Transcripts For CNBC Closing Bell 20240713

Last ten minutes or so and finally, optimism around the possibility of new stimulus. All of that helping the market up about 1 on the s p 500 as we stand. Coming up on todays show, big moves in the banks space and Goldman Sachs is bringing workers back to the office well talk about that with the president and ceo john waldron and Michael Novogratz will lay out the risks he sees. Mike santoli is tracking the Market Action and a pair of key faang names holding their annual meetings as tech underperforms today and mike, start us off with the Broader Market and the action were seeing right now. Yeah, so weve been talking about this rotational activity away from the big growth winners into all other areas of the market that are more sickly call and smaller. It is really happening in a benign way so far. Sometimes the baton can get dropped in the handoff but it is towards its highs so kind of stalled out at this area, but below the surface, equal weighted is up close to 5 so it is kind of stuck there almost for good reasons because of the rotation into more cyclical economically geared areas. At least the story for now obviously you cant count on that continuing in a seamless way. But i also wanted to highlight the credit markets and the high yield hygtf. It continues to point in the right direction, still well off its strongest levels still not where back to the lows before all it started. But the fed support and a lot of investor response which has helped this out. Look at the pace of inflows into the hyg, it has hit a bit of an overheated level so maybe this has to take a break, this bottom panel on that chart is also the premium of the share price of hyg to the net asset value. So this is an etf trades based on an index, slightly rich to that index by about 0. 8 and while that is not out of whack, you see how volatile it was. That is in part why the fed has to say we want to make sure that the markets function properly. Arguably ris arguably risk reward might be tilts against it, but we want to watch it as either confirming or opposing point on what the equity markets are up to so the theme that you say continues today, value over growth, obviously it is key. Investors want to know should i get into more value like financials and industrials what has driven that shift and how can we rely on sort of the fundamentals to tell us whether it will continue two things seem to be driving it one is strictly i think an investor positioning issue people saw how stretched the large growth trade got relative to small value it seemed just it could have a mean reverlgs thesion there but also the fact that all 50 states are in the process of reopening the economy, that we have not seen anything to interrupt the idea that were in for a few weeks with increasing activity, and seeming like there is a cushion and if things can get moving fast enough, we wont gr drop anything big along the way. Again, they got so stretched looking at the top stocks in the s p yesterday and today, and they are up a lot. It is travel, retail, finance names. Yet they are all still down on average 40 from their high. So there is just so much ground to make up that simply at little bit of flow from one of those groups into another has a lot of affect on the latter group and the other point id makes a well, Brian Moynihan is presenting at the conference as we speak and he struck kind of similar stones to what jamie diamond struck yesterda dimon yesterday including mortgage forbearance, that the data on that is improving and much reduced from the earlier weeks and again some people already making payments again. And he said data that he released in terms of Consumer Spending not quite as bad as some people feared down 7 in april, down 5 in may. Again, painting perhaps a slightly better picture that the worst case scenario. And kind of similar to yesterday again, intra day highs for bank of america stock up about 6. 4 during that presentation and ill point out john waldron this morning programs wasnt as constructive as moynihan and dimon were so well be good to speak to him coming up at will 4 10 p. M and Goldman Sachs stock only down 10 year to date. Meantime, lets drill down on amazon deidre bosa has the headlines of its Share Holders meeting. And this was their First Virtual Shareholder Meeting, so we didnt see the protestors and activists signs, but we heard from a few of them and certainly the pressure was still on, especially when it came to the companys Covid Response which has been under scrutiny by employee, activist groups and lawmakers. Today was a chance for Share Holders to voice their concerns. One share holder proposal called for more disclosure of covid19 patients and warehouse conditions am mid tid the pande. And jeff bezos took q and a at the end of the meeting, asked whether increased scrutiny could hurt amazons reputation with customers. And he said no, we welcome it. Asked whether he thought amazons leadership and board has done enough to protect worker, and he said yes, they have done a remarkable job but amazon shares are down today but trading near alltime highs. And bezos closed the meeting by saying when you find yourself between a rock and a hard place, the way out is to invent your way out. Back to you guys i guess he has track record of doing that. As for the actual votes, did any of them go against the company, were any of them even close . No, there was about 12 shareholder proposals ranging from an independent chair of the board to environmental concerns. None of them specifically drilled down on amazons Covid Response, but the theme was intertwined through all of them. The board remains in act and the Company Proposals passed deidre, thank you. And facebook held its Shareholder Meeting today and Julia Boorstin is monitoring that one for us. Thats right, Mark Zuckerberg controls the majority of facebooks voting shares on the companys proposals including reelecting the board and executive compensation were approved and all the proposals opposing zuckerberg were rejected, including limg naturing hnatur limiting his voting control, and having a man dated independent board chair, and other proposals were calls for a report on facebooks advertising rules, another one to prohibit encryption in order to prevent child 2exploitation and another on pay equity. It will be meaningful to see which percentage of votes they draw. And it will be included in s. E. C. Filing that facebook puts out in the next couple of days but for now, zuckerbergs control prevails back over to you i guess, julia, shareholders dont have that much to be upset about because the stock has done relatively well even in the face of huge challenges like the regulatory overhang and the political battles and the controversies over fake news the performance has spoken for itself yeah, thats right. Look at that year to date performance, up about 12 . So the stock has done well, but also, these are complaints that Share Holders have had for years can now. This is just the later and i believe the theird or fourth yer that asked zuckerberg not to be chairman as well as ceo. And they know that zuckerberg controls the majority of votes i think it is really more about making a statement, asking the company to take steps to have greater oversight with the full knowledge that they may not win the vote, but they can send a message. True. Julia, thank you and on that note, dont miss andrew ross sorsorkins intervi tomorrow morning and the dow is adding more gains, but Mike Novogratz sees big risks. This is decision tech. Find a stock based 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. Michael vasquez come over here. Ive heard such good things about you, your company. Well, i wouldnt have done any of it without you. Without this place. This is for you. Michael, you didnt have to. And, were going to need some help with the rest. Youve worked so hard to achieve so much. Perhaps its time to partner with someone who knows you and your business well enough to understand what your wealth is really for. Across america, Business Owners are figuring things out. Finding new ways to serve customers. Connect employees. And work with partners. Comcast business is right there with you. With a network that helps give you speed, reliability and security. And enough bandwidth to handle all your connected devices. Voice Solutions Like remote Call Forwarding and readable voicemail. And safe, convenient installation. When every connection counts, you can count on us. Get the connectivity your business needs. Call today. Comcast business. Welcome back were just over an hour away from the moment of truth from spacex and American Space program, 4 33 eastern time spacex plans to launch two nasa astronauts into orbit, the first crude mission to space and what Jim Bridenstine called a new era in space flight. We will certainly be watching this, 4 33 eastern time. Stay tuned, well have all of the key moments as we approach that looks a little cloudy i hope it clears up so that they can take off and dont have to delay it i guess they will break through the clouds i dont know how much of a difference that makes to be honest well speak to our experts later in the show. And Morgan Brennan our space guru tells us that they could change it based on the weather, they are just monitoring the conditions in real time. And if they decide to delay it, they will try again on monday. But were glued to the shot. The president and Vice President set to be there, wishing the two astronauts well as they go up to their mission. Back to the markets, the dow and s p both higher after volatile trading led by reopening plays like traveling and airlines doing well today joining us now for market outlook, Michael Novogratz is back on the show welcome back sansmustache. Looking good how are you feeling about this market ive been on here a few times and ive been more bearish and i always thought