For a closer look at the economic fallout from the coronavirus situation. Steve is dig through that right now and wee chell check in wit. Kelly. As mentioned the nasdaq was heading back to its record high, but now its under pressure. Down about. 5 at last check. Bob. Its under pressure because the mega caps are finally underperforming, its about time in the is all part of that broad evening o broadenning out of the market. You can see it again today. Whats outperform something whats doing better . Stuff that wasnt doing well a month ago. Weve had double digit gains in some of these banks. Fifth third up 15 so far this week. All of them are up double digits. Look at the retailers, nobody cares about macys or nordstrom. A few people are trying to do something. Some of these stores are up double digits. Gap, kohls, all up in the is for the week overall. Same thing with industrials. These stocks were not market leaders a little while ago. American, theyve had a great week. Theyre all up double digits so far this week. Whats underperform sngt mega caps. This is why the nasdaq is weak. Look at facebook, apple, theyre not doing anything. Theyre being used as sources of found buy the other stuff thats now rallying that i just showed you. Take a look, my favorite quote of the day, zoom fatigue. My friend coined this phrase, i think its great, it illustrates whats going on. These stocks have had great runs and now theyre not because the economy is broadening out a little bit and the market is broadening out and theyre not the favorite kids on the block anymore. Thats called rotation. Guys, back to you. Thank you very much, bob. Lets go out to the bond market now and check in with rick santelli. Hi, rick. Hi, tyler. Big feature today of course was a very lackluster, if not below average fiveyear note option. I gave it a d. As one person pointed out, its not a wad thing that investors are looking elsewhere to put their money. Looks like equities is the game of choice these days. Yield curve, short maturity is unchanged. Long end, moving down about three basis points, you see the flattening going on there. But the big story continues to be in europe. Look at the italian ten year. In six weeks its gone from over 215 on yield to around 1. 5 . Thats a big move when the you put it on taich boop of a boom t yo, you can see how its overperformed. And finally, the two day dollar index, close the at sixweek low, its only having a small bounce today. Im anxious to see what steve sees in that beige book. Kelly, back to you. Rick santelli, were still waiting for Steve Liesman to thread through this beige book report. Meantime, lets go to diane, not for reaction as we had anticipated to the beige book, but maybe for a little bit of preview and her sense of where the economy stands right now. There have been some articles welcome, first of all, diane, always good to see you. There have been some articles lately in which some prominent democratic economists have said the economy may have a period of explosive growth in the Third Quarter and into the fourth quarter. That will have definitely political impact. But how meaningful would that kind of explosive growth actually be economically well, thats a good question. Economists are really debating now thousand discuss how to dis coming off of zero. All Economic Activity to some economic, the percent changes are large but as the percent of capacity of the economy and thinking of firms and how much of their capacity theyre actually using or how much of a restaurant is being used or if its even open at all, thats a very different equation. So you could have very large percent changes, but if you divide by zero, you get infinity, right . So double of nothing is still nothing. Think we really have to be cautious about how we talk about the rebounding growth and ramping up, because were coming off such an extraordinary low level. Yeah, thats exactly really to the point there, diane. I know now that steve is ready with some perspectives on the beige book, so lets go to him now. Hi, steve. Yeah, not a pretty beige book, tyler, but a little better than last one. Its an Economic Activity fell sharply in most districts. Consumer spending fell due to closures. One bright note here, auto sales were lower, but several districts did note improvement. There was sharp drops in manufacturing activity, home sales plunged in part as diane has reported due to lack of inventory. Thats the big issue in home sales right now. A large number of retail tenants missed or deferred their payments in the commercial real estate sector. Energy activity plummeted with wells rigs shutting down. Unemployment decreased in all districts. Prices were steady to down. The only good news, tyler, i was just doing this when you came to me is the word reopening appears 25 times in the beige book here. Ill read to you some of them live here. Outlooks were bleak, they said, in the dallas district and uncertain largely centered on the speed and scope of the reopening. Thats not that positive. Heres one from the overall thing here, scattered reports of macy pick up in early play as parts of the economy have started to reopen. And the st. Louis district onethird of Stores Expect to be open in three weeks. Plummeting Economic Activity, but hopes of reopening making a brief appearance in the beige book today, tyler. All right. Thank you very much, steve. Lets pick up the conversation there, diane. Steve, stick around for it. What do you what do you read into or take from what steve just reported, diane well, i think, you know, the hope is there on reopening, but the idea that theyre not going to, again, be ramping fully up, thats the real issue. Its a real challenge for many businesses out there and its one of the problems with the payroll Protection Plan is that many businesses were actually getting these loans and supposed to be hiring up as we were still in lockdown in many states. So the hope on reopening is there, but being able to get the volume of business you need, a restaurant needs 75 capacity to break even and thats with high volume days of thursday through