Transcripts For CNBC Closing Bell 20240712

Sanctions and claims to the South China Sea take center stage today. Stocks are shrugging it off. The dow up more than 400 points but the big tech is struggling faang, internet names that have been on fire are seeing weakness today. Were following it all 59 minutes left of trade. Certainly weve been all over the place in markets but were up as we stand with the major indexes we have a big line up of guests. In a few moments well speak with shrewsberry, cfo of wells fargo. And Robert Kaplan will join us and well speak with Michigan Governor Gretchen Whitmer an earlier biden endorser as biden lays out more details of his economic plan. Lets focus in on the big stories were watching at this hour wilfred has the highlights ph wilfred, start off with the banks here. The key focus, sara, as we expected it to be on provisions for potential bad loans. They rose from all the banks from q 1 to q 2 and rose more than expected. Wells fargos more than doubling quarter over quarter the big question will it will be the peak for the provisions particularly given spike in covid cases since the end of the quarter. Here is jpmorgan chairman and Ceo Jamie Dimon on that topic. We feel the same today as we did at the end of the quarter. And were very clear we cannot forecast the future. We dont know. Were also very clear deny sh did at least i think, well have a perkier economy Going Forward. We are prepared for the worst case we simply dont know i dont think anyone knows. Citis ceo was not too down beat about those spike in covid cases. I think you can see that in the spend rates that, you know, while these cases have had a resurgence, you know, weve seen spend come back off in some of those places we havent necessarily see it go back to the lower levels of the darkest days of early covid. None of the banks could guarantee that provisions have peaked trading in Investment Banking for citi and jp strong a huge upset to the pressure in the Retail Banking operations. Wells fargo, on the other hand, doesnt have that offset and their dividend cut could share to 10 Cents Per Share was bigger than expected hence the share price move all the banks trading down today other than jpmorgan which is holding on to slight gains and Goldman Sachs is up, as well, ahead of their report tomorrow, sara. 0 so do you think the shift in tone from dimon last quarter i remember he sounded a little bit more constructive as it relates to the economy. Is it because the stimulus effect was in full force last time and now its wearing off . I think theres a slight shift in tone from early june when the share prices peaked and they all sounded a bit optimistic in terms of whether or not reopening was going well. Theres definitely a little bit of a softening or worsening in tone since then. The tone wasnt outright bearish. It was just unquestionably uncertain. The scale with which provisions have gone up again in q 2 is significant. Its almost inconceivable, if any of these base case expectations that all the banks have within their Investment Banks and economists, almost you can see the second half of the year provisions could be higher than the first half of the year. No one can say that for certain. Investors want certainty we havent gotten that yet thats why share prices are selling off. With jpmorgan, you see an absolutely outstanding Investment Banking quarter it means the share prices are slightly higher. Youre getting a sign of what people might expect from Goldman Sachs tomorrow the fixed income portion did very well. They dont have as much in Consumer Banking and commercial banking, which is where the provisions are turning out. Jpm and goldman helping the dow now. Turning to the other big earnings story delta shares lower. Phil joins us now with some of the details and the color from his interview. Shares of delta are off the session low. Make no mistake, it was an ugly Second Quarter the company losing 3. 9 billion pretax a loss of 4. 34 a share. Wider than expected. Thats not the reason the stock is lower the revenue coming in and just under 1. 5 billion, the worst since the mid 80s the real question is how bad will it be over the next 12 to 18 months . And in regards to the business now, ed was very clear travel demand is slowing down this summer its not reversing its just not growing as much as delta and other airlines expected the daily cash burn is down to 27 million a day. Delta has plenty of liquidity now at 15. 7 billion, he told us its likely delta will have to raise more. I anticipate we will raise some additional funds. As you mentioned 19 months buys us time, assuming no progress from this point. We will certainly be looking to reduce that cash burn level 27 million a day in june. Expect july will probably be about the same level as it was in june. But certainly as we get toward the end of the year, our goal is to get our cash burn down to 0 we can start raising cash to pay the debt down. The weakness in the Airline Industry not just here in north america but around the world, its being reflected in june orders from boeing negative 182 airplanes thats what happened in june year to date, negative 784 in turn terms of commercial airplane orders. June deliveries delivered 10 airplanes. That number is likely to increase once the max is certified and ungrounded, potentially, later this quarter. Bottom line is this, airlines, particularly Leasing Companies and airlines, they have cancelled the max because when you look at the 182 in terms of negative orders in the june, guys, 179 were for the 737 max. So what did he say, phil, as far as the outlook on travel demand returning has it been impacted by the surge that were seeing in certain pop lis hot spots across the state now . Sure. The sun belt thats right in the heart of delta, you know, the hub their home is atlanta. So they see the southeast much more than other airlines they are seeing the impact down there. Its not just the resurgence of covid19 that might have people saying, well, why am i taking a trip to florida or texas or somewhere elsewhere cases are spiking. Its the fact youve got the quarantines that are in effect in new york, the tristate area, massachusetts, chicago has one itself so it has people in these areas saying, well, should i take a trip if im supposed to quarantine when i come back here overall, that has fewer people flying than expected this summer. Phil, thank you so much for that now to the coronavirus and a growing backlog of tests in the united states. Meg has the details for us hey, meg, tirrell. Reporter fiphil mentioned te areas. Quest diagnostics saying last night for nonpriority patients, essentially those in the hospital or Symptomatic Health Care workers, for everybody else, it takes on average seven days to get their test results its up from 2 to 3 days in early june its not just Quest Diagnostic buy row reference labs three days or less how to fix the problem admiral brettgiroir is saying couple of things is coming online by the fall he points to point of care tests like antigen tests. He also points to the idea of pooling where youre testing multiple samples with the same test beyond that, he said we should be prioritizing testing, again, to patients who need it the most there is a growing frustration, guys, about some groups of people can access to testing and it includes professional athletes nba player Hassan Whiteside posting he was getting his 20th covid test nba players are getting tested every other day as theyre in the bubble in orlando. We reached out to the nba about this, and they said our testing in orlando will not result in Testing Capacity being i did strerted from the community. They have a program that will be additive to public testing guys, just more problems five months into this pandemic. Back over to you. Meg, switching focus slightly what did we learn from maderna today . Well, they posted the Clinical Trial criteria. The protocol for their phase three vaccine study on clinicaltrials. Gov they have an estimated start date of july 27th for the large phase three trial. So this is barrelling ahead toward the start of the huge effica efficacy studies for vaccines in the u. S. On the testing front, you mentioned the nba and clearly if theres money, they can pay for faster tests and they can pay for more tests harvard university, and its plan for return to the fall, even though its going to be online, said students can come back on campus, if they test every three days how is that going to work . Are they going to pay for it and do that . There are lines in arizona where people are waiting 13 to 15 hours in their cars to get tests and, as you said, waiting as much as a week to get it back. Yeah. Thats a look at harvards plan, but i know some universities have access to Amazing Technology so harvard may be tapping into the institute which has genome sequencers being employed now to help with testing. A lot of people said Academic Medical Centers are an untapped resource in helping us with our testing. Universities might start getting creative in how theyre doing this. Meg, thank you so much for that markets, by the way, up 0. 6 on the s p but the nasdaq just given up a little bit of ground and gone back into the red albeit slightly down continues to lead the charge up 1. 