Know, ive been long microsoft, long apple, and long amazon. Well, given where we are, giving that we are seeing a bit of a surge in cases for covid19 in texas and in florida, given that we have a Federal Reserve meeting i have too much risk exposure out there so i identify these three companies, scott i say to myself, given the significant price appreciation, which Management Team do i trust most, to be most judicious which is cash, and history will show that amazon is liberal in terms of spending, therefore i decided to step out of amazon. I still own apple. I still own microsoft. It raises so many questions, joe. Thats why i wanted to start with you today this is one of those stocks that is up just huge off the market bottom there are many others on the list assist i said, is it time now for our viewers, joe, to reassess everything theyve been writing since that day on march 23rd when stocks hit bottom . I get the problem i have with it is theres a degree of ignorance regarding asset inflation and speaking about portfolios mark las ner is doing a phenomenal job talking about it ill take that trade every day over equity in boeing. Im still invested ivesaid i not going to go from the dash to trash. I dont believe in the airlines. I dont believe any significant recovery and a lot of the travel and leisure names. I want to stay committed to quality. The inflation you can fin in the economy or anywhere else is reflected in asset prices steve wise is withes along with jon in a najarian. Carey, ill start with you gunlach was talking about the super six of the return gap that these stocks have seen since the low, one that he said could not sustain it slurp by the way i want to throw up an intraday of amazon as we have this conversation, carey i cant see the charlotte, but i think he know the chart. I would say what joe is doing makes sense in the near term i have no problem with trimming some amazon. We trimmed some home depot and trulio, but the question is, do these stocks, the type that jeff gunlach has talked about, who i believe wasnt buying in march, are they overpriced right here how do we fee el about that . I had a vinnie put together a chart for me you can see theres been a dramatic outperformance of growth versus value. Growth for the first five months has relative outperformance of 19 , so 1900 basis points. In june, its lost 1250 basis points so still massive performance though has accelerated and shown during an extreme panic and serious economic down turn in all ways that people still use platforms, they use the digital connection theyve been able to provide, whether its paypal in Payment Service or connections through facebook or amazon, because youve bought things on it, thats why those stocks have had the kind of performance they had. Have they gotten a little ahead of themselves . Thats possible. Do they need to correct a lot. I would assume were due to have some sort of correction. A call is not an easy one to make, right . Its unpopular, a hard thing to do, to get out of one of thinks high flying stocks is it time to takes some profits in some of these other names if so, which ones . Oy love the way joe is looking at it. Im looking at taking exposure down a different way, and its not in tech, frankly tech has been performing not only from the stock standpoint, thats not what im focused on, but performing from a fundamental standpoint i think well see the division continue to grow the fang stocks hold on a second. Look, Everybody Knows why they stocks have run up the way they have in the pandemic, right . But that doesnt mean the moves themselves are fully justified in terms of the magnitude. Fundamentally you can build a case as to why they performed the way they did, but can you make a fundamental case as to why amazon is up 40 since the low, or a facebook is up 60 or that apple is up nearly 60 or alphabet is up 40 . No, but let me tell you why im staying there. I cant tell you ill about he there in another few days, but i think i will be. The stocks are ahead of themselves when stock get ahead of themselves, if i can envision a time when they catch up to the prices, and i still want equity exposure, because i think its going higher, those are the ones im going to own that catchup period has to be six months to a year if not, ill get out but if theyre overvalued and i have to make taxes on extraordinary gains, im behind the equal, so im willing to see them trade done again, if the future is as bright as it is sorry, steve, i want to go to jon. When i ask whether it was worthy of these number, i think i heard you say yes, that these stocks should be where they are. Yeah. Definitely scott, we talk about the pandemic, and how its affected everything its affected the pandemic of stocks was when everybody was throwing out the baby with the bathwater, which we all identified in march. Since its a capweighted index, the s p 500, which is what the rest of the world trades we talk about the dow, but we know people dont trade the dow. They trade the s p if your money coming out of europe, scott, which we have addressed time and time again, so guess what youre buying . Are you buying halliburton no, because its way down the scale. Are you buying apple of course. Are you buying amazon . All of these stocks. So that pandemic panic created opportunity. In terms of will those stocks continue to earn and to adjust your faith in them im not saying joe is wrong for taking money off the table, but to steves point, if its taxable, i am disagreeing rather severely he could instead just buy a put, which is insurance, and its not that expensive its come way down when insurance is cheap, scott, thats put option at the 2600 strike in july, 75, thats basically almost in line with how much the stock is up today so, in other words, if you want to miss out on the up side, and if you want to pay somewhat extraordinary taxes, especially if thats shortterm capital gains, scott. Youre talking about why not buy that put instead or sell the at the money call, same thing, at the july at the 2600 strike, youre collecting over 100 for that call. For my money, it makes a lot more sense than for me to incur, which to me since i bought amazon would be an extraordinary tax burden exiting the stock in a taxable account. Joe, the last word before we move still