Transcripts For CNBC Closing Bell 20240712 : vimarsana.com

CNBC Closing Bell July 12, 2024

Disturbing and said it could top 100,000 cases per day. And we are preparing to close the books on what has been a rough first half of the year its included a painful, record breaking sell off followed by a fast, record setting climb back up stocks set therefore for their best quarter in decades. 59 minutes left of the session morgan, we are up a full percent on the s p 500 yeah, were watching that last day of the quarter, last day of the first day my goodness. Coming up, as we wrap up the first half of the year, were going to focus on why not work from home. Twilio stocks up in 2020 well speak with the ceo about the demand for his companys Cloud Services during the pandemic mike is tracking the Market Action kayla has the highlights from fed chair powell and secretary mnuchins testimony on capitol hill and joining us to look ahead to the second half of the year is lori but mike, lets start off with you and a look at the market this is a good illustration of the old say a iing dont sho a tulle tape kind of a slow preholiday week we have pretty low volumes and yet theres this upward drift in share prices driven by those liquidity beneficiariebeneficia. We basically regained the levels we had last thursday friday was a pretty weak today recouped that. And the market is trying to rectify what would otherwise be this kind of declining, lower highs, shortterm pattern, but really openly what matters is market seems to have held this area for now around 3,000 and really not a lot of Downside Momentum given the liquidity backed, that leveraged investors dont seem overcommitted to stocks nobody has where nobody has to sell on pullbacks. Still working on the highs from early june not quite there yet. Really, this is a reflection of things making new highs that are not just stocks. Today, gold, new high. Inflation protected treasury, new high intermediate term treasuries, ne essentially, a lot of stuff is working. The risk parody etf, af a billion Dollar Exchange traded fund that includes gold, xh commodities, treasury inflation protected security, regular treasuries and stocks in varying proportions and using leverage to try to mitigate the volatility of those things or target volatility. Thats pretty much at a new high here this is a traditional stock bond mix. Vanguard balance fund. Thats outperformed stocks, too. So you see the smooth ride weve gotten based on what the fed has done like microsoft chrks almost act as bond like investments on days like today, guys. Yeah. Fif looks like you got a haircut im digging it you u touched on it with microsoft. The s p, its up 19 , but the nasdaq composite is up 30 quarter to date and its really been driven by these megacap tech names like microsoft and i think one of the key questions is going to be how sustainable is that moving forward given how much weight theyve had both in the s p and nasdaq right so the big five stocks of the market right now, all nasdaq stocks about almost a quarter of the s p and theyre about half of the nasdaq so clearly, that is where the bulk of the movement happens in these indexes. There has been a big rush of inflows into nasdaq specific fund funds. That often means its due for a pause. I think youve seen a little bit of maybe some overheating and complacency in those names, but the driving the big caps, they dont seem to be removing those forces anytime soon, to microsoft has a 1 yield. Theres a scarcity of long time cash flows thats what keeps those stocks working. Mike, thanks so much for that we just talked about, were now less than 1 higher on the s p and the dow is just fractionally negative jay powell and Steven Mnuchin just wrapping up testimony about the governments Coronavirus Response kayla has been watching and has the highlights for us. Todays hearing had a cleenlgal and collaborative and decidedly middle inning feel as both congress and top two economic officials acknowledge theres more work to do to stem the economic fallout from the coronavirus which is presenting new challenges both fed chair powell and treasury secretary mnuchin said the stimulus programs have largely worked and where they havent, like ppp, with leftover money and the main Street Lending program which is seeing stamped interest from borrowers, theyre open to making changes and refining the programs. One of the changes that came up over and over again was the need to help specifically overleveraged businesses and businesses where it might take quite a bit of time for consumers to change. Like hotels, retail and commercial real estate and the fed chair specifically said there needs to be a solution for companies who just simply cant take on more debt. More debt may not be the answer here. Debt doesnt solve every problem. Youve got people who cant currently service debt so thats a serious problem here that needs to get fixed and were racking our brains to see how it could be somethinging we could do by lending but thats really what we can do. Is create more debt. So of course those conversations will take shape at the end of july, but both powell and mnuchin said they are working with experts in their own agencies and members of congress to try to craft programs that meet the needs of the moment back to you. Did we get any guide from the opposite side of the two as it were as to what the other side could be improving on . Did we get my comments from the fed chair about specifically whether Unemployment Benefits for example have a huge impact if theyre extended or not we did not get a lot of meat on the bone on that specific topic, wilf, but as the hearing was going on, there was some news made by mitch mcconnell, the Top Republican in the senate, who said that basic