Where we are volatility picked up this week couple of big down day, now a lilt bit of a snap back. What do you think about with where we are well, the snap back is not that convincing because its losing steam volatility is back for sure because when you reach these levels in the market in terms of valuation, in terms of just overall movement, youre going to see more volatility because people get r more nervous. I think were in a small consolidation period and as we get into the heart of earnings season which i think will be positive, will probably take off again. I wouldnt expect the velocity to be b the same overall, i think the bull markets in tact, but as ive said repeatedly, you have to be haunted by your eck appearance when youve seep this before and not always be be all all in looking to buy every dip i just bought alibaba. But never got hit. So just bought baba. My point joe, is the volatility good . Because its going to gi you an opportunity if it continue, to get into some names youve been looking at sure. Probably give you opportunity to get back into names like goldman sachs. So yeah, volatility would be a good thing if you have a longer term vision, i think josh said this yesterday. Give me a correction i would be welcome and i tend to agree with that. Howard marx was excellent yesterday in highlighting the fact its not a time to add risk if youre long stay long. No need to get aggressive. In the near term, i think the market is highly aggressive on what we hear from apple. Apple tried to rally today now its lower down for the year. I think were apple dependent. Lets listen to howard and what he told us yesterday. The oak tree chairman, about where he sees the markets today and how to decide if we are where we should be or if people are getting ahead of themselves and too excited. What matters the most in the short run in my opinion is whether prices are realistic, relatil to fundamentals or whetr theres too much or too little optimism and when theres too much and everybody says nothing can go wrong, there are very few things more dangerous than that because eventually something will weve been in this kichbd market where seemingly evefb is positive, bullish. You hear words like euphoria being thrown around. What do you think of what he said i think hes right. You have to look at the fundamental, but i think theyre underpin ining this rally. Expectations going to this year for growth, for the s p 500, are close to you know, double digits anywhere from sort of ten to 15 depend iing on which economistsr which analysts you speak to. Right now, were up about half that gain on the year. That said, i still think you can see even without multiple expansion, you can still see further Earnings Growth underpinning a stronger equity market i think we probably have marked about half the gains this year, year to date thus far, but that still xwifs us room to run for the rest of the year in equity markets. Is there volatility ahead or is this just a head fake within a couple of days that felt kind of bad but as steve said, youre going to get back really into the heart of earnings season and he thinks earnings are going to crush it then the stock market is going to go higher. I welcome the volatility. I wrote a piece last week for cnbc. Com and it was about the absence of cynicism. When you have u the market down two days in a row it shows that people are skeptical, questioning. Thats very important. Because if its all positive all the time, you get a disappointment which we might have later in the year if companies do not come in with these 15 quarter over quarter growth rates and you suddenly are going to have this downdraft, so im very pleased we saw that sign of some cynicism and skepticism in the market so josh, youre still pacing for the tenth straight month that is longest streak since 1959 yeah, listen, terrific. I agree with everything that carrie said and what steve said and i want to add this idea is a concept called the minski moment where if things are too tranquil for too long, people take more and more risk and get more and r more complacent and the way you pay for that ultimately ends up being much worse than if you just have gradual pockets of volatility all awe long. I allocate assets every day. Im not suring for new record highs every five minutes thats not way i want to invest for people so if were going to have this correction that everyones been speculat speculating, if thats going to take place now, couldnt think of a better time lets do it. I dont know about fundamentals being the thing to focus on. We focus on them all the time. They dont shift as quickly as prices do. So i think price action is more relevant if were talking about is there a correction or not take a look at small caps and transports if thats the case, they have now tried three dconsecutive das and i think tha indicative of a market thats exhaustive by the time ive finished talking, well make a new record high but its notable were seeing those areas slow down. Still have par bolick stuff going with amazon. New record high. Nvidia looks bananas to the upside so you have these areas that are working, but i think a lot of the market is taking a breather and god bless. Thats what should happen. To your point, youve had transports put in their fifth negative day out of six. Youve had retail put in their fifth negative day out of six. These are areas were working. Are they going to stop working now . No, i think that firstly, to joshs point, i think hes right regarding the minski moment. One of the things we have seen emerge over the last couple of years is a tremendous amount of money thats gone into these low volatility funds that have been maybing be i making bets. So the more money that goes into these funds and the lower volatility tick, it just grows and grows and that exacerbates the problem when you start to see volatility picking up. So i think this increase starts to clear the deck, change the mind sets a little bit and potentially you know lead us to a better environment in the months to come joe raises the point of apple with their earnings on thursday, whether that holds a key for where parts of the market go for here youve