Treasury secretary digging in his heels on the topic of reopening saying, we cant shut down the economy again, sarah. Gary he cou gary cohn joins us and last month there were more bubbles to come hell join us to weigh in on todays down turn. And the black swan of 020, thats what sequoia labelled the pandemic in march. Well talk to partner roelof botha about how he views the startup landscape right now lets get to the selloff and our team of reporters to break it down mike santoli tracking the plunge Brian Sullivan on energy stocks. Meg terrell covering one big area of the market for the market, the rise in covid19 cases in some states mike, start us off with the broader ugly action that youre seeing in the final hour of trade. There was an easy way to deal with that and hard way we took the hard way a sharp and violent flush, maybe the start of something deeper. I want to point out stops along the way. The easy way is to flatten out the rally and go side ways were below a 5 pullback. This runup, we had had three 5 pull backs but only 5 that didnt give you resistance on the way up. Its unclear if it will break things if we continue lower. Other points to look at. 2980 p that brings the dividend back to 2 . Its over several years and then 2950 maybe it will be tested you can kind of stage it down there. Until you get to that 2900 area, youre still in that zone. It does seem as though this market tends to overshoot. It seemed to overshoot and be persistent well see how things go. Around 2900 too. I think this is a key area we spent a lot of time in the zone in bull markets, pays to buy pullbacks the 50 day average well see if thats what were, guys obviously, mike this is broad based all 11 sectors are lower what can you glean from where the pain is this most severe right now . The energy, financials what other stocks are bearing the brunt of it . What does it tell us about the why . It is giving people hope that market was positioning for an acceleration in the economy. So were having a lot of money drain away from there. Its a very defensive move altogether you have big tech holding up slightly better than rest of the market its familiar when bonds rally and go down. That is the direction of movement its a rethink of the reopening is going to be smooth and strong but it also could be those sectors which were in deep down trends had just bounced way too far in a hurry mike, thank you for that defensive the operativeword. The dollar is higher gold is higher oil though moving in the opposite direction down about 9. 5 . Energy, the worst performing sector, Brian Sullivan hag a look at what is driving that move hey, brian what is not driving that move is us driving. I guess. The recovery maybe a little slower than people think thats one of the factors. All right. Lets go through the four things that are going on with oil and oil stocks number one, many people you talk to say, listen, the recovery is already priced in. How much more do we want here . Were not going to get back to 100 normal any time soon. This is come far fast. Jet fuel, it remains weak. It is 30 of total Global Demand for the use of refined products. Guess what yeah, the tsa numbers, theyre coming up. Theyre still down 90, 95 from this time last year. Inventories, dont lose sight of that they are still high. Are they topping over the tanks . No but theyre still very close to that more oil by the way continues to be imported into the United States and from if an equity point, guys, you have some stocks, not all, but some that are not only at or well above the analyst targets. You have exxonmobil sitting at the average target look at the indices and etfs getting hit die. The xop is down 8 of the oih that, is much worse the oih is smaller etf mostly composed of Smaller Services companies so if you dont believe there is going to be a production recovery, avoid that etf they get paid when the chevrons and exxons spend more. Capital spending, guys, as we know, has come down. Thats almost all services companies. Thats why that is down there. But again, we have come back pretty quickly the average big cap stock in energy is up 38 this quarter despite the fact that a few days ago the eia cut the demand for 2021 forecast for the second time soft we look out we look at demand. Yeah, its Getting Better. But we got a long way to go. Supplies are still high. Its spooking the Energy Market today. Brian if you tuned into our cnbc pro event, an oil investor, i guess hes done well indeed. Great timing on that particular call brian, my quick followup question as you mentioned the smaller ames back in march a big question mark about whether they survive or not has that risk itself gone up over the course of the last couple days . Are we really tracking the equities and the oil prices which as we say already is down 10 soor so today. Thats a great question we talked about it again the risk of bankruptcies has not slowed at all. Because the way Oil Companies work, ill be quick here, is that twice a year, banks come in and they look at the value of their reserve assets the value of the oil under the ground we literally just got through that first cycle wh this covid19 hit and oil prices collapsed p companies were able to sort of maintain that six month reserve value on their books if oil stays low, guys, then in the fall when the banks come back in, theyre going to say oh, you know, frost and oil and exploration are valued 50 too much the value of your reserves just dropped by 50 and now you broke all the could have enants and, by the way, give us our money. So were going to have to wait when that reserve thing kicks in and look and revalue the oil assets under the ground. Thats the key. The problems are not solved. Brian, thank you very much. The second worst is financials banks getting slammed today. Down over 7 18. 