that there was this tug of war between fundamentals and liquidity and obviously liquidity is winning the tug of war weve taken it as pretty big chart levels and i tried with puts and put spreads and almost have thrown in the towel i still am worried when i look at the supply situation. The last few years, the whole market was driven by buy backs they are down 80 this year, m and a is pretty much dead and you have huge supply so this is a market that once it runs out of its enthusiasm i think has a ways to fall and im not fighting it right now, the market feels like it wants to go up, were seeing a lot of rotations, you know, into stocks that lag the market that were probably beaten down. So maybe there is one more are leg up but i dont think that it is a market that you will buy and come back in 12 months we might have one more little leg up here. But i still think that the supply is down and the fact that will the economy come back anywhere near where tfz it wit s and do you think it is telling that the likes of apple, facebook, amazon are in the red, only that you will get rotation one way or the other, you wont get banks and the nasdaq both significantly higher on the same day . It feels like that. I dont think that that is a great sign for market vols well see how far the laggards can go before they run out of steam. They have been beaten down a lot. And especially when you were talking about the travel stocks before listen, covid will end and well start traveling again, so there are plenty of plays in that stays that i actually find appealing. But overall the market just seems way too optimistic given a really difficult police situati political situation. If joe biden becomes president and i dont think that he will, i dont think that people will want donald trump president for a lot of reason, and that wont be good for the markets. Corporate taxes are going up, not down taxes are going up, not down so well run into a political environment that just cant be this optimistic for markets. You think joe biden is going to push to raise corporate taxes and taxes at a time whereas you laid out the economy wont be back up to where it was before the crisis yeah, this narrative that, you know, amazon paid no taxes and made gill ga zazillion that has a big force the drive is poplism and the idea that the billionaires have made 347 billion in the last eight weeks during covid and even else is suffering is such a powerful story, if you are a democratic president , you got to do something. And so silicon valley, beware. There will be pressure on these companies that are making so much money to pay more of their share. Deescalating tensions with chooif, shou tensions with china, should that be worrying the markets . It should be worrying the Hong Kong Market i think that it is a stunningly important development. I think that that is risk destability l losing. And pompeo said that we dont anymore recognize china hong kongs independence. So if we start using the same rules that apply to china and hong kong, there is a whole lot that changes you could see funding pressure on the hong kong banks which create the funding pressure on the reminibi and it will crate a lot of uncertainty and a lot of, you know, bad pressure mike, you said that the overall markets are moving against sorry sorry, i thought you were done just wanted to talk about your specific calls here. Understand the market is moving against your bearish view of where were headed are thereany spo any spots wheru are putting on shorts positions or betting against Certain Industries or sectors that you think are not connected with reality . You know, i havent specifically there are one or two stocks that im short that i dont want to mention. But i keep buying put spreads and losing a bit of money to stay in the psychology of the game and hoping making money in currency and fixed income and bitcoin and other things to make up for it. One of the funny things about running a family office, you are always in some ways cheering for overall markets to go up because all your other element assets ae to the s p to a degree and so im not unhappy the market is going up, im unhappy that ive been wrong about it. I want to touch on bitcoin. That was a relatively bear wrish no note out of Goldman Sachs. And one of the arguments is t si wont act as a typical hedge that people might think of gold for example. Where do you stand on that issue in particular . Because clearly you are a long term structure augu structural bull on bitcoin so where do you stand . I think that it is a great hedge and it is a broad hedge against the fact that we are moving to a world where we will monday size oetize our debt at. Only time weve had deficits like that is world war ii. So if you just keep applicanprir assets find a way to go harder so bitcoin is a heenlg to readge global uncertainty you know, it is funny, i talked to charlamagne before she wrote this piece and i got her story, but i keep thinking that she owns wealth management, they have old conservative clients, and i think that you are missing thes bigger picture. Like that paradigm is shifting and it might not shift next year, but the probability that it could shift is a lot higher than it was when you look at the deficits that the entire developed world is running so were seeing more and more an option, more and more rails put in to make it easier to buy. Bitcoin is still hard to buy so this whole industry is putting it on. And i guess the last thing id say, when does something become a story . 100 Million People own bitcoin does Alan Greenspan have to say it at what point do people say it is a storied value i think that were way past that moment charlamagne obviously doesnt think that weve gotten there. But i think that weve crossed that rubicon and now it is a matter of time before you see more and more reduction and that is my stand and im sticking to it Mike Novogratz, thank you always good to check in with you. You guys as well. I for one miss the mustache i thought that was stellar but there we go. I got a call from my mother who is turning 80 and she is like it makes you look tall, please shave it. So when your mom calls, you dont have a whole lot of there is not a lot of negotiating power. Ive xwabeen there you cant deny the mom mike, thank you. Were at session highs, the dow up 350 points or so. 1. 4 s p just shy of a percent higher tech still lag, but up 0. 4 on the nasdaq still to come, the quest for more tests, Quest Diagnostics launching new tools to help Companies Bring 34riemployees bk to the office. How many tests can they actually handle and the ten year currently 0. 68 . Whatd we decide on the flyers again . Uh, fifteen minutes could save you 15 or more on car insurance. I think were gonna swap over to over seventyfive years of savings and service. What, were just gonna swap over . Yep. Pump the breaks on this, swap it over to that. Pump the breaks, and, uh, swap over . Thats right. Instead of all this that ive already . Yeah. What are we gonna do with these . Keep it at your desk, and save it for next time. Geico. Over 75 years of savings and service. But when allergies and congestion strike, take allegrad. A nondrowsy antihistamine plus a powerful decongestant. So you can always say yes to putting your true colors on display. Say yes to allegrad. Truly transformative sleep. So, no more tossing and turning. Because only tempurpedic adapts and responds to your body. So you get deep, uninterrupted sleep. During the tempurpedic summer of sleep, all tempurpedic mattresses are on sale 34 minutes left of trade here is where we stand in the markets. Were near session highs with the dow 365 points every sector now higher in the s p 500 led by financials, technology lags. Nasdaq only up onethird of 1 and bill ackman is saying that he has exited his investments in Berkshire Hathaway because there might be better opportunities. And shares of himicron moving higher, and they boost the revenue guidance the stocksti still down about 1 for the year and still ahead, the countdown is on for the biggest test yet of spacex as the company gets ready to launch two nasa astronauts into orbit. Well bring you live to the launch padn hior d, oa sticay next welcome back to the closing bell as you see, green across the screens again. Were back to the session highs which on the dow means that we are higher by 380 points sectors all now just about in the green. Financials continue to lead the charge banks themselves up 5. 9 just under 30 minutes left in the session and key things driving the action, optimism is boosting banks and Retail Stocks and dr. Fauci says that second wave is not inevitable and tech stocks losing steam but climbing back into the green and Central Banks continue to pump liquidity into the market time now for a coronavirus update with rahel solomon. Chevron says that it will cut about 10 to 15 of its workforce or as many as 7,000 jobs with lower i eer oil demand, cn has been reducing new investments and operating costs. And in california, one size whether not fit all when it comes to reopening schools state official says that plans will be different across region, but there will be some common threads. Class sizes will be smaller and students will have their temperatures checked at school and yale researchers say that monitoring sewage could give an Early Warning of covid19 outbreaks daily tests of sewage in new haven showed a live in coronavirus rna days before reported cases in the area rose. The study has not been Peer Reviewed for more coronavirus coverage, head to cnbc. Com thanks so much. And we have 28 minutes left in the session and were higher by about 1. 