Massive rally on the heels of the stunning may jobs report 2. 5 million jobs added last month and the biggest increase ever and economists were looking for payrolls to drop by more than 8 million and major indices were 50 above their march 23rd lows and four s p 500 sectors were now positive for the year and the Consumer Discretionary hitting an alltime high guy, does this make sense . Amazing not to me, it doesnt, clearly. And ive been saying this now and it seems like the last 300 or so s p points and its been steadfast and hes been in that camp, as well. Just on the terms of a backdrop on a lot of Different Things it doesnt make sense, but if you strip out everything that weve seen, you start doing the math on this thing and you look at the s p 500 market cap over gdp, youre talking about levels that are nosebleed and nosebleed i mean 150 and a lot of that talk about it as the buffett indicator and it typically is unsustainable and if you start to do the math on the multiple and i understand that people say the multiples dont matter right now and earnings dont matter. Earnings do matter and even if you assume 130 worth of earnings which i still think is somewhat Wishful Thinking and you start about an s p 500 trading somewhere north of 24 times these levels and i understand the optimism and today was a great day in terms of that number i want people obviously, to get their jobs back and to get those numbers back where they belong in termless s of unemployment. Does this make sense to me it doesnt make a lot of sense. It wasnt just the jobs report last week and earlier we had the adp which was the ism in the United States and the pmis around the world, mike so were going in the right direction and is this a market that is foreseeing any stutter steps ahead when it comes to we might not be thinking about sustained chronic unemployment and if were pricing in a market thats 8 unemployed is this the multiple that you think it should have . The first thing i would say is i dont think most investors are looking at basically the turn on this years earnings or the next 12 months. If youre investing, chances are youre trying to take a look at what your equity will make over the next serve to ten years and i realize its a very difficult thing to do. Certainly in the context of what, you know, weve been seeing, i think its kind of hard to why we would get the numbers and i would go back to when we last saw prices at this level and say what is the market forecasting then, and is it a different situation now . I think the answer is clearly it is it may not be as bad as people thought it would be a week ago or two weeks ago, but it is worse than when we saw prices at this level earlier this year and all of the bad news related to the pandemic we paired some of our positions and its not something we would typically do, and we did because theres quite a lot of exuberance built in on one piece of news. When the market rips on one bit of news and thats something that people think they should respond by piling in more or taking a little bit of profit. This is what we do it brings up an interesting point in terms of calling from the bottom the direction of the markets that well go. I think a lot of people intellectually believe that the markets would tread water and would bounce back quickly. Is there a point in time that says, you what this is a painful trade and i have to let go of what i believe to happen and go with what is happening in the market. I hate to jump on to the dog pile and be more optimistic, but i do think that yes, today was great news certainly, and i think theres plenty of more wood to chop and the market is pricing in a recovery. Markets treating the economic shock at this point like its a bad dream and were all of a sudden past it and well have the vshaped recovery. The jolt is off the bottom and the bottom is the depressed levels and you mentioned pmi, so were getting the marginal increases in the diffusion indexes like pmi, for example, and i dont know if the recovery weve seen so far is consistent with the profit recovery and are those profits going to be enough to support multiples where they are today . Im not so sure. When you think of pmi, i dont think people frame it in this way, but if you have a 43 one month and a 50 the next month, that means no change from the depressed levels remember that well need many, many months of plus50 readings in the ism, for example, to actually get activity to pick up relative to valuations, were getting expensive and we can certainly continue to get more expensive and the market is vulnerable to negative shocks and there is enough to worry about, that you have to consider valuation of what the market might do, if we get a second wave so on and so forth to answer your question, i do want to tough positioning. For the average investor, you will not be all in, or short the positioning for individual, the positioning is more nuanced than that, if you look at it relative to the russell 2000, there is a bend and there is a tilt toward value so if the market keeps ripping higher those will help our performance, but to hedge, weve reduced the overall equity exposure a little bit below what the typical target would be. So you have the nuance under the surface because we have to be realistic and theres a lot of uncertainty and to your point and we dont know where the market will go. Chris, welcome to the den on this friday. Youve been positive for a long time and are you as positive as you have been . Yeah. I think that we need to see that none of us are smarter than the market and the market has sent a very, very powerful message here and it strikes me still to this day how resist antti thiant of Market Investors have been materieling us six, seven or eight weeks. We learned that this market can continue to work even when tech is not leading thats a remarkable change from what the last two or three years have looked like we have lived and died with Tech Leadership so i think if anything, rotation is probably the wrong word to describe this market this seems more like participation is actually broadening out because apple and microsoft, theyre still at new alltime highs and theyre still not outperforming to the same extent anymore jeff mentioned the small caps and i agree entirely i think the small and the midcaps here entering into the fold is a healthy, healthy change sxrm, small