Dow topping 28,000 today for First Time Since february. Its the value trade thats working. Is the rotation for real i think as long as you have confirmation in the bond market, you can believe in it but when that link breaks, the stocks the value stocks probably crash again. We witnessed an episode like this that happened from the middle of may through the middle of june. It was almost a full four weeks. It was violent to the upside value stocks, cyclicals, the quote reopen names Small Cap Value did incredibly well the Growth Stocks took a pause the high flyers corrected but when that ended, it didnt end gently you had crashes in the reopen stocks you had crashes in the value stocks both asbestbsolute and relative to growth its a Real Recovery if that link breaks and i know yields have gone up a bit here and abroad as long as that continues happening, im fine with it. I think you have to watch that more than commentary, more valuation, more than anything else jpmorgan had a great note about this sunday just talking about the last time we saw sustained rally in value and outperformance in value, took place from 2016 to 2017. Think about what was going on then rates were rising. Thats first of all. We were raising rates. Fed was raising rates and you had true globally synchronized Economic Growth and that is the right fertile environment to bet on cyclicals and value i hope it happens. I hope thats the environment that were shifting into but watch bond yields. Steph, this is a josh saying, ill believer it when i see it hes right last time it didnt end well is this time different well, i think the liquidity is working its been in flplace for a whil. I think its starting to hit the system well get more in terms of fiscal policy many the next couple of weeks. As a result, youre starting to see the economic i understand caters rebound youre seeing housing recover. Youre seeing retail sale, ecommerce growth recover and accelerate by the way. Pmi is over 50 thats expansion ism, new orders. Best since november of 2018. Its not just the u. S. , buy the way. It also is the euro zone if you look at retail sale, spain and italy had double digit growth last week you think its legit. Ive been talk about it since march. As soon as the fed said unlimited qe, thats when i went quality and technology and some growth i also went into the cyclicals when some of the stocks were down 40, 50 i think its the cyclicals that have more operating leverage from here and they are under owned. I think you will see a chase continue i do believe he told everybody to be prepared when you look at the cyclical stocks, these are the names that have been written off by the market its only 26 of the market cap. They are trading at around 15 times forward which is the same as an emerging market stock. Look at the jobs number. We retrace 50 of the jobs losses i have to agree with josh on this one as you look at value, for value for to work, we need to have certain conditions come sinto place. Higher yield, better than expected growth. I think you have to ask yourself do you believe that you can extrapolate the pace of economic recovery that we have seen to date we are bait more cautious on that we dont think well have this same linear trend. Were already seeing signs of plateauing i respect stephanie pointing out the ism and pmi numbers but those numbers were very, very bad. Having a 58 or 54, above 50 is good but we need to see sustained numbers above 50 were not overly bearish i think at the end of the day yields are low, stocks are where you have to be were slightly cautious on this economic recovery continuing at this pace. For us, its about diversification. Have a little bit of that value exposure but dont go all in on that because we think growth will be delivering good returns to investors over the next 12 months youve heard everybody give their opinion, jon is it legit. Every time value is taken a big step forward, its been short lived. Why would it be any different this time . Thats what well have to see. Whether or not it is different this time. There are a number of stocks that are start unusual activity tells us institutions are putting money to work in these names now ooem not saying josh is wrong or shannon about as far as show me. Meghan. Sorry what i am looking at and you know thats part and parcel of who jon is keep going. Dont get off the tracks its going really well. You know that when were seeing big institutional paper in these kinds of names like a general dynamic and a bp that tells me a lot more than people making some mad spec trades the airlines have done great 17 to 24 for american, for example. The retailers have done well job higher is slowing. Youre going to have Companies Going bankrupt its the way its going to be. Small business is struggling tremendously and you still have upwards of 30 million or so people who are unemployed. The data is looking better i cant get past those things that i just mentioned. Because the market is a forward looking indicator. They are looking past 2020 and into 2021. What dwo you think copper is telling us thats a really interesting indicator to watch i think its very powerful its more than any one company will say its real track, real demand versus supply. I think thats something you want to watch. Again, i think the market is looking forward, scott thats what they are doing they are saying not only is the Economic Data going to get less bad, it might get good again and what happens to profits in that environment. You probably will see a vshape recovery in profits into next year i have not be thinking that all along. I thought maybe we would have no normalize 2021, maybe 2022. Youre putting your money where your mouth is. It looks symbiotic with jims list i think its the most operating leverage to these companies. The margins have stayed pretty firm if you get an inflection in demand and depend ons the end markets. Ppg has great end markets. They