Dow. Stocks are having a nice bounce on some renewed optimistic about reopening the economy in various states of the nasdaq closing in on going flat for the year oil is up on signs of gas repairing. A general believe in a Third Quarter rebound has some exists warning too much optimism too early. For that we will turn to steve lease man. Carl, good morning. The rapid update does indeed show this historic, unprecedented Second Quarter decline. A Third Quarter rebound. And i want to talk about that. The Third Quarter rebound is even more ingrained. Stocks trade on this idea after we get through the Second Quarter, you will have a Third Quarter rebound. Down 34 after minus 6 . Up 16 in the third. Up 12 in the fourth 7 in the first quarter. Not enough to make up for the year where the average of our 11 economists is 5 decline but take a look now at a bunch of outliars. They are contrarians on the street on this Third Quarter rebound. The q3 rebound bears bank of america, minus 1 . Rsm up just 1. 5 oxford, middling there at 7. 6 and the relative to the average. So i called up some of these folks and said, hey, why are you such an utlier michelle said this is such a painful and shocking recession there will be residual pain. I dont expect business to start reinvesting right away it comes with Capital Spending coming back in structures. Will people build hotels, oil wells . The big rebound in capital is something worth thinking about and joe has a different idea why the Third Quarter rebound may not happen he said based on what ive seen and im hearing, we are at risk of another mini wave and households will continue to selfpolice. This is what we talked about yesterday. If you open it, will they come we have not seen evidence yet that in the open states people have come back in droves some of the traffic data i saw at rush hour has not really shown much of a rebound. So two things on the contrarian side one is this idea of do animal spirits really return in gang busters to power that rebound in the Third Quarter. And the second idea is is it too much too soon on the reopening such that we risk a rebound. Markets trading on the conventional wisdom. Not saying thats wrong. They are the contrarians called to consider steve, a tightrope act, as fauci said it will depend on how much death the society is going to be willing to tolerate. Steve, thanks so much. The largest Teachers Retirement Fund in the nation and 11th Largest Pension Fund in the world. Chris, always good to talk to you. How have you been . Okay, david how are you . Its okay its carl this time. Sorry. You have been defensive historically, even when the markets were soaring and it does sound like even at this level you are more in line with with what Warren Buffett said on the bullish stance sorry, carl yes, i am. This is nice to see. The bull market is over. And we are in a bear market. And i think were in a trading range. Its nice to see some of the other stocks do better today it has been highly concentrated. We are far from out of the woods on this one. Theres been a goldman took a crack at the concentration youre talking about of the tech giants and how much they account for the s p highest level in 30 years. Their point is those types always resolve the same way. Their argument is they are unable in the long term to provide the earnings power to maintain positive sentiment for the index overall. Do you think we will retrench because of that . You know, carl, i do. They did some homework they represent 20 of the s p. Over 17 of the u. S. Stock market as is pointed out, historically that is not a good concentration. They usually decline down. These are the stay at home stocks they are priced to perfection. The next step is to move out and for people to be out in society. 23409 that the stocks are going to crumble but they need to fade away we need to see the rest of the market have strength we will be in a trading range probably for easily a good nine months i dont think we will see the return of a bull market any time soon good morning good morning its john fort you expect us to be trading in a wide range into the november election it certainly doesnt sound like you expect it to be higher from here do you expect major averages to go lower than they did in march . And if you think thats possible, how do you weight that possibility . I dont going back to the march 23 lows, i think we will be in a range probably 2950 on the high side of the s p we are close to that we hit it last week. Maybe 2400 on the low side even though we are opening up the economy, you are talking about people picking up, restaurants being 50 of capacity i know i dont enjoy wearing a mask Walking Around outside or going to the store and into work all day. It is not going to be something will be comfortable with my staff would rather stay at home they dont mind driving up and picking up merchandise but they are not eager to go shopping in this kind of environment. So we still have a long way to go, especially if we have a resurgence in the fall people are going to want to shelter in place on their own even if theyre not ordered to i listened to scott last night i got worried. The impacts are serious. And i think were going to see some downward pressure on this market the optimistic is great. We will see downward pressure in the fall with all the uncertainty. At the same time it seems like a growing disconnect between the Health Outcomes and data we are seeing and the economic moves we are seeing at the same time. Even though deaths continue to rise, there is economic opening up should inventors be watching the Health Outcomes or watching the economic moves it seems for better or worse, and we dont know which yet, certain areas of the country seem to