Government the talks right now on ice and well hear what leadership from both sides of the aisle is saying without that stimulus money, major cities in the United States are kind of stuck between a rock and a hard place and a new report lays out how bad things could get power lunch starts right now it does welcome the power lunch. Tech continues power ahead with the nasdaq leading the way near its record high which it hit on august 7th one tech stock not joining the party. That would be cisco having its worst day since 2011 even though the s p isnt there yet, its pretty close but not there yet. Check out the names hitting record highs tyler, back to you the stimulus stalemate in washington continues today threatening to further delay payments to struggling americans and failing to provide much of a boost to the u. S. Economy. Lots of big names on cnbc talking about the issue today. Lets go to eamon for more. Reporter its a total stand still. While theres not a lot of real negotiations going on, theres a lot of rhetoric and it took place on cnbc earlier in the day. Lets start with kevin brady the congress and the economic adviser who are both on cnbc earlier today laying out the republican and white house perspectives on whats going on here you get a sense listening to them of just how far apart the two sides really are here they are. Theyre asking too much money. 3. 5 trillion. We already spent over 3 trillion so much of the democratic asks are really liberal left wish lists. We dont want. Voting rights and aids to aliens and to forso forth thats not our game. The president cant accept that. I would start over. Rather than start over and stuff spending into that, what do we really need . Reporter kevin brady saying there he would start over in these negotiations that gives you a sense of just where we are basically, nowhere in terms of putting together a deal. The democrats are at 3. 4 trillion in their proposal the republicans are somewhere around 1 trillion and the two sides cant seem to meet in the middle jack lui was on cnbc today explaining why he thinks the stalemate is so dangerous. I have to tell you that were at a moment of crisis and the stalemate is playing with fire as jim said in your last half hour, we learned in the Great Recession that if you dont continue to respond forcefully in a crisis you pay the price in terms of lower Economic Growth and more pay reporter no indication here of whether both sides will be able to get to a deal here or whether they simply throw up their hands and say we will take this to the voters in november and let them decide. Does the falling number of jobless claims, now below a million, which is nothing to crow about, does that take any of the pressure off the congressional negotiators to strike a deal . Reporter i think it does if you can paint a picture saying things are Getting Better we dont need to rush so fast. We dont need to be so intense in our efforts, sure the other factors are out there affecting americans in terms of their daily lives. The school year restarting at the end of this month and so many students not able to go back to school that hamstrings parents who are trying to work from home or get out to work and they dont know what to do with their kids i would say the College Football system falling apart adds a social element to this as American Society so used to the rhythms of fall, were realizing e ining that school a football are not coming back in the way we think they are. I think that adds to the level of anxiety in society that this problem is not being solved. I think that does put some pressure on negotiators. The question is whether those things trump the Political Considerations that both sides are weighing here in washington. All right thanks very much despite no stimulus deal in sight, stocks are still near record highs our next guest is shifting away from the high flyers on the phone is russ koessterich. Russ, always good to hear your voice. Why moving away from tech. Has it gotten away from you, so to speak were trimming it a bit we remain overweight i think the goal right now is to think about you do have an improving economy. As you just discussed, its not out of the woods but we are seeing improvement and are the parts of the market whether here, in europe that are more geared to that expansion where you get a bit more leverage in places like transports, capital goods. Some of the Higher Quality names in industries and those are places were seeing opportunities, its a margin were trimming a bit some of the growth this would be a move into classic Economic Cycle tied cyclicals . I think thats fair were really still emphasizing quality. Were thinking about the companies that are profitable and have earning consistency, manageable debt were not chasing some of the more speck speculative plays. What are your allocations around the globe and where are you seeing the best opportunities right now . Were still very overweight in the u. S if you look at our global allocation, it hasnt changed that dramatically since before the crisis we still have a significant overweight to the u. S. Where you see the best companies, the best Growth Prospects we still have a modest overweight to companies in and around china the one place thats shifted and goes to the theme of a little more cyclical exposure is europe we were fairly flat. A lot of the same types of companies that spoke about in the u. S. Machinery, industrial companies. Europe has done a reasonably good job of managing the virus as well. Those are three reasons weve been adding a bit to europe. We dont know what the affect of president trumps executive orders last weekend will ultimately have, how much of the capital will get allocated and to where, how quickly and so forth. We dont know what might come out of the fiscal side of things the one thing we do know is that the fed is going to be buying a lot of stuff and thats going to backstop stocks one way or another. Youre exactly right. The fed will be buying a lot of stuff. Its not just the fed. Its the European Central bank and the bank of japan and one of the factors that is backstopping this market is this wall of liquidity. You can park your money in cash. You ask generate a 6. 