equity strategist mike wilson here to make his case why stocks are likely to go lower. we debate it with the investment committee. carrie firestone jim lebenthal, josh brown np s&p now negative by a fraction the nasdaq holding its gain of the day. let's bring in mike wilson he has been looking for a 10% to 15% correction in the market mike welcome back, good to see. >> you thanks, scott thanks for having me >> glad you joined us today. jim cramer says the s&p is quote ungetting slammed. why do you think it's not? >> well, look i think the markets have been going through a rolling correction really since march. and that fits the narrative we've been espousing -- it's about the index. look when this happens historically scott when you get the sort of rolling corrections the market always goes after the weakest link first we have seen seen that through the sequential order as we typically do, starting with the very expensive unprofitable companies when rates went up and we've been to some of the reopening stocks now to the pure cyclical stocks. you know, the growth stocks

we can focus on earnings growth. >> all right, what do you think about what mike wilson had to say pb directly he has been right. he loh there has been a rolling correction he is looking for more severe downside from here. >> scott, i don't think he is right. he is talking about a 10% drop the difference between 2018 and today we didn't have the stimulus pumped in the market. that's keeping the positive sentiment, sentiment is really pushing the market also we didn't have a pandemic crow closing down the economy. so companies cut costs what we're seeing now, i believe about 23% of the s&p has reported -- 87% of the companies beat eps earnings by about 16% they have beat on revenue about 86%. they've beat by 6% on revenue. so we're beating on earnings, beating on revenue and the only thing holding the economy back is the variant. but i don't think -- i don't see a pullback of 10%. >> yeah, amy, how do you see it? because we have had a volatile week we certainly feel better today than a week ago today. and then the carry-through on monday you have the delta variant out there and likely

let's bring in mike wilson it's always good to talk with you.talking for a while, just to remind our viewers, about this mid cycle transition you argued that the market understands the challenges, peak ecodata. was last month an attempt to price that in? >> monday is part of the same narrative. as you know, carl, we had a big spike in rates, that took out some expensive stocks. we rotated away from low quality and the market is getting very narrow that's all typical of what we call a mid cycle transition, when you go from the accelerative part of the recovery it's not the end of the cycle. it's not a recession, but the market leadership gets narrower, and eventually it gets toward defensive parts of the market. we think that stage is next, and then you have an index level correction we're trying to make money through that whole process, but it's still a bull market we've navigated it pretty well, so far, knock on wood, but we don't think that transition will be over until probably the fall. >> interesting now that we have additional wrinkles, sa

mike wilson was coming on and he has been right in terms of this rolling correction, but he does thinkther 10% to go. >> yeah, but i think that what's -- what i like about mike is also what bothers me, okay? it makes you want to sell. when you listen you want to sell you want to say i should take profits in starbucks i ought to bang out some facebook it's really time to go when it comes to snap. you can't do that. you have to just take the pain i think he has to really come out and say you know what, in these corrections, you want to buy them they're all working for you, and it's real bullish. instead, i tremble a little. i say, ooh, let me get out and maybe i'll get back in you can't do that. nobody's that good, but i do like mike and he comes on and he's good and what can i say i don't want him scaring people. how about that i don't want him scaring people. >> well, the key -- the key to his call really hinges on mega cap tech, the faang plus stocks because they may have -- you know, they may have started that rolling correction a long time ago, right last fall. >> yes, exactly. >> a

dave: that would be mike wilson. wilson is a pretty common name, tom, unlike say keene. i digress.bout quality. at least, that is how mike wilson sees it. initially we have seen a recovery. if you look at the msci index based on return on equity, earnings growth, debt levels, it has had a bit of a comeback after a year-long decline. the s&p 500 versus the russell 2000, the msci quality index versus the russell 2000, we have seen a comeback led by tech stocks. they certainly fit the category. looking for a broader move in quality, specifically some of the slower moving companies. you think about health care, consumer staples, real estate, phone companies, those are the kind of stocks he he's doing well going forward because he's concerned about slower growth perhaps in the economy. the nature of the recovery shifts away from the faster growing tech companies. tom: we've got to leave it there because of the time and go to west texas now. jonathan: thank you, dave. tom: bloomberg technology's emily chang is in van horn, texas, where she had a very early morning. she has known the amaz