sunday and usually a bar tab that helps to boost their margins. You cant do that in a socially distant environment. The retail deferrals of commercial office space, weve been getting reports across the board across clients whether they need it or not, theyre asking to not pay to conserve their cash at this point in time. That really points to pretty hard times for commercial real estate out there. And one thing were watching very closely is how many wages were cut. This was sort of an instantaneous reaction thinking it would be temporary. Are the furloughs going to be become permanent and will some of the wage cuts weve seen become more sustained as the economy reopens but doesnt completely turn that covid tainted spigot back on. Lets go to that point tyler, i can yeah, certainly. Im sorry, lousy delay with this. Im sorry. I wanted to pick right up on dianes comment right there with a line here from the cleveland fed in the beige book which says only onethird of contacts who reduce staff levels expect to rehire close to the full number when their businesses reopen. This expectation suggests employment is unlikely to climb back to pre pandemic levels quickly after businesses reopen. So theres a lot of talk, tyler, about this number which was in the last jobs clort wreport, wh think it was 18 million on layoffs and that was seen as a good sign. Now we look to the question of these businesses reopening, how many will come back . And it was also saint lieu twhas sa li lewis that said about onethird plan to bring them back. If businesses are not going to hire the full suite of workers who they let go, then that means a longer road back in terms of the jobs and also for the economy. Lets tease that thought out just a little bit more, diane. Weve lost many millions of jobs. What percent and we may have really very powerful job growth as people come back, in the millions months at a time. But how many of these jobs do you think are going to be lost permanently and then were going to get we hear today boeings going to lay people off. Get to october 1 and you Better Believe the airlines are going to start laying people off. Well, and thats the issue is that this is a enough fits and starts and reopening, but its a struggle to reopen to full capacity. One study out of university of chicago suggests that out of temporary furloughs, 42 will be permanent. If we took that number from the data on april alone, that was 18 million that said they were on temporary, that would be 7. 6 million that actually would be permanently laid off. We lost 8. 8 million jobs in the last recession in the Global Financial crisis, so thats really stunning the kinds of job losses that are more permanent out there. Or they certainly are going to be for a very long period of time. Science is moving at a break neck pace to try to get treatments and a vaccine. But 2021 is an eternity from now when youre still social distancing and trying ramp up. That really is zis tushing dist terms of whats to come. And the next shoe to drop is the drag on higher wage jobs. The first wave hit low wage, leisurely and hospitality. Health care was also hard hit, but were seeing it broaden out. My fear is youll see more permanence, even as were coming back, its wrong to think of it as a recovery like a normal recovery. As we were talking about earlier, those percent changes. We have to think of an economy operating at a small percentage of what it was previously. All right, diane, thank you very much. And steve, thanks to you as well. Kelly. Lets turn back to the markets with the dow up about 300 points after pulling back earlier. There you can see the gain is 1. 2 while the nasdaq is back into positive territory just fractionally and the s ps up 21 points. Lets bring in jeffrey solomon, the ceo and chair macman of cow its been on a tear these past few days. Would you tie this back to the bad treasury auction we had last hour maybe if Interest Rates are going up, that helps explain, you know, some of the market rotation here. Well, i think the market has if you look at individual sector, theres been a significant amount of sector rotation in nasdaq and tech stocks. I think the rally in financials has been a function the fact that people are expecting that we wont have as deep a recession, maybe, as we previously heard. And that low loss reserves for banks wont be as as bad as they were the last time we had a recession. And so i just think people are saying the books these are trading at discounts to book value. If you have any sort of a sanguine view, this is going to be great. Certainly see the travel air little bit more concerned about how they look long term. I think theres an interesting Inflection Point where the stay at home trade, to sow to spe tos not working and the cyclical are. These new trends, working from home, going out to eat a little bit less, if those are here to stay, what does that mean for the stocks well, theres a very big difference between whats happening in publicly traded markets and whats happening on main street. I think thats a difficult thing for people to be able to reconcile. In the Public Markets, Public Market investors generally look at three to five year time, discounted cash flows in plates place to evaluate the stocks today. People are saying theres going to be a dip in 2020 and maybe into 2021. But if you build a fiveyear cash flow analysis and expect a moderate rebound from here in terms of Economic Activity, you know, if you grow back into the kind of economy we had pre covid or even some large percentage of that, stocks look really cheap for a long time. Now, is this rally long in the tooth . Have we recovered further than we should have recovered maybe. But, again from you look underneath the inde indexes, pee working from home, health care, job discovery and tools of diagnostics, those are place wheres investors are putting significant amounts of capital. And that is the indexes significantly. Theres one other kind of thing i wonder about for next year and maybe 2022, which is commercial real estate. Its one thing to get through rebound and say things