6 after the break, wells fargo has been underperforming all year and todays results arent helping the stock. Well discuss with John Shrewsberry after the break. Experience the joy of a bigger world in a highlyconnected lexus vehicle at the golden opportunity sales event. Lease the 2020 es 350 for 359 a month for 36 months. Experience amazing at your lexus dealer. Experience amazing 49i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. Welcome back after reporting the q 2 earnings before the bell, the Bank Reported a miss on the top and bottom lines so for more on the earnings well bring in the cfo of wells fargo John Shrewsberry who joins us by phone. Thank you so much for joining us caller thank you glad to be here. We wanted to start on the topic of provisions. Yours, in particular, relative to q1, up far more than your peers. Why did you think that is . Did you underprovide in q 1 or is your business mix worse than some of the other banks . Caller yeah. I dont think its in fact its probably better given how far less exposed to credit card and given the change in environment. The we work we put into the q 2 provision and allowance bill to be gone portfolio by portfolio and done bottoms up work throughout the course of the quarter and everybody has a better line of sight on at least the fact there will be a vshaped recovery and parts of the economy that opened up over the last few months, weve had some close down, et. Cetera. Thats all new and incremental news and different banks will process it differently theyll apply it to the different types of loans but that gets us to the level where we are, which at about 20 billion or 2 of our loans overall, actually, compares appropriately on a mixed suggested basis with the others. What level of confidence do you have, john, that q 2 will be the peak for provisions . Caller it depends. We have high confidence if the Economic Forecast unfolds the way we expect it to. We have our own base case that lines up reasonably well with the median of most public forecasters. We put about a 20 weight on the downside case, which is substantially more pessimistic than that, just to be cautious in this process. And so sitting here today and, you know, at the end of the quarter, we believe we have captured the lost content. Were aware of the Accounting Firm loan loss provision for banks changed this year. Were trying to capture the loss content in the portfolio at the end of the quarter, knowing what we know, we feel like weve got that. John, its sara im trying to read your results relative to the others as well as your share price, which is done markedly worse than the other banks this year. And im wondering how much of it is a wells fargo problem its no secret you were struggling for years ahead of the pandemic with the fake account scandal and the weight it was having on your business how much is a problem in the u. S. Economy and some of the places that youre particularly exposed to, like consumer and housing. Caller yeah. We all have different business mix. Theres definitely some level of idiosyncratic wells fargo story. We have some work to do to repair our relationships with our regulators that we have talked about its hard underway but the franchise is very much intact. You know, our status is the largest mortgage lender, coverage, Small Business lender, middle market lender all of that is intact. I think Bank Balance Sheets and loan quality is as strong as it has ever been going into a downturn in a cycle. Certainly much better, not just for us but across the board among larger banks for each of us its a little bit different. One of the major areas of differentiation today, you can see in the results, is we dont have as large of a corporate and Investment Bank. We dont have as global as Investment Bank and there was a opportunity in the First Quarter. We had a record quarter for us, but it is we dont have as much weight on that in our business mix and that was an outperformer and then were providing, wolf said, some folks put up more in the First Quarter and less in the second we put up more in the first. I believe most people believe will tail off from this point, unless things get worse than expected from here. Go ahead. Finish your thought, john. Caller i think its worth pointing out we have a new Management Team, new ceo who has brought in a wide array of new leaders. I think theyre doing their work certainly investors and other stakeholders watching to find out what it looks like once theyve had a chance to put their imprint on the company as a whole. And were in the middle of that. So some of that came up on the call earlier this morning. I think by later this year, you know, coming into the end of the first year with cheryl as the ceo and looking as the opportunity for people to understand charls intentions are and run the best over the next several years. Theres also, of course, the fed asset cap. It came up on the call, as it did last quarter i mean, just how much of a hindrance, john, has it been for you and charlie as you try to run the business caller more recently its been more of a constrain you know, when riskfree rates moved above zero a year and a half ago and cash flowed out of banking system, our Balance Sheet naturally rolled down. People put cash in Cash Equivalents and out of deposit accounts and it created some head room. The reverse has occurred in the last three or four months as people have stockpiled liquidity from the bank. It makes our Balance Sheet bigger, even if were just holding cash at the fed. So weve had to do a few things that definitely cost us Interest Income at the margin to be able to navigate through that well continue to, as long as the gap is in place. So, you know, its hard to put a number on what it costs. If our Balance Sheet were 10 bigger, call it 2. 2 trillion versus just under 2 trillion, there are, you know, there are a few billion dollars worth of revenue most of which probably falls to the bottom line thats the order of magnitude. Having said that, doing the work necessary to satisfy the feds so that asset cap can go away, thats the most important work were doing and the volumes in our quarter to get it right and to their satisfaction. Curious about your thoughts on the bank front. We saw so many corporations draw down aggressively in march and april. Are they paying those bank what can you tell us about the pace of the draw down . Caller yeah. We had about 80 billion worth of draw downs in the in march. Some of which bled into the beginning of april, but, you know, most of that, i think, figure that the bond market would remain closed and i think those Companies Many of whom have calendar quarter and wanted cash on the books at the end of the quarter. Its substantially all paid down, at this point. A lot of it because the highgrade market was a record level of issue in the quarter. People went to the bond market and got the cash they needed, paid down their bank lines so that commitments are Still Available but its, for us, and for others about entirely gone away its a testament to the success that the fed had in calming markets because it was relatively short period of time where that level of uncertainty existed and high grade markets, in particular, were functioning very well now and have been since mid april. I want to play a quick sound bite from the call from the ceo cha charlie sharp. The Balance Sheet cap exists because leadership sales oversea and infrastructure in the company and our financial underperformance is because leadership didnt make the difficult decisions necessary. We also recognize that we have been extremely and inefficient for too long and will begin to take decisive actions. Since i joined the company nine months ago, ive added six new members to the operating committee coming from outside of wells fargo with strong and relevant industry experience. John, youre one of the few remaining senior managers on the old team when you is it quite demoralizing, i guess, this isnt charlies first Earnings Call anymore are you helpful its the last one of the past blame game and the kitchen sinking . Caller yeah. Of course i would exception with kitchen sinks but i know where youre coming from i think its a fair criticism for him to say, listen, ive seen what good looks like elsewhere and some of the folks who have joined us in the last nine months and en before who joined us from outside and theres a different way to run the bank a different way to be structured a different way to operate well move in that direction and you cant help but to contrast it with the way we were structured and operating previously, which is some of the experiences of folks in the bank previously in a variety of ways did a great job for a long time. And credit, you would say, is well run at wells fargo. Capital liquidity strong but Operational Risk and compliance and just operating in general were not areas of strength and thank goodness for us not only do we have charlie but the broader team of leaders to b able to make the additional changes and pull the bank into the next phase, which is going to be better. John shrewsberry thank you for joining us wells fargo worst financialer for today and the year down 55 now we have news on the white houses plan to Bar International students from living in the u. S. While taking online classes kayla with the details reporter sara, the Trump Administration and major u. S. Universities lead by harvard and m. I. T. Reached a settlement today that would see the white house rescind the policy announced days ago that would ban foreign students from living here in the u. S. If the university were they were enrolled went fully online the settlement would see the white house reverse the policy its unclear what the full extent of what the white house would do and what the universities agreed to the settlement was announced moments ago by judge Allison Burrows in massachusetts who had been set to hear arguments today as this case escaladed, as many of these universities are arguing that this jeopardized students safety and long planned curriculum plans for this fall. So certainly it would seem to be a win for those universities and for foreign students who are studying here in the u. S. , who are wondering where exactly they would be enrolling in these inperson classes. More as we know it back to you. All right kayla, thank you weve got about 35 minutes left of trade take a look at the markets seeing some strength here. The dow is up near 451 points. Most sectors are higher now. Nasdaq goes positive though technology is not the star of the day. You have other groups leading. A little bit of a rotation here. Energy, materials, industrials, and health care are the winners. Still ahead, dont