Lets begin by taking a look at where we stand onwall street theres your picture all sectors but industrials are in the red right now, dow trying to claw back off the lows still down about 7b3 points the question now, josh brown, im sure everybody is thinking about this if not being asked it directly, im going to do it the same what now where do we go from here well, i think were in now the third at the last five days, were in third day of this mean reversion trade where the hardest hit sectors and the sectors that have the most gain on a successful roping of the economy are leading. Its really interesting to look at, for example, the fact there are 20 s p 500 stocks that are up more than 20 on the year only one of them is green from the day. Big outside day developing teledoc, i wouldnt want to be in that name right now youre seeing the semis getting turned away. Semis have been out stangding bt they got turned away hard. When you look at the rsp versus the spy. The s p having a bad day is interesting. That mean reversion is continuing beneath the service a los of people are placing bets on the worst sectors of the market that the reopening will goo smoo go smoothly. I hope those people make money on those bets. For my taste, its too soon to say this will be a new trend i still like the prevailing trend which is Growth Companies leading, companies that are not issues sentab susceptible doing better than companies that are i have to change my mind right now im not. He suggest to buy those stocks the question is and josh was making this point in part, any time that we have seen these thigh Growth Stocks take a breather and weve had a conversation of is this it is this the time where money will move away from them and into somewhere else . All they have, for a day and it has reverted back to the way its been. Is that going to change . Is it different this time . Most much like the post financial crisis environment, this market likes the massive liquidity injections that fed has been putting forward moe theres 5 billion in money markets and so, markets are moving higher as a result of that liquidity however, we have to face some reality in 2021. That is that were going to have economic carnage on the street well have very slow rehiring of the jobs force were going to be have a lot of failed businesses. We reduce stock buy backs. Lower dividends. At some point this market will have to either find the fed thats going to be more accommodative again, inject more liquidsty or face the reality of lower earnings in 2021 other than that, how is the play, mrs. Lincoln i havent been on a flight or plane, so i wouldnt know. Okay. I get everything you said. The market carry has sort of moved away, if you will from the reality of main street and its been the case has been made many times. There are those who continue to make a bullish case for stocks maybe the reopenings will go much better than feared . Sure. I think what youre saying is what the market is thinking. The market is looking beyond this period. Definitely beyond the Second Quarter. This Second Quarter will be abysm abysmal. Its probably looking at the Fourth Quarter into 2021 now were close to 3,000 were at a level of resistance the market is bouncing up against the 3,000 level on the s p. Well see if we can breakthrough this josh said its trying to broaden out. If it does and tom lee is correct that 3600 is attainable level for this year, what are we talking about for earnings of the s p . Hes got to be assuming were back above 160 on s p earnings next year. 2018 was a strong year this coming year might be tougher. Were facing the reality where we have to see which type of sector, whats going to work its not the whole market. Whats driven the market is Growth Companiesand those that have been able to maintain their earnings and looked through this, gone through this well and willcontinue to expand their share of s p earnings is growing. Thats why their market capitalization has grun as well. Its getting harder, perhaps, to find areas of the market that are worth playing ball in. Ricky sandler saying there was too many things that needed to be bought was just on in the last hour. I want you to listen to what he said about hi vuz of the market now and why hes less bullish than back in march i would say im not bearish im still long america but im less bullish than i was then i still believe that we have a chance to make new highs we have a chance to have all the optimistic things that i said play out we, as a country, have to begin to make the right decisions. He also went on the say i thought we were going to hear this part. Im measure cautious than in march. We have trimmed or sold some of things i talked about in the past the risk reward was lez than it was. What the future of this reopen in this estimation steve, play this risk reward question for me. How do you answer that i agree with everything he said when the markets had been moved, that its had despite no real change in the economy, then you have to be more cautious sochl t some of the stocks in the market define reality you still have an economy largely shutdown sure there are openings but theres some green chutes. The market alway optimistic its more than 80, 90 of the time you have to say where is the best asset class take out cash because i believe we will see inflation. Dont really have it now but its stocks. However, you have to decide where youre going to go the biggest risk in the market at this point is china its even a bigger risk because nobody on this show has mentioned so far its not a lot of commentary were what doing with others that are listening that came and trade here, thats doing the chinese a favor. They have been trying to prevent those variable entities youll see more of that they go to pink sheets, youll see major carnage in those names. You turn the the semiiesemis, rt now what is put out, thats the most benign solution that can occur. Nobody is mentioning the election and trump needs somebody to go against china, as it has been in the past, is the perfect target. I dont see anything to stop us from making new highs. Market is not carrying that earnings theyre far enough out in future as we continue to open, the markets momentum animal has well as long as the news momentum is positive