caps didnt peak in february of this year. Small caps peaked two years ago and theyve been in a bear market for two years and a lot of the cyclical names started to put in the bottom and we think about the sequence of this entire event while the velocity of the whole event was so quick the order of events was historically very common and the market bottomed before we got to the worst part of the data, and thats what we see coming out of these events and im trying to listen to the message of the market. This wont be a Straight Line and it never is. The market has voted loudly want broadening of this rally that weve seen weve seen a riff higher in financials particularly with the yield curve steepening and you have other things going on where financials are underperforming and the financials are the life blood of the economy and theyre telling us something bad and we have them here to the upside how can you still be bearish me personally well, for the reasons i gave earlier. Listen, i understand whats going on here. I mean, i see it clear as day. Youre talking about not only u. S. Historic stimulus and dont fight the fed mantra and you have the rest of the world getting involved as well and money is finding these assets and just like what we saw somewhat indiscriminate selling a couple of months ago, but there is a euphoria in the market that i think is somewhat misplaced. Listen, maybe im 100 wrong, and things are incrementally better, but are things better to where youre making alltime highs with 200 i dont think so. I think were nose bleed level and the market is looking past a few things and not least of which is the u. S. China situation that will be amplified given the sense that the market is where it is as i said before, the higher the market goes the more President Trump feels he has chips to play with correctly, by the way, and i think hell start using them. Lets get through the charts and chris, why dont you walk us through the levels yeah i brought along three charts and we are up 40plus percent off the lows and lets assume that there will be some giveback or consolidation and what is the area that we would look to as viable support, and i think what you will see is the 50day moving average is starting to converge on the 200 day and i think that will be a big level as we move through the course of the summer and maybe lore and 2900 that will be a very, very meaningful level of support and when we put this rally in context, and were about 50 trading days off the low and we just go back and say, okay, what are the other best rallies in history . To date were 43 off the lows and these are the other 50day rallies that weve seen in history and if you just look at some of these days, its the major historical market bottom and its the major 2009 low and its the major 1975 low, so the external momentum that the market has exhibited has really only been matched a few times in history. What youve seen from those periods and then continue to resume higher, so i think we have to look at that as some type of a benchmark. I brought along one last chart they think is really, really telling and we spoke about participation starting to broaden out and the best way we can show that is the number of stocks making new highs. Today you had 65 of the s p and when you back test this data it could be very climactic in the short term meaning when you get the surge of new highs the markets have a tendency to pause and correct, but when you look at the Forward Return of this condition, six months in the future, 12 months in the future, you tend to get returned so much stronger than historical average i think this is another data point that argues, hey, this is not just rotationing and partis pagsz, as investors that weve been craving here. There is a chance at this point that you do see a krekd and a it the yield a historical rush. The next 100, 150 points will be anybodys guess we just had the most remarkable rally in 100 years worth of Financial Data what i think what were trying to focus here is are these characteristics and this momentum internally and externally, is this what you would want to see coming off the major cycle low . The answer is yes. This is what you would want to see in these moments and i have to respect that as a disciple of history and trend. I have to respect those signals. Mike khouw, what do you think . I think not just taking a look at the technicals there might be a reason why you see these things and the amount of cass that was undeployed on the side you on lines and the chatsing that goes on in the situation like this. Obviously, a lot of people were waiting in for and trying to anticipate when you would see a light at the end of the tunnel and playing for a bit of a recovery and some of the stocks doing the best and he was just talking about how there was a broad edge and when you look at the tech sector, a lot of companies are still doing very well when theyre trading 30 earnings and they were at the end of the april quarter and that performance doesnt necessarily suggest that microsoft, for example, is overpriced and there is, of course, the alternative issue, which is where else do you deploy your capital . And it is a dicey proposition and fixed income is an impossible position. So when you look at that scenario, you realize that investment dollars flowing into Financial Assets and equities are probably, there is a good case for why were seeing those lows and we are still long i want to make that clear. We were talking about being in a beyer camp were not in a bearish position, but i do, were having a lot of fun here. Apple, and why one analyst raised his price target on name and grub hub adding to the menu of potential suitors and all of that when we come back stay tuned great sleep comes naturally with sleep3. Only from natures bounty. Welcome back to fast money. Two big calls on the day and theyre raising apple to their 260 and thats helping the giant rock tote rocket to an alltime high and the call continues to rise bringing its gains to a record 75 and big moves here, but lets kick things off with apple. Jeff mills, this is seen as safety and growth. Where do you stand on that here at an alltime high . Its clearly at a critical price juncture just breaking out to a new high and i read the note and it wasnt necessarily a rousing endorsement and as you said, you moved the price up to 295 and its below where its trading now and again, they mentioned carrying a higher multiple and theyre giving it a Services Momentum and i would say its a relatively neutral call on the stock. For me, we like it as a longterm holding and i do own it and ill reference piper jaffray. 