Transcripts For CNBC Power Lunch 20240713

Getting back to work versus the Public Health interests here billions upon billions of new debt has been issued, as companies try to fortress their cash hoards. Well talk about the big debt bomb that may be looming and later, the cleveland fed president horror retrloretta me join us to talk recovery and whether the rates are really on the table or not cannot wait for it. Tyler, thanks. Its the financials and the Energy Sectors which are leading the declines again today for more on the selloff, lets get to Robert Pisani hi, bob. Hello, there. And two buckets here this is about the reopening and its about questions on the valuation of the market and the big rally weve had. 60 of the losses weve regained here thats whats going on here. And you can see it in the sectors. Tylers absolutely right banks just having a horrible week were down like 13 for the banks this woke. This week the russell 2000 is getting clobbered. Retail has been drifting lower as well. Energy down about 8 or 9 , resumed the downward trends here and the reopening stocks, this is a simple way to look at the markets. Are we more optimistic or less some of the travel and entertainment and leisure stocks, like avis, united airlines, trip adviser, Carnival Cruise line. Remember what moves the markets. Theres a few buckets to describe here. The reopening. Hows it going is it going well or not going well how about monetary and fiscal stimulus is there more coming or not more coming how about a treatment of a vaccine . Is it advancing . Are we getting good news or not getting good news on that front. And how about a couple of other things trade war with china is it coming, heating up or not heating up and finally, valuations. Is the stock market fairly valued, overvalued or undervalues. These five buckets are what moves the markets. Look at this commentary that weve got today. Mr. Powell talked about prolonged recession here the World Health Organization says weve got a long way to go to beat this tepper, the second most overvalued market hes ever seen since 1999. Druckenmiller saying this is the worst risk reward hes ever seen so you can see why the market is down today two of the buckets we talked about not working at all for the markets. They are now looking at negative rates as a policy tool lets get to Rick Santelli for more on the market response to those comments rick yeah, no, i keep listening to bob talking about buckets. And i certainly believe theres lots of folks out there that think that one bucket we should never find anything is the negative yield bucket. Lets look at a oneweek of twoyear note yields thats the shortest maturity and last friday, when everybody started getting nervous about how these markets were moving potentially, pricing in the possibility in investors minds negative rates, it was trading down at ten basis points its now at 16 unchanged on the day. The rest of the curve is actually lower now lets go to the epicenter. Lets go to fed fund futures april of 2021. Its the only current futures contract thats trading at 100 when you hit 100, anything above that implies a negative overnig overnight. And you can clearly see last friday what happened it jumped up, traded up to 06. Six basis points through negative but look at the lows, okay yesterday the low was 100. The day before the low was 100 today the low is 100 he really didnt change anybodys mind or the market would be a bit lower he did say, and look at a yeartodate chart of that contract boy, if we zoom, its no question that investors are looking at how its just sailed up and the possibility of negative rates in the marketplace, even in twoyear notes, is possible but he didnt really put it out there that he hates negative rates. He actually kind of says that the jury is out from a global perspective. Maybe he needs to push a littl harder tyler, back to you all right, mr. Santelli, thank you very much. And as weve been reporting all day, stocks have been falling after fed chair powells warning of, quote, significant downside risk, as america moves towards reopening the economy. So should investors brace now for more of that pain to be reflected in the markets, as we move into the summer months . So lets ask david speaka, president of Guidestone Capital Management and jim mcdonald, chief investment strategist at Northern Trust gentlemen, welcome to both of you. Glad to have you both here yesterday, it felt like it was epidemiologists and doctors ringing the caution bell today, it sounds like Jerome Powell do you disagree . Let me start with you, david speaka, that the markets may be a little tippy absolutely, tyler i think the markets have gotten well ahead of themselves i think investors are going to have to start to realize that this rally has been based on nothing more than fed stimulus and momentum the prospects for a vshaped recovery are thintonone, and right now, we have to see, are consumers going to come out of their homes. Are economies going to be reopened successfully. Are people going to get their jobs back and start spending again . Theres been a lot of damage done its going to take time for the standards to be repaired and stocks are not reflecting that today. Jim, you say that your tactic of Asset Allocation suggests that equity markets are overestimating the resiliencesy of the economy, after the big gains from the march 23rd lows so what do i do . Well, tyler, we do think that the risk reward here is not as good as it was a week or even two weeks ago. And