London Stock Exchange. We get perspectivy from one of the rivals terry duffy joins us exclusively here on set. But first, its still on and we are talking about the great roe rotation so many of the desks have been skeptical of maybe even poopooing at times. Showing tahoe strength here in sectors russell, banks, retail to name a few. Whats making you a believer, guy . Its a fascinating question i mean the market has an uncanny way, not that i need help making me look silly. Within a of alltime high of the s p 500. Everything looking fantastic when do i become a believer . You know, i dont know the answer to that but what ill say is the head winds havent gone away that much yes rates backed up probably a healthiy move yes the gold market not exploding up maybe the situation with hong kong has abated but its still there. The market is looking past them. I dont know how to answer the question because the concerns i have i dont think it they dont get resolved in one day. I know how to answer the question like when the. Nothing will make you a believer. Very simple when the rest of maga naks a new high and apple is on the way to do that about 10 bucks from the alltime id love google and amazon to participate. Knows are three and a half trillion dollars of maga cap you mention the russell id like to see the russell break above the sevenmonth range and get people thinking about maybe small caps digested the bad news and ready to go. Knows are areas i want to focus on im not interested in alcoaia ralliesing off the fiveyear lows too junky. Yeah. Okay karen. I love to buy when things trade down integerp by selling fop jp morgan calls, i do own Something Like a united rental that has obviously participated to the downside hard and back to the upside hard. I still its attractive. Fedex that we talk about a lot, no news what so far has gone from 149 to the whatever, 171. I like it higher than 171. So even though that one is up a lot ill hang on to things like that the vix coming in a lot. I want to own volatility because we are one tweet away from going back to the markets that seemed to fresh in my mind could be any second we could be in them again. Tim youve been onboard the rotation since you pointed it out. Sort of i dont want to say its a believer but you acknowledge the presence here. I do. Give us your youre a fellow georgetown alum yorp rangers come patriot tell him what he missing. Move from on the 10 yooer the move on that was way too excessive relative to the fundamentals in the u. S. Economy. Maybe not to the global economy. And i continue to think that some of this rate dynamic was a function of pulling down in a relative value trade i do think some small this is not full reconciliation in hong kong has been important to set the tone wore at least regionally there is more stability into october talks thats important im not sure what with he get out of it. We have reaffirming offer the u. S. Skierm. The services ism really the back bone of our country not a manufacturing reading. And so while we know that pmis go down around the world injury thats been part of the story. The most important from a market perspective is i think we have had the rotations many times in many cycles throughout the last two years. Its easy to say the market has done nothing but i think if you look at where retail is. Retail underperformed the s p bip 20 for a year until it suddenly it makes that back up recently if you look at transports and banks, but the thing about it is that the valuations to me do make some sense. And we sat around here and talked about food stocks talked about restaurant stocks and things that were tough to explain. And i think the markets rationalization is that those things can only go so high and recession is off the table for the next six months. Thats with a central bank at your back, thats been the justification and it didnt happen three days ago. This happened three weeks ago when the rest of the world started rallying relative to our fkt market. Thanks for jetting us but do you think that was bullish when you have the cht of the United States suggesting that the fed should go to lower zero or negative or possibly lower. Or negative. That incandescent elicits a lot of confidence in the economy. You are talking about psychology 101 im in the ap economics class online here where you have a case that the macrodata doesnt add up to a market falling off a cliff with the state patrol banks being what they are. You mentioned the last two years the market hasnt done much because you ac nonld that we have seen lots of rerae are rotation the thing is here we are at 3,000 in the s p fiechd. Well make a new high. Do you think were going to 3030 and then straight signup you know, five, seven, eight . No not particularly likely if you look over the last two years when we made a new incremental high we have gone down a lot we have. I dont think most of our audience is making a call on the market out so and so i think people are investing in stocks they are themselves rotating in and out. The fact gnat semis which i think have been an easy target of volatility and the volatility in that space has been ee nornlz but semis are about to make another fresh high and theyre up almost now theyll be up 9 from june of 2018 when everyone said thats it thats it for semis. Ill take 10 and take ten at a time when people dont believe in the. You think ten thp theyve had two 30 draw downs thats does make you feel good. Most people are not no theyre not. Invested in individual names. Let eye of what. Again, i understand statistics and i understand standard deviations and we are split up but to tell me that people should not have been investing in things that overall fundamentally their business zblees thats not what im say zblag you say because they went up and down a lot they were uninvestable in this period. Injury most arent trading like that. Whats the flipside to not bleaching in the rotation. Whats the flipside. If