Welcome to the entire committee. Lets check on the markets first this hour. We have run out of steam the dow is marginally to the down side. Down about 31 points in the red. The s p 500 just about even right now. Flat on the day. Level 2798 there the russell 2000 flat as well. As you can see that steam running oult as we rallied so strongly off the lows that we saw just about one month ago lets go to our Investment Committee with the traders here and perhaps well start with you. Youre the one right next to me in this box. What exactly is happening right now. Have we run out of steam for this particular rally . Well, i dont know necessarily running out of steam is a bad condition markets, generally, when they rally significantly need a pause and that pause is generally a consolidation type of pattern in the markets. I think right now, most investors and most speculators are anticipating a rollover and the concern that identify is a lot of people are positioning for that rollover and losing money because they are not getting it one of the i understandicator t need to watch is the volatility in the treasury market the volatility in the treasury market, particularly u. S. Tenyear treasury that telegraphed the decline we saw through the beginning and middle of march we saw a significant contraction in that treasury market volatility over the last four weeks. Its concurrent with the recovery youre seeing in the equities market. For me, if were going to experience the rollover that every one expects to occur, youre going to have to see a bit of elevation in the treasury market and to put actual numbers to that, dom, one month ago when markets were declining the average weekly range for a u. S. Tenyear treasury was about 75 basis points this week we have a tenyear range of only 11 basis points. We have seen significant compression in that volatility thats a good condition. Its one of the reasons why were sitting where we are as we talk about some of the overall themes playing out, there is a close eye being paid to whats happening with the treasury side of things. Is that resonating with what youre seeing . Is this pause happening as gold prices maybe stabilize, treasury yields start to hover around and colease around certain levels, the safe haven doing what theyre doing . Does this mean its putting us in trading range yeah. Were at the upper end of it that could not contest lows. Were going to consolidate with the lower bias let ntell you why i feel that way. The market is trading like one big bio tech stock it took down a market that had been very strong during the day. Not sure that strength was warranted. Then today when we got the news that cnbc broke about the chl chloroquine trials being stopped because the outcome is death death is bad in any outcome. Lysol was the next recommendation that came out of the white house. Companies are reporting great quarters, some of them the market is not willing, at this point to look through what their guidance is. A couple of examples verizon, lets not take that one because they did lose subscri subscribe subscribers, which isnt supposed to happen if you look at others this reported great quarters its going to be squishy because you dont know when this will end. When you take those stocks down as well as a number of others, thats got to give you pause in the market that we have moved a lot. We have given a lot of credit to this coming out. Its coming out sooner than perhaps we will and normalcy returning sooner than what will happen were not trading down significantly lower but we are hitting the pause button saying exactly what am i paying for at this level and chances are youre paying too much lets talk a bit about this idea that the pause button is being hit because we are in trading range now and will be for a while, its something that could really perhaps benefit those people who take an active approach to managements. We have been talking so long about the prevailing theme for markets being passive investing yet gold mman sachs saying theres better opportunity for stock pickers and the best outcome would be for this market to be stuck in a trading range if that is, in fact, the case. If now the alpha, the out performance will be general rte because people can position in certain stocks and industries. Does that mean its a selffulfilling prophesy ive seen the vix, the volatility index that measures stock market volatility and the s p collapse from a high of 80 plus during the lows we saw last month to hovering around 40 it means volatility is coming down yeah. It has been coming down in a variety of places. The one you site is the broadest and the one that represents the trillions of dollars in the u. S. Market we saw crude Oil Volatility up over 500 its back down to 200 now. Its Still Holding onto gains but stabilization in that market, stabilization in our markets. I do not disagree with joe that consolidation isnt a bad thing. When you get consolidation, you get folks a little more comfortable than when the market is making these incredible gyrations up and down. Youre seeing baby steps youve seen more than baby steps becau because, as you say, its been a whole month we have seen that stabilization coming into the broad market s p 500, dow and even the iwm. It will be great opportunities its one of few times im agreeing with Goldman Sachs because i think the opportunities are absolutely in trading and not in investing at this level lets bring kate moore to this discussion right now. One of the other things that stood out to me in this goldman note, this idea that we believe the main reason why the recent market rally has offered better alpha out performance opportunities than typical ra y rallies is unlike others the rally has not been associated with clear out performance of cyclicals or economically sensitive stocks theres particular stocks and areas that are not just going all up together or all down together is that