Highest level since july 10th. A new month for stocks take a look at how the dow historically does in august. On average the best performing month of the year, after 86 all that changes and august is now the worst month of the dow an underperformer for almost the last 30 years. That sets us up for the first trading day of august, stephanie. What do you think . Are we in for a decline in the markets based on historicals or Something Else that could keep the rally going . Weve come a long way in year to date in all the averages. It wouldnt surprise me. Im encouraged by the Economic Data were seeing and how that is translating into earnings being a little bit better than expected if you look at the Economic Data, we have the gdp numbers, 2. 4 versus 2 in the first quarter. An acceleration led by the consumer weve talk about the consumer endlessly all year supported by jobs, supported by wages, and even the j. O. L. T. S. Number today, i know people are encouraged because it came down, you still have 1. 6 Jobs Available for one unemployed person manufacturing is a little bit different. The manufacturing side of the economy certainly could be the surprise in the second half of the year as it gets better and at the same time we all know that inflation is coming down. It is leading to better than expected earnings and a broadening of the market if you look at some of the industrials, theyve been stellar. Theyre seeing about 7 , 8 growth the financials put up about 8 banks put up 19 Earnings Growth its not just tech, and im encouraged by that if we continue to see the broadening in the marketplace, i think that might carry us higher, these other industries so im encouraged. A lot of encouragement there. Almost 30 years the dow seeing a decline in august. Is that meaningful in todays environment . I think it is september is no gem, frank not a good month, either. And october october is not so bad it gets a bad rap but lets not get stuck on that. The market is up 20 now you have to decide how you want to deal with that you can take some money out of the market i do not think its wise to get wildly out of the market i have about 70 another way to deal with that is take money from the high flying tech winners and put it in things you and i have used for quite some time, industrials, material and energy. It is not scientific this is just experience. This will run out of steam and consider, frank and everybody, consider that next week you have the cpi. That would indicate the fed should be done i think the market has priced that in. Its hard to get good news into the market in the long run things look very bright these three infrastructure bills the last two years dont start hitting until next year 2026 you dont want to be out of this market but can be tactical around the edges liz young, are you look at that Historical Data its absolutely meaningful. You have to look at what investors typically do after a big runup like this. To jims point, weve seen such a strong rally its natural for the steam to come off that. What a lot of the minds have changed to come to believe is that maybe an armageddontype recession is not in the cards, maybe its a softer recession, maybe its some type of contraction thats not as painful, and, even better than that, will not hit every single sector at the same time because tech has already gone through its pain, gone through cost cutting cycle and then this big runup in price perhaps leading a little bit and getting ahead of itself but now the question is does tech have to move down to meet the rest of the market or will the rest of the market come up to meet it, the cyclical sectors and the stuff unloved if july repeats and extends into august and into fall, then it sounds like the cyclical sectors and small caps will catch up, which, to stephs point, broadening out is a strong indicator. I think were still not entirely sure, though, what these lagging effects of the tightening cycle will be. Im not ready to jump in and say full steam ahead but it does look stronger than i expected is it meaningful everybody has been talking about the rally broadening out, the hard hit of the indices down 1 , the dow just fractionally higher and the other down twothirds of a percent . Small caps had a standout july anytime you see such a swift rally like that a little giveback is normal i wouldnt put too much weight, lets back off the gas a little bit in the stadium thats run really fast. Working from home today, whats your take on the Market Action so far . Let me start with a correction i am working from ritholtz management im not working from home. The big picture here is the leadership theres a lot of extended charts in the new leadership areas of the market its okay if these things cool off a little bit its okay if theres a little bit of a retracement i want to see low volume pullbacks in these areas that dont end up breaking down Energy Related stocks, crude is about 81 a barrel. The high on the year was 83 which was way back in april. I think we can see that level taken to the upside. 100 of the components of the xle, the s p 500 Energy Sector spyder is a sector probably as a group needs to calm down a little bit it has been above 90 so should they be at 52 week highs probably not dow transports are up 23 year to date. They were flat for the year as recently as memorial day also cyclical. The industrials, look at the xli, the top three holdings. U. P. S. And caterpillar, all are above their 50 days, 200 days, up an average of 12 year to date these are the bank stocks. 