Here to tell you what the key is Going Forward for their streaming success. But we begin with planes, trains and automobiles, the transport surging back today trucker j. B. Hunt crushing earnings the airlines soaring that group up, 5 in just the past week so is the classic dow theory, the idea the transports are going to lead the market back in vogue . Its been around 100 or so years. Pete najarian, is that move a huge move for airlines, railroads, truckers, mean that it is all all clear for the overall market i dont think it is that easy i dont think the markets are ever that easy Everybody Loves to say that. Is that theory dead i would say this, it is a great sign the airlines, we watched them produce and produce and produce and people still dont want to seem to own a lot of the various airlines when i looked at delta numbers last week and it almost went by and nobody talked about it and yet they crushed it. They had a record Second Quarter. So we know right now that they do have Pricing Power. Theyve got great deals with the credit card. When you look at unite it, yd, u look across the entire landscape, i think the Pricing Power theyve got is impressive. Obviously with oil just kind of hanging around in the 50s, 60s, that sort of a range, i think it gives them a great opportunity to just keep printing money, which is exactly what the airlines are doing. Yes, but separating out the airlines from the rest of the transports, right . Yeah, yeah. A very different story. Csx earnings coming out after the close right now. It is worse than expect. Jb hunt earnings last night were slightly better than expected on weaker estimates they werent really that great csx comes out and says intermodal is down, a slow drip down it is not complete gloom and dom but a slow drip down thats the story of the interior of the economy the airlines i think are separate from the rest of what is going on in transport i would not look at a broad index and go, oh, everything is great in the market out there. These csx numbers are not that great. I have to push back on you. You have canadian, pacific, norfolk southern, theyre stocks are 48 . And the dow is down after the close. But theyre up 36 for the year. But theyre down, the reality the reality is that the earnings are not great that are coming out now so whoever bought the last 38 was wrong. Well, for 33 they were right, but anyway it is the same argument but i do think you have this monolith of transports and to have that be, you know, a proxy for the market doesnt make sense. I mean the airlines, which i have some airlines, they seem to be great although every time i hang on too long. Which are you long . Delta, america, unite fltd. But the transport to me is a bigger story actually, the rail part of it. As brian said, csx is coming out with this is what im afraid of with the trade situation, that the uncertainty theyre looking you know, their second half is going to be down and, you know, were seeing uncertainty. So for a while the market has been trading on this tide of macro events now we are getting into the nittygritty, the earnings thats what i like to see. So to see rail earnings like this yeah. Be this disappointing, that in a way jeff, it is funny, because the two railroads you would think would be most smacked down by the trade fight, at least with canada and mexico, Canadian Pacific and Kansas City Southern which has most of the revenue crossing the border. Theyre up 32 and 28 this year are you surprised . I am a little surprised look at the transports more broadly. It has been a nice move. I would like to see them doing a little bit better, but as a broad index theyre below the highs previously to believe the move i want to see a breakout past the old alltime highs if im optimistic i think that maybe this supports our view we are going to see a cyclical bottoming in pmis. I think you are still seeing tighter financial conditions flow through the economy i think lower Interest Rates will start to support pmi, which i think is a good thing. If you are looking for confirmation for the market overall, i think theres things out there to look at if you look at the breadth of the market, it is widening out. In a good way. In a good way, look at weighted indexes but volume has been terrible, lowest volume day since 2017. A couple of things dont tell the whole story. Look at credit spread. The bbb credit spreads hit a 52week low. Thinking about liquidity, the credit markets, these are good things it is based on our work. We dont see sentiment as overly kpeeb ra exuberant at this point. You look at transport with a grain of salt, look at other areas of the market and the setup is generally good over the next six to eight months. Does anybody believe the s p market is overheated overheated is probably not the word i would use but i would be extremely cautious. I thing the biggest risk you have is that things stag nate, not that we necessarily go into a recession but because of the uncertainty things stag nate thats what you see in the earnings here. You have to wonder what the market does at that point. Have we priced in too much at this point in time i would be incredibly cautious maybe we get a cyclical bottom but maybe we dont what if things stall thats a problem. One of the things that all of us have been doing for a long time, that history has told us, markets could remain up or irrational or overvalued, and i say it in air quotes, a lot longer than we think there were people in 98 who were saying, were doomed, they were right but two years too early which means they were wrong. Yes, absolutely one thing i would add is we talked about volumes, as you did a second ago, brian. When you look at the july volumes in the derivatives world which is what i look at not only because i came from that floor on the options floor in chicago, but when you look at when leverage was taken away after the financial crisis, where did the volume move . It moved into the world where i am, into the derivative side we are seeing right now low, low volumes to your point. I mean were three million a day under the average. We only had three days in derivatives. In the derivatives. We only had three days so far in july that actually hit the average for the entire year at 19. 