5 return thats a fantasty today. Part of what investors have to think about is where can they generate a reasonable return given an environment where the policy rate is zero. Shares of im sorry that was yours to take away. Im so used to doing the exchange where theres nobody else simmer down i got this shares of vroom are falling nearly 20 they are still up huge since june ipo predicting a bigger than expected loss. Well show you back to beginning of march why are we showing you the beginning of march the pandemic was picking up momentum businesses were shutting down or not going to be open to the Public People said nobody will buy cars the big three said were shutting down production that was the bank that said to investor buy into the auto de dealer stocks because it will be limited quantity of new vehicles it will be a market that will take off and boy have these markets taken off. Three things have contributed to the auto dealer stocks. They have gradually been expanding and as they have expanded, their revenues and profits have been growing as well the average auto dealership right now, about 17. 5 million thatincludes the underlying real estate and it depends on the location, the brands youll be selling and also the carvana trade continues to be red hot. This is an online trade that has really worked well in terms of online sales of automobiles. Bottom line is a lot of people when they focus on the auto industry, they only focus on the auto manufacturers you have to look at the auto dealers now. Does that benefit some of the other names like auto zone thats one we have seen in the analyst notes thats benefits because people are keeping their older cars they need to buy parts to service the cars and people are taking more road trips this summer because not a lot of people want the fly. Right they are putting more miles on the vehicle in that regard they are taking care of them thinking i may have to hold onto this vehicle longer than expected vehicles are getting older were at a record age in terms of the average vehicle on the road thank you coming up, while the s p nears record highs, the number of countries around the world are also near their all time highs. Weve got those details plus u. S. Cities from coast to coast on the brink as money runs out as stimulus talks are at a stalemate. The new report from the National League of cities lays out how bad things could get more power lunch right after this break come on in, were open. All we do is hand you the bag. Simple. Done. We adapt and we change. You know, you just figure it out. Weve just been finding a way to keep on pushing. Welcome back new york city and san francisco, the homes of wall street and Silicon Valley both getting hard by the fall out of the pandemic. Lets start with robert frank on the hit to new york City Real Estate hi, robert the number of new leases in manhattan falling 23 over the last year. Rent is falling by 10 that was the largest decline in history. The most troubling sign for the nations largest rental market is the number of empty apartments there are now 13,000 apartments listed for rent in manhattan thats an all time high and more than double last years total. This especially bad news for new york since july and august are usually the strongest month for rentals as families prepare to go to school its still expensive in manhattan. The average one bedroom rents for 3500 a month. With so many people leaving the city, landlords are offering 1. 7 months of free rent just to get tenants. About half of all apartments in manhattan are owned by Small Business owners. Without the rent, they may be unable to pay their workers and property taxes and since property taxes in new york are the largest source of revenue, these rental declines could start to affect services which could affect the attractiveness of new york and lead to even fewer rentals. Its a bit of a spiral right now. Thats interesting. Robert, i would imagine that more of these Small Business owners, especially if you have fewer tenants it becomes harder to pay your mortgage pay your mortgage and theres some forbearance there the big issue is on the city revenues and the work force and the entire economy in new york that is built on real estate its sale, rentals, management it really probably is the first or second most important city. Financially for a city thats facing a 10 billion deficit, this is getting to be a problem. I have to wonder, is this something you expect to be perhaps short term or is this something that might be long term i know a lot of friends in the city talking about leaving and they have no plans on returning. Initially every one thought this was temporary maybe for the spring and maybe the summer now more and more people are putting their kids in school in the hamptons and connecticut and the hudson valley. About a half Million People left what you asked is the big question how many of those 400,000 people will return to new york city and we just dont know yet all right thank you. Another thing that new york city is facing a fall off in tourism both doe messiahmestic d foreign. San francisco is grappling with the same thing the numbers are just staggering tourism is san franciscos top industry sf travel is projecting the city will lose nearly 11 billion in pandemic related losses to local tourism and says that sf tourism will not fully recover until 2025 the Market Organization says the number of visitors this year will be cut in half from about 26 million last year to about 13 million this year. Visitor spending projected to be slashed by 70 down to 6. 5 billion from 13. 5 billion last year driving those losses, 40 conventions have been cancelled this year and next in the city those estimated losses are about 700 million googles next force are among some of the cancels events sf travel says Convention Room night booked are down 90 from a record high of more than one million last year. The head of sf travel says its the biggest decline we have seen in the history of modern travel and tourism, of course, in san francisco. 