then youll see the market continue to creep up but the volatility is not going to go any way any time soon i think its prudent i want to have a debate on what ideas will work for our viewers. Sectors we can discuss theres a good debate over discretionary names and it plays right into the conversation over risk reward. I play off the tom lee comments too. The sector has a weak earnings profile. Its been one of the leading sectors in terms of suspending dividends in buybacks. A v shape recovery is off the table. Its not realistic what about you on a day where starbucks says sells are rebounding tjx says they are encouraged about the strong sales they have been seeing in the ropings they have been having when we start the reopening, what is the trajectory what is the growth rate of the consumer is going to be. You have the lows and all the others that have come back a lot of them have reflected the consumer coming back the question is will this be sustained . Will we have two steps forward, one step back . We dont flow the its too early to say if youre looking at the sectors around, the five stocks of the s p that are carrying the wei t weight, we really havent had the breadth. I wouldnt chase it at these levels its so wide at this point. What about the ones that have been left behind we dont necessarily have to say its either you buy fang or nothing. What about the banks they said these are too attra attractive to leave behind and focus on these small sectors that we talk about every single day. I agree with you. Its hurt us all through this year i added a few weeks ago. I havent put any new capital in only because i think im fully vinsed in that area. I dont think i need more basic pose your. It havent reflected the future earnings thats place to go Morgan Stanley upgradesed to buy. That stock is up its up 6. 5 in a week as money has come into the banks as theres been more optimism about the reopen josh drown, what do you do with the banks . I think the driving force behind Morgan Stanley is not banking. Its Wealth Management and capital markets. I think if you want to be an investor in that space, you could probably do just as well in morgan as you would in goldman. I dont see a ton of daylight between where the two corporations are going its the same story. To me meteneither one are excitg to make this sector wide call buy or underweight consumer discretionary. Look whats in that index. It has amazon and ford what are you talking about how do you make a generalization on the whole. It doesnt have to be about that sector as youre talking about it with those particular stocks lets have a conversation on because maybe the banks play into that too. I understand the high level of unemployment in this country its painful and im not discounting that but if you do have pent up demand and from consumers willing to spend the idea it may be stronger than some people are counting for, maybe you get a tick up in rates if the economy starts to perform better than people think maybe those are the trades that we need to talk about now. The easy and obvious money has been made in things like the fangs. Josh the experience of starbucks is interesting im low many the stock theyre talking about seeing those stores back to 80 of the levels they were at prior to the pandemic i think thats instructive. Is lowes going to have as positive a tone as they seem to have right now some of the 30 Million People who lost their jobs are not coming back when the Unemployment Benefits wear off i think its stupid to look at it sector wide and say that what happens to mcdonalds will be all similar to what happens at o riley automotive. Its apples and octopuses. One thing has nothing to do with the other. Maybe its time to raise expectations from the depths from some higher level of optimism maybe not. Lets have that debate starbucks said they regained about 60 to 65 of their prior year comps for the u. S now, i understand that people need their coffee and coffee is different and its not high ticket starbucks is more expensive than some others but its not high ticket relative to some other thic things but thats pretty good numbers for starbucks. Thats a great number it shows you that brands do better the offset is as josh has been saying when Consumer Credit starts to turn and we dont know if it is, thats whats been holding back the banks in the sense they have taken the reserves and people dont believe the verreserves they hae taken are enough youll have people renegotiate credit cards and rents i think those can be atraktsive investments. Its a little more of a wait and see because if things go much better than planned then i think you get the Consumer Credit issue off the table. A lot of these stocks will do really well. You put forth a pretty dark view of where things are and where you think theyre going to be some say youre too pessimistic . Our clients have fully invested we havent taken any equity exposure off the table that averages 40 to 50 of our client assets my concern is the market has largely moved higher based on the liquidity. Our themes in terms of investing are the bricks to click so we want to be in e commerce, cloud, software, sectors that benefit from technology. We also have recoverying economy theme. Theres names like boeing or disney names that will snap back when we have the pandemic restrictions released. Also, theres some cheap stocks thattalking about. When you can buy these financials at one times book, you have a recovery economy, youre going to have an attract i ive rate of return over a one to three Year Holding Period from here my concern is in 21 when we have to start reconciling where this economy is and what eps we can expect thats fair fp no one has an idea of where earnings will be in 21 thats for sure. I want to go to boeing real quick because rich you mentioned it we wanted to make that its initiated out performing b rbc which has been a real battleground why did you buy more boeing . Boeing was confronting liquidity crisis in 2020 boeing had a soupply and demand problem. The supply problem is the max. They havent gotten it faa approved and the demand problem is the shutdown of the airline if you look forward, we see both of those occurrences correcting themselves where boeing is announced they will restart