A heaping of starbucks and shake shack after the closing bell despite a host of developing threats out there, no disability a quarter of companies that have reported so far have yanked guidance China Threatens retaliation for its role in the pandemic, and the virus death toll, new reports we could see 3,000 deaths a day in the United States as states begin to reopen. Is the action we saw today actually a sign that the market may be climbing a wall of worry . Hi, mel. Hi, guy its clearly climbing something. Tims been on this theme, so kudos toll him i was impressed, the price today was, you know, very interesting. So kudos to the market and people that still believe in it. Out of the three things you mentioned and loss of life obviously is the most concerning, but in terms of the market, you know, this potential retaliation against the chinese, that Steve Mnuchin spoke about today, and saying the chinese were still going to honor their trade agreement, i personally dont think the markets are paying enough attention to this. I happen to think this rhetoric is only going to get louder and it in no way is market positive. Although today was impressive and energy really i think were having some problems with guys shot well go to tim now in terms of your thoughts. Tariffs could be the biggest potential worry . Energy. Were still in the midst of a trade war, we only had phase one go into effect in february we have other phases to go, and were talking about a ramp in tariffs at this point. Right, and think about the job in a the market has gotten from the fed, what the fed has done versus what they said they could do when you come out there and Start Talking about leveeing tariffs and going back to trade war, even if its just rhetoric, thats not what they want to do right now, theyre trying to boost moral, trying to ultimately boost confidence in markets, but also in the global economy. This is a little puzzling, whether you believe it has merit and base in purpose and efficacy guy was mentioning energy before we lost him, i think thats something that at least is encouraging. Youre seeing some of the technical elements of the market we know that the supply and demand fundamentals arent great. We know its going to happen to demand we have to get some sense for the credit issues, we still dont know that, oil is up 40 in 4 days. If you look at other constructive parts, they were part of that resilient turn around today we have terrible data out of asia, and those were pmis from countries that gave us some sense of confidence the earlier month, taiwan went from a 50. 2 down to 41 and change on their pmi. Just because asias 2 or 3 months ahead of us, doesnt mean it gets better for them necessarily. I think thats what were worrying about time and temperature for the park for you, dan . Yeah, i think what tim had to say about a lot of these different moving parts is really important. Its obviously been a volatile period over the last 2 1 2 months or so to say about the u. S. Stock market pretty interestingly, toward the end of march, when it was down between 30 and 35 in a little more than a month the selling became very indiscriminate, especially given what we didnt know about the health in the economic crisis. A week or so ago prior to the bulk of the s p earnings here, i feel like we felt things were getting a little too much over done to the upside up about 22, 23 from the lows. Here we are right now, struggling with this 2800 level in the s p 500, which is nearly the mid point of that 2 1 2 month range from 3400 the up side to 2400 on the down side. I think that makes sense you use the term visibility or lack there of just before. Thats where we are, we have to digest what corporate earnings are going to look like, what are the next shoes to drop for the economy. We dont know right now, the idea that the market takes a bit of a breather here, and addresses some of the commentary for the major companies, makes total sense. I think the market is totally pricing in a lot of rosie scenarios with the s p 500 only down 12 on the year, given what we know despite all the stimulus to me, i expect a retest, at least somewhere 10, 15 lower than current levels here dan mentioned the next shoe to drop. Is there an assumption that there is a next shoe to drop i think theres a next shoe to drop, in that i think the reopening doesnt happen as smoothly as we like, and that the rebound for so Many Companies isnt near what we hoped it would be. I agree with dan, i think the market has come way too far too fast looking through to the other side, we dont really know how far away the other side is, the one thing that is really important, though, is that the credit markets are wide open companies that three weeks ago or four weeks ago, really were thinking very hard about their balance sheets, how are they going to survive theyre able to do deals now this is some of the most active Capital Markets weve ever seen. Thats helpful and the fed has obviously said we will do whatever it takes thats helpful, but i really dont it feels like people think the fed has done a money push i dont believe it im always looking for things to buy, and right now i find very Little Things to buy its amazing 3, 4 weeks ago, there was plenty to buy so i think this bounce back is really really too far, and i think its discounting very good treatment. A vaccine next year, and a robust recovery in pretty short order. The credit markets being opened thats really a lifeline for a lot of companies, that extends the amount of pain companies can endush were talking about companies from ford to avis. Troubled company in a troubled sector, to apple which doesnt need the money, but is going to raise the money anyway we have companies out there raising money left and