Transcripts For CNBC Closing Bell 20240712

Albertsons ipo. All of the stories that we cover so closely i know. And banks already rallying today off that deregulation news earlier on the day theyre up 1. 6 at the moment. The top of the s p 500 sector. We have a huge show coming up on closing bell. On the day, we get the stress test results that sara mentioned. Well be talking to the ceo of barclays in a rare exclusive interview. Thats just about five to ten minutes away after the close, the they will join us this is the sign for the first time in months so lets get the pictures here mike santoli is here for the markets. The moves and valuations he is tracking the surging covid19 cases across the u. S. Mike, first to you. We have a pause today in the markets within a pouz. That is similar to a couple weeks ago. We this that big down day number real sustainable followthrough to the down side why is that . It doesnt seem like theyre overleveraged in a way that kree auts a liquidation cycle on the down side. There you see that flat lining there above the lows we saw of a week ago monday. I think the way to think about it is this pushpull between concerns about the pace and strength of the reopening. But then again supportive credit and financial conditions and also rotation within the markets. You mentioned the strength in the banks. That actually has been something that is taking up the slack today for the indices. Here is stocks versus bonds. So far this quarter, the quarter about to end, of course, next week a lot of people on wall street handicapping how much money by Pension Funds and other asset allocators may have to come out of stocks and reallocate it back into bonds just because of the vast outperformance of equities over bonds you see here, more than 14 on a less than three month basis. So just on net, its going to be tens of billions of dollars. Probably the estimates vary. Some of this is already done it does create at least a perceived head wind and maybe an actual head wind going into next week st if you remember back in march as were ending the First Quarter, a lot of talk about how much money had to go into stocks by asset allocators. They outperformed by more than 20 so far that quarter. A little bit of a head wind. Probably a temporary one i would want to point out if you own a blended mutual fund, vanguard balance fund 60 there are 40, theyve done great flat this year total return kept pace with the stock market with less risk over the last two years as well even though there is not a huge amount of breadth today, given where we were just before the open just immediately after the open and the fact we declined so much yesterday, quite encouraging to see green on the screens in this final hour of the trade. Yeah, you would say basically, it shows that there is not really anything that has built up a lot of immediate stress in the system and created extra selling. Really changed the overall story. Do you have the shakeouts when the big Growth Stocks dont do their share as happened yesterday. And today, you know, theyre not really leading the way theyre not falling apart either so you do have other stuff like smaller stocks and the banks there to take a little slack on a day like today all right mike, well see you soon mike santoli apple announcing theyll close 14 more stores in florida as coronavirus cases in the u. S. Continue to surge. Meg terrell with the details for us, meg . Hey, sara you can use apple as a mark of the epidemiology what is happening with the hot spots in the united states. Now with the 14 stores theyre closing across florida and places like ft. Lauderdale and miami and orlando, you know, this add two stores, they already closed in houston, south carolina, north carolina, and arizona. This was the original announcementst 11 stores that they closed a couple last week states, florida, arizona, texas adding record numbers of cases in the recent days the hospitalizations also incredibly concerning in the areas. The darker yellow is seeing increasing hontizations on a seven day average. The most and texas really, of course, a focus here the state announcing to day, the governor, that theyre pausing theyre reopening plans. Freezing the state where it is not actually taking a step back. Except for hospitals in four counties where theyre banning elective surgeries to make sure they have capacity for covid19 patience that has houston officials sounding alarms saying theyre almost at the limit the normal capacity and now theyre going into that Surge Capacity in texas. So concerning picture there, guys but we heard from the cdc director today that were in a different situation than we were a few months ago with a lot more younger people now being infected back over to you i just wanted to ask about the age. Are the states breaking it out by age and the fact that we are hearing from some of the governors that a lot of the cases are young, should we be encouraged by that . Should we be discouraged by it that younger people are getting sicker if if hospitalizations are going up it really depends on who you ask, sarah now were picking up just more folks. So thats a good thing but he also said that it is possible that these people will spread disease to people that are more susceptible to more see disease. They have to see if hospitalizations and deaths then do pick up as a result of these younger folks getting infected we would love more data. The cdc saying we need more granular data. Meg, thank you very much for that we improved a bit during the top part of the show the s p 500 is up 1 the we have 53 minutes left of the session. After the break, a live interview with the ceo of barclays on the markets Global Economy and how the business performed since it came into play youre watching closing bell on cnbc. What do you look for when you trade . I want free access to research. Yep, td ameritrades got that. Free access to every platform. Mhm, yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. Now offering zero commissions on online trades. We charge you less so you have more to invest. 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 markets rebounding sharply from march lows with financials leading the charge today an exclusive interview, barclays ceo joining us thank you for joining us how you doing very well, thank you. Very well. And i want to kick off with the rebound i eluded to that weve seen in the markets. From where you sit, does it make any sense to you that youve seen markets rebound so aggressively when the economy still is to follow you have two forces. You have an Economic Contraction in many ways unprecedented but on the other side of that, you have had fiscal and monetary response by the develop countries. But also unprecedented the ability of federal governments and Central Banks to reenergize the countrys quaun take theive easing and direct lending to consumers and businesses and were trying to balance that out one thing i say for sure, the amount of injection of liquidity by the Central Banks has really calmed the markets down quite a bit. People are trying to find relative values. That is the long Term Economic impact on this pandemic. But given the robustness of fiscal or monetary measures, its not that surprising that the markets held up the way they have we heard from some of the Leadership Teams of some of your u. S. Peers the start of the month a couple weeks ago. They seem to suggest that when were talking about trading and Capital Markets that performance in q2 is better than q1. What i would say is that, you know, the financial crisis of 2008 and 2009, the epicenter of that crisis really were the best i think one of the responses by regulators and governments around the world from that financial crisis was to seek a lower role of Bank Balance Sheets and financing the developed world than we historically there is mute aol funds and by insurance companies. They use the Capital Markets as financing vehicle more so, perhaps than the banks themselves and what weve seen, i think, over the last couple months is thats sort of worked. The banks are not the epicenter of the financial challenge by and large, theyre doing reasonably well. And the Capital Markets are extremely robust again, the monetary and quaun take theive easing has been very big issue. You have Central Banks around the world. That is something that no one would have imagined. The high yield market, et cetera, so those banks like barclays that have a very significant role in the Capital Markets and training and underwriting the securities that go to the insurance companies, et cetera, they have had a very good First Quarter we saw it with our results and our market revenues doubled in the First Quarter versus 2019. So for sure the Capital Markets i think are paying a very significant role in trying to get the financing of the developed countries going. The short end of the curve is trading there. And andrew bailey, the new banking governor seemingly reluctant to rule it out altogether what would be your take on negative rates yeah. St you know, i think its a real open question. Whether negative rates really have much throw away in terms of getting Economic Activity going. And they clearly put pressure on the financial industry and for sure when we look at the balance of barclays business in the First Quarter, our Investment Bank and Capital Markets had a double digit return on capital. Our Consumer Bank which had generated that fell to a single digit number and in parts because the Interest Rates were coming down so low i think the governor of the bank of england is keeping his options open negative Interest Rates and in particular, you know, translating the negative Interest Rates to the market themselves its an option that people dont want to discard. I dont think people can do it right now as a very powerful mechanism to get the economy moving are we going to get a v or check mark is it the slow and steady path towards coming back . The imf put out a World Economic forecast that is dire yesterday for global growth. And says that its not going to be made up that much based on the loan activity youre seeing out there and seeing from the place thats