you dont if you dont no, no if you dont believe the rotation is for real. Right. What do the markets do . They have been Trading Opportunities. Listen im the first it tell you i thought the markets were going down sometime. I dont hide from it but within the context that have we brought up Trading Opportunities as a matter of fact a couple weeks ago we power pitched a bank at a time nobody liked banks. Citi bank did you that. That was pretty much universally poopped you used that word not me by the audience that closed at 69 today. Within the context of being a nonbeliever there are opportunities. My only point is that everything that got us down to where we were a month and a half two months ago have not gone away. Its gotten clearer. At 15 vix to karen karens point it doesnt make sense with the back drop thats out there right now. All right well the next guest says the value rotation can continue and new highs are coming with it lets bring in mark klon vick. From jp morgan always great to see you. Thank you. You have a bunch of concept iks on the rotation. To answer guys original question what has changed to make you believe the value rotation is here. Well, first positioning is extremely low. If you look at the Hedge Fund Equity exposure its zero le close to all time lows in 2008 aa, ii its same level at 2008. So a lot of bad things priced in the Market Positioning is low generally there is upside thats pure mechanics not even economics 1010. Ap economics. Thats something we can hold onto a low positioning. And then the you had some positive developments been mentioned already. You have a services in u. S you have a little bit on the brexit, a little bit on italy, a little bit on hong kong sar. And then you had this october negotiations so if dsh we have two to three weeks before october where we still have a buyback full force when the vicks decline from 22 to 14, 15, all the sort of system faults will relever and you have discretionary investor basically zero invested in the market thats which we think it can continue now why the value rotation continue people add to market . The first thing that will close is the shorts. Net positioning is zero percentile but gross exposure according to jp morgan prime is 99 you have a trade where people want long volume and short value. If they want to increase the net exposure i dont think they are triple quadruple and software sufficient like that they close on the energy aboil and gas. Some of the em, banks and other value stocks we think it can continue in our view until october in october basically you have negotiations anything can happen, right so if the negotiations blow up, we go back if negotiations actually produce some results i think this can last a full year like into 2016 and 2010 when it lasted more than 18 months. Very strategic trade. Strategic is until october. Right. And in october i think we need to reassess if there is progress towards the trail twrad deal this this can be new 2017 sorry 2016 age 2 plus 2017 can last another 18 months if the if more of the same, you know, missouri no resolution back and forth tweeting stuff like that then we go back to where guy tinks we go. We you say we could go back if there are stumbling blocks in trade do we retest the ten year yield lows. Yeah on the 10 year we already said most of the 10year move was purely technical. Mortgage rehedging entrance liability hedging ct going up to 500 on the long bonds and stuff like that. A lot of it was technical, not necessarily, oh we are going to recession next we can or next month. And what tim said when the services came out even the jobs number were not going next month. Who knows if there is no trade we may as well go in recession next two weeks i dont think we go in rezblegs marco, tim mentioned 10year treasury almost cut in half we know where fed funds is above 2 lets assume the data does stabilize. Conversation around trade is okay what does that mean . Are we seeing rates go back up quickly. I hope so. What does that mean for equities because there was a time everyone is convinced rates can go up and stocks go up at the same time. And they did until 330 or ten years. I think from 140 to 170 i think is all positive. Probably to 250 is all positive and three like last year in april. At some point if but we are not yet there. Far from there, right . We are 170 so sort of lets kind of think when we get there and if he with get there. But i think yields going higher is good for value and stock at this point now bonds and Equities Trading risk on risk off fed is cutting its not as if fed hikes and rates shoot op off and sell off. Every central bank is cutting. There is monetary stim laws. Comes with the lag hits the equity market with a rag three, four, five six months if with he bridge october, november, december we start seeing actually the monetary stimulus feeding in equity market you also see credit from inputs from china lass five or six months you see that feeling i think we are vulnerable in october if we blow up like august 23rd with the tweet but if these through an orderly fashion ideally some progress being made i think we can 18 months, right that thats like 20 out. So very poor performance like in what you mention raies russell is flat since october 2017 maybe last two days break that two years within the move. All time highs we really didnt move 18 months or abouts. We could breck out again if we have some normal sort of political environment, Central Banks are easing and positioning is pretty much close to zero marco great to see you as homs jp morgan. Compelling argument. Very. The bulls are in charge right now. He makes as did tim make a very compelling argument. My only pushback is again things might have gotten better on the margins. But the problems we were concerned and and i was concerned about really vbt gone away and to dans point you have the president saying we should be at zero if if not lower in rates thats to me problematic. Lets