what you are seeing play out as well . First of all, good to talk to you. I would also say that when we think about the dispersion in the market, we think about dispersion in terms of the cyclicals and within each industry really is great environment for active investor. There are some tactical opportunities if you want to play the range if you want to think about increasing your beta at certain points when the market sells off or reducing in other points. We try to toggle up and down our risks as we look at positions around sentiment and flow. This is also great time for active investors you step away from your screen for a moment and you start asking questions about what the biggest drivers are going to be of the market, of the economy, where the changes in activity will be over coming years, you might really find yourself in a position to Start Building interesting positions in your portfolio that you wouldnt have had an opportunity to do say in january or february. I would say you can be tactical in the near term thats one bucket. At the same time, this is also great opportunity as the market is gyrating in a trading range, to step back and do longer term work about what the big persistent and changes will be in the market. I want to know in your mind, what are those trends, theme, the thesis that you want to develop given that kind of environment that you just laid out for us we have been focused on looking at themes and a couple of major sectors that are well loved. We see a huge amount of Growth OpportunityGoing Forward. Up with of them is in health care we talked about the opportunity for telemedicine and a slightly changed Regulatory Environment after this cooperation were seeing between some of the Health Care Companies and government as a result of this covid19 crisis. I think theres a number of different industry and specific themes within health care. Were looking a lot across Technology Something ive talked about a lot. Were seeing in individuals and Companies Use technology differently. Im really encouraged by the number of new companies that are coming out with Interesting Solutions as we all work from home blackrock has been talking about the fact we have 16,000 employees working in 16,000 locations seamlessly a lot of that has to dowith th investment we made in technology i expect more and more companies to increase their Technology Spend even if they reduce their spend in other places. I see a huge amount of opportunity there. Dont also forget theres other themes and technology around 5g and the speed of connectivity that will be really relevant to the consumer side over the next two years. This is great time to bring in mr. Wonderful, kevin. You deal with all different types of industries. Give us your take of whats going on with the economy. Has there been a change. Can you see from your standpoint the economy here, in the way its played out with the virus changing fundamentally in the coming months and years . I do. I do see some fundamental changes that will permanently impair certain sectors of our economy and boost to the upside some others. Ill give you an example it was clear to us that the government wanted us to sustain the Employee Salary of the snapshot through june 30th thats at the expense of the landlord and every one of my situations, practically 100 , we have asked to push our rent for 90 days. Theres another form of impairment occurring this one will be long term what we have noticed in operating remotely in all of these companies now for almost over two months is we can do it very efficiently after having spend new licenses on new technologies and upgrading Internet Connections and all the rest of it what were planning to do across the board is cut our use of office space and retail space by around 30 on average hoping to get another 7 to 11 cash flow right across the board because we learn frds the Employee Base there are many that are taking care of elderly parents or raising children or they just want to stay home and they dont want to commute. We dont care. The opportunity to save money on rent that we never needed, although could never test, nobody would have ever done this to a business. Blew it up and moved everybody afar and work remotely unless they were forced to and we were. Now we can save a ton of money will be a new america emerged from this. Not for real estate. That will be permanently impaired i see the cap rate on triple a towers in new york and boston going up because they will have to retrofits with all kinds of hazmat air systems, put cubicles everywhere whoever wants to get on an elevator with a hundred people again. Everybody will turn into howie mandel when this is over you want to sell your reits. That was a core holding for a long time. The other thing ill say about the trading range that i have come to live with is theres only one index to live with. It occurs between 12 noon and 3 00 every day everybody watches new york its a giant cruise ship stuck on a rock, 75 stories high and the virus is causing havoc even the traders and the Sovereign Funds in the middle east are watching the index. The entire world indices trade on the optimism of cuomo in new york or the pessimism. When you want to see recovery, it was the first green chutes of cuomo talking about stabilizing outcomes in new york city. Well learn first in new york when sports open we will learn everything watch that its interesting that you bring all these up and especially because later on the show youll want to Pay Attention because we have the ceo of agre realty his commercial trust deals with that space that stock is up about 15 so far this year. Well ask him why thats happening. Keep it right here lets bring in the chief Investment Officer at lockwood advisers lets talk a bit about kevin brought up this idea of permanence versus temporary. Theres some things that may change permanently regard with behavior and some things that may