Great to have you with us ahead of the Labor Day Weekend the final trading day of august, another volatile one, between gains and losses, the dow had been higher earlier in the session, but right now we are just barely higher by 14 points, s p and nasdaq has turned negative this is the second losing month of 2019. Investors got more defensive, utilities, real estate, consumer staples, the only sect aro finances down 5 , energy down eight. So the question going into september is do you stick with what is working . And implicit in that question is, do you remain defensive going into what has historically been a very tough month for the markets . It has been a tough month you look at it and say its probably going to be volume tiff were going to see more responses on trade from china. What im doing is, yeah, probably more defensive in my style, which is to look for Companies Generating good cash flows. How do do i know theyre returning it to me dividends, maybe theyre increasing dividends, but in particular share buybacks. Theres a few companies that have talking about stocks like citigroup, gold manning sax, marathon tipetroleum. And particularly some of those names are buying back below book value, which is immediately accretive. So bottom line, yes, defensive, looking for the Companies Buying babb shares. So many unknown as in the month of september we have tariffs going in on 125 billion worth of chinese goods ecb meeting, a fed meeting later this month, on top of just whatever is happening in the markets. Whats your strategy here . Well, i think first of all, theres a chance that september ends up being quieter. I think people might return to their seats. I think individual thought might come back in, and we wont have as much program trading, but if youre nervous about that and dont want to miss out on those ten days of the market, and you might need income, there are a lot of really Great Companies trading cheaply, like at t, enter price products, ibm, chevron, duke energy these are company that is have paid dividends for dozens of years, sometimes 100 years or more even throughout 2008, 2009 are trading at a discount significant to the market multiple so hide out, stay invested, collect . Income, you get to stay in there. Joe i think if you look at the month of august, i believe that the portfolio diversion iskt story taught a valuable lesson to all investors, even the equity investor. You look at it, the s p were going to bleed off about 2 , but when youre looking at reits, both higher by 3 , munis up, even highyield was up so you extrapolate from that the portfolio diverse i was, and the look at the equity, how did you do from the last year when you have overattraction from the faang names, and they havent even returned to above their highs. So i agree with what jim and jenny are saying i think on the key side under a slant toward quality, lower beta type of names. I dont know if you want to look at the market and say i want value. Value didnt really work well this month energy and financials declined significantly. So i think it goes back to defining in this environment what have been the leaders i think in september, leaders continue to lead, lag guards continue to lag. Does that mean that tech, josh brown, doesnt really have as much of a place in your portfolio . If were looking at tech having the worst august since 2015, along with finances and industrials and materials, and you want to stick with what is working thats correct implies not tech impltsd well, whats working over what time frayed . If we pulled it back and look at that time it over 36 months, you would say i really only want to own tech and consumers discretionary, so i think this arbitrary turning over the calendar is actually not significant for professionals managing money i want to build on something joe said, which i think is the biggest takeaway i decided sometimes after memorial day that i was not going to be one of the people running around with mire hair on fire every time a president sent out a tweet or Chinese Media put out a counterpoint. I want im going to have a good summer, read some books, focus on me. Im not flipping open my laptop to swing cash back and forth heres what happened if you chose to ignore all the histrionics take a look at a 60 40 portfolio, van guard, total market, stock market, and b d, by the way, this portfolio is essential free, a couple basis points. If you that youre up 0. 68 . Thats how you go into labor day. All of the tension, the screaming and yelling and vix spikes, et cetera, et cetera you didnt make a ton of money, but youre up, youre fine it doesnt matter. I think thats been a really good posture to have when we now have elected leaders who can swing the dow jones by 600, 700 points on the tweet. If thats the environment were in, the answer is not let me guess when and what the next tweet is the answer is stays diversified. Do you have that port for the i dont going through the independence of the year yes a year ago at this time and i looked back, we were going into labor day 2018, and we the royal we, we were absolutely certain that rates were going nowhere but higher jamie dimon said look out. Its a year later, now were say treasury is going to zero percent, if not negative, to fof europe we are almost as sure about that outcome combined with more fed funds rate cuts as a year ago about the exact opposite, the fed has to raise rates, wage growth, near the those extremes probably plays out so you make not look like a genius every day, but overall the risks and rewards will balance out this is a rational course of action in a irrational period of time so i gra he with part of josh and disagree with the other part i disagree on the 60 40 its hard to think about putting any money in bonds, and the inflow the last month, i dont know who is buying bonds i certainly wouldnt want to the part that i totally agree with you on is in a nutshell what youre saying, is control yourself, use discipline, stay focused, tune out the noise. I think especially in this percent where its so much noise to me its almost how i felt in 2015 when i was waking up every morning and checking the oil markets. The best thing you can do for your portfolio is focus on long term and keep control of yourself and dont be good et in and out. You know that there are european bond funds where a year ago people would have said how can you buy european bond funds, that are up 30 to 50 year to date, on european sovereign bonds that nobody in a million years said these are these are a buy. Capital appreciation in european bond funds has screamed to the up side. You can say you lie it or ecb is manipulating it, you can do the whole dance, but you still have made money in that asset class. 