May including everything from Student Loans to car payments to mortgages, the number more than triple that of april its the latest sign Unemployment Benefits and stimulus checks arent enough to fully cover the expenses what happens to the consumer and the economy and the stock market its not good its something weve alluded to for a while. Go and look at wells fargos First Quarter they reported in the middle of april. They took a 14 billion loan loss provision which was up 413 year over year by the way, when they report i think in the middle of july, that number is probably going to go up again and further anecd e anecdotal proof that wells fargo is trading below tangible book value. The banks have been trying to tell the story, but the Broader Market has sort of been impervious to it until recently. Well see. Again, ill say i am not all that optimistic about where the consumer is 69 months from now. Clearly i hope im wrong but behind closed doors, a lot of companies are saying weve learned to do more with less, lets continue this moving forward. Stimulus wont last forever deferments and forbearance dont last forever what happens then . They get extended remember, were in an Election Year ugly, but its not going to end any time soon. This close to alltime highs, youve got to still be buying the market i dont think its about a program right now. I dont think its about the economy. I think you hit it last time i was on the show. Its about bridging that gap between now and when things normalize. If you can say that the fed is going to outweigh it, the stimulus is going to outweigh it, politicians are going to outweigh it and were getting closer to a therapy or a vaccine, buy the margin. Karen, what do you think . The banks obviously will see the first immediate buyin whether or not the consumer is going to pay once the deferment or forbearance period expires what do you think is going to happen well, i think we are going to see once this round expires, i agree with steve i think that bridge will get extended further some people are just not going to be able to make those payments regardless of how far the bridge goes. For a while i thought there was a disconnect between the rebound in the stock market more broadly and the rebound in the banks, which has been much more muted i think those two will need to converge at some point, whether thats the market goes down and the banks go down lei do think that a lot o the Student Loans are government backed, Mortgage Loans are government backed. I think there is somewhat of a net there, not that it wouldnt be really ugly in the interim. But i also think the banks came into this really well capitalized and i think we are going to see big provisions. We saw one the First Quarter well see more but i think thats why the stocks are here, because the anticipation of big provision. So i think that some really bad Economic Data is priced in already. Tim to the banks, not necessarily to the market. Jobless claims this morning didnt give you a lot of relief. Its kind of on again off again in terms of the macro. Its hard to disagree with everyones assessment that this is a bridge to the other side and that the consumer on the other side is probably going to be, look, we went into this at peak employment and we went into this at a place where consumers had started to see some wage growth and that was very encouraging. If you look at the stocks that have rallied in the market, yes, banks have not taken part and have underperformed meaningfully i also just think that consumers or creditors or debtors can be opportunistic in this environment. I think anyone who has the ability to withhold payment will withhold payment People Holding onto their money as long as possible is also a function of all the forbearance and all the relief thats come in here. Im not sure were getting a real read on where the consumer is able to pay these loans or whether theyre putting them off because they can i think you have to be careful on that side of this trade in the same way were talking about the consumer who in many cases is making more money with unemployment than with their regular salary there are a lot of things going on right now which distort the picture. Ppp prevents businesses from right sizing their business at least for right now. We have the stimulus checks which are sort of inflating what consumers have in terms of Discretionary Income you have forbearance and deferrals which allow consumers to not pay certain loans and maybe have a little bit more discretionary to do other things does that bridge bring us to the other side to figure out what some of those consumers will never be able to pay yeah. I think the people that came into this strong will leave strong i think theres been an overlay that if you turn on the news or listen to these programs, youre incentivized not to pay. Youre incentivized to hold onto your money i think people are i dont want to say synthetically holding onto the money that dont need to, but there are people that can make these payments that arent, there are people staying on unemployment that shouldnt and i think theyre stronger than we think they are and they will be stronger on the other side. Some subset of people without there wont be able to pay artificially right now theyre okay and they can open up their pocketbooks and retail sales can jump but when these programs end, thats over. Thats over and it has to end. Listen, full disclosure, i mean, again i think people who watch the show and i know you get tired of hearing me say it and ill say it again for the 100th time, in my