Joe, you get the first crack at that question, i think the question becomes, what goes long youre long the fang names and gogo names. But if a certain point oil keeps going lower, i think that becomes a problem for the nvidia, the highgrowth momentum type names pete, there was a time when if oil was falling out of bed the way it is now, you know, its 42 bucks, the market would have had a conniption over the whole thing and not so much, why . It seems to me the focus has not been on oil. We did have all of those reactions and weve stop reacted to that. Everybodys focus continues to be on recently the focus is the financials and this breakout up to this 24. 5 level. Even on days where were going down, the financials have hung in pretty well sure, theyve given back here and there. But overall, look at how the financials are trading, that is we talked about financials and energy not participating, were starting to get some participation from the financials thats making up for the energy news. Steph, in overdrive or in denial well have a guest come on in a minute who says the stock market is in denial about a lot of things that are out there. Is that the case things arent perfect, for sure and the Economic Data has certainly slowed youre running at about 2 to 2. 5 gdp growth. We started the quarter thinking we could get to 3 to 3. 5 growth but its not recession and thats very important. And this energy call is more supply, its not demand. I think thats really important. I also think that youre going to continue to grow 2 to 2. 5 , earnings should be pretty good, especially if you have a low dollar, weaker dollar, low interest rates, thats all very supportive for stocks. So its not perfect, but in a couple of weeks, well get earnings and i think well feel better about earnings, given the macrobackdrop. And some of the something that just happened in the rearview mirror, just days ago looking at that huge deal with whole foods and amazon getting together there will be more of that to joes point, as far as how energy has traded this year, down 13 versus the s p, up 10 there are going to be some stocks picked up there, joe. Now, im probably not going to be the guy that makes that timing correctly, because i have seen people jumping in, time and time again, into energy names, and it just hasnt worked this year well, listen, i mean, most of us, we dont look at things on a quarterly basis, but you have Portfolio Managers who are going to say to yourself, okay, here comes q3 here comes the second half of the year what was my measurement in the first half of the year what can i do to try to make up for some of the gains i didnt get with an exposure to growth you could see that in energy, but i think one things for sure the volatility is going to expand and continue to increase. Up with way or another, oil is not staying at 43 for very long. Lets continue the conversation now with a market watcher work investors today that youre in dial. David rosenberg is the chief economist and strategist at gluskin schef and joins us live from toronto david, what are we in denial about . Ill tell you one part of the denial the comment earlier that were in a 2 to 2. 5 growth range in the economy. The answer to is that were not in 2 to 2. 5 were probably just a little bit better than 1 to 12. 5 we averaged 1. 7 last year and things are not speeding up we had the 1. 2 gdp growth performance in the First Quarter. And everybody was talking about how it was all due to weather and seasonal maladjustment and were going to have 3. 5 to 4 in the Second Quarter and the new york fed just published its latest estimates for Second Quarter gdp growth and its down to 1. 9 . And their Third Quarter estimate, which is about in line with mine, is at 1. 5 . So the denial is this view that were 2 to 2. 5 . Were more like 1. 5 to 2 and we havent seen the full effects of the flatten yield curve in the feds rate hikes kick in to the economy yet that will come in the next four quarters are you averaging in an ugly First Quarter . Which by many accounts is skewed when you come up with that number if we had Charlie Evans on the Network Today saying that the fundamentals of the economy are pretty good. Lloyd blankfein on with us last night said the same thing. Youre telling me theyre missing the boat well, i guess that i would if i had asked them the question, i would say, so, define to me what good is. Is good Housing Starts down for the past five months is that good is out sales down for the past five months . Is that good is good restaurant sales, which is a bellwether leading indicator for Consumer Discretionary spending, down each of the past four months, would you define that as good . I guess i would just ask a supplementary question if you think things are good, tell me how its good. The bond market, surely, cant be telling if things are very good when the tenyear note yield is all the way back to 2. 16 . Unless you think i mean, youre essentially saying that bond yields are telling us that the economy is not as good, to use the word that were going, as people think. Again, Charlie Evans saying that its not representative or representing the economy its more a sign of all of the central bank stuff thats still in the system. There is certainly a bit of maybe risk off among folks around the world, to keep buying treasuries to push rates that low. More so than reflective of an economy thats suddenly sputtering well, let me ask you the question, then was that your narrative . When bond yields were striking on this growth reflation trade after the november 8th election, bond yields backed up substantially on a certain view of what the economy was going to be doing by now. And that was the narrative then. I dont remember anybody saying that, well, all this Central Bank Liquidity is being providing a big helping hand for the band market. Six months ago, people were saying, sell bonds, were going through 3 on the tenyear note. So the question you would have to ask yourself is, why hasnt that happened . Because the reality of Central Bank Liquidity hasnt changed. Heres whats changed. Heres whats changed. The economy is underperforming expectations, full stop. When youre taking a look, say, in the last five weeks, you look at the 16 Major Economic indicators that have come out, only one has managed to come in above expected and that was ism the beginning of the month every single other indicators from Housing Starts to Consumer Confidence to employment to retail sales to production have all come in below consensus expectation. So i would just come back and say, please define to me whats good if youre going to tell me that good is the new york fed being 1. 