80 of the teenagers they surveyed said they owned iphones and it is still showing it can diversify away from iphone right around when that survey came out, Goldman Sachs downgraded the stock, but they were modeling their Sales Recovery after the early 2000s recession, so the question is is this time different, and i think the labor report this morning begged that question we saw International Luxury sales recover pretty quickly in areas that had the virus before us so that could be a good sign for me to be a quicker pickup in sales for apple, and i think in a lot of ways the exposure to the highend consumer is what you want in this market and the general positive comments from me at over 23 times forward earnings the stocks not chief right here and you probably do still have some nearterm headwinds in terms of iphone demand so i would at least temper my enthusiasm for the nearterm upside the stock long term, we still like it. What if the iphone is delayed until much later this year guy, i dont know if you were doing last night, but if you caught the broadcom call, and they talked about a major delay at a manufacturer, Something Like that. Its a cryptic way that he often refers to as apple without naming apple we are to believe based on that cue that the newest iphone will be later in the year and not september as it normally is. Does that impact this run here you would think it would, right . But its interesting because if you go back and remember months ago when apple said they would have problems in china on that friday the stock closed at 323, i think alltime high at the time and that monday the stock opened at 3. 16ish and by thursday it was making a new alltime high. So apple is somehow impervious to what it usually is bad news a and so much of this move higher has been multiple expansion. With that said some of the multiple expansion is multiplied as they move toward the Services Company and its just a question of how much. 295 is the price target and as much as apple is a buy and hold name, its been an incredibly great trading stock in the last few years. Youve had moves to the upside and downside in apple when you have to consider is this time to take profits and look to buy it back cheaper . I think it is. Raymond james saying the stock is business quote, this got a cred, deeper and it announced it is going to increase its capacity next month . This seems like a crazy move and given its a Short Interest maybe its not entirely surprising, but still an upside move for this one. Yeah. You hit right on it. In any situation like this where you have a company thats in deep distress and you have a highShort Interest and there could be Capital Structures at work and the Equity Investor can ride on that momentum because theres still considerable risk here and theres considerable leverage and thats why the move is sharp, but i wouldnt chase it your take, chris . I tend to agree we are back to where the stock broke out from in january and february probably a lot of people who wished they sold it back then and they made their money back and theyre probably natural sellers here and tactically, this is a better sale than a buy. Guy, are you raising your hand are you trying to get my attention . Whats going on here im trying to be respectful you know im not a blurter ive never been a blurter, but one quick point. Look at the volume American Airlines with 625 million shares and if youre looking at volume for a sense of an upside capitulation which you also see today is as good as it gets. All right. We have a lot more fast coming your way and a special 6 00 p. M. Hour and the jobs report tells the true story of Economic Health fast money is back in two. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Welcome back to fast money. Shares of grub hub on news that the company has attracted a couple of new suitors. Cnbc learning that the company is feeling interest from at least two european players in the space. Delivery euro and just eat take away. Com grub hub is still in talk with uber already this is one of those shelter in place stocks that benefited. This can only help, i would think in terms of getting a better price if uber talks are going on im not suggesting its in grub hub, but if you look at the stock, does it have more room . Yeah i would suggest it does have more room and this is a 145 name and it has room up to 80 bucks and again, its one of those names that people learned about in the last couple of months and theyre not going to flee when things get back to normal i think you stay with this name, mel. Chris, what do you make of the charts here . I think i had this one spot on this is a name like a lot of the small caps have been in a bear market for two years this peaked in the summer of 2018 this peaked for two years. There was a major, major low any pullbacks, you want to be very aggressive here and this say major bottom its time for the final trade. Mike khouw the market had a big rally here you dont have to sell your stocks, but you can sell covered calls against them and you can tune into options action for more on that. Thats called a tease. I would be a seller of ibb here and the call is technical and the price action is up to speed and we talked about it on monday and it is right up again the july 15th high and 15 above the 2 hunday moving average and i think you give some back chris rio tintos mi icong alive Natural Resource stocks. Guy, i will see you at 6 00. Meantime, options action is up next. Bye but no matter how things change, one thing never will you can rely on the people and the network of at t. To help keep your business connected. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. Hey, happy friday. Welcome to options action. We have lot ahead for you tonight. First up, opec, the Energy Trader and our carter worth sees junk in the trunk that caused that to backfire today has retailers and Retail Investors seeing green tony jiang has more, and watch out for that how breakfast at tiffanys can give you a boot and mike khouw will give you a taste. It is time to risk less to make more lets get right to it. Check ou