3 million per day so we are seeing low volumes, which is odd because here we are in earnings season and you would expect to see the volumes rushing back in but were not seeing those. What does it tell you other than there may be a lot of institutional interest it tells me participation right now is starting to back off a little bit we have volatility that is low karen and i were talking about this earlier, but protection right now is cheap we talk about it all the time and yet people dont like to hear it. When you can buy at these levels protection at 12. 5 over a portfolio on the s p 500, thats a great time to be a buyer. Yes. But when it comes is when you have the hurricane to the side thats exactly. I say im cautious right now, not necessarily saying dump everything but why not buy puts with volatility at this level . Why not protect yourself there are enough concerns out there you should be at least protected. Thats my point. Karen, it is like we look at low volume as a negative sometimes, but, you know, if you like your car, you keep it you hold on to it. I wonder if low volumes are telling us that theres no buyers but maybe theres no sellers either, that people are happy where they are and theyre sticking with it. Right well, so thats that piece reads a little complacency, a little i dont know, you could say complacent on either side as a buyer or seller. But to me petes point is so on target the volatility is coming in here im long, always long no matter what, how scared or bullish i am, im always long. Thats what i do im not going to sell things into, you know, a trade war that im afraid of, but i have to own protection if the vix is going to stay here, i got to buy more protection hopefully i will lose money on the market and continue to go up. Brian, to your point about the market being able to stay expensive for longer than we think, i hate to make this argument because over the long term it is not a good one, but look at the equity risk premium with what rates have done. It continues to blow out theres no alternative it will be good in the short term for equities. It forces people out the risk curve. Over the long term, look over the next decade, probably means lower returns for equities, but for now i feel people are being pushed into risk assets which is good for multiples. We have earnings out on one of the names you own, one of the transports, United Airline phil lebeau, we will give you a couple of minutes to look through the numbers here how is United Airlines looking theyre strong numbers which is why the stock is moving a little higher, but theres a piece of news in the Earnings Report we will get to in a bit it comes down to this. Strong domestic deman is td is e reason they beat on top and bottom of the sector quarter they raised the full year guidance, but for the Second Quarter in a row united will not detail the exact impact in terms of dollars and cents of having the 737 max grounded all of this raises the question, what is uniteds plan when it comes to dealing with the max . Not that they have a lot of choices right now. So were just everybody is clear here, they have extended how long that this plane is off the schedule through november 3rd the capacity is being brought down for the full year it was 5 to 6 growth, now theyre saying, look, it may be 3 to 4 because they may not have the max back by end of the year 14 in the fleet have already been grounded. Remember, theyre scheduled to get another 16 this year realistically it is probably not going to happen, which may be the reason why buried deep within the note if you read all the way down you found that united in the Second Quarter purchased 19 used boeing 737 700s those will be into the fleet starting in december theyre not disclosing the price nor are they disclosing who the seller is, but, guys, this speaks to the need to make sure they have the seat for their Capacity Growth plan as they move into 2020 so, again, theyre buying 19 used boeing 737700s we will be talking with Ceo Oscar Munoz about this as well as a number of other things tomorrow morning you do not want to miss this interview exclusively on squawk box starting at 8 00 p. A. M. There will be a lot to discuss with him as well karen, start with you. You said you own it. The numbers are pretty good. The numbers are pretty good what is interesting, look at the run the stock had since the end of may here we are in the mid 90s it has been quite a run and the bar has been higher and higher and they put out earnings that even beat that all of that having been said though, the airlines it is time to do some petes pay book and sell calls against it. Which i have done i own united today i own southwest as well. Today i rolled my calls out a little further into august and a little bit of upside to try to collect. I think the august 55s and i get a little over a dollar for those. I agree with you i dont know were going to see the airlines absolutely take off no pun intended but i think they continue to grind higher if theyre going to do that, im going to sell calls against it, brian, and be able to take in the premium and watch these things and they move to the upside and get protection to the down side. I guess a point to the question, a point would be you wonder how much Earnings Growth there is if the fleets are not getting any bigger planes can only be 100 full once they have the load factor jammed in on every flight capacity is growing a little bit too. But then you get to a point the fares are too high and people say, you know what they havent gotten there yet though. And we all fly. All of us. And we dont see nobody around this table needs an analyst. Right. To tell them about the Airline Business because we all have our own little cubicle at Newark Airport but you wonder