5 Third Quarter growth, if were going to define good as 1. 5 , then i guess thats good but the reality is that is what we used to call in the business stall speed. So when youre talking about denial, there could be a whole bunch of reasons thats driving the stock market higher. Liquidity, momentum, these massive flows into etfs. But ill just say this after being in the business 30 years, that the bond market, more often than not, gets the story right who wants in . Go ahead. Im just curious what you think earnings are going to do because we just had 1. 7 gdp growth in the First Quarter, but we actually posted really good earnings in fact, we also got Revenue Growth of 8 earnings grew 15 . So we can grow earnings in a 2 or sub2 gdp im curious where you think earnings are going to go, because that is what i think drives stocks Going Forward. Okay. In some sense, were comparing apples and oranges because were looking at s p 500 operating earnings on a year over year basis. And were comparing that to gdp on a quartertoquarter sequential annualized basis. So, of course, we were always due, no matter what, to have the First Quarter of this year come in gangbusters, because were coming off one of the worst First Quarters of the year last year, when we had all prices depressed and all the spinoff effects that had on basic manufacturing, and even on the financials so we had a nice year over year boost and i would submit that earnings also came in above analyst expectations that much is true. But heres the rub were looking at s p 500 earnings, thats 500 companies there are thousands of companies in the United States, both large and small, midcap, listed and nonlisted and when you go to the actual gdp data and look at the National Accounts that looks at all earnings, and not per share, by the way, so this isnt about share buybacks, its about actual dollar billions, earnings on a National Accounts basis actually have contracted, shrank, at a 7 annual rate quarter to quarter in the First Quarter. So when youre comparing apples to aepples, and this is a numbe that never gets repeated anywhere, earnings actually went down in the First Quarter. So talking about denial, is the stock market giving you an accurate read on the economic backdrop and outlook right now i would say that its not. Maybe its in denial about the power of the parts agenda that havent been realized, that even the speaker of the house himself is going to speak about today. We heard from the treasury secretary already. There are some who think that tax reform could be 10 into earnings and you get multiple expansion on the market simply by that metric alone and the economy may not be gangbusters. I dont think anybody is suggesting its gangbusters, but its far from the picture that you paint. Well, lets take a look at valuations, because beauty is in the eye of the beholder. So if you actually go to unscrubbed earnings, im not talking about operating, im talking about reported earnings, the multiple right now on the s p 500 is 24. The only other time historically that it was higher was in 1999 during the dot come craze when it was 33. The multiple right now, adjusted for where we are in the cycle, is 20 higher than its been in previous peaks we have already taken out the 2017 peak on the multiple on reported earnings, which are the earnings at hand weve already taken out the peak multiple before the 1990 recession. The peak multiple before the 1987 stock market setback. So when i hear people telling me that theres room for multiple expansion, then were talking about telling people that, you know, this market is actually going to go into bubblelike territory. And if thats your view, theyre going to go into bubblelike territory, because this is not the 13 to 15 multiple that we had six to seven years ago, if youre telling people, buy this market on the hope that were going to get further multiple expansion, premised on where we are right now, you would actually want to tell people to be prudent and actually start taking some profits as opposed to jumping in at this stage of the sick david, theres the economy and then theres the market. When you look at the s p 500, you have significant exposure to technology which clearly se is seeing the Revenue Growth and is seeing the performance therefore, are you saying that technology itself is overvalued . I would say that technology is certainly overvalued. And i think that when were talking about what sort of rally this is, it certainly is a liquidity and fun flow driven rally. And i primarily buy the proliferation of inflows into leveraged etfs and the bubble truly is in passive index buying so i would say that technology, you could argue, is a key driver of the economy ill make no bones about that. But the valuations in my opinion are very extreme right now somebody mentioned before about the financials its not as if i dislike the entire market. There are areas, actually, that are starting to look attractive. If you have this view that the marginal Energy