Additions here amgen, honeywell and salesforce which report after the bell. 59 minutes left of trade welcome to the big show, david yep and head on todays show as well sara, were going to discuss the Economic Data points and what the outlook is Going Forward were going to have the council of economic advisors acting chairman his name is tyler goodspeed. Hell be our guest plus, well focus on todays strong housing dwrat with redfins ceo glenn kelman. And it may be late in earnings season there are still some big names reporting after the bell including sales force, nordstrom, Toll Brothers and more well bring you all the numbers, sara, as soon as they hit the tape before all that, lets get straight to the market the major arnlgs following another record high for the s p 500 yesterday. Mike santoli is tracking all of the moves for us good morning i should say that is the last time ill do that, mike good afternoon, mike. 3 00 p. M. Is the last time were going to call it morning appreciate it, david and, yeah, you know, it is a mixed action out there the quiet. The market, the s p 500 if you look right here on a one year chart, its not doing much what its not doing is really falling apart, correcting in major way. It finds a way to stay supported. Yesterday the story is nontech today, weaker breadth. Tech outside of tesla and apple doing quite well and the s p 500 is just extending this what i call boring uptrend boring uptrends are boring and persistent dont know if its going to extend that much farther some aspects are getting stretched. The s p 500 is far above the 200 day average. But for now, the market is finding a way to keep itself supported. There is a gap here that it dropped in a sud wayne at the beginning of the coronavirus hatz no t it has not closed. And two of the four tech stocks, cisco and intel, have been dogs. That has been a weight on the dow. Lets compare the two. Now that we have this refresh of the dow coming, trying to modernize it a little bit. A lot of debate whether it is worth looking at the Dow Jones Industrial average it even relevant, well, its sort of got historical relevance. This is the dow divided by the s p 500. This is the ratio of the two indices. For the last 21 years, and what you soo he is they wax and wayne relative to one another. The dow tends to outperform in bear markets this was the last kind of surge of the tech bubble the dow had had little in tech right there it added microsoft and intel, first two nasdaq stocks to go in. St capitulated to the fact that tech is the whole market then you see it outperform in that bear market its not always the case over a long span its right in line its hard so suggest that dow is irrelevant if it tracked, you know, on different pasts over the last 21 years. Guys so when i say it is the statistically irrelevant, mike, i guess im wrong . I mean there it is, the poof that actually does its unrigorous lets remember, it started as an average, a little ral average of the stock price. It is divide by 30 and had to kind of go over the years its too what it now is but it still price weighted. That doesnt make a lot of sense in the age that were beyond paper and pencil right now the way i describe it though, david, its like fahrenheit or batting average. We have superior measures of temperature and batting performance right now. But people know what it s people know what the moves are relative to history and thats why they persist. So ill never understand why celsius is superior and ill never understand how to translate it ill stick with fahrenheit mike, there is a big discussion right now about how the s p 500, you know, for all the benefits of having 500 members is totally unbalanced right now and is not a reflection of the economy or the overall market because its all so heavily weighted to a few Mega Cap Technology names. Is the dow a better reflection its certainly more spread out. The way its now going to be revamped after the apple stock split and the new stocks going in there, now its still going to be the top five or six stocks in the dow are still going to be more than a fifth of the dow but thats only 5 out of 30 members as opposed to five out of 500 members and its going to have a lower tech rating. The sector distribution is going to be a little more diversified than the s p 500 is right now which is ironic given the fact that it is only 30 stocks. I think a lot of people are going to know the names more i mean salesforce is btob business that a lot of consumers dont know it just puts it on the radar we talk about them more which could be one reason why theyre near the top of the market there is not a lot of money behind the dow its not as if there is a tremendous amount of index funds in that index. So its not like theyre going to have to be furious buying of the stocks when they go in no. Nothing compared to the s p 500. All right. Mike, well see you in a bit thank you. As the s p 500 hovers near that high, more investors may be drown to Value Investing we hear it all the time. In a new note, bank of america is warning investors not to fall for value traps or stocks that are inexpensive for the wrong reasons. Joining us now via phone is the person behind the note, bank of America Securities head of equity and quaun tastrategy its time for stocks to outperform as this economy and recovery should broaden out. Which ones are you warning about . Yeah. So, you know, its a good its a good question i think it is time for value