opinion some of the biggest villains amongst many of the century are going to be central bankers. Go back to that Jerome Powell 60 minutes where he was asked where does this money come from and he essentially said created out of thin air that infuriates people part of this is at the foot of the fed. W pay say why should i pay my bills when they can just create money out of thin air . I dont think thats discussed enough if it happens again in terms of another round, its just going to get worse that cycle, that circle will become something you cant extricate yourself from, in my opinion. I agree with guy. Were equally frustrated as peers on what the fed has done in overstaying their welcome in the context of this question, isnt the fed going to nationalize their debts as well . I mean, are people not paying Student Loans because they think at some point the government is actually going to take them on i hate this. Thats part of Central Banks overstaying their whaelcome and nationalizing the consumer Balance Sheet. I think were going to see a lot more of that in the fall. Karen the fed is funding that debt that the treasury will need to take on. I agree with steven that its an Election Year and i think the possibility of us not getting any more sort of candy is very low. I dont want to bet against the fed even though i think th market is high given where this economy is loan defaults creating more turmoil in the economy you said this is not a good reflection of where we are. I do think the data is a step in the right direction its more of a temporary improvement. Consumers were facing an extreme amount of pentup demand so you saw a bing in may after an equally downsized april. Look where we are in the longer term consumption is still down 8 from prepandemic levels in january. On the waiver side, yes, we did add surprisingly 2 million jobs in the latest report in net were still at a loss of about 20 million to get to a longer term sustainable pathway to recovery, its going to be slow and bumpy and quite a ways before we can talk about a sustainable improvement. As an economist, lindsey, what point in time do you think youll get the data points that reflect the true state of the consumer and the economy is it a month, three months, two quarters i do think the data right now reflects the true state of the consumer, but its very volatile the consumer is in a very volatile state, dramatically shifting their spending patterns month to month it reflects the chaotic nature of the consumer at this point. I think what youre getting is when do we see more stable data points to get a better sense of the underlying trend i dont think were going to get that to closer to the end of the year or 2021 and we start to see some stability in the economy and we start to get some stability in terms of the labor market as businesses reopen back to a more normal level of capacity in the marketplace. Right now were talking about some businesses reopening, some waiting until the restrictions change to a 100 capacity. Theres still a lot of volatility in terms of how business is going to function in the marketplace. I dont think were going to see that true level of calming trend until sometime at the end of the year or next. In terms of loans, im curious as to how you take a look at this figure of 100 million loans that arent being paid in the latest month and also what the ripple effects of that are what was interesting in this wall street journal article is that they noted that in doing a credit score, missed payments are noted and are factored in but not loans in deferral of some sort. So a bank or a lender could look at the state of a consumer and may not be getting the full picture. I ask this knowing you are a former mortgage analyst. I think theres two diverging things in terms of the Consumer Sector on one hand there are millions of americans skipping payments particularly Student Loans, auto loans. This reflects both increasingly favorable terms in terms of the debt holders its also reflecting reduced financial conditions in terms of the individual and the household. The pandemic has brought millions of businesses and workers displaced. On the other hand, were also seeing americans pay down debt at this point, particularly Credit Card Debt this is more a reflection of reduced expenditures because we have been in lockdown for the past several months. But were seeing favorable Unemployment Benefits, stimulus checks, other Government Programs some americans have benefitted from that and theyre taking that opportunity to pay down debt levels. Were seeing two very different themes when it comes to the debt market some may emerge from the pandemic in stronger financial footing while others may face increased financial ruin. Thank you karen, especially the banks are preparing for the stress test next week how do you view how theyre going to do in these tests and whether or not there might be extra stresses put on them in this process this time around . Well, i think the stress tests were obviously put in place post 2008 crisis for terrible scenarios and we actually are in one. However, sort of ironic is ever the stress test were to give banks a little more room and be a little easier graders, that would be now because they really want those banks to keep functioning. I dont know we talked yesterday about the idea of jp morgan having a dividend cut priced into their options. I really dont think so. I think were going to see goodmagoo good marks across the board in this stress test i hope it helping bank equity. Tesla upping its price shares. Its interesting to