reopened, whats your best bet of how quickly well recover half of the uk economy goes through the payment types at barclays. We have a good read there. I say right now we are more optimistic about the robustness of the recovery today than we were a month and definitely two months ago in terms of spending and Consumer Spending and corporate spending on essentials and nonessentials is encouraging that we are into a into a recovery so i would i think we would believe that the recovery will be is not too far away and clearly the pandemic itself and the uk and in europe, i think the numbers are pretty encouraging as well. That being said, the unemployment numbers are deeply troubling. You have o to expect that is going to vn impact on consumer demand over the median term. I think that our view is probably have morrow bust recovery but dont underestimate that there will be a long term demand challenge driven by unemployment so were not going back to the 3 unemployment levels that we were looking at towards the end of last year any time soon uk regulators forced you to cut your dividend. U. S. Regulators deciding today whether to do that with the u. S. Banks. Do you think banks should be given leeway to make up their own minds on capital return plans . One thing i say, wilf, i believe it is a different dynamic today than what we had in 2008 and 2009 the level of engagement between banks and regulators are those that supervise own those that are being supervised is much morrow bust an much more constructive now than it was ten years ago. You know, were in contact daily with the bank of england, vra, sca and very, very frequently with the fed and with the ecb. I think there is a Great Exchange of data and information obviously, the pra and bank of indy and the recommendation or a strong suggestion to the banks about a 2019 dividends so we did spend that we went into this year with the highest level of capitalization, capital risk assets in the history of barclays i think there is a real desire to be cautious and prudent until we get greater clarity of the contraction. I do think that banks are in a much better position i think there will be revenue headwinds. We waived banking fees and i think on the profitability of many the Consumer Banks spending was down dramatically but hopefully the system recovers and i do believer the banks went in with a strong level of capital and our hope is within a reasonable period of time we are looking again at the ability of returning excess capital into shares given how you just described your bank and other banks right now, what does that mean for the outlook for jobs on global wall street there is some concern that, you know, youre using a lot of technology, work from home can you do more with less. So are we going to see layoffs you know, i got a question from a senior Government Official the other day much so when are the people of barclays [ inaudible go back . We have 58,000 people globally 70,000 people are working remotely so the answer is was actually no one actually stopped working were doing it from a different location clearly and one has to marvel at where we are as an industry in terms of technology and operations you know, we can process checks. Question do Foreign Exchange trades we can underwrite bond issuance, et cetera. 70,000 people working from their kitchen tables which is what im doing right now. Thats remarkable. That allows us to go much more cautiously back to work. We can focus on the health of our employees which is our third important target during the crisis but, you know, lets see how technology plays out we have weve held our Employment Base constant throughout this crisis i do think, you know, where people work from, you know, physical footprints and what not will be a lot of time to are view those things. It is extraordinary what weve all done with the operating Technology Platforms that weve got. The financial industry and Banking Industry is a robust part of employment its very important that we are part of the solution of bringing these economies back rvelgt we would look to be regarded as a partner with the countries that we do in order to help this recovery and that includes the people that work for barclays. I want to ask quickly about brexit clearly Boris Johnson has made clear he doesnt want to extend the transition period. So were six months or so away from when that takes place the hard line hes taking, as it relates to your sector, your industry zshgs that make sense to you if there were a firm cutoff who knows where well be in ten years. Would Continental Europe heres Capital Markets be ready to take share from london next year . You know, ive been ive been consistent since the referendum vote. First of all, we got barclays prepared for the hard brexit almost day one we relianced all of our branchs in europe as branches of our bank in ireland. We made the allocations of capital on the management of risk so that we are offset to run our European Business from our european banks which is head quartered in dublin. So were set for hard, soft, whatever type of brexit it s but also say right now the limelight is a little bit you know, id rather have a certainty of a brexit, hard or soft than the uncertainty of what were facing the latter part of last year the second thing i always maintained this view that london is going to stay a Financial Capital in europe and a Financial Capital for the Global Economy. Its not because of where the banks are. Its because again, so much of the Fund Management business managing all that capital is located here in london i dont think its going to leave. We have a very robust legal structure here and then ultimately, i also think that aside from the political ranker, europe and the uk have been partners in the European Union and i think they will continue to have a very high level of cooperation. I think there will be a real push towards equivalency for sure the uk wants to have the independence to make sure its looking very similar to the regulatory construct in the u. S. Keeping a regulatory, i9 is important for us so, you know, even during this pandemic in crisis, the amount of debt they have used to fund the governments is being very robust so i were still a big buyer of london or soft brexit. Good to hear, jess. On the regulatory front, i know you cant comment on the u. S. Stress test which is due in an hour but what about the news this morning from the fdic in terms of interests held against swapz and also on the volker rule. Were you surprised by that and pleased by it . You know, i think pleased by it for sure. I think from the ecb to the bank of england to the fdic and the fed, what not, they have, i think, done a lot over the last three or four months to try to get the banks positioned again to be collaborators in helping these economies recover. I also think its a recognition that the banks went into this crisis very high capitalized, very liquid. The i think the Regulatory Framework is much morrow bust. And so if we can work collaboratively, so we have a Balance Sheet that we can expect to our customers and our clients which weve done robustly if, we can partner with governments to do in the uk its bounce back loan program for we have lent to 2,000 Small Businesses billions of pounds in the uk guaranteed by the treasury to help the Small Businesses move forward. So any relief they can give to the bank to allow us to do what we do well, i think is encouraging. But underscores the fact that the Banking Community is improving right now. And jess, just finally, i want to ask, i mean, youve been criticized by activist investors for a couple years now mainly focused on strategy but i guess it peaked a little earlier this year on the news that uk regulators were investigating whether or not you had disclosed your prior business relationship with Jeffrey Epstein to your own board. But in april the active investor backed down oncalling. Were police pleased how they played out in the First Quarter. Obviously, you know, ive got the full support of the board. We had our meeting and the votes were cast. We have a support of 99 of the shareholders so were here to run the bank and we look forward to do that as constructively as we can. Jess daily, thank you for joining us thanks, wilf. Weve got 33 minutes left of trade. Check out the markets here the were getting a little bit of strength on the dow so a little bit of a lift here with 30 minutes left of trade. The s p 500 is up 1 the nasdaq is up 82 and the russell 2000 index is up 1 its been a brutal year for boeing and air bus and now boeing stock is under pressure again were going to dig into. That and shares of nike have recovered from their march selloff. More people shop and work out from home. Were going to get a read on athen nike reports after the bell well get you a preview coming up next. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. Were seeing a surge of the market we were flat when we started the hour just about a half hour ago. We were down more than 200 at the lows to day. S p 500 up. 8 financials, energy and technology are winning the day so far goldman sachs, the best performer in the dow lets check in on some other individual Market Movers for you. Shares of boeing are under pressure they downgraded it to sell the firm believes the demand outlook for boeing has not improved pointing to slower 737 max recovery air bus meanwhile is higher today. Airbus america striking an optimistic tone on squawk box. Listen. This industry restructured itself over thelast ten years to put itself in the best possible position. So as i look over the next 12 months, no, im not concerned about it time now for a cnbc news update there is your cnbc update at this hour. The county Health Department says the recent spike in cases is hitting those age 18 to 25 the hardest. The democratic republic of congo is declaring a end to the ebo will a outbreak after two years and 2200 deaths. So despite vaccines and treatment for the disease, Health Care Workers struggle to contain the outbreak because the eastern part of the country is still controlled by armed groups california is declaring a budget emergency due to the pandemic. They allow the state to tap the rainy day funds so cover on going virus related expenses americas most populous states expects a 54 billion deficit from the outbreak. And amazon secured the naming rights to a new seattle arena that will house teams from the nhl and the wnba for more on the stadium that amazon is calling the climate pledge arena, you can head to our website, cnbc. Com. Youre up to date. That is the cnbc news update at this hour. Back to you. Thank you so much for that. Still to come, a reopening for a larger crisis coming for corporate america. Yields moving a bit lower early in the session the ten year falling below 0. 