The Investment Committee is ready to go. Halftime report starts right now. Good to have you with us on this monday. Our Investment Committee, joe, josh, steve, jon, shannon is here, the chief Investment Officer at Boston Private Wealth begin with the markets stocks modestly lower. Now some key questions about whether there is enough momentum to carry stocks higher between now and the end of the year. Weiss, optimism is rising and has been and you can see it in a number of different ways, interest rate, 10year pushing 2 there are socalled unloved assets that have joined the rally according to some which is another bullish sign justified . Enough momentum to carry us higher i think there is. The seasonal trade is difficult to bet against, however i took off a little exposure and sold some of the smh. I kept adding to it and added through earnings, because i thought the semis would have good quarters and they did now that that fundamental part is over, im more in the Market Movement trade however, everything you point out is a bullish sign, to me is more of a cause for concern because youre not anywhere near euphoria but all seem to be saying the same thing. The economiesare improving globally, im not so sure is the truth. They dont need to be improving that much, just not getting worse. Yeah. Right. Ill agree with that. Look, i still got more equity exposure than i typically carry, added to alibaba this morning when it was down any time theres geopolitical disruption in the market its a good time to add alibaba story hasnt changed for me since friday or last week and added to that and i will buy other companies that get dislocated i did sell some in adobe, became much too big a position for me opportunistic is okay. Shannon this raises a good question, weiss own trading activity raises a bigger issue thats being discussed and that is whether it is time to look at some of these gains and say, enough is enough valuations have gotten stretched from where the stocks have risen and time to take money off the table. Look at the areas of whats been working in the quarter the smh, weiss is trimming a little bit of, 11 . The ibb up 10 there are individual names like apple up 16 and on and on. Does that set alarm bells off that its like time to take a little risk off or is there enough momentum in these spaces to keep risk on, if not increase it i think youve got the best analogy. The worst sentiment, 73 of investors are bearish or neutral according to baron you have sectors that are doing well this quarter that havent done well. You have emerging markets that about 12 of the year, over half of that has come quarter to date theres a lot of cross asset support right now across the market and for me, it would be hard, i would be hard pressed to start taking exposure off the table right now given the steepening yield curve weve seen and some of the support broadly for a risk asset in this environment. Josh, i can see all of the things that youve said recently that are positive for the markets, wall street journal joins the narrative of the kinds of things youve been saying, commodities, emerging markets stocks, if you want to look at currency, british pound, theyre all catching a bid which they say is a sign of general optimism about where the narrative is yeah. Yet you could point to downgrades which we will of some of the better performing stocks that could lead you to entertain the question of should i lighten up in some of the positions that have done better than others. Well, the story of this year is two things. The first is, Asset Allocation beat narrative once again. 60 40 portfolio a double digit whipper and then like, you know, valuations being stretched, weve had that conversation once a week for nine years. The xlk up 40 year to date. So much for calling the end of the faung f. A. A. N. G. S. Pl apple a new high microsoft a new high on friday to shannons point here comes the cavalry. Take a look at the russell 2,000. Its hanging at the highs a breakout looks extremely likely. It has been a very, very long time coming. It has been a huge under performer relative to large caps if this goes, what are you going to say at that point one of the number one reasons for being concerned about the markets was the lack of breath or the concentration among just a handful of sectors last week the xli, industrial sector, quietly made an alltime record high, almost nobody remarked upon it these are important things so if you are looking at the russell or want to talk in etf terms, the level im talking about is 1600 on the russell 2000 index or 1 60 in the iwm etf. Wait until you hear when that breaks through. Wait a minute. The money is coming from ill come back to you and let you finish thats why oppenheimer today, again, weve mentioned sort of the tone of wall streets commentary has shifted as well, oppenheimer, you aint something nothing yet. Commentary following price. But theyre pointing out what youre pointing out. Sure. Things like the russell. Fine. But commentary follows price i always look at technicals because i want to understand what people are doing. If youre wondering where the money is coming from, go take a look at xlu. Its the utilities index lot of people looked at that rally this year and said its too much maybe they were right. That is now 5. 