5 still ahead, shares of Goldman Sachs outperforming the broader bank index making another decent move well drill down on how the company is navigating the esenident when we speak with the pridt and ceo john waldron were getting a super competitive Interest Rate on our money. Were able to invest through the same exact platform. I got approved for a loan and it was a gamechanger. Truly sofi, thank you for helping me prepare for whatever the future has in store. [sniffing] is the salmon wildcaught . She only eats wild caught. [cash register beeps] uh, i need a price check on honey. Dont get mad. Get e trade and get more than just trading. Investing. Banking. Guidance. Truly transformative sleep. So, no more tossing and turning. Because only tempurpedic adapts and responds to your body. So you get deep, uninterrupted sleep. During the tempurpedic summer of sleep, all tempurpedic mattresses are on sale Quest Diagnostics announces a new initiative Offering Services such as temperature checks and covid19 dying not tick and antibody tests which take one on two days to results tick and antibody tests which take one on two days to results. But the cdc says that they should not be used to make decisions about return are being to the workplace and steve, thanks so much for joining us i guess first question, on that cdc guidance, where do you stand on the relative importance and accuracy of the different types of tests particularly those serology antibody tests . Sure. So first of all, the primary tests were using for the return to work program is the diagnostic tests, something referred to as the cpr test. And that is determined whether you have the virus or not. The serology test, sometimes referred to as antibody, it is a blood based test and it will determine that you have the antibody so it does indicate that had the virus, which is helpful to know particularly Going Forward to understand whether you had the virus given there is so much uncertainty about the long term consequences of having the virus. And secondly we also understand that past viruses like sars and mers, there has been immunity for a period of time but we dont have enough data yet to determine if that is true for this virus but it is likely that there will be some immunity for a period of time so steve, as far as your return to work, scaling up of test sites, is that something that you think is necessary for employees to do to take a virus test before returning to work . It just feels very unstandardized as Companies Make the tough decisions whether to bring workers back yeah, there is a lot of variation. You know, there is variation based upon where you are located, so geographic variation, unite different if y quite different if you are in new york city or oklahoma and whether you are a tech employ he eor working in the Food Processing any or in health care and then finally, what type of employee you are professional employee, primarily in the office, or you are a manufacturing employee there is quite a variation so while we workwith employers everyone has a different approach on what we might do steve, this is meg tirrell. Im curious about your capacity targets. You say as you are introducing in employer program, you aim to get up to 150,000 diagnostic tests capacity per day from about 80,000 per day now and almost doubling. But youve also note that had whi while you have supplies to meet the current capacity target, the Global Supply chain is still under some stress. What can you tell us about the supply chain weve made significant progress this all started in early march and we brought up the first test on march 9 and today were at about 80,000 tests per day by the end of may beginning of june, well be at 100,000 tests and well be bringing up a number of new platforms throughout our laboratories. And that will allow us to get to 150,000 tests by the end of june so roughly well be doing about 4 million tests per month. And this is the molecular tests. And there are several parts of allowing us to be able to do that, one is the lab capacity. And you mentioned reagents that are necessary but also the specimen collection process, we need to have the swabs and those capabilities in place to be able to do those kind of volumes. But were confident given our supply chain and what weve done with ourners to deliver those kind of volumes Going Forward. Is there one area of the supply chain that is kind of a weak link right now . Is it the supplies, the transport media, the reagents, is there one thing that gives worry as you look ahead to what the Global Supply chain will look like over the next few months frankly, we put a lot of Energy Around the specimen capacity for collecting the specimen that front end is quite important. So we have worked with partners, you probably have seen our drivethru events with walmart we are actually supporting cps as well as they bring up their pharmacies were working with qualified Health Care Centers and Health Care Systems so a variety of venues to make sure that there is enough front end capacity and when we get to employers, when we work to bring in their specimens, were actually working with on site employers as well. And what sort of positivity rates are you seeing across the country and what hot spots do you think that we should be particularly worried about yeah, we still have a lot of variation around the country if you look at the primary testing and the pcr molecular tests, it ranges from low Single Digits to double digits. The hot spots are those that weve talked about over the last several weeks, new york, new jersey, portions also of louisiana, portions of florida, portions of the west coast but there is wide variation in the results so far and finally, steve, how do i know what test im getting we at cnbc report every time a Company Comes up with a new innovation and it is always faster to get back to people and it is always more accurate than the last one but it feels like all the tests are out there. So if i calliest, which tests are you had ministering and how do patients, consumers, know what they are getting and how can they ask to get better ones . Yeah, so in Quest Diagnostics, the tests have been validated by us and we have looked at what we need to do to validate both the specificity and sensitivity of the testing so that is a measure of their accuracy and we worked with platform providers, the manufacturers that provide us test systems and all those test systems have been qualified and approved through the fda president zelensky so we are highly of tconfident t it is the quality that you have come to recognize and expect from Quest Diagnostics steve, thank you for joining us good to get an update from you we are looking at session highs here with the dow up or the s p up 1. 1 and were less than 20 minutes to go before the close. Again, stocks rallying, there is the dow 425 points zooming ahead into the close led by financials after the break, disney ceo says the world is ready to get back some magic and back of america raises a recovery red flag. 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Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. 16 minutes left in the trading day. An. 16 minutes left in the trading day. 16 minutes left in the trading day. 16 minutes left in the trading day. 16 minutes lefte trading day. Dow up 430 points. Joining us now for his last chance trades, josh brown is back on the show what are you going for today, josh athe trends have alsooverseas and one of the most interesting things is a trio of etfs via ishares. But the last chance trade is going to be efg, which is basically Growth Stocks from developed markets in hong kong, gentlem japan, australia, canada and so those trends are benefiting these companies when you look at a three year chart versus its counterpart, the value version, it is a massive very much of outperformance so if you are someone who thinks that the things that benefit you as Growth Stocks will stay enforce and that they also apply to developed markets around the world, this may be a better bet that be just straight up owning the msci index which is flat so the value version is down 13 and this is up 13 so dramatic outperformance i dont know when that mean revert, but if you want to bet that it doesnt, that is how you get exposure to phrma, tech, all of the best performing sectorsosectors overseas some people would be surprised that had there is any growth overseas. But to your point, did you not expect like were looking at the market today in the u. S. To be some kind of rotation back into those value names at all i love what is happening right now. I think that it is vindication for people that have diversified portfolios and couldnt just own the buy five nasdaq stocks over the last eight day, small value versus nasdaq 100 is up 15 which we havent seen anything like in 19 years. Since the last double burst. So if this continue, then just owning the index is the better bet than betting on overseas gloets b growth but we have seen these mean reversion trades before and most have dissipated. And lets go to the commercial free coverage, and mike s mike santoli and josh brown are with us. Mike, to you first as josh mentioned, these types of rotations typically havent lost it for long, in fact they have just lost it for one day. I guess this week we are seeing quite a resounding two days in a row, tquestion is will it go on much longer. And i think the stuff that is being rotated out, it is not as if it is getting dumped wholesale. In fact, some of them have had intra day recoveries so it has been more of about which is up more as opposed to what is up and what is down. And there is no way to tell whether this will get traction what you can say is there is such a wide gap in performance, it got stretched so far that even if it goes on for a few more weeks or 10 or 15 relative percentage point, it will still be extreme so i think that it is ripe for more of this i dont necessarily think that you want to bet everything on it happening. What you might want to do is infer from that the market message that, you know, the economy looks like it has a little bit of clearance to run or at least we cant tell for sure if that is the