Good morning, scott boy, that apple number, let just start there. That really pops out at you. Is that a surprise 18. 3 boost in reported earnings yeah. Its pretty significant. I mean, apple has a relatively high reported tax rate today of about 25 , and under proposed tax legislation they are going to pay 20 on u. S. Earnings and probably will pay something closer to 10 on foreign earnings, so on the blended basis, apple may have a tax rate that is in the very low teens on a goforward basis and you run through and thats a dramatic increase in report earnings, and i would underscore its reported earnings from a cash flow perspective theres probably going to be little impact but certainly from a reported eps perspective it could be very significant. Yeah. At the same time though you say expected tax reform would have im reading from your note would have a smaller impact on the tech sector versus the rest market. Why so oh, if you look at the tax rail for tech today as a sector. Its tax rate is 19. 5 . The rest market is at 24. 6 . So if you end up having a lower tax rate, something thats 20 or on a global basis going to be less than 20, tech is simply not going to benefit as much because its starting from an existing lower tax rate. Im looking at some of the companies that you think could benefit beyond a its certainly the headline grabber and quite a number to go along with it, but toys krisko and microsoft, oracle, even adp you put in this basket of winners, so to speak. Absolutely. There are a couple of different kinds of companies that will benefit from the proposed tax reform the first one is companies that currently pay a high proportion of the revenues in the u. S. And as a result have very high existing tax rates and thats Companies Like visa, adp, texas instruments. Additionally there are companies that have very large offshore cash balances, and they are going to be able to repatriate those cash balls so were looking at apple with 252 billion in offshore cash and microsoft with 128 billion offshore or oracle with 450 billion offshore and cisco with 67 billion offshore, 20 plus of their market caps in cash that can come back, and obviously it can be used to either repurchase shares, be dividended out or used for investment or acquisitions. Yeah, at the same time with the haves theres the havenots and ibm falls into your list along with hpe and hpq of companies that would be socalled losers out of all of this correct so, you know, the companies that are going to benefit less are companies that have existing low tax rates and have little to no trapped offshore cash an Companies Like ibm have a tax rate today thats in the 12 to is a range so their tax rate may not go down. It may actually gun, and they dont really have any trapped offshore cash and the same is true with hpq and hbe, so in this tax reform, you know, certainly on a relative basis and perhaps even on an absolute base they may be they may be losers. Interesting tony, thanks for jumping on the phone. Well talk to you again soon. Thoughts on these stocks that you open or in this group . Quite a few of those, microsoft, krisko and oracle one of the other things i think could be a Silver Lining in this if the tax does get passed corporations with lower tax rates will spend money on tax. Look at microsoft, look at krisk cisco. Joe, visa a name that can work . And a group over at bernstein. Would i go back to what sarat has said and what companies spend with the lower tax rate and the software size is one particular industry that stands out. Has to be a winner in the Global Environment that were in right now thats focused on growing the company. How about this apple number, 18. 3 bump to reported eps thats fantastic, and let me tell you the other good news on apple is they are apparently cured to a large extent production issues because the availability of the phone has increased dramaticically i was at an apple store on friday they got two shipments of the x so man is not strong or they have increased production. My bet is they have increased production. Is that an apple watch i see you wearing . Yes, it is, and i wore it for your benefit i just got it, got it for working out, great, the cellular connectivity great innovation. Does it work . Oh, it is. Do you know how it works. I know how most of it works. You literally bought an apple watch this weekend i did, i did i. Are you with him . You guys hang out after school saw from the notes and i almost fell out of my chair. I did its a great device. The guy who criticizes this finally buys the stock the guy who criticizes that finally buys the watch, and whats next . And im long calls, the february is a 2180s which im long its a great stock. Hes a threedimensional person has a web of contradictions and, you know, thats thats normal. People should be allowed to change their mind. He knows hes been wrong with this argument all the time. Im not wrong with the argument in real life he knows. Hes never wrong. As a matter of fact, an Apple Employee came up to me in the store and said i agree with you on innovation points. Nonsense. Absolutely. Whats his name he also said im his favorite person on the show. Now its definitely bs. So that buttresses his credibility significantly. Kevin oleary, how about this number and the bump that apple can get or another Technology Company from the tax reform plan i want to go i want to go back to that to that analyst looking at, you know, apple in conjunction with a lot of other companies and saying that tech doesnt benefit. Theres another aspect to this every s p company, largecap company with 47 of their revenues abroad has been contorting themselves for years to get their tax rate below 20 . So my argument is why not just go to the russell 2000 and find the large cap out of those which is around 4 billion average theres 300 companies in the russell 2000, and buy that basket because 100 of their revenue is tasksed at a very high rate north of 30 , so if you are a believer in tax reform you wont get it out of the s p. Youll get it in allamerican made revenue and domestically. Thats where it is its sitting in the large cappish and midcappish, about 400 of them, in the russell 2000, and i like that play better i think its going to outperform the s p next year. Theres actual evidence statistically to that, a high tax rate s p company so far has underperformed a low tax rate s p company 8 versus 20 , okay . Shouldnt the street be smart enough to recogni