Points, of course we had 74 earlier in the week sort of reflects that. It does indeed. Lets talk about it. They join us now to break all of that down. Good morning, guys. Good morning. Tobias, your target for the s p in june 2021 just a bit higher than where we are right now. 3160 given that, how should investors be positioned . Is it just a matter of averaging back in if youre not in the market and doing it cautiously or what do you expect . So i think you just put it perfectly and cautiously using that terminology i think the market right now is a bit ahead of itself so i think its a bumpier road Going Forward in the nearer term four key issues to worry about, one the unemployment numbers, how quickly they come back the fact that most of us will probably be somewhat in terms of practicing social distancing not going back to normal until things like vaccines, commercial industrial lending standards data suggest tightening of Credit Conditions which usually means no big bounce really in the fourth quarter, and lastly, the, you know, if you kind of think about the elections and will businesses want to step up in an aggressive way in front of the elections or wait to see the results in case there are major policy changes. Sam, at what point do political polls start to effect the markets given President Trump seems to be setting china up as sort of a foil in this Election Year . Is it going to get to the point if the president is weaker in the polls, people read something into whats likely to happen with trade 2021 and beyond well, i would actually say that market itself is a poll and if you look to july 31 through october 31 of president ial Election Years, historically its been a very good indicator about 85, 90 of the time if the market has gone up, then the incumbent person or party has been reelected. If the market went down in that threemonth period, then the incumbent was replaced i would actually say yeah, you could look to the polls, but at the same time look to the market as its own poll. Yeah. Tobias, im curious, you used the word cautious, but when you look at hows the week actually started, the sectors that were performing the best, the fact that you did see the treasury yields tick up, theres a breather happening but the socalled reflation trade, is that something that is kicking around in this market . Is it attractive are there certain areas where you would be playing that . Sure. So lets break it down two different ways one, if you look at the market and theres been a lot of narrative focusing on the f. A. A. N. G. S. Or the big, large cap tech companies, the beneficiaries if you like of the pandemic, if you look at since the bottom march 23rd, actually an equally weighted s p 500 is equal to that of the market cap. Its been more broadly based here its not necessarily cyclicals versus defensives. I think the thing you should look at is not just the 10year treasury yield but tips break even what is the bond market saying about kind of cyclical recovery, inflation prospects. Thats doubled off the bottom and you dont see that in the 10year yield necessarily. The other thing i want to point out this term caution one of the reasons were cautious is our primary sentiment metric which measures positioning not feelings we got a signal in january before the market sold off and a similar signal in september 2018 before the market sold off we are worried the market is a bit ahead of its skis here. Yeah. Sam, how about the ratcheting up of tensions between the u. S. And china . Is obviously we had that bill that went through the senate yesterday. The rhetoric gets more pointed as well. How much is priced into this market well, i think that the additional bill is probably or something is priced into the market at this point, but the market, i believe, as tobias implied is now in a waiting game, waiting to see what kind of an effect that the reopening of the economy will have on Second Quarter gdp system as well as corporate earnings forecasts, also looking towards other things such as additional announcements of virus injections, virus inoculation capabilities and looking toward whats the possibility of a resurgence in the covid cases. I think theres an awful lot that wall street will be looking out for, but still has to wait several weeks or months to get a better read on it. Tobias, that was my question, what sam just said, because the last two times weve tried to spike to these levels, these 2930 levels, one was in late april on news about remdesivir and then the most recent one, of course, was the news out of moderna. Given the amount of money that is parked in money markets, earning nothing, completely on the sidelines, dry powder, i mean how do we process this sort of hairtrigger sensitivity to even the slightest good news regarding therapeutics or vaccines so look, the market is looking for good news. Investors want to hear good news and all of us i think want to hear good news on the therapeutics and on the future vaccines to kind of get back to real normal as opposed to, you know, some sort of semi normal in that respect, that is kind of one of the key signals that investors want to hear the other side of it, you talk about the cash thats parked on the side, the no alternative to equities right now, if you look at the amount of cash held as a percent of Financial Assets for the household sector its not at an extremely high level. If you look at absolute high dollars it looks higher but as proportion of Financial Assets there isnt. In that sense there was a fair amount of capital in theenutional world we did a survey in late march and found institutions had 10 of assets under management in cash that was twice what we had seen over the past decade and higher that be in december 2008 in the midst of the financial crisis. That probably has been put to work Short Covering has been occurring as well. Again, i think there is a lot of uncertainty and to answer, you know, if you really believe that the economy is going to get better because of whatever drug is going to come out in enough time for earl next year, some of the cyclicals look more interesting, the chips, the banks, few of the industrials, but still too early for the industrials. I want your take on big techs outsized weight in the s p 500 right now. I mean i guess on the one hand we call it big tech but on the other theyre different kinds of companies. Amazon having such a big retail component as well as the cloud microsoft and apple having pcs, facebook and alphabet having huge advertising they call them tech but theyre different. Is that healthy for them to be weighted the way they are in the s p or is it not well, i think its healthy, jon. You brought up a good point now were seeing the tech sector creep up in the upper 20 area of the s p 500 from a market cap perspective. You did mention, amazon, thats actually in the Consumer Discretionary sector you talk about facebook. Thats in the Communications Services category. So it really has been sort of spread out but i think the implication of the question is, we are still being driven or at least apparently so by the behemoth companies within as a result im fairly encouraged by the widening of the breath that weve been seeing over the last several weeks where actually mid and small cap stocks have been outperforming large cap issues weve been seeing a bit of rotation into the value area et cetera to me that is encouraging that investors are saying there could be additional life beyond the behemoth techs yeah. I guess to that point, tobias the jobless claims numbers we got today the initial numbers still very, very high but starting to come down, but now increasingly a lot of focus on continuing