mike wilson, 3,900 base case for the s&p 500. karen financials have been having a tough go of it because of these yields. are they going to get a respite? >> i hope so i do think so. we'll see. i like that they're going into earnings having sold off a lot i think j.p. morgan is down. i don't know, maybe a little less than 10%. i bought some j.p. morgan just for earnings because i think the risk/reward is compelling. they're definitely cheaper going into earnings. the question is are they cheap i think so what we really need to hear from them is their economic output, and will they grow their loan books. if rates are here, and they don't have more loans, then that will continue to be pressured and i still think they'll have good trading revenue and banking revenue but nothing like the white hot this year's first quarter with spacs and deals, and they will still be good but notas good, and we saw their credit card portfolio is in great shape but it's smaller and that's a high yield business all of that has been weighing on bank sto

you have mike wilson on today. >> we do. >> mike wilson does not do that kind of thing. he does not say listen, i'm raising my price target for coca-cola from 56 to 130 come on. >> mike wilson's been directionally right in thinking that there is going to be a rolling correction and he was -- it's not like he woke up this week and started predicting it as we're in the midst of it. look at new core, the largest steel company. remember, this is our largest steel company, okay? and reported an unbelievable number today it sells at four times earnings. that means people think it's going to fall apart, right obviously it's not four times extra -- i think that new course price wrong. i think that things are going to be good next year. i think mike thinks things are going to be good next year. >> he's been looking for a 10 to 15% correction which sounds severe 3% is feeling pretty bad. >> new core just had that. >> a lot of stocks have had that in the rolling correction. what hasn't had that >> what hasn't had that, faang, big tech hasn't had that. >> because of what lee cooperm

let's bring in mike wilson he has bee

. >> what do you say when you have people like morgan stanley's mike wilson, 10% to 15% pull back for the indices do you see that as a very, very low probability. >> personally, i'm friends with mike wilson. i was at morgan stanley. i would say there's differing views. i don't have the ability to call market corrections of 10% or more that's challenging or make me call a correction of 10% or more. too much capital spending, too much hiring, inventory levels look like they are going to impede growth, fancy new corporate headquarters i don't see a lot of ek ses in the market right now i see the opposite so i think that's what i need to see. on the debt front not a lot of companies that turn around their debts. i don't see a lot of reasons to be cautious. if you're making a call if the market corrects for some other reason it's about market raise they want inflation and let things run as hot for as long as they can i don't see that correction. i'm more optimistic for next year earnings are growing economy is growing et cetera. and if you want to fight that go ahead. i don't think you sho

jonathan: mike wilson also making the point that the index level correction is still in front of us.l trying to work things out. we've got this rotation going on. that was the start of the year, and then got this rolling correction. we are still working our way through it. tom: it is like lisa abramowicz's vacation schedule. [laughter] lisa: we can discuss that later. i expected this. i knew i would be talking about my sabbatical for the next three years. jonathan: welcome back. lisa: thanks. jonathan: we will talk more about it as the week progresses. let's get more movers. here's romain. romaine: the biggest fall you move on the day is virgin galactic. richard branson of course having that successful flight to the edge of space. once you get beyond the cyclical, there is a bit -- the spectacle, there is a business case that was bolstered. richard branson himself talked about the backlog of orders out there. the idea that once they get through the summer, they will start taking new orders, and those are going to be priced above where that current order was, which was right around $2

jonathan: your colleagues, particularly in investment bank, i am thinking of andrew sheets, mike wilsonthey have been focused on where we are at in this cycle. the team at morgan stanley believe we are experiencing a midcycle dynamic. explained that to our audience why we are already there so quickly. >> generally, these things take time and bull markets last for a while. because of so much stimulus and this whole economic reopening event that we are going through, everything is happening quickly. we seem to be going into [audio drop] which is known for corrections and pullbacks. because everything is happening quickly, there are developments and concerns dealing with inflation, labor shortages, higher cost of materials, you know, on one side, we have this growth of recovery. on the other side, we have the volatility. we think the pullback on the correction at this stage in the recovery is a midcycle transition that we find ourselves in. it's only natural. romaine: this is a pretty broad-based pullback, at least for today. nothing of significance higher, at least in the premarket. i wan