manufacturing of the max this year and also aviation will resume they have a 400 million backlog. We think the stock, if you have a learner term Holding Period and want to be into that industry, expect the world to resume in avenue ration, its a great time to be buying the stock and putting it away. O. Why is he wrong i think there are too many moving parts and not to make a pun. Boeing has 64 billion of debt it used to be a cash machine and now its the opposite. They have demand problems and they is supply problems. Even if the max gets reapproved with Energy Prices this low, it makes the purchase much less compelling for airlines around the world that have old fleets. Its got a lot that neezs go to right for us to find it compelling here. Maybe at the price it should be now there are lot of people like rich that didnt think it deserves to be where it was. Thats whey its up. Face back pulled off another few bucks off of that. Apple had its price target race today. Netflix get its price target raised from 450 to 350 this trade just going to keep on working . I believe it will where are you beginning the go you going to go into those working and rewarding you for doing it i just want to revisit consumer discretionary. I think its important that youre going to see job losses, affirmative job losses and a separation, a bigger wealth separation in this economy youre seeing massive buying online you do want tone the brands and own those more levered to fundamentals like what you need to own but also those that can still survive from a different type of customer i think there is room for them in this market in terms of banks, its just in the too hard category. Interest rates with way too low. Its very difficult. Yes they are cheaper than they have been for a long time but they deserve to be because the margins arent there make they were but its other places to go to make money i dont want to go backwards. Hurry up i dont want to go backwards i want to stay on the fangs. No worries, go ahead. I want to talk about amazon 2525 was the high it hit today thats a new high we mentioned yesterday. Everybody buying everything from home then you have great portion of the country working from home. Do you need to ask yourself whether these things are fully priced or not. Amazon is definitely fully pri priced the trick answer is to say can you think of a time when it wasnt you cant and its up thousands of percents. That reason hasnt gone away amazon told share holders, quote, sit down. He did that. The stock is higher than where it was trading when he said that when they reported earnings. If you think amazon is doing the right thing by making investments now in the new reality of where we are for commerce and where we work, how we play, what we do, how we use cloud computing, if you believe in that vision, nothing has changed to make you believe otherwise other than stocks went up a couple of percent. Let me finish where i was going to go. Ill let you go first. 2500 a share, arent you crowding out the potential pool of new buyers for a stock that is that expensive . You know that amazon doesnt do stock buybacks yet . When people say oh, my god its up so much maybe it cant match the same gains since 2010 maybe its not realistic to expect that. Companies have multiple levers they can pull. Its not just about a share account continuing to go higher and higher they could get to the point where its only a 10 or 15 grower a year, which is totally reasonable, but they start shrinking the float by 5 or 10 each year. If youre a stock holder, you get that same share price appreciation at a lower growth rate because the base of shares they are distributing those earnings out across gets smaller. That part of the amazon story hasnt begun if you dont think thats powerful, then i point you to exhibit aapl because apple has not grown nearly as fast as amazon has because shares have kept pace. Theres dividend, buy book and Earnings Growth and price appreciation youve got to think of amazon right now the wap aay i am its possible they cant have the share price repeat what we have already seen and the growth rate, the law of large number will come into play. Anybody else want to take a stab at that question . I will. It doesnt matter where the stock price is a dollar you put in is going to give you the same return, same decline regardless of the share prices whether you put 10,000 into amazon or 10,000 into 100 stocks it just doesnt matter thats the math. Amazon is a true leader. Leaders are getting rewarded they will continue to spend. I dont see them doing buy backs. Thats not what they do and thats not what makes the company great. Warren buffet doesnt do many buy backs either he only does it when he cant see something cheaper out there. Jeff bezos is a visionary. It it took me a long time to get there. All right can i make a comment . Quick, please quickly, amazon has so much available cash and so much availability to move in directions they want when they made the whole food acquisition, a lot of people said they over paid and it turned out to be an unbelievably clever move. You get a monopoly affect that extends into other different realms that whoever would have thought this was turning out to be a clever move i hadnt expected this to work out. Twitch. Twitch could be as big as youtube. Nobody says the word twitch thats over the age of 40 years old. If youre under the age of 20, you spend more time on twitch than you spend worrying about hbo or netflix theres so many aspects of this company that were not picturing that have yet to be truly monotized which is another leg of story i was thinking along the line of stock split as the stock price continue gos up and up, its harder for a new pool of, i dont know necessarily know if you need to say younger buyers but are you going to buy one share of amazon theres a psychological benefit to that that a lot of people arent aware of. Just picture an institution acting differently than an individual investor. An individual investor says maybe ill sell amazon at 1800, i know if i get out im not going pay to get it back theres actually a benefit to not splitting it i dont know if you can quantify what that is it doesnt end up being a robinhoods name. I dont know if thats a negative its not a day trad