A second look for the long run given these big market swings. So much more ahead on the markets on fast money tonight, but we have to begin with this the developing story out of the white house as new details, merge about President Trumps possible economic stimulus plan to combat a virusled downturn in the economy lets get right now to eamon javers at the white house on how this is all developing right now. Brian, we are half an hour out from a White House Press briefing slated to include the Vice President and the Coronavirus Task force aides throughout the evening last night and the day today have suggested that that could be a place where the president might roll out some of his economic ideas, but we are not hearing that at this point there is no plan as of right now, this moment, a half hour out for the president to attend that briefing. The president said last night that today he would roll out a News Conference to roll out Major Economic initiatives that would be dramatic in scope so far today we have not heard any official confirmation of those the president has not held such a News Conference and we dont know whether hes coming to this 5 30 News Conference or not. So keep an eye peeled for that in the bottom half of this hour and were getting details about what the president has been saying to lawmakers up on capitol hill including that the president pitched them behind closed doors on the idea of eliminating the payroll tax altogether, a 0 rate on the payroll tax from the employers side and the employees side through the end of the year, and i am told in that room there behind closed doors with the senate republicans, was there also some discussion of eliminating the payroll tax altogether that would carry an enormous price tag. More than a trillion dollars, a huge amount of money and it also has implications for Social Security and medicare because thats where a lot of those funds are earmarked. Ultimately, will that be too big an ask for capitol hill is a really important question here i dont think we should leap to the conclusion that its a done deal those are the kind was ideas theyre kicking around at the white house and no official proclamation of what the president s plan is at this point. It sounds like theres disagreement, eamon, listen, if we did a 0 payroll tax, to your point, what is it . The nine comma club. That is the trillion dollar club. Its enormous thats medicare, medicaid and Social Security. So ostensibly, the consumer would get the break, but at some point the government would have to probably issue another trillion in debt to pay that because that gap has to be made up right so i asked a white house official how are you going to pay for that, if youre proposing to eliminate the payroll tax not just for the year, but indefinitely, this official said, hey, why are we always asked how were going to pay for things taxes are our money to start with why do we have to pay for keeping our own money essentially was his argument thats how this white house is approaching this question right now, but politically, its a big, big number, brian, and you wonder whether congress is going to go there or go all of the way to what the president wants. The president is obviously in a go big or go home mode right now on this idea i know its not popular entirely among members of congress. Republicans, included. Not entirely popular among the president s own staff, necessarily, but the president did pitch it today so well see where it lands. We know that you poorful senator Richard Selby suggested that they do an infrastructure package as well and something weve been waiting on four years. One more real thing, i am told theyre considering aid for the shale oil you understand stree its not a bailout or guaranteeing that theyre going to do it, but that conversation is happening behind closed doors also because of what weve seen in the oil markets this week well get to debt and oil in the show eamon javers, thank you very much you bet. So all of these reports out of the white house coming after another wild day in the markets and your money because lets face it, on any other day, an 1100point gain for the dow would be huge news cheers all around leading the nightly news today, though, no other day. It was a day following a 2,000point drop and one of the biggest percentage declines ever so while todays move was certainly comforting, it did erase just about half of yesterdays losses the dow still down about 12 this year. In other words, today was much bett better than yesterday tim seymour, but some anybody feel particularly good right now . You should feel tired think about the volatility weve had intraday and we traded down 4 out of the gates over optimism and eamon talked about these are the kinds of ideas this doesnt, you know, i feel like weve been down this movie and been down this road and pick your metaphor, but ill leave that aside for now and we rallied to 5. 