feel that its a time to pull back a little bit of risk in the portfolios that are managed tactically were very much looking at the developments on the health front as being key to whats going to drive the market so were paying a lot of attention to the case counts in the economies as they start to open back up but after the big run that weve had over the last seven weeks, some settling down of the market here is certainly to be expected so, jim fwb you say if tactically, i should pull back on risk a little bit, how and where do i do that what do i sell sure, so we reduced our exposure and our tactical portfolios in three areas, in real estate, in highyield bonds, and in u. S. Equities. And it was really a broadbased view that the risk reward was not as strong as it had been, so we wanted to spread out the bets on where the Risk Reduction should take. But we still, on a relative basis, like the u. S. Over emerging markets we still think high yield looks okay here. We have an overweight position still in highyield bonds, but we think the return youre going to get there is going to be more like the current coupon, as opposed to before where you had the potential for some nice spread compression, thats mostly behind us david, so what are you doing in your client portfolios to adjust for your market view that the market is a little overextended well, tyler, weve been positioned defensively, really for about the last 18 months we expected something to happen. We didnt expect a Global Pandemic weve continued to be positioned def defensively. We think investors should be looking to make gains in companies with very clear earnings in revenue visibility, Like Health Care and technology. We also think theres a Good Opportunity in highquality Corporate Bonds. The fed is now buying corporate debt for the First Time Ever the fed is providing a significant backstop to the credit market credit spreads have not come in to the extent that equities have gone up so we think a balanced portfolio focusing on high quality is the best way to get through this right now. Im glad you addressed the bond issue, because it was obviously a looming one. David speaka, thanks very much jim mcdonald, always great to see you. Thank you very much for your time today kelly . All right, tyler, and thank you. Coming up, the s p in the red with energy and financials the worstperforming sectors today the banks are down 7 this week alone. Were going to have more on that move plus, corporate debt is exploding as the Federal Reserve begins to buy it up. But could the borrowing binge end up doing more harm than good for the economic recovery . Tethes much more power lch un afr is these days staying connected is more important than ever. So were working 24 7 to maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Welcome back, everybody. Uber and roku just two of the companies today adding to the growing corporate debt pile, rushing now to raise capital in these uncertain times. Lets go to dom chu for some detail here. Hi, dom. So tyler, they are doing this because they can do it there is investor demand out there and now, almost a backstop of credit market support being provided by the Federal Reserve bank, now that theyve entered the Corporate Bond market through etf purchases on both Investment Grade and perhaps some highyield debt, as well. But take a look at this wall just a sampling of the companies that have now raised debt, whether they be Investment Grade or high yield. You mentioned uber how about apple. How about hyatt, disney, ford. How about boeing, qualcomm exxonmobil, royal caribbean, cocacola, chevron, starbucks, ibm, you name them, theyre all there. Now, heres some perspective on just how Many Companies are doing this and why it matters. Because take a look at these stats. Now, over about 100 billion in Corporate Bonds were issued just last week alone. For some perspective on the Broader Market, over 600 billion in just investmentgrade bond issuance happened just since march 23rd and for even more perspective, kelly, about 1. 05 trillion in total Investment Grade issuance happened in all of last year so over half of last years total amount happened in just the last two months. A lot of Companies Taking advantage of this almostimplied, now implicit fed backstop for the credit markets. Kell, back over to you dom, thank you. My next guest says the fed could be propping up other companies that would collapse and its Corporate Bond buying could lead to a spike in the number of Zombie Companies Going Forward for more, lets welcome in torson slok. Its good to see you how much of an overhang do you anticipate what does that mean for the prospects of a v or u or anything like that in terms of recovery this is very important. The broad trend here is that over several decades, weve had a tendency that more and more companies have debt servicing costs that are higher than their profits. This has given cause to the term, namely companies that simply have not enough profits to the debt service. A different way of saying that some companies have toohigh debt levels to be sustainable in the longer run and why are they kept alive . Theyre kept alive simply because Interest Rates are so low, so they continue to borrow and ratcheting up high levels. And according to the pis, they have basically estimated that that the number of companies in the u. S. That can be categorized are in the ranks of 15 to 20 , a significant amount of companies that simply have so much debt and are not able to service that