Transcripts For CNBC Power Lunch 20240713 : comparemela.com

Transcripts For CNBC Power Lunch 20240713

Welcome everybody. Our breaking News Coverage of the market continues now welcome once again to my kitchen. Big rally to end the week on wall street. The dow up about 400 points right now on reports that coronavirus patients are responding positively to a gilead drug. Its tale of two dow stocks today. Boeing surging as it gets ready to resume airplane production in Washington State apple is sinking as Goldman Sachs says the stock could fall as much as 20 on lesser iphone sales. Crude getting crushed. Just how low can oil go . What happened with all those production cuts. Kelly. Welcome. Over to you. Thanks so much. We have full Team Coverage we have a rally, kelly. Its getting harder to push it forward. Were now pushing up against the 50day moving average for the s p 500. Sectors that are most beaten up this week are doing well we highlighted this all day. Finally small caps out performing banks out performing home builders, industrials oil down as much today even the energy stock is rallying happy to see banks come off of the bottom since monday they have been selling off four days in a row some of the big names like key for third all trading to the upside the lagguarards flat to down about 2 . Where are we right now i want to highlight the fact that we have had a tremendous move off of the bottom about 53 of the losses we have recovered. We have been looking at 2021 earnings right now its 18 times four earnings. Those are pricey number pps a lot of people are arguing. Its good news we hadont have a time line for reopening but the market has moved very fast in a short period of time i think youll se a le a lot ofs back back to you. Thank you very much lets get to rick on the stats state of the bond market yields where are they its almost as if on cue we have gone from 60 basis points to 62. It doesnt sound like much but now were only one basis point away and were down about 10 basis points on the week we did dip below 60 basis points down to 58 briefly that would have been the lowest intraday trade since early april. The deterioration, at one point we were over 1 . Were flattening out, hoverering on the bottom. We flatten nine basis points because twos are much more well behaved. Short maturity glued on the wall we settled last year at 192. Were down 130 basis points from there and with stocks up and they better notion of maybe we can get our arms around the coronavirus, it seems as though the buying and treasuries is just two solid to get any up draft in yields. Kelly, back to you this is a peak into a Clinical Trial of gileads drug. Its not the official trials themselves theres some controversial around how to interpret what were seeing they have enrolled 125 people into the trial and observed rapid recovery and fever and respiratory symptoms they said only two of those patients in the trial passed away reports while encouraging do not provide the statistical powers in necessary to determine the safety of remdesivir when will we see the Clinical Trial results . The first will come in at the end of this month. Next month, were going to see the nih trial. That was a double mind, placebo study, the Gold Standard that regulators look for to approve a drug that will be the key to watch, guys meg, let me ask you a follow up question. This is a drug thats already out there and approved for other uses, as i understand it couldnt doctors prescribe it even without that approval on an off label basis . Gileads drug has not been approved yet testifi it was tested for ebola. Its still an experimental drug. The one drug on the market thats being used off market is hydroxychloroquine in order for any doctor to prescribe it, it would have to be approved. Thanks very much. Larry adams is chief Investment Officer and ron is a senior add vierz. Youre a very senior fellow ron. Lets talk about this possible use of remdesivir if it turns out that it clears these hurdles, you would have to think that the market not just sustain its recent rally but add to it. I think we both agreed. I think anything that appears to be bullet proof is going to change the entire arc, not only how we deal with the virus but the conversation around the economy. If this worked and took a serious illness off the table, most people would fall into socsome of the behavioral patterns we saw before this occurred were still waiting. As you point out its been the strongest s p since 1938 can you believe it when we were down i think it was over reacting to the down side we put out this road map of four things that could help get the markets back up to closer to 3,000. You see in two of them come in much bigger than what people even thought they could. That is in the form of monetary stimulus i think the fed has been an unbelievable leader doing much more than what people expected when you think about the stimulus coming from washington, at one point they were talking about a trillion tlars dollars n stimulus and now were up to 2. 