where is that Pricing Power lost, where is the cap where the nonessential Business Traveler says, i cant swing it can i play out one other thing people forget about . Now about the money delta makes through the American Express deal and the partnership theyve got there . That is a number thats free money coming into them for the most part. I mean it is incredible how much money theyre making in different areas that people just seem to discount they look at just one specific metric i think theres other metrics to look at, and some of the partnerships are really starting to pay off as well. I would just say if you are worried about that and i think it is a legitimate concern, about at some point the Pricing Power isnt there. Multiply coach from newark to cincinnati, people will say, you know what thats a problem. But look how the stock is trading. You have 100 is the high back in 2018. We are getting close to that, right . You can use that you can sell calls against that. You can use that as a place where you might want a target to sell out of them so i think it is it is not a bad point to say, listen, maybe theres a double top here. Lets be cautious. Hold on, guys we have a news alert on new skin the stock is taking after hours. Seema mody, what is going on here is the story new skin is issuing a warning. It now sees Second Quarter earnings coming in below forecast, 82 to 0. 84 versus the estimate of 0. 94. The company says it is primarily due to a reduce revenue outlook in Mainland China following the governments 100day campaign to review and inspect the Health Products and direct selling industries the company also mentioned the negative impact of the stronger dollar you can see the stock is reacting, brian. It is down about 14 in extended trade. It also has been a tough year in general for the company. Back to you. Thank you, seema. Stock down 25 this year, 39 over the past year it is one of the multi Level Marketing companies. Yes. Anybody here ever owned it . No. Ever shorted it, bought options, ever used the product have you ever heard of new skin . Not i i mean i use olive oil. You look great. Thanks, i appreciate that. Dont tell thats why it is trading so badly, olive oil. Olive oil, thats all you need. I preferred wimpy, i thought he was the stronger character in popeye. Lets go back to candid transports it is funny, we focus on delta and united and everything like this, the best performing is not only aleaglegiant, a small compy but one 60 minutes did a deep dive and scare piece on it, but the market didnt care there are so many weird things going on with the names in this space. I wouldnt want to touch allegiant. I wont want to touch them for an investment, nor would i want to necessarily fly on them thats my personal decision. I happen to think you stick with the majors though because if theres going to be any type of Pricing Power, theyre the ones that have it the planes are still full and theres still a little more. Dont dabble maybe in the smaller cap transports is what you are saying coming up, facebook facing congress and feeling the heat, but will congresss anger hurt the company or their shareholders plus, there is one chart jeff mills says could help you catch up to this record rally. One group that hasnt come along for the ride yet but cldou as always we are live from times square, new york much more fast money right after this stick around Xfinity Mobile is a Wireless Network designed to save you money. Whether you use your phone to get fit or to find the perfect gift, youll use less data with a network that automatically connects to millions of wifi hotspots and the best lte everywhere else. So you save hundreds of dollars a year on your wireless bill. Xfinity mobile has the best network. Best devices. Best value. Simple. Easy. Awesome. Click, call or visit a store today. Welcome back to fast money, everybody. The s p 500 is hovering near record highs, but the little guys really havent been coming along for the ride small caps down nearly 10 from their 52week highs, but lets look at the chart of the day that jeff mills of pnc brought along. Jeff, you say something, something good may start to be bubbling y bubbling up for the russell 2000 what do you see . I will get to the details of the chart in a second, but one of the questions we get from advisers and clients all the time, look at the divergence between small and large. Is it telling us something about the sustainability of the rally. It could be problematic, there could be bearish complications because small caps are not keeping up s p 500 all time high, 10 away from the all time high this only happened three times in the past 40 years we went back and looked at, well, what happened during those three periods. It is not necessarily a robust sample size but what we saw in every one of the periods was small caps eventually catch up and make their alltime highs. Again, not a huge sample size but gives us an idea what might happen in this environment like i mentioned credit spreads before, they still look pretty good i dont think small caps lagging is necessarily a commentary theres risk aversion in the market and the s p cant sustain its highs. I think it may be more of a commentary on the fact that bank for example are the largest Interest Group by far in the russell. It may be an individual Industry Group problem there. You go to the chart. The russell hasnt made of progress to the high time highs. But you are seeing on the surface new 20day high list, starting to expand you are crossing the 35 threshold there. 35 of issues in the russell are now making onemonth highs this is generally a good thing when you look at the returns in the russell over the next six to 12 months. So if history is any guide, if this internal expansion we are seeing within the index is any guide, we could see a catchup in small caps over the next number of months. Because the gap, jeff, between the small caps and the s p 500, i dont know if it has never been wider, but it is really wide in terms