debt servicing cost at the current level of profits there so 16 to 20 of the companies, just so everybody caught that, might not be able to service their debts a lot of Companies Even going into this had higher debt servicing costs than profits that ate into those profits substantially. So i guess the question now is if the point of the feds response is to react as if the u. S. Were, you know, hit by a giant tidal wave and try to kind of say to all companies, hey, whether you were weaker or stronger, you get to participate in some of this relief, you know, i understand that approach philosophically. But what happens to all the funds going to companies that might not be viable or if the rollout isnt perfect and the economy continues to struggle, you know, how much i guess the question is, should that money then even be given, if its just going to weigh on prospects for the recovery for everybody else yeah, this is very important, kelly. Think about it, on a daily basis, theres 1,600 companies, under normal circumstances that go corrupt so now we have had significant support, not only from the Federal Reserve, of course, in the form of bond buying, but also broadly speaking, with an ocean of support thats been coming to the corporate sector then we have, of course, had significant lift in issuance, significant lift also, broadly speaking, in Credit Conditions and this has meant that financing has been readily available. And why is that a problem . Well, that is a problem because it sort of changes the destruction that normally happens, where some companies go under, new companies appear. And when you suddenly start to intervene as aggressively as the fed has been doing here, it does begin to raise the question, if you do this on a sustained basis, are we beginning to crowd out new, good ideas . In other words, are we keeping Companies Alive that maybe shouldnt have been kept live . This is not only the last company at a broad, broad level for the u. S. Economy generally speaking where this becomes an issue. The short answer question is, maybe the risks are that the longer these programs continue, the longer that companies are kept alive, that might have gone under, then it will, indeed, be a very important consequence of the programs that just have been started here in the last few days torson, this is a fascinating topic. Ultimately, i think, too much leverage in debt always catches up with the company. This time around, what are these big Borrowing Companies doing with the proceeds of the loans theyre taking back years ago, they used those proceeds to buy back stock this time, are they basically using it to put some of them, to put lipstick on a pig in other words, to make their liquidity position, their Balance Sheet look better, even though the loan, of course, is a debt owed. Its not really an asset this is, of course, not a general description of everything thats going on there are certainly different between companies that have plenty of profits, but to your very good question, i mean, the broad answer is that companies at the moment, of course, are borrowing and the issue is that when the economy is basically shut down, the revenues that normally comes in, because youre selling more product, when those no longer come in, you need some other financing to keep your lights on. You need some other financing to keep your staff and apparel going. So even if you have laid off a significant amount of your workforce, you still need a source of dollars to pay your bills, so in some sense the dollars and the money thats being raised at the moment is really a replacement for the revenue that you would normally get, but its a different type of replacement, because this is something that needs to be paid back its not like making more money and this is my money to keep this is a loan that i get that needs to be paid back. Its just magnifying some of these issues about leverage. Its magnifying some of these issues about debt levels and that is beginning to become a problem when you think about the consequences, and in particular, when you think about this very broadly in the economy overall torson, before we go, is there anything that you would change in terms of how these programs are working right now so i think the programs, if you think about it from a fed perspective, this is the right tool if you are in a situation where the shock is at the corporate sector does not have any cash flow, because the economy is shut down, then the right answer is to make cash flow available for corporate so in some sense, what were going through here at the moment is not something that could and should be solved by negative Interest Rates, thats a whole separate debate thats not the answer to the problem that were faced with. The answer is excited to make dollars and money available for corporates the problem was just that we came into this with a situation where you have had some trends going on, where a lot of these companies, once youre a company, there is a 60 to 70 chance that we will continue to be a company also over the following years. N in that sense, getting rid of this structural challenge, this is not only in the u. S this is something around the world. This is something very important driven by this very low Interest Rate environment that we have had. Torsten, thank you, appreciate your thoughts torsten slok from deutsche bank. Thank you, kelly. Still ahead, we are Just Moments Away from an important interview with thecleveland fed president , Loretta Mester on