7 . 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. 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. 24 minutes left of trading were just about near session highs for wall street. The dow is up 250 points 260 26 260 is the high. It is being driven by financials the rollback of the volker rules. There is a bid for materials and Energy Stocks as well. Nasdaq technology also doing quite nicely up almost 1 . Up next, the income cliff. Were going to get a check on disneys decision to delay reopening disneyland and why the end of july is incredibly important for corporate america. Well be right back. First up is this exquisite bowl of french onion dip. Im going to start the bidding at 5. Thank you, sir. Looking for 6. 6 over there do i hear 7 . 7 in the front 7 going once. Going twice. Sold to the onion lover in the front row next up is lot number 17, a spinach and artichoke dip, beautifully set in a hollowedout loaf of sourdough bread. Dont get mad get e trade and get more than just trading investing. Banking. Guidance. I wondered. Could another come around the corner . Or could it play out differently . I wanted to help protect myself. My doctor recommended eliquis. Eliquis is proven to treat and help prevent another dvt or pe blood clot. Almost 98 percent of patients on eliquis didnt experience another. And eliquis has significantly less major bleeding than the standard treatment. Eliquis is fdaapproved and has both. Dont stop eliquis unless your doctor tells you to. Eliquis can cause serious and in rare cases fatal bleeding. Dont take eliquis if you have an artificial heart valve or abnormal bleeding. If you had a spinal injection while on eliquis call your doctor right away if you have tingling, numbness, or muscle weakness. While taking eliquis, you may bruise more easily and it may take longer than usual for bleeding to stop. Seek immediate medical care for sudden signs of bleeding, like unusual bruising. Eliquis may increase your bleeding risk if you take certain medicines. Tell your doctor about all planned medical or dental procedures. Whats around the corner could be your moment. Ask your doctor about eliquis. Yo. Disney shares falling after they said they wont until after july 17th. We have a look from los angeles. Julia . Disney delaying reopening the anaheim theme parks saying theyre waiting for guidelines from the state saying given the time required to bring thousands of cast members back to work and restart our business, we have no choice but to delay the reopening of our theme parks and resort hotels until we receive approval from Government Officials. This does come after unions representing 17,000 disneyland employees wrote to the governor raising safety concerns about the opening of the park. Disneys parks in orlando are going to open in july 11th. What happens to the workers that disney furloughed, the park employees if this is now delayed . Do they get hired back do they stay on unemployment even as we come up against that deadline for the bonus unemployment checks to run out te at the end of july look, i want to say that orlando employees, it seems like everything is on track for them to continue to on the path to being rehired from their furlough in anaheim, here in california, there are employees that are still on track to be rehired to work in the Retail Operation outside the park the so that is the outdoor mall adjacent to disneyland as for the employees, many of them Union Employees who were hoping to get back to work ahead of that july 17th opening, im not sure exactly whats going on with them. I am reaching out to disney. But well see whether disney just sort of continues their furlough and delays when they would start. Of course, they would have to get people back to work, you know, ahead of when the park actually opens sure. Julia, thank you. It does raise the question with todays 1. 5 million new jobless claims, disneys delay, there is a fiscal cliff coming. The emergency Unemployment Benefits start to expire next month. For more, lets bring in our chief economist from Deutsche Bank securities. What are we looking at here . The extra 600 bonus is set to expire at the end of july. I know there is some discussion in congress of extending it. Im not sure the administration wants to do that kudlow is talking more about a bonus return to work whats it going to look like if those are left to expire here in this country yeah, sara, this is really important. The key reason why this is playing such a significant role is the c. A. R. E. S. Act gave a lift to Unemployment Benefits and that has been providing significant boost to Consumer Spending we have seen very much better numbers broadly speaking in retail sales across the board than what you would have expected given the Unemployment Rate at 13. 3 . The so, therefore, to your question, the conclusion now is that if that runs out by the end of july which is what congress decided, then you will no longer have that Consumer Spending. Then as a rule a serious income and consumption cliff. People are not able to consume the same way if you suddenly have a sharp drop in Unemployment Benefits. Thats why it becomes very important to your question whether we will will continue to support the household sector from Unemployment Benefits dropping off as dramatically as theyre supposed to do at the moment how big an impact would that have on the gdp in the u. S. This year it is quite important if you look at it for april, if you look at consumption versus income, the savings rate is more than 30 people just couldnt go out and spend because the economy was in shutdown now as you have also been debating and discussing, were now entering a wags where it may be that government doesnt shut down the economy but the private sector and households may say well maybe i shouldnt be booking a table at a restaurant maybe i shouldnt be going out you may have the savings rate gone down a little bit and could go up again. In that sense, we have posed a problem that consumers are beginning to self regulate in terms of consumption problems because of the spikes in cases you also have the other issue that maybe there is no more income support coming along. It all depends on what comes out of washington, d. C. , whether another fiscal package in particular a fiscal package is directed towards consumers will be coming out or not yeah. And were still in the middle of the pandemic just getting a headline here governor desantos in florida says no plan to go to next phase of reopening now this comes after Governor Abbott in texas said something similar. Theyre going to pause with the next phase of reopening. So now what happens if congress doesnt extend the aid for unemployment and come up with another fiscal package for smfr the states and local governments and Everything Else that needs to be done as were still fighting through this and to your point were starting to see some states push the pause button. Thats right. And what will happen, it will set in motion a lot of Different Things the conclusion is that if we are now entering a period where there is a spike in cases and therefore Economic Activity, things slow down further, that means that recovery is going to be weak. This is what the Congressional Budget Office and this is what the fed and what everyone in the Economic Community is saying and the conclusion is the Unemployment Rate, the Congressional Office expects this year is around 10 . That means that there are many people who now if they lose the Unemployment Benefits will start to get behind on payments and auto loans and credit cards and mortgages on consumer loans. And that, of course, will have a wide range of consequences then the whole crisis will be interchanged from liquidity crossice nice a crossice wris people cannot pay their bills on a wide range of loans and that can cause a bad scenario from a Macro Economic perspective the market doesnt seem worried about it thank you very much. Well talk you to soon up next, the Bank Stress Test, nike earnings, albertsons pricing the ipo. Its all coming after the bell for you. Well debate each one in the market zone. Thats next. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. 12 minutes left in the trading day. Were now in the market zone, commercial free action heading into the close our senior markets commentator is here to break down the crucial moments off the trading day. Today we have the hightower investment strategist with us. Lets kick things off with the broader markets. Stocks rallying in the final hour of trade today. But just off the best levels after floridas governor Just Announced the state will pause its reopening plans but were still up a healthy 0. 9 for both the s p 500 and dow. Mike, it was some positive news for the bank thats turned things around pretty soon after the open but encouraging to see the final hour drag ten out of the 11 sectors higher yeah. And nothing in particular necessarily catalyze that. It doesnt seem like, you know, the market as i was mentioning at the top of the hour had shown no down side followthrough. So there really was not a sense that yesterday really dhafrchan the equation at all. Very low volumes today then you did have this sort of buy programs sweep through around 3 00. To the net infect effect of gai third of the losses. The market doesnt seem like it wants to buckle altogether in the news of anything that changes the equation so the markets now down about. 