5 . Down some 16 since mondays intraday high. This does come off a terrific one month rally. Up about 25 from the middle of may. Clearly that impacts ability for banks to earn. Here are some names most exposed to Net Interest Income the exposures do match up year to date with share price performance, morgue an stanley, outperforming citi and wells fargo. On top of that, banks very much part of the bucket of cyclical value stocks that all year have been punished when fears over the economy and the virus spike as they have in the last few days the s p 500 is down 5. 5 , you koshgs framers, why isnt it even worse you could also frame it the other way. The why isnt it better when you consider this week the tone from most management teams was constructive the morgue an stanley conference consumer quality looks stable and deferrals continue to decline. All card issues spending off the march and april lows and, three, expecting most banks to maintain their dividends. That said, wells fargo is less constructive and expected to cut the dividends. They suggest that reserves will continue to need to rise in the Second Quarter it will be to varying levels but certainly a very big rotation today, sarah. They continue and banks very much in the eye of that storm. Was that really the big weight here as we discussed yesterday with mike, the kind of fed futures and whether were going to have rate hikes didnt really change p no ones expecting rate hike as you aptly ay. The clearly, there is always the potential for the fed to decide to start hiking if things improve. Jay powell can change his tune look at what the ten year has done we nearly got up to 1 just five or six days ago. Were now down to 0. 66 . And so whether youre saying youre tracking the expectations of rate hikes or rate cuts or not, they do always track what the ten year and 30 years bond does there is the ten year. That is just today there is also not a v shape recovery talk today. Its a economic softness and what is this recovery going to look like . Well take a look at the banks one factor weigh on the market is an uptick in coronavirus cases in some cases. We have details on the hot spots to watch meg . Hey, sayer yachlt trah. Theyre in the south and the west florida, texas and arizona in particular were also seeing trends up in california and nevada, utah. Looking here at texas, you can see the cases are starting to increase that initial reopen at the end of april theyre only ticking up from there. Red line is test positive rate that is also increasing in texas. So the increase in cases cant just be described by increases in testing youre also seeing infection spreading there as well. Looking at florida, youre seeing a similar trend after the stay at home order expired on may 4th, youre seeing cases increase. The test positive rate, it is under 5 , it is also ticking upward and in arizona, the trends are really the most pronounced st icu availability is down below 30 there. The test positive rates approaching 14 . Of course, you are seeing those cases tick up as well. And now as were looking at these data, a very high profile model is updated today it its been cited by the white house. The it received the fair share of criticism but this model does show that second wave of deaths could start to happen in september this is all based on what we do from here, guys, in terms of our social distancing, our gatherings, and they say they hope to see the model proven wrong by swift actions of governments and individuals to reduce tra reduce transmission. The states with the earliest upticks in death are florida, arizona, georgia, and colorado guys i wonder how important the mask wearing culture is in some of these places. And also social distancing you know, when we look at europe and china and japan and see that they have been able to reopen so far without any major surge. We also see pictures and hear anecdotes that theyre following the rules, especially on masks what are you seeing out west yeah. I think there are definite cultural differences between countries. What is really fascinating to me is that places in the United States, you and i were talking earlier about georgia and florida. Were not seeing, you know, you wouldnt imagine major cultural differences. But youre seeing a uptiblg ck florida. Youre right cultural differences, adherence to Wearing Masks and social distancing guidelines may describe why Different Countries are seeing such different rates the who just updating the guidance on mask wearing saying we should be Wearing Masks if were wearing cloth masks with three layers to them. I think most of us are not doing that so a lot we can learn about that meg, thanks so much for that. Quick check in on the market you can see down 6. 3 on the dow. 1700 points. By the way, not inconceivable we could see the Circuit Breakers kick in. That would have to happen before 3 25 p. M after that, no Circuit Breakers no matter the level of the trade. Still ahead, navigating the selloff. We have a big lineup to help you make sense of the market down turn including jeff sherman, National Former counsel director and Goldman Sachs coo gary cohen. Youre watching closing bell on cnbc. Need better sleep . Try natures bounty sleep3, a unique trilayer supplement that calms you, helps you fall asleep faster and stay asleep longer great sleep comes naturally with sleep3. Only from natures bounty. vo at whether on the track,that exhor the everyday drive. Ty, today, that philosophy extends to how we connect with you. We call it, audi at your door. Whether a remote test drive, shopping, tradein, or even service pickup, audi at your door can do this and more at participating dealers. The premium audi dealership experience, on your terms. Audi at your door. Joining us for more on the selloff, jeffrey sherman, chief Investment Officer and dan suzuki good to have you here. Jeff, how do you see the why for the magnitude of the selling are you pinning it on the fed, on the cases, on just a need to pull back after an extreme run what is it yeah. Its an extreme run across all risk assets. If you look earlier in the week, we had the rsi, technical indicator looking at the last 14 days roughly half of the s p 500 getting north of 70 north of 70 and the