wrong way to think about things for a few weeks and months that is why i think it is not so much what is driving the market higher, it is that nothing is getting in the way of it in the way of bad news on viral infections or anything else going on and people seem still kind of und underinvested and sentiment hasnt gotten too overheated yet. So therefore why dont we front run the daily overnight futures rally in the afternoon which maybe is what is going on right now. For sure growth versus value, but also a lot of hope for a vaccine which gets into the work and stayathome stocks versus the going out stocks walmart is underperforming, microsoft underperforming, amazon not only are those sort of the growth plays, but it is also what has done well as people have been made to stay at home how do you pick stock around that weve been always on thedy veers if diversification side it is hard to tell when there will be those periods of mean reversion, which is the point michael made we ran the number today, one of the things that we like to do is look at the s p 500 and just get a sense of what is happening within that singular index the 50 s p 500 stocks up more than 5 today had a median year to date decline of 31 so that really accentuates the huge moves today are happening in stocks that are still down a third in just five months. There are 20 s p 500 stocks that are actually down 2 today and those have a median positive gain of 11 . So to michaels point, not a ton ever huge losers from the big growth winner, but i think that it is important to have this type of rotation happen within the market and to have the stretches where the other guys get a chance so to speak you really dont want to see a rally continue and have each day a lesser and lesser amount of stocks being at the head of the train. So that is not what has taken place over the last sit deight s and i think that it is welcome what would we have to see in the underlying economy to see both of these groups perform well for the rest of the year and how likely is that scenario . Well, i think that is the thing and that is what is most frustrating for a lot of investors. It just so happens the largest stocks with the biggest market caps are the least fazed by what has gone on. And so i think that the answer to your question is the reopen has to be successful most of the cyclical businesses that were talking about that are getting hes big moves up today and yesterday, they are getting the big moves up not because the fed is doing something new or there is some new regulation that is helping it, it is cut and dwrry they need the reopen to go well without a resurgence and if that happens, there is no reason to think that these stocks cant continue. When you pull out the growth names from the s p and just look across the board, even if you did it by industry, historically they are not expensive and we just hit session highs. A nice leg up in the last 10, 15 minutes. Over 500 points of gains now for the dow, 2 in percentage terms, s p up 1. 4, nasdaq up 0. 7 . And disney has announced plans to reopen. The company outlining safe itty precautions, adding more hand washing stations and temperature checks and suspending parades. And their ceo joined squawk alley earlier today. The honest thresponse that we got in shanghai and also Disney Springs. The response has been tremendous we opened up the stores and restaurants inside Disney Springs and the demand has been encouraging. So i think that the world is ready to get back to some magic. And disney search can proviz diy provide that magic and still down yet 15 today. Right and it is a good good am pl of the kinds of calculus that you have to make at the highs before this crisis, disneys theme park business was designed for just massive throughput, almost assistants shorta constant shortage available. And that is a completely different set of economics. Stan constant shortage available. And that is a completely different set of economics there will be a big pent up demand initially, but what percentage of former occupancy rates will they be targeting and i think the stock reflects that uncertainty and we have no box office too. So stock has held unreasonably well given all those things. But it really is just kind of a wait and see in terms of how broad the consumer rush will be to get back to Something Like that and i think it will be more likely to do Something Like that than just go for your basic thursday night at the casual restaurant because it is not that special of an experience as opposed to disney and lets talk retail for a mom moment ralph lauren shares posted a bigger loss and sales decline, but did offer an upbeat view of the future i spoke to their ceo this afternoon. And he said that he is encouraged wouldby chooiinas r and is looking to grow market share. And he said that China Digital commerce was up 7 76 in the lt two months and he says that competitors have gone bankrupt so an opportunity to grow share. And as far as the u. S. , 50 stores are open currently, consumers he says are coming back, he noted that they are, quote, motivated and he 1k3ek9s he expects to va region and 80 of Ralph Laurens workforce though in the western world is furloughed as the company has moved to conserve cash and finally, he did talk about the speed at which he has had to pivot the business to follow where consumers are going. For instance ralph lauren is doing curbside pickup, buy on line, ship from the store. These are thing 245s we saw from big box retailers, but a company like ralph lauren has had to put those things in place in a matter of weeks. And no surprise, lounge wear and home are more in demand right now because that is where consumers are focused. How do you play a name like this which has been punished and we saw in the results is suffering, but does project some confidence and optimism about the future. So a couple things on ralph lauren the first issic by now like you realize if you areal involv vofh the stock, that the stores are closed down. I dont think that anyone involved with the stock was expecting anything less than one of the worst quarters of alltime so you got that. The stock has come down from 16 five years ago for many reasons that have nothing to do with covid. So it has already been cutin half because it is apparel and retail and those are two things that just seem to be perenniareerenn decline. So if you want to make a bullish bet on ralph, you say 4 yield probably not going to pay that, at some point that shoe will drop, they will cut it, market probably expects it. 9. 5 times trailing 12 months we did not know what the earnings are and so lets assume the market gives them the benefit of the doubt. In a best case a 2345ir yscenar finds a way to become lulu, more rely want to become the 30 somethings and it is in the out of the question it hasnt happened yet, so that is the bet that you have to make here to want to be long. And the bet that all of a suddte big, no one will make that bet so you have to think of them more like a brand, less like a chain of stores and hope for the best if you are getting long here i would not want to make that bet. Well, we have just about 2 1 2 minutes left of trade. Mike, what are you seeing in the market internals today yeah, they have been positive in fact everyone when tn when t0 was around the flat line, volume was up this is but the trois because te still marching ahead some of the short term indicators actually got a little overbought in terms of percentages of stocks and 50 Day Moving Average and stuff look at the high beta versus low volatilit volatility, it has been a rout and the volatility inddexindex think it is not quite confirming what the equity markets are doing. Continue to watch it not saying anything alarming, but just are sort of sticking up there along with maybe high yield spreads. Having a fair bit of distance. Mike, thanks so much. Just over one minute left of the session right near the session highs if we can have an intra day chart, you will see up about 550 points and so 2. 2 of gains for the dow in terms of the s p 500 gains, 1. 5 and nasdaq and tech names still lag, but up 0. 75 . And the russell in particular is surging today. All 11 sectors are now in the green. But banks lead the charge. Up on massive 16 over two days. Extraordinary bounce for the banks which of course have been significant underperformers so far. If you want a little bit of pessimism thrown in, oil has slipped during the session, down 4. 3 and gold covered having been down. And there goes the bell and we are pretty much at session highs. 552 points high on the dow, 2. 2 , s p up 1. 5 , nasdaq up 0. 8 certainly a strong close with the dow up more than 550 points welcome back, everyone, if you are just joining us, im sara eisen with wilfred frost and mike santoli take a look at how we finished up for the day a surge into the close and as you see, the dow closes out up 2. 1 . 