75 for the week you are taking the opportunity to buy with the weakness and some of your favorite spots like industrials or banks today theyre doing well not so much the previous few days yeah. No i mean i havent really done too much, sar yachlt ive been trimming a little bit. Paypal just because theyre up so much from their march lows. I still like them. Still own them i think were in this period of consolidation which is very natural, very normal were up 39 from the march lows i mean that is just an enormous move and i think the debate is going to continue. Strong Economic Data that were seeing and we got another round of it this week with pmi, durable goods and initial claims coming down. That is offset by higher virus cases. People are nervous that virus cases is going to impact the economy. Just keep in mind that these four states that are seeing higher cases, arizona, florida, texas, and oklahoma that 16. 5 of the u. S. Gdp. If we dont close the economy as a whole and close the hot spots, i think its very manageable i think the economy can continue to see progress. But i do think were in this kind of consolidation period at least until earnings season and until we can hear companies what they have to say about 2021. Im writing off 2020 so lets hear what they have to say. Hopefully we can see stabilization in the higher virus cases. Retail is under a lot of pressure today after a new announcement this morning from macy macys big layoffs courtney hi, sara. The macys ceo did say that Department Store would emerge out of this covid19 crisis as a smaller company. In both number and costs and now at least today investors have the numbers. So macys is cutting around 3900 corporate jobs fwz 3 of the total workforce but this is in addition to the 2,000 job cuts announced before the crisis in february it also noted reduce something jobs in stores, supply chain functions as well as customer service. Some of the jobs may come back as sales begin to recover. But its just sort of hard for them to predict exactly how many and when tapestry among many others job cuts often do, of course, translate into cost savings which is the case here, these are coming from a very different than what you would see typically. They have to cut further jobs. Sales just havent returned at the level yet that they were before theclosures happened. And even though macys warned us it would happen, its now a reality and retails recovery may be that much further out wilf thank you so much for that. Banks leading the charge the bank index up is 3 . Of heres whats moving the banks higher today its being adapted as proposed earlier in the year. Banks can take private equity. They cant trade for their own accounts known as problem trading. The second change, a little more Surprising Development is the fdic and occ will not require banks to hold margins which trading derivatives with the affiliates other than exceptionally large derivative trades both of those passed this morning. And was announced on the day that we are, of course, going to have the stress test results in about 30 or 40 minutes it powered the banks and they tend to benefit the most as it relates to the stress test we wont get the full details in until next week when the individual banks start telling us what the regulators will tell them today mike, the banks rallying into the close today. Theyre at the session highs having turned around the rest of the market earlier today though i would note we are up today less than we were down yesterday. It was the kind of day where there was a reach of the lagered groups this lifts the overhang. This is part of the rotation small cap stocks at 1 again today, too and that often goes along with when the financials are getting a little reprieve. Nikes stock is trading higher ahead of reporting earnings just after 4 00 eastern time today joining us for a preview, Senior Research analyst at Susquehanna Research group he loves nike. Sam, the problem is Everybody Loves nike right now the stock is up 69 from its lows back in march so how does it live up to that with earnings this is afternoon . Well, i mean, we look at it as by far the best, you know, probably the best Retail Organization out there they have more levers they can pull than anybody else they have more innovation than anyone else. You know, the new ceo has a background in digital which is much needed in this circumstance and, you know, we think that theyll be a Much Stronger Company coming out of the crisis than they were going in. Sam, to saras point, you really love nike, i he feel like i guess the thing that stands out to me is whether or not any of the things that you like so much about them can be replicated by rivals will things like the direct to consumer i mean why cant adidas copy that and the way that walmart and target have adapted to take on amazon again . Well, so much of what nike does is developing is developing the relationship with our customers. And their data source and point of view as a brand and when they step back even a little bit, it hurts them. And so i think from a stichystes perspective, they lead the pack. You have to have a very strong brand, a very strong grand point of view and great execution to really win coming out of this crisis nike is one of those companies theres a handful of them. Everybody else is sort of fighting for second place. And i mean you saw that last week when nike made the social justice claim and then adidas came and said we agree with nike adidas knows that they cant beat nike. I also think i would add someone that covers the stock, you know, nike has people in there like Tinker Hatfield who run the design they have collaborations they tend to have the huge design focus that led them ahead of the pack and really kept them, you know, able to raise prices for consumers because of innovations and designs are so strong steph, what do you do with the stock right now . I own it. I bought it back in march. And its had a really nice run i dont i wouldnt necessarily add to it here it had such a nice run trading at 40 times forward estimates. Its never cheap theyre amazing. But i am more curious its too what sam, maybe can you answer do you think theyll have just as good china sales as adidas did remember they said they raised guidance they saw in april triple digit growth how is china going to recover . And then inventories, were expecting them to be up north of 20 or so with sales down 20 . So when does that kind of rectify itself well, so a couple things. One, we expect china to be very strong xbe we expect the Digital Business to be exceptionally strong as far as inventories go, we heard from their wholesale partners that theyre in the process of shifting orders out now that the store theyre able to reopen stores, they have a tremendous outlet piece of their business and they can move goods through. And we think that theyre just spreading out the flow of the goods. It will certainly be high. We expect, when they report this evening. But we think that probably lives for another three months or so and again, we based on what were hearing, we think the momentum of the brand for manufacture the reasons you stated will continue but mine, again, the real story here, yes, the Brand Innovation is great but so is their marketing and so is Marketing Innovation and their data i mean, they are the best grassroots company out there sam poser, thank you. Thank you for weighing in ahead of that nike report in just about 15 minutes we have two minutes left go in the trading day. Were looking at session highs what you are seeing in the internals . Yeah, the internals swung you see a big surge in the advancing volume in the New York Stock Exchange close to three time the declining volume. So that certainly kind of endorsing what is happening in the index. At least so far today. Look at kind of a little bit of the shifts in consumer amazon versus the discretionary sector its a shift back towards the stay at home and the e commerce as we rethink the reopening type plays. And then the volatility index, some of the wind came out of the vix in the afternoon still implying a 2 market move. We have 40 seconds lefrt of the session. The dow is up 282 points were above 300 moments ago. Very close to the session highs. Well, well off the lows which was down 240 points right near the open you can see that intraday recovery is similar as well. The s p 500 is up over 1 . So is the financials banks are up 3. 4 . Ten out of the 11 sectors are higher only utilities lower a very strong intraday rally a very strong final hour of trade leaves us up 1. 2 on the s p 500 at the close sfwlfr n not baa bad close there. Im sara eisen take a look at how we finished up the day the buyer stepped in the final half hour of trade or so and we ended just about at the highs. Up 298 points on the dow goldman sachs, the biggest winner, financials drove the day after those ease restrictions on the volker rule. Weve got the other sectors higher into the close as well. The s p 500 up 1 . The nasdaq higher by 1 as well. Technology did play a part in the rally. This was the ninth positive day in the last ten for the nasdaq the nasdaq is now up year to date 11. 4 the russell 2000 joined the rally and led today up 1. 