the state of the economy and the response from the fallout of the coronavirus. She is an interesting person on the fed board there. You wont want to miss it. Plus, bank stocks falling again today as bob pisani highlighted them a few moments ago now down more than 30 as a group so far this year and one trader says the group is a notouch hell tell us why after this short break. Stay with us all right, lets get to sue herrera now for the very latest on the coronavirus hi, sue. Hello, ty hello, everyone. Heres what we know at this hour new jersey is easing its pandemic restrictions just a little bit more. Governor phil murphy announcing nonessential stores will be permitted to do Curbside Pickup and nonessential construction can resume on monday murphy says the states trends are improving, but it isnt in the clear yet. In las vegas, a sharp increase in new infections. Testing in clark county has also been on the rise on saturday, nevada allowed restaurants to reopen with capacity limited to 50 . And amazon has extended pay raises for hourly workers through may 30th the doubling of overtime pay is also being extended. Amazon says it continues to see heavy demand it is the second time the company has extended its pay increases. As always, for morecoronavirus coverage, you can head to cnbc. Com ty, back to you. Sue, thank you so much. And lets go now over to seema mody for trading nation. Hi, seema. Hi, tyler we are watching the banks, which are under pressure today after fed chair Jerome Powell warned of significant economic risks. Take a look at the kbe its down 5 today, adding to major losses for the week. Your trading nation team today is mark tepper and j ceo hakrrk. Why are you recommending markets to stay away for banks you typically dont want to own banks in a recession, in especially this recession, when theres real longterm demand destruction. Our economy is not going to snap back to 2019 levels quickly. Its going to take some time and as Small Businesses start to reopen, but now theyre only doing a fraction of the business that they were doing precovid, theyre going to be pinched for cash and remember, their rent payments are fixed and theyre way too high and on top of that, workfromhome is here to stay look at twitter. Theyre doing workfromhome forever, right all of that means Small Businesses are going to have to negotiate lower lease rates. Then thats going to cause the commercial real estate owners to negotiate with the banks and what do you know, in the end, the banks are left holding the bag once again last time, it was residential real estate. This time its commercial real estate so i would not be buying them here and jc, tracking the charts, what do you see . Well, you know, when we look at the kbe s p 500 banking etf, it screams theres zero appetite for banks for Market Participants it had a very weak bounce, and the bounce to us looked more like sideways consolidation. Just this week, the etf is down 10 , every day has traded with aboveaverage volume so distribution is continuing. And the largest concern of hours, with this etf is its actually trading at a 52week relative low for the s p so for us, we want to avoid this area we would rather stick with stocks moving higher than stocks making new relative lows wow, pretty bearish view there on both sides. Jc and mark, thanks for your perspective. For more trading nation, head to our website or follow us on twitter. Kelly and tyler, back to you seema, thank you. Fed chair jay powell warning this shutdown may cause lasting harm to the economy. Cleveland fed president horror retr Loretta Mester joins us next some companies are actually benefiting, though well explain. Before we go, you can always watch or listen to us live on the go on the cnbc app stay with us here on power lunch. Hey lily from at t here. Im back and while most stores are open, im working from home and here to help. Heres a tip get halfoff the amazing iphone 11 on at t, americas Fastest Network for iphones. Second tip you can put googly eyes on your stuff to keep yourself company. Uh for example, thats heraldo. Hes my best friend. Oh, sorry nancy, i forgot you were there. Get the amazing iphone 11 for halfoff on at t, americas Fastest Network for iphones. Welcome back, everybody. Oil market closing for the day and dom chu has the details at our commodity desk dom . Tyler, were getting a bit of a rally off the lows of the day. A down day for the stock market also playing out for the Oil Price Market as well traders are getting incrementally more cautious about the prospects for a widespread kick start to global economies in the wake of the coronavirus pandemic currently, u. S. Benchmark west texas intermediate or wti prices, 24. 34, about 1. 75 downside now, the drop in prices comes even after official u. S. Energy Department Data showed that u. S. Oilstockpiles fell for the First Time Since january Oil Inventories last week fell by 745,000 barrels. Now, a reuters poll of analysts expected a 4. 1 million barrel build in inventories todays information follows up on yesterdays eia, where it cut its world oil growth demand forecast by 4. 