Producer is not going to get shut out of the credit markets, those tabs will be shut, were not far from a floor on oil and maybe therell be a similar buying opportunity in that space like there was around this time last year. The financial to me look like a good place to be from a valuation standpoint, a deregulation standpoint. One of the sectors that would benefit from a rising fed funds rate so you can speck spots that you like, but the market writ large including technology looks very expensive right now. It so sounds to me like you subscribe to the gundlach newsletter, if you, which is, there is a bubble in passive index buying its going to lead to a more volatile situation later in the year you would do a pair of trade being short the s p and long say eem or europe, which i know you like as well that makes sense thats the point of view he put forth in may i would say that, you know, i mean, thats what weve been doing at gluskin schef, were not shorting anything, but we have been taking profits in the u. S. Market and we have been deploying it, really in japan. And i would say in continental europe, which husband much greater cyclical tail winds and liquidity tail winds, but also has a much more profound political rerating positive right now in the wake of these french president ial elections and the parliamentary elections. So i think the case to be made that europe is probably a better place to be, thats been the case all year long we all focus on the fang stocks. I understand that. But the very boring german index was also up almost 20 for the year and that is an economy, by the way, that is operating on all cylinders. But if you had gotten out of the u. S. Market too early, he even jeffrey himself would say and he did say that stocks in the u. S. Could go up for a while before that particular trade may work i mean, im looking at the gains in europe in the last six months, so lets call it yeartodate or close to france is up 9. 5 . Germany 12 spra spains 14 ftse is 7. S p is obviously right there yeah. Why is there still so much more room to go in europe . Well, firstly, their central bank is not raising interest rates, so thats one part. Secondarily, i mean, i look at the u. S. Economy right now and i did a lot of analysis on the broad Economic Data and where theyre telling me we are in the u. S. Economic cycle and were in the eighth inning. So, look, i never said were the bottom of the ninth, but were late theyre more midcycle right now. S so i just thinking notwithstanding the last six months, and you can always pick your points, that the u. S. Market has kept up, i think theres less risk in those markets and certainly less policyrelated risk. I actually think despite all the chatter about, you know, what the house and senate are going to achieve in the United States, i would hazard to say that Emmanuel Macron and the rightwing coalition in the National Assembly are probably going to get reforms done more quickly in france, the second largest economy in the eu, than will see them in the u. S so i think thats a lessrisky market, more upside potential, a friendlier central bank. Look, we cant have it both ways for so long, we talked about how friendly the fed is. Fed is less friendly now janet yellen, i was actually quite surprised at how strident she was. Of course, the bond market is calling bluff on the next rate hike theyve already flattened the curve. And remember, what the fed does in time x has an impact on the economy and the markets with a 12month lag the lags between what the fed had already done, we started seeing that by the summer of 2007 so this is not a time to become complacent as tempting as it is, this is not a time to become complacent. Youre trying to get ahead of what you think could be a fedinduced recession. Is that what i hear . Lets put our historian hats on and look, i understand look, bull markets are a lot more fun than bear markets i understand that. But weve had in the postworld war ii period, 13 fed rate hike cycles, okay ten landed the economy in recession and three landed the economy into Slower Growth i just dont know what Slower Growth really means when your starting point is roughly 1. 5 where do you go . But the answer to my question, david, is yes. Well, i think that im not calling for a recession around the corner, but i think were closer to one than a lot of people think that i will go on the record as of saying. Okay. I want to leave it there i really appreciate the conversation thank you so much for joining us, david rosenberg. Pete, do you want to wrap that up the whole segment talked about, youre in a denial. How about it feels like hes in a bit of denial. Hes in denial of the earnings themselves how about housing today . The ceo talked about Building Permits and he talked about yeah, the tenyear, the quarterly, the new orders. Im not so sure that somehow youre just selectively taking things out and i dont how you can say that tech is overvalued theres plenty of great values in tech that also have growth on top of it, excluding the fang names. Lets go back over to the semis. You can go all over the place and find areas where youre going to find great opportunities with growth and look at valuations that are very fair i think theres still all kinds of areas and he did touch on the financials yes, thats the place to be. But that doesnt mean you cant be in tech he talked about peaking in auto sales, but Online Retail sales were up 10 in the months and Home Improvement sales were up 14. 6 in may, in the most recent reading the consumer is certainly choosey, and weve talked about that, but the consumer is still pretty good. Thats 70 to have gdp and its important for that group to stay strong and i think theyre okay. Zpr oka okay, good stuff. Goldman sachss heavily invested in the retail sector. Plus, a section of the Health Care