And take a look at where we stand in the markets now we are at session highs. Dow and s p, nasdaq, all rallying the dow is up by 1. 4 . So is the s p 500 and nasdaq is up by 1. 7 major averages are on track for their best week since the beginning of june. Check out some retail that i means hitting record highs home depot and target lets get to bob pisani for more on whats driving stocks higher look whats going on here this week, the sectors most beaten up in august, theyve all rallied. Cyclical semiconductor, retail, industrial theyve all rally ied this week. The more defensive groups, the ones that have been stronger all throughout the month of august, the Consumer Staples and the ewe tillties and gold stock ises, theyre all underperform iing ts week so what is this were seeing here is this an oversold rally in these sicyclicals . Month end rebalancing . More optimism on trade talks maybe all of them. The problem is theres not a lot of confidence in the rally because of the uncertainty first and most important ly, th around the direction of trade and tariffs. Secondly, the stability around europe and asia and finally on what the right Central Bank Policy response should be for weaker growth overall. Not clear just cutting rates is a panacea. Right now, everybody agrees, this is an easy trade for the active managers. Short the cyclicals. Go long defensive stocks and occasionally, you get snap backs like were seeing this week, but without the uncertainty of a trade deal, guys, all these rallies kind of have a tentative feel, at least to the traders down here. Thank you part of this rally driven by comments from President Trump that trade talks with china are continues. Kayla explains what that means those comments came in a fok radio interview this morning President Trump was asked about china, the stock market and how long this new status quo can last he says i have talkeded schedule theres a talk today at a different level and theyve been talking. Lets see what the end product is that is what you have to judge it by. Now its clear that talks at the deputy and ministerial levels have been clear, but no call on whether trump and xi has taken place. Chinese officials said overnight both sides have maintained Effective Communication and beijing hopes washington can cancel those tariffs on tap for this weekend the Washington Post reports the white house is considering a tax cut that would be equivalent to how much the u. S. Is bringing in in tariff proceeds. It was an idea first floated on cnbc by florida senator rick scott. Clearly were going to have shortterm pain. Anything we raise in tariffs we ought to give back to the American Public in tax reductions so it doesnt impact american families. Weve got to help American Farmers open up more markets for the around the world now an aide from senator scotts office says that he is currently focused on hurricane efforts but there could be a policy proposal forthcoming, but the idea could get complicated considering the tariffs are mostly paid by u. S. Importers and so far, President Trump has chos chosen to send proceeds to hard hit farmers. Zpl when it comes to the trade turmoil, is there light at the end of the tunnel . Joining us now is Michael Clark and Peter Anderson welcome to you both. Peter, you know its calm for now, but weve got the tariffs september 1st. Do you invest with the people like bob mentioned who are playing it defensive r or do you think those areas are overcrowded and youre leaning against that well one of the things i try to do and especially when things go off the rails, which they have occasionally over the past month, is you have to just look at facts on the ground what do we know and what is not contestable. So we know that chinas you know sentiment since the newspapers are state owned. Were never going to get a real clear image of what the chinese are thinking thats number one. Number two, to really calm my fear, i think about the trade imbalance. China sells us 500 billion worth of goods we sell them 130 billion back. So no way is china in the long game theyre just not going to give this up and i think there will be a resolution, but its hard to stick to that big theme when youre having these tweets coming every day and things do seem to go off the rails more frequently than we would like. So the bottom line with this is if you have a year horizon of investing, i would not be in equities i would be in cash, but if you have longer than a year, i would say buy the equities that you like stick to your plan and you know things will get resolved eventually sounds like youre fairly cautious given where we are in this bull market cycle given of the signals were seeing around the world. I think thats right. Probably no surprise, just echoing some of the comments from earlier given how far into the cycle we are and the volatility and uncertainty, we are cautious you know like everybody, were focused on the trade wars. And we hope that what we hear today is actually a real step in the right direction but i think weve seen this a lot so i think its way too early to get exciteded. You have some interesting ways to play this. Alternatives like black stone so the pipeline names, kendra morgan, end bridge talk about those areas of the market those are a couple of areas, not specific to just whats going on with the trade wars, areas were finding attractive theres a couple of things thats interesting you dont normally think about alternative Asset Managers so similarities would be in a world where its really hard to find income, these stocks offer nice up front yields and they have Dividend Growth because both are in secular growth industries. The alternative Asset Managers are raising money hand over fist the fees