revert back to the way they were years ago lets talk about your view of this is anything temporary or permanent with regards to the investment themes Going Forward. In addition to all the things that kevin mentioned, who will want to sit in the middle seat on an airplane ever again. Who will want to go to a Movie Theater . Who will sit in another crowded theater for a concert . All those things are things well have to deal with. I think those things are real. We will focus on the kinds of things we can measure as to the difference between temporary and permanent. In the latest payroll numbers, we had only the first glimpse of the types of labor damage that well see to the economy which was 700,000 jobs or so lost. If that given an idea of the magnitude of temporary versus permanent, it might help us. We have looked at dividend futures which is also very interesting because that market is predicting it will take Something Like ten years to get back to the dividend levels that we were at before the crisis that is on the order of world war i or the great depression. It will take us quite a bit of time to get back to where we were before. Dividend futures in the Great Recession of the 2008, 2009 period, took only three years to get back that is an idea that some pieces of the market are really predicting a much more long term recovery and i think that points to the idea theres going to be some real permanent dislocation to capital labor resources in the economy. Thats an interesting take there. Lets bring it back to our investment economy here. As we talk about some of the bigger moves happening with the marketplace, steve weis, ys, you made a number of portfolio changes. Take us through what you did and what the reasoning behind it was. The reason behind it was is what join pointed out is you have to take what the market gives you and there are phenomenal Trading Opportunities in this market both on the long side and taking profits when the market gives you too much. For example, i sold quarter, before the comments were made by cornell. Sales are going higher but so are costs. They will be selling a lot more lower margingood it was an opportunity to go and buy it and trade around it ive been lowering exposure mode im comfortable where i am in the margin trading around it. I want to address a couple of things that have been said kevin said he sold all reits all are not created equal. If youre saying youll use less office space, you may need more apartment space. Particularly, if you want to put an office in your apartment. You have to look at apartments maybe theres an opportunity there. I know when joey will come on and talk about, his reits arent going out of style hes been signing up business. Walmart, for example, because it depends on where you are walmart, walgreens, lowes, theyre going to do quite well in terms of the theme im looking at, ive been consistent with this. 5g everything that was spoken about is 5g related. 5g was on a nice ramp before and soc some of the commentary has been skeptical. Thats why 80 of my portfolio is in 5g related stocks. They have been reporting very good numbers there are opportunities for a long term stand point. In terms of dividenddividends, t know ibm, great example of that kate, lets get you back in here with this given everything we heard from steve, there are places then of relative kind of out performance. If something kind of lags behind, its because somebody else is benefitting. Its not necessarily a zero sum game there are pivots and movements happening. Lets take us through what types of companies are the ones who could benefit given some of those im not going to call them seismic or techtonic but they are changing happening. The debate has been whether or not value can outperform or the cyclicals lead we have said there are a couple of characteristics around companies that will be the most important Going Forward even if we start to get better Economic Data or return to some level of normal activity. Not 100 thats a long ways away. Once we start to see live concerts again, ill be pretty excited to get out to see some of my favorite bands those companies that do have some level of visibility, even if they cant get hard and fast number, i think will be rewarded the second characteristic, like Balance Sheets matter. I think the quality of your Balance Sheet and how youre managing your cash, some of the moves they might be able to make, some of the Portfolio Companies and maybe in some case expanding markets, that will be critical i think analysts will be very, very focused on the quality of management teams how are management teams commune indicating what are the decisions they are making and how strategic are they being and what is otherwise fairly challenging operating environment. Those are the three characteristics that will differentiate compancompanies. The Balance Sheet theme has been brought up countless times. Joe, how much more are you looking at balance street strength, Balance Sheet health, debt to equity, things like that when it comes to the portfolio moves youre making and, if so, what kind of moves are you making that defines quality. Its a company that could withstand the absence of buybacks in a world looking forward that will significantly reduce the buybacks presented to the market and its company nas have a fast visibility to a return of earnings growth. Its a sector im focusing on and thats Health Care Health care in my exposure there is the etfs, the xlv i have abbott labs identi ive increased significantly the exposure the Consumer Spending will be resilient. The Balance Sheet is strong. Health care offers Something Else as a sector thats critical now. If you define the six sex tctor that are outperforming the actual s p, except for technology, five of those sectors have a lower beta exposure if you look at the sectors that are under performing, they have the higher beta Exposure Health care in its