to outperform growth. But not all value. So our note, what we try to do is differentiate between good value and bad value. And what we found theres a really easy way to identify bad value or value traps these are stocks that are starting to look cheap but its because prices are falling faster than analysts are actually taking down their earnings expectations. So its basically, you know, the case of a company where the market is telling you that something is going wrong but earnings estimates havent necessarily caught up with that information. And what we found in our model is that stocks or industries that are identified as traps tend to basically remain kind of dead money they fail to outperform the two out of three times over the next 12 months. So its really a better stay away signal whereas if youre a value manager, the root to underperformance is by buying too early. And what we try to do is guard against those types of situations so we just showed some sectors. Yes i just want to get to the specifics. So real estate investment, what are the other groups that you say beware of that fall into this trap . A couple of yeah, so a couple of other groups that fall in there is telecom is also an industry that doesnt necessarily look cheap for the right reasons. Real estate is an interesting one. It is potentially d rating on the more structural covid19 related issues the maybe we wont need as much commercial real estate coming out of this crisis we started to see kind of a cheapening profile but really more because of earnings not catching up to where prices are have fallen. O our value trap model is saying its too early to buy in these areas that i just mentioned. All right that leads to the question, of course, where does the true value potentially reside here . Yes. I asked it. Where is it and is it still too early to even buy that well, no. So i think that there is there are value opportunities we identify good value as a fairly cyclical group of industries so were seeing it in household durables were seeing it in some of the industrial sectors were seeing it in if financials these are companies and areas of the market that should benefit from a little bit of a pickup in Economic Activity and are also not necessarily, you know, in that area of where analysts are going to take them down. So the area thats are attractive are largely in that cyclical and maybe even more consumer oriented area of the market savita, thank you. Going to leave it there. After the break, Consumer Confidence plunging in august. Home sales continue to surge were going to try to make sense of all the latest data well speak with the acting chair of the council of economic advisors next. Youre watching closing bell. Turn on my tv and boom, its got all my favorite shows right there. I wish my Trading Platform worked like that. 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Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. Welcome back 46 minutes left of trade of mixed Economic Data out today. New home sales surging to the highest level, up nearly 14 for the month of july and up 36 from a year ago. But on the other hand, Consumer Confidence told a different story falling to the lowest level in six years what does that say about the economic recovery . Bringing in the council of economic advisors. Good to see you, tyler. Thank you for having me, sarah. What is your idea about the Consumer Confidence numbers . Certainly today we were encouraged to observe the housing data, housing does remain a very strong point in the economy. So were actually in this context, im look morgue closely at levels than rates because we had a big contraction in february, march, april of this year were going to hopefully observe a lot of growth rates in response to that and when we look at existing home sales, there, too, were observing a level that is the highest its been since 2006 and thats why were also starting to see some strength in if the Residential Construction sector with Real Investment in in Residential Real Estate to ip crease 20 annualized rate in the Third Quarter. And thats about 4 of the u. S. Economy. Something like that could add up to 1 to real gdp growth wooer ve the won assumer confidence data is something were looking at very carefully there are mixed message theres. We saw on the Conference Board indicator a decline. In the preliminary university of Michigan Survey last week, we actually saw a slight uptick in Consumer Confidence. Tyler, no question the housing numbers are amazing. There say boom there and the stock market is at a record high. But the nearly 30 million americans that are receiving Unemployment Benefits right now are not buying housing and stocks so it does feel a bit lumpy out there given some of the economic situations that we have going on with unemployment. What do you make of that overall disconnect with what were seeing in housing and stocks in march and april of of this year, the u. S. Economy and Global Economy was hit by the worst Macro Economic shock in decades. We observed a sharp rebound from the marchapril lows the a sharper rebound than i think anyone was expecting and thats also reflected in forward looking equity markets but there is no doubt that there remains a long ways go before we get back to the overall levels that we observed before this adverse shock hit. And thats precisely why weve been very, very disappointed to observe little action on the part of congress im frankly baffled