you've got morgan stanley's mike wilson who still believes the index level correction is in front ofs, not behind us. tom: different opinions out there, that's what makes the market go. i am going to scientifically say we are 2/3 of the way back from the agony of a few days ago. i'm watching the same thing i was watching and preparing for six weeks ago, which is earnings reports. j&j this morning, they up the forecast. jonathan: the outlook for coca-cola better, too. i'm looking at the rates market, looking at treasuries, and witnessing the consensus view totally break down. the last 24 hours was a contested example of that, just capturing the degree of uncertainty that still exists and persists. one point what he 5% this morning on tens -- 1.25% this morning on tens. the market living its own life. tom: i am going to suggest uncertainty is what drives the market. coca-cola, which i haven't even looked at yet. but all of these individual stories sum up to corporate america adapting to the cards they are dealt. jonathan: verizon doing the same thing as well. tom: in the banner, organi

you mentioned mike wilson, he talked a lot about this idea of maybe people got a little too far forward with that growth trade and giving up completely on cyclicals may be premature. jon: he's calling at the rolling correction. nasdaq futures down 23, down by about 0.15%. for the broader market on the s&p 500, up 11, advancing .25%. after eight straight days of yields falling on the u.s. tenure, yields are rising by four to five basis points to 1.3394. euro-dollar stronger by .1%. tom, later this hour, we have got to talk about the ecb fed-like strategy. for a lot of people, that was underwhelming. tom: i love the phrase fed lite. it had to be an american or anglo american feel to it yesterday. what i would look at is, on the real yield, it is slammed. i use that word carefully. it is slammed from a negative what? 1.02%, up 10 full beats to -0.91%. a huge move as you go into your important program this afternoon. jon: never mind my program later. we have to push to next week's. -- next week. earnings data. july 13. tom: right. i put an article on twitter and it goes back to earnings to

i am saying that the market rolls over it could roll over 3%, but take a guy like mike wilson who i like >> morgan stanley strategist. >> and he's now saying, listen, we got to get a little more defensive. >> okay. >> well, hello, david, the cyclicals have been rolling over for weeks, weeks, and now we get defe defensive? now is the time to locate cleveland-cliffs at 19 because the sells at two times earnings? now is the moment? david, it's -- >> he likes mondelez. >> mondelez has been great for weeks. >> to the extent the market is responding to this perception that economies are going to slow or we're not going to open as quickly. i don't know, we're fully open where we are here in new york. >> california. >> well, the key -- dr. gottlieb saying that's silly, in l.a. by the way, not california. >> he also says the third booster, no evidence we need a third. >> but the uk is fully opening today. >> even though boris johnson who obviously had a very bad bout of covid. >> uk's sending mixed signals. one of the things that's happening in europe is if you get covid they seem to not trust th

expected >> i don't want to rain on anybody's happy talk parade or anything, kevin o'leary, but mike wilson over at morgan stanley, he said a 10% to 15% correction is coming it will be a buying opportunity, but he said the market is solidly mid cycle and with that typically comes a 10% to 15% index level correction and expect such a correction >> that is not the personality of this market we have seen sectors correct and stocks correct, we've seen rollinr rolling corrections, everything this the 5% range. real corrections are 15% to 20% and the reason i don't think that we'll see that in the rest of this calendar year probably into next year as well, the economy is really doing well and i think that you will see evidence of that right through these earnings reports and i anticipate 80% will beat as they have been doing almost every quarter. we're in an extraordinary resurgence at the consumer level now buoyed by all the liquidity and the fact that the fed has been very accommodative. and if tom is right, it sets up for extraordinary up lift because there is not much competition for equities

let's wrap up our a block by going a little bit big picture mike wilson, morgan stanley, he's with us later in the week so we can talk to him face-to-face about the calls he's made lately which cls a 10% to 15% correction he's looking for. he's talking about the rolling correction as only 25% done. you agree with that? you think we're heading for a 10% to 15% correction? >> it's hard to know exactly what the catalyst for that would be as we're sitting here just right before what's likely to be a pretty strong earnings season. but i'll say, you know, certainly there's going to be that taper talk. there's going to be more inflation figures. could be something from a macro standpoint as well as overall state that could lead to a correction it's normal to have a double-digit correction. we haven't had that. although many sectors have experienced corrections or pause this year and have since recovered from that pause. so i don't think it's completely out of the question. but i think those kind of corrections really create opportunity to buy the names that might be on your shopping list and