7 . So a good day for the small stocks as well if youre a bull investors now are waiting three huge events after the bell nike earnings, Bank Stress Test and the pricing of albertsons ipo. Well break down the results of all three coming up this hour. Joining us to talk about the market today, hightower adviser still with us. Courtney gibson and Solita Marcelli will join the conversation was there momentum into the close . I dont think there was a headline i think it was a little bit of the market itself held together. There was no down side followthrough yesterday some of the lagger groups started to work. And also i mentioned earlier there is this potential out there for a quarter end trade reallocating out of equities into bonds there didnt seem to be any activity poised for the close today. If you look at the indications i dont if that was behind just this sort of rush to get n but in the context of a month long side ways sort of digestion process this market has been going through. So it didnt take us out of the kind of the rails that weve been running along for the past week or so but so far been a benign kind of corrective process from the highs of a couple weeks ago. So are we getting a sense today that second wave fears for the virus are not going to derail the market that badly well, i mean, i think this kind of volatility as we have seen yesterday because of second wave concerns is going to be with us for some time. This is the driving markets higher they make us stable and keep on driving markets higher so volatility in the short term is going to come i dont think those concerns are gone and will be us with but liquidity will dominate. What did we learn about the markets tolerance for bad news on the virus as we saw yesterdays numbers show record case numbers it seems like texas and florida paused the reopening theyre not rolling it back. Texas is rolling back elective procedures in hospitals. But still, taking a pause. How rinne vestors able to brush that off so easily. Well, i think that, you know, i think there are a lot of things that are really causing that and i think the market wants to be up it has the will to be up right now. I talk to my friends and you watched the hangover. Ill use an analogy here, you know, its one of those things where the virus, were seeing more cases in the hangover, they say but did you die . Right . And so until i start to see i know a number of our clients start to see the death toll rising, the case numbers are not really causing as much concern as one might think they should or that they did earlier in the year people can come out of this. I think the market right now is, one, thinking about the cases and hospitalizations versus deaths as well as the power of liquidity coming from the fed at this point in time which is tremendous what came out regarding the volker rule today is huge as it relates to the events. Ive been a huge pro poen enlt proponent of this in particular. But this allows the commercial banks to do is put capital to work in the private market its going to be tremendous. And i think even the Long Term Benefit to retail and main street which is always the biggest concern is that now these banks have the ability to take stakes and help Companies Grow thats a about thing if we think about the market so im incredibly excited about my positions there im excited about the market going forward. I think there are some sectors that are going to see some troubles times for a while like ree retail and travel. But if you have the stomach and hold on to the names of your holder, i think youll see some winds on the back end of this. Zbll stephanie, good news for the bank this is morning if they got bad news this afternoon and it was a politically driven broad suspension of dividends for all banks by the fed, would you buy on any weakness . I would i mean, i think you have the companies are very well capitalized. Its hard to predict this whole coronavirus, what that means for the kmi, the companies but i think they have a lot of excess liquidity and capital i think the largest eight systemically important banks have 86 billion in excess capital. So if they had to cut it, the dividends, i dont think its necessarily a dire straits or implies dire straits for the companies. I think its conservativism and i think a lot of bad news, you and i talk about this all the time, a lot of bad news is in the stocks again, having all this liquid, i think you want to buy very selectively. I have companies that have stories to them because obviously we know the challenges with Net Interest Income we know the stories with the yield curve and how challenging the revenues are going to be at these companies. So bank of america is a cost cutting story and theyve been executing. Wells fargo has a new Management Team that is doing a very good job. Just taking them a long time American Express will return eventually to the t e side of the business those are the three i like a lot. What are you seeing in terms of sentiment from your clients in wealth manage nement in the u. S. You know, its actually quite constructive i mean, obviously, there are questions around if there is a disconnect in terms of economic numbers and the way the market is rallying. But overall, you know, when you look under the hood in terms of valuation, i think its still reasonable given record low Interest Rates theyre rereceptive regarding markets and our construction on Global Equities and credit mike, in terms of the intraday action that we saw, are we seeing any changing positioning or any changing breadth that makes us get more bullish again . I dont know that it changes the picture too much again, to essentially look to the fact that the market has declined to break down so far. This whole rally, i think the real take away and theyre in a position and has not become overaggressive . That moves a little bit of the sense that you can really have a spill that stays down for a while. They go side ways for a few weeks. Midday recent market volatility, grocery chain albertsons is expected to price its ipo this afternoon could come as soon as this hour. The company which also owns safeway and shaws supermarket and plated plans to raise up to 1. 32 billion on the Public Market this is the third attempt by albertsons to go public after failed attempt in 2015 and another attempt back in 2018 pulled off after a failed plan to merge with rite aid they will still retain control of the grocery and there are a few red flags out there. That is a sweet spot they put out their per inspectous and we see those kind of numbers continue i think youre spot on. I think this is the peak for kroger and albertsons and not only that but i dont want to own a controlled company i want will Management Team and the board to make really right decisions. Not saying the controlled Companies Wont do the right things but i want the ceo and the chairman and the board to really make those decisions and it tends to get us a lower multiple for the stock at controlled companies thats number one. Number two, 8. 2 billion in debt is way too high. Number three, you pointed out, theyre not getting any of the proceeds so, you know, you have all the things wrapped up. If if i do one or the other, i think kroger is the other. I do think youve seen peak. 30 comps at albertsons is a huge, huge number as did crowing her a great too. I just dont think that momentum is going to continue courtney, is this a sign of the top for Grocery Companies and staples more broadly stephanie knows i love her and she is just absolutely brilliant. And obviously with her style of management this probably doesnt fit. And maybe ipos generally dont. I think a lot of the grocers, you brought up kroger and the digitalization before covid19, i never bought groceries online i bet the majority of americans hadnt either. So i think this is a very interesting time for albertsons and others to ipo. The ipo market i think is back really in full swing if you look at the appetite, the appetite that Institutional Investors had as you of late as it relates to the transactions, its been tremendous and its been across sectors i mean, prior to this week it was, you know, spacs and biotech. But now youre seeing kind of calm youre seeing tech and grocers and com and Warner Music Group that i think is probably still even up 30 from its ipo days. And youre even seeing secondary transactions coming off right now which are huge i mean i think its been almost 140 deals year to date and 150 billion being raised in the secondary market i think there is a lot of capital on the sidelines and theyre putting them to work in the companies they believe in and they think theyre going to get the return over time mike, will the price action here around albertsons say anything about the ipo market which has been pretty robust lately i dont think can you generalize too much. When you have a private equity controlled company, theyre sold more than theyre bought it really does matter a lot how they value it. Thats going to determine whether youre getting a kind of slow growth mature business with a lot of debt at a decent price, a fair price or not. And, you know, kit go either way. The hilton was an ibo and done well can you look at Michael Stores which it didnt after they became public again. There is no way to say this we can project what happens from here into the appetite for new issues in general. Its not traditional this has been private for 15 years. Longer than anticipated. As we noted yeah a few attempt as long the way. Courtney beg courtney gibson, thank you for joining the conversation dont go anywhere. We are awaiting nike earnings. They should cross in a few minutes. And, of course that, albertsons ipo pricing. Well bring it you to as soon as it happens on closing bell. Youre first. First to respond. First to put others lives before your own. And in an emergency, you need a network that puts you first. That connects you to technology to each other and to other agencies. Built with and for first responders. Firstnet. The only officially authorized Wireless Network for first responders. Because putting you first is our job. Welcome back t this is a look at how we finished on the dow. Great final hour of trade. Only a really bad first half hour or so of the session. The rest was green the final hour taking us to more than 1 of gains for each of the three major indices. The russell up a healthy 1. 7 . Banks, the best performing sector quite comfortably the banks index up 3. 