got facebook after the bell today were going to talk about that maybe people are expecting disappointment whats guidance going to be. If all of a sudden this week, you have a week in this transports havent been working. Retail hasnt been working some other areas of the market seem to be breaking down a bit then faang, some of the techs dont start. So apple, i own apple this is what i want to say theyre expected to do 87 billion in revenue and 383 in earnings if they come anywhere close to that, its the most successful quarter in the companys history. Thats versus like 78 billion a year ago and 330 something in earnings per share however, its perfectly reasonable to say the x was a big gamble on thousand dollar plus phones. Demand did not materialize, at least not yet, whthen the other two phones replacement cycle wasnt so hot. China wasnt so hot. Its about 5 above its 50day moving average hasnt been below since july of 2016 another downgrade today im not sell it not saying its the worst company. Just saying why should apple add 50 billion a quarter . Thats what its been doing. Its up 200 billion in market cap over the last 24 honts why should that continue on if growth is not what we thought it should be. As they say the headline of their note, have shares then plateaued for r a while. Saying phone sales are plateauing one could be in the same. Sure. If theyre able. In other words, if phone sale sales dispoint i feel you. We said this the other day. I think its on and off, but in 2018, a cash story its a Cash Management story we know the product story already, so i think were already building in the disappointment on the product side, but i think the other side to that is apple able to present a form of guidance with the tremendous amount of Free Cash Flow theyre going to have, theyre able to exhibit to the marketplace, hey, this is what were doing with the cash. I think its a cash stroir that could off set the product weakness now if it doesnt, to joshs point, and it corrects, youre going to have a marketplace thats going to have that sentiment thats quoing to shift and youre going to have a market thats under pressure talk about boeing boeing is powering the dow higher today its another all time high beat on the top and bottom line. Also gave up guidance. Shares of the company have more than doubled in the past year. And kevin o leerileary still t theres plenty of iranway ahead. He joins us from theness dak i got to say, you bought the stock the other day. Or more of it. Made your case we pressed you on it and congratulations. Thats a good buy. Its wonderful when it happens and im humbled by it, of course, and i still own it and im glad i bought more the company is transforming itself into a subscription service. So many people have not acknowledged that yet, but every time you buy hardware from them, whether it be a Missile Defense system or aircraft or whatever youre buying from them, you are mor or less hooked in perpetuity into buying their Software Updates for ever who would want to get in a plane without the latest aif onices . I love their Balance Sheet ch i get emotionally involved when i look at it it is such a thing of beauty and just generates more and more cash flow and that is whats driving the stock. Managements done a hell of a job here, but theyre basically changing this business to a very high margin. Service business we were just talking about apple. We used to talk about how services was under 10 then it started to stream into the earnings past ten. Well boeing is in that same transition now except their customers have to buy the update what do you think boeing at these levels well i wouldnt buy it. We dont own it, its great if you do, but its up over 100 . Not as if anyone didnt notice that they were going to have a good fourth quarter. It is up 25 you think it was going to be a 5 pop in the stock day quarter . That good . Sure, why not this is a good day for infrastructure, machinery, capital goods type of stocks and i think that the market is enthusiastic about the big dow names on days like this, but i think its hard to make a commitment with new money to a stock like that. It is up 20 year to date if you think volatility going to come wak and is in the early innings of doing that, you think maybe theres going to be some sort of a correction, are you tempted to take some profits in boeing today im now mining. I agree with everybody talking about volatility its starting to creep back in when vol comes back to a market like it is now, you want to do to work on the Balance Sheets. Im going through mine looking for ones with less debt sh higher returns on assets across all sectors and when you do that, it leads you right back to Balance Sheets like boeing it is a thing of beauty. Its got tremendous cash flow. Remarkably clean Balance Sheet and fantastic Business Model why wouldnt i want to sell that this thing is driving my performance. Boeing is at a valuation that hasnt been seen and part of that is from the market. So not saying they havent executed they have. Not saying theyre not in the sweet spot with the airlines adding a lot of capacity of course theyre benefit. And with trump talking bt increasing defense spending. Their model isnt a lot different in terms of the subscription model, but this is also a product of the bull market nothing wrong with that, but youve got to recognize, thats the new growth stock of the mel enyum. A lot of the movement reflects momentum investing like bah bah baba an i bought more yesterday. This is trading on its Balance Sheet. Bull market with good excuse kevin, you want to debate that with weiss . Its trading on my favorite term, cash flow. Thats why i own it. I love businesses that can can increase cash flow, increase return on assets, are generally less volatile and have clean Balance Sheets im going to keep owning it. I dont see any reason to sell it i think its part of a you know, optimism on a Business Model that is morphing i dont think anybody was talking subscription a year ago and now all of a sudden, were looking at maybe more than 10 of revenue so i love all that you know, look, i agree with everybody else im trying to reduce the risk of my portfolio