be willing to risk the Health Outcomes in order to drive the economic ones. I have been talking to my board this week. That is the question im getting from them. It looks like this is divorced from reality there is such a strong bid to this market, particularly overnight trading in the futures overseas it doesnt make any sense to me. So, yes, im going to say i agree with Warren Buffett. I agree with the sraoepb kwrous. There is big risk. It seems surprising there is such a small bid into this market and we are trading up in the higher part of the range youre right, the reality is this is still a serious virus. We are opening up the number of deaths, number of infections are really plateauing. Not declining. Everybody is so excited we bent the curve. We havent seen it slim down on the down side. It has just maintained and i fear by opening back up, were going to have more cases it is so contagious and sticks to different areas this is a health recession not a financial recession. And were not out of the health data we have to understand what is going to happen in the markets and prices should reflect that uncertainty. At the end of march, calstrs 4. 7 43. 2 of equity versus 51 target have you been putting any of that cash to work right now, or is it sitting on the sidelines we still have a large cash position in a bear market, cash is important. Cash is king we have been slowly getting a little offensive we think this recession is longer than what people are expecting. We are still being fairly defensive in asset allocation. We will end up shifting that because of the private market assets real estate is still strong. Were not seeing Investment Opportunities appear as much people are stretched on the debt side and in this crisis it seems like that is the best opportunities there is a lot of money to go into that. Helping companies bridge this recession in their cash flow i think will be the best opportunity for people yeah. Given states and municipalities facing such severe financial carnage right now and all the discussion around that i realize you invest for the long time. How are you taking that into consideration . Do you expect it to shape or change the way you think about investing Going Forward . I managed through the 0102 financial crisis, 9 11 and through 08. It sounds strange but our asset allocation, our portfolio is designed to go through these recessions we have had a long run without one. We will siebert investment on the other side of this we will see opportunities to have high double digit returns they need to am torize over a period local governments and state governments, when you have a twomonth period with almost no retail sales, no hotel occupancy. They still need to make the minimum contribution to their plans. Everybody wants to put them on as they are due today. Thats not the case. We can amortize 30 years think about your mortgage. You dont look at that as a due payment right now for all of it. You spread it out over time. You can refinance it eventually. For us, low Interest Rates will be a challenge we will weather this storm and we will continue to do well on the other side of a recession. Hate to say it but recessions are good i was concerned the last two years along that bull market was running because it pore tended that the other side, the down side might be really negative. Who knew we would have a Global Pandemic and that would cause a recession. But a bear market doesnt last three weeks like we saw in march. We have to run through this. We will see this sloppy opening that is hard on the economy and eventually on the market yeah. We remember those when we were in a different world we will learn a lot the next couple of weeks whether or not they can be done safely or not we look forward to checking in with you soon. Take care. Thank you very much the ceo of el free we will be speaking to him after the break with the dow up 340. Stay with us 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. So were working 24 7 toected maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Welcome back aerospace l 3 harris rising up 2 after posting better than expected Quarterly Results joining us is the chairman and ceo. Thank you for being with us today. Good morning. That you can for having me so as you mentioned, a beat today. You did lower 2020 guidance due primarily to covid19 impact on commercial aerospace at a time when there is so much focus on aviation and the downturn we are seeing within that industry now. What is factored into your forecast so let me start by thanking all the men and women at l3harris great start to the year with revenue up a . Operating income 17 good cash flow orders good. So it was a very good start to the year despite the environment we happened to be in youre right, we trimmed the outlook for the year we were anticipating 5 to 7 growth now it is 3 to 5 that delta the exposure we have where we have taken our number down 40 in the year it is not a big part of the overall portfolio. It did reduce our forecast and our balance for the year yeah. Of course defense, the majority of your business, has been so resilient. You are one of the top 10 defense contractors in the world. Backlog thats been growing. Maund your cash target as well what has that process of working with the d. O. D. Looked like in the midst of this pandemic and i guess when Lochhead Martin is coming out and saying the longer it stretches on, the more risk to supply chain disruption. Are you seeing the same thing . So, look, 75 of our business is tied to the department of defense. That business is up 8 this year so it is strong. We have been working very, very closely with d. O. D. Leaders, Service Leaders to do our best to try to accelerate contract awards