Worst day in a couple weeks. The nasdaq snapping an eightday winning streak if we close where we are today bob pisani now has more on the markets. Bob . Very tricky moment here, tyler, right near the 200day moving average technology has the leader whats the problem theres a number of issues the coronavirus story is the most important its not going well. We have infection just outbreaks, some threats from Governor Cuomo to close things down, tariff tensions are still out there. That moved the markets prior to the open valuations are still high. Energy stocks up and then down same with the banks here 12 to 16 honeywell, and then all way back down again. See how similar the stocks are, the inverted vs, and now theyre breaking down a bit more mcdorchlds 180 to 200 theres that v we have to figure out a way back to you theres the dow now, the tristate area closing off borders from visitors out of state. With no plans there to halt reopening. Meg tirrell has the latest details for us meg . Hi, kelly, this travel advisory goes into effect tonight at midnight. It applies to about nine states right now. New york Governor Cuomo laying out the criteria later today therefore, states with a rate of ten infections per 100,000 people on a sevenday rolling average or where theres 10 of the pop 4r5i8 north and south carolina, all qualifying for that in terms of enforcement. Governor cuomo say every state will be doing it differently in new york the first violation is 2,000, second is 5,000 if harm is caused, he says the fine can be up to 10,000. How they will be policing this, he said maybe in hotels if somebody notices youre from out of state, theyll notify somebody, or business meetings so kind of relying on the community to police this, though he did say Police Officers may notice cars with license plates from these states and may take action in that way as well as we are tampa, san antonio, orlando and austin, and the hospitalizations data also not good in many of those states, seeing fast rises and record highs, including in arizona and texas where the trends, guys, are particularly bad tyler and kelly . Meg, im contemplating what all of that surveillance is going to look like at it plays out here i have a related question, sometimes we have seen in other states i can think of an example in texas where authorities would called and check if the travelers was in the place where they could be. Should we expect that kind of monitoring yeah, it doesnt sound like right now new york, at least, plans to do that we havent heard specifically what new jersey and connecticut might do, but it sounded like this was more of a Community Policing initiative from new york right now one interesting thing they said is the arenas are in the federal domain theyre going as far as they can go, but they could do anything in the airports in terms every enforcing any of these state rules. Fascinating meg tirrell, thanks so much. Ty thanks, kelly. It is the surge in the case cass that is weighing on the markets today. For more on what this means, lets bring in Eric Marshall at hodges capital management, and jordan posener gentlemen, welcome very much eric, let me begin with you. You say among other things that youre looking for good, safe bargains what does that mean . I can find unique situations, where companies are actually doing relatively well and being overlooked we see a number of those right now in the market. I think small caps really have been out of the limelight. And they were economically sensitive, but we do think there are opportunities where you can find some good relative values. Small caps dont always lead in the first one or three months from the bottom, but looking out six months from when the economy bottoms out, small caps typically lead the Broader Market by 13 or more. So we do think eventually if the think the market is going to bottom out at some point in the next six months, this is the time to be looking at smallcap stocks. Jordan, you also sort of subscribe to the idea you shouldnt chase the momentum plays right here that would lead you to a different sort of category of stock. What would that look like . Sure, would love to the markets been up 40 from the lows and even within that, we would use this opportunity not to take money on the sidelines and plow into the things that have already moved dramatically that have the most momentum, but instead focus on companies that have solid balance sheets, have good different yields, and Sustainable Business execution, because theres going to be volatility, and were seeing that today so we would use a down day like today to pick your spots to find good opportunities to fill in while maintaining your overall Asset Allocation so, going back to the idea that stocks execution at higher dividend yields for that list for us to talk about today are cvs, u. P. S. , at t and merck. They all pay dividends north of 3 , in some cases much north of 3 , modest valuations, and actually have a pretty Good Business dynamic, which has been uninterrupted by the covid recession that we are in the middle of. Eric, let me get some picks from you from the smallercap space, and they include callaway golf, and Home Builders and kuehlic and sulfa, which i guess is a semiconnector maker explain the thesis here. We Want Companies with a good secular story. Callaway golf, the rounds of golf is up one of the things were deploying is outdoor plays this is a summer of Outdoor Activities because of the virus. We think they stand to do very well over the next several quarters taylor morsing homes trades at less than one times book value i heard you talk about that on the program earlier today, which we would agree with her thesis on that. And then kulicke soffa, we think theyre in a cap ex spending cycle for the Semiconductor Industry we think that stock could potentially reach 40 in the next two to three years, as they reach their earnings power of about 4 a share that would