right with the feds implicit back stop to all of this which is definitely market bullish, but it gets you down the rabid hole of should we do be doing it in the first place or should we be allowing the phrase corporate darwinism to take over. I favor that its not pleasant but i think its vital and important and necessary. To sort of echo the things karen is saying, i find myself you know, i think tims on one end of the spectrum and looking smart on that now. I find myself closer to dan at this point than tim for a myriad of reasons, i was mentioning this u. S. China rhetoric that is going to continue to escalate i dont think thats bullish or the market is giving it consideration it needs to. Here we are at 2800, i think its a level where, you look at some of these stocks and say, its time to take money off the table. Big cap tech helped prop markets up today dont change this minimaga rally, though. Always great to speak with you great to be here youre not talking about technology, youre saying overall, dont buy anything right now, why not i think we have to be careful about making it a big cap tax thing, at 29. 50 im not chasing. Whats interesting, the fed put if you had a strike price, it would be right here, this is on april 9th, the Game Changing decision that the fed made was to announce a 2 trillion stimulus package that could buy municipal debt that made it going all the way back to the low on likely. You have a fed putting it right at this area, this is a Perfect Place to have a real bull bear epic battle. A tug of war between monetary stimulus and negative economic outcome. And what a place the rage is right here what should investors do at this point he with load our rating market in january. To get us more offensive, to mirror what a lot of the other panelists have said. You need to see more than these mega cap stocks rallying the s p 500 is the 28, 25 or wherever were close today its all up on these mega cap names and accounts for 20 of the index. I dont know if its good or bad, it is what it is. If you look underneath it, what would get me more offensive, you would want to see the u. S. Treasury market have a pretty significant uptick in yields suggesting that its betting on economic recovery. Its what happens each time as we talk about last time, youre coming out of a recession, you get a sharp steepening of the yield curve, if you couple that with relative out performance of the offensive sectors, that is where you want to start to attack the problem is, lets say, i dont know, 5, 10 ago i said, everybody in i would have been wrong on my sector bets. Its been these mega cap stocks versus the underlying sustainable Economic Outlook groups so tony, its dan, how are you . Good, dan so talking about these maga stocks microsoft, apple, google and amazon all of them reported decent earnings amazon had some issues do you think theres risk if we do take a leg lower in the broad market that those names lead to the down side and present more of a problem than if western to continue that toward 3,000, the help that they may give to the up side. Do they have the potential to snowball because of that concentration . Well, i got to tell you at 2300 with the most historical condition in the markets history. You got to buy for relief rally. So now what i could sigh happening after weve been turned back at 29. 50 frankly, i felt like an idiot, because i didnt get it. I didnt think it would go up that much. Back here at 2800 i could envision a situation where the market the s p 500 index itself doesnt do a whole heck of a lot, but you start to see the roy taking underneath. To karens point there, a lot of the broad market hasnt been lifted, fines have been a disaster, industrials have underperformed even with todays strength and today was a good day accept financials and industrial industrialals, the two offensive sectors that lead out of a real economically driven bear market low underperformed you had had a nice stabilization in the treasury market, i want to see those groups catch a real bit. More than a one or two day bit, pick up the relative performance, then we can get offensive. Not defense you need signs first tony, great to speak with you. Thank you. Thank you, have a great day what do you make of the underperformance weve seen in financials and industrials im kind of surprised with the underperformance of financials mainly. I can accept that maybe this is where they should be, or they should be lower. What i cant understand is, how is the broad market here with financials there that is a disconnect the economy is going to be much better than the banks are telling you, or the banks are telling you the economy is going to be weaker, those two things i really think need to divert, so im long financials. You know, i think were in for some big provisions coming up this quarter and next quarter as well on top of the one they reported. But i think theyre going to make it through. And so surprising to me that and they are levered surprising to me how big this underperformance is. We have some breaking news on Restaurant Brands. Lets get to dom for the latest. Restaurant brands, the Parent Company of burger king, tim hortons, popeyes, louisiana kitchen up 5 , roughly 2 million shares of after market valium. This is on headlines coming out, because pershing squares bill ahman has now taken his stake above a threshold amount to a total qsr. You may recall that hes been an owner of the stock for the past 8 years, he actually made some comments to our very own scott wapner just a few momenting ago, saying this is in no way an activist position, and they fully support management and the board at Restaurant Brands international. They tend to go into discussions. Not an activist position but the reason why