29 Million Barrels per day. Todays more gloomy comments from fed chair Jerome Powell about the Economic Outlook did not help matters dom, thanks as mentioned, fed chair Jerome Powell gave a pretty sober speech, warning that policy makers may have to make use of more of their fiscal and monetary arsenal to pull the country out of this economic crisis that he says has caused a level of pain that is hard to capture in words lets bring in our own Steve Liesman now, whos with the president of the cleveland fed, horror retr Loretta Mester, steve . Happy to welcome cleveland fed president Loretta Mester to the show president mester, fed chair jay powell, as kelly just said, gave a relatively downbeat statement of the economy and the outlook, saying it was highly uncertain with significant downside risks. Is this also your outlook, do you agree with the chairman on that so its certainly unprecedented situation that we find ourselves in. So i think the chair is trying to convey that theres a lot of uncertainty around the outlook and frankly, my view is were really at early day here is. Its hard to assess things i think a reasonable outlook at this point is that we could see, as the economy starts to reopen and activity picks up, some improvement over the second half of the year, but at the end of the year, still, were going to have output below the level it was at the end of last year. And we may see the Unemployment Rate come down but its still going to be in the double digits or maybe high single digits. So i agree that thats a reasonable outlook, but a number of things would have to fall into place for that to happen. And an equally, almost equally, probablistic outcome is much more dire than that. So right now were in this situation where we really want to make sure that were doing all we can, certainly at the fed with our tools, right, to make sure that the economy is in as best a position as it could possibly be in when the economy starts and we see an increase in activity i think its early days now. I think well need more support from the fiscal side of things, because this shutdown period has gone on longer than i think anyone has anticipated in the beginning. And theres a lot of pain out there. Lets leave aside the fiscal side of things, which i understand what youre saying and i once what the fed chair said about that. What about the fed is the fed doing all it can right now to bring about the best possible outcome that you can predict from this . So were doing a lot with the numbers that we have so we have the section 133, some of those are operational, some of those are still being set up and then the announcement for the main Street Lending facilities, which is yet to come online, but its being set up as we speak, right . Weve said were looking at the Nonprofit Sector to see if theres something more we could do there to support that part of the economy, because thats another important part of the economy. So were using our tools weve used some of the tools that weve used in the last financial crisis weve innovated and have other tools. Again, were trying to help really bridge over this period, where theres a shutdown in economic activity, so were helping households have credit, were making sure that businesses of all sizes have credit flows, and were making sure that municipalities have a flow of credit to them thats an important component of this and then the fiscal policy makers have done a lot, as well, in terms of trying to get direct support to households and businesses and to the municipalities. So i think this is a multipronged effort, sizable actions have been taken, but at the fed, were always looking to see if theres more we can do with our tools to support the economy. And of course, once we get in the position of a recovery, well continue to do more. So speaking of doing more, theres a lot of talk about negative rates the market has, at times, priced it in. Chair powell was asked about that this morning. And he said, you know, the committee doesnt support that were looking at, and added the words for now, which makes those think its coming, maybe it is coming one of these days what did the chair mean by for now in that context, and do you think the fed should have that as part of its tool kit and be prepared to use it now so, we looked at this twice, as the fmoc, once during the financial crisis and most recently as part of the framework review that were doing. We looked at tools and if you go back and look at the october minutes of the fmoc meeting, youll see that the feeling there was that across all committee members, its not something that we think of as being a tool that we would use you know, the fed never says never, right circumstances could be different, but this is not a part of the active discussion. We have tools at our disposal in terms of including the quantitative easing or the asset purchases that we did during the last crisis and also Forward Guidance, that i think is effective. And those are our tools that are in our arsenal theyre the tools that are our goto tools. You know, i think that there would be a lot of problems with using negative Interest Rates in the u. S. Financial markets i dont think its something that i would certainly want to turn to. And i was part of the all members of the fmoc, who was expressing sort of not really wanting to go there. But, you know, well have to see where the economy takes us i dont like to ever rule anything out, but i think it hasnt worked necessarily, as well, or as badly as people thought before other countries started using it so at this point, theres no active discussion about it not something i support at this time and i think we still have the fools that have served us well in terms of asset purchases and Forward Guidance that would be in our tool kit. Weve used them before i think weve learned by using them, and i think those are the tools that we would go to. President