Tom Essaye, The Sevens Report Founder, joins Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Jared Blikre to discuss the latest market action.
ALEXIS CHRISTOFOROUS: Welcome back to Yahoo Finance. We have stock futures rallying into the open on the hopes that we're going to get that $2 trillion stimulus package from Congress. We had a record number of Americans applying for unemployment benefits last week. But the hope is that the stimulus plan will help to offset some of that. And here is the opening bell at the New York Stock Exchange.
And a new trading day has begun at the New York Stock Exchange. By the way, their iconic trading floor continuing to be closed throughout this pandemic. I want to bring in Tom Essaye, of The Sevens Report, for his take on what is happening. Good morning, Tom. Good to see you.
You know, I read something from Credit Suisse that was pretty encouraging. And I'd love your thoughts. They're saying, they think we are at or near the bottom for this stock market. Would you agree?
TOM ESSAYE: I would agree as-- with one caveat. As long as we see within the next few weeks a peak in coronavirus cases, then, yes, I think we are at a bottom. In Sevens Report, we've been talking about three things that need to happen to get a bottom in this market. One, the Fed essentially backstop everything, including corporate bonds, which they did on Monday. Two, the very large stimulus package, which will pass on Friday. And then three, a peak in coronavirus case growth rate. We're getting close to that. It looks like they're peaking in Italy, which is possibly a great positive sign. So now we're just waiting for the US.
BRIAN SOZZI: And, Tom, to your point on a potential bottom in the market, we're just seeing news cross the wires. Treasury Secretary Mnuchin told CNBC, coronavirus stimulus checks will come within three weeks. So that is certainly good news for consumers.
But back to your note this morning. I follow your morning notes very, very closely. And I did sense a shift in tone, maybe getting a little more active here. But you do make a note. Don't go out there necessarily to buy.
And buy ETFs. Look for a bunch of cash-rich companies. And you put up a good list.
TOM ESSAYE: Yeah, exactly. One of the things we're focusing on in The Sevens Report now is looking for opportunities, because, you know, the next six months is going to be very difficult to handicap because we don't know how deep the economic damage is. But let's be honest. If you have a timeline that you're measuring in years, if you have a retirement account, if you have 529s, then every time in history we've seen a decline like this, it's been an unbelievable buying opportunity. I highly doubt this will be any different.
One of the areas we're looking at is cash-rich companies, because guess what? In a panic cash is king. And these companies will be able to turn this into an opportunity once the economy begins to turn around.
ALEXIS CHRISTOFOROUS: Tom, what would you say to folks who are lucky enough to have some cash right now that they can play with and may want to get into this market? What would your advice be to them?
TOM ESSAYE: Take a measured approach. Create a strategy. Space it out over some time, because guess what, folks? The volatility is not over. It is not over.
And we're going to have ups, and we're going to have downs. And we will probably at some point get near to those previous lows. That's the way these types of markets usually end.
But just take your time. Find good companies and good sectors. And be deliberate. And don't jump in too much at any one time.
BRIAN SOZZI: Yeah, Tom, I hear you on volatility. But break down what that volatility will look like. Look, we have fiscal stimulus here.
We have the Fed ripped out its howitzer. No more bazooka, just whipped out its howitzer here. Do you think those 2,000-point down days on the Dow are over and done with?
TOM ESSAYE: I sure hope so. And I think today is an important day, to be honest. I mean, we're-- we've been up two days in a row. We've rallied out here. Futures were down in the morning.
I just want an orderly market. I mean, wouldn't that be nice for a change, if maybe the Dow went up or down 100 or 150 points in one day instead of, like you said, you know, 1,000 points up, 1,000 points down? So I think that some normalcy would be very good for this market over the medium and longer term. Let's just see sort of a regular few days of trading, the market digests this news, and then we can figure out where we are from an economic standpoint.
ALEXIS CHRISTOFOROUS: Let's talk about the stimulus package that's making its way through right now Congress. Do you think that it's going to be enough? Or is this sort of round one of what will be many rounds for the government to have to interject here?
TOM ESSAYE: Yeah, I think it is. I think it is round one. And I think that's part of the reason you saw the futures rally in the morning, right?
So we get a 3 million jobless claims number, which is something no one ever thought would be possible. And stocks rally in result? How could that be?
Well, it's because the market views this bad data as essentially a whip on the government to get them to do more. And I think that the market looks at this 3 million number, and guess what? If we need another stimulus bill, all anybody has to do is point and say, hey, that jobless claims number was five times or nearly five times what it was during the depths of the Great Recession. That's a lot of motivation for the government to do more.
ALEXIS CHRISTOFOROUS: Yeah, that really puts it in perspective. All right, let's get over to Jared Blikre now for a look at what he's watching on his charts. Jared.
JARED BLIKRE: Yeah, we have a broad-based rally here. Cyclicals are leading. Here's our Dow Jones heat map. We can see in the upper left, Microsoft up 2.4% here. We'll look at a two-day chart, and also Apple up 1.3%.
And then let's take a look at the sectors and see what they're doing here. We have health care is leading-- that's interesting-- followed by industrials, financials, tech, and materials. Those are all outperforming the S&P 500. To the-- in the downside in the lower right, we have energy and real estate.
And let's take a look at the NASDAQ, see what that's doing. And we can see all the FANG stocks in the green right now. And if we sort by market performance here, we can see in the upper left American Airlines getting another boost here. Over the last few days, just been an incredible run for a lot of these stocks.
But if you put it in the context of what's happened within the last month, it's a different picture. So, for instance, let's go to a one-month year-to-date look at some of these. And we can see not many stocks in the green.
Tesla stands out in the upper left because it had its historic run, followed by JD, some China plays in there, and then some health care plays with Regeneron and Gilead. And then to the bottom right, we see United is down 57% for the year, Wynn down 45%. And it goes on like that.
And we can also take a look at some of the other markets that are moving right now. Gold futures are up 2%. We have crude oil is down 5%. That's been under tremendous volatility and pressure recently.
And also taking a look at the US dollar index, that is down. We saw a huge run up over the last few weeks. But it suggests that funding pressures have eased a little bit. Alexis.
ALEXIS CHRISTOFOROUS: All right, thanks very much, Jared.