they made this is because they crossed a threshold amount from a regulatory perspective its now roughly about a 9 1 2 stake in Restaurant Brands international. Back over to you thank you, dom, guy adami ill go to you, owner of popeyes, et cetera i wouldnt chase. No, i love yeah, but not a cheap stock and less cheap now with the move to the upside. You know i love popeyes, we did that taste test when we were all together months and months ago i dont think you follow, in my opinion, you dont follow him in at these levels. To doms point, the disclosure needed to be put out there, to chase it up now, probably 10 in the after market, i think youre trading wrong, i use this as an opportunity to trim the stock. Well, it bill ahmans been decent in the fast casual and quick serve space. Think about chipotle, other things hes been a part of recently where he saw not only a trading opportunity, but a fundamental bottom up. I would agree, i dont think i chase a filing, but and again bill ahman is someone that went pretty aggressive near the lows in the market with putting the cash back on an allegation basis. Were going to talk about mcdonalds later in the show, shake shack. I dont think its a great environment for these quick serve fast food locations. Having said that, i do think there are franchises that are taking market share relative to their peers. Were going to talk about food next actually a java volt, what starbucks said had the reopening shooting higher in the after hours session. 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Com moving today. Lets get straight to phil lebeau for the details the stock is plunging right now on reports that hertz is hiring restructuring lawyers and bankers preparing for a bankruptcy filing. Thats why when you take a look at shares of hertz, its under pressure on this report that theyre hiring restructuring lawyers at hertz in preparation for a possible bankruptcy filing they just missed a lease payment or there are reports of them missing a lease payment at the end of last week, thats when you start to see the pressure mount on this stock. We know whats going on with all of the rental car companies, and the financial pressure weve been facing especially given the fact that weve seen a massive drop arrange the country what is the Ripple Effect if any, on the Auto Industry of hertz taken out as a player, a buyer, fleets of vehicles . Well, im not sure theyve been taken out as a buyer. More than anything, its that they restructure their debts and especially when you look at their fleet portfolio, that would have some implications in terms of the pricing, the residual values on those vehicles in terms of demand in talking with executives in the Auto Industry, almost all of them say the same thing, theyre not expecting much demand for the remainder of this year they realize whats going on in terms of the rental car companies. Phil, thank you dan nathan, its no surprise, they missed the lease payment, the clock was perceived as ticking since that point in time, and its being hit, no travel to airports means no rental cars from there. Yeah, whats sat, mel is that obviously hertz avis, these are Great American companies, between the two of them, that doesnt mean those employees are all going away, theyre going to restructure their debt, the equity in these two k47s is at zero the main takeaway here is that prepandemic, these companies were already in massive decline, and this was just an accelerant for them, im not sure it gets much better for them on the way out, no matter how they restructure their debts. Fundamentally these businesses have changed and its going to be a very tough environment for the next few years right now, even if they were not to change too much from here saying that these companies basically are zero is pretty dramatic would you agree with that . Well, i think in hertz case, thats probably true, look quickly at some of their debt thats due in 2022 it was 100 cents on the dollar its now 18 cents on the dollar. So thats telling you that the equity, if thats where the debt is trading at 18 cents on the dollar, the equity has to be something that rounds to zero. For avis, when i heard that story about hertz, is that a positive for avis is is it a negative that hertz would be able to restructure in bankruptcy and run more efficiently. Or do they just pull back from the market that might be better for avis. I dont know, its a scary space to be in thankfully im just a voir youve got an earnings alert for you meantime on shake shack. Kate rogers joins us with the details. A mixed First Quarter for shake shack. A miss on revenues as the company warned in its preliminary Earnings Report in april, same shack sales fell by 12. 8 for the quarter. The end of march really hit the company hard, sales falling to 29 due to shutdowns seen across the country. A few bright spots in these Earnings Report. They noted the company is beginning to hire back some of the companies that its furloughed since the low point of the quarter, shake shack is seeing steady increases in sales thanks to expansion of its integrated delivery partnerships and its licensed business is starting to experience small signs of recovery in korea, hong kong and Mainland China in a limited capacity covid19 will add additional costs as it invests in supplies to keep its staff safe the future impact of the pandemic cant be reasonably measured at this time. Kevin johnson just out with a letter to the companys employees as it begins to slowly start to reopen some of its Stores Across the United States in modified formats beginning today. 85 of Company Operated stores will be reopened across the United States. They are expecting more than 90 of stores to be open by early june, under modified operations a