mester, i want to ask you one very quick question here you talked about qe. Am i right in saying that you guys have not really done a classic qe program or a kind of qe program yet that you did in 08 or 09, which is a Program Designed specifically to reduce Interest Rates or ease Credit Conditions in fact, what youve done is really liquiditybased qe, in order to unstick the treasury markets and the Mortgage Markets that you still have essentially infinity qe in your arsenal, not really used in this crisis, yet. So i agree with that interpretation what were doing now is were making sure that the Financial Markets are functioning well, that credit can flow to businesses and households, and the purchases weve done, say in the treasury market, which was under extreme stress in february, were really meant to make sure that that market stayed functioning we certainly wouldnt want to have a financial crisis on top of this Global Pandemic crisis and so, weve been in the markets, trying to make sure that were providing the backstop needed. And those asset purchases in terms of treasuries and agency mortgagebacked securities are really focused on Financial Markets. There will become a time when activity can pick up, when things reopen. Where regions start, you know, allowing businesses to reopen and people will get back at you know, active again, where i think were going to need to really support that recovery and thats when, right, our tools of Forward Guidance and longerterm asset purchases will be important for getting us a recovery that takes us back to our dual mandate goals and maximum employment and price stability. So, right, i think your interpretation is my interpretation those asset purchases weve done so far really were addressing the stresses in the Financial System and trying to really get stability back there, because we did not want to have a financial crisis on top of this pandemic crisis that would have not been a very good outcome at all. President mester, im going to ask you a question that may be a little abstract or philosophical and i may not phrase it exactly right, but i hope you get the sense of what im driving at and what im wondering is, what is reasonable for the American Public to expect or for the Investment Community to expect is the objective of the fed in taking actions its taking because the fed on i think some people think that the fed is serving as a replacement for the real economy in some level and that all of the actions the fed has taken and all of the stimulus thats been put in by the federal government is becoming, in effect, a standin for the real economy so can you explain what the what the objective is in the context of that idea that all of this money is not and cant be standin for the real economy . So we certainly are not trying to stand in for the real economy, but remember, the economy shut down as part of our battle against the pandemic, when policy makers decided, the government government decided that was the best way to try to limit the spread of disease and to buy time so that the Health Care System could gear itself up and be able to take care of this thing, this is what happened and so thats why you saw that sharp, sharp decline in activity and in employment, because it was shut down. When that happened, right, Financial Markets got disrupted. Were trying to build that bridge that both the fiscal policy makers and the monetary policies are trying to build a bridge over this period of shutdown, so the economy can be in as best a situation it can possibly be in given the circumstances when the economy opens back up again. So i dont think of this as being stimulating, i dont think of this as being replacing the economy. This is really to help those people in pain from this and unfortunately, its the most Vulnerable People in society right now that are bearing the brunt of this investment in Public Health, so when we get to the point when the economy can reopen, when there are Adequate Health care facilities and testing and contact tracing, so people feel comfortable and safe going out and about their business, we will be in a position to recover. This is a very deep, unprecedented situation. And so i think that i applaud the fiscal policy makers and i hopefully that people will understand what the fed is trying to do is to not crowd out private sector activity. It really is to build this bridge to get us to the point where when the economy reopens, the recovery can launch. Thank you yes, and im just going to thank president mester thank you for joining us im afraid were out of time theres only a hundred more questions, but well thank you for coming back and seeing us again soon some time all right, steve, thank you thank you all. A pleasure. And thank you, president mester youre exactly right, steve. A hundred questions and so little time, but a fascinating conversation allaround. We appreciate it coming up, well get a check on the markets and some of the biggest movers of the day because that is what we do and the pain in the sharing economy may not be shared. We will look at the potential winners and some of the sinners or losers. Stay with us for that. Happy birthday so, it goes. Hold up your answers. How is mickey doing today . Youre just a really hard worker. And its mission is to give you truly transformative sleep. So, no more tossing and turning. Or trouble falling asleep. Because only tempurpedic uses proprietary tempur® material. That continuously adapts and responds to your body, to relieve