have auto and housing they have diy. You want to be there you have to bet the economy will start chugging along again those are names that are down a lot. Industrials are where im overeight. Thats the bet i want to reiterate, im not all cyclicals, all value i do own some defensive Technology Companies i still own several of the faang names. They just may take a breather for a lirt l bittle bit i hear you. Its been difficult to make the call on some of those. No group has been more difficult for anybody than financials. The financials have done next to nothing because Interest Rate vs remained low among other issues. Good to see you again scott. Nice seeing you youre back today because you say money will flow into those areas. When it comes to large banks, its investor heaven this Value Investor heaven with big banks. We think banks are the place to be bank stocks have underperformed the market by onethird over the last six months. The only time that happened in modern history is during the Global Financial crisis when banks were the source of the problems, not part of the solutions. At some point, price itself is a catalyst you also get extra covid data with these bank stocks on any hint of any progress with the economy or covid these bank stocks out perform. Today they are up 200 basis points versus the market it might be a dress rehearsal, whatever at some point over the next two years we get through this. The most important fundamental point which is what i work on with over 200 earnings models is we think Second Quarter earnings per banks were the bottom and that Bank Earnings increase by 50 over the next several quarters relative to the Second Quarter. Banks have war chest they are the forgotten sector. Justice of the peace more began is up 50 . My point is you need, you need the broad rotation to work for this trade to work you need it to be lasting for this all to go well. You dont need sector reation over t rotation over the next one to two years youll need steeper yield curve, some more Economic Growth, some more progress on covid theres several catalysts potentially for the banks. Thats under appreciated even without sector rotation, once banks get back to generating double digit returns, money will flow back to the banks. G you stay with me i want to get the input from the committee. Josh brown i guess i would say i think thats right you do have that covid beta in the banks. My two plays in space, jpmorgan, which i was pounding the table under 100 ive been buying it. Now that they are the airlines are out of the portfolio hes been acquiring shares in bank of america. Its an Insurance Business its a financial business. Apple is paying 800 million a year in dividends, which is nice berkshire is my favorite cyclical even though its not a true cyclical. Its my favorite financial even though its not quite a bank i think you can still buy it here this was a stock making all time highs the day before covid spring began really the company is in pretty good shape all things considering and considering how widely spread their interests are across every segment of the economy. I would keep buying that i would keep buying jpmorgan if mike is right, these will work its interesting, mike is not that high on Morgan Stanley. Mike, why arent you that high on Morgan Stanley then i want to hear from steph. Thats been a four year over hang its gone from a short term trade to a longer Term Investment at goldman. Its a relative value for us we think it will be a little more tricky than the market expected they do have a decent business mix. That stock eld up. Id rather go for one of the forgotten banks or the ones that have been beaten down like a city, a jpmorgan or bank of america. Steph, just bear in mind, mike cant talk about wells fargo. I know youre a big proponent of that stock he work frs ts for the company. Steph, you can talk about the others you own i agree with mike Morgan Stanley is up 3 of the year bank of america is down on the year bank of america is the most levered to the yield curve, to Net Interest Income and margins. You really have to believe rates are going a lot hire for them to get the operating leverage they have done a great job on cost control i do like bank of america but im going to stay patient because i know what nied to see if that works. I think they are being conservative i think thats the peak for them what do you make of the buffet buying binge in bank of america in. Unbelievable. This is Value Investor heaven. You have the most feigned Value Investor of all time not getting enough of bank of america. Youve heard of buyers remorse, when he has buyers remorse when he buys bank of america. He has remorse over not buying enough 13 straeparate days of Purchase Bank of america stocks. If you have to own a stock for the next 100 years, bank of america fits warren buffets methodology very well. Megan, what do you like scott go ahead, steph i was going to ask mike what about the elections. What if the dems sweep do you think the banks will work then if they are more regulate than now good politics is good economics. Dodd frank was law passed by the democrats. A lot of the democratic plans have been put in place maybe its the absence of some of the roll back of the regulations. From what we have seen so far, we havent heard as much mention of a transaction tax or big bank tax. You can create a tail risk scenar scenario whats good for the economy means youre going to need to rely on the banks and reenforce capitalism and it might not be its a concern its a short term concern for investors out there. Its also a concern weve heard through others just buying in democratic administrations megan i think for us the question is as were talking about financials but were also talking about the value rotation are you look at those bigger, more diversified banks or willing to nibble into the smaller, more regional banks i think the two most important things