553 points led by the banks. Goldman sachs, jpmorgan, American Express among the top performers in the dow. Walmart and visa, those were the laggers. S p every sector higher into the close. So the nasdaq up only three quarters of 1 into the close, about half the gains that we saw for the Broader Market and the big comeback of tus arr 2,000 index, stocks that havent been doing as well are playing a big catchup in the last session and yesterday. And some of the best performers that have been driving this market like amazon and netflix and facebook, mostly finished lower. Coming up this hour, well ask john waldron about the outlook for the Banking Industry during the Coronavirus Crisis and goldmans plans to bring back workers, some worker, to the office and plus we are minutes away from spacexs historic launch of two astronauts heading to the International Space station. Well bring you live to the launch pad coming up but first lets talk about what we just saw in the market. Joining us, josh brown first to you, mike, on a pretty strong close we really are starting to break out. What is driving it yeah, it is the beginning of a breakout seeing the slow motion surrender are the skeptics we have not had necessarily anything to get in the way of the idea that gradual economic reopening, beaten down cyclical stocks finally reviving a little bit, and really not much damage to the big index stocks just yet are. So all that put together, you have maybe sort of a capoff phase to the strong rally, getting above 3,000 means something, but you want to see a few days of that before you qular th declare something was really achieved so right now people seem to feel underinvested in the economic revival theme. And still watching treasury yields a little stubborn on the low side, but credit seems okay. And so therefore i think Equity Investors can handle it for now. And have you taken profits in anything of late in this rebound . And it is still a wait and see type scenario. I mean, i mentioned coming out of like tele dock and stuff, not because i dont like it, but i felt like the work from home stuff was looking hobby. And zoom is a stock where it was up 140 . So i took out my original investment, im still in it, but in it with the houses money so very, very small moves like that the nasdaq is the only index that was able to maintain and up trend based on lets say a traditional 200 Day Moving Average. Even despite the crisis, if you were to look at monthly closes and the nasdaq has really been the place where i think most people that have come into the market since the crisis have started. So you think about all these online brokerage accounts that have open, robinhood, et cetera, people werent starting with campbells soup or are shares of wells fargo. For the most part they were either buying the single digit trashed airline, which is a good trade, or the apples, amazons. And so you are starting to see that broaden out now look at discover financial for example, dfs this is credit cards at the low end of the credit score scale. Huge day to day. Look at the airlines today look at jets if you want to look at one ticker. So seeing that broad be out and s broaden out and the cyclical side of the market, i think that it is really constructive and i hope it continues. And the question underlying all of this is where are valuations and what about those risk factors like a second wave of infections in the fall that lot of the medical experts are warning about, like a slow return to Economic Activity and a slow rueturn from the double digit market levels. Does all of that wash away when you get the sidely liquidity thliquidity sizely liquidity that we have . Valuations are not particularly relevant. The market will seize on the opportunity to say everybody gets a reset and then figure out how we dial ahead and when we get back to Something Like 2019 level of earnings and of course we have Interest Rates near zero, so you can discount them back if you feel like it. And in terms of the risks, i think that they are embedded in every investors mind and they are embedded in the field position of those cyclical stocks you were talking about ralph lauren before. It got cut in half all the airlines are down 50 , 60 . So anything that you have tremendous doubts about whether the business is viable, the stocks already somewhat reflect that and i think that we are still benni benefiting from the idea that the bold case is difficult to refute and so it is almost like free play for now in terms of trying to anticipate whatever scenario you think makes sense or just catch up in terms of getting your equity sx pexposure highern case your probability set has to include that things go really well and we have earnings out from hp josh hp reporting 51 cents, and revenue of 12. 5 billion analysts looking for twef12. 93. And been looking to closer to 9 billion in the epcs. And q3 eps forecast, a bit light relative to expectations, 39 to 45 cents the company does not provide outlook for the year i did have a chance to catch up with their ceo and asked about that personal systems business, the pc business, why the miss relative to expectations he told me that the company was certainly impacted by the supply chain disruptions, factories closed in china. He emphasized that his supply chain now is back up and running at full capacity and as for the pc outlook, he told me that the pc you now more essential than ever as so many of us work from home, he is optimistic about that market in 2020. We talked about with the printing business too, remember the supply there, ink and toner, that is the Profit Center of this company and in the short term, the work from home trend, different puts and takes. It did impact his commercial print business with so many of course out of the office now on the other hand, he said it did benefit demand on the consumer side. So puts and takes for that business, big question for investors though is capital return remember, earlier this year hp said that it would buy back 15 billion of stock, 8 billion of that in the first year i asked is that still the companys game plan. The cfo telling me that principles of that plan are still in place, he said that they still feel that their stock is undervalued but that they would discuss it more on the call remember, that starts at 5 00 p. M. Eastern and also want to bring you boxes results for q1 reporting, eps of 10 cents and arrive new 186. 6 million. Billings better than expected at 128 million deferred revenue at 368 million. And as for the frost, borecast,o 14 cents and revenue basically in line for q2, they are looking for between 189 and 190 million. For the year, eps nicely above consensus. And the top line here, solid relative to expectations 760 to 768 million for that forecast did have a chance to catch up with box ceo aaron levy, as well i asked how the work from home trend is impacting his company he said that they are seeing healthy expansion in the enterprise segment and they need new secure ways to collaborate on content and 40 des in the quarteroff o 100,000 and he said softness in the smb segment and he called out some softness in the consulting business too that he said did impact the top line the top line printed guide broadly in line, better than expected results on bottom line. So independent descri asked him dynamic. And he said way better cost discipline at the company and also note that had no surprise travel expenses are also down. That helped the bottom line as well josh lippman, thanks so much. Josh brown, a great snapshot of Software Versus Hardware right now. Totally i look back at hewlettpackard, you have to search really hard to find a tech giant that is still down versus where it was trading in 2007. This is pretty remarkable, how long this has been a mediocre business so i think that if you are a Value Investor and your mandate is to buy cheap stocks and you need tech in your portfolio, maybe this is something that you are paying attention to. Box is less interesting to me, it seems more caommoditizecommod but hewlettpackard has value and we wanted to talk about the fact that your Firm Received a ppp loan for Small Businesses. You blocked about this and talk us through the process. First firstly, was it easy to get hold 6 the loan and how did you find it all . To get hold 6 the loan and how did you find it all easier than i thought but it wasnt easy. We have large bank in manhattaningmanhattan ing as our lender. Our bank spent the first week back and forth with the treasury about clarify this or that so basically i sat there like i hope this happens. One of the things that i think is misunderstood is that it is not a go loan or a bailout, we owe the money. It is debt what i did was i took the uncertainties in a my employees, my clients might have about our business and i transferred them on to myself so we owe it back to jpmorgan chase. It only becomes forgivable if eight weeks from when they get the loan that they apply for forgiveness. The loan itself was a two page application. The forgiveness application i think is 11 pages. So you are not going to see every single Small Business that took a ppp loan apply for forgiveness. You will see a lot of those loans get paid back in full plus 1 annualized Interest Rate. The other thing that i think people dont understand is, and they should understand it, the vast majority of companies arent going to be talking about having received any loans. They just go along like business as usual in the financial industry, you have to file what is called a form 80v. So were starting to see a lot of firms that are ten times our size saying that they took ppp loans. I would imagine that if the recovery continues the way it is, you will see very you few of them need forgiveness. And most if not all of that money paid back b so were hoping for the recovery to go off without a hitch and companies to say yes, there was economic uncertainty, but there wasnt an economic decimation and we didnt have toefit was y months before you owe money. So if you got your loan in april, the first payment is due in october so were really hoping that that will be the case not only for us, but for everyone josh, there is a lot of controversy around all of in how do you respond to some critics that say this was money that was really meant for the Small Business, that was on the brink of going bust . Not for necessarily a financial 23ir78, firm that manages over 1 xwld 1n billion. So how do you respond to that . That is a great question. 