miss an exclusive interview with Robert Kaplan taking on the coronavirus situation in texas and across the country and what it could mean for the economy and the feds next move. Thats coming up and 32 minutes left of trade. Dow at session highs up 460. A number of las vegas bars are suing over the governors mandate to close down operations in some counties Contessa Brewer with the details. Reporter sara, more than 3 dozen bars in and around las vegas are suing to stop the governors order to close down bars again from taking effect. In fact, it is already in effect they argued its not fair to single out bars when other similar, noncertainessential bus are continued to operate they mention cad see knows, gaming floors, and pools are open and the bars are pushing back on compliance reported at less than 1 50 before july 2nd, they argue 80 after that look, the cases here dont mind. Clarke county just hit a record more than 1,000 new daily cases reported yesterday analysts and inest verse are watching closely to see if theres new restrictions on casinos to follow. Wolf contessa, thank you very much a new cnbc analysis found when it comes to the ipo process, theres a big disparity in fees paid to minority, veteran, and women others. Theyre aiming to close the gab. Leslie picker has the story for us hi, leslie reporter hey thats right amid greater quarters for equality among women and minorities they have been adding more of the diverse broker ages to the banking line up. So far in 2020 they were a part of 41 of u. S. Listed ipos according to refintive we crunched the numbers and theres a big gap for what theyre being paid on average over the last five years, the firms are making just 12 cents on the dollar when compared with the fees generated for other smaller firms with similar roles. Our analysis found minority women and veteranowned firms brick on average 0 pnts 69 more than of the fee pool others generated 22 of the total fee pool on average. But you mentioned bill akman is the first large ipo to elevate the role and therefore pay out for the minority underwriters. Guys well look for that thank you. Were starting to see anupc the states with highest coronavirus case loads texas, which has one of the highest positivity rates in the country has seen a 31 increase in the sevenday average of currently hospitalized patients. Californias hospitalization rate is up 13 while georgia does have fewer cases than california and texas, it is seeing a big surge in hospitalizations that is the seven day average of current hospitalizations up more than 40 meantime, maine, new hampshire, vermont, those are the most improved states have seen more than 20 declines in the sevenday average of current hospitalizations keep an eye on that in our coronavirus tracker. Im glad you had that read. Hospitalizations you said it perfectly about seven times. Yeah. Well, were all becoming a little more familiar, sadly, with saying it lets get a broader news update with sue herrera. Hello joe biden has unveiled a 2 trillion plan aimed at combatting Climate Change and stimulating the economy. He calls for 0 Carbon Emissions from Power Generation by the year 2035. Bail has been denied for maxwell. Prosecutors argued shes an extreme flight risk. Maxwell plead not guilty to sexual abuse charges related to jeffrey epstein. A judge has thrown out a 25 million set mr. President betwe bihar i have weinstein and his accusers they called the millions set aside for legal fees incured by weinstein and stredirectors of s companies obnoxious. In san diego a navy ship continues to burn for a third day. Hundreds are trying to save the ship and stop the 1 million gallons of fuel on board from leaking into the harbor. The navy said it is making significant progress ill see you again in an hour. Back to you. Sue, thank you very much. We look forward to it. Still ahead on closing bell well speak with Robert Kaplan about reopening roll banks across the country and what it means for the economic recovery here is is a check on bonds. Weve seen buying of the bonds pushing yields down to about 0. 61 on the 10 year woman my reputation was trashed online. I felt completely helpless. 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. phone ringing a phones offers big button,ecialized phones. And volumeenhanced phones. , get details on this state program. Call or visit and accessoriesphones for your mobile phone. Like this device to increase volume on your cell phone. phone ringing get details on this state program call or visit 24 minutes left of trading here is where we stand higher across the board. Looking a lot better than where we were yesterday where yesterdays rally gave away to a pretty ugly selloff into the close. The dow is trading near session highs at session highs. Up 464 points. And s p up financials and consumers discretionary the worst weighed down in part by the Bank Earnings its been a wild start to the week for the market. Well discuss where stocks will go next with david ohara. And were minutes away from Robert Kaplan. His read on the economic recovery and reclosing measures fa factors into his outlook thats coming up on closing bell. At leaf blowers. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. 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. Welcome back to closing bell. Stock rallying today the dow powering ahead as we march into the close with with 20 minutes left. S p up almost a full percent tesla on a tear. Now up more than 260 , so far for the year will the momentum start to cool down and value names start to take off its a hot debate now. Joining us is Value Investors and manager of the decade david herro. The dichotomy between value and momentum took a wild sharp uturn yesterday one of the biggest weve seen in reversals in the nasdaq. Technology is on the back foot what is driving this caller well, who knows what is driving things daytoday you know, its hard for us to predi predict. Its more something traders do we as investors try to evaluate the value of the business. Pricing the positive and negative attributes and make sure that all those attributes reflected in business evaluation then buy the businesses when theyre on a significant discount youre exactly right, companies that have been trading at big discounts of their Intrinsic Value have fared poorly not only yearto date but over the last seven, eight, nine, ten years. We never know when it changes but we know over time it has changed. Eventually the forces of supply and demand and eventually the concept of buy low and sell bigger begin to assert themselves you know, its a high price is simply become unsustainable. Almost for what they are the higher prices, the more money that goes into it, more money that is needed to sustain that price and eventually it just runs out of fuel. In the meantime, the opposite is true for low price stocks. If everyone is selling those evaluations get crushed, those market caps get crushed, and how is anyone involved so for the teeter to thor to turn, it doesnt take much to move prices up so i dont know when itll happen but all i know is when you see this dichotomy, and when it gets bigger, bigger, and bigger, when it happens it can be explosive where do you want to be when it happens to be honest, you want to be in kind of the harris type of stock. European industrials which we are heavily involved in. Like company like daimler or even some of the financials. These are companies that have lagged over the last two or three years. That have, in most cases i mean, if you take a company like daimler or bmw great brands, strong Balance Sheets, net cash on the Balance Sheet. I dont have to go over the math that the enterprise value of daimler, which is the worlds biggest Truck Company and owner of the worlds most recognizable car brand, mercedes, and if you add enterprise value of bmw, which makes, what 2. 3 million cars combined thats about 60 billion compared to tesla which makes half a million cars, has an surprise value of 300 billion. Tesla, of course, a great company. Innovative you know, i like to refer to elon musk as brother elon because hes a free spirit fights for freedom but, you know, the Company Looks stretched. Who knows when its going to turn but when it does, i do believe its Companies Like a daimler, like some of the sup le suppliers like continental, these are the businesses that will eventually get revalued. Indeed. Who knows when it might turn, david. Thats why weve heard you make that argument quite a few times over the last couple of years already. Switching focus a little bit banks today reporting take aways from the u. S. Banks for the european banks a little bit. Dont forget Business Models are a little different capital positions are a little different. But i think there is a take away one that, yes, on the negative we have to continue to make credit adjustments the european banks, of course, have faced these margins for a long time. This is nothing new for them the balances, the european banks, in particular, whether it be trading revenues or Asset Management fees or selling insurance out of branchs and other financial services, european banks have been able to sustain earnings and maintain earnings power despite the narrow spreads meanwhile, the european banking sector, in general trades probably less than half of what the u. S. Sector trades and the u. S. Sector is cheap compared to the rest of the market i think the european financial sector, broadly speaking, whether it be insurance or Asset Managers like a schroder, a credit squeeze, private bank, and Investment Banks these companies are trading at around half, twothirds, 50 or 60 of book value and they should be able to earn double digit returns. So its, to us, a strong value proposition. Youre going to say, yes, david, youve been saying this for a few years. Now last year, by the way, they actually did quite well as a group. European financials. I would expect from these levels youll see similar price appreciation over the medium term based on the quality of earnings and the price of the business. Thank you so much, david. Good to see you. This is the last commercial we take before we head to the close. Up next, untptnierrued coverage of the final moments of trade as we take you inside the market zone [squeaky shopping cart] [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. 