relative strength indicator. What that means is that theyre overbought and so all it took was a little trepidation in the market to really get things going. You can see how it really exacerbated as the days went on. And i think what you see here is that this is the fed did what they could they said, look, we have given you low Interest Rates were telling you weregoing t be low for a while we dont have negative Interest Rates on the table right now maybe we do some form of yield curve control. At this stage, what they want to do is communicate were going to commit to low rates for long period of time and thats our way of saying were here to support the market theyre still doing 120 billion a month in quaun take theive easing what the fed said themselves is theyve done all they k but there is too much optimism in the market i was listening to the report before listening to the energy side you dont see the gasoline demand you dont see tsa traffic. There is a lot of parts of the economy not showing the v shape. The but they priced that in. Theyre going to be susceptible to economic volatility as we get more data through. As you mentioned too, the virus case is accelerating in certain parts of the country is reason for concern here and so its something the tone out there has been very, very bullish. Its been ignoring that economic d data he is not looking at market performance. He is looking at the Economic Data and it doesnt corroborate the information weve seen. In terms of what is priced in this, yields closed to 1 to now down to 0. 6 or so what you would say is more likely a rate hike again by the fed, by the end of 2022 or the fed going negative we dug our heels in we hope the fed doesnt go negative we have seen that experiment just not work in other parts of the world. And so i think thats the old quote, definition of insanity is doing the same thing over and over again and expecting better results. So im going to say the rate hike is more likely. Jay powell told you yesterday, regardless, theyre not thinking about hiking, hes trying to nail that to investors heads. I dont blame the said for the selloff. I blame the virus and the optimism out there we see the desk studies that talk about a second wave this is not a second wave. Were not through the first wave yet. When we look at the table reservations, you look at the gasoline demand that they put out, what youre finding is were on the cusp p of turning it looks like a lot of the worst is behind us it doesnt look like were out of the woods yet still, i he dont think the fed wants to go negative they know that it would really cause problems in the bank willing system here in the u. S. And give them the largest Banking System in the world and the reserve currency is challenging for us to weather that globally. So, dan, what are you doing what is your Investment Advice is this the time to take profits . I dont think this is the time to be swinging for the fences here. I think there is a tremendous amount of uncertainty on both sides. I agree with what jeffrey said at the same time, you know, there is a lot of positive things going on right now in terms of the magnitude and stimulus and also, you know, the fact that jeffrey mentioned that were sort of hopefully finding a bottom here. I think the reality is as bad as things are on an absolute basis, theyre Getting Better i mean all the data youre seeing that. Youre seeing is telling that you the data we got out this morning is telling that you. So my guess is that six months from now things are going to be better than they are today, not worse. It is still bad levels i think its hard to be very take an extreme bearish position when things are Getting Better remember, the market cares less about the absolutes of good and bad. And more about better than worse. So, yes, there are risks to the recovery there could be second and Third Order Effects that start to weigh on the recovery. I think here while things are Getting Better, you have to be nimble and rent this with an option to buy this rally later the i dont think it makes sense to be extremely bullish or bearish here in this situation. If you had to pick one sector to buy today, what it would be from the sector perspective, the main focus is about balance. If you want to play to the up side, energy is the most leverage to the upside i think you want to hedge that with high quality or defensive positioning on the bearish side. Thats a bold call on energy. Thank you both very much we have a little less than 40 minutes to go before the closing bell the dow is down almost 7 . The s p 500 down 5. 6 . Only two stocks are green in the s p 500. Still ahead, scott minerd warne there were more bubbles to come. Well see if this is the start of a larger down turn. A quick check on bonds as weve been talking about, bonds are in demand. The safe haven trade is in demand ten year yield,. 65 were seeing the lowest levels there since early june two year note yield though remains bate higher. Well be right back on closing bell. Lets have a check on the markets. The s p 500 is down 8 this is set to be the fourth worse points decline ever. That stands at 6. 8 now. Nasdaq down 5 all of the sectors are lower the best performer, staples, down 3. 6 . Energy, financials, materials, all down 8 or more. Lets have a look at individual market movers. Starbucks is sliding the current sales trend remain challenge and believe Near Term Upside is limited. Grub hub bucking the broader trend. That stock rising on merger plans with just eat. The deal valued grub hub at 7. 3 billion in equity its up 4. 6 or so uber suffering today because of missing out on that deal yeah and the overall market, too. After the break, well talk exclusively with director gary cohn his thought on the debate in washington next. Incomparable design makes it beautiful. State of the Art Technology makes it brilliant. The lexus nx experience the crossover in its most visionary form. Experience amazing at your lexus dealer. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward a