The Leadership Group right now so joe terranova, i go to you on that note, the melt up in tech seems to be picking up we asked the question whether the growth tech stocks wrestled the market back from value and then thats where the money is going to be made Going Forward clearly the mega cap growth names have wrestled the market back theres an added dimension to it, scott, being popularized in a lot of Research Notes im reading. Pippa stevens of cnbc has a great report element of esg investing and something i didnt think about in prior weeks but if you take all the esg funds, the largest esg etf, its popularized by all the names that youre talking about. The apples, the amazons, the microsofts, so theres an added element to these hyper growth names that are not just about the quality and the cash Balance Sheets and the very visible return to Earnings Growth but an importance as it relates to social and governance and youre seeing a significant amount of fund flows into esg and thats even more reason to own these names which are the Largest Holdings as it relates to esq etfs. Nasdaq up 45 from the march 23rd lows. Its outpaced everything else. F. A. A. N. G. s month to date, apple knocking on a new high up 11 , netflix hits a new high today. Microsoft 7, facebook 6, alphabet is flat these stocks have been where the money has been made. How about the question as to whether theyve takens the market back now . I think anybody who wanted to say that value was going to start to take over growth and be a leader Going Forward and surpass it for the rest of the year, was a little bit premature and shortsighted if you look at the separation in growth versus value year to date, the russell 1,000 growth index is up 8. 5 the value index is down over 16 . There is a lot of catch up that would have to go on there. To joes point, esg is driving that i think theres also a big force here from individual investors a lot of those individual investors are younger generations and those younger generations are going to be interested in technology theyre going to be interested in esg theyre here to stay theyre building their wealth and they are a force to be reckoned with. Its not like people are backing away from the value trade. Liz makes a good point but you look at tom lee, his note today, hes not wavering one bit. Value stocks are likely to lead in the second half of 2020 he says mike wilson, Morgan Stanley, midyear outlook, sick lacles, really thats what he says. Then you have these moves that i just said and this seeming resurgence of the apples of the world and the stocks like them, which is going to win out . In my view, its going to be growth its going to be technology. If you just think about this logically, if the economy is improving and is able to drive thats call them cyclical stocks rather than value, i dispute theres value in a lot of them, then that means that trends youre seek si youre seeing in technology will continue the growth will accelerate i believe the growth in Technology Stocks will go. Why . Theyre innovative and theyre helping the economy be more efficient, more productive, and by the way, they save costs. Companies with their Balance Sheets somewhat depleted but overall in good shape. Theyre going to look for those productivity enhancements that technology can continue to provide. Thats why im staying with technology i see no reason to sell it to me any value more than a decade has been short lived and ill timed. Stay with whats winning in this market as you should in a lot of markets. The biggest position you have in terms of stock standpoint apple price target goes today, 400 at cowan,s a wds begins at 1 00 p. M. Eastern time by the way, apple shares stock up 55 from the march 23rd lowelows on track for the best quarter since 21. Look at the move that microsoft is making pushing to 200 here again just like maybe 50 or 60 cents off the alltime high that it just nutput in a week ago. I think theres so much not just demand for the products that these guys have because obviously cloud, we know how big that is, but what theyre providing now to really go directly at amazon is they are purchasing this Company Cyber x and that will be additional security on the azure platform for their cloud delivery and so forth, so end to end security, scott, is something that were all going to be concerned about. Its one of those issues that, you know, plagued briefly, very briefly, zoom video earlier this year and now the fact that these guys are really addressing this, i think cloudbased security is going to be huge microsoft is clearly leading in that right now with this addition to their offerings and i think that when youre im in every one of the names were looking at here of these mega caps except for google and the only reason ive shieded away from google is its a tough trade. You cant just buy and hold it but all of the various parts o google are really expensive and thus the spread between bid and offer, scott, is just discouraging for a trader. Not for an owner if you want to own it, i understand, but as a trader, thats a tough one because youre giving up so much, getting in and out of that stock. These tech names right now are moving towards the highs of the day. Stevin steve, in the last month or so, youve had members of our Investment Committee come on the show and say theyve taken profits in microsoft, in apple, and even as joe did recently in amazon are those going to they were good short term, if you saw the value trade reemerge, are those going to prove to be foolish moves . Is the market telling people who did that, those are the wrong moves to make . Well, i never know what somebody else has in their portfolio where theyve allocated the capital. I dont know if they will be foolish. Your question is and i think it is, are those going to continue to go up, i believe they will. To come on to what i think will be their biggest Product Launch ever which is the 5g phone we just saw ericsson last week increase their estimate of 5g phones from 