Matt Maley, Chief Strategist at Miller Tabak & Co., joins Yahoo Finance's Alexis Christoforous and Brian Sozzi to discuss what's moving the markets around Friday's opening bell.
Friday trading day underway. One day after the Dow sank 1,800 points. It looks like the Dow is going to start the day up 700 AS it starts to rebuild from yesterday's big sell off. Here are the headlines making "The First Trