There was tesla. After its broad earnings report, shares were up as much as 6 but end of the day down by 5 it seems like the momentum trade, the big cap tech trade got unwound a little bit today. Yeah. Is this another one of those rotation moments we had one in mid may and one in mid june maybe we have one here in late july if you think about the move in big cap tech, apple is down about 5. 5 against the s p in the last ten days. Across the board youve seen this essentially across the tech space. If you look at small cap stocks, the iwm, the etf that tracks the russell 2000 it actually eked out a small gain today banks are up 4. 5 in the last ten days this isnt just a oneday move sometimes these days seem like, boy, this just all started today. This is a move thats been building for the last at least two weeks of sessions. I think its something that could continue weve just gotten through earnings from a lot of these folks and we started to see what it looks like when you start to sell the news. Very, very undersold in terms of value versus growth. Weve talked about it ad nauseam and it does matter. The earnings are giving investors a reason to take a look at these stocks in the context of their valuation microsoft for instance, there are a couple of things that normally investors might overlook in terms of operating margins coming in a little bit light, in the context of its valuation, was that an excuse to lighten up on a name that on a price to sales basis is close to fiveyear highs . Yeah. I think thats right i mean, the action today, particularly some strength in other sectors, augers for this kind of, okay, lets take a pause here that being said, im a bit cautious and a little concerned for two reasons. Number one is you mentioned microsoft, but tesla they had some great earnings and it reversed and went lower apple not looking that great these are kind of the names that everybodys been involved in, the robinhood traders, whatever you want to say. The momentum really reversed today. That concerns me, number one number two, as tim mentioned, the yield curve continues to get flat and that eventually is going to start, i think, to hurt stocks you have to think, okay, what does the economy look like going back to your microsoft question, is this as good as it gets for microsoft will the economy pick up and will they be able to grow their way out of these little hiccups theyve had . I think the answer today that the market gave you was no. Tlt was up by more than a percent, karen i mean, theres a lot of conflicting things out there to the extent if things are Getting Better in terms of can the country reopen, then you saw some of those trades today, right . You saw banks and airlines and that rotation toward value, towards industrials, its been really, really beaten down a lot. Maybe its just the end of momentum and i think we give too much credit when we think about, oh, should microsoft be down a little more than this, a little less its really just the momentum going in and people deciding, all right, you know what, so do they ring the bell last night at tesla at 4 30 in the afternoon when it traded close to 1700 and h then you hear everybody trample toward the door. I think that is probably more than a oneday phenomenon. Im long google, facebook, apple, microsoft im not inclined to get out and hope i can figure out when to get back in. I think theyre still in favor, but this one or twoweek reversal should be expected when you have valuations as quickly and as far as these have. Yeah. Andyoure starting to get street analysts question the valuation. Bonawyn, i know you saw this call out on apple from Goldman Sachs basically saying the stock price is unsustainable theyre questioning the launch of the 5g phone, saying it could be delayed by a month or so. Theyre starting to question this run that weve seen straight off of the march bottom to where we are right now. The stock finished down by more than 4 in todays session what do you think happened in todays trade and do you think it lasts for more than today thats a great question i tend to agree in large part with what karen said this is a momentum play. If we look back to a lot of the comments made think about move higher in large cap tech, this was never really a valuation play at least that wasnt the argument for these things Going Forward. Really what it was was a flight to what is perceived value we are seeing rotations into energy, industrials, rails and some of the other names. What gives me pause is when i start to see rotation into names like some of the airlines, which the credit market is clearly telling you theres still some hiccups down the road. I think youre still paying points up front on a couple of those names. That doesnt bode well for the stocks Going Forward youve seen quite a bit of increased volatility around all of these names amazon was up 7 , down 7 in the last three days. If you look over a longer period of time, a lot of these names are down 23 . In large part tech earnings were relatively strong. I think its about momentum and expectations i think expectations got a little bit high and people are taking this opportunity to rotate into other sectors. Were watching disney shares move lower in the after hours. Julia . Disney just now announcing delays to its film schedule in light of ongoing theater closures as well as production shutdowns. Announcing that mulan is now pausing their relief plans while they assess how they can most effectively bring this film to audiences around the world the Company Announcing that all currently scheduled avatar and star wars films have been moved out by one year and other films set for release later this year have been pushed back as well including a searchlight film, the personal history of david copperfield. Then the ridley scott drama the last duel is being delayed until october of 2021. Disney shares are trading down about 1 in after hours trading. This year looks like it could be a wash for Movie Theaters. We still dont know when theaters will be fully open in the u. S. For them to simply move out a full slate of movies including star wars which also has ramifications for all the products tied to star wars, like all the toys and things sold by other companies. Were really seeing the stock take a bit of a hit in the after hours session. Yeah. Not a dry eye in the house over the delay of david copperfield. I know youre looking forward to that greatly. Personally crushed. Disney, we continue to talk about theme parks but the studios have been the gift that keep on giving the delay in the release is logistics and some of it is trying to target the best audience it would be very interesting to see how they want to use disney plus and their north of 50 million disney plus subscribers now to be releasing some of these. Will this change a release approach that maybe ultimately is how they totally control their distribution, which they largely do right now none of this is is a major surprise this isnt a major move. I think disneys issues are reallytied to the reopening of the economy and there is some level of reliance upon the infrastructure in Movie Theaters and theme parks. I dont think this changes your approach on disney as all. This underscores just how powerful, though, the studios are and thats something i think that ultimately will come right back for them and there will be pentup demand. I guess we knew it was taking a hit from all sides going into today. We knew sports wouldnt be back for a very long time we knew that studios were going to be challenged we knew that the theme parks were going to have hiccups in the reopenings still, how does this make you feel about the stock at this point . Im wondering also does this delay in production not just from the Movie Theater revenue but also from wasnt this going to then be new supply for disney plus that gets pushed back however long i dont know if that was sort of the bright spot even though it wasnt in terms of money making the bright spot because theyre still spending so much to build it theyre sort of in the center of the worst of it all. Thats almost so appealing to me that everything is terrible that ive got to look at it again, except for they do have a lot of debt from that fox acquisition i think you can wait a while. The stock is down 1. 5 right now. Intel shares are tanking down about 9 right now off of the after hours session lows deirdre has the details. Theres a few reasons for the drops that we are seeing one is a more near term concern. Growth margins fell to 55 versus 62 in the year ago quarter. The bigger reason that could affect intels longer term position, the company saying its new seven Nanometer Chip Technology is six months behind schedule and moving higher on this news, the rival chip maker launched its own serve nanometer chips in 2017 now intels delay could allow amd to take even more market share. One of the key questions for investors going into this report was can intel hold off rivals and upgrade its manufacturing processes. Certainly going to be a question on the analyst call thats just getting underway the ceo is speaking. Intel has seen other setbacks that have allowed competitors like amd to take market share. Guidance implied a disappointing second half of the year, appearing to be below estimates. Shares are down some 9 in the after hours. Remember too that intel has been battli battling nvidia. Bonawyn, this is an intel specific problem, it seems we knew that there were some questions about intels competitiveness. Apple moving to its own chip sort of underscored that notion going into this already. With the delay of the seven n o nanometer there are some real questions about the future. Absolutely. When you think about technology stocks, youre going to point to the gross margins. A lot of these businesses are relatively capital light intel has had several challenges i know that amd was also up. The short story of it is that im hesitant to put too much krcredence into whats going onn the shortterm the apple news is not positive but that might expand their Pricing Power and revert some of the margin impression that weve seen theearnings just came out. Id really like to dive in a bit more before i can give you an answer there upon first glance, i tend to think this might be more of a shortterm shock than a longterm trend. Heres what i say its clearly, i dont think you can extrapolate whats going on with intel for the rest of the market thats number one. Number two in this environment, having margin compression is not going to be good for your stock price. Thats what everybody is looking for is these high margin, high growth stocks. If thats coming down and thats going to take a couple quarters as their guidance appears to be indicating, that again is not going to be good for your stock price. If im in intel, im probably starting to get out of it, take some profits you might want to look at amd but i think with intel for now the trade is done. Lets get to the next virus relief package elon early next week that has been expected that Senate Republicans introduce their next Coronavirus Relief package we thought that was going to happen today, but Mitch Mcconnell said that the white house wanted more time to look over the details of the aid. Still, he said the administration and republicans have reached an agreement in principle. Although the early days of our economic recovery have beaten expectations and surprised the experts, we have really only begun to repair the damage more than 17 million americans are still jobless. Far too many families are still hurting. This is not over heres what we know is in the package so far theres another round of ppp for businesses that have suffered a revenue loss of at least 50 theres 105 billion dollars in aid for Education Plus the ability for states to use federal aid to offset revenue losses 16 billion in new funding for testing and some version of those enhanced Unemployment Benefits treasury secretary Steven Mnuchin talking about a 70 wage replacement there. That 600 boost to unemployment expires at the end of next week. Right now the timeline for congress to get something done before then