11 of the First Tranche went to financial companies. So i think the highest distribution by industry was construction at 13 . So there was a mad rush to be able to be a part of the ppe loan process but a lot of that mad rush didnt actually exist they said as many as 50 of the applications for the first wave were duplicates meaning firms were applying at three different banks hoping that one of them would give them a yes. Once that went away, there was much less of a rush. And then they did a second tranche and there is 138 billion sitting in that second straun trau tranche right now. So if you can still worried about keeping your employees, you dont need forgiveness, it is a low interest loan and you may end up starting to pay it back once the eight week period passes so there is almost 140 billion sitting in the program now wall street is weird, sarah. It is an environment where a company will come out and say were doing 5,000 layoffs and the stock price will go up 7 . It never makes sense to outsiders. We understand how it works on the street, but nonmarket participants say i dont understand, they are firing people and the stock rallies and the ceo takes a bonus . I think what led to so much frustration in 08, 09, was that Large Companies had all these programs and Small Businesses were told too bad this time they went the other way, lets do these programs, first lets send money to people who need it based on who filed taxes. Second lets do a payroll protection so Small Companies can into are row borrow at low n and on and we were fortunate, we had the ability to take out a loan and god willing well be able to pay every dollar of it back. We dont have a forgivable loan, no one does, because the forgiveness period didnt even start until eight weeks in so that is where it stands i have the debt, me, not the taxpayer, not the government and i dont like debt. So im hoping to be able to pay it off, im hopinging the recovy allows everyone to pay it off. Josh brown, thank you as always. We appreciate it well, this is exciting spacex set to become the first commercial arroerospace Company Launch astronauts into orbit and michael sheets is at cape canaveral. And what is it like to be down there right now . Reporter yes, this is a moment that spacex has been working towards ever since its founding in 2002 the company has successfully launched satellites and cargo into space dozens of times, but never launched people. And if elon musks long term dream of taking people into space and even sending them to the moon and mars is going to happen, that dream needs to be launched successfully on this mission righ unfortunately, the weather is not cooperating but were on a bit of a nice edge i just got word that nasa is looking at whether or not it will be postponed until saturday well let you know, but sure to be exciting either way thanks we just got confirmation that it has been scrubbed because you are right there in front of us, you didnt have that information but that is a great shame. The 4 33 launch will not be happening today for spacex more likely to happen on honest. Still to come, outlook for m and a. Well talk to the Goldman Sachs president and ceo john waldron welcome back reminder that the spacex launch has been scrubbed for bad weather, now expected to take place on monday instead. Financials leading todays rally. Goldman sachs is one of the best performing bank stocks this year, but down 8. 5 . And their president and chief operating officer john waldron is joining us. Thanks for joining us. How are you, good to see you. Not too bad at all. And in the last couple days, there have been various conversations goi s conferences going on and there has been a slightly optimistic tone struck by bank of america and jpmorgan i listened to your presentation this morning and you went a bit of a different way what i said this morning and i would start by saying that we certainly would like to see a strong and sustained recovery and hope that it will come but if you are planning it and thinking about what is ahead, the risks are fairly elevated in many directions dorian t s towa side so it is not certain we dont have borders open, so we want to see how we get to a place where borders are open and people moving around the world can start to happen. The Consumer Behavior is still something that i think is very much uncertain it is difficult to model how consumers will come back into the economy whether the anxieties will recede particularly as we get back into the flu season we dont really yet know what the health care treatments or vaccine will be. Were seeing good news and that is indicative of the progress that is being made and it is quite good and can give you optimism but until we see more factbased news out of the health care system, it is harded to know where we are so a number of risks im worried about the employment levels so while we hope for a strong recovery and we would love to see a strong recover ofry, we have to be findful of the fact that we could be off to the races again. And what about for about Goldman Sachs specifically, have you seen the strong trading for example continue into q2 weve had a very good run in our trading business during the crisis i would say, you know, i feel very good about our performance. Our volumes are high we have seen good activity with our clients. Ive been on a number of calls and the Senior Leadership has been on a number of calls and the feedback is extremely good were standing in there providing a lot of liquidity, were helping our clients risk intermediate and that is very strong were doing a lot of financing for our clients. So it feels good across the board and i hope it continues as the quarter unfolds. And what can we expect in terms of provisions for bad loans . Is that going to increase again in q2 and q3, q4, what are your expectations we took provisions in the First Quarter as you would have seen and obviously the Second Quarter weve seen more economic contraction. Higher unemployment levels than we might have modeled going into the end of the First Quarter and so it would stand to reason that you could see more provisions coming in the Second Quarter, but it is early to really make a judgment on that at this point. John, so overall, im trying to feel out sort of what your outlook is how would you characterize credit risk now facing corporations and consumers i think Corporate Credit risk is the place to look really more in that middle market area i would say. I think the Government Intervention has really done enormous amounts to help reliquify markets and a lot of corporations that have access to the Public Markets so the Capital Markets activity has been very strong and a number of corporations have availed themselves of that opportunity set. You do have a lot of middle market lending in the u. S. And europe in particular with the last eight or ten years that is less supportive by the Government Intervention and the Capital Markets. And that is where were keeping a close eye and i would expect if we dont get a sustained economic recovery, could you see higher default rates particularly in that middle market lending area. And on the consumer side, i think that it is tied to unemployment if we get unemployment if a lot of the furloughing and unemployment that we see as headline numbers becomes reemployment as we get back into more of an economic recovery, then the consumer Balance Sheet probably is fine if youyou end up with a stop and start recovery where it doesnt feel sustained and you dont have as much government support, at some point the consumer balance 1450e9s will s balance 1450e9s will heets will stretched. Are you saying we need another Fiscal Relief package to help bridge us to the reopening, whatever that looks like was it a miss in terms of the amount and the timing . I would expect that you will see more stimulus from the fiscal side in the u. S. And in europe you are seeing the european governments and the ecb kind of start to talk more about that. And obviously there is a debate going on in the u. S. About more stimulus i would expect that there will be more stimulus i think that one of the things that the market is kind of discounting is that there is Unemployment Insurance that carries for a period of time and then will be reupped, maybe not at exactly the same levels, but it will carry the consumer and the unemployed further so that the recovery if it takes a little longer can still came them through so id say the governments have kind of bridged consumers and in many cases corporations for a period of time here. And i would expect the governments to decide to put more stimulus into the system. I think you mentioned at the peak you were operating 99 work from home, which is extraordinary. What do you think the long term implications of that are in three years time, will Goldman Sachs have a smaller prime commercial real estate footprint . I think one thing that is dangerous at this point in a crisis is to forecast too far ahead. Were in a period whereas you said, weve had close to 98 of our people working from home were starting to bring people back with. Weve seen in asia now a pretty sustained week on week increase in the number of people coming back to work in hong kong, in china and in korea, were building towards 50 of our people back in our offices. And on the continent in europe, were actually starting to get close to 10 of the people in our offices around the continent. Were obviously lagging in new york and london given the government restrictions and we wont move ahead of those government reopening plans and so i think that it is early to predict what will happen. There is no question in my mind that we will continue to run a more distributive model. We want to put more people into strategic locations, places like bangalo bangalore, salt lake city, dallas, warsaw, singapore before and i think that we will move faster towards a more distributive model some of our people may work from home longer or maybe even more on a semi permanent basis. But we thrive at Goldman Sachs by having people around the table working in an office, solving our clients problems and coming up with creative solutions. And i think at some point well want to see more of that well go slower on a journey, we wont go any faster than we should go. But ours is a firm which will thrive in having people