An upgrade yes, thats a hint. We start off tonight with hello from the other side hello from the other side are the markets trading like we are on the other side of the Coronavirus Crisis despite the spike in cases around the country . The reopening trade, that was on fire today and so far this week, cyclicals have been the big gainers, industrials, energy, materials and small caps what has under performed, Big Cap Technology guy, whats going on here . Are we on the other side as far as the stock market is concerned . I tell you whats going on here im going to offend 90 of our audience by saying despite the fact that adele is a huge fast money fan, that might be the most annoying song in the history of mankind. Thats why we used it. Notice i was closing my eyes. Hello from the other side thats why we keep playing it. Trying to zen out typically on a thursday im in a really good mood you play that and im miserable now. I dont know what to tell you. What i tell you about the other side is can we go on with what the show is about . Yes, we can go on you played the music at some point. At some point were going to start the show weve been talking about the materials for a while now. I dont think thats surprising anybody. The mining stocks have had tremendous moves i think you stay with them the names flying under the radar is a name like caterpillar they report at the end of the month. Youve got to take an upgrade at bank of america initiated with a buy at deutsche bank, i think a 165 price target. I think this thing prints 150 by the end of the month when they report earnings pete that jarn, what do you say . I would agree with guy. The parts of the market working well, you look at the industrial space, its been on fire all of a sudden of course we get those big hits every once in a while. We just had some huge buying yesterday in boeing. Stock had a nice move this morning and recaptured that move it made early after selling off. Its impressive to me. Youve got the industrials working. Suddenly the financials maybe are going to work, so thats pretty nice. And energy so youre looking at different pieces of the puzzle starting to work pretty nicely guy mentioned materials. Weve had an incredible amount of option activity just in the month of july when it looks like the basic materials have really started to kick in, steel, iron ore. Not the gold and silver and all the rest of it im talking about the types of materials that really go into that could be an economy that maybe starts to work in the future by the way, quietly in a nice big move, but look at copper very close to 3 its had a nice recovery so far. If you piece these things together, the outperformance and the nice gains in these cyclical areas of the economy, the underperformance of Big Cap Technology which had been the sort of bunker trade during the pandemic, do you think stocks are trading as if we are on the other side, if you will, of this pandemic i mean, in a way weve seen this before, right if you go back to may you had small caps rally, mid caps rally, value rally weve seen that before during the recovery the question is is it going to stick. I still question how quickly Economic Activity is able to recover to previrus levels. Im paying very close attention to the russell 2,000 as an example because its trading right back up to that 200day moving average where it failed a couple of months ago looking at high yield spreads as an example, nothing worrisome but theyve been creeping ever so wide since the beginning of june look at rates. Theyre not necessarily underwriting the move in stocks, the ten years right around 60 basis points all of those things still give me a little pause. I think about employment as an example. Theres this Silver Lining that a lot of jobs that were lost were temporary i think thats largely still intact but if you look at some of the increases in permanent job losses in june for example, that was to the tune of about 650,000. When i think about the broad market, i think the risk reward is still asymmetric to the downside eastern i youre ta i think that means volatility is probably still the order of the day. To play devils advocate, stocks are forwardlooking instruments. Shouldnt we be looking forward and past all this . When the markets bottomed back in march, did we see the full impact in the Economic Data yet . No, we did not, so maybe thats what were experiencing right now. Obviously the lack of visibility back in march was a real issue and obviously investors just hit the panic sell button there without any idea of what the hit to 2020 earnings was going to be, what the structural impacts to our economy and employment were going to be. Weve had this massive wall of liquidity that has been just thrown at our Capital Markets here and weve seen a massive benefit, at least as it relates to risk assets i think what jeff is talking about, though, is what are the scars were going to have from this down 50 in gdp in the q2 . What is it going to look like in the back half of the year . And we still dont know that right now. The way i see whats gone on over the last week or so, we have seen rotations out of tech in the past. What happens is that tech comes right back i think its really interesting that we woke up on monday morning and i think some people said, okay, we are looking to the other side, what is going to get us there because the stuff thats gone para bo pa parabolic is not going to make new highs. The s p 500 has not been able to get above 3200 3400 is the prior high to get there were going to need rotation in these other groups youre seeing banks rally on not horrible news. Youre seeing industrial, retail, small cap. That may get the s p to the new high. Guy im waiting for Saul Berenson and Carrie Matheson walk in there. He looks like hes on the set of homeland right now. Im going to give you a hint here you know where i am . Im on the playground where i spent most of my days in college. Im at West Philadelphia at the university of pennsylvania im at the fabulous inn at upenn right now. Im glat yd you satisfied th curiosity of an entire one person here. We are seeing the impact of the spike in coronavirus cases in the data steve, what are you seeing were seeing a definite impact of the surge of the virus on the economy when it comes to Consumer Spending and when it comes to employment. Looking at our road back barometer, lets include the chase card tracking spender that looks at jp morgan credit card information. Its down 10. 7 . Ill show you some interesting differences in that in just a second its worst than the best levels in later june. Looking at home based employment gauge of employees working, its down 30 in the hot spot states, florida, texas and arizona thats well off the best levels it achieved in late june while if you look at other states, the best levels are down 23 compared to february lets look at the history of this when you look at just arizona, florida and texas, they were leaving the country and putting employees back to work since mid june, it has dipped down and those three states now are lagging and the other states still down but picking up a bit of slack looking at the chase card spending data, we can separate that by card present and card not present. Card present, people buying online you can see what happened there. Card present people at Stores Coming back, its now flat to down if you look at the red line at the end, thats bumped back up people again buying more stuff online that shows you theres been some retrenchment in the opening up in the High Frequency data a very interesting correlation found here states with higher levels of spending, especially cardpresent restaurant spending, have seen more rapid growth of the virus in subsequent weeks a really interesting finding from jp morgan about people going to restaurants and getting the virus. Steve, if you had to marry what we heard from the beige book today with the road back barometer in terms of employees working, one standout line was that it was difficult to find employees to return to work. It would seem theres a little bit of friction there as well. Even if companies are reopening and they want to reopen and return their workforce, its difficult to find those workers. I think thats an issue i think the beige book closes a little bit before. The data im looking at is days old, the beige book, about a week or two old. I dont know how much the beige book would have picked up this recent round of the resurgence of the coronavirus and the impact it had on the data. Its taken a little while to show up, but its definitely shown up that issue of bringing employees back, there were three reasons put out there. One was child care, two was Health Concerns on the part of workers and three was the Unemployment Benefits. The Unemployment Benefits are going to work themselves out sooner or later and people are going to lose those benefits well see how much thats held back employment. Guy, the rule in television and if you publicly say you dont like a song, they play it more often. Hello from the other side the more you know once again. Steve always educating us on many different levels. We appreciate it guy . I happen to know for a fact that steves band covers that adele tune and they do it magnificently, number one. An hour ago, mark cuban tweeted something thats true. Were in the midst of the greatest economic experiment in the history of mankind basically. He doesnt know how its going to end i dont think anybody does weve created 6 trillion out of nowhere and it apparently is making its way into the stock market my big fear is that inflation despite what the fed says is definitely creeping higher in a very low growth environment napna which is an unhealthy mix. In terms of the data, which is exactly what you were talking about in terms of the concerns you had that have yet to play out. Right we talk about airlines all the time weve mentioned the tsa data you see this huge recovery off the bottom but still this massive gap between today and a year ago my question is where does that plateau, whether its travelers or anything else i go back to the june jobs report you have 40 of those 5 million jobs we gained were in leisure and hospitality. Looking forward to july, what does that look like . Again, looking forward to tend of the month when some of those additional Unemployment Benefits roll off, what does that do to the income gap thats been filled by fiscal policy . We have some breaking news here on American Airlines. If youre going to have mass layoffs, you need to notify employees of that 60 days in advance. American like other airlines expecting tor d ining to be dray smaller starting october 1st it has notified 25,000 warn notices will be sent out Ceo Doug Parker says they anticipate having 20,000 more employees than they need with the smaller schedule starting october 1st. Were not going to run down all of the numbers but here are the big funs flight attendants, 9,950 positions eliminated, father or mother followed by fleet service, maintenance and other related jobs, 3200 passenger service, gate agents eliminating 2900 jobs. Pilots eliminating 2500 jobs just like united when they sent out their notices within the last week or so, american is going to be offering early retirement packages as well as unpaid leaves of absences. There are thousands of employees who may take those packages. All be laid off. In fact its going to be a smaller number than that just as it is at united and other airlines clearly theyre going to be eliminating at least 20,000 positions and these notices are being sent out to 25,000 workers. Is this steeper than expected no. Its about what we expected. Basically youre looking at about 27 of the company this is what were seeing with all of the airlines. Theyre going to be anywhere between 2025 smaller in manpower come october 1st. Pete, are airlines a trade at all . I think they are a trade, but everything is a trade right now. Until we get the vaccine and there are so