be about a double from here. Eric marshall, jordan posnor thank you. Until now, the market has happy with the trajectory of the economy, but a new outbreak calls that into dowubt. Steve now has more its an interesting comparison, when you look at the response to the great financial crisis and to whats happening now. So far it has seemed more than adequate if you look at the Unemployment Rate right now, it looks to have peaked well see if thats true just too much after the recession began. Last time around, it took 22 months if it continues the way it is looking at the fed response, just four months after the recession began, the fed has pumped raised by at least 3 trillion all of this seemed adequate up to today real quickly, look at the financial outlays, 30 up the last two months compared to a year ago it took them ten months into the recoveries in 2008 to get there. What were the lessons then in take a look real quickly at the stock market which trough 17 months later, covid19 shut down, so far the trough was a drop a month after what were the lessons here it helps to understand the severity of the crisis bipartisan support really essential for aid. Now, kelly, the question becomes, is the market satisfied with the plans for the treasury and the fed to spend and the outlook for the economy if we do indeed have another outbreak thats especially true with several key programs expiring, and the 600 unemployed benefit at the end of of july. It seems that the answer is that it depends. If this is the start of a deeper slide, obviously policymakers know what tends to stop them you know, i think at some point, kelly, the market is going to start wondering what happens when ppp expires to those people who were brought back, do they go back on the unemployment lines what happened to Consumer Spending if we dont extend at least some portion, which you talked about yesterday of that 600 unemployment benefit if people dont go back to work were kind of like in a limbo period, where i think officials have gotten a bit of leeway to not make those decisions i think those decisions may have to be made sooner rather than later. Thank you, steve ty all right. Kelly, coming up, the reopening rally taking a bit of a breather today, now 713 points, all 11 sectors of the s p 500 are in the red. Energy hand financials are the big dogs of the day, real estate as well. Tesla taking a hit after a new report put the cars reliability in questionable. Well tell you what it could mean for the stock what its all right meant after it sgeurd to 1,000 a share. Much more power lunch coming right up you turn 40 and everything goes. Tell me about it. You know, its made me think, im closer to my retirement days than i am my college days. Hm. Im thinking. Will i have enough . Should i change something . Well, youre asking the right questions. I just want to know, am i gonna be okay . I know people who specialize in am i going to be okay. I like that. You may need glasses though. Yeah. Guidance to help you stay on track, no matter what comes next. Check out the airlines all of them getting hit as the coronavirus cases rise and the road to recovery is looking longer and longer. The selloff for the Airline Stocks was almost to the minute when you saw the news come out of new york city, for the selfquarter teen of 14 days if they true from nine states delta, american, united, they all have hubbs in the new york city area. Jetblue has big exposure to the northeast. Even the southwest has a lot of exposure to the tristate area. A lot of people will selfquarantine, you know what im just not going to make the trip thats why a load of people say that will hurt of demand that also comes out on a day when we have big news of the initial survey of quality from j. D. Powers, we wont go over the brands that are listed, but what is most noteworthy that j. D. Power tess about tesla the brand. It says tess that has the worst initial quality in the industry, in terms of problems per 100 vehicles, as j. D. Power calculates them. The biggest complaint, the fit and finish of tesla vehicles that raises the big question, as tesla has pushed manufacturing, pushed to build and sell more vehicles, does it take shortcuts . Maybe not deliberately, but not as smart and as complete as it should be when it comes to the overall quality of its vehicles. Thats what came out from j. D. Power today, as you look at shares of tesla. Keep in mind ntsa is opening an investigation into the touch screens of model s vehicles sold between 2013 and 2016. Whether or not that results in a recall remains to be seen, but certainly questions being raised about the quality of tesla vehicles today. Phil, stay with us. Talk about how the disappointing results can impact the carmaker. Tim, welcome, what do you think is more problematic for tesla . Is it j. D. Power saying it has the worst initial quality or the potentially problems with the model s touch screens. The j. D. Power issue is going to be a potentially big one going forward. Teslas brand is build on a virus marketing, on early adopters who are excited for this vehicle as you start to set mohr and more of these cars to everyday folks, if theyre a First Experience in the first 90 days is, whats 250 problems were is 00 cars, youre one of those people, you probably will not be so excited that could potentially by a problem for tesla, as it trying to become a mass market maker. Phil, can you elaborate a bit on these problems. By fit and finish, it seems like you didnt adjust your seat properly and you dont like the paint color. Obviously were talking about Something Different here what does it mean exactly . Things like wind noise, gaps, maybe something on the inside is just not right the squeaks and rattles is the way they summarized it to me when i was talking to the folks at j. D. Power. Are these the types of problems that make someone go back and say i dont want this car at all . Its terrible, it