2. 5 florida reporting a record jump in new cases today the governor of texas saying there is a major Virus Outbreak sweeping the state new york, New Connecticut imposing ;stcftk from hotaa spots guy . The bottle i dont think theres anyway to get people to go back to what we were doing a few weeks ago i think we tried to do this too quickly. One of the things i said and im not splitting the at tom here, a lot of people have said it, the bullish, cmi m 1 if you want t }zthe beach. That soon as much as youd love ton seea vaccine arounds, the corner,vs just not thereband the0÷numbe are going back. thats veryfk troubling especiay when youre talking about s an economy thatca73 drivecmby consumer theanes p 500 clztoday at 3050 to me the number that keeps popping up is 2790 and the s p 500. It makes a lot of sense for a lot of reasons you just say, well, look where we came into a day like today where there was some disturbing news on the virus the market has been unabashedly bullish if you look at the Investors Intelligence numbers were an absolute bull over bear spread in terms of positioning, at least in terms of wh uzthe sentiment lies. C whats todays pullback . Its nothing to what i think had been the rally this week and late last week especially as it relates to mega cap tech i will certainly throw into the hat that i think that along with the rest, i think the markets have gotten ahead of themselves. A day like today is not necessarily a reason to start thinking about retesting march the issues on the virus are certainly disturbing little bit more. Zabout the vir i would n2nnecessarily say the reaction to the market was5 all about4rathe virus. It was an opportunity to takey profits and the;i markets probay opportunities. Karen, what did you make of the selloff today and what did you do if anything similar to tim, if you step back and look at the ae less from theabottom. Y rt hac the scale of the tally, this really just alctiny blip. I thinkg that once wenr start think the market will like that. I still think the underpinning of the fed being there, to me i was looking for things to gbuy. One thing im looking to buy is starbucks. It closed at 73. 64 todays low was 72 i didnt buy it there. I thought i may get a chance a little cheaper in the coming days i dont know if ive missed it or not im looking to buy that. I put on a jp morgan call spread, could be an option action kind of thing for july earnings because i thought that was a cheap way to play not just jp morgan of course but the market bouncing back i was looking for things to buy. I didnt quite get there yet, but i dont view anything as radically different. I think we could be one vaccine release away from the market turning around one vaccine headline away. Thats what i meant, you are correct. Or one headline about a treatment. Or what i think we might also see is the people getting hs gbvrn thinkv are onv average significantly yw er and i thinkrztherefore well hp scary even if we do÷9 have mors infections. Youre shakingvoyour head. Scary until theres a vaccine available to the masses. When you think about whats going on right now with this virus is that its spreading in e huge eers prior and itsxv spreading in areasyy where peop wearing masks. I when you think about the fact thatu stores and a lot ofln re stuff wasgnopen in manyj of t partsb2in the south and southwt where placesw in the northeast were shut now theyre4yhaving rolling its not going to be dictated from the states or its going to be a local sort of thing and its going to be led in the private sector the summer is going to be really rocky from an economic standpoint the Economic Data is going to continue to stay volatile. When i think about the s p 500, im hard pressed to think about anything other than the mega cap stocks that have dragged it up then i look at how poorly the russell 2,000 small caps act i look at how poorly the tenyear yield acts. I see the dollar bounced a little bit today im not particularly constructive as we head into the summer i dont mean that were going to test those march lows, but 32 in the s p 500 seems to be some pretty significant technical resistance but from an economic standpoint, say to yourself, listen, the market got ahead of itself it was basically pricing in a very sound recovery here in the u. S. I think what the last week or two tells us that its going to continue to be rocky the last point im going to make is from a psychological standpoint, the fact that a hot spot like new york and new jersey are going to now impose zor tells you this is not9tgoing any time e oon. It will remain politicized and to volatile in the stock market. Yo want to go to next. W that iswybusinesses decidingzbn their own hespite what theut is doing[to shut down4f locap companies have2u announced some measures today lets start with the breaking news in just the last half hour rocketing higherefter hours u u credit card issuer 3cardworks haveo mutuallyqcagreed to cal drastically market co resulting from theq pandemic. Other compapzj also dealing with the rise in n nfections. Apple saying it will reclose seven store locations in houston, texas, confirming those locations will close tomorrow as the Lone Star State grapples with a rise in covid cases like Governor Greg Abbott in texas is calling a massive outbreak apple has closed 18 locations in various hot spots around the country. Scesaraesars entertainment, di have petitioned to urge the government officials to reconsider the opening of the theme park on july 11th next month. The petition was posted on moveon tmov moveon. Org guy, you mentioned reclosing. Forget it. Aint going to happen. If it happened in a part of the private sector, deciding it may