13 minutes left in the trading day. We are now going into the closing bell commercialfree action going into the close. Here to break down the crucial moments of the trading day is bba capitals barbara durran is back and David Ellison is here were seeing a nice lift into the close session highs the dow up more than 500 points. We have every s p 500 sector now positive after another volatile session. As you can see, just climbing here as we approach the close. Barbara, what is driving the persistence strength amid the worries about the economic recovery now taking a step back as a result of the hot spots around the country for coronavirus . Its a lot of uncertainty and worry but i think the underlying thing is the fed the fed has said theyll keep Interest Rates lows and keep it at zero for the next two and a half years they have flooded the system with liquidity we dont know what the next package will be. It looks like there will be one. I think it provides tremendous support for the market and evaluation support its a big part of why i think weve seen Growth Stocks continue to run. Its not theyre the beneficiaries in this semishut down, but they also can support higher evaluations. So youre not you dont think the rotation takes place now, barbara weve seen this i think we saw the rotation start about a month ago. I think weve seen it over and over and the question is, is it sustainable . Again, i see it as i did a month ago. This is rotation these stocks like amazon has been up 300 or 400 points racing toward the price target in the last few weeks its a normal breather you have to consolidate gains so you go for cheaper stocks its cyclicals and industrials. I dont think the fundamental outlook has changed. I think recovery will continue its not going to be a straight v up i think given the unemployment, which stayed high and low double digits, i think its going to be slow and halting but improving so i think its too soon for industrials and cyclicals but well have a short term rotation into those because those are cheaper. Lets talk bankings earnings kicking off this morning. Jpmorgan and citi were helped be amassive surge in trading revenues wells fargo doesnt have the trading exposure, the notable underperform reported a 66 loss per share. Wells fargo so provisions for bad loans rise more than jpmorgan and citi. We asked John Shrewsberry about this. We have gone portfolio by portfolio and done bottoms up work throughout the course of the quarter. I think everybody has a better linet least the fact it wont be a vshaped recovery and that parts of the economy opened up over the last few months weve had some close back down, et. Cetera. Thats all new and incremental news and different banks will process that differently theyll apply it to the different types of loans that gets us to the level where we are, which at about 20 billion or, you know, 2 of our loans overall actually comparison mixed suggested basis with the others. Your take David Ellison, your overall take so far weve only had three out of i dont know, a couple thousand but i think the take is i think they have their arms around what is happening in credit certainly theyve been looking at that hard for six months. I dont think thats the issue with the companies and the evaluations but the issue is the level of rates and the lack of loan growth. I think thats the longterm problem that we have in the industry thats why the evaluations are where they re. I mean, theyre at very, very low evaluations relative to certainly tech stocks and historically relative. So i think its a level of rates and its lack of loan Growth Credit theyll work through. They have plenty of earnings theyll get through that they did it before 08 wasnt that long ago the challenges where rates go. If we end up like japan, it means margins are going down and the stocks will probably follow that. Did we get a tone, dave do you have a good sense of what the tone was from the bankers as far as forecasting what is next for the economy and for their industry not as much as i had hoped. Clearly they have more access to customer than we do or i do. I think the issue is that, you know, i call this market the bakers dozen market, you have 12 companies that are running the whole economy and the fed is carrying everybody else, and the fed is carrying these banks and so its the federal government and their programs so, you know, it depends on what the fed does and i think we all know the fed is going to stay in the question is what does the federal government do . If they start to quantitatively tighten by taking away some of these programs, it will have an impact on the unemployment level and the delinquencies that they havent seen yet so the industry is preparing for a recession that hasnt happened yet, if you look at the nonperformers for the chargeoffs they have a six or nine month head start thats why theyre reserving so heavily because theyre concerned, i think, if the government pulls back in terms of their stimulus plans, it will create a lot of losses for them. Thats the risk we have in the next two or three months. Yeah. Reminds me of jamie dimon quote today youll see the effect of the recession, just not right away well move on to tesla robin hood users have been a buying frenzy for shares of tesla. Kate rooney with the details and the numbers. Hey, sara tesla has been a popular stock on robin hood but not this popular. Take a look at this week in the past 24 hours, nearly 50,000 robinhood accounts added tesla to the holdings. In a fourhour period yesterday, 40,000 people bought tesla according to thirdparty site robin track. That was a whopping 10,000 people per hour. Tesla surged as much as 16 at the high yesterday coinciding with the buying spree. Tesla is the tenth most popular stock on robin hood even beating out retail favorite amazon guys, back to you. Kate rooney, crazy frenzy thank you. Meanwhile, Piper Sandler raising the tesla price target to a street high of 23. 22 per share. The firm calling tesla the most consequential company and the Mobility Ecosystem this is unlikely to change in the next decade. So, barbara, youll jump on board with the retail traders and the analysts community not likely. You know, i read his face and his target is more like a 2,025 target each and every way you look at the numbers and the units projected in the best margins and cash flow, thats when you get the price target so i admire him. Theres almost no downside for him to go out there because given the momentum traders, its youngsters i had a couple of clients said why dont we own tesla i said were not going to. I think the stock could go higher based on the mom it up. I think its a 2025 target yes, they are consequential but it takes into account no competition coming in. We know everybody is sharpening their knives and its a longer run play but there will be competition. By 2025, it will be interesting to see what their market share is and how good the competition is. Proving nicely to the close the dow is 600 points. 2. 3 s p is up 1. 4. Nasdaq close to a percent higher its the underperformer compared to the major averages today. But the techheavy index up more than 8 in just one month 9. 4 , in fact, now with the interday improvement. Bank of america came out with the fund manager survey and 74 said they believe going long tech is the they believe shorter tech is the best contrary began trade the headlong rush into tech usually gains for overall gain i mean, clearly, dave ellison, youve got to be a brave man to short tech overall today shows that given that even despite opening lower, the nasdaq is higher by 1 do you think we can have a sustained relative outperformance for value as were seeing today and yesterday . Caller i think that will happen once we understand theres a vaccine that will work i think thats the problem is that the Technology Trade is a covid trade. Right. The worst the virus gets, the more Important Technology is thats what everybody is using at home. Theyre buying stuff on amazon, using their apple phones and computer and checking out netflix and all that other stuff. So once theres a vaccine, i think the market can flip. I think the market is telling you, or maybe trying to tell you that the vaccine is a long way off and if youre going buy stocks, theres only a few that you can buy and the rest will sit and wait until theres a vaccine and we get back to what is going on. I came into boston today for the first time in a long time. Theres nobody here theres nothing open i had to walk a mile to get a cup of coffee. I passed probably 20 shops on the way. Theres nothing happening here thats why technology is working and the banks and real estate and all the other stuff is not thats going to continue until theres a vaccine. Weve got about a minute and a half left of the session we are rallying, as we mentioned, nicely into the close. Briefly 605 points higher on the dow. The dow about 573 at the moment up a healthy 2 minu. 2 . Impre impressive we were down from the open s p 500 up 1. 4 . The nasdaq composite which was negative significantly there at the start of the day is up 1 , itself in terms of sectors on the s p all in their higher consumer discretion communications and energy and materials and industrials are at the top thevance index is down weighed down by citi and wells fargo down 4. 5 . Despite the broad market rally, the banks not shrugging off the declines, other than jpmorgan had solid results and Goldman Sachs up 2. 