is looking really tight. Of course were just simply talking about the package that the gop is going to put forth. They finally agreed on that. There is still the whole other process of negotiating with the democrats. The chasm between what the democrats want and even this proposed package is vast. Thats right. Democrats have said they would not start negotiations until republicans had put forth their own proposal i think its quite telling that literally within just a few minutes of mcconnell saying theyre going to unveil this next week, pelosi announced shes going to be having a press Conference Tomorrow to push to preserve that 600 in Unemployment Benefits. You can already see the battle lines being drawn. We spoke to treasury secretary Steven Mnuchin he said explicitly that the enhanced unemployment benefit as it stabnds now will not exist that implies some headbutting when it comes to that specific point. It had been long assumed in the market that there would be a bill passed and there would be no gap what do you think now . I think the markets have priced in an expectation there has to be an extension of unemployment or delivery of some type of new stimulus checks. Yes, delays will hurt, but i still think that the Biggest Issue for the market is not around stimulus. I think its around the Federal Reserve. As much as stimulus checks have been very good and weve actually seen the Straight Line through to some big box retailers like best buy, im not sure that the market is as off sides on this as this presumption might be i think ultimately there is going to be a very bipartisan followthrough i think its all about the Federal Reserve right now. Brian kelly beaker, thats me so i actually think theres a nontrivial chance here and lets call it a 40 chance that this does not get done in time if you think about it, theres not a lot of incentive for the democrats to negotiate, right . The republicans and the president , their biggest metric is the stock market. If youre a democrat and you want to kind of hurt the reelection chances, you want the stock market to go lower theres no incentive for you to negotiate. As well, congress has always shown us that deadlines dont necessarily mean anything to them multiple times they missed that and the market misprices that. I actually think were pretty vulnerable based on this news that were just at the gop level. I think the market is more vulnerable than people are giving it credit for. Lets bring in tom lee. Great to have you with us. Thanks for having me. In terms of the selloff today, you think this is a reversal of the momentum trade yeah. I mean, i think its Pretty Healthy profit taking. Stocks cant go up forever weve had already a great july i think its nice to see stocks go back and i think its good to see rotation in leadership to me, its painful but i think its really healthy. I was sort of taking a peek at the conversation you and your Technical Analyst were having on twitter. One thing that i thought was interesting that rob pointed out was that gold was higher today, but we did see miners reversed really indicating this is an unwind of some of that momentum. How long do you think a move like this lasts . You know, in 2020 growth has led and there have only been short periods of value leadership i dont think that value sort of sustainable leadership takes place until we break the path of the virus. Right now unfortunately the virus is spreading at an uncontained rate i think growth is fine i think people are making too much of this sort of top five stocks are too much of the s p market cap theyre 2 2b2 of the market cap but theyre not disproportionately representing earnings share. Brian, you got a question i do. Hey tom, its bk you made a tremendous call when the market was down and you tend to be a bit of a contrariacontrn im surprised you arent a little more cautious coming into the election with potential for the tsunami wave coming into the fall, what gets you concerned . None of that concerns you at all . I mean, theres a lot to be worried about. The economy is still stuck in neutral. The virus is still growing at an uncontained rate on the other hand, when i look at positioning, the majority of our clients that i have a conversation with are really cautious for the reasons you mentioned and for obvious reasons like earnings are terrible theres so much cash on the sidelines that when youve got negative sentiment, Retail Sentiment negative and then a vix thats about to break down, i think this next 7 is higher not lower. I think people think were topping right now. Tom, were going to leave it there. Great to speak with you. Thank you. Karen, tom just hit on a bunch of points that you make when you explain why you stay in some of these big cap tech stocks. Right i stay with them because i still like them even though their valuation is a little stretched. But then i also have named that are more, the banks for example. If things get better in the country in terms of reopening, then i think those will do better i am always nervous. Whatever tom says, he makes these bold predictions and i always think, wow, thats crazy. Hes been right so many times. It doesnt feel to me like the market is about poised for another big breakout, but hes been right so many times ive got to think, maybe there is so much money on the sidelines. He makes these bold predictions in monotone. You dont even realize theyre bold until after you sit there and think about it basically hes saying the pain trade is going to be higher at this point Buehler Buehler . F he makes some great points there is 5 trillion on the sidelines. On top of that we have fed stimulus thats continuing to be more speculative in nature its a logical argument. If i go to pick it apart from a technical and hodge cal standpoi logical standpoint, it makes a lot of sense. I really dont think this rally, i mean the last leg of this rally has really been leaning on valuation. Its growth, its forward earnings out to 2122. As we said its really a fed put. Theres a fed put in the market and theres no denying that. Trying to over