this is a name not fraught with risk it is fraught with cash flow whats the cash flow multiple on that . Just curious i dont know its trading at the market multiple, but the point is, you have to ask yourself about the quality of that. What is the stability of that cash flow . Where does it originate . What would change it you speak of boeing almost in defensive terms. In the environment that were in where as weiss, you make the argument that you seem to be, you would be increasing your risk going further out on the risk no airline orders get canceled its had from time they go out the order way more than they need then they cut back and cancel it then boeing comes out and say weve got to cut our projections. One thing that could happen. Its always happened all im saying, not saying sell it keep in mind its benefitted from the market. And it used to be a cyclical stock. Exactly its not a defensive stock got defense business, but its not defensive. Its highly cyclical hey, its joe can i ask you, 15 billion in operating cash flow for the guidance five years ago, now, its been five years that its increased it was around 5 billion. If you were to see that cash flow for 2019 decline for the first year, is that for you where you say to yourself, okay, im not in the stock anymore you know, i look at the risk in interpreters of modifications to estimates like that and ask myself five years ago, did they have over 10 of the revenue coming from Subscription Services on defense and aircraft i think the answer would have been no. We didnt look at that just assumed those contracts were sign and you were given the upgrades today its a different deal because of the mix of product changing look, the end of the day, the company said that they were going to focus on the aif onic business and start to do a different kind of Business Model. And i think its bearing fruit its not a major part of that their business yet, but it is so high in margin that id argue that the quality of the cash flow today versus five years ago is much higher now look, anything can make me change my mind if management does Something Different i looked at it a year ago if would thaw deliver on these and they did is the model changing, yes is this a defensive stock, yes, and the its a defensive stock with trump talking about military sprending and asking his partners on that point in the military spending, we saw what trump did with air force one these guys have margins of defense where its been unaba d unabateded they 500 for a toilet seat i think trump is going to be more focuseded youre talking 24 million for a couple of refridnlgerators no. Do you think trump did got a lot of great press in terms of his nailing boeing on air force one. What if they do that with spend something. Ross is going to canada, ace asia, singapore, you buy these planes you want to reverse the deficit . Start buying boeing. Youre missing the point. Im talking about margins that they take at the expense of the u. S. Government. Not whats going to happen with others buying planes theyve been doing that. Hey, look that could happen. Thats another risk, but right now, i would say theres as much momentum in back rooms going on with the trumps of the world saying look, you want to buy defense, buy boeing. You want to buy america, buy an aircraft from us its a trend thats your friend. Were really debating the quality of earnings here its a name that should stay on your radar thats my argument im forced to sell it down after it hit 5 , which is going to happen today im going to have to look at this again this stock is on fire. Its gotten overweighted in my portfolio. Going to have to do some trimming, but thats a nice problem to have. Thanks. All right, lets talk rates. The tenyear yield hitting its heist level since april of 2014 this week. How high will they duo rick is the global chief Investment Officer at blackrock joining us from new york city. Thanks for having me. Is this a week ha sofrt changed everything i dont think so. I think were going to, there are few things that are important. The fed obviously is important i think were going to learn a lot about the fed today thats going to be trily important longer term. By the way, the treasury Just Announced more funding to fund all of the fiscal spend, the tax billet s et secetera rates are going keep trending higher i wonder how the market is going to respond to that were at 273 on the tenyear look, 270 seems to be a little bit of a line in the sand. Made some people nervous stocks have been selling off the last couple of days and today, tas boeing market and Everything Else is really down or flat in the dow. Yeah, a couple of things. Your discussion about cash flow, i always wonder, people dont spend enough time, why is the equity market going to keep going up the Free Cash Flow, everything that matter ss Free Cash Flow relative to where you fund it. Say you go to a 3 tenyear, maybe a bit higher than that are you still generating enough free cash growth you are. Its part of my more and more people are focusing on the fact rates are going to move higher, but if you take where the fed is today, rates are still accommodative. I think people are not putting it into, yes, rates have gone higher the starting point was so low, were going to push a bit higher its not going to be enough giffin the growth to really off set it its funny. So argue theyd be anything but accommodate i at a two on the ten year would be laughable. Totally i think people by the way, the ecb and bank of japan are still fairly close to zero in terms of where ra rates are there we think were in the mode of where the Central Banks are going to start pulling back. Global liquidity is extraordinary today. Theres a cap because of demographic, liquidity in the world. Were still seei ining signific inflows, so rates are going to move higher, but not dramatically higher. Ray, hirick, its josh brown. Are individual investors being paid enough in terms of spreads to own high yields here . Youve got breakdown in the hyg, etfs and youre see things happen with flows that are interesting. Is that a risk worth taking . Should they come in more whats the house view . Weve reduced a fair amo