97 of the kbe holdings are above their 50 day these are cyclical areas of the market theyve taken over the leadership i think theyre really important. I think theyre all a little bit overbought short term. Let them calm down a little bit and cool off and lets see where things stand this could be the next great buying opportunity of the year if thats what ends up happening here i dont think the charts break down i think they need to gather before we get that next breakout were in the inbetween moment xli, xle, kbe, cyclical areas of the market that are the new leadership nice shoutout to your company. Liz, do you want to shout anything out is it meaningful we see bond yields go above 4 on the ten year and all of a sudden things working all year long taking some pretty steep declines right now. Youre seeing companies with good earnings have selloffs in their share prices it started with microsoft. A great quarter. The stock went down anyway bear in mind it was the belly the yield curve, the big question mark, every maturity before ten years was north of 4 last week, and every maturity longer dated than the ten year was 4 and then you had the tenyear at 3. 95 seeing that rally, the steepening were seeing, a lot of people looking at manufacturing data would look at that, wait, why are we steepening if things are getting worse not better if youre looking at pretty much anything else the steepening makes sense, the ten year rising above 4 makes sense i dont think theres that much more to the story than that. I think its commodity. The commodities have been on a tear in the last month especially twhet. Brent is up, copper is up substantially. All across the complex it has to do with doing better than what i expected and the dollar weaker, of course and so that actually, i think, is the reason why yields are going higher and maybe get a fine cpi next week you could see that reverse a little bit and maybe the fed is done the reality sets in the rates are going to be higher for longer speaking of things going higher, s p pric oppenheimer, the target by year end 4900 weve seen a lot of bullish sentiment when it comes to the s p. Hes at the highest, 4900. You see the stats here appears closer to a pause and capitulation for bears may flow back in the stock do you think this is catching up to the rally were going from 4400 to 4900. We see even bigger hikes from other people like at citi from 400 0 to 4700. Is it a sense there is something fundamentally that will push the s p higher and keep the markets going higher there has to be something fundamental underlying the movements. They have been blown out already. Things must be getting worse the back half of the year in order to come back down to where we thought the price target would be and i think there is the Economic Data has been stronger earnings are expected to be this quarter, the lowest growth year over year that well see and then they get better as far as expectations go for the rest of the year and into 2024. If that all works as planned, and if the fed is able to start cutting at some point in 2024 just to bring us back down to neutral rather than in reaction to something bad thats happened, then i think the price targets are ration the issue were looking and waiting for, is there going to be some sort of credit crunch because of this extended yield curve inversion, the very fast hiking cycle, and the credit issues that maybe have not shown up yet, that yield curve inversions suggest are coming. Jim, a head scratcher for me, raises s p target but cuts eps target from 230 to 220 it seems a bit of a mixed signal it is a mixed signal. Three things i want to say here. One, i think his target is going to be reached in the next 6 to 12 months. I feel bad for these guys who have to put a year end target, it has to be there december 31st i wish they could give themselves leeway and say in the next 6 to 12 months, a 7, 7. 5 rise in the market seems reasonable to me to the bigger point you were making going across the board with all those macro analysts is you should not look at these analysts as telling you turning points whatsoever. They are herd followers. If anybody is offended by it, tough. These guys are herd followers. You do this long enough and you know that. The last thing ill say, the herd following on the estimates continues to go down im looking at fact set right now, the s p 500 estimates are as of last friday at a new low for this year and almost at a new low for next year as well. What id like, again, they dont get turning points right can you really not see how good earnings are coming in this quarter and just change your mindset from the bearishness of the last six months to recognize things are better than expected . That will happen it will be late. Thats what they do. Lets wait for them to turn the estimates up it sounds like you have some farmer jim rallies we do that on the farm, we chase other things you said the herd we chase fox when they grab our chickens that hams. Oppenheimer going higher than f f fundstradt some people are at 180. 220 is optimistic. Better economy across the board. And to jims point, we listen to Conference Calls nonstop during conference season. The banks were the Biggest Surprise in terms of sectors look at caterpillar today, to what eaton had to say, this Industrial Revolution happening in the United States its yet to be felt because they havent kicked into the economy. Theres a lot out there thats very good in terms of bottoms up that is important. You have to focus on fundamentals and pepsi, coke, across the board josh, back over to you. This oppenheimer call. Part of the thesis here is the fed is done raising rates, possibly cutting early next year do you believe thats a sentiment everybody is holding on to and is part of the reason were seeing this rally, this sense that the fed may be done, even though they havent said that the economy is approximately 70 based on services. The difference between the economy and the stock market, most of the earnings are coming from the goods side. Its really weird but the waiting of apple and how many iphones theyre selling or caterpillar or the larger stocks i think that dichotomy where last year the economy was doing better than the stock market, for example. This year maybe they are more mirroring each other were having a very axios called it a low pain direction in the market. The labor supply is less tight its not mass layoffs and its not happening quickly. A lot of people are getting new jobs very fast so long as thats the labor situation, the Services Business will continue