7 off its highs the iyr, publicly traded real estate stocks down 5 from its highs. That is coincident with the rates backing up as steve weiss mentioned these things dont happen in isolation from each other. What you want to see, scott, to answer your question, you talk about individual Companies Getting downgraded thats a healthy market you want winners and losers and you want them to rotate from time to time. For sure. But is it as an investor. Thats great and thats true. Is it time, though, to look at some of the winners and say maybe little too much . Maybe its time to have a rotation as josh is talking about the healthy nature of the market, take some off of a qualcomm, for example, which got downgraded on valuation. Trimming a little smh because the stocks have done so incredibly well. Smh is broken out and very technical oriented nvidia broke out above 200 a while back we discussed that. We said if its breaks above 200 its not going to return bow lo there and it has not. Some think its going to, got two price target raises including one to 240 by ubs. I think the path for nvidia is higher, technical confirmation of that i think overall for the marketplace, we continue to move to new highs as we go through the remainder of the year. There is significant strong investment demand for global assets its incredible to me the conversation that we continue to have i heard steve in his opening remarks say that yields are backing up and i was waiting for someone to say thats going to be a bad thing for equities. We were wishing yields were going to back up two months ago and here they are. Its been supportive of financials where you could find opportunity once again i will tell you this, at the end of today i will buy boeing boeing is back, boeing is giving guidance that is suggesting that the deliveries will resume in december theres boeing right there. Up 3 . Buy it now or wait for it to pull back . I will buy it at the end of the day today if it is trading 362, 364, wherever it is, i like the confidence in the guidance i think thats a favorable condition for the overall market i will buy boeing at the end of the day. If boeing gets into gear thats a new high for the day. Thats exactly right. I mean im there. So im more the more the merrier. For me i bought boeing when it got i owned it but when it got destroyed a couple weeks ago, thats when i added to it. Given the missteps theyre not going to provide that guidance without having strong confidence. To me, it the plane was always coming back i prefer to buy it when it gets back to nvidia. First of all, ive been in this stock a long time. Ive had my moments where i looked like an idiot and the stock sells down 300 to 150. Whats wrong with you and back at 200 and change. I just sit here. Nothing has changed about me its an investment but for traders, they take their cues from names like nvidia. Im not in that camp im an investor in the Company Traders looks at stocks like that getting back on their horse and say two things risk is being rewarded in some of the high flying names again weve had a two or threeweek stretch where anything even remotely looking silicon valleyish, apart from the big five stocks, has been trashed. Stocks like zoom and work and uber and go down the list. But seeing a name like nvidia back on the horse is positive. Nvidias story is, whether they like to admit it or not, tied to the macro. Investing in the cloud and investing in next Generation Technology at the enterprise and corporate and government level, unfortunately its a macro trade. I think the movement in the stock tells you not just about whats happening at nvidia as Standalone Company but the bigger story of spending coming back to the enterprise and thats going to be important for a lot more stocks than just this one. Dr. J, Piper Jaffray note firing on all cylinders, spx year end to 3125 thats not a big stretch, you know, 50 points. But your thoughts based on everything you heard, which side of the debate do you come down on in terms of where the momentum is right now . I absolutely hold them. I would not pull them. I know it sounds like kenny rogers song, thats not what im doing. A stock like nvidia is poised to potentially break out. Look at that one versus the dow. Year over year, forget about the december selloff, folks, of 2018, year over year, these, the Dow Jones Industrials and nvidia are up 9 . Year off year. If i took it from, different numbers. Apple 34 , facebook 34 . Amd, 91 year over year taking out the december selloff there. I mean i think if youre getting out of some of these names youre really going to be unhappy with your decision in the First Quarter of 2019. Theres some names, pardon me, some names to take a second look at, is anybody going to look at apples tremendous year, 400 billion of market cap so far this year, up 65 , thats the best run in the decade nobody is going to look at apple and say i better take some off the table that name. No. And im not doing it qualcomm move, you scrutinize things like that differently than an apple. What about an intel look at intel, approaching the highs from april at 5882 right below it want to take profit off of intel or if it breaks out above 59, its note worthy thats the highest level since 2000 its breakout coming for 19 years. I dont want to take money off the table in intel i want to buy that breakout. A lot of setups in the market like that. Whats going on is the real debate between fundamentals and technicals take a look at the october numbers for taiwan, all the oems, 90 reported down numbers. D ram down in october. Everything is down foxcom was flat in terms of their production so youve got that youve got nvidia, maybe it shouldnt traded down where it traded down or be up where its up theyre trading up technicals as apple. Apple trading up on technicals as the smash apple had down earnings and revenues, thats not a stock that goes up by 60 , right if you trade in pure fundamentals its money coming into the market we say everybody is negative, but if you look at to joshs point if you look at price, more people are positive than negative. Thats for sure. And thats on the return. On nvidia i have no view, not involved no they report this thursday and want to know if its being rewarded at 207 or the price resistance. Steve makes this point where youll hear professional investors talk about how cautious they are but theyre taking in inflows and putting it to work and buying, not selling. As evident as the nose on your face they cover their basis so they can say, of course, im investing, but im look how sophisticated i am, im worried about china and this and that and the other thing. Thats part of the game and we know it, everyone that plays this game. Let me bring you some of the commentary today