are attractive and this low rate environment just reenforces that attribute. On the pipeline side, its different, but the secular growth story there is shale. So we know that the growth in u. S. Shale is having a negative effect on oil and gas prices, but volumes are growing tremendously they fix their balance sheets. With five, six, 7 yields and growth, theyre very attractive and both are converting from k1s to corporations. Its really increasing the size of the Investor Base there are a lot of people that couldnt invest in them before and now they can peter you like Computer Security in areas of the markets that have higher multiples in the software sector, from auto tes k as well as box, that they are impacted by the tariffs, that they are impacted by the trade war because of u n uncertainty. The drops weve seen have been greater. Is that a concern of yours not at all. Heres what im doing. When things get very crazy the way they have been, its very hard to look at specific you know trade details every day and instead what i do is i look for themes so if you just step back and say to yourself in years from now, will Computer Security be around i think the resounding answer is yes. It is a, a war on cyber that is an arms race it will never go away and if you call any chief risk officer in any Large Company and you would ask them you certify today that you spent all the funding you need to be immune from any attacks, they will always say no, we need more funding thats the first thing t. Then in terms of data storage, same situation. Right. Theres nothing thats going to replace that and as you know, with every day that passes, we just get more and more demand for data storage. And so that will go on, too. And until we have something thats really breaking, Say Something like quantum computing, which is far, far away in the future, these Companies Still will be an anchor in your port fofolio. Especially when you have times like this when sometimes you dont have a compass but you know further on that these themes will be b robust. And youve got peloton. That ipo peter, i know youre hot on i think youre being sarcastic. Im hoping i think you said only people in prison exercise regularly what let me say a couple of words about peloton. Just a couple of words you know i think it will go the way of go pro and other companies that have had fads you know one of the things you can look at all the financials, right . But lets ustyukhinae a little f common sense most consumers dont like to exercise in isolation in their home takes a tremendous amount of selfdiscipline and most of these bikes and other treadmills et cetera, usually end up as a clothes hanger frankly after a certain period of time so the fundamentals of peloton in term of what betting on i think are very weak and i did mention prisons because i was thinking in terms of where would this sell best places where you would be confined not public gyms maybe in apartment complexes. I dont know if we have to go quite that far i hear theyre selling well there. Now we know what peter doesnt do at home exactly thank you guys. Appreciate it. Bye bye shares of Philip Morris falling in part of an investigation of juuls marketing practice Frank Holland has the story from the ceo of juul. Social Media Influencers and whether minors were targeted is the focus of the probe the ftc would not comment. This report comes a day after ju, l announced a new system to prevent minors from buying the products the data i was looking at shows its not only former sm e smokers youre converting. Some are starting juul and have never been on nicotine bf. Whats your advice dont vape. Dont use it unless you have a preexisting relationship with nicotine youre not our target consumer sharing falling more than 3 on the news. They bought a 35 stake in december Philip Morris shares dropping on tuesday. The two Companies Announced they are in merger talks. Juul says it cooperates with all investigations into the company adding its never marketed to minors it released this statement our paid influencer policem er a small pilot that ended in 2018 we worked with ten adults and were smokers or former smokers over the age of 30 they control about 30 of the u. S. Vaping market and has been blamed for a rise in teen nicotine use thank you coming up, apple shares higher on trade optimism, but new numbers showing the companys increased reliance china. Plus, what can we expect from the Just Announced apple event disney plus in just a couple of months and disney says interest is surpassing expectations how good will it be for disney and how fobad r netflix . Power lunch will be right back [spokesman] if youve tried college but never finished, group cheering snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu time now for a power run down three big topics e sports, disney plus and apple. Joining us now is laura martin great to have you with us. We want to start off with your new note on e sports that argues that videos will ballize viewers from traditional media. How fast will that happen do you think . Probably nest three to five years. Were getting one out of three kids under the age of 25 is spending an hour a day playing video games and for every hour you play, you watch another hour to get better. Globally, we had a 16yearold win the fortnight champion were giving scholarships to go to college by playing video games and they get to keep their winnings so why go work your ass off as a b Football Player to get your College Tuition played when you can do e sports and keep the winnings. Its more fun and kids love it we have 450 Million Viewers of e sports right now and inkre increasingly, were going to see this higher profile in the u. S. As price pools get