pressure. So you get deep, uninterrupted sleep. All night. Every night. The tempurpedic summer of sleep starts now, with all tempurpedic mattresses on sale, and savings up to 500 on adjustable sets. Welcome back, everyone tonight at 7 00 p. M. On markets in turmoil, ulta beautys ceo mary dylan on the companys response to the coronavirus outbreak and the reopening of some of that successful chain stores plus, main street in crisis. How some local businesses downtown in thomasville, georgia, are fighting now to survive. And would you volunteer volunteer to be infected with the virus . Well meet a woman who is doing just that. That is tonight, 7 00 p. M. Eastern time, with scott wapner. A lot of good stuff on top. Lets check on the markets right now. Its continued to weaken as we head throughout the afternoon. Dow is down about 2. 5 right now, nearly 600 points at last check. The s p down 2. 3 . Same for the nasdaq. The russell 2000 is the worst performer there, down 3. 6 ty kelly, time now for some power movers i almost called them power mowers, because thats about almost all you here out hear in the suburbs. Start with ww, thats the parent of Weight Watchers jeffries initiating that stock with a buy rating and a 32 share price target on ww saying the company could benefit from wellness being a priority during the shutdown. Boy, you do see a lot of runners, bikers, walkers out there. Sony falling today after reporting a big drop in profit and saying it expects fullyear profits to be down, as well, even under the rosiest of scenarios. But it did see strength in video games and in digital entertainment. And lastly, United Natural Foods on pace for its best day ever. The company benefiting from the pantryloading trend and saying demand has remained evaluated there. Kelly. Tyler, thanks very much coming up, everybody the coronavirus pandemic will forever change how we live and where we live. With t what the latest housing data is telling us well be right back. Att problem. Round and round with love well find a way, just give it time. At least geico makes bundling our home and Car Insurance easy. It does help us save. Round and round with love well find a way, just give it time. Round and round what comes around, goes around. For bundling made easy, go to geico. Com find a stock basedtech. On your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. phone ringing a phones offers big button,ecialized phones. And volumeenhanced phones. , get details on this state program. Call or visit and accessoriesphones for your mobile phone. Like this device to increase volume on your cell phone. phone ringing get details on this state program call or visit a big jump in Mortgage Applications last week and its where people are looking to buy thats most interesting. Diana olick has those details for us diana . Yeah, kelly, Mortgage Applications to purchase a home rose for the fourth straight week, jumping a decisive 11 now, they were still 10 lower than the same week one year ago, but that annual loss has been shrinking markedly and thats all according to the Mortgage Bankers association. Now, the states leading this surge really say a lot about whats going on with mobility, affordability,and urban flight new york led with a 14 jump in home buyer Mortgage Applications weve heard anecdotally of people trying to get out of the city and into the burbs, but wer as well as georgia, which recently opened up and North Carolina, where employment was strong now, california is also seeing big demand that may be because so much of the new construction is there. Now, remember, we had a housing shortage before covid19, and it is much worse now as sellers have pulled their homes from the market back to you guys this hurts, diana, because my neighbors are going to florida i guess what i wonder is covid speeding up a lot of the trends already in place, people leaving for states like florida and georgia and North Carolina i also wonder how the schools are playing into it because i know in our neck of the woods theyve decided the they think the fall it will look like kids going to schools every other day. Not a lot of incentive to stick around people thinking maybe this is a good year to move and not be out much especially in the big cities where parents put their kids into private schools they dont want to pay big tuitions learning online they may be looking for better Public School districts in different areas, a great incentive to move. Such a good point diana, thanks. We appreciate it diana olick with the latest there. Ty thanks, kelly coming up, stocks nearing their session lows on the dow as we head into the final hour of trading. The dow down more than 500 points, really close to 600 points right now we have much more on the markets coming up as we wrap up our hour of power test test hey lily from at t here. Im back and while most stores are open, im working from home and here to help. Heres a tip get halfoff the amazing iphone 11 on at t, americas Fastest Network for iphones. Second tip you can put googly eyes on your stuff to keep yourself company. Get the amazing iphone 11 for halfoff on at t, uh for example, thats heraldo. Americas Fastest Network for iphones. Selling across the board for a second day in a row. All three major indecks are off about 2 tech stocks had been holding up the Broader Market but are lower today as well. Lets bring in gene munnser and gene we intended to talk about the sharing economy and how some companies in the sharing world have benefitd through this and