5 and large part of why the two stocks, the dow is outperforming. The Goldman Sachs reports tomorrow european and asian indexes were negative at the close. [ closing bell ] well, that was the opposite of yesterday a strong close at session highs. Welcome back, if youre joining us to closing bell. Im sara eisen here. We finished up the day on wall street positive across the board. Take a look at the climb just in the last half hour of trade or so, making the dows best day since june 29th a surge of more than 2 . 557 points higher there on the close. As far as what lead the dow higher, the best performers United Health care and home depot and apple. Those three contributed the most s p 500 up 1. 34 got every sector higher there into the close energy was leading all day this was not one of those techdriven rallies. You had groups like industrials and materials, also, in the top spots. The nasdaq closing up 1 there on the day aztec did eventually join the rally it was broad based in the end. And the russell 2,000 index and small caps it shined today 1. 34 outpacing the overall market coming up well ask Robert Kaplan why he thinks the economic recovery is losing steam now and why he said the best way to help the economy to recover is for all americans to wear a mask. Joining us to talk about the market today, though, Barbara Duran from bba Capital Partners and David Ellison from Hennessy Funds and liz ann sonders. That was quite a close impressive rally with every group ending the day positive. It didnt look that way earlier in the session what is driving the strength here caller well, i think this is the nature of the beast these days, and clearly a function of the mechanics of the markets or the rise of the machine. You have a unique day yesterday with the nasdaq having a 4 percentage point reversal from, you know, up 2 , more than 2 to close down, more than 1 you have to go back to march 2000 the last time it happened. We saw a reversal of that today. I think its hard, especially for individual investors, to try make hay of this on a short term basis. I think the best strategy investors can have to the extent they can handle it for a turn over implication is not try to anticipate in a short term what the market will do but instead react. By react, i dont mean case the momentum in the direction its going but try to stay in gear. Maybe add when you get some moves down thats kind of the best thing you can do in the unique environment. But, liz ann, in terms of the growth into value, clearly the nasdaq did rally interday, it was the relative interperformer. Have we, in the last couple of days or weeks, seen some of the warning signs that the evaluation difference between growth and value was stretched to a sort of multiyear high . Caller i do think there is often a little bit more attention on evaluations when you get into earnings season obviously earnings season the outlook for earnings makes doing evaluation analysis much more difficult task than is typically the case its quite murky i also think when you move to some slight optimism that maybe youre going get a pick up in Economic Growth relative to expectations that tends to cause a move toward value. These have been moved. They have not sustainable. I still think quality growth characteristics are ultimately from that perspective going to define leadership but i think that there are investors who are trying to be a little bit more value minded when looking for those quality characteristics. Barbara, the view on earnings season, now were in it, going in was its going to be the bottom its only going to get better from here. It doesnt really matter if the numbers will look ugly is that still the case are there questions now given the surge weve seen across the u. S. And the warnings about the rollback and the recovery about whether this is, indeed, the worst its going to get. Yeah, sara, thats a good question this was supposed to be, you know, the kitchen sink quarter i think it probably still is yes, its going it slow down like california 15 of gdp having to roll back but theyre not closing Outdoor Dining theyre still, you know, pick up. Of course, theres states that are still staying open for business, but consumers are the questions. Its the question for demand i think it probably is the low but i think its not going to be the quick bounce back people connect but a slow ascent to next year. I think the recovery will take several years. Were doing some permanent damage here, even with, thank goodness, for the stimulus keeping people afloat. Its doing a lot but not enough. Dave ellison, i get your point earlier you prefer some of the payments companies, perhaps to the more cyclically linked traditional banks. That said, when it comes to a name like wells fargo down 5 today, 55 year to date, do you get the feeling that there is no more bad news to come out . Its priced in weve had now multiple quarters of kitchen sinking from the new Management Team caller well, certainly the evaluation is compelling its around 70 but citi has been below for a long time and hasnt seemed to want to rally up to book value, at least there. So i dont think evaluation matters. I think people need to get a better feel for what the longterm profitability looks like i talked about the fact that margins may be contracting at a more permanent basis, you know, credit will eventually take care of itself. It always does and i think the issue is, again, loan growth and the margins. I think thats why the industry is where it is i think, you know, theyre just in a you know, theyre in a bad place. But nobody cares about the dividend nobody really cares about buybacks its rates are going to go lower because the fed needs to continue to stimulate. The stocks will go lower because the margins will go lower on a permanent basis. You have Mortgage Rates and alltime lows. Thats maybe good for me and you but not good for the banks and with the deposit rates near zero, theres no reason to, you know, put money in the bank from a retail perspective so i think the business, you know, as i said in my notes that i gave you guys, the Business Needs to cut costs and consolidate. Theyre not going to they just dont have the role in this, it would appear, to compete with visa, mastercard, paypal, square, you name it. They just dont want to do that. They want to make money by, you know, lending money and borrowing money. That business is going away. Its gone away in europe and gone away in japan if were not going to remake themselves, then they need to cut expenses and consolidate thats the only way youll hold on to the values and have a chance of making money in is space. Weve had a lot of fed speak today and Steve Liesman has the latest highlights for us. Well, thanks fed officials reeing risks to the u. S. Economy remain to the downside theyre signaling low rates ahead. There are differences on the outlook. Fed saying a, quote, thick fog of uncertainty surrounds the u. S. And the economy. She worries a second wave of the virus could reignite Financial Market volatility. Saying in a speech that the u. S. Would likely the fed would like the policy but stabilization to accommodation those new policies could include stronger forward guidance, quantitative easing that is bond purchasing, and even controlling the short to medium end of the yield curve. But st. Louis fed president breaking now saying his base case is for the economy to improve pretty quickly through the next six months, including perhaps a dramatic decline in the Unemployment Rate. This is despite downside risk. He believes the country will get the virus under control. Asked about equity values, he said, quote, the stock has been optimistic and its been right. Very interesting that take. I guess not necessarily the same view held by all fed participants we will get more fed speak in a few minutes when we speak with dallas fed president Robert Kaplan in an exclusive interview who expressed a down beat economy on the outlook, i think, of late. Also suggested rolling back the level of fed stimulus. Liz ann, what do you take away from this kind of commentary if the fed was to remove even a fraction of its stimulus or the government didnt extend some of their programs, would the market take that badly . Caller i think there is an expectations built in that the fed will be there. They have, to some degree, unlimited ammunition, at least the key Financial Markets relatively or the financial system, i should say, relatively healthy. I think the uncertainty is now is on the fiscal side and what can be done there. I think it would probably incite the volatility and the negative reaction if there was no extension. Whether its an advanced unemployment or the potential for additional stimulus checks when you think about the hands in which that additional income replacement went, those are the consumers that have the highest marginal propensity to spend, which is part of the reason you saw such dramatic improvement off the depths of the lows in retail sales i think the persistence of that increase off the bottom is going to be limited unless there is some sort of extension even with an extension, there will come an end to that i agree there are so many real significant structure hits to the economy and Second Quarter economic effects, absent any additional shut down at the state or level, but i think thats being under estimated by many market participants. You know just going through some of the headlines, David Ellison, especially the tougher speak around the banks weve seen that reflected in some of her votes lately not to mention the dubbish policy around the economy. I wonder if there shes one of the few remaining fed appointees from the Obama Administration shes buzzed about as a potential, you know, policy maker, potentially treasury secretary in a Biden Administration its just chatter and rumors now, but i wonder if you think that is an point caller well, i think that lets remember after 2008, you know, 2009, 2010, 2011 the larger banks were effectively nationalized and stress test, et. Cetera weve been dealing with those every spring we just had one. Now, of course, we got reminded again that they basically control these