in offices. So i wouldnt predict what our footprint will be other than it will be more distributed and were likely to get more people back in the office as it is safe to do so good to hear people going back in office in asia, but as one issue starts to subside, another rearises how concerned are you about the latest headlines out of hong kong and are you reconsidering having an office there at all in. Were watching the situation carefully. And there has been the announcement on the u. S. Policy and so were keeping a close eye on it. Hong kong is a place that has always been to me about open markets. And always been about the rule of law and we would hope that would continue that will be an important element for hong kong to continue to operate as hong kong has operated in the past we do have a number of people there as you rightly point out and were focused on their safety and health and wellbeing and that will continue to be a focus Going Forward. And i wanted to ask about m a, there has been plenty of rumors in the banking space and Goldman Sachs has been at the center of a lot of it. You made a little bolt in it thinking bigger in the works weve been pretty consistent in our strategy. We bought a business called United Capital about a year ago and we bought folio, it is serving iras so two investments that are strengthening our cape ability in the ira channel and giving us a custody more durable business which is part of our theme Going Forward in terms of taking our firm into fee based durable streams. And those are the types of acquisitions that you will want to see us make there are things that work in our firm they dont really impact the whole of the firm. So when you Start Talking about things rumored on your network, those are deals that the borrower would go up materially higher in terms of integrating and in terms of its yoefof over. So we would raise the bar substantially. And so if you were to merge with wells fargo, would it be wells sachs or goldman far go . I wouldnt spend time worrying about that. John, thanks. Appreciate the time well, we just heard the big news, glassnasa postponing its h due to the bad weather this is expected to be spacexs first launch with human passengers those on site at the Kennedy Space center included president and elon musk. Michael, are we going to do it all on monday . Well be back here over the weekend. Saturday and sunday are the current launch backup days so well be all coming back here essentially just to try it all again. To be honest, this is a mission that lot of people have been waiting several years for, so to wait a few more days, i think people will be willing to just are to make sure that everything goes 134509lsmoothly they were going to try to get it as close to the liftoff time as they do, so unfortunate that just are under 17 minutes, they had to cancel it, but wool sele what happensoff t pens over the. And if things go successfully, how big a win is it for spacex in the competition relative to the other big private names like or begvirgin galact galactic no comparison they would be the first commercial company to be spending astronauts into orbit ever on commercially owned not only rocket, but also space capsule, the fact that they are doing it with nasa has been years and billions of dollars into the works so really essentially even though we have this scrub today and the launch is now being pushed to hopefully potentially weather and technical stuff permitting as soon as saturday, you are still talking about history in the making right now. I would just say as we are looking at these pictures of 39 were on board and it really did come down to the wire. Less than 17 minutes which is pretty unusual for nasa to wait that long to make a call but in terms of things you can control versus things you cant, the weather is ones that you cant. And if it hasnt had to happen right at 4 33 exactexactly, the conditions could have potentially changed. But as it stand, safety is First Priority and you want to get everything right. So now we will set our clocks and wait the next launch window which is saths afternois saturdt 3 3 22 p. M. Eastern. And so clearly this is important. And the president is there i think that ash forir force ond already touched down about yes, air force one had flown over the launch pad actually just before aboutan hour and a half before this was scheduled to launch. But for nasa, the importance of this mission when it does launch, it cannot be understated. We have spent almost a decade of paying russia upwards of 80 million per astronaut to fly on their spacecraft ever since the space shut Program Ended in 2011, we havent had a way to get you are our own astronauts in to space so it is critical for nasa especially in the terms of the agencys long term goals to be able to launch it regularly. But it is also a cost saving mechanism as well. And nasa sees paying spacex for services, essentially putting astronauts on an aircraft that space sxchpacex built, is a way money long term. And does this all mean that spacex has far more clean routes to monetization than virgin la la galactic does . Virgin xwa laga lack tir is tourist play right now but essentially with crcrew dragon and this crew program with nasa, this is a space taxi if you will. So nasa goes from being a specialist in operations and owning its own hardware to now helping invest in and develop the hardware alongside spacex but essentially becoming a customer, one of potentially many customers and by the way, spacex is already partnering with other companies to potentially as soon as next year start sending some paying tourists up to the International Space station and into orbit as well there is even plans for a movie with tom cruise on the iss in the coming years so, yes, there is a lot of opportunity not only with nasa, but in terms of commercialization of space and low earth orbit. And of course bragging rights for spacex too as it looks to develop a next generation starship rocket and eventually make it to the noon and mit moos and would have the distinction of the first private company to send humans to space. Guys, thank you. And elon musk gave jay leno a ride in the cyber truck and talked about how spacex is involved in tesla. Here is a sneak peek of the episode on tonight it will have an option to have rocket thrusters from spacex all right how does that work see, i dont know when youre kidding and when youre not. In this case im serious. You will have rocket thrust ters yes and there is no fuel . No, well use ultra high pressured compressed air the main thruster will be behind the license plate, so for acceleration, it drops the license plate and that is a rocket thruster. Very timely, dont miss the all new episode of jay lenos garage tonight at 10 00 p. M. Right here on cnbc coming up on closing bell, value over growth. That is what we saw in todays rally. And well talk to a top strategist who says stick with that strategy. And you can always watch or e bcen to us live on the go on thcn app well be right back. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Stocks rallying for a second straight day with the dow finishing higher by 553 points and for a change, it was banks supporting the market and retail joining us to discuss is tony dwyer. This is the rotation everyone is talking about. The fact that the leadership in the last few sessions is coming from places that had sharply underperformed the banks, industrials. Are you seeing the signs of life as something that is here to stay would you actually tell investors to go for those groups we put out these sunday night and monday morning, and one of the indicators, there has been a call for banks to outperform or to play catchup over the course of the last two months once we bounced off the march 23rd low there hasnt been any sustainability to it we call it the banks and tanks trade with value the value space has reached a level of underperformance relative to growth not just on an absolute level, everybody can see that when they look at the growth versus value chart. And that is easy to see. What we use is a ten week rate of change indicator and anytime that it has gotten to the spike of growth outperforming value that it got to, and then reversed, begun to reverse, it has gained to trend that way so our call has been, frankly i should have been more bum lillin the s p 500, but it has been led by the covid19 trade. Those companies and those areas that benefit from a work from home stay at home. So actually for the first time in a while, the market is saying that the economy is going to recover. Prior to now, it has really been talking about an extended work from home period and if that does happen and the market does recover, lets say in a really strong way, do you see the big outperformers like amazon continue to rally alongside the banks as we saw the banks strong today or will it be either or . I appreciate the question and i think that we really have to define the market were talking about. As it relates to the s p 500, weve been neutral, so we havent put new money to work. Even since tlow, we had a panic low and significant relief rally. And then we havent been bullish enough because it has not been led by the sectors that typically lead i dont want to call them defensive, i want to call them a covid19 work from home space. So what were starting to see via the credit markets and of course it is all based on the fed. What really changed the retest call and made it wrong was when the fed said at the fmoc press conference that they will continue to provide there is no limit to the amount of support that they will give the market they then said that they would literally print money. And then they said that they want to get it to they will do it until you get that growth. And the thing that blew me around the most, the trade versus growth, that not only is it unlimited, they literally said that they wont worry about it for a while and until they get better growth, they will keep doing it, which means that you started to price in the credit markets and economic recovery then and that was april 29th. And now it is actually catching some steam so i would bet that it came out of the frustration trading range. It could grind higher, target is 3,000. So it can go higher than fair value, clearly looks like it is going to and that may drag up some of those growth names like the faang stocks but the real story i dont think is the index, i really think that it is the rotation. And ive gotten bullish when the feds started buying high yield debt but i would have put you in the wrong spot i would have said go into the market but by economic offense and it would have been wrong so at this point i think it does look a lot better. Tony dwyer, thanks as always. Thank you and Toll Brothers earnings just out yeah, and a nice beat for the luxury home builder coming in with 359 cents a share on revenu of 137 1. 