Flat for 2020 as tech continues to lead the gains. Financials and utilities amongst the worst performers today coming up on todays show, we will speak exclusively with sap ceo Christian Klein about his companys efforts to develop a coronavirus Contact Tracing app and what hes hearing from customers about the state of local business and the earnings reports will come fast and furiously this afternoon highlighted by lyft, grub hub, tmobile and well speak with tmobile Ceo Mike Sievert ahead of his companys Conference Calls just after numbers cross. The big stories we are watching, mike santoli following the volatile trading action, Steve Liesman with a look at the economy and another sobering jobs number today, and deirdre bosa is covering uber and lyft mike, start us off the s p struggling to stay in this zone for the past few weeks. This is a oneyear march its flattened out since april is it resting, rolling over . Its a bit of a standoff i think people are saying right now its preserved most of the rebound rally gains, perhaps if it got down in the 2,700 range, maybe it starts to change this idea that its just kind of pausing for a moment last weeks low 2,720. Were still kind of treading water and as everybodys been mentioning, mostly thanks to those very large megacap Growth Stocks not attached to the economy. Thats v whats not standing still is the forward valuation the index is flat. Were now above 20 on a forward p e basis because the earnings forecasts are going down fast. Now were at 130 per share looking at an 18 , 19 decline from last year clearly the market is not really trading on this years number but it will show you how deep the hole is. This chart is the p e of the median stock in the s p 500. So itdoesnt really get affected by the megacaps, and this is on a trailing basis. You see again, around 20 now, it has been higher here a couple years ago when we had that big surge before the tax cut, but it shows you on a valuation basis the market doesnt have really a big cushion. So therefore its about the speed and the cadence of any comeback in earnings, which, you know, very hard to project but see if some investors are willing to do that at this point. Sort of what i was going to ask, mike. Weve gottena pretty decent sized batch of earnings and economic data. Is there any clear picture as to where the economy goes and how long this lasts arising from that information i dont think just yet. Really all were doing is defining how deep the hole became in april. Obviously, people are fixating on the incremental moves towards a reopening. You can see the Market Action itself it is money flowing into those companies where a comeback is not relevant to the outlook, the big five of the nasdaq until that changes youre wondering if in fact the index as a whole can hold in place here, give a little bit, make a foray to the upside as you get that incremental information no one has a fix if its not p e multiples or any other valuation multiple, what are people looking senate technicals is one. Other things like dividend yield where we have seen companies reiterate their dividend on a marketwide business, thats not helping very much because overall dividend amounts are going down theres an advantage over bond yields people are looking at equityfree cash flow yields perhaps compared to Corporate Bond yields. Thab th maybe that gives a better idea in 2009, that forward p e shot up and went vertical because people said we dont care about this year. Well look for a comeback. It was at a lower valuation level, more like 14 times forward, not 20. Mike, thanks as always. Another sobering look at the jobs market as new data shows private payrolls plunged by more than 20 million in april yesterday on this show, we spoke with fed vice chair rich clearer about whether more monetary and fiscal action is needed. The c. A. R. E. S. Act was absolutely essential because, you know, the fed has Lending Authority but not spending authority. We can lend money to companies that are solvent with the expectation theyll be paid back, but we cant transfer income to households and firms, and obviously the c. A. R. E. S. Act, through paycheck protection and Unemployment Benefits and other provisions, was very, very important to the economy and it may well be the case depending on how the economy evolves that more policy support will be needed from the fed and possibly also fiscal policy Steve Liesman, a terrifying number once again on the employment front, albeit roughly in line with expectations. What are we focused on ahead of friday all the things that rich cla reda was talking about its a twostage process first off, you dont want to be benumbed by these terrible numbers coming out just because theyre expected, doesnt mean theyre less horrific we have to log that in this is a terrible situation with up to 20 Million People in america losing their jobs. But the key right now, theyre trying to figure out, okay, we expected this, what comes next can we is there going to be residual damage to the economy, and if so, is the Federal Reserve they have to be ready with a set of programs to address that we talked with jim boarden this morning just as the number came out. Heres what he said. Theres no question this is very, very disruptive and we expect a very sharp increase in unemployment, a very sharp job loss, but we understand the shock and what were doing here. I think everyone gets the program. We have to invest in the National Health and get to the other side of this crisis. Take a look at the numbers here you have the 20 million that adp