are looking better than we thought. But as we come out the other side of this the next few years, if people needless commercial office space, restaurants go out of business, places like kids gyms that i used to take my son to if theyre just not around on the other side of this and theres more commercial real estate defaults and the banks are exposed to that, do you have any concerns about what could play out there i think you have to allow yourself tothink about that possibility. And ive told people over and over again, our clients, that you have to, you know, prepare for the worst and then see where you go you know, see where you grow from there. Obviously if i were in commercial real estate, which im not, but if i were i would be preparing every possible way to make it to accommodate my clients and renters to come back to the office. Certainly were thinking about strategies on how do that. Were not going to be relationship deuci reducing our footprint entirely. But over time will we needless commercial real estate probably. If you look at the long term effect on commercial real estate, thats probably where it gets hit more significantly in the outer years. On the retail side, people are going to come back to stores. You know, i think there will be some rent abatements. I think there will be some depressed activity there. Its one of the sectors im least bullish on. But do i think its going to cascade into significant mortgage defaults and significant damage to bank capital issues i dont think thats actually going to happen because this is going to be playing out over an extended period of time and theres more than enough capital in the Banking System to absorb those. Ive even heard people say companies will need more commercial real estate because they need four times the space to put in the same number of people as they dr. Did before. Open question, i guess. Its possible. I was in the Office Yesterday for a little whys while because i missed it. Its empty. Weve got some prretrofitting ta we have to do and were not going to be back in the office for a while because we need the social distancing. But people realize were going to have a point in time where social distancing is not going to be the thing that were doing. If youre a long term vester in real estate, you have to recognize theres going to be a return to density in cities at some point. Its going to take time. But if you have the ability to bridge yourself from here to there, youll be fine long term. I think probably commercial real estate stocks reflect that. That would be my advice to investors. Were dealing with a very, very fastmoving situation. None of us could foresee where equity markets would be, you know, two weeks ago, three weeks ago, four weekends ago, yet here we are. Thats because the market is adjusting quickly to the fact that long term there are going to be solutions here. If you look out into 2022, twenty 3, beyond, were going to have a return to Economic Activity thats not similar to anything like what weve seen. Even to density that. Does seem like a contrarian call these days. Great to check in with you. Appreciate it. Good to see you, kelly. Tyler. All right. Check out moderna while youre at it. Stock is selling off after a sharp selloff. We will get a reality check from the dean at stanford about how close we maybe to a vaccine. Plus, spacex gearing up for its first space launch with nasa in just a couple hours, two hours from now. Elon musk describing it as a culmination of a dream. Could it be a dream for tesla share hold centeers . Wheel explain when power lunch returns. I am totally blind. Returns. el explain when power returns. Lel explain when power lunch returns. L explain when returns. Talk to your doctor, and call 8442342424. Thats why working together ist 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. Across america, Business Owners are figuring things out. Finding new ways to serve customers. Connect employees. And work with partners. Comcast business is right there with you. With a network that helps give you speed, reliability and security. And enough bandwidth to handle all your connected devices. Voice Solutions Like remote Call Forwarding and readable voicemail. And safe, convenient installation. When every connection counts, you can count on us. Get the connectivity your business needs. Call today. Comcast business. Welcome back. Weve got a news alert on waway. Deidre. Kelly, huawei cfo has just lost a court battle, one that could have seen her walk away free. Instead, the ulg paves the way for an extra diction hearing starting in june. It has been a flash point for diplomatic tensions between china, canada, and the u. S. Shes the daughter of huaweis founder and shes been in vancouver under house arrest since her december, 2018, arrest. Huawei continues to be in focus amid china u. S. Trade tensions of course huawei remaining on the blacklist. Back to now. Thank you very much. Deidre bosa. Lets move ton shares of moderna, they are under optimism as the vaccine is tempered. The stock was down by as much as 20 today. It has paired some of those losses as we learn more about the vaccine study. Lets bring in the dean of the Stanford School of medicine and meg terrell. Doctor, nice have you and, meg, nice to have you again. Meg, ill turn to you on the moderna question in a moment. Doctor, what are you seeing in terms of the covid caseload, the number of icu admissions are the numbers trending in a positive direction well, thank you, tyler. Its good to be with you. Yes, the numbers are trending in a positive direction. You know, the bay area went to shelter in place early. As a result, we never experienced the massive surge in patients that so tragically affected the new york area and other areas around the world. We continue to diagnosis new cases of covid19 in the bay area. And continue to provide care through our Health Care Delivery system for those patients. But, its a much lower number of patients and, by and large, fewer severely ill patients than were seeing in many parts of the country. But, that doesnt mean that we shouldnt