55 billion. And what is interesting, the ceo said that the Second Quarter was really bifurcatbifurcated, came strong in the beginning with net signed contracts up 43 and then the second half of the quarter contracts were done. And he said net signed contracts were down 37 , but deposits were up 13 year over year over the past three weeks now, this is what were seeing from the builders in the market in may that is a strong buyer demand coming back very quickly. We saw it in new home sales which surprised to the up side in april and also one more thing on Toll Brothers, their average sale price for both homes this backlog and homes sold was considerably lower again, this is a luxury home builder up in the 850,000 to 900,000 range, but down at 788,000 as average sale price so lower price and more demand coming back into the market. Back to you guys yeah, and a nice little 3 surge here after hours on top of some better performing home stocks lately diana, thank you still ahead, mike santoli will be back to break down one chart pointing to a potential m and m boom for tech. This virus is testing all of us. And its testing the people on the front lines of this fight most of all. So abbott is getting new tests into their hands, delivering the critical results they need. And until this fight is over, we. Will. Never. Quit. Because they never quit. Welcome back breaking news on United Airline lines. Phil United Airlines changing chief operations officers with greg hurt, the long time coo, he will be stepping back and effective next monday, john roitman in charge of Network Operations has been with them for a number of years, he will move up to the coo position. Not a surprise, guys, that you have a bit of a changing of the guard there given that new ceo is probably putting his team in place as he looks out over the next couple years. But again, united coo will be stepping back and john roitman is moving up to that position. Thanks for that and new now a look at Toll Brothers beating on both top and bottom lines. Sales weak in may, but the indicators suggest coming ckba fairly strong. Up 9 in after hours trade across america, Business Owners are figuring things out. Finding new ways to serve customers. Connect employees. And work with partners. Comcast business is right there with you. With a network that helps give you speed, reliability and security. And enough bandwidth to handle all your connected devices. Voice Solutions Like remote Call Forwarding and readable voicemail. And safe, convenient installation. When every connection counts, you can count on us. Get the connectivity your business needs. Call today. Comcast business. Welcome back lets send it over to mike santoli for a look at cap levels in the tech sector right now mike, what do you see . Yeah. Sara, a big theme, merging from the whole period is the very strong getting the better of the weak and that might translate into the buy of the week and look at the tech and Communications Services firms and it is in the uptick in the latest quarter and this is data from Credit Suisse and then look at a member of m and a deals in the same sector and its lagging the previous years pace and this is a tough environment to get the transaction done and there is a dry powder there presumably for a large activity that tech firms look to fill in, and Big Companies with high cash and a ton of corporate debt that was issued just in case to cover cost, if in fact the economy recovers they dont need to burn through that cash is probably going to feed to more m and a down the road if the economy stabilizes quite a bit something to put in the radar where were not looking at other types of uses of cash quite the way we have been in recent years. But i feel like, mike, the more we talk to executives right now or maybe this is different in technology, what youre hearing now is its all about cash preservation. Its now a time to manage your cost and to keep your cost and stay conservative. I think it will be interesting to see when that tide turns and what does turn that tide it doesnt feel like ceos and other executives that we talk to are quite as optimistic about the recovery as the market. No. Theyre completely in defensive mode right now i think it would take a few quarters of the economy looking okay, but the Big Tech Companies can be opportunistic in this type of environment because they dont have to think that way in terms of their Balance Sheet so thats why this one area you might be able to see something happen mike, thanks so much. Up next, Retail Stocks surging today got nordstrom and kohls amongst others gniaing significantly. Well preview earnings still to come later this week where will you go first . Will it be familiar streets . Or perhaps unknown roads . Wherever you may go, lexus will welcome you back with exceptional offers. Find a lexus for every road at lexus. Com. No payments for up to 90 days on all 2020 lexus models. Experience amazing at your lexus dealer. Okay, give it a try. Between wisdom and curiosity, theres a bridge. Between ideas and inspiration, trauma and treatment. Gained a couple of more pounds. Thats good for the babies. Between the moments that make us who we are, and keeping them safe, private and secure, theres webex. Beautiful. Welcome back. Looking ahead to tomorrow well get numbers from a number of retailers, nordstrom, Dollar General and Courtney Reagan is here with those. Those are just a few of the names that we will get tomorrow. We expect the results will diverge again between those essential retailers with open stores and those that werent and we want to know where shoppers ultimately ended up spending those stimulus checks, but its the comments about the reopenings thats whats going to really matter here. We got a preview of costco with the Monthly Sales results which showed the stock up behavior in march and stock did show the shelter in place rules costco provided consumers with essentials which is key and maybe a particular boost for Dollar General so well look to see what they say about that Williams Sonoma stores, of course, those were closed, but 56 of Williams Sonoma sales are online already and we know the customers hunkered down and leaned into home good, homeware and appliances for the kitchen so that could be a benefit, too. Nordstrom also has a higher proportion of sales online at about 35 . It could provide some offset, but still, we know its in the Beleaguered Department store space and it already announced a restructuring so far during this crisis so it will be a mixed bag for sure tomorrow. Quick question, courtney, a lot of the share price reaction to some of these earnings has been on the back of commentary from the calls about what the retailers are seeing postquarter and just in the last few weeks especially the ones that were hardest hit what are you getting on that front and are there threads developing about how confident and optimistic these companies are about the reopening . Yeah. Absolutely its always key to look forward, right, but especially now because we just finished the messiest quarter that we will hopefully ever have in retail so we care about whats happening now and how have consumers responded as stores have reopening and some retailers have actually had green chute commentary about this without any real hard numbers in a lot of cases, but they said, look, the traffic has come back stronger than we expected. Conversion has been up so the shoppers that are coming to the stores are coming with intention and theyre buying theyre not necessarily just browsing around. So thats sort of what weve heard so far and well see if we get color from the variety of names. Thanks for that mike sasantoli well pivot back it is up 16 in two sessions and the question is how long it can continue, but year to date still down over 30 and highlights the level of underperformance even coming into this week. Yeah, so much room to make up if this trend does continue, wolf, and as i was saying before it is not at the outright expense of the leaders and it is an answer to critics who said this is a narrow based economy and 90 of all stocks above the 50day average tends to be a good leading indicator that the market is on firmer footing and thats where were seeing and at least for a day, its 2 hunday average. I would just add that it continues to be a ray of growth and a lot of indications point to the fact that things are picking up j. P. Morgan just put out a credit card data alert showing that we are start sog see signs of life in debity and credit card spending from low levels. Well have to see if that rotation continues were out of time. Thanks for watching. Fast money starts now. Fast money starts right now. Im melissa lee. Guy adami, tim seymour, Karen Finerman and jim grasso. We will break down the big risks in the brewing battle. Shares of moderna tumbling and what we just learned about Insider Selling that is raising more eye brus and box getting a pop in the