mike wilson from morgan stanley says markets are likely to take a break in summer, because, yeah, the economy is booming but it a known known and the markets aren't reflecting it. if the markets aren't reflecting or buying the story any more, where does it come from? where does the upside come from. >> well, i think if you take a look at the rotation that we all have been talking about, i think the areas that had been lagging are probably the areas that still can have us moving to the upside there was a question last week about what do you think going into the second half of the year and are we going to be up, down? be as up as in the first half of the year all the questions were being asked. the reality was we gave the same answer, which was we think there is room to the upside. we don't know we see the same results as the first half of the year i stand by that. i think there is rotation, though and right now the rotation is back towards those fang names. that could change. but when you look at the first six months of the year and looking at apple and wondering when is it moving agai

said, maybe joe -- i can't remember -- about the rolling correction we've had by the way i think mike wilson is with us tomorrow, as a matter of fact. >> yeah >> who has been calling for a correction and has noted for weeks and weeks and weeks this rolling correction, which by and large has not hit the fang stocks yet which is a bullish sign for the market i mean, you can only take it one way. if the big widely held stocks haven't gotten hammered and until they do that remains bullish. lee cooperman weighed in on the fang stocks too. his largest positions -- let's listen to what he said >> when you look at google you look at facebook, microsoft, amazon, if you believe the economy growing and interest rates stay where they are, they're not overvalued and as i made a point on your program probably over a year ago, there is three markets, the fang market, there is the robinhood market and there is the everything else market i traffic a little bit in the fang market because i think they're great companies. that are really -- have demand pulled forward at least five years because of the virus my

the likes of mike wilson at morgan stanley has talked a lot about it. dave wilson mentioned it about 10 minutes ago. they've boosted the view on staples, and when things get tricky, get boring, and staples fit into that. tom: there's a lot of different correlations going on right now. we heard yesterday of the gold-bitcoin link that is not so tight right now. kailey: i want to know a bunch of people not sitting on a pile of cash, wanting to buy this dip in the equity market and having to sell their bit going to do it. i think it does raise the question of whether we're going to see a dip in the equity market that is in bought. it just seems like over and over again, it is buying of the dip. is that narrative ever going to change? maybe not. tom: key support for bitcoin this morning. we have to set up the rest of the hour before we get to the markets with alisha levine -- with alecia levine -- with alicia levine. it is four humans into space. we haven't done that in a while. jonathan: are you willing to call them astronauts? you are hesitant. you go past

mike wilson talks about seeing major corrections in individual stocks and certain sectors so we expect that fall but we're staying invested, diversified, bar bell exposure, the new defense he was, tech exposure, also cyclical exposure despite the fact that we expect a pause, strong markets tend to stay strong. pauses are likely given the uncertainty. and markets grinding higher but volatility beneath the surface shows that everybody is trying to figure out what's going on. and so we are going to be buyers of the dips as they happen and hopefully we get some. because we think that, you know, the market is a seller of today's sentiment, my analyst kevin miller always talks about this but we remain buyers of tomorrow's fundamentals. and, you know, what impacts sentiment today. you have the delta variant and slow e.m. vaccination rates. that's skarpg the reopening trade, right but the u.s. consumer story still stays intact and the developed economic cycle is lagging us. so we're buying internationally, going to where the puck's going and we think the economic trajectory is incredibly posit

melissa lee, and guy adami, breaking down the pull back with morgan stanley's chief strategist mike wilsonwe'll get his take on today's draw and what happens next and baba down 10% in a week. one of our traders has longed this name, why they are hunkering down for the long hall, and twitter taking a tumble, the stock down 3

we will break down the moves with dave wilson, and the outlook for crypto regulation. mikeer of bitgo, joins us to talk about that. amanda: we are seeing something of a quiet session, although we are seeing some trading off stories for individual names. over, pretty flat picture, slightly negative. everything but communications and energy are moving higher, just not moving higher with any momentum to speak of. the nasdaq just dipped lower. 2:00, the fed minutes may shed light on some of the discussions around when the tapering may happen. it really is the bond market that has been the focus, playing a part in how these sectors have been trading. the 10-year trading at 1.3. another question will be what this means for growth. is that growth surge behind us? where do we go from here? of course, quarterly profits are up next. for what it's worth, a place you often see growth is the economics of the olympics. they can attract a lot of economic value to a country, they can cost a lot, too. 16 days away, it appears japan is considering keeping spectators out. maybe no spectators,