broke down on the side of the road no, but if youre paying 50,000 for a vehicle, you want it to be perfect. Every vehicle has problems out there, but the question becomes whether or not these issues are so great and so persistent that it ultimately tarnishes the tesla brand, which, by the way, it has one of the strongest brands in the auto industry. That was the question i was going to ask i remember not that many years ago, i believes it was Consumer Reports, a nearly perfect car so i ask two questions, what has happened there since then . Is it simply a difference in methodology or ratings, approaches, so forth number two, does this necessarily translate into less robust sales which could affect the stock prime, when often we see brands like land rover, like jeep, that dont score well, but it doesnt seem to hurt their sales very much at very well people want jeeps, and they do seem to like tesla youre hitting on two important things, the model s is widely perceived as one of the best cars in generations, and one of the things thats changed at the time that vehicle came out, people reported problems, but generally speaking, these were handmade vehicles, and as tesla has grown, growing from thousands of vehicles to hundreds of thousands, it just has way more volume its not accustomed to dealing with those are the problems that Consumer Reports j. D. Powers hag highlighted. Youve all right kind of achieved in your life cycle, you know how to make a car and the paint is right thats where tesla still struggles, but what tesla has been able to do to get beyond that issue is its brand is just so powerful. Those early adopters are in love with it, and they think its the cool, hot thing. So thats been able to go beyond those issues that they had if it breaks down or if its not quite right. The challenge for tesla is that it wants to be a mainstream automaker. It wants to make electric cars ubiquitous everyday buyers may not be so willing to overlook flaws in a vehicle. Its also interesting, phil, we had this down grade about tesla this week. Theyre warning that investors worry about it too much that the price would imply 4 million unit sales by 2030, which is double what they think is feasible. I wonder it tesla double down on a Technology Company they consider themselves a Technology Company rarely do you see executives talking about their company as traditional automaker and Auto Executives talk about their companies. They talk about tesla in terms of where the technology is headed, the technology theyre putting into the battery development, how long these batteries can go, you know, where the future is taking the vehicle. Whether its autonomous or other features thats what tesla is trying to push as much as possible then you have adam jonas who says its a tech company, but its also an auto maker. Im sure they dont mind being valued as that they have been a leader on that. Thank you, guys. Tim higgins and our own phil lebeau talking tesla today tyler . All right. Folks, amazon is the only s p 500 stock hitting is new high before selling off with the rest of the shares. The whole market is under pressure the dow is still down about 700 points on the button there paying in the payment stocks after hitting highs yesterday. Square and paypal are falling after one top analyst says these names have gone too far too fast well have these details and more, after this short break thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Yeah yyeah yeah hey, hey while the future of work remains a question mark, one thing is certain reopening will be a journey. Thats why salesforce created work. Com to help at every step of the process, with tools like manual Contact Tracing to help prevent one from becoming three and three from becoming more. While displaying Key Information in one place on a Customer Relationship platform you trust. Because heres one more thing were sure of. Relationships are the heart of business. So lets tackle this together. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Welcome back to power lunch. Im seema mody paypal and square both getting hit hard today after rallying more than 70 so far this quarter. Paybalance getting a downgrade to neutral on valuation concerns we have the team here. Mark tepper, ill start with you. Buy, sell or fold . I would definitely prefer paypal over square weve been in and out of this thing for a while. Right now were out of it. Theyre both expensive, i would be waiting to pounce if and when theres a pullback in paypal the issue i have with square is they have a lot of exposures to small momandpop shops, the once that rely on foot traffic and the ones that have been devastated by this crisis. Paypal is more on the ecommerce play, and i do believe the shift to ecommerce will sticky. It wont go away even when youre doing business in person, more and more people are preferring additional. Square does have an advantage or paypals venmo, but i would see it as a catalyst i think paypal would have to drop for the 140 level for us to deliver. What are some key levels to watch . So lets talk about paypal versus square for a minute paypal has gotten extended so you go from 80 to over 16 on, you know structurally the stock seasonal that sound. He does start to pull back in the weeks ahead. I would be a buyer right down near 125, 130. Square, on the other hand, i actually view as the more attractive of the two. The stock is really just breaking out into new high territory. So trierly its a big better shaped, and technical not overbought i would be a buyer both on pullbacks, but thats one i look at. Well leave it there. For more, trading nation has more up side, and follow us well get the closing traits on oil, and wee see how that rippling through the Energy Stocks plus the main reason for the sell jive, the spiking number of covid cases. Well be joined by d jeremy faust after this short break 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