30 to 50 . Specific european bonds. Wait wait, are you talking about greek bonds . All over the continent. German bonds . Bunds didnt have that far to go. Youre not getting 30 to 50 on unless youre not adjusted for currency, greek bonds trade as a lower nominal yield you can say it shouldnt be that way. Josh, josh, im going to call negative yields what they should be called. Simper augustus that was the name of the most expensive tulip. Thats what we have going on anybody buying bonds and negative yields, anybody doing that is saying im going to selled bonds to a greater fool than me. Not a game im ever going to play i think the 60 40 planning is a good one i would make a slight modification, the bonds, why not put it in cash i agree. The bonds rate is 2 . Its one of the highest rates in the world. Fine, so buy a money market and lock up im not disagreeing bonds are a spectrum of different maturities. This conversation is kind of nuts im talking to four people who manage money who pick stocks for a living, who guide people in choosing their portfolios, and say i do 40 march in cash. 40 in catch when is the last time you said that, jim . Temples bonds are definitely more than cash. Theyre not yield can you go bond ladders youre not going to get hey, josh, i know something about Municipal Bonds. I know you know quite a bit im making the point cash is not the only way to earn a yield 2 . And can you joe terranova, what are your thoughts he, mil how are you . Were talking about 40 exposure to bonds and classifies it as government bonds thats incorrect lets talk about corporate bonds. Highyield . So if you think about u. S. Equities in the financial industry, the source of opportunity as an investor has been on the debt side verse the equity side. We keep talking about financial equities, a lousy place to be, muted returns. The did i of Financial Institutions has been the place to be. So lets take the conversation and move it in the right place corporate conditions are in a strong place we are not going to see with lower private sector borrowing costs that suspect we suspect theyre going to continue to fall youre not going to see a growth in defaults. If you have lenders that are willing to extent maturities, youre okay on the default side. So youre going to have a lot of debt offerings, for s p 500 companies. I would argue you want to take advantage of that, because youre utilizing it as a diversification tool government bonds, thats pasch much the equation that i dont think belongs in a conversation about 40 exposure in your portfolio. Joe, i just do not want 2. 5 tenyear corporate debt in a world where i with go by the dvy, the ishares dividend at 3. 5 . Hold on, heres my point. No, no, lets say you bought Interest Rates are too low. Im not buying it. Im not selling you bonds you are. 40 bonds. Oy vay. Jim, if you built a portfolio geared toward fixed income, but you incorporated things, to joes point like investment grade, highyield cold debt. If you incorporate Municipal Bonds and then threw in thinned like preferreds, have you seen a chart every the preferred Stock University 30 , 40 its an incredible diversifier it has some equitylike component to it, but youre getting yield there, people are chasing it higher after you bought it. Final word to jenny here. Heres the thing, as your average client, you think, my average client, they want that 40 for the income, for the safety theyre not looking that happens. That is not your point. Youre using it as ballast, dry pow, so when theres an even very like we had in september, you have a. Use cash instead. I agree you dont get enough yield pickup to go out ten years you have a flat yield curve. Cmon, joe. If you built a portfolio youve done incredibly well so should you abandon every fixed income im living in the Market Conditions of today. Youre right, a year ago, youre right, that was absolutely the right call when jamie dimon was calling for 4. 5. Josh, youre absolutely right. So today is the wrong call . At is. 45 on the tenyear . Can they not . Why do you need is it impossible . Who cares if youre long it matters. Certainly low to like ridiculously low why dont we go plaid, to quote spaceballs. Commodity trader sitting on the desk sugar and a penny . Thats what youre investing for . Why not buy bitcoins and bury them in your backyard . If youre looking at a port follow to jenny ace point youre not getting enough currents yield out of a conservative we all agree on this premise, but what if were saying were looking for total return on this portfolio, which might mean when bills come due for a retiree, they have to sell down in equity or sell down some bonds rather than pull that income out, that is what Financial Advisers in this country are doing for millions of people in retirement or close every day. We have no choice, so i appreciate the world that you want to live in where yields are being paying you for the real risks you are taking we just dont live in that world today. I dont know that we will. We got to move on. I want to talk about individual winners in mott month of augusts individual stocks. Yields actually. Yield curve. Home depot gaining 7 , veriz verizon, merck cocacola do you stick with these . Jim, boeing, you owned this, they just pushed babb the return of the 737 so united did that. Im sorry, yes. Thats an important distinction. Boeing as of last week is still defending early in the Fourth Quarter theyll be flaying the 737 max. Honestly