long apple, still long microsoft. Im still comfortable with what i did today. I think its a proper time giving where the valuations are to really asset your risks and your leverage exposure to me thats the right economic behavior for a portfolio. Lets bring in tom lee right now. You know, weve had him on a few times. He called the big move in the market you all know that. Tom, i gave you a lot of credit for that, for the gutsy call that you made now the work gets harder lets not even focus on the epicenter folks. The nasdaq pushed past 10,000 against today. There are many stocks including amazon which had hit new alltime highs theres no froth in this you dont think thats a sign at all of froth i think a pullback is always healthy, but i think something we all have to consider is the u. S. Economy is going through a contraction worse than the great depression, something well never see again in hopefully five lifetimes. All these companies have proven you cant kill them. They produced new numbers. We put them through the biggest stress test in five lifetimes if they have survived, i think they deserve higher multipallets. I think thats what were seeing. Even the facebooks, apples, microsofts of the world . Yes, because these are essential unkillable if you throw a contraction thats never happened in modern American Economic history, this is a contractions well never see i mean globally, and they managed to grow earnings or prosper . Those are incredibly strong businesses the stock market might need to be revalued, because these companies which for the last ten years everyone kept says 16 p. E. Is the right for the market. What about these other stocks . As you coined it, to reopened airlines, casinos, cruise lines, banks . Are you cool with where all of these are . Uh, yes i mean, i know theyve had some i think theres still an anchoring bias thats negative, because, number one, as you know, the majority of wealth in america is controlled by older americans, and so covid is obviously still quite dangerous for older adults, but its made them think that these businesses are flawed or theyll never come back, or because weve fallen so much they cant recover. I think theres a linear anchoring, but if you cant kill a cyclical in the greater of greatest depression, and in 2008 during the financial crisis all these companies showed they were good at cutting costs and reengineering processes, were seeing that innovation hatching at lightspeed right now, i think theyll surprise in earnings next year. Thats where the power will go to, because a lot of the people who are riding out the storm are already into the proxy names now the epicenter is the real opportunity. I think its where youll find value in the up side. Carrie is tom lee right again . Well, i think part of what tom is saying is what we believed is that the market was very cheap, and you want to stick with the names that were strong growers that we just discussed. That has worked out incredibly we had we aded to names like we made some moves, and weather participants strongly in this rally whether the cyclicals or names like airlines, cruises, energy and industrials that are starting to participate will be the strength of the market for the rest of the your, im not sure that i believe that i would think that they have moved pretty aggressively right now, and i dont think that they can sustain it unless they can produce the earnings i would say, though, and i think tom would agree, that if you look at the contribution of technology and Communication Services to the s p 500 earnings, for this quarter, for the second quarter, probably the worst quarter were ever going to see abinvestors, it would be 42 of the s p earnings, and their weight is 38 . So to say that they are overrepresented in terms of the valuation of those groups, thats not true right now, and i would think that that wont be true they will outearn their market share for the rest of this year as well, so i understand what tom is saying, but were pretty strong believer in the Growth Companies that can produce earnings will continue to drive the market over the next year. Tom, though, youre not overestimating a return to whatever level of precovid normalcy you think will come back i know you think the consumer is resilient, especially when it comes to travel the the sectors youre saying are still overweight are the ones that have flown so high so fast i think weve been constantly surprised by the resilience of the exhumers we were posting to our clients some data around travel bookings i think Hotel Bookings are back to 80 thats how fast its come back but the earnings slingshot will be pretty stupendous epicenter groups are 20 of the market cap of the s p right now. Theyll be close to 75 of the earnings delta next year theyre doing a lot of heavy lifting. Thats really assuming theyre not reengineering their businesses so, scott, its a fine line. I think everyone thinking there will only be a modest recovery in travel, because everyone sees how dangerous it is, and it is dangerous to be engaged in large groups right now, but thats not what it will be like six, 12 months from now. The stock market wants to think about just beyond the next six, seven weeks when it comes to future value the great unknown, steve weiss, tom is hanging on the fact that theres not going to be any wherewithal to shut down the economy again, right thats almost a given. At the same time, when you have cases that are spiking in places like texas and arizona and elsewhere, and that is going to be the unknown as to how the consumer, him or herself, reacts for that were not going to have the governors and certainly not in washington the administration, shut down the economy again. Its just not going to happen. Do we know how consumer will truly react in cases do start to rise more broadly as they are in, like 21 states now, steve, are seeing an increase in cases, yet some are acting as if the virus is gone, that its all over. Hes expecting it to continue, that just wont happen the states showing the largest resurgence of cases are the ones that open earliest so theres been a laziness Deutsche Bank put out a study that a lot of people are getting very lazy and not practices cdc guidelines such as masks and so forth, but away from that, say you do say that