that congress would be recalled from reset and recalled on a weekend to discuss a bailout for the United States post office but would not be recalled to discuss and vote on a reload of the paycheck protection program, to vote on a continuation of enhanced unmoiment Insurance Benefits to vote on an Employee Retention tax credit to vote on state and local aid to prevent layoffs among essential service providers. So i think there is no doubt theres a lot of anxiety out there. Thats why the Trump Administration and the absence of congressional leadership took Decisive Action to provide protection against evictions and provide continued enhanced Unemployment Insurance in the midst of the largest shock to hit america in decades the tyler, you know well why there is not that aid forthcoming. There is such a large gap between the ask. And the key area of contention appears to be aid to state and local governments. How concerned are you . You mentioned concern about the state and local governments if they dont get any aid, even if its just 150 billion youre offering or if it was to be a lot more no aid at all, with woun have to imagine, layoffs are in the offing if not already taking place with so many of these strapped municipalities. The cares act we provided 150 billion in assistance to state and local governments and 150 billi 150 billion sources f mechanisms and recently, the republicans proposed relaxing some of let strictithe restrictd providing flexibility. And my colleagues, the chief of staff and treasury secretary have put on the table an additional 200 billion in support for state and local governments. And, look, as the treasury secretary said this doesnt have to be the final word on this issue. If we need to revisit the question of state and local funding, we can revisitthat in a phase five, in a phase six this doesnt have to be the end but if we agree in in principle that this support is needed, then lets get that support out there and then revisit the issue when and where needed. So then why is the senate on vacation im afraid that would have to be a question to our counterparts on the hill its republican led senate. And theyre taking the cue from negotiations in the white house. Its hard to figure out why these talks remain stalled with such an urgent need for extended Unemployment Benefits and stimulus to Small Business which you laid out, extension of the ppp program and so many other necessary stimulus measures that will help bridge us over until we can effectively fight away this crisis this pandemic the calculations, the political calculations on the hill are something to which i cannot speak i can simply say that in the absence of Movement TowardBipartisan Legislation that the president can sign into law, the president took the bold and Decisive Action to provide protection for americans at risk of eviction, to provide Additional Support to student borrowers, to provide payroll relief to American Employees and to provide continued enhanced unemployment Insurance Benefits to the 15 million americans who remain unemployed and the millions more who remain on pandemic unemployment assistance how much of that is actually going to happen . I know there was some questions, tyler about, the effectiveness and the legality of it as well so this is something that was thoroughly reviewed by the office of legal counsel, authority to defer deflection of Tax Liability is an authority explicitly alotted to the treasury secretary under the u. S. C 7508a. The authority to defer collection on to provide relief to student borrowers is explicitly provided under the Higher Education act of 1965 also there are authorities granted to the president under the stafford act and so those were vetted by the office of legal counsel. And weve been providing guidance to make sure that those executive actions are implemented in as expeditious a way as possible. Yeah. Im sure we can both agree the nation would benefit more broadly speaking from action from congress. So back to this question of aid to the states and localities i think you said 150 billion then the ability to repurpose existing funds and then you mentioned an additional 200 billion, tyler is that correct . Where is that coming from . I heard you say that maybe i missed it in the news over lat last week. The white house was willing to authorize an additional in any phase four in any phase for legislation to provide an additional 200 billion in support to state and local governments. That doesnt have to be the end, the final word st but but if we can agree we want Additional Support, then lets provide the flexibility for them to spend what is already been allocated chf approximately 80 billion remains. And authorize additional funds and then if we need to revisit the issue, revisit it. Lets agree where we have agreed lets agree to provide support where we agree support is needed. Finally, tyler, this is the first time youve been on with us so welcome its been active in your office. Kevin was there in your position i think twice and has left already twice. What people dont know about you is that you actually published a paper at the white house september 2019 about vaccines and their Critical Role in had innovations in fighting a pandemic just as the white house remains a source of intrigue, im curious what your role is there right now. So that was a very strong and pressing paper that we published in autumn 2019 it is something that a lot of components read with