others seem to have suffered but i think you follow technology, and the one thing i would say as i am surrounded by more devices in this kitchen than i knew existed in this house, that technology looks like it comes through this better than any other sector undoubtedly, tyler. I think you need to pick what they play into we refer to them as undeniable truths not all Tech Companies are created equal. Yes, these devices are part of the fabric of our lives and there is an opportunity to invest in that i would direct investors to think about some of those longerterm truths and the tech around them that are empowered, those obviously around wellness, 5g, gaming, think about the future of mobility with electrify case, autonomy those are probably going to be the most powerful factors. I think the trap within this is the things that worked in the past, the Tech Companies that surrounded us that worked in the past will be outperformers in the future as i see this playing out, i think there will be a reshaping. Companies more advertising focused like facebook and potentially streaming itself is going to be more difficult but apple and amazon are in a great longterm position when you sit there, gene ill get to jim in just a moment when you sit there and you look at the facebooks and the googles, one of the things were seeing as was reported in this mornings wall street journal, is that advertising increasingly does seem to be moving away from the analog world of television and radio and to those digital platforms and so thats a tailwind for them too definitely a tailwind and i think that our belief is that investors going to want more than what has worked in the past once we exit the pandemic and so, yes, that is a Good Business im 50 years old undoubtedly facebook will endure long past that im here but its not about what those companies will be successful, google will be, but its more about tapping into Something Big and transformative like they did when they came up with the digital advertising. Google does have the option of all its other bets, which i think could stoke it into a musthave longer term. Jim, lets talk more broadly about the market and why it has sit such a stumbling point for the first two days of this week. Clearly based on valuations as you hear david tepper and others, we are at elevated valuations with very low visibility we are flying through clouds, folks, and we cant really see where the Landing Field is concentrate on the visibility we have. The low on march 23rd in all the indexes, what happened on that day . The answer is thats when the fed came out and announced unlimited quantitative easing. To me, that was amazing, and, again, everybody is sick of the word unprecedented but theres been several things during this whole time period theres no other word to describe it. Since then the battle has raged on on one side we have the cataclysmic economic event were experiencing and on the Positive Side we have the fed, the u. S. Governments fiscal policy, not just those two things but the world central banks, there has to be an assumption made as they throw money into this, that theres going to be a bleeding effect that comes into u. S. Stocks as, you know, being the best option. But i thought for three weeks and still think it now, i think 2,950 on the upside because the line in the sand ted can bring us up to that, but we need some genuine meaty fundamental change in what we see going out the next six months of course it makes perfect sense that technology is leading the way too. One of the things that surprised me today is the s p is almost 5 from yesterday a high. The nasdaq has actually been less than that i thought when we had some selloffs the nasdaq would lead us up and take some air out. It didnt. Thats telling me its the same situation and technology the playing a bigger part as we go i think we trade within this range but need to see good news to go out of it to the upside. The dow is now at the low, off about 600. Jim, one of these days were going to play a game whenever anybody usesprecedentef abundance of caution, everybody will chug a beer what other word am i supposed to use its 5 00 somewhere back to you, gene, if i might. As you look at that sharing economy, it would seem to me that the Delivery Services are in a very sweet spot but that some of the others where you have persontoperson contact, whether its airbnb, whether its uber, lyft, those might have a bit heavier sledding. Right or wrong yeah. I think definitely airbnb is in a tight spot and i think ultimately uber will do well theyll buy grub hub and that will be good for them. Yeah. You would think that that kind of consolidation would be pep e helpful there. Folks, thank you very much gene, jim, we appreciate it. Kelly, thank you as well six devices here right in front of me. I want to know more about the power mowers i think that segment should be renamed until youre back in the studio weve been very lucky, very lucky that the leaf blowers and the mowers the blowers and the mowers havent shown up. Thanks for watching our breaking News Coverage as we continue into the last hour of the trading day with the closing bell. Thank you, tyler and kelly. Welcome, everyone. Im sara eisen with wilfred frost. Stocks in selloff mode big time major aemplg averages back to s of the day, down more than 2 . Fed chair powell taking a cautious stance on the state of the economy saying the recovery may be slower than expected. Hedge fund heavyweights are also sounding the alarm as davi