to thrive. Not only does that translate to earnings and revenue but sentiment. I mentioned manufacturing before the people who have spent the last 6 to 12 months fixating on the manufacturing data in the economy, i think, have largely missed this, which is that so long as everyone is working and so long as home prices are stable, now theyre actually rising, and the stock market is rising, and now people are even earning a positive real return on their cash balances its going to be an environment where people are okay taking risk people want to own stock people want to think about the future more than the present thats how were getting through this valley in the earnings picture. I dont know why that will stop or when, but until it does, thats what youre fighting against. Its a very difficult tide to fight against. Earnings and also coming up apple and amazon you earned another shoutout. Well let you do it. On a serious note, broad ownership of apple and amazon, steph, these two mega cap tech stocks, so much ownership in the market and also really wide ranging businesses especially when it comes to apple is this a litmus test for the strength of this consumer that so Many Companies have highlighted especially mastercard and visa. And American Express, too good point. I think apple will be fine. It is a big part of the s p 500 as well as the qs. Its huge. Its very well owned interestingly theres only 66 of the sell side analysts that have buys on it. Amazon has much more, 93 have buys on it i think its going to be fine in terms of iphones, 43 million, 46 million is the range its down 8 year over year. Its seasonal issues the services will be the interesting piece especially after what bob iger said about disney taking espn to dtc. What does that mean for apple plus and the expansion there and the opportunity there . I think the ad Online Market weve seen is recovering and that should help i think the services piece is something to watch and the expectations are for Something Like 5 growth, which would be encouraging. All that being said, frank, the stock trades at 33 times tenyear average is 19 times so it is rich. I know its a changed company because of the services component, it is up there. You sound a little mixed. Were seeing so many bullish notes. Dan ives put out a note do i have to say what i said before again you may i dont remember what you said before let me finish. Pointed about herds and analysts and following the crowd. You might as well just say it now. You already led us there okay. What analyst is going to come out and put a 160 price target on apple thats career threatening. What they do and why they herd, safety in numbers. Look, what stephanie is saying is absolutely right. I think im paraphrasing saying its a 33 times multiple for a stock the Analyst Community sees longterm Earnings Growth of 9. 9 for any value oriented investor you look at that that doesnt mean sell all your apple but if you own apple you should not expect the 30 per annum returns in the share price that youve seen over the last five years its not likely to happen without that multiple expanding from 33 to 40 or 45. Could it happen . Of course it could happen. Its not likely to happen. Apple gives you 5 to 10 returns for the next few years on an annualized basis its fine. It has technicals supporting it. From a fundamental point of view its borrowed next years gains. I just want to highlight Morgan Stanley a note, katie expects a material raise to guidance and believes a big catalyst for the stock fiveminute abs farmer im, youre on fire today. We have to cool you off. How meaningful is an apple raising guidance a bead on these for the market and rally overall . Its meaningful for sentiment. You dont want to hear about one of the biggest stocks in the index be downgraded. I want to go back to valuations. This isnt just for apple but for any stock, any market at large. Valuation multiples, as we know, are terrible timing mechanisms what they are good at is foreshadowing forward returns, and you have to look out about five to ten years to feel good about that if the valuations are that stretched it suggests that forward returns will be muted. And may be disappointed if you expect them to extrapolate the way they just behaved. Valuations could continue to go higher momentum is a very powerful force and its been powerful since january 1 of this year what it does suggest is the forward returns over a fiveyear period will be more muted than in the past. I think investors need to keep that in mind as they make the longterm average total return is 7 exactly you can have a bad year like last year and the prior year we had a really good year and just not sustainable. Its a good point that you make. A lot to watch looking at apple shares down right now on a day where a lot of the market is down in all fairness our chart of the day, uber shares in reverse of the posting its firstever operating profit. Josh owns this o lget his reaction up next the first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com you can see the dow literally flat right now were back here on halftime. To our chart of the day, uber under pressure after reporting Second Quarter results, firstever operating profit and Free Cash Flow above 1 billion. However, those shares are giving back gains from earlier in the premarket. Josh, this is one of your top positions. It is look, the stock went into earnings last night up 100 on the year it had broken above 100 billion in market cap for the first time really since it came public back in 19 i think my big takeaways here just in order, besides the headline numbers, are the following. Number one, dara told Andrew Ross Sorkin this morning he expects profitability every quarter from now on. I wasnt expecting that. I was expecting a little bit more lumpiness just because of how long it took them to get to profitability. But thats not what theyre saying, and i was encouraged by that the advertising business is at a 650 million annual run rate no one was talking about ubers advertising business as recentl