companies. Theyre talking about cutting dividends, eliminating buybacks, and, you know, theyre allowing enforcing a covid overlay on the liquidity requirements and Capital Requirements so this is a, you know, in a sense its the fed has gotten so big relative to the banks theyve taken over a lot of lending function of the banks would be doing if anything, the banks are pulling back and becoming more restrictive. You heard it with, you know, wells fargo. That means very few people can get jumbo loans. And the point being the banks are pulling back and the fed is trying to push forward so the bank is providing a lot of products to the marketplace that the banks used do so theyre losing their ability to sort of have a, you know, skin in the game here. So i think the issue theyre going to continue to be controlled heavily by the fed. If the government comes this and starts to do things, with a new administration or new thought process, you know, that will change again so sort of the idea of what the companies are worth and why anybody should own them. Weve leave it there. Thank you all for joining us. Yeah. After a strong finish for wall street. Up next, well ask dallas fed president Robert Kaplan about the soaring coronavirus numbers in the state of texas. Why he said the economy could bounce back, if all erans amic wear a mask. Were back in 90 seconds wow. Jim could you ipop the hood for us . . There she is. Turbocharged, right . Yes it is. Jim, could you uh kick the tires . Oh yes. Can you change the color inside the car . Oh sure. How about blue . Thats more cyan but. Jump in the back seat, jim. Act like my kids. How much longer . Exactly how they sound. Its got massaging seats too, right . Oh yeahhhhh. Oh yeahhhhh. Visit the mercedesbenz summer event or shop online at participating dealers. Get 0 apr financing up to 36 months on select new and certified preowned models. 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. Welcome back the latest data from isi finding that states with stricter Mask Policies have seen a significant decline in weak over week growth in covid19 cases. This as dallas fed president Robert Kaplan noted that Wearing Masks is now the most important factor for the economy right now. President cap lakaplan joins us. Its good to have you here if we got a federal mask mandate in this country, what would it do to your Economic Forecast so my comments are based on a range of conversations ive had over the last number of months with epidemiologists and Infectious Disease experts they pretty much agree if we all wore masks, we would substantially mute the transmission of this virus its clear that the recovery would be better if we could mute the transmission of the virus. In fact, im worried that since mid june the rebound that we expected in the end of the Second Quarter and the Third Quarter is stalling somewhat so if we all followed these Health Care Protocols, we would grow faster and have a lower Unemployment Rate. While Monetary Policy and fiscal policy have a keyrole to play, at this point, theyre not as important as all of us Wearing Masks and following these Health Care Protocols. I wanted to particularly ask you about texas, your district, obviously. What is it now almost 10 of our nations gdp, obviously, dealing with the heavy rise in case numbers, hospitalizations, and death rates ticking higher. Yeah. What is the Economic Impact so far how is that going to look in th coming weeks and months . So weve seen and the thing i watch most carefully, not only in texas but across the country is hospitalizations. We knew with reopening the cases would rise what you worry about is they rise so much you overwhelm your Health Care System and weve had a dramatic rise in hospitalizations were seeing that rise be mute in the last couple of days well have to see if that continues. What is the impact the impact is were seeing, again, based on the High Frequency data we follow and my lots of conversations im having with businesses, were seeing a pronounced slowing probably again started sometime in the middle of june. Its not that were not growing here, but the rebound that weve been expecting is muted and slower than it would be otherwise. President kaplan, clearly you alluded to what weve learned about the importance of masks during this reopening phase. Weve also i think, learned about large indoor gatherings. What extent are you worried about when we get to the fall and the weather gets worse in a lot of states, particularly in the north, that well see an impact of that on Economic Performance then so, what were seeing and what, again, were told by Health Care Experts is the probably of getting the virus, as you said, if youre outdoors is reduced theyre of the view that you should, on the one hand, you should avoid indoor gatherings, if you can obviously socially distance. Wen again if you wear a mask and everyone else wears a mask, they would say and advised us and me that it would dramatically reduce the probability of transmission i think going into the fall, i think youre going to see a lot of caution about density inside, social distancing inside, and mask wearing inside. We think thats appropriate. Until we get a vaccine, which may be some extended period of time, weve got the ability to manage this virus but we have to follow these protocols i think thats what youll see i would hope and think officials will be urging that as we head into the fall. President kaplan, i wanted to quickly play a sound bite from jamie dimon about the prisurprig shape of the recession were in at the moment. So the normal recession unemployment goes up home prices go down. None of that is true here. Incomes go down, savings go down savings are up incomes are up home prices are up so you will see the effect of this recession you wont see it right away because of the stimulus and the effect making more money than were making when they were working. Its a peculiar time you mentioned the stimulus there and were getting close to the date that the unemployment boosting benefit runs out. How important is it that is extended or how big an impact will it have if its not. With the Unemployment Rate this high, some form of the extension of Unemployment Benefits is going to be critical i see and i agree that these benefits will have to be restructured to create more incentives to work, but i would believe that we need to see some extension of these Health Care Benefits when youve got this high of Unemployment Rate and i would be optimistic it would be the case i think you need to see some additional aid to state and local governments and municipalities who need to balance their budgets and have got a big fiscal hole. But part of the reason incomes havent fallen is was said the Unemployment Benefits have continued. Thats been an underpinning as we work through this virus. President kaplan, the nasdaq is up 17 so far this year the s p 500 is down only 1 . Does this price action make sense to you i mean, youre at Goldman Sachs for a long time. Does it make sense given the size and scope of the economic losses were looking at and the uncertainty ahead on the virus so there was a trend before this crisis of increase in technology and Technology Enabled disruption everything im seeing suggests that trend is accelerating adoption of modes that use Technology Rather than historic call ways of buying goods and services you go through periods historically where you see some disconnect between the market and the economy. The market looks ahead a year or two or three years, and the economy is right now but ultimately its my judgment that disconnect will get reconciled one way or the other i think that will happen here well, what is more likely . The economy rises or the market falls . It depends a lot on how well we manage the virus. I still believe if we follow these protocols, we would see a rebound from the deep hole we dug in the Second Quarter, which still have a contraction of about 4. 5 or 5 for this year and Unemployment Rate in excess of 9 . Ill still believe in 21, we will see abovetrend growth and well continue to grind down the Unemployment Rate. So the question is when do you get to more normalized economy its going to depend on the path of the virus, how well we manage it, what is the timing of the vaccine . But well eventually im optimistic well work our way through this it would be a lot less costly if we did a good job managing the virus now. Ultimately i think youll see some convergence between markets and the economy just may take a couple of three years. Thats the nature of the disconnect between the historicalically between the markets and the economy. Thats not that unusual. Just want to go back to the banks, which as you know started reporting this morning while clearly they are not the epicenter of the crisis this time, nor have they received a direct bailout this time around. We did see this morning huge Capital Markets performance. Particularly in citi was up jpmorgan up 120 year over year. Do they direct to for the enormous profits in the trading divisions . Well, so you talked about Capital Markets. Thats really there was a historic theres been a histic amount of new debt issuance what the fed did back in smarnl we stabilized the treasury and mortgagebacked Securities Markets but weve also, through the so called 13 three programs we did with treasury, we tried to stabilize Corporate Bond and other markets and companies took advantage of that. I think thats a positive thing. They extended maturities they issued debt they raised liquidity. We saw a record amount of issuance and i think youre seeing that in your comments so im hopeful as we go through this crisis one of the things weve got going for us this time versus the last crisis the banks went into the much better shape from a capital point of view because of Bank Regulation weve also eased some Capital Requirements that accessed to the discount window so the banks could play their role through this crisis. Theyll let some of the