2 and the most impressive things and the things that would give me the most comfort is weve essentially had a 50 basis point rise in the tenyear note. Almost a threepoint selloff which is unheard of. You thought the rallies were unheard of at least in one day youd think the world was coming to an end if we were at normal pricing. The dollar rallied which perversely was almost a risk on moment its usually a risk off moment, and the yen sold off 3 . We continue with the hyperbole in terms of what the market is doing. I think until credit begins to settle down its very difficult and we could have said this a week ago. Day traders are having a great time and knock yourself out, these are dangerous markets. If we can put the j and k and the junk bond etf that weve been talking about because were talking about credit and Pay Attention to something tonight when it marks to market, see if it goes below the Net Asset Value and its held junk debt. If junk debt is not liquid, karen, and this etf is supposed to be liquid its just something to watch about the Net Asset Value of some ever these widely owned, highyielding etfs and something on my radar. Is it something on your radar . Absolutely. Explain what dropping below nav might mean because i dont think a lot of people understand that well, so this portfolio owned this etf owns a portfolio of junk bond, right . And theyre marked at supposedly wherever they trade. However, if you get into illiquid markets you can get widespreads for where any given underlying bond could be so the hyg is very similar to the j and k in that theyre junk bonds so theyre below Investment Grade and as we see even with rates going down, credit quality is starting to deteriorate so the hyg is going down ive been short this for a while against and im long banks so short this, and now i try to short more and i couldnt get a borrow anymore you couldnt . What does that tell you . That tells me the short is getting crowded and i have to remain short and be aware now, wow that was an interesting risk reward it is changing now 89 ten days ago and its 83, 82. I think things can get uglier. A sevenpoint move in this index is really a lot, but the Investment Grade index, lqd, and the rates move today so it should go down, but it went way beyond the move in rate. Whats interesting about this and what karen said its hard to get a borrow and short hyg at this time and what people do because its highly correlate side theyll use s p puts and s p futures and thats the link between the bond market and the junk bond market and the s p 500 so if you cant hedge out your junk Bond Exposure you go out and sell s p futures and that adds selling pressure to the market so besides the credit qualities and the concerns about Oil Companies going out of business, there is this kind of mechanical selling that goes on that investors need to be aware of. And you nailed it were all on the phones on. As you do and everybody i talked to thats deep in the market and listen, were a tv program so we have to sort of speak in a more general way and theyre going into these things about whats happening in the market and first off, im not sure i understand it. I can explain it on the air. What you said between the credit markets and equity for selling on the s p because you have to raise cash any way you can raise cash or hedge a position that you cant sell short. So lets just say, example, it was ibm, and you couldnt sell that short, but you needed to hedge it for some reason you can sell short s p and the spy, the etf and you can buy puts and that would put pressure on the entire market even though youre just trying to hedge out the idea youre actually impactsing the whole market i didnt realize we went up 1100 points on the dow today is everything okay y everything is probably not okay and yesterday it was certainly a big down move. To get back to credit, there is a pricetoearnings ratio and the s p 500 and Investment Grade credit as well and i brought a chart along that could probably put it up and if you look at Investment Grade credit spreads theyre typically highly correlated to the s p 500 and as they start to blow out, investors are willing to pay less for their equities. What youve seen happen recently is a little bit of a gap so that chart youre looking at right now and the orange line is actually inverted and that means credit spreads have blown out and there is now a gap between the pe ratio so the valuation to where the market is trading and where investment spreads are. Based on kroept credit spreads, that would foretell a ratio of 14. 5 times the marketplace and you multiply it by forward earnings and youre talking about a level around 2400 or 2500 in the s p 500. This isnt the only thing you should be looking at, but in terms of trying to pick a level and figuring out what they might be telling us, this is an interesting relationship do you buy anything, bk i put them out again. Careen . No. Try to short hyg basically, yeah think about what im going to own. I hate buying stocks like days like this . Why is this because it feels like a suck ares rally. I dont know its unsettled and youre getting mixed signals and they are blown out. That would be a good sign, but youre seeing the net swhort and were seeing sent imcome back, and on the valuation side, theres nor to the sound downside the vix its not like were not in elevated time too remember, what were do being days and you have to have a plan for where valuation makes sense, and at some point, look i look at the charts i look at the levels and in the current credit environment i dont need to wholesale buy stuff. I think 2700 and 2750 is kind of where were headed or 2650 if you look at the weekly moving averages i dont want to get into that. You were asking me what i was doing. I do think if you have a plan and if there are people that have some cash to put to work, i dont think you need to time this market perfectly. In fact, i would urge you not to do that. The spoken investment research, noted this incredible folks. This is the tenth time out of ten times the s p has risen over 2 following a 9 drop. This bounce was all, but guaranteed according to history. All right your next guest says her clients arent panicking and theyre looking for the Federal Reserve with more coronavirus cases every day and the real threat of a Major Economic slowdown ahead. How optimistic can you be really right now . Joining us is the chief equity derivative strategist at credit