100 million to 190 million this year alone. Now most of that is in asia. We saw samsung is coming out with a lower price 5g phone. What youre going to be able to do with that phone is going to be incredible. No, i dont think its misplaced with apple are the stocks ahead of themselves they could be. I did shave a little apple a while ago because just got too big. Its still my largest position with amazon and with microsoft and microsoft continues to innovate much more going to the cloud than there was you have to expand that to security tu take a look at what those stocks report in the First Quarter like ffiv, security business is very, very strong and getting stronger look, i think there will be regrets but when you made a lot of money theres nothing wrong taking youre not going to say you made a lot of money, took a little profits, shame on you the point im trying to make is like the one you made in amazon. Do you regret taking profits and selling out of amazon when you did . Thats just thats a simple answer. If you sell amazon, which i think i sold it around 26. 50 and its printing 26. 96, im an idiot. Of course i regret it. Did i have to do it at the time in terms of managing my risks, i did. Unequivocally, when the stock moves higher and ive said since i sold it theres no reason why it will not continue to move higher, its one of the best companies clearly in the world, one of the best companies that an investor can invest in, ive got my apple, ive got my microsoft, but yes, i regret, i dont have my amazon. But that okay. This is an interesting debate that i want to have now for our viewers in terms of managing risks by selling out of a stock that you just made a case for with so many reasons as to why the rewards are still ahead, so why take risk off the table in a name like that where theres so many other places that are seemingly so much more uncertain than an amazon or for that matter an apple or for that matter a microsoft so to answer that question and i think john, liz and steve, really all understand this and i would literally have to sit with you, scott, and show you my sheets and say heres where i am looking back about two weeks, i realize that i had way too much exposure to growth and way too much exposure to Mega Cap Technology if you remember, over the last three weeks, ive been talking about that i did not want to go and buy what i call the dash for trash. I didnt want to buy the airlines or the cruise ships, i didnt want to take that hyper cyclical trade in nonquality companies and i was expressing to you a frustration that i really couldnt find any other opportunities, quality wise, to enter into stocks. Now, as amazon and as apple and as microsoft continue to push higher, your risk increases more and more and more. What i had to do, i was forced to do, the portfolio was telling me to do it was to take off some of that risk i reassigned some of that risk into health care, which i believe in when weve got a russell rebalance coming up on friday and i believe a lot of the biotech names and health care are going to be winners that rebalancing, so i put some money and steve and i talked about it at the time in seattle genetics, xbi for a while, so its a great question. Youre asking an obvious question, but its a little bit more detailed than that and it relates to a persons particular portfolio. Im not managing warren buffets portfolio. My individual portfolio is not as big as his. If it was i would have never sold amazon. Liz, part of my point is if you are selling names like that, how are you going to get back in right . Its like the cramer, dont trade own apple because if you trade it, you run the risk of missing the opportunity, how you going to know when to get back in amazon is a good example of that youre out at 26. 50, take profits, now 2700. The high is 2722 so i dont know that the question is if we get out of one stock do we want to get back into the same one. If you look at portfolio construction generally, the first three ingredients into those decisions are number one, whats your return objective number two, whats your risk objective . The third one, whats your time horizon. To joes point if he spent his risk budget in other places and he was meeting his return budget cleanly, theres no reason to continue to take risk in a concentrated way spread out that risk budget, diversify more into other sectors, maybe a smaller cap nameand then think about what your time horizon. I do agree that over the long term, these stocks will be higher i dont think anybody on this desk or on this show would say we expect stocks to go up in a perfectly straight line. We dont we know there are going to be pullbacks here and there and mini boom and bust cycles as far as valuations go, but if you have a longer time horizon you can buy and hold these names its a matter of understanding your risk tolerance and then whats the time horizon of that risk tolerance it sounds like joes time horizon of that risk tolerance was a little shorter so he took it off the table. John, the stocks in many ways have changed the dynamic of how people look at them, right they become defensive plays in many ways, which you would never have said that about some of these stocks in the past that are now viewed as defensive moves. Absolutely, scott im not questioning joe taking some money off the table i think as liz just said more eloquently than i certainly will, youre prudent to make moves like that. I mean when you hit your own risk limits or when you need to diversify and pull some of that capital off, im never going to question an investor or a trader when they do that. Do you get a chance to get back in the market has shown us time and time again you get those chances, scott, and then its just a question, do you have the intestinal fortitude to pull the trigger when that happens and thats what all of us have to deal with. As far as these being defensive plays to your point, scott, back at the beginning of march i said, look at these names because they