2 trillion if we do get some form of a they are putherapeutic that will intensify the discussions of us reopening this economy i think we continue to move higher the therapeutic is one thing. The economy is quite another and the numbers that have come out this week and presumely are going to continue in a trickle and a torrent over the coming weeks are likely to be numbers that we have never seen before how much wind are those numbers likely to take how much wibds is it likely to take out of the sails of this market i think to the extent that any numbers come in worse than the worst possible estimate that we have seen thus far. Earn ngs the Second Quarter which we have yet to estimate. If they were to weaken you would have more head winds for the Financial Market we know where we are roughly we dont know if we will exceed our worst expectations and we dont know the pace of which well recover quite yet. Theres a bilogic problem that comes before the economic problems the extent that gets solved at any period, at any point along the way determines a lot of the economic and market behavior the one thing i would say and im keeping a close eye on is the price of oil if theres an economic canary in the coal mine, a normalization is not an need term consideration. Larry, lets say youve been pruning your portfolio, perhaps taking some losses on positions that you had and now you want to redeploy some of that capital. What is the prudent place to put money. Do you chase the winners, the netflixs, the amazons or do you look somewhere else . I think were in market right now where selectivity the critical not only by sector but intrasector. If i look at the broad base sectors, the areas i continue to like are technology. I see the catalyst in front of us i think that will continue to be with 5g. With all of us working at home we have seen what we need. We need more power, speed, more storage and applications i think thats a broad catalyst for the entire sector. Thats one area that has the most cash on their Balance Sheets i think that could buck the trend and you could see some dividend increases, buy backs and merger and acqisition activity you not only get the Traditional Tech Companies but you get some e commerce and the payment processors i do like tech then the other area i like is health care. I think one thing we got to keep in mind when we look at this economy is that the u. S. Economy is not necessarily the u. S. Equity market. While we may focus on some things like restaurants and some of these other smaller parts and department stores, they represent like 1 of the s p 500. If i focus on health care which is a very big part, thats actually reaping the benefits of whats going on because i dont think well ever see a situation where well be undersupplied when it comes to medical devices and supplies i do Like Health Care Going Forward. I think the viz blsibility for r earnings is strong as well lets hope youre right on that last point that we learn our lesson with respects to preparedness larry, we appreciate your time stay safe, stay well the senior commentator, ron insana kelly. Koling ingcoming up, were todays market rallies the rally in energy is despite oil sinking. It hit the lowest level in nearly 20 years as it falls well below 20. It broke below 18. You can see the chart. A 10 drop theres a lot more to this story. Stay tuned well dig into it right after this plap. Welcome back despite the market rally oil is in a free fall with kruds hcrud hitting its lowest level in years. John, well start with you im hearing this has to do with the rollover of monday expiration of the may contract rolling into june. If you look at the june contract, things dont look so bad. Is it technical or is there something more fundamental going on here . Well, the bad thing that it is reflecting, kelly, is that the cash markets are flooded right now with crude oil its backing up in the system. Refiners are dialing back. That contract you referenced expires on tuesday some of those barrels will go to delivery there are some people who will take tlidelivery or try to make delivery into that contract to an already overly supplied system on top of what we have going on right now, there are concerns about storage tanks in the u. S. For crude oil filling the up probably in next eight weeks or so the real punch in the gut from our good friends the saudis, theyre sending 20 super tankers our way on Everything Else the cash markets are a mess. Theres some hopefulness about the drop in the rig count and other measures that are being taken. Thats why youre seeing the following month much higher. Theres a huge spread between wti and brent by about 10 maybe some of this will normalize next week. Energy is leading the way today in terms of the stock market why do you think that is i mean this is an incredibly important event thats happening in oil markets that is a direct result of the coronavirus and how everything is unfolding on the demand side. Were heading into what looks like a recession oil demand is incredibly weak with further downside risks. Supply is starting to respond. Not only are we seeing rigs down, several operators are announcing major cuts for Spending Plans for the year. Fracking activity is down. Something like 40 in the last month. We had this all important opec plus deal. They agreed to 9. 7 million barrel day cuts. All this is happening. Its just that its not enough even with the opec deal taking off we have Something Like 7 Million Barrels day over the next month or two. We had about 1. 5 to 2 many barr Million Barrels day of announced economic shut ins already on economic supply. Prices still have a lot of work to do in order to resoevvresolv 15 Million Barrels a day john, it sounds like theres no good reason for the Energy Stocks to be up today. Would you attribute that to anything special and would you have kind of similarly bearish views about how much lower the price of oil is going to go. Im no total agreement about the bearish outlook for the price of oil as was mentioned, the industry is responding, kelly, in a big way. Youre going to see the u. S. Production come down the future of energy here is the big oil companies. The companies who have cash in the Balance Sheet that can with stand this series of body blows that the industry is taking right now. Whoever is still Walking Around with shares are the cockroaches will thrive. I think thats where the bets are being placed in the equity market on some of those companies. Quick question here when do we run out of storage for this surplus oil when do we have to start using swimming pools yeah or joes pool. I think eight weeks from now june, july time frame is when you really see that. They will also start to use pipelines. One company is looking