4 . Lets get over to mike now he is taking a look at yields across various different asset classes. Yeah, we talk about how low yields essentially anchor asset values across the board. This is a hierarchy of yields. Here you go. Least risky, ten year treasury yield. They bounce and then fell off the shelf in march you would expect and then we have s p 500 dividend yields. Theyve been kind of somewh syne up look at how corporate debt plunged. Then its not a cash yield, but the Free Cash Flow relative to price of the nasdaq 100, the big Growth Stocks, look at how that has come down. This starts to make sense. Youre getting 3 notion and Free Cash Flow out of very large Growth Stocks. That makes sense as opposed to 5 back then because of where other yields are. Take a look at the percentage of s p 500 stocks that now have dividend yields above the 10year treasury pretty much a record all time going back Something Like 50 years. So so this helps explains why you have a dicey fundamental backdrop so particularly that second chart would suggest that equities are screaming buy but i guess the question is how long can the t note, there is no argument whether they can continue and relative attraction always proves that things rise relative to absolute attraction. Thats right. First of all, i dont know if they were screaming buy. They have a swiconstituent i is that is going to be more durable on pullbacks its going have a floor under valuations but, yeah, when the ten year treasury is at 0. 7 , it shows you all is not well with the world. So its not magic. Also, i sort of reject the absolute idea of there is no alternative. There is a lot of alternatives thats what people are buying so many bonds and driving yields down so much. In terms of the yield stocks themselves, even if that net argument paints quite an attractive picture for the indices as a whole, yield stocks individually when may have a very high yield, they havent really performed that well. Youre right. Its just really just giving you a compass is pointing to them. Its not as if the highest yielding stocks are performing well. Were going to have the nike earnings in just a moment. In fact, we have them. Sara bs over to you. I am going to bring you nike earning thats just crossed the tape big miss here on the earnings. It was a loss of 51 cents. The street was looking for a gain of 7 cents per share. And looks like the sales were a miss as well nike revenues coming in it at 6. 3 billion street was looking for 7. 3 billion as nike notes, it was a quarter where 90 of nike owned stores were closed for roughly eight weeks during the quarter they say to protect the health and safety i will note one bright spot that they point out right at the top of the release which shows what happened to nike Business Online as the stores were closed. Nike Digital Sales increasing 75 during the quarter 79 on a current basis so that is sharply, sharply higher and the street will give them credit for that in particular. That number was up 30 last quarter on the china shutdown. They did return to growth it looks like for china during the quarter. The other thing i note is gross margin did decline 820 basis points to 37. 3 the story there is that they shipped fewer inventories to the wholesalers. Theyre not accepting the goods from nike. That is a big Pressure Point the key on the call is going to be any commentary around reopening stores they have started to reopen stores in europe and in the united states. Are they seeing the kind defend manned that appears that they are seeing that momentum in china . Still though, obviously a big miss the profitability miss has to do with the margin story which is the fewer wholesale shipments. Lets bring in analysts to talk about. This nike shares down 3 on that big headline miss. The managing director and Senior Analyst at bmo Capital Markets and liz dunn from pro forma. We were all cure dwrous see what your hairstyle was didnt disappoint. Talk to me about the numbers a big earnings miss. It would appear to me that a lot of does it have to do with the fact that they couldnt ship have the shipments going to wholesalers and so many Stores Closed in the quarter. Whats your take i think youre right. Listen, sara, no one is buying nike for this quarter. Most people are not buying the Retail Stocks for this quarter the question is what does the quarter tell us about the future if anything . And then ultimately, how do you believe that arc of recovery is going to look . Thats what is so interesting. China is the point everyone is going to look towards. North america may be critical. But so early we just dont know what it looks like i think very much agree with your point i get the stock is down. The stock rallied forward. But at the end of the day, the question is going to be what do they say on the call to make people feel comfortable at the china return can resemble the rest of the world. Liz dunn, i also mentioned the Digital Sales, increasing 75 . 79 currency neutral talk to us about that number it appears very strong what were the expectations around that . What does that tell us about how much of their business is actually being done right now online yeah, i mean its a great number in the absolute i think the last commentary that we had from the company suggested it had been a little stronger than that in the first few days of the covid19 crisis hitting the united states. They have taken a huge leap forward which will position them well for the future. The china rebound is really important and its a blueprint for what we can hopefully expect in other regions as things start to open up should this work in nikes favor . Absolutely. I think weve been talking to investors and companies. First thing everyone had to do was make sure they would survive. Once you attack the liquidity and draw down what you need to draw down, there are Certain Companies that are well capitalized to go on the offensive. To not pull back marketing to liz and saras point, are you focusing on direct and owning your message reducing the whole sale exposure theyve done is proving very questionable right now i think if youre nike, you focus on how do you tactfully take advantage, not exploit, how do you capitalize on the situation, deploy the marketing dollars, get more share and even if rev senue is down today, youl build in the future. That will play into their strengths. I just wonder, you know, the numbers from go ahead i also wanted to bring up a broader retail point were seeing 40, 50 declines on revenues for nike. That is not surprising given what they said, you know, over 90 of the stores were closed during the quarter does all rev tail need to be rerated and sort of rethought out on these numbers if theyre best in class and everything that youre saying all the glowing remarks about nikes brand and the sustainability is true, i mean, what is the earnings season going to look like for the rest of retail this quarter its going to be a tough earnings season. Theres no way around it i think that the categories that are suffering most are apparel and footwear you know, youre thinking about what people need when theyre staying at home, its not necessarily to dress up or to have a new outfit. So these are going to be the toughest categories. I do agree with the point that they positioned themselves well for the future and i would even add that they have the brand has gained some momentum in this quarter. Not just because they have executed well on digital, but also theyve come up with a very strong message on social justice which i think is really important for their customer and i know a lot of companies did it but nike did it first and they did it loudest i think the customer noticed thank you both for joining us nike shares, you can say, only down 2 or 3 given the scale of this quarterly miss. But as our guest was saying, people buy the stock for the years ahead not just this quarter. Coming up, well bring you an instant analysis of the latest Bank Stress Test results set to be released 4 30 p. M were also waiting news of albertsons ipo pricing. Were back in a couple minutes s. 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. 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. Talk tswithout even on pryoleaving your house. Ant just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll 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. Time now to get a cnbc update hi, sara. Here is your update at this hour floridas becoming the latest state to not advance to the next stage of reopening this is, of course, amid rising cases and hospital admissions. The governor saying that state will continue to take stepbystep approach. We are where we are im not taking i didnt say were going to go on to the next phase. The you know, weve done a stepbystep approach. It is reflective of the unique situation of area. Athletic directors and coaches from all eight of mississippis public universities are urging the state legislature to adopt a new flag without the confederate emblem on it the ncaa has banned championship games from being held in the state while the current flag flies. And disneys splash mountain is getting a makeover after being criticized for featuring diz niz from the 1946 film song of the south it will be remade as a princess and the frog ride. The that film featured disneys first black princess character youre up to date. That is the cnbc update at this hour back to you. Thank you so much for that. Coming up next, well have the results of the banks stress tests. 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. We hope you find these Digital Solutions helpful to bank from almost anywhere. Deposit a check with your phone or tablet. Check balances, pay bills, and more. Send money to people you know and trust with zelle. Explore all you can do with our Digital Tools from almost anywhere. Pnc bank. Wherever you may go, lexus will welcome you back with exceptional offers on exceptional vehicles. Get zero percent financing and make no payments for up to 90 days on all 2020 lexus models. Experience amazing at your lexus dealer. The results of the latest Bank Stress Test is out. The fed is requiring large banks to limit dividends and buy yakz after analyzing the resiliency during the pandemic the fed said that for the Third Quarter it is suspending the firms Share Repurchases capping dividends allowing them to proceed but based on a formula derived from recent income the largest banks if you recall had already ended buybacks through the end of the Second Quarter. This move takes it a step further. The fed will reassess on a quarterly basis. For the first time in the ten years of stress testing banks are required to resubmit their capital plans later this year to reflect the current environment. Now the vice chair notes in a statement that there is material uncertainty about the trajectory for the economic recovery and the impact on banking organizations. Not all governors agree to let the banked continue payouts if theyre limited. The fed governor said in a separate statement that she does not support giving the green light for large banks to deplete capital which raises the risk they need to tighten credit or rebuild capital during the recovery this was an overlay for the stress test where the fed tests the viability for recovery that is v shaped, u shaped and w shaped the fed notes that the scenarios are not predictions of the likely path of the economy in aggregate, the fed said that loan losses for the 34 banks tested amounted to 560 billion. Aggregate capital ratio is 12 from 2014 to between 9. 5 to 7. 7 in the hypothetical down side. They did not break out the results of the covid19 analysis on individual banks. Thank you very much for that. I mean, i guess as you said the key individual lines as we knew coming into this will be for the banks to release themselves and theyre not even allowed to do that until next week as opposeded to this week but in terms of that potential for limits to dividends, the formula theyre using, did they release that did you say either way it was based on earnings . It is as opposed to levels of capital or any other factor like that thats correct, wilf. It is based on historical income levels that is an issue that they had the formula. The fact that, you know, were looking forward into this pandemic where we dont exactly know what the earnings will look like we dont know what the recovery will look like we want to make sure that banks are adequately capitalized in in the event of all down side scenarios. That is a big concern. It was backward looking. Thanks so much for that, leslie i dont know if we can bring up, guys, were showing the share price of the Kbw Bank Index today. The after hours traders. Having a look at j. P. Morgan down 2 . Wells fargo down 2 after hours. These are some of the commercial banks there, the big commercial banks whose earnings are more linked to the consumer, more linked to Net Interest Income and, therefore, will be likely lower than expected if youre kind of limiting the ability to pay dividends to earnings. That might be why were seeing some of those banks see wilfred yes go for it. Was that sara . Me. I have a question. The fact that they have to resubmit plans before the end of the year, how is that unusual . They havent had to do that, have they . Its definitely unusual all thing this is year are unusual. Its definitely going to be a costly and timely process for them to have to do it again. And i guess again, it highlights that word uncertainty. That the fed is saying towards the banks theyre not happy necessarily that one stress test this year is enough to be sure that theyre comfortable going forward. The only other thing i say, well get to the guests in a moment in, terms of limiting the dividends, was this priced in unexpected clearly not. Shares are declining but this is not you cannot pay dividends no matter what for the whole year going ahead this is for one quarter as we stand and it has to be limited based on your earnings and so you can still pay out a portion of your earnings even if earnings are lower that might still mean the payouts are possible we dont know how it relates to individual banks until we get their releases next week but decent slides as you can see including the Investment Banks thin volume though lets get to the portfolio manage we are Hennessy Funds and tom brown able to join us as well stephanie link rejoining us and mike santoli as always with us mike, i come to you first. Not good news on the headline. Following a strong day for the banks and on thin volumes after hours, i guess you expect a bit of share price decline yeah. I guess it is capped at Second Quarter levels. It becomes a contingent issue. So perhaps thats the reason that this means monitoring and its no longer just about essentially getting a green light at these levels. It doesnt change the equation dramatically just yet after a strong day and dave, the dividends not fully eliminated should we be taking a more positive spin . Well, i think what were the thing i by this is that the it sounds like buybacks wont come back for a long time. Theyre really inserting themselves and these companies are effectively nationalized and were seeing the effect of that today and what theyre saying. So theyre worried about the economy. Theyre more worried about the economy than the market is again. I this way heard powell last week say that he was worried now it seems like were hearing that again and this is going to be an on going thing. The banks are going to be battling this for the next couple years as the fed inserts themselves and says, look, you have to stay liquid. You have to stay safe because we need you guys to help in the recovery effort. If thats the argument, tom, why dont they just make that scrap the dividends like sheila bear and janet yellen and prior regulators have said they should do just to be prudent during this crisis in i mean why cap it at these levels and not just tell them to suspend it like the buybacks i think its premature to get too excited about how negative this s i think what the fed is just doing is trying to build in some flexibility because they try to run a stress test in the middle of a health crisis, an economic crisis and a social crisis. And all they came up with is wag. So i think theyre just saying okay, lets go slow. If it gets worse, then well come back to the dif denlvidende this year. Except for wells farg yoo, i dot think anyone will announce a dividend cut when they announce the plans. Based on your answer to my question earlier, youre buying some of your favorite names, your morgue an stanleys and wells fargos tomorrow. Yeah. I mean, the after market is very thin lets see how the things trade the theyre not down nearly as much as i would have initially thought. And you can look at that positively or negatively, wilf you really can and ive said all along actually expect wells fargo to cut. I think it will be actually viewed positively. Even if they cut, if they can still offer a 2 or 3 dividend yield which is well marore than the ten year fees are under pressure. Theyre under pressure what this means to me, youre going to see a heck of a lot more cost cutting at these companies in a big, big way so that they can hold the line in terms of earnings or maybe not be down as much. But look, if they have to resubmit in six months, what if we get a vaccine in six months right . So you just dont know at the end of the day i think you have to applaud the fed for being conservative and the regulators for taking kind of a glass half empty view because you really dont want the 2008 disaster that we had. I think the capital levels are fine so i think we will be fine were looking for opportunity. Lets see how much these are down tomorrow. Lets see what happens on monday when we get the actual results i think leslie picker is still with us. I know we dont get a pass or fail this year we never expecting that. I know were not getting individual lines for the banks thats for them to really release next week. What is the overall theme . Did they state that everyone stress capital buffer which is the focus for the fed this year was fine no one has to be raising capital in the short term . No one is forced to do so . So that stress capital buffer is something communicated to the banks directly they can choose to communicate that with the public after the close. But we were not given any insight into the seb as its known. We did get the results for defast all of the banks had capital ratios that passed the feds test but that test is important to note was created in february of 2020 it was created with a hypothetical down side scenario that really looks almost, you know, friendly compared to what a lot of the economy went through in march and in extent months as a result of the pandemic that covid19 overlay is what informed their decision to limit the dividends and buybacks dave, we are seeing a little bit of disparity in terms of the reaction j. P. Morgan is down 1. 4 after hours. Wells fargo down 3 . I think the opportunity is ahead of us. We have to wait until we get some credit issues and we resolve how low the margins are going to go and how poor loan demand is going to be after the ppp is over. So to me, you know, were battling with the fed being very conservative thats been said a number of times. I agree with that. But i would like to see some credit issues. Id like to see some margin pressure so that we have something to get better to you know, right now nothing really has gone wrong except for maybe some margin compression. But we havent seen any credit issues we havent seen any liquidity issues that drives these stocks to a point where can you make money. The fed is cautious and they want the banks to stay healthy at all cost. Thats where we are now. The economy is not bad if you look at the banks. The economy is pretty good to trade the stocks on this news, you trade on fundamentals. You buy them when fundamentals are awful. You dont buy when their good like this. We leave it there thank you very much. Dave, tom, stephanie, leslie as well banks having a strong day in their regular session. But trading down now after hours. Sacks opening the doors of the flag ship fifth avenue store in new york city yesterday. Well ask the president marc metrick how traffic has been and how the retailer is preparing for a possible second wave of the virus. vo since our beginning, our business has been people. And their financial wellbeing. Its evident in good times, with decisions focused on the longterm. And crucial when circumstances become difficult. That continued emphasis on people our advisors, associates, clients and communities gives us purpose, strength and a way forward. Today. And always. This virus is testing all of us. And its testing the people on the front lines of this fight most of all. So abbott is getting new tests into their hands, delivering the critical results they need. And until this fight is over, we. Will. Never. Quit. Because they never quit. Starting to day, any traveler from a covid19 u. S. Hot spot has to