bigger. When we say traditional immediamedi loses out, were talking about netflix. I know Reed Hastings mentioned that in jest sort of i believe it was the First Quarter or Fourth Quarter where he said fortnite wascompetitor how u badly be the streaming Services Feel it i think its a big problem. He yaused eed to say his bigges competitor was sleep theyre playing three hours a day. I think theyre playing more than theyre sleeping. By the way, when you get legalized Sports Betting on e sports, i think that elongates engagement more because if you bet a dollar on a certain winner out of 100 fortnite players, youre going to stay until the end of the game to see if you won your 3 for the dollar you bet. I think more and more, these Interactive Games are going to take share from all streaming services speaking of streaming, laura, the hype for disney plus seems to be real a new report saying the its outpacing disneys initial projections. Is that a surprise to quou its not. Disneys core confidence is marketing excellence and i think that kid hook, like children are churn proof, thats a great description of the disney superpower so i expect people to for 7 a month take disney and their kids are not going to let them churn. Disney projected originally theyd be at 20 to 30 million subscribers in america in five years. I think that could be higher crazy then we have apple sending out invitations for the september 10 event where the new iphones are expected to be announced. So the iphone pro is coming. What else . Theyre saying theyre going to introduce three new iphones i think the important point to make, a continroversial point of view, is on ramps into the ecosystem. You want cheaper phones and higher end phones that get people to come to the ecosystem so that you can sell them. The new arcade service, which is video games. The new over the top service, which is video more services. Like drop and cloud and because what are data and Research Shows is once somebody has three services, they churn theyll stay in that Apple Ecosystem sort of indefinitely so moon ramps into the Apple Ecosystem and more products once you get there. Once you have three product, youre not going to churn out of the Apple Ecosystem. Do you need three foephones r that sfwl no, you need products theyve done this upscale, down scale thing before. I dont know if thats true what apple has a monopoly on today is the rich 15 of citizens in the world and its been highend. 1,000 800 so to the extent theyre l lowering their price point which increases on ramps into the ecosystem, thats a positive thank you laura martin my pleasure less than three weeks away from the next fed meeting and pressure is mounting on the fed. Were going to talk to a former fed governor next about why President Trump might have put jerome powelinl a lose lose situation when power lunch comes back automatically goes into a Money Market Fund when you open a new account. And fidelitys rate is higher than etrades, td ameritrades, even 10 times more than schwabs. Plus only fidelity has zero account fees and zero minimums for retail brokerage and retirement accounts. Just another reminder of the value youll only find at fidelity. Open an account today. Welcome back itolli. Check out the beauty stocks. Estee lauder in the green. As ulta greer gears up to repor earn earn, could this be the start of makeover for the group . Your trading nation team today bill, get us started give us a snapshot of how you think ulta and estee are holding up here. Kind of different segments, but at one time or another have been leading consumer stocks. Both are trending strong and theres tho reason to think its going to stop. Ulta broke out above highs in march and that was about 315, 320. You have to 200 day moving average. However a weekly close below 315 is going to encourage more selling. Thats where the 50day moving average is as for estee lauder, youre seeing this thing tread strongly broke out about two weeks ago above a trend line were coming back, testing about 195 to 197 its well above the 200 day moving avrnls. Is right now, it would say the trend is going to continue as long as it stays above 195, 197. Obviously the backdrop is as a sector, cosmetics are doing well you have the selfie economy in their favor. But estee is caught up in this big trade and of course ulta is a physical retailer, so wher does that take you yeah, youre right. In fact, the fund mamentals for ulta are quite good except they sit in the retail sector, but if you look at the way theyve pivoted from just brick and mortar to more of an xuonline offering, their latest report would suggest thats going to continue to drive their growth i think within the retail sector, they look fantastic because beauty is very much a recession proof commodity and so you know you welcolook at long for ulta, theyre stacking up u well the challenge is going to be its valu valuations its trading really hot. 24 times valuations for pes versus forward of only like nine times. I think the challenge is is going to be how that works itself out and i think ths thats one of the reasons its been struggling. So we have to see how this valuati valuation element shakes out its been a physical exception for that high valuation. Thank you very much. For more trading nation, head to our website or follow us on twitter at trading nation. Back to you. Thank you ahead on power lunch, the great rate debate. President trump renewing his attacks on chairman powell and the Federal Reserve. Plus, todays power house. Well take you on a tour of the most expensive home for sale in the u. S. And a poweful hurricaning towards florida. What it means for those travels over the big Holiday Weekend all of this when power lunch returns. Good t