dominate, theyre the biggest cap stocks in the s p 500. If youre afraid when youre in europe of whats going on over there and youre not getting as much support for ppp like we got over here for the paycheck protection and so forth, so that people had the money even though they werent going to work, if you didnt have enough of that over in europe and you were looking in the United States, top of the list is apple 1 yield pristine Balance Sheet all of the reasons that we could have named and yet, the stock was 100 points lower back in march as that selloff accelerated, took it all the way down to whatever 225ish or wherever it was, scott, so that was a steal for all the people that did have that forty today and called that trade and or bought in to that dip, man, what a great defensive trade and the it remains that today. I mean, im thinking back to when doc, apple was sub150, it was 149 and change it doesnt feel like it was that long ago now youre knocking over 350 the other idea here is that if the economy recovers faster than people think f these reopenings, even though were having spikes in cases around, if the economy continues to move forward, why wont cyclical stocks, steve weiss, move higher why wont there be a barbel move that you can have growth but the value names are going to perform . Thats the philosophy behind tom lee and other notes that say dont give up on these things just because theyve come a long way. I agree with that, but its where you put your money, how selective you are. The rising tide of the economy is not going to lift all stocks. For example, i would stay away from American Airlines i would stay away from United Airlines i would stay away from the cruise ships and some of the leisure stocks, the hotel stocks. What would you do lets do this, cyclicals, sorry for interrupting you no problem. What would you do with the financials right here . Dick bovay said Morgan Stanley is a nobrainer. He has come out in the last month and talked almost every single bank stock higher he has upgraded them today its Morgan Stanley. While at the same time American Express gets cut to a sell at ubs. Take me through that trade sure. So American Express has a disproportionate amount of their revenue that comes from the areas ive described, travel and leisure and business spending which we see less of in terms of the bank stocks, all extremely well managed companies, all High Quality Companies that have been through much worse times however, with the yield curve where it is, with rates so low, while they can make up for some of that with efficiencies, i just dont think thats where im going to get my highest return its a relative game that you play when youre in stocks i own visa and added to visa recently as i mentioned last week its a quasi financial, but were going more and more cashless and thats been accelerated. Can the banks go up . I expect them to Morgan Stanley, a well run company, were seeing more interest for the first time from Retail Investors, but for my money i expect a bigger return and wont get that in financials thats why i dont own them. You picked Morgan Stanley a while ago and you own it yeah. I bought it and this goes to your question which is a fair question about amazon i look at the portfolio and you asked the question, is tom lee correct on the cyclicality . Yes. Tom lee is probably going to be correct on the cyclicality but i want to stay up in quality and in talking about the cyclicality, from a macro standpoint last week, again, high yield spreads they came in 33 basis points Investment Grade came in 33 basis points look at oil, oil has found its Comfort Level above 40 as its expiring i cant lose my nike i cant lose my disney i cant lose my eli lilly or doccusign. Its difficult to stay in that trade. When i looked at amazon and microsoft and apple, those are the three places i chose to get out of amazon i didnt want to lose a Morgan Stanley or a jpmorgan or a blackstone because if i begin to think about the market, im doing the wrong thing in terms of looking at my risk to reward. I have to have the market tell me what its going to do and i did not have enough exposure towards the cyclicality that obviously im not seeing, but others are and the market is clearly in terms of its performance representing it. Right were having a conversation here as to whether thats going to continue whether the cyclical value trade will continue. You think tom lee is going to be right. Why do you think that . But i want to stay up stay high up in quality i gave you first of all i look a lot at credit spreads and i believe that seeing the significant compression and high yield in Investment Grade is telegraphing to us that, number one, the infinite liquidity is working, its being distributed in the right places, youre seeing a relaxation in the heightened sense of urgent volatility that was represented in the credit markets, but youre also seeing the recovery in oil i think the recovery in oil is significant. Thats messaging something not just about the domestic economy, but also about the global economy. The cyclicality is there i agree with it. I have not been on the cyclicality. I dismissed it in the last four to six weeks but i need to have exposure to it and im going to be doing that very carefully and trying to identify in a qualitative way. Do you know how difficult it is to stay long home depot given where its pricing right now every day i look at it and say okay, this is the moment to sell it when i look down at my sheets and i do the analysis and understand the correlation to the cyclical recovery, i know i need to continue to hold it on my sheets. Its a hard trade to continue to possess. All right im looking at another stock thats on the move right now pushing 100 in fact it is nike up 2. 25 . Rahel solomon tracking that for us. I have a price target increase this morning from matt boss, the streets top retail analyst, raising the target for jpm to 104 from 91 from jpm. Ubs raising its price target from 114 to 122. A couple