something we are very well focused on many have exposure to commercial aerospace. We are working hard to support the small suppliers. Some is coming from the department of defense. Right now, youre right, it is vulnerable you said you were looking to shed as much as 10 of the portfolio. Is that still the plan are there currently buyers in the market right now good question we are about 10 minutes into the Merger Integration is going very well cost synergies are tracking well we are accelerating. It helped to offset some of what we are seeing in commercial aerospace. We have been looking the last 18 months we want to be in businesses where technology differentiates. We earn good returns we can grow. We can win we just closed on a transportation yesterday for a billion dollars selling airport securi security so onethird away from getting to 10 theres going to be some friction some will move to the right a little bit longer term, taking a hard look at our portfolio is the right thing to do even in this environment. You mentioned Airport Security and automation business sold officially last night even though you have exited that business, im curious what you think air travel will look like from a securities standpoint its a very good question i think its going to change in some ways. Maybe different ways of monitoring passengers as they come through checkpoints i know its something we were looking very carefully at. There may be different ways of biometrics, temperature screenings hi, bill. Good morning its john fort i have noted that you expected to have around 50,000 employees as aoe a merged entity is that still the level where you are . Where do you expect to be in the coming months as the year ends are you hiring in certain areas . Are you laying off in certain areas . Thanks for the question we have 50,000 employees all working hard, mostly in the u. S. A terrific group of people large proportion of them are technologists, scientists, engineers. Were hiring we have hired 2500 year to date. We will hire 6,000 this year 800 new College Grads and 700 summer interns so, yes, we are hiring we are growing and we are hiring wow that is definitely something to take note of as a defense contractor you are an essential business. Amidst all the aid and stimulus packages, in d. C. , this debate emerging about where future budget cuts are going to happen. What is your longer term outlook for defense spending so this year is quite good. The budget is up 3 from last year the d. O. D. Budget has come up quite a bit. Going into 21, it is expected to be about flat thats the president s budget and grow 2 beyond that. That was a precovid forecast. Together, by the president , next year will be okay. Beyond that in 22 it will still be okay. 135 billion worth of unspent money, investment account money that will continue to drive growth in the space. Beyond it, look, the threats of the world remain you can see what north korea is doing. The chinese, the russians. I do believe there is bipartisan view thank you for joining us today. Stock is up about 2 that you can very much. A check on the major averages all of them at or near session highs at this point on the dow that translates into a gain of about 364 points all the indexes up by better than 1. 5 . Well take a quick break stay with us welcome back norwegian cruise lines said there is substantial doubt about its ability to continue as a growing concern. We have the details. John, norwegian cruise mine is in survival mode. It sees substantial doubt about its future as the covid19 epidemic wreaks havoc on the cruise industry. They were able to get 400 million from el cateton. That is contingent on raising an additional 1 billion in capital. If it is able to do so, suntrust said it will survive on zero revenue for 20 months. A sharp decline suggests the market is growing concerned about norwegians ability to get the liquid i did boost norwegian is the most leaved, highest debttoequity ratio the question is whether that will challenge the pitch to investors and its ability to secure attractive terms. It is worth noting carnival, when it went into the debt mark it did raise money but at a high price. 11. 5 . Time is of the essence for norwegian to see if it can raise capital. You are looking at the stock down as much as 20 just today even onyear to date basis is significantly underperforming carnival and Royal Caribbean carl, back to you. And sue herrera the hq hello, everyone heres the latest. President trump leaving for his first outofstate event in two months he was asked about china and its role in the spread of the coronavirus. What happened should never, ever have happened china should have informed us if they had a problem i have not spoken to them. I might, but i havent spoken to president xi i have not and the United Kingdom has the highest death toll in europe 32,000 people have died, sur passing 29,000 recorded deaths in italy well be back in an hour with more for more on the coronavirus coverage, go to cnbc. Com morgan, back to you. Sue herrera, thank you as always, lets get a check on where we stand in todays trade. Stocks are rallying. Looking for a second day of gains. Every sector is in the genre 2890 is your level there dont go anywhere. Abouting in two. bling see, incident resolved. How did you. Gotta enjoy the small wins. You keep being you, derek. Keep being you. Confident financial plans, calming financial plans, complete financial plans. Theyre all possible with a cfp® professional. Find yours at letsmakeaplan. Org. We work founder has filed a lawsuit against soft bank alleging abuse of power. We have been covering that since early this morning hey, d hey, carl thats right this is the first time that we are hearing adam newm