be too risky to operate in this environment, thats the same effect. Right 100 its the same effect. Its not the governmentf,yw you were 6reclosing. Za te companies. o rt hahp c its people8saying do iireally want to. subject my family to potentially getting this[ disee at some water parkc or disneyt world. The answeraist8 probably no for fact whenqeyoure a consumer driven economy, its problematic if people stop spending money. I know i listened to a hundred people tell me about the great retail sales number last month, up 15 u that jobstj number got everybody. pthats in the niq,t of some im hard pressed to believe wd cont7lj that n ctory. X its note me trying to be do piblgture i think theres a psychological component to this as well. Karen, you mentioned the mortality rate going down because its younger people being infected unless theres a change in your attitude, knowing youre not going to die from it doesnt make you feel better about going out necessarily. Does it change your behavior just because you know youre not going to die from it but you might get very, very sick from it i mean, if youre a college aged kid, i dont know that it really changes your behavior for me, you know, i have hardly left the house in three months i think, though, that even if it does, lets say we have a dent in the economic recovery and its pushed back a month or two months, the market isnt valuing this next quarter of earnings very highly anyway i still come out with ultimately do we have either a treatment or vaccine, and i believe we do, and is the fed still there, and i believe they are i think we will see additional stimulus as well. Lets get more on todays selloff. Our next guest has a perfect o÷ lets nbring in tonyndwyer. Wezr u n 50 points of u hat. Doesnt mean you cantkv blow through it. n q things that are in place, there were three things that really drove that final leg lower in march. It was you had no idea what covid19 was you had no idea what the Economic Impact was going to be andg last and you hadj idea what the Monetary Policy wase goingo you know,÷that uncertaifyin thoseqpareas nowhave some xy visibility karen hau mentionedxw monetary n continue we3 believe that a vaccinesoan treatment should at least be announced and eexist at some point thisn year. R the market has been driven by Monetary Policy, so you know based on the Economic Data, based on the Monetary Policy and based on the science of trying to find a vaccine and treatment in our view you want to be a buyer of weakness. What areas would you buy . Its the most insane thing to say on the planet, but if you believe that the fed is going to continue the stimulus and by the way, it has been extraordinary. You have never seen this kind of money supply growth in our history. You have never seen this kind of excess liquidity which is the money supplied plus other liquid assets against what you need to actually grow the economy and youve never seen the promise of a fed to just look into a camera on 60 minutes and say were just printing money with that backdrop, it ultimately comes down to what karen mentioned, the vaccine and treatment. If you get that vaccine, its like a light switch could go on. The challenge i think the market has now is that its tryine figure out, number one, what multiple you pay for the fed to i es you cant fixx debt wi x expznnentially more xebt. I believeitsbe to be the] whi been correcting sincet weve be looking for this consolidation since june 5th its interesting, though as of today, 56 of s p components are trading above their 50day moving average. It was 97 last tuesday. Correction its been that starts to build on itself it depends on what bond market to your point, the tenyear treasury is telling you its going to be a lame recovery, a meek lending environment you have well over a trillion dollars raised you have the money supply numbers growing in the 20 area. It is bananas relative to any other period in our countrys history. It depends on what stimulative effect of money happens. Heres the thing about the banks. When the market was going higher before that 60 minutes intervie by the fed, i believe powell was on there in part because the banks were retesting the low the thursday before that interview where he talked about ans no reasonbto expect itl to sp any time ,soon, right before that, that lastj2 thursday, wel fargo was nrumored. To be havi to cut their beingnn7 acquired byv goldmanq then they just gripped] it higr becbwaf that fed where it understood that the fed is going to print money until they get their two mandates how many times have i been on the show and ive looked into c you what they are goinghyto do intention. Position and i think you could banks and r industrials and se of the economic sensitivejiare thi ve alreadyvcp corrected. Guy, why dont you believe that paowell has the power anymore . The fed managed to lift us off the march 23rd lows. I should believe him, absolutely so many people have said why make this more complicated than it has to be tony dwyer is the head of that list i totally get it why fight what is clearly their mandate . Their mandate is to make sure the is s p 500 or the nasdaq gos higher with that said, you hit a point of diminishing marginal returns with these actions i think were getting close to it by the way, dan mentioned the dollar had a bit of a rally. You start seeing weakness in the dollar and people might tell you how bullish, i think that could be extraordinarily bearish watch the u. S. Dollar. The u. S. Dollar has been weak. If that weakness continues, i do not think this time thats bullish for equities that falls at the feet of the fed reserve. Worst performing ars in banks gear upj for their ann stress