that sounds a business aggressive, but management keeps say this i have to believe that theyre saying that, because they have some inside knowledge of this. If not, they are setting themselves up for a world of trouble in terms of shoulders lawsuit it gets back in there in the Fourth Quarter, the stock goes back to 400. If it doesant if its late Fourth Quarter, fine if were talking we dont know, maybe the First Quarter of 2020, look out below. Jennie, in boeing no. Is it too risky its too expensive for me i agree. Ive always said i would look at it if it traded with a market multiple i dont think were going to get there. Lets go walmart joe, you got this one . Its interesting. When i look at the list, i see walmart up 4 , verizon up 5 a lot of the names i have in my equity portfolio are doing exactly what i wanted them to do whats been a chaotic environment. So we had the Federal Reserve meeting. We felt as though we had the all clear, and then the president gifted us with a bit of thursday afternoon august 1st messaging that the markets did not like. That followed a lot of chaotic communications back and forth. To have names like verizon in your portfolio, and be up 5 month to date. To have mcdonalds in your portfol portfolio, which i have, 4 up, walmart up 4 , i even offer the example we had a gentleman on from Goldman Sachs talking about the faan good s and technology, didnt mention microsoft once microsoft for the month of august is actually higher. So i think its a mindset where you want a quality focus in your equity portfolio i think thats the environment were in right now i think its the right environment, and i think it goes back to the beta exposure, you want to make sure year exposure is lower than it has been in the 12 months prior. But weve seen at least in the retailers a sort of weve seen pain overall for the sector, but the once doing well are sort of the discounters. That appeal to values and bargains. Thats a good point, but theres so many more losers than winners in the spate you can identify the winners you talk about dollar store, but also costco, target, walmart yow side of that, i dont think you touched the space, were going to talk about ultimata later o. But i mean its just another story where somebody with brickandmortar retail, the stock got ahead of itself, and its probably not going to get better retail is very, very tricky, only stay with the winners the retailer, named specifically have all figured out a way to keep that you are consumeers in a colloid loop, with omnichannel, with apps, with the types of with membership, these are the things that keep somebody continues to choose the store its very, very different for retailers to do that, so i agree with jim, i think its been a very tough place i want to pint to verizon. Im long the name. Verizon hit a high of 59 bucks last december. Its been bumping up against that level its clear resistance, look at a threeyear chart this is a stock that i think breaking 59 to the up side maybe because treasury yields go significantly lower, and people keep chasing these names, i dont know what the reason will be, but im going to tell you something, this set up, verizon above 59, even with a retest, that would be a clear and present breakout for a major league important company, and this is the type of stock similar to microsoft, people dont talk about t. People dont give it respect, people dont get excited about it, but it lox phenomenal technically its set up. You own verizon firms i also own home depot what i see collectively is one commonalty is these are all particularly wellrun businesses none were up in august, because the overall industry was up. They were all up on their own merits when i look at home depot i hate the broad brush statement that retail is horrible its not really true its just changing home depot is one of the case in points here. Its a phenomenal executer look at walmart, target, theyre crushing it, but theyre the next 20, 30 years. So i like the list by the way, all new time high for stor, this is one of the best charts, it continues to make new highs, this is the company, if you want exposure to consumers, but you dont want exposure to how a retailer does, this company is buying up their real state and leasing that spa space. This is the name that i think is better than almost. On the equity side, i think what i have to try to do is find the tailwind in each of the sectors, what is the tailwind in retail its the consumer is driven by the opportunity to Purchase Online s if you have that digital strategy, the Online Platform and youre able to communication it effectively and have your consumer interacting and purchasing online, youre doing oak the other thick is back to technology and some of the megatop technologies giving, i go back to Megacap Technology i think what will important now is Capital Allocation. If you look at the chaos the markets have endured in the month of a, alphabet and apple in the mig acap technology names, they have not seen the type of megacap technologies have i think the focus is because of the Capital Allocation, a new one on the part of alphabet, and continuing one on the part of apple. I think there is your tailwind. Alphabet up almost 4 in the week to your point, they have the flexibility to be way better at Capital Allocation than they have been. You have to think they have to be looking at microsoft, apple, what are these guys doing . Especially with the quarter they had. Yeah, they need to. Lets talk about the economy weighs on investors. Lets brings in Steve Liesman with a rapid update. Whats new youre talking about the consumer we had the Consumer Spend z spending, our squawk box when it happened. Up better than expected. That leads to a slight adjust upward to on gdp running at 2. 1 , which is, you know, better than sub2, which is a lot of people were focused on we have two more months of data to go. This is where our tracking forecast from the street are running right now. Lets look at who is where he the high side there raced up 0. 3, oxford at 2. 1 and deutsche bank, they have the bottom there, 1. 6.