from citi because it think it mirrors whats happening in front of me. They say they cite meltups overshoots and price momentum. Sentiment is shifting, right we agree with that providing less support for further appreciation we can debate that we perceive significant risks for the second half of 20 but the market unlikely to discount that potential this early. We talk about what the market discounts. Its not going to Pay Attention to whatever risks exists in the middle to late next year this soon. The only risk you have between now and year end, is china trade. Thats it. Well yeah. China trade and lets remember the president is speaking in front of the new York Economic Club tomorrow so does he go unscripted and Say Something to your point, but again if he went scripted that would be a risk. He always goes unscripted. Citi maintains their year end target for 2020. Looking ahead, hard to do, 3300. You know, decent appreciation from where you are now their point is youre not going to even Pay Attention to most of the worries you could have next year if you think were going to have any this soon clearing the way for a sevenweek move at minimum to the end of the year. Agreed. I think the big worries the big worry in the second half of 2020 is the Corporate Tax rate does the Corporate Tax rate go back to where it was previously. We dont have an answer to that so you cant invest around that. What do you mean . Its not going to back to 35. Again, im suggesting lets talk about reality versus things that will never happen. I dont know if the democrats are going to get the white house, the democrats are going to get the senate, the democrats are going to get the congress. I have no clue that could to me thats the risk for the market you return the tax rate to 35 the reality of the next three to six months is about eps and the forecasts. We were expecting down 3 for the current quarter. You came in down 1 . Epps in the next three months continues to be marked lower im going to say the probability of that happening is slim which one im talking about eps right now. Were going back to the Corporate Tax rate you made that point yes. Thats the risk for the market im talking about what is the probability of the the likelihood of it slim i would agree with that. Still a risk for the market, though has to be. I dont know about that go ahead i mean i think what were talking about were looking at pmi bottoming and when you get to the point where pmis are bottoming unlike historically not seeing energy, the commodities quote unquote that are running are semis and true cyclicals and true industrials and i dont see scott, to your point you made it earlier, Economic Data doesnt have to improve over the next eight weeks for people to pile into risk assets. Look at europe, germany up 25 this year. This is supposedly in an economy in the doldrums and were tong see money to joshs point flood into this under Asset Allocation. Al this is maybe im sorry why mike wilson still says Growth Continues to underperform that cyclicals will outperform anybody take issue with that plausible i just told you that thats actually not the case this year. The xlk, there arent cyclicals in that space, is up 40 year to date the s p is up a mere 25 the biggest winners this year pure growth companies. Now there have been winners elsewhere. Home builders i would argue are value stocks have had a phenomenal year and wave had, of course, utility do well, reits do well. Theres room for nuance. What wilson is talking about is something that could be the case going forward. Weve seep a lot of moments where value has had big rotation and peters out i hope this is sustainable and next year we have a year where value beats growth its theory. It hasntcome to pass yet. So far, there have been a lot of fake outs along the way in the postcrisis period i dont know. Weve seen the lines blur we have people that have Value Investors coming on buying amazon right. What is that . Justification. Weve seen and come in and buy on a statistical like on a very doctrinaire view of what Value Investment is, price to book, there is no universe in which you can look at they havent been the winners of 2019. Doc, what are you seeing internally in the market that leads you to believe were headed one direction versus another . I continue to see a lot o upside speculation, scott, in all the names that we talked about top of the show. I wont belabor it but weve continued to see people taking some money off the table in the actual stocks and putting on derivative bet bests instead into the year end. I think its a prudent thing to do as far as taxes if somebody was worried about putting on a trade taking off stock, could they push it out into 2020, yes, they could and a lot of them are right now. Im sure theres a lot of over the counter trades of that same thing going on. Hey, im only suggesting is there a possibility that certain parts of the tax law could change depending on the outcome of the election . Oh, sure. Sure. Very difficult is there a likelihood no. Whether the Corporate Tax cut is going to go back to 35 . I agree with you, but we are seeing notes written my point, i dont take that as a thats not a realistic market risk. Its not. What is its not the planet could fall on us right now. Its not actionable for today. Its not actionable but you mentioned a note that was written talking about the risks in the second half of 2020, and when i define the risk to me for a Market Participant thats the risk i agree with you, slim probability of it happening. Even if you think its happening. Nothing you can do now. The market will not do anything about it now anyway blinders on about the risks that exist in the next half of 2020. The first area of vulnerability would be financials financials as a sector were one of the biggest beneficiaries of the lowering of the Corporate Tax rate because tax rates for Financial Institutions were so high. Okay. Im glad you brought up the financials one of the sectors thats been working. Does that continue to be that way. Pheno