cases top surging in those case and other states as they reopen. The facts are that youve got companies such as the airlines, which i sold, because it was a trade. Youve got them significantly impaired in their Balance Sheets clear theyre not the companies that were. This is the heart of the argument, right . Tom lee, right, youre saying its okay to overweight the stocks and still buy them. Even though steve says it was for a trade, he still sold the airlines, thinking that their earns and estimates will be cut, right . Thats why you saw theres so much ceiling left, because you have to stay focused for a longer period of time. To steves point about credit, if you look at highyield markets, or even the best performing credits have been the epicenter groups if their credits are that strong, and weve seen how easily theyve been able to fund even cruise lines, i know mark lasner was on a few months talking about carnival thats been a monster home run decree buy when theyre rallying that strong, its hard to say the stocks should be falling, because whether you believe credit leads equity or not, i think they tend to theyre saying we should expect a pretty robust economic recovery but, tom, when youre funding the crews lines, only 12 debt, 6 debt, zero essential interest rate, how does that not impact your earnings so youre taking a look at a narrow windows of one or two months, saying this is a referendum on the future im telling you that that is not true were going to see significant unemployment Going Forward and the countrys going to be in recession for a long time. So dont take a look at what the highyield market has done and say thats great, thats judge and jury right now thats not going to be the case, and history shows that well, i have a lot of experience with high yield ive been doing Research Since the early 90s high yield was a huge market for wireless. I know, you worked for me during that time. He forgot about that period on purpose [ laughter ] i dont blame him so wireless companies, you know, people were borrowing money at mobster rates, but then it went back to par and they refinanced. Thinks why the level theyre paying now isnt as important as the fact the credits are outperforming. That gives a lot of confidence to investors this rapid lly reduces their ri of insolvency. Carrie, i want to talk about some moves youve made i find theyre interesting and they do fill into this conversation youve had many winners. Ten of your 32 fogs are up more than 10 for the year so twiyou trimmed twilio, and home depot, but you are taking some profits in some of the higher flyers in your book. Sure, i think thats the role a portfolio manager. These are longterm holdings, our job is to maximize what we call the real estate of our portfolio twilio had an enormous move, and i think its prudent to move that down from a pretty big weight for us to something that we still own quite a lot of it, but its just more reasonable theres risk whenever there are high prices, as joe attests to, people take profits. People start to see theres other places to put their money so i think its why is to take money off the table, and then you look for other places to put money. We own re max and booking holdings, to toms point, these names will do well when people start to move. So you have to have some of the other side of the equation. Its interesting. Theres no great appetite to sell stocks, right that seems to be obvious by virtues of how the markets are trading. Throw up amazon on the intraday. Joe, as we started our show 26 1 2 minutes ago, we said you sold amazon. We did see on an intraday basis that stock give up some of its gains. Thats how long it took to get them back. You see that v thats indicative, though, about where stocks are, where the mentality is, is right now theres no great appetite to sell stocks. I mean, that is just incredibly foolish if anyone is selling amazon based on me saying that im ringing the register youre moving the market. I dont know if we have time for a quick question i dont have that time, joe i apologize. Tom, thank you for being here. I appreciate it very much. Thank you thats tom lee all right. Where are we at now . Coming up next, well, weiss talked about selling the airlines, t lbuwel tease it anyway, were back in two minutes. Right now is a time for action. Thats why usaa is giving Payment Relief options to eligible members so they can pay for things like groceries before they worry about their insurance or credit card bills. Discover all the ways were helping members today. Makes it beautiful. State of the Art Technology makes it brilliant. The lexus nx experience the crossover in its most visionary form. Experience amazing at your lexus dealer. All right. Lets go to phil bless lebeau, a a news alert on boeing. We have confirmed through multiple sources that boeing is targeting a recertification flight by the end of the month so that means boeing has less than three weeks for this to happen, if in fact it does make it before the end of the month we have reached out to boeing for a comment. The company is not saying anything officially about what we have learned from sources we have also reached out to the faa. It says the faa is in regular contact with boeing as the Company Continues its work on the 737 max. The manufacturer must demonstrate compliance the aircraft will be cleared for return to Passenger Service only after the faa is phied with all the safety issues. Thats a pretty standard statement. So officially its not commentings on the recertification flight just so you know how it works. Boeing has drawn up recertification flight plans, and the pilot is an faa test pilot. Its not a boeing test pilot a boeing test pilot is in the copilot seat. They essential draw up plans where were going to test this plane to make sure the upgraded software for the flight controls can handle a number of different scenarios. Again, what we are total is boeing is targeting dont a recertification flight or flights be the end of the month. Nobody knows this industry better than you. When you look at the stock gains in boeing, up 50 in the past month, or american up 60 in the past month, delta up 34, united up 55 or southwest up 31, what do you think keep in mind that boeing has a backlog. Its backlog is 4,744 planes. This is