many different Drug Companies out there. We hear from moderna one day, pfizer one day, as ts astrazene. Its a lot like the Bank Earnings you go into the Bank Earnings and we were talking last week and you said i sound a little negative its not necessarily that im negative its where do we go from here . We have to wait that out look at Goldman Sachs today. When they delivered these un believable trading numbers, they crushed the earnings. Stock was up 4 . It immediate hi pullly pulled bk the same thing happened the day before with jp morgan. I think the financials are kind of in a very difficult spot. Getting back to the airlines, yeah, i think this is to be expected i think at some point in time when we get the absolute news there will be or at least theyre a little bit closer to a phase three of vaccines, then well start to see that flip around, i think, for the airlines but until then, its certainly just a trade there is no way you can invest in that right now. We have a news alert on a hack at twitter. Julia . Thats right. Were watching this story. Several high profile twitter accounts appear to have been hacked with comments posted about crypto currency. Jeff bezos, bill gates, elon musk, uber and apple the uber tweet read, quote, due to covid19 we are giving back 10 billion in bitcoin, all payments sent to our address below will be sent back doubled. They post a bitcoin address and say this is going on for 30 minutes. We reached out to twitter. They tell us they are looking into it and dont have any real answers as to whats going on here our colleagues at nbc indicate that money has already been sent nbc news reports that over 250 transactions have already been sent to that bitcoin address pretty striking there. Hopefully well get to the bottom of this dan nathan, this is targeting a few accounts this is not good news for twitter. The not good news for twitter. Not good news for anybody in the social space when you think about what is one of the biggest existential threats facing these companies. Its really surrounding trust and safety of their platforms. This goes back to the 2016 elections. This is not the sort of news you want to see in a heated election season if they can hack elon musk and bill gates, we know that theres others who are very important whose tweets and words matter. If they are coopted and hacked, theres much bigger implications than some bitcoin being tossed around on the internet. The accounts of corporations like apple as well as uber you know, as we get nearer and nearer the election, this is going to be a focus and could be a source of scrutiny by lawmakers on twitter and social media. 100 . So how my mind works is i go back to a conversation we had a week or so ago but a conversation weve been having for months about the imptato ned those are the companies in play right now. Pnw scares me a little bit theres something going on with fire eye in my opinion i think these Cyber Security firms are where you want to focus your attention twitter shared down 3. 5 . Pete ne jarn, is this a significant risk in your view to the twitter story . Oh yeah i think this is an absolute monster risk, quite honestly well have to see how this plays out. But to guys point, and you brought up fire eye, were always talking about cyber skur security thats a name that always seems to come up one of these days i think well see that name somewhere else other than where it is right now but i dont know when that day is going to come there are always call buyers in there, mel theres always speck haitian in th speculation in this name security is as big a deal as it is for facebook. It absolutely is for twitter just checking on social media stocks in the after hours, it is a twitter problem in that facebook shares are basically flat and snap shares flat as well i think twitter might end up getting punished disproportiona disproportionately there are questions fundamentally about the company. Anythi youve seen other Companies Like zoom that have had Security Problems where the stock hasnt reacted. Because twitter has some questions there, it could be hit harder the recovery may face challenges, but our next guest sees stocks grinding higher. Chris harvey is the head of Equity Securities for Wells Fargo Securities grind higher with what sort of leadership what we think is going to happen is youre going to continue to get this less bad news type situation or story whats going to happen is people are going to realize that we hit the worst in the economy slowly grinding back but well eventually grind higher. As that occurs all your stayathome plays will consolidate or underperform and we think youll have that rotation into your more economically sensitive names and thats exactly what were beginning to see. So should investors if they had been hiding out in names like amazon and netflix and facebook and microsoft, should they be looking at industrials and some of the more cyclical names . The simple is i think so. We want clients to pepper their portfolio with some of your deeper value names, some of your con tratrarian names, some of y sick hi ccyclical names some of these tech name versus h have had a heck of a run we want you to make some profits. Dan hey, chris, its dan. Just in the last 20 minutes we see the headline for American Airlines cross the wires that they melee off ay lay off 25,00. How are you thinking about some of the scars placed on our economy Going Forward despite the news in the next couple quarters that might be less bad to q2 are we going to be dealing with structural unemployment in 2021 thats going to be a huge damper on Consumer SpendingGoing Forward . A couple things, dan. One, our biggest fear is not this big selloff in the shortterm our biggest fear is some sort of meltdown because people are positioned for this meltdown we have 0 interest rates. Thats going to cause speculation to come back in. Our story about this less bad scenario continues to play out now back to your situation what we roworry about in that runu