get to the story we are following in the after hours session. Oracle shares are down reporting earnings a day early with ceo mushing hurd announcing a leave of absence for healthrelated reasons. The stock is down 2 had been down by as much as 2 its recovered a bit. What do you make of this. I think its obviously after market and investors dont like these surprises. We hope that mark hurd is just fine but i think the results probably look okay. That was probably a knee jerk reaction its important to remember that last quarter, the q 4 they reported is was good the stock broke a all time high process you look like the value and the secular trends you probably like a oracle at 55. The team is pretty solid. Katz is still ceo. Coceo thats interesting rarely do you get sort of two, you know, a two of them are very seasoned obviously ellison as the founder. I think from that standpoint investors should feel okay about it im curious. I dont know what the duty of the board is, hoich information do they need to give you know this came up a lot when steve jobs was sick. I think the board handled it poorly, not good closure and then later more disclosure i dont know what the duty is. But this brings up a question. More detail around the related issues. Right. And therefore lets not read too much into it is that the conclusion. I feel so. Because they have to do in the overly compliant board environment. Where well i dont know what to playbook of it. I dont know the duty i dont know what they feel their duty is coming back to the orange point i do think youre in good hands with ellison and katz. We spent time talking about software failing and essentially the high growth stories that have been really the byproduct of the selloff and rotation. Occur sell not a high multiple stock. Its in the middle of the space i like it. Guy, the. Margin better than expected you can quibble over eps maybe a miss in revenue margining hang in fl the at 13 times the magnitude we saw at 20 minutes ago was over done. I think ellison and katz are more capable picking up the slack in the interim. They may manufacture eps growth but this is a low single digit sales groer and they need to make massive acquisitions every two years. They are different buckets when we think about some of the Software Names that are a bit more exciting. Coming up hospital stocks getting a boost but jefferiys has one chart spelling ill will for the group. Plus apple getting a boost on the reveal of the iphones but there could be head winds facing the product that could signal the end. Much more fast money right after this you should be mad that this is your daily commute. You should be mad at people who forget theyre in public. And you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Stand up if you are first stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. I will tell you this, Southern New Hampshire university can change the whole trajectory of your life. To the wait did frowe just winners. Prouders everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy a new samsung note. Click, call or visit a store today. Welcome back to fast money. Lets do a checkup on the hospital stocks. Catching a bit in the past with shares much ten et Health Leading the group up nearly 26 s the Broader Health care sector lagged this year up sus just 6 . Look at the chart by jefferiys by the analyst what you see here is the blue line is the spread between biden and warren the spread between biden and warpen as that narrows or goes down, the Health Care Sector xlv in the orange also goes down so as warrens cans look Better Health care stocks do worse. So now we are handy capping the potential democratic nominee. I guess it makes zbleens it works. In terms of hospitals at a certain point this was a valuation story. We mentioned ten et health care before now you look at it in a significant downtrend back the last couple years. Maybe its time to take money off the table. Then you go downstream along of the big cap farm iaaf names have been whacked nancy pelosi made comments recently i hear what you are saying if you are trying to handicap the election and overlay the stocks its hard. I would say certain stocks are cheap. Biogen is cheap. Unh still too chief and the sell off in pfizer is overdone. If you look at ata, the chart even with the volatility is sideways on a slightly downward trajectory that guy is talking about. We have done this every political cycle. So you really have to look up Second Quarter numbers slight miss. People were more concerned about the credit dynamics within the sector some of those fears have been alloyed. I dont think you have to rupp out and buy the stocks if you think the headlines are the koermgss those arent going away. Not only going away theyre getting worse. I think that i dont know that you know they probably bought them before the resolution of who the next president is going to be. But i feel like we have time stween now and then i want to stay away for a while. Its a sector buffetted by the political winds lets say. Yeah, its funny, i think back to 2015, 16. Dwas both sides a bit of both sides. Seemed like its a very popular bipartisan issue we can focus on the dem nominees that will may cause volatility or express suppress it. If you look at the xlv im looking at it four times over the last five years theres been at least four 10 plus peak to trough declines you get sole offs from high and you get the opportunities. A lot of these are cheap talking about value. These are names you want to buy when you go the blow ups i know you were talking about pfizer and bristol some of those single names seem the debate where all the dems on stage tonight can only imagine. Yoend you the blue line that represent the warren view and. The blue line was spread between warren and biden, the front runners. Warren advances. My guess is those things crisscross every zbleebt could be. Based upon the political winds and support there. For more