quarantine for 14 days if they enter new york, new jersey, or connecticut this comes as luxury retailer saks fifth avenue reopened in new york city to keep customers safe the store is implementing enhanced safety features including ultraviolet hand rail cleaners on escalators and requiring all customers and associates to wear masks all 40 of the locations across the u. S. And canada are now open including in states where covid19 cases are rising like texas, arizona, and florida. Joining us now is marc metrick from the saks flag ship store. Marc, youve been open since yesterday . How is traffic looking yes traffic is looking good. You know, we feel very good about how the customer is coming back in. Just good to be doing one of these for you sara and wolf from the store and not from a zoom. Marc, looks like its busy behind you i mean, what has been the level of traffic compared to expectation . And what type of thing are people spending on. Traffof traffic is right whe weve seen it. That is promising. And people are, look, its about mens and shoes and handbags and accessories. Its been the same story throughout so its been pretty consistent across the country as weve opened what about the changing room rooms . How is behavior different in a major Department Store like saks i think people are aware of whats going on around them. After they try something on, we quarantine that product for 24 hours. Its really about safety its about making people feel safe and also making them safe to what extent in normal times, mark, is the foot traffic at saks in the new york city flag ship based on travelers and tourists versus locals is that a hurdle for you you look at the rest of reopening. Youre unlikely to see travelers, particularly international travelers. The way were looking at it is because of people being a little bit more captive where they are, its going to be less coming in and less going out what you are seeing, marc, in texas and florida and arizona right now . Have you seen any change were still seeing the traffic there we talk to our store and teams every day and telling us theyre really not sealing it or feeling it in traffic or customer the attitude and the sensibilities and how theyre shopping so, you know, were watching this very carefully for other reasons. But really on the top line, we havent seen it. Marc, Department Stores havent been in the opt malposition if we look at the retail environment for this year do you think he can come out of this as a net beneficiary . We chatted about this i think painting all Department Stores with a broad bush is dangerous. Some of us have been doing a great job of evolving, modernizing our assortment and customer experience. Were the ones positioned to win when we come through this. So, sure its going to be about who does this best and who is positioning themselves best teat the end of this what does your Online Business look like do you expect that to continue as the stores reopen yeah. Its interesting you know what . Were looking that by customer segment. Just to understand how different customer segments are reacting to online and before we opened, we were doing all of our Business Online or most of it. Some of our business was still being done with the stylist in our stores working virtually as we reopened and seen people come back into the stores, were still overindexing versus where weve been historically and looking forward to kind of keeping the online and offline shopping going the ecosystem is the most important thing to us. Marc, really quickly, nike just reported earnings a big miss but there were clean signs of strength there in the ecommerce and brand and turn around in china with the business theyve seen have you had to change out the inventory and what you have in the stores given the just changes of behavior . Is it more athleticwear and comfortwear than going out in dresses for women . People are not going to parties around new york here yet. Yeah. Look, you know, i think we saw fashion. I think that is the beautiful thing about what we do and right now i wouldnt make any long term decisions on category expansion or intensifications or deemphasis because were in the unknown. We have to get through this period and get into the next normal to understand you could be wearing an evening gound to a friends house for dinner who knows . Not likely. Marc but maybe thank you for joining us. Thank you guys. Thanks again still ahead, the Texas Governor is freezing additional reopening phases as coronavirus hospitalizations spike up next, well ask a doctor on the front lines ofhe fht tig in texas about what he is seeing. This moment. This moment right now. This is our commencement. No, well not get a diploma or a degree of any kind. But we are entering a new chapter in our lives. Our confidence is shaken; our hearts cracked. The kind of a crack that comes from the loss of a job; from life plans falling apart. We didnt ask for it. But we are rising to meet it. And how far weve come isnt even close to how far we can go. We just have to remember how patient we were. How strong we can be. how strong you can be. and remember this; theres a crack in everything for a reason. How else can the light get in . Tomorrow starts today. But a resilient business you cacan be ready for it. Re. A Digital Foundation from vmware helps you redefine whats possible. Now. 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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. Texas announcing a temporary pause of additional reopening phases today after reporting over 6500 new coronavirus cases, the largest ever singleday increase for the state for more on what hes seeing on the ground, dr. Gaundi have you seen a big pickup in patients in your hospital . Absolutely. I work at a federally qualified health center, a nonprofit clinic on the east side of town. Last friday we had an emergency meeting in the evening where we decided to double the amount of capacity available for drivethrough testing and double the amount of capacity to see patients with respiratory symptoms as of last night we have record hospitalizations here in the austin area, record use of the icu. Were seeing the same thing in houston. We are seeing this in realtime Community Transmission of coronavirus. Its taxing our system what about the age ranges of your patients that are getting hospitalized were hearing a lot that its younger people who have gone out and are suffering right now. If so, how are they faring once they are hospitalized . It is certainly starting to skew younger when this pandemic first started, i was seeing a whole host of focuslks 65 and older ive been seeing younger patients in their 20s, 30s and 40s. Because i work in an outpatient setting, folks in their 20s and 30s and 40s tend to fare better than folks in their late 40s and 50s and 60s and onward it doesnt quite change this fundamental fact widespread transmission is occurring throughout the region and there doesnt seem to be a plan coordinated either at the federal or state level to mitigate this. Do you feel like the Health Care System across your city or your state is prepared to deal with the levels of patients that youre seeing so far its a twopart answer here i have confidence in my colleagues in medicins in medi and social workers and physicians, we will do what it takes. Its what we signed up for but folks are exhausted. I walked around our clinic to fire people up because folks are tired. The reality is we are still needing ppe in many of our hospital settings and clinics across the region. Marry the fact that we have a lack of supply of ppe, we have rising numbers in houston and usa austin and our hospitals and Outpatient Clinics and you have Health Care Workers overworked, under staffed and without the appropriate equipment. Its a stressful time. I believe our colleagues will see this through. Thank you for joining us. We appreciate the update guys, hes also running for congress, which i think we should also note thats another reason. Thank you for joining us as we wrap up our final thoughts, pretty strong close, pretty strong ultimate session were going to be looking at banks tomorrow under a little bit of pressure on this news from the regulators that theyre going to have to cap their dividends. Nike shares under a little bit of pressure on a big miss, but overall painting a big picture of strength online i do wonder what its going to mean for the rest of retail trading or whether theyre going to get rerated based on the fact that nike is obviously seeing a huge miss on sales and earnings. There are now a few excuses to see if the market wants to seize on them. I would say banks, while they were strong most of the day, didnt really drive that last hour of upside it was kind of broader and concentrated in most of this typical index big cap stocks the enthusiasm still kind of hanging around in this range here is a big question, also personal income spending tomorrow there have been some wild numbers month to month see if they come in anywhere near economists have pencilled in. Well dig into the banks stuff in a little bit more detail overnight on the surface, while, yes, this comes as a surprise and no one wants to hear a regulator telling you you can or cant do something, its based on equation relating to earnings, which dividends always should be and its quarter by quarter. Its not a rule to say no dividends for the next 12 months its quite plausible that almost all of the banks will still fit within the terms of the equation and be able to pay dividends as already planned. Well have to wait and see, obviously, as the numbers come out. Yes, theyre going to trade down a bit. Well see more details overnight. Session lows coming back in the after hours sessions already. Tomorrow we have an interview here on the show with the imf manager director kris, the alina georieva were out of time fast money next. Fast money starts right now. Im melissa lee. Coming up on fast, nike lower after reporting a big miss the companys Earnings Call just getting started. We are on it. Also ahead, disney under pressure as the Company Delays reopening its california theme park we will break down the fallout