suisse. Mandy, no panic. Good what are you advising, though, your clients to do so i think what surprised a lot of people that despite measures of volatility reaching postcrisis highs if you take a look at the vix index, other measures in the option market are actually signaling, i wouldnt say calm, but certainly no panic and thats backed up by the flow that were seeing from the institutional clients where what were seeing is theyre mop tiesing some hedges. Theyre resetting hedges and theyre not panicked grabbing for new hedges and that to me is a constructive sign. Can you explain what monetizing the hedges. Theyre rolling out, and im getting wonky its okay its okay because i feel like were all sort of helping viewers understand that theres a lot of stuff that goes on in this market, tim, thats not just lets buy this etf. This is the mechanics and the stuff that the pros like you guys deal with every day, and i think its important. Sure. Monetization means theyre selling out of their existing hedges and not buying more basically theyre calling a bottom here. Were seeing some of that and the majority is the resetting of hedges and rolling them down maintaining the same exposure and given how much the market has moved and theyre rolling the strikes further down and buying puts and put spretds tadt are further down given the market move. We obviously know which sectors have been the big laggards and the ones that frankly have looked like the credit issues are significant. What are you seeing now . Part of the reason why Institutional Investors have held up okay so far this year is a lot of them since the beginning of the year have been adding to shorts and those shorts have been concentrated in the value and cyclical sectors and what are they . Energy, financials and they obviously have sold out a lot more and thats helped out investors in terms of performance. Mandy, we rarely see the vix hang around 40 for even day, right . So where do you think its going . I think in the nearterm were likely to see continued volatility just given this macro environment and the headline environment. One point i would like to make on the vix is even though it is elevated at 40plus to 50 its actually trading below what the market is realizing in terms of realized volatility. So vix at 40 to 50 is implying an average daily move in the s p, about 3 . Were getting 4 to 5 daily moves in the past two weeks and the option market is not freaking out and not panicking it says expect continued turmoil given the macro headlines, but both the vix and other measures are more contained than you would expect given the headlines. Bottom line well let you go with this, based on what you talked to us and some of the technical stuff that matters a lot, by the way, doesnt look like the overall selling is probably done. Were not at capitulation yet. So when will we know a 2500point down day and a vix at 75 . So i think what were tracking is the client positioning and the difference between this selloff versus fourthquarter of 18 is that Fourth Quarter of 18, they were selling the Stock Holdings and shifting to cash what were seeing right now is theyre buying portfolio protection and theyre hedging given the macro environment or theyre holding on to the core long selectively adding certain situations, but certainly this to us is more constructive than what we saw in the Fourth Quarter of 2018. Mandy xu, thank you very much b. K. , you bought puts and it sounds like mandys puts in new york today didnt feel like this was the bottom i think theres just so much uncertainty out there that continues, and i think we have several more weeks of this before we get maybe, hopefully, we get some kind of clarity. Remember, weve gotten hit on two fronts and its not just the virus headlines and the oil headlines that you talked about last night and thats another huge, economic drag here and until we get clarity on that it will be really hard to have a sustainable rally. All right good stuff there, guys take care, well see you soon. On deck on this big night, what really happened between the russians and the saudis and well hear from alina kroft who was there with the saudis over the weekend. Plus, the idea is to buy low or lower. Your traders will uncover their picks for stocks for the long run. Remember, be sure to watch or listen to us live. On this day d anage, you need the cnbc app were back after this. I saw you move in, and i wanted to welcome you to the neighborhood with some homemade biscuits oh, thats so nice and a little tip, geico could help you save on homeowners insurance. Hmm cookies uhh, biscuits. Mmmm, is there a little nutmeg in there . Oh its my mums secret recipe. 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Which means you can save money without compromising on coverage. Get more flexible data, the most reliable network, and more savings. Plus, get 300 off when you buy a new Samsung Galaxy s20 ultra. Thats simple. Easy. Awesome. Call, click or visit a store today. Money. Oil having its best day of the year all day it doesnt say a whole lot because yesterday was the worst day in 30 years. This is the question Everyone Wants to know the answer to. What exactly happened that caused the russians and the saudis to take their oil barrels and go home and sent oil and the markets literally into the tank . Rbcs helima kroft was where it happened and she joins us now by phone. Helima, i cant believe i missed the meeting, but im glad you were there what the heck happened i think what happened essentially is the russians said no deal. The saudis were looking at a 1. 5 million barrelper day Production Cut that requires the russians to kick in an extra 300,000 barrels and the russian