protections for Unemployment Insurance should be extended to give americans added relief. Now exactly what that means and cwhat the nuance of how that wil play out in the next stimulus package is unclear that has been the focus of many late night conversations on capitol hill and in the Trump Administration about whether that program as it stands, should continue as is or whether it should berefined. Back to work bonuses or some other type of holiday to get workers back on to the payrolls and not collecting unploim insurance, but it does seem like its a double edged sword at this point thank you very much for that. Someone needs to get fed chair a slightly bigger mask that nose being too big and pointing out is a problem i know only too well. I will say, he pulled it down a couple of times to speak because perhaps he felt like he wasnt being understood or hurt, then he would pull it back up. It comes up a a lot its becoming a meme, so i just wanted to clarify it. On this final day of the first half of the year, the major averages on pace for their best quarterly gains in decades. Lets bring in lori, head of u. S. Equity strategy, rbc capital markets. Great to see you thanks for joining us. Clearly, weve had a massive bounceback following a big sell off. Are you a a little surprised weve held on to this bounce back in light of the spikes in coronavirus cases across the country . You know, i would say that the recent action of the tape has been a little surprising we have seen consistently since february, the market has responded to news flow on the virus, vaccine treatment, stimulus, and weve been getting pretty bad news here in the last week and a half, so the resilience is a little surprising, but what i would tell you on a day like today, were getting excite d about th market seems to be doing well, but look at the nasdaq versus the russell 2000 the nasdaq has become an expression of defensiveness. A way to play the market without really playing the market in a big risk on way. The russell is really your cyclical risk on tool and lagging on the day so that tells me theres not a lot of conviction and as mike pointed out, sort of held that 3,000 level lately as we look to the back half of the year, we have to realize were in phase three so to speak. We had the drawdown. It was very average with what you typically see in a recession. We had the initial rebound on par with what we typically see come out of a recession within the First Six Months of a recession ending now were on to the new normal and what i see have extended valuations, in some case, worse than what they were when the market peaked in february. I see an uncertain outlook i think the market is vulnerable to bad news. The news flow is starting to turn and as i talk to investor, i dont see a will the of conviction in this rally, which tells me the Institutional Community at least is not ready to step in and by buy dips to your point about nasdaq versus russell, i guess i could push back and ajouf got breadth hire energy higher, banks higher. Almost as if this is a day where everything broadly is working. The financials and Energy Stocks are up, but theyre not really leading the market today. And you know, i do look at the small caps as that real cyclical expression what weve seen is that the small caps have really been benefitting when investors really get some confidence back in the Economic Data we saw that trade really take off in mid may, for example, when Economic Data started surprising to the upside so yes, the financials are moving a little bit. I think the news flow on the stress test has confusing at best, but bottom line, i think you look at the small caps that has bellwether and its echoing what im hearing in the institutional conversations im having the people who have lost their jobs and think theyre coming back quickly may not be entirely right. Im hearing a lot of concerns about a second wave of corporate layoffs and you know, i really as i talk to investor, theyre worried about the 20 election and looking for a big correction around that. So i just dont see a lot of conviction in the Institutional Committee and i think youre seeing that a lack of follow through on the small caps exhibiting that. Yeah. And of course the small caps in the Second Quarter had become basically a proxy for the reopening trade overall. You could make the same case for copper and crude, some hospitality names as well. The fact you sound so cautious going into the second half of the year right now, whats an investor to do do you nak takai some money out of the market here and park anytime cash look at other Asset Classes . If you talk to the high Network Retail Community Institutional managers dont carry a lot of cash. They shift into secular growth, nasdaq and tech stocks that position is pretty high what weve told people is to expect a lot of twists and turns so we want to keep a balance by your favorite cyclical areas. For us, our favorite cyclical exposure is through industrials. On the growth side, we prefer health care over tech, were neutral tech, but we think health care gives you a much better valuation opportunity and we think utilities on the defensive side have made a nice case for themselves in cent months they didnt outperform in the initial drawdown tech stole their thunder youf got a safe place with dividends and attractive valuations i would pick the best. Were really stressing this idea of balance how do you explain the outperformance of the u. S. Versus the rest of the world in this past quarter . I mean it applies, apart from the dax, it applies even when you hook look a at the s p to the nasdaq if you think about the trade off on the march lows, theres no conviction. We saw stocks outperforms and when growth yoet performs in the u. S. , we see the u. S. Beat the rest of the world. What we have noticed since mid may, i wouldnt quite use the word breakdown, but it started the falter a little bit. Depending on what time period you look at, youre seeing strength and rest of world relative to u. S. One of the things weve talked about is investors seem to care about valuvaluations we think thats starting to have an impact on markets Global Investors have been very nervous all year about our election so we think that the fact that theres some concern about a changing of the guard in washington may also be contributing to some early rotation out of the u. S. And then frankly, if you just look at the virus counts, europe has flat ped the curve new york has flattened the cu e curve. Dr. Faucis counts are rising. What ive seen in the performance, as some of the work we do, suggests that u. S. Leadership trade is starting to come under pressure for good reason thanks for joining us up next, shares of twilio are up more than 120 on the year as the Cloud Communications Company Benefits from the work at home trend. Well speak with the ceo about his expectations for the second half and how his company is working to help track the coronavirus. Youre watching closing bell on cnbc usaa is made for whats next no matter what challenges life throws at you, were always here to help with Fast Response and Great Service and it doesnt stop there were also here to help look ahead thats why were helping members catch up by spreading any missed usaa insurance payments over the next twelve months so you can keep more cash in your pockets for when it matters most and thats just one of the many ways were here to help the military Community Find out more at usaa. Com 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. Welcome back shares of twilio have more than double d this year. To move operations to the cloud or engage with customers remotely joining us now is the ceo, jeff lawson thanks for being with us today thank you for having me given the fact that a theme weve been seeing, whether its your company or some of the others that have been on the tech side, the cloud side of benefitting from this work from home shift, this dinlgtization of really everything now, an acceleration in adoption of the technology maybe from what would have been a years long process to a months long process, where are you see iing the fastest adoptin and how sustainable sit as we go into the second half of the year yeah, every company is really having to adapt quickly to the changing environments and what were seeing is the world is mounting a 21st century Pandemic Response so what does that mean it means using the power of the internet of software. To rapidly recon figure for the changing realities ahead of us. So what weve seen is examples of retail, where you see you know, curb side pick up and contactless delivery you see health care with tele medicine, education with distance learning. Banking with contactless account opening. You see all those use cases that are arise iing and having to be built incredibly quickly in order for businesses to respond to the changing environment and what twilio offers is Digital Engagement the ability to do so using Digital Technologies software agility the able ility to build those solutions quickly, on the fly, as the needs are changing. As well as cloud scale the ability to build something and know its going to work when you turn it on also in terms of customers, but also worldwide, because this is a worldwide pandemic yeah. Im curious about the coronavirus efforts on behalf of the company as well. You just mentioned tele health and the work youre doing in this industry, but also the fact youre partnering with new york city for Contact Tracing obviously a key component of the reopening of economies right now and certainly it focuses especially as we hear from reports that a a number of states and a number of municipalities are maybe falling r short in terms of those tracing efforts. What a does it look like in terms of your partnership in new york and how efficient, how effective, are those methods you know, Contact Tracing is a great example where the world really had to innovate most of us, if youre not an epidemiologist, were unfamiliar with the term Contact Tracing several months ago but weve had to, as a society, deploy an at scale quickly we have a product called flex, which is designed to be integrated and extended by Developers Working in every kind of organization. So our flex Contact Center product has been used by organizations to enable work from home Contact Centers and things like that, but one of the unexpected areas was how flex could be used for organizations and governments to rapidly stand up Contact Tracing new york city is a great example, where Contact Tracing is when you find out somebody has covid, finding out who they have been in contact with. Contactingthose people and putting those people on a selfquarantine schedule and on a watch list to see if they end up having symptoms and if they then need to be Contact Traced that takes people. It takes experts as well as a lot of labor, in order to contact allthose people to successfully trace if you look at what new york city has been doing. They stood this up around june 1st and so far, the efforts put into it have been successful soing what were gioing to see s more focus put on Contact Tracing at city level and increasingly at state level, to enable states to more safely reopen because they know they have the response in place for when outbreaks inevitably will tart to happen the key thing is to be able to nip those in the bud as opposed to letting them go on and therefore, having to shut down again. So we are very

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