see stocks trade up in todays session the chinese equivalent traded at an alltime high on record volume guy . Tesla befuddles me and i understand it but a lot of people get it and i dont. What i have seen for the past month or so is the comments going pack back to the presiden interview in january where he brought up elon musk ever since that point the stock has only gone higher in further proof in terms of how impervious the stock is, 700 at the end of may elon musk said the stock was too expensive. Now were 43 or so higher grasso, is this one of these trades where we hop on board and enjoy the ride yeah. You have to hop on board and enjoy the ride im a little concerned over the nosebleed territory, but you could have said that all the way from the price where they raised money at 767 or there abouts the stock, its ability to work off overbrought on an rsi is phenomenal if i look at the chart now, it was overbought at 1,025, traded down to 990 and worked off the overbought status. Its no longer overbought. Remember, they had a head start. We are talking about all these names prepandemic we talked about all the competition, ford, gm, bmw but all of those Car Companies took a stutter step. Tesla has been keeping at it while the other ones are making face masks and inhalers. What you have now is tesla spread the gap between them and tesla. I think you kind of ride this one out, look for support in the name its obviously around the 20day moving average is 900. So you have a lot of room between here and then but thats your exit strategy in tesla, keep playing higher and play it for a 900 exit on the way down. We are just Getting Started here on fast money. Well hear from the ceo of ripp ripple first, Kim Kardashian and harley quinn, what do they have in common 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. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Talk to your financial professional or consultant i geh. Common bird. E. Ooh look over here something much better. There it is. Peacock, included with xfinity x1. Remarkable. Fascinating. Very. It streams tons of your favorite shows and movies, plus the latest in sports news and. Huh run the newest streaming app has landed on xfinity x1. Now thats. Simple. Easy. Awesome. Xfinity x1 just got even better with peacock premium included at no additional cost. No strings attached. Just say peacock into your voice remote to start watching today. Spotify soaring today to a new alltime high following a report that spotify has signed an exclusive deal with Kim Kardashian west for a podcast exploring her work with wrongful conditions dc comics stock has gained more than 70 prn this quarter big things happening at spot apparently grass owe, wh grasso whats your take . Its nosebleed territory. The viewer can do whatever they want because the exit is up to the customer when you look at podcasts, the headwind that spotify had was amazon because if amazon got in here, it was going to kill everybody else in the space. That doesnt seem to be happening. When you look on a chart, were not out of gas just yet but it speaks to the positioning here that no one thought it would rip this high this fast. I saw unusual option activity about a week ago thats why i bought it im staying long just a little bit longer. Guy, quickly on spot, your thoughts great call by steve if he says take the money and run, you have to listen to him check out shares of kroger falling into the red today shares of the grocery chain are up more than 50 from march lows karen, what do you make of this move i think thats the part that being up so much from the bottom is really, you know, i think theres some disappointment theyre not giving more guidance on the rest of the year. I dont know how anyone can give guidance, actually remember back a year or two ago when the amazon threat seemed to be an insurmountable obstacle. The business is doing a good job but that business has such thin margins that its not for me i dont own it. Take a look at u. S. Steel falling double digits after the company warned of Second Quarter losses the company raising 429 million for a common stock offering. The story there is a company that has enormous both gdp sensitivity but a levered Balance Sheet going into covid19 that was part of a threeyear trend really and a trend that some of this was trade war and the irony was we were protecting Steel Companies and throwing tariffs u. S. Steel went from 45 down to 5 theyre not unlike so other companies we spent time talking about in the last month that if they can raise money here, they will its about having liquidity. I believe in the trade to be clear, this is a stock that i think has a lot of kind of default dynamics priced into it and i dont even think theyre close to that. They raised money defensively but its not a trade for the feint of heart theyre not going to have the financial distress that the Balance Sheet is priced in. I agree with tim. He nailed it i was going to mention prior to all the talk about trade wars and what have you, u. S. Steel was a 43 stock headed probably to 50 all the steel stocks were crushing it. Now you see where they are a year and a half, two years later. Its fascinating quickly about kroger and i hear what karens saying, its actually a very good quarter margins were much better operating income was 950 up to 1. 4 billion now the only reason the stock is lower is because they didnt want to give guidance. I think you buy kroger on this we weakness at leaf blowers. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. 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