q9 chris, great towbspeak with yo n to see you, melissa i hope everyon y you think thatlgdividendse across the boardn st . A couple of months ago i neu that svprovisionsqmnumbers t quarter was dbig. It was up . Alm. What we have to look for in a are they etwith provisions . Theyre getting confident and they have a basic idea of what theyre dealing with for the year if they come in same level or higher, it tells you we still dont have visibility. Were talking about credit loss. Theres no vaccine for credit loss its fine to talk about the fed. I agree with your previous guest. I kicked all of my equities out, common equities out on monday. I just own preferred because i want to go higher in the capital structure for a while. I dont want my feet to get wet, if you know what i mean. This is a 1930s type situation this isnt 2009. This isnt about liquidity this is about credit loss. A broad swath of america in terms of corporate credit, commercial real estate is going to take a big bite out of the banks. I think losses this year could be more than 2009. Commercial industrial loans as well. Right were going to do 2. 5 trillion dollar in Residential Mortgages this year. Chris, im wondering how do you think we should think about provisions iap half ofke hac the oard you saidee this was a c 1930s x scenario should they be even higher . K sen the banks if they hadaj to pt that capital xaside . Y t through 2009 tj hrected that earningsv power at the problem and dealt with it. Same thing here. You could easily see earnings this year get consumed by credit cost provisioning in 2009 was 2. 5 time what is they actually charged off. L recover a lot ofc value later n this is about dtime. . The market come backants to seet i jdo below book v0le. Thats4u whatlxdek ive been d. I think avery longterm opportunity to get in. You may have another opportunity. I think there will be disappointment in Second Quarter earnings but if the banks can give us more guidance and we get more data, especially commercial, this is very lumpy, its not like Consumer Credit its a very big, very lumpy asset class. Stocks could take off again. Youve seen that. Chris, thank you. Be well. Chris whalen of Whalen Global Advisors karen, what do you think jp morgan is my biggest position i dont believe they will change their dividend i think well probably hear early next week what their strategy is. Well get some guidance tomorrow from the stress test i dont believe that for jp morgan that will be an issue weve talked a lot about wells fargo. Maybe that one is an issue im not as comfortable with their capital. Also i think the yield is ridiculous e price thing, but feek of one to be avn candidate to c their d zyim . n commercial mortgageobacks and the potentialc exposurev banks have there, for those provisions why drive blind . I think youre going to hear kc ultimately better terms from tho bank. Were justfngetting started here0zezfast yxmoney. a coming up weoy break down the0 three most defensive charts in the entire jarket. Tracki trends the one stockonday traders are piling into during todays see can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Tasnhu lets you transfer prup to 90 creditsnsultant [announcer] if youve tried college but never finished, toward your bachelors degree. [woman] it doesnt matter how old you are, you can do it. You can finish. [announcer] finish your degree at snhu. Edu. More big news in the retail trading world today. Were seeing a major rotation out of one group of stocks and into one big name. Kate rooney has the details. Airlines had been leaders on robinhood in the past few months but today clients were selling out of those Fan Favorites delta, american, united and Spirit Airlines all seeing a drop in popularity on robinhood according to Third Party Aggregator robin track those stocks taking a hit tooda as a spike in Coronavirus Infections pulled traders away from those names companiesltgainingecpopularit trt h that is one3fof the[] nmost the millenniale trading bylat. Guy, well, hello retail traders at home delta air lines, if you recall, there was concern, concern, their pilotsm numbers. F,iny. The stock trades 60 million n sharesr u u orc8 so a day i think youre going to get it around the 23 level. Thats where you reenter a name like delta. Amazon finished the day down only 1 . I dont know how much of a pullback this was to take advantage of, but its interesting to see what defensive is in the minds of these traders. I think a lot of it has to do with sentiment i think the investment world has come to universal believe amazon t is the prepandemic winwinner, e postpandemic winner this market has been a traders delight. You can get in and out of those things, trains, planes, automobiles, the things that the port nen portenoy guys are in i think youre going to see a lot of that money come out of that trade then theyre going to move back into the mega stocks thats whats going to happen. I think todays underperformance on the downside is pretty telling. You had money come out of the a into the microsoft, google and eh im shaking my xhead becaue this isnt traders delight. Caue this is a case where retail traders were getting out at the bottom they didnt buy the bottom today after a 30 to 40 pullback, its nothing to do cartwheels over. i people have been ueaqr ected on thiscpif anything, a day like ty when you got on othg states, ih think its ferterms of . Nmazon, it ubn kefeels safe ben after. I think that trade continues. Karen, quick comment . Lets say you and i started a podcast where we were betting on sports for whatever reason we like their uniforms we were having a good time and we were doing it every day then the real sports gamblers who really know what theyre doing started listening to what we were doing. Wouldnt that be kind of ridiculous point taken, Karen Finerman well put guy, go its a free for all now. First of all, i love the sugar cane gang as much as anybody and i have them on my spotify play list. Sugar hill. Sugar cane, sugar hill. Is that it . Thats it coming up, seeing red on wall street today. The chart master has the three most defensive charts in the market whe cf1 o youre first. First to respond. First to put others lives before your own. And in an emergency, you need a network that puts you first. That connects you to technology to each other and to other agencies. Built with and for first responders. Firstnet. The only officially authorized Wireless Network for first responders. Because putting you first is our job. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Woi felt completely helpless. Hed professioonline. Consultant my entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Market sun surge in coronavirus cases weighs on investors. Thedcsafestm charts in the 1mt so he sa] 9 lets look at a few charts first the s p. Selloff. In the early part of may we had a 7 selloff i think there is more downside the first of three did i haefene areas of the mark, lets look a gold look at the second chart you can see all the way back this was a very big juncture look at the third chart. I have here i included back to then when gold peaked in summer of 2011 finally, take a look at gold and its relationship to all commodities. You see on the top thats gold on the bottom is the all commodity index. Second area to consider. This is the powers combined. The bottom line is the baskets performance relative to consumer staples. We see absolute performance. Look at the big move two or three weeks ago, a huge pop off the average. Guy, which would you like gold, no question about it. Gold is breaking out if you see that weakness that i anticipate, i think thats going to add a little turbo charge to this gold move if you look at the relative gold chart, i like the bottom panel. Whats most interesting about gold is it may be pulling other commodities higher or at least the message is on the weaker dollar commodities move in five and tenyear clips the last time we had a commodity super cycle was 20022003 after a major recession. Coming up, californias battle against big economy giants getting a little more head way today what does the latest move mean for uber and lyft. Later were counting down to earnings out of nike stock slices. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. Schwab. announcer reliability is everything. So, if your networks down, youre down. Verizon knows your customers need to reach you seamlessly. Your team needs to work from different places across many devices. Plus, you want the security trusted by some of the Largest Companies in the world. And thats why you trust us. The most Reliable Network in america. California ramping up its legal battle against the gig economy. Californias attorney general is getting ready to file a preliminary injunction tomorrow. The city attorneys filed a lawsuit against the Ride Sharing Companies paback in may saying they were misclassifying their drivers under californias gig economy law. Weve been talking about this battle for months. Theres a group of drivers who want the benefits and protections that come along with being full employees lawmakers also taking notes that gig workers are on the front lines as essential workers but they lack those protections. On the other hand theres a group of people who enjoy their status as contractors because it gives them flexibility this is critical, of course for uber and lyfts business models, having to treat drivers as employees could force them to shut down service in california or raise prices dramatically for riders San Francisco and l. A. Are two of ubers biggest markets globally so the stakes are high here. Weve been talking about this for a while now. We know that instacart and door dash have raised a lot of money with some high valuations in the last month or so but the point she makes is the most important one when they have to start classifying some of these workers and the costs associated with that, thats going to be the headwind here. I really liked lyft here im bullishly positioned in the name with options. But breaking 30, theres a lot of room to the downside here, especially if the reopening trade doesnt go as planned. That said, i think coming out of the pandemic with a vaccine in the next 612 months i think these stocks are ready to party a little bit here but they really need some clarity on this worker issue. Coming up, nike on the move over the past three months plus, tesla coming in dead last in jd powers quality study. All the problems they saw ahead. Welcome back for the first time ever, tesla included in jd powers initial quality survey, but it might have been happier to stay off that list. Well talk about the tesla results in just a bit. Let me show you the top and bottom auto makers in terms of quality. This is what people say after 90 days, dodge and kia tying for number one in third place its a tie between chevrolet and ram. The one at the bottom will not be a surprise, mercedes and volvo, audi and coming in 31 out of 31 brands land rover. They have a lot of intense loyalty and sales remain strong. Tesla is not officially ranked they did get answers from about 1300 tesla owners in 35 states based on that jd power says that the initial quality is the worst in the Auto Industry in terms of problems per 100 vehicles. Moi most of the problems have to do with fit and finish, things like wind noise, squeaks and rattles. All of this coming