programs ease but they were necessary what youre seeing in bank results, part of it, is is a historical amount of Capital Markets issuance, i think that helped Companies Get through the crisis and ideally help them preserve and help us preserve jobs. As far as what else can do, president kaplan, the fed Balance Sheet is already at what, 7 trillion. It is. And chair powell leaves more room on the table to do more, if necessary. Yep. So what could you do . We still on the one hand, we still have a substantial capacity in these 13 three programs, which were intended to stabilize Financial Markets. I hope we dont need to use it weve got that capacity. Im hopeful if we do an outstanding job and better job of managing this virus, and wide spread Wearing Masks, following Health Care Protocols, we will not need to do as much and question show restraint and well needless fiscal policy i think that would be better for the country if that was the case so weve got capacity at the fed and weve got a number of things we can do. We stand ready to do them. I think it would be better for the country if we didnt have to if we had better performance on the virus and we got more growth at a faster rebound. Thats why im talking about the Health Care Protocols because i prefer for the fed to have to do less not more. Also, i wanted to figure out how youre thinking about inflation now. We did see a tick up in Consumer Prices for the month of june largely gasoline americans are paying more for food thats been pretty consistently climbing do you see bubbling inflation in this economy are we still worried about deflation with the loss of demand how are you thinking about it . So, there are going to be spots, food is an example, meat is another there are supply shortages and youre going it see higher prices the overwhelming trend and force is weve got lots of overcapacity in the economy. That is disinflationary. Deflationary so while youll see these individual hot spots when we have this much overcapacity, i dont think youre going to see much other than muted inflation for some period of time. The issue will be a couple of years from now and itll take a couple of years to get rid of the overcapacity thats where ill be attuned and watching whether we see more inflation pressures. While weve got this high of Unemployment Rate and this much overcapacity, the overwhelming trend, i believe, is going to be disinflationary. Thank you so much for joining us, president kaplan. Thank you good to talk to you. Dr. Anthony fauci speaking now about the coronavirus cases spiking across the nio s issuing a dire warning. Well have the headlines coming up 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. 49i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. Welcome back National Institute of allergy and Infectious Diseases dr. Anthony fauci giving an update now on the coronavirus pandemic. Meg has the highlights. He started with dr. Fauci being asked about the current numbers and what the trends imply in terms of what were going to see in terms of hospitalizations and deaths. Here is how he answered that question. Theres no doubt that there are more infections. We know that because the percentage of cases of the cases that are tested that are positive is increasing, therefore, unequivocally, youre seeing truly more new cases. In addition, were seeing now more hospitalizations, which lag behind infections. Were starting and will see, though not as much as weve seen, very likely more deaths. And he did say, though, that even though we are going to see more deaths follow these increased hospitalizations, he does not think that the rate is going to get as high as it did at the peak here in the northeast, for example he did point out that the people mostly getting infected now are a decade to a decade and a half younger than those getting infected before. So he did say hes hopeful that the death rate wont be as high. He was asked, of course, about the question of opening schools. He said its very important to try as best as possible to keep children in schools. Citing the downstream impacts to families and kids themselves he said it will be geographically different based on infection rates around the country. As i was coming onair with you guys, he was issuing warning and sort of a plea to young people that even though they are at less risk of severe disease, if they do get sick, they can pr propagate the pandemic were all in this together and have to protect one another. Thank you very much for that, meg. Presumed democratic president ial nominee joe biden unveiling his second part of his jobs and economic recovery plan. Well ask gretchen whiter in about the impact it could have on her state well check in shares of sirius xm moving up higher. Its moving up about 2. 5 . Woman my reputation was trashed online. I felt completely helpless. 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. Democratic candidate and former Vice President joe biden taking on President Trump on the economy again today. Detailing his plans to tackle Climate Change, modernizing our infrastructure, and create millions of jobs, including in the Auto Industry. Listen. Were going make it easier for American Consumers to switch to electric vehicles, as well. Not only by building 500,000 charging stations, but by offering rebates and incentives. This will be 1 million goodpaying jobs in the automobile industry. Joining us now is a supporter of Vice President biden, Michigan Governor Gretchen Whitmer. Thank you for joining us today. Good to be here. Following the plan on autos it sounds like it could help the likes of tesla, which is actually not one of the detroit automakers what are the priorities here when it comes to creating jobs for the automakers when President Trump himself has been focussed on the manufacturing recovery well, its one thing to be focussed and send tweets and make trade policy that is been reckless its another to have this plan to move this country forward and i think this plan out of joe biden is really visionary. Its about investing in the technologies of the future it certainly does deploy a lot of work that the big three are already doing here in detroit and expand upon that and build that out even further. The electric vehicles of the future these are the industries we have to got to make investments in we have to grow and well make our environment cleaner and be a much longer term type of investment for the people in this country i was excitesed to hear the plan today. Obviously, you like other states, are seeing rise in case numbers. Not quiet the peak what are you seeing in the industry like automakers are they able to continue manufacturing with the flair ups . Yes, i work closely with the heads of the big three as well as the head of the uaw we need to make sure we get it right. We have a lot of people that work in the Auto Industry and we shut everything down because we had such a dramatic increase of covid back in the end of march and beginning of april we Work Together and put into place protocols. Weve had a great deal of success getting people back on the line and keeping them safe certainly its not without some experiences of some covid but weve remedied it along the way and the benefit of the big three is theyve got a Global Presence theyve learned lessons from other parts of the world and deployed them here to benefit our auto manufacturers. Governor, i wanted to go back to that announcement by Vice President biden today. Whether or not its the right thing longterm for the nation do you fear how it might be spun in the short term . You can see it already be framed as the democrats want to increase your taxes to spend the money on green energy as opposed to at a time of severe economic weakness stimulate the broader economy. Do you fear it might not be a massive vote winner . No, actually, i think the opposite you know, we have seen weve paid the dearest price for an administration that doesnt have an plan. For an administration that failed to execute when it became clear what needed to be done right now we, i think, have got an opportunity to make a change that will dramatically improve our health, our welfare, our longterm Economic Prosperity in this country thats the plan that joe biden is put on the table. This is about getting things done the people of my state, like i think the people in many states across this great country of ours, want to know their leaders understand what theyre going through and have a plan to fix problems were confronting thats precisely what this is is a component of i add this on top of joes plan with regard to covid19 and building up testing and getting the virus under control, which it very much is not across many parts of the country now and i know this is what will make us more economically solid but also make us a healthier, wealthier nation. No individual states, governor are taking slightly different actions based on the level of virus cases theyre seeing but if the Vice President had been present, and the democrats in power, would you like to see a nationwide federal instruction on Wearing Masks absolutely. You know, i got in the cross hairs of President Trump when i observed very early on that the lack of a National Strategy was a problem. You know, the nations governors have stepped up. That is a bipartisan effort we have seen because theres been a vacuum of leadership. We have a patchwork of policies across the country we havent deployed the dpa to produce swabs and n95 masks which are still in the issue here we are months into this it remains an issue. I think a lack of a National Strategy hurt us it probably cost a lot of lives and its really important that leadership comes from the top with accurate, consistent medical information so that people can understand what were confronting and rise to this challenge. Governor, thank you so much for joining us. Oh, sorry, sara. I was going say, you have the mask mandate in your state why are we seeing pockets where 40 or 50 kids are getting