come down to Interest Rates, as well as whether banks set aside enough for loan loss reserves whats interesting in this recession is that consumers, at least, the commercial side is a bit different but consumer Balance Sheets have been more shored up during this recession. They have been paying down credit balances and getting their much because of the stimulus thats been helping them we are looking at the bigger banks. Mike, were having a little problem with feed. Well talk to you soon i thank you for coming on today. Thanks. Its also worth noting on this s p new record watch that the nasdaq has now gone positive too. Its hard to believe youll come into an environment where youll have money flowing out of whats been such a tried and true and winning trade. What do you think about that i have the nasdaq going positive now. Clearly min is not ready to pour out of it. No. That much is exactly how i think it will play out 5g with the iphone and so forts. I think a lot of the money that has been scared, thats been n n the sidelines is loathe to jump into those stocks and is looking around at those value stocks that we talked about at the top. Thats why were seeing some of the commitments on the bigger institutional paper into some of those names that everybody on the panel has discussed. Lets go through a couple of moves that you all have made before we take a break. You had results in some of the work from anywhere sass high flyers fastly has gotten its head cut off. That was an important name i think docusign is now down 16 from its high. Really, really fast. When money comes out of those high flying stocks they all get hit mine got hit im out. Maybe ill set back up in another time does it change the way youre thinking about it as a group now . No. Bill. Com has nothing to do with work from home its literally software for small and mid size businesses to deal with their vendors. That doesnt go away just because people start working in the office if anything, you can make the case that it can make its business stronger because the overall economy will be better i think at some point ill be out of this living room and back in the office. Sorry to interrupt you. You may have noticed a news alert at the bottom of our screen recagarding a ruling in Qualcomm Qualcomm is jumping this is on news of headlines that the u. S. Piles court has tossed out an antitrust ruling saying their Licensing Activities are not competitive this is why the stock is up 4. 5 this is case that has stretched for years, at least since last year a huge ruling for qualcomm the u. S. Appeals court tossing out an antitrust ruling qualcomm up, scaling down a bit but about 4 we appreciate that very much. See you again in laittle bit. Well take a quick break stock picks tand were back in two minutes. Our Retirement Plan with voya gives us confidence. We can spend a bit now, knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Im good at my condo. Well planned, well invested, well protected. Voya. Be confident to and through retirement. Welcome back i mentioned one firm is out with a new list they are calling the new normal these are the names that will benefit from an extended recovery analysts favor the atlhleez you are trend. They also like auto zone they think vacations will be road trips lowes is mentioned. It hit another high today. Costco is on this list if theres a second wave in the fall well start to see people restocking their pantries and ebay is the ecommerce play. They point out the strong cash flow return on investment for each of these. Thats how they identify the companys cash flow. We should say that these name vs all been relative locked down beneficiaries with the exception of vf corp thank you steph, vf, you own that. Costco, you own. Im sure you have opinions on lowes and auto zone and the others what do you think of this list for the new normal i actually like the list. I dont know if vf corp. Fits into that. Thats not a return the growth in China Inventory they have done great job managing im not sure it fits this list, so to speak. Its Great Management Team i like the story cost co costco, i love it. Jon, you like ebay and vf corp. . Yeah. I think steph is on the right one with vf corp ebay, i like it because i think its a beneficiary of stuff. Its not just the stores on ebay josh, name the two that jump out to you, if any i have to say that costco is probably the best position name for almost anything that could come whether or not its a new normal or return to the old normal the new new normal this company just has everything figured out. It looks like it wants to fall back a few bucks and retest that break out level. Thats where i would pull the trigger with the new position. Well take a quick break. As we go to break, lets look at the major averages because im noticing the s p 500 is now just ten points away from a new record closing high. 33. 86 is the number we need. Its a gain of 15. Financials, industries, industrials. Wii back right after this for unusual activity where jon is trackingt t iinhe Options Market were back right after this. Experience the adventure of a bigger world in a highly capable lexus suv at the golden opportunity sales event. Gets zero percent financing and make no payments for up to 90 days on all 2020 lexus models. Experience amazing at your lexus dealer. Were committed to making college more accessibley, by making it more affordable, thats why were keeping our tuition the same through the year 2021. I knew snhu was the place for me when i saw how affordable it was. I ran to my husband with my computer and i said, look, we can do this. [narrator] take advantage of some of the lowest online tuition rates in the nation. Find your degree at snhu. Edu. music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. Welcome back long time no see, for real long time no see. A record jumping covid19 deaths for florida. The state now reporting 277 new deaths