300,000 employees in the bay area travel sector have been laid off or furloughed back the yo you guys thank you very much fleeing residents and weak tourism arent the only issues facing cities. Severe service cuts, extensive layoffs, furloughs and roll backs all increasing and according to a new report from the National League of cities, nearly 90 will be less likely to meet fiscal needs in 2021 here is the discuss is the chief economist at moodys who helped to work on this report we know cities used their sources of tax revenues to create their budgets what sources are most likely to be the hardest hit sale s tac s tac s taxes. All those tourists that arent coming to cities income tax people are working less hours and suffering pay cuts that means less income tax revenue. The one thing that is holding up at the moment is property tax. Thats tied to the price for homes and commercial real estate values that will take a bit of time to work through it will. The prices will come down and that will hit property tax revenue but thats something for another day. Right now its about sales and income tax does it seem like there hasnt been a ton of reporting on this issue. Maybe its because as you point out it hasnt been impacted or felt just yet. What might we start to see trickle down as far as services that might be cut off or that sort of thing . How might this affect people at home it already is state, gotvernment have laid off 1. 3 million workers. Its teachers, fire police, emergency responders, hospital workers. People will feel that when they need the services and that help. Then, were going to see other Services Start to get cut back everything from trash service to sewer, water and those things that government does for us that we take for granted until we lose it. When we lose it, we really feel it because these are necessary things theyre not luxuries these are things we need to just live or daily lives. Mark, because everything revolves around new york city in a new yorkers mind. How long will it take for new york to come back to where it was . I think this is a game changer for new york i think its going to be diminished i think new york is a world class vibrant city always will do well. Its going to do less well 5, 10, 15 years from now as a result of all of this. I think a lot does depend on how we approach globalization. New york is a global city. Relies on global trade, immigration, foreign investment. Governments have been trying to protect their populations from virus. A lot depends on getting those walls down again and getting trade back up, tourism, travel all those things that make new york great future policy makers work hard to engage with the rest of the world. New york will be okay. Theres a lot of head winds here are there certain areas that stand to benefit the worst or benefit the most or we just heard you say new york city but robert mentioned that people are moving to connecticut and moving to the hamptons. Might some municipalities benefit from this . In the long run it will be a lot of juggling around, shifting around work from home is real its a fundamental shift i know many others wont either. That will have lots of imp implicatio implications its a process its not going to be a Game Changing event its not like the whole world is changing there will be some parts of the country that do benefit from this and some parts of the country that dont urbanized area, big urban centers are more at risk other parts of the country where costs are lower and living is easier, theres not as much traffic and commute times. Schools are good it will be an interesting thing to watch thank you, mark. Appreciate you being with us today. As we look at the dow at its session low, the s p is hesitating right below its all time high. Energy and real estate and financials those are key sectors under pressure only one sector is in the green. Well hear from the ceo of fazolis after this break. Its a fast casual Italian Restaurant thats reshaped its Business Model amid the coronavirus pandemic he will explain how enwh power lunch continues after this break. Welcome back to power lunch. The s p 500 less than 1 from records. Its not just the u. S. In the race south korea, japan, china and germany all marching their way back to 52week highs to discuss whether theres better opportunity beyond our borders lets bring in the trading nation team. Nancy, were looking at the s p 500 trading at 23 times earnings you could argue that valuation wise the u. S. Market is starting to look a little bit more expensive. Would you start to look for opportunity outside the u. S. Markets like germany, south korea and china . Yes absolutely theres been a lot of head fakes on tglobal market. My partner took a position at the end of june in china though its run up about 18, 19 since then, he owns the local a shares were still very optimistic about china as a trade Going Forward. Youve got the leadership is supporting tariff targeted companies with lower vats. Banking system is no longer being used to prop up stocks youve got a new economic plan lastly, it was first open and demand for the rest of the world. We think theres a lot of room to go in china an interesting correlation between the weaker and the weaker out performance in certain global equities, where would you put your money to work in. I agree with with nancy we originally warmed up to south korea for several reasons. One as you just mentioned. The weakening u. S. Dollar has translated nicely into korean one strength you also mentioned earlier valuation. We have the s p at 23 times. South korea has been one of the better countries in terms of their handling of covid. The most reason we like south korea is the fact the chart is breaking out to multiyear highs. For the south korean etfs, the next level of resistance is 13 higher theres plenty of room to run. Finally, the fakt thct the rela line of south korea versus United States has reversed longer trend to down trend thanks for joining me today thank you ahead, adopting to the new normal