reported today versus a forecast of 21 million. There was no possibility of an upside surprise on this. If it was 10 million, if it was 5 million, it would still have been horrific. We would have thought it was under counting looking at depth at the adp number quickly, you see that Large Businesses and Small Businesses, the smallest, did all lose jobs but Small Businesses worse than the Large Businesses a 16 decline from the Employment Level for march reported in april at just 13 for the largest companies. So everybodys shedding workers here, and a big question looking at whether or not the ppe program is working, were just not seeing it right away here in these job numbers where its Small Businesses who are losing so many workers. I guess thats one question as to whether ppp is working in the immediate short term the other question is whatever level of success its had is how long that can last and whether they will extend that program and increase it significantly or whether we have to reopen the economy almost regardless for the impact it has on health. You know, wilf, i think your question kind of answers itself, if there is no cure for this thats going to replace reopening the economy. People are going to lose their jobs at increasingly because the High Frequency day that that im looking at shows two things. One is that stores are Still Closing and two is were not seeing much increase at all in the traffic numbers that show people either going back to work or going back to the mall. So we can try these programs the best thing we can do, i think, is to provide help to people to tide them over but i dont think we can restart an economy that is not ready for the people in it to restart. Steve liesman, thank you. Adding to the job losses, uber announcing thousands of layoffs earlier today as lyft gears up for earnings after the bell. Deirdre bosa has more on both companies for us deirdre . So, sara, we know that its going to be ugly the question is how bad and whether thats already baked into ride sharing share prices as you mentioned, uber laying off about 14 of its workforce last week lyft said it was cutting 17 of its workforce ride revenue has of course fallen off a cliff both companies have withdrawn their guidance so theyre doing everything that they can to cut costs right now. Unlike uber, lyft has not updated investors on its financial position since the pandemic began as of the end of last year, it had just under 3 billion in cash and Cash Equivalents, but remember, it also burned through more than 2. 5 billion last year in net losses, which was an ipo year now, also unlike uber, lyft does not have a food Delivery Business and only operates in north america, so it would have seen the effects of the coronavirus lock down, show up partway through the quarter, so it may not be as bad as what uber has experienced around the world. A key question as we go into these reports is whether theyre now seeing any kind of their businesses rebound as some states lift those lockdown measures now beyond the financials, guys, ride sharing is really facing this existential question what does their Business Model look like . What does the future of the gig economy look like in a world where social distancing is the norm thank you very much for that. Weve got 50 minutes left of the session. At the moment, we are flat s p just higher, dow just lower. Nasdaq holding on to a nice 1 or so of gains after the break, well speak with the sap ceo Christian Klein about his read on the state of Global Business and his companys efforts to develop a covid Contact Tracing app in germany. These days, its anything but business as usual. Thats why working together is more important than ever. At t is committed to keeping you connected. So you can keep your patients cared for. Your customers served. Your students inspired. And your employees closer than ever. Our network is resilient. Our people are strong. Our job is to keep your business connected. Its what weve always done. Its what well always do. 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 a check in on the markets with 47 minutes left of the session dow down 0. 2 , ns p flat, nasdaq with 1 gains. Tech at the top with that nasdaq performance. Utilities, energy, financials at the bottom today lets look at some individual market movers. Wendys rising after customers are returning and sales are turning around same store sales fell despite reports of beef shortages of some locations up to 7 . Activation rallying after an increase in engagement across all franchises the ceo weighed in on why consumption is up for him. Theres definitely an impact thats come from people being at home and having more time to be engaged, and i think we offer a form of entertainment thats very social, so when people are in a place where they are separate and they dont have the ability to connect socially, having this social lens that, you know, you view through entertainment is something i think is really valuable right now, and thats a big part of why our consumption is up. That stock up more than 5 today, 6 now. German chancellor Angela Merkel announcing the country will be taking steps to ease its coronavirus lockdown to help with easing measures, germany is calling on Technology Companies like sap and Deutsch Telecom to work on a Contact Tracing app to track infections in the country joining us to talk about those plans and the path forward is sap ceo Christian Klein. Good to have you here. What exactly are you working on and how is it different than what apple and google are doing in this country . Thanks for having me. Hope youre doing well we are tracing together with deutsche telekom, and the tracing app will help germany to see the lockdown in the country to come back to normal business very soon. We are on a very good path on delivering this to the market. What are your expectations as to whether this will help germanys return to Economic Activity and where do you stand given your Huge Customer base across europe on the likely shape of economic recovery in europe as a whole . Absolutely. This app will help germany tremendously to overcome the lockdown, to trace where there are infected people and to lower the curve and to not fall back again into a lockdown. On a global scale, we actually see already in china that our businesses are recovering. Theyre fully back to business we are meeting customers there are plans for the economy. In north america, we expect now further decisions to come back to a Good Business for us its even more important now that the marriage out of this crisis is strong. And as more and more customers realize it is important to get more resilient in such a crisis, i am confident we are providing exactly the solutions, what the customers need to succeed in the digital age and to get more resilient against such a crisis. Just on Contact Tracing, what about the privacy supporters or advocates that are concerned that its giving too much personal information, literally tracking them, to Companies Like yours or to governments that, when were done with this health crisis, could be used for malicious intent or just as an invasion of privacy . We deliver the app in the natural way and we were in contact with all Development Security committees of germany but also across europe so we made sure that we had the highest Security Standards so that the data of our citizens is extremely secure i wanted to ask, christian, about your own companys guidance recently released, 2020 guidance, everyone sort of surprised to the downside by a bit, but i think pleased that you reiterated the firms longterm targets, which are timed to come into place by 2023 does that suggest you see quite a big shortterm impact but no longterm impact by the p pandemic absolutely. Im talking to many ceos and many politicians sap was already talking about the intelligent enterprise before the crisis. Now in the crisis and after the crisis, all of these decisionmakers are looking for Intelligent Software to make their supply chain more resilient, of applying new Business Models to not, you know, get blocked by this lockdown of having intelligent commerce solutions, of having Intelligent Solutions to provide new flexible financing models to their customers. And all of these solutions are getting provided by sap. Only sap can provide the intelligent enterprise end to end. This is why we are so extremely confident about our financial ambition in 2023 well, youveobviously got a great read on Company Spending and what i. T. Budgets are looking like, and youve got a pretty good global picture which parts of the world are you seeing strength and which parts are you seeing weakness . As i said before, china is already coming back to business, and we see that there is a huge recovery of pipeline already the same is happening actually in europe. In north america, we are still waiting for some of the decisions here to come back to normal business. But a good thing is that everyone is realizing that a Digital Transformation is not optional its a must to succeed in the digital age. This is why we are so extremely confident we will overcome this crisis in a very strong fashion. Christian, until recently, you had a coceo the structure has changed of late part of the reason given was that the pandemic has changed the environment. Why has the environment meant the previous structure that had served for quite some time and served the company well was no longer the right structure we had a great start in the model. We made very important decisions for our customers to signify the organizational setup, to make it easier for our customers to do business with sap. Afterwards, we were heading into this unforeseen crisis, with lockdowns in one country after another, and in such a crisis, you have to do decisions, fast decisions, agile decisions, on an hourbyhour basis to safe guard our customers. Jen, i, everyone felt we had to come back to a clear leadership structure. Clear leadership is always needed for any Company Always whether youre making decisions every day or every hour. So why the kind of clear reason that that warranted her leaving the company . When you are acting in such a coleadership model, you have to make decisions on a frequent basis, and you have to share certain ways to go forward for the company. Jen and i were on many topics on the same page. Of course there are always a few topics where you have differences on opinions. And when this crisis kicked in, of course this accelerates because then you have to have the accountability to make clear decisions in an agile way. You cannot paralyze this company, and this is why we both felt that its the best for sap, our customer, and our employees to come back to a sole ceo leadership model okay. Im not trying to go over the point ad nauseam, but are you suggesting now that you kind of dont have any discussions with any of your lieutenants and its just your way is the way forward no matter what no, not so much about right or wrong of course, you know, there are a lot of important decisions to take, you know, about the way forward of sap and again, jen and i were for many of these p