claims as well. How closely are you watching that metric specifically and does todays reading actually signal a peak . So i think we saw the peak earlier on when we had 6, 7 million. But in the sense that, you know, we think theres some duplicates in there and some fraudulent claims in there, in other words somebody didnt get through or werent sure they got through and put through another, you know, a second claim, our economists think that the numbers arent really 38 million but closer to 28 to 30 million in reality thats a big difference. Yeah. Because again, if youre filing more than once because youre not sure if it worked the first time, that is a big difference still an enormous number of people out of work we actually think about half of those will probably get back to work by the end of the year for six months, lets say of recovery, and then we still have this significant number of people that could act as a drag on consumer activity because the likelihood of extending these really powerful Supplemental Benefits are pretty low. We did a virtual visit if you like to washington on tuesday talking to some people on the hill and there isnt a huge appetite to extend because particularly Small Businesses saying its acting as a disincentive to get people back to work. Well, tobias, sam, great insights as always thank you. Thank you, have a great day thanks. Lets get a check on where we stand in todays trade. Stocks have been mixed with dow, s p and nasdaq all moving between gains and losses currently although in the red, the dow is down 96 points. The s p is down 20 or about 0. 7 the nasdaq is down 0. 9 . Energy, materials and tech stocks are leading the way lower. Ayitusst wh. Im back working from home and here to help. Hey lily, im hearing a lot about 5g. Should i be getting excited . Depends. Are you gonna want faster speeds . I will. More reliability . Oh, also yes. Better response times . Definitely. Are you gonna be making sourdough bread . Oh, is that 5g related . 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[ no audio ] if you could give us a status check on where Johnson Johnson is in its covid19 Vaccine Development timeline and sort of where you see the Company Standing versus other efforts . We heard from astrazeneca today, they plan to start a phase three trial as soon as next month. Are you still planning on phase one in september yes, were still planning to start phase one in september and we closely work with the fda on all regulatory steps towards that its a careful designed process to go through, we started with 12 different vaccine constructs and selected the best one and were now testing in animal models and we validated those models, they have been published on monday in science papers showing that animal model is valid and that the vaccine can protect animals and now we are challenging with a vaccine which is a proven vector based delivery where we boost the activity of the dna very much. We can therefore now test it in the month of june. And then we do upscaling and enter phase one in september we are upscaling the manufacturing in hope to make a billion vaccines next year part of the timeline in joint discussion with the fda. Its interesting to put j j timelines into the context of the rest of the field. Perhaps your starting date in humans is later but youre still talking about similar timelines in terms of having the vaccine potentially available to people early 2021 if all goes well. Could you explain that difference is j and j taking more times to the lead up to human trials, being more careful how can you explain why the timelines are so different for you . We have definitely taken more time to make a selection of the vaccine and that shown in the animal models, that different pieces of the spike dna and different modalities to that give different protection in the animal models. That was a careful selection to go to the maximum protective spike piece we could use we have done that very carefully in the first three months of the work in parallel we have done the upscaling work so the decision as i said before is based on the best immuno genic vaccine combined with the best productivity in the vaccine. To get to a billion vaccines you need huge productivity in your line, and very fast, you need to be careful on doing that the other point we have done a lot of work before we had four vaccines we have done it four times in hiv and rsv and zika and ebola and that learned us a lot on being very careful on selecting which vaccine you make, how you upscale it and how do you bring it to the clinic so that experience tells us step by step what we need to do and we have the blueprint applied in an accelerated way which brings a vaccine by the end of the year, hopefully at a billion level next year. And i want to ask you also about the construct of the vaccine. You use it, a virus, to deliver it, an adno virus as the vekts and there was a paper in science just a week ago where dr. Fauci and dr. Collins of the nih mentioned one of the potential things to look at with the vaccines that uses this vector, if people have been preexposed to that virus they may have immunity to it and could affect how effective the vaccine is and needed to look at in early studies. You have a lot of data on this approach in other viruses. What is your take on that . Yeah. We have studied extensively otherwise we would have used the same vector every time again with ebola and hiv and zika and rsv, we learned that with the vector we have its not a fact its in some regions it is somewhat more preexisting antibodies against it, but in most of the regions not. Thats different with other vectors like at 5 which was used five to ten years ago where you found a lot of antibodies in humans and we carefully selected this adno vector and we have not seen that even after many exposures in the same person, we have not seen building up against the vector itself. The Science Behind that is too complex to explain here but we have good evidence thats not the case for our vaccine its greet haat to have you. In a week where investors and the general public are trying to get their arms around the nuances associated with data and studies coming out he want to go back to the monkeys for a minute how much weight should be put on the data as it relates to some of the results, some of the research, whether its yours or some of the other reports weve gotten this week, about positive results in monkeys how much of that can translate over to human beings well, its difficult to predict for this disease because it never happened, but what we have been able to show in one of the two studies which have been published is that you can make a nonhuman primate sick, the virus multiplies, get antibodies, cure from it and when you rechallenge that animal its not possible to rechallenge the animal, they quickly mount immunity against covid. It is an animal model to be used for challenge. The second was where dan and his team in boston, together with our folks, we tested several prototype dna vaccines which then showed protection and the level of antibodies was correlated with the level of protection there is a correlation which you can study in animal models how predicative that is for humans will be shown later, but its a good model for us to at least Start Testing whether we which vector, which dna and what should we use and select as the best possible immunogenic vaccine to protect people from covid. Doctor, i have a question about Vaccine Distribution of course looking forward to getting to the point where thats our primary concern has there ever been a time when youve tried to distribute a vaccine to so many people so quickly and what do you