sick from going to a lake party or a bar, which ive seen in the new news a number of times since the july 4th weekend so people are still going to do their own thing when it comes to masks and social distancing in this country. Thats true, but if we have consistent messaging and we take the politics out of the simple act of wearing a mask, this is about public health. Were dealing with a novel virus for which theres no cure. Theres no vaccine it doesnt care what party youre in. What state youre in what part of the country youre in what happens is when people travel, the virus travels. Thats how we expose one another. By wearing a mask and had the Trump Administration from day one been echoing the same thing youre hearing out of state leadership, we might be in a different position so just, you know, universal mask wearing will help us get the virus under better control as the person who interviewed before me acknowledged, that would be a great thing for our economy all the way around. Governor, this time thank you very much. Thank you stocks stage a big rally today. Coming up well discuss a major al cld to the market rlyou be looming in the end of the month. Time for a cnbc news update with sue herrera President Trump is scheduled to hold a News Conference on china and hong kong. It is set to start at 5 00 p. M. Eastern time you can stay with cnbc to watch his comments live. Republicans are preparing to move the three big nights of their National Convention outdoors according to the new york times. The move would include the president s acceptance speech. It is unclear how many people will be allowed to attend, if the venue changes. Mexico proposing another extension of the ban on nonessential travel by land, if approved it would extend that ban until august 21st. And a a day of celebration in paris thats the frances Ministry Minister who ran after her car after realizing she lost her mask another official came to her rescue with a spare. Always bring multiple masks. Thats the news update this hour back to you. Particularly when you know there are going to be hundreds of cameras and youre an elected official. Yep and thats the policy. Up next chinas economy recovering its cities are reopening and stonets have surged over the la mth tensions with the rest of the world are bubbling over. Well discuss it next. Now is the time to support the places you love. Spend 10 dollars or more at a participating Small Business and get 5 dollars back, up to 10 times with american express. Enroll now at shopsmall. Com. In a highly capable lexus suv. At the golden opportunity sales event. Get zero percent financing on all 2020 lexus models. Experience amazing at your lexus dealer. President Trump Holding a News Conference in a few moments on china the uk banning huawei from the 5g network, which the u. S. Has been pushing for the world will say theyll not allow beijing to treat the South China Sea as the maritime empire now both sides are threatening further sanctions. Joining us for more is the managing director and former asian policy analyst at the department of defense during the Obama Administration thank you so much for joining us i mean, what is your take on these elevating tensions whether or not theres a chance that were about to bubble over meaningfully in the weeks ahead well, thank you for having me. The u. S. china relationship has moved into what can be viewed as longterm holistic competition, which is going to impact almost every aspect of the u. S. china relationship economic, political, security. So i dont think were going to see this dial back at all. I do think that what were having now is a situation where each side is testing the others will to continue to push for in this escalation action reaction cycle. Unfortunately i dont think that were done at all here i think, in fact, were probably just getting started. Does it matter who is in the oval office . What are you telling your customers or your clients that pay you now for this kind of advice and insight would be different, say, between the u. S. And china in a Biden Administration since you were a part of the Obama Administration. Good question, i think for many of us watching it on the outside now is the Strategic Direction, a longterm Strategic Direction is firmly set, i think, for the foreseeable future that is strategic competition. I think what may be different, and likely to be in a Biden Administration is the approach to how we compete with china. So i expect the Biden Administration to do much more with our allies than weve seen with President Trump i expect for there to be a relationship that has mechanisms throughout the agency. This is not a relationship managed at the leader to leader xi to trump level, but in fact some of the experts in the bureaucracy actually begin to help manage this relationship through its rough pactches. Thats what i think will be different. Up next, the income cliff is coming congress is working on a fix will it be enough . Hey lily from at t here. With some helpful tips. Tip 1 you can currently get the amazing iphone 11 for halfoff on at t, americas Fastest Network for iphones. Second tip you can put googly eyes on your stuff to keep yourself company. Uh for example, thats heraldo. Hes my best friend. Oh, sorry nancy, i forgot you were there. Get the amazing iphone 11 for halfoff on at t, americas Fastest Network for iphones. 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. Snhu lets you transfer up to 90 credits [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. Save without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, you only have to pay for the data you need, starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. 5g is now included with all new data options. Switch and save hundreds. Xfinity mobile. A big rally into the close today, the dow up over 2 , all s p sectors were in the green by the close. Up next, one k reyisk factor that traders are watching. At leaf blowers. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. 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. An extra 15 percent credit on car and motorcycle policies . Ok . Thats 15 percent on top of what geico could already save you. So what are you waiting for . Dj khaled to be your motivational coach . Yo devin remember to brush in a circle motion. Thank you. Dj. Khaled. Tiny circles, devin. Do another one. Another one. Is this good . Put in that work, devin. Dont give up. Geico. Save an extra 15 when you switch by october 7th. Over 30 million americans have been collecting an extra 600 a week from unemployment, a lifeline as many businesses remain closed, but those benefits are set to expire at the end of the Month Congress is still locked in a debate on whether to extend that stimulus how should the market take it . Why does the the market seem alarmed . The consensus is that the stimulus will get renewed. To me, the shape and the size of that stimulus renewal will matter a lot in terms of determining the market direction Going Forward. So i think people expect some kind of bill coming out of congress i think the magnitude of that bill could be significantly less, especially if you look at the rhetoric coming out of congressional leaders. I think thats going to have a big impact in terms of whether we can continue to rally Going Forward given the stimulus is a big driver of the rally weve seen over the past few months. These dates are pretty close and yet the market is very near alltime highs do you think were due quite a big couple of days of volatility over the next several weeks . I do think as we get closer to the cliff, there is going to be elevated levels of volatility, especially i think well be pretty susceptible to headline risk as we get close to the end of the month i think investor consensus and what has been priced into the Options Market is that it will get renewed. If you look at for example in the Options Market, volatility is at its lowest point on the curve compared to options expiring later in the year that to me is kind of the consensus or the complacency that is where you may see some potential for risk Going Forward. A lot of people have been flagging the volatility picking up around election day what are you seeing there . Election risk actually is one were seeing a lot of focus on that is one i think youll see a pretty clear pricing of that risk in the Options Market and we have seen i wouldnt say specific election traits because were still pretty far out from november and we still dont really have a lot of policy clarity. But i think what were seeing through investor behavior is a lot of people looking at hedges expiring November December citing the election as a big potential catalyst for pullback. That is one area we have seen a lot of investors Pay Attention to we have seen a lot of investors look at hedges in the near term, we havent seen a lot of action weve got two weeks thank you for joining us as we look to a pretty strong close and a continuation of the resilience of this market in the face of some big economic risk like the expiration of the bonus on Unemployment Benefits in two weeks and the virus risk a lot has to go right now when it comes to more fiscal stimulus, that the Federal Reserve stays in the game and that the deaths do not go back up to that peak. Its good to hear this hour that dr. Fauci does not think well go back up to that peak in this country where we were seeing deaths of 2500 per day were nowhere near that at this point. Goldman sachs rallied today given its business mix well see how they do tomorrow that does it for closing bell. Fast money starts right now. Im melissa lee. Guy adami, carter worth, dan nathan send us your questions and we will try and answer them on air live plus, were fast tracking the data to get a look at where the recovery may really be heading what this chart could be telling us about what is in store. Were awaiting comments from the president expected to speak at the rose garden shortly. Well bring you his statements