on a day when the national Highway Traffic Safety Administration has launched an investigation into whats going on with the touch screens of 63,000 model ss built between 2013 and 2016, a number of owners reporting problems with those touch screens. Whether that leads to a recall or a notice from the Company Remains to be seen as you take a look at shares of tesla once more, remember that next week well get the q 2 delivery data from tesla and whether or not they have to alter their guidance for full year deliveries. They are saying they plan to deliver 500,000 vehicles world wide this year though given what we saw with the factories shutting down in april and a number of issues around the world, the question is whether or not they still plan on keeping that guidance. It will be much harder to hit that year end target if they fall short in the Second Quarter. Phil, thank you. I would imagine, karen, this doesnt change anybodys mind when theyre going online and buying their tesla that there are some squeaks and rattles and things like that because of a jd power survey. I think thats right. Also i think investors, its not going to change their mind because the thesis is its not a car company. I guess it doesnt matter if they come in last. As they make more cars, i actually think they will be able to improve that, but on a valuation i just cant get there at all. I think this entire panel is bearish on tesla is that right . I wouldnt short it. Yeah. Go ahead, guy. Its hard for us to ascertain whos going next in this open ended environment. There are a lot of reasons to be bearish on tesla i dont think the jd power survey is one of them. As a matter of fact, they probably look at it as some sort of badge of honor. Theyre down there with porsche and audi and mercedesbenz just trying to keep it real here coming up, nike set to report earnings tomorrow and options traders are betting on a slam dunk. Plus, jim has the governor of rhode island on mad money talking coronavirus reopening plans for the ocean state. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Nike traded well over two times its average daily options volume today we saw call volume outpacing put volume by about 31. The 5. 1 theyve averaged over the past Eight Corners the july 2nd weekly 105 call, those were trading for about 1. 30 buyers are obviously betting that the stock is going to be above that 105 strike price by expiration which is a week from this coming friday that would represent new alltime highs number one, that would be a new alltime high. Secondly, these are very cheap options. These cost a little over 1 of the stock price. That might be one of the reasons. Options traders are looking to toy with that strike in particular tim, what are some of the key issues for nike . Obviously china would be one and direct to consumer i think he nailed it. The product mix and where the exit data from may will come from china if its 20 or knnorth, i thinki a world of stratospheric valuations, you want to own it i think nike is a name that continues to be well above the rest it continues to grow the margin base i think the company should be rerating in an environment where Companies Really dont have a good insight into the business this Company Seems to be able to give you as much as anybody and i would stay with it. What do you think of nike, karen . Are you still in footlocker . Im not, but i like nike. Im not long i agree with a lot of what tim said i think theyre direct to customer theyve been ahead of the curve there. That will help them. I think a lot of stimulus checks will be converted or have been converted last quarter into sneakers as well as people want to be comfortable at home. Tims comment about widespread panic may have gone over guys head. I saw widespread panic at the Beacon Theater on march 24th when the stock was near its lows with a seven handle on it, what i think is most interesting about their guidance tomorrow, on that last call they were already talking about china reopening. Any commentary they can extrapolate is going to be really important next, final trade. Were committed to making college more affordable. , thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Heres where we stand after the close of trade here, s p 500 down by 2. 6 , the nasdaq composite coming off of the record high from yesterday, down by 2 , the dow losing 710 points by the close, down 2. 75 final trade, tim people will cut their flowers and nicely is a beautiful flower karen im actually hoping we get another down day because some of the things that have got a little too frothy are coming down the first one is starbucks im hoping a get a chance around 72 tomorrow. Tim is one of those beautiful flowers i used to line up on the lacrosse field and yard sale totally. That was the weakest thing ive ever heard carter on the defensive trade, i think kroger is an interesting one here the stock trades really well the chart looks great. Any bad news on the reopening, restaurants, delays, thats going to be good for kroger. Guy our San Francisco office has the great josh lipton. Now we have debow. Way to go. Dollar gen is just a monster here tnkfohas r watching my mission is simple, to make you money im here to level the Playing Field for all investors. Theres always a bull market somewhere and i promise to help you find it. Mad money starts now hey, im cramer. Welcome to mad money. Welcome to cramerica other people want to make friends, im trying to keep you from losing a lot of money my job is to educate, teach, call me or tweet me at jim cramer sometimes a few negatives here, a couple there throw in history and you start to get
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