into using their vast liquefied gas storage. Their backs are up against the wall all right, thank you both still ahead, shares of apple down 12 in the past three months falling today as Goldman Sachs says the stock could fall as much as 20 . Paul krugman out with a new op ed saying starve the beast and feed the depression when it comes to fighting the coronavirus and reopening the economy. He will explain what he means by that more whepor nccoins n weluh ntue right after this issues facing our world, what do you see . We see breakthrough medicines getting to patients in record time. We see harnessing natural gas unleashing the promise of clean energy. We see engineers simulating the future to improve today. At emerson, when issues become inspiration, focusing core strengths to create a better world isnt just a result, its a responsibility. Emerson. Consider it solved. At t knows you have a lot of things on your mind. Staying connected shouldnt be one of them. Thats why were offering contactless delivery and setup on all devices. And for those experiencing Financial Hardship due to this crisis, well work with you to keep your service up and running. Hi because at at t, were always committed to keeping you connected. Welcome back lets get to the latest on the coronavirus. Good afternoon. New jersey governor reporting another decrease in deaths the states total death toll has gone above 3800. Deaths at Long Term Health care facilities continue to rise. New york and new jersey reporting between 20 and 40 have happened at all such facilities 42 Nursing Homes with ten deaths and one with 55 fatalities more than half of the sites have crashed in the past month thats according to the Information Technology and Information Foundation florida says it has a backlog of 850,000 applications its only managed to proses about 141,000 claims an expert at the World Health Organization is questioning whether antibodies in the blood will give full immunity with reinfection. He says preliminary information shows few peoples immune systems are making antibodies and the herd immunity in the broader population lay nmay note achievable tyler, back to you thank you very much. Goldman sachs dropping it to a sell rating. The recovery cycle will take a lot more time. Lets discuss with Craig Johnson and chad morganlander. Goldman sachs says now the the time to sell apple do you agree i disagree. I look at the slowdown you could see here as what you would expect ahead of the 5g launch of the phones if you look at the dhachart thai brought in, you can see the shares have pulled back. I dont see that being broken again. I think this is a time on any sort of pullbacks we want to be buying apple shares in here. Chad, many people would say apple is up with of those Tech Companies you want to own. Strong Balance Sheet, a good component annual growth rate what do you think . At the right price, unfortunately when it comes to where we are, large Cap Growth Companies have out performed by a considerable margin in relationship to large cap value. For example, if you look at the rustle 1000 growth index you would see only 4 . If you look at the russell 1000 value, its down close to 21 . I understand why they move rapidly off the bottom due in part because of a lot of cash on the Balance Sheets and a high level of predictability. Once again, valuation doesnt matter got it. Compelling views on both sides chad and craig, thanks for joining us for more trading nation head to our website or follow us on twitter. Back to you. Still ahead, jpmorgan stopping home lines of credit overnight. That could put a further damper on already kracratering renova s renovations. Paul krugman joins us with why he think is u. S. Economy is in a medically induced coma and what Congress Needs to do to wake it back up. You can always watch or listen to us on the go on the cnbc app. Our special breaking News Coverage continues after this. Welcome back about 90 minutes to go until the close. Lets check on tennessee market where the nasdaq is almost giving up its gains but not quite a enough more solid gains for the s p and dow of 1. 5 . We largely given up the gains when we were up more than 600 points at the high let chief executi lets check on the russell which was the big win of the day widespread testing for covid19 will be necessary to reopen the committ economy but states access remains pretty uneven. What do we know . The president says the u. S. Has tested more people than any other country and that is true according to the covid tracking progress, 3. 4 million tests have been run but that only represents about 1 of our population that important number is the per capita number. By that rate, other countries are far ahead of us including ice land, germany, south korea and canada access to administration of the test remains spotty at best. This map shows how wide that range is new york and louisiana have some of the highest per capita testing rates while california has one of the lowest. Partly because it has a Large Population even though it did have one of the earliest outbreak outbreaks. A lot of finger pointing going on not just between republicans and democrats but the states and washington thank you very much the white house has released guidelines for reopening the u. S. Economy did so last evening. According to our next guests latest column, we are still months away from a safe end to this lockdown and partisan politics are crippling our policy response to this deadly pandemic joining us now is New York Times columnist and paul krugman always good to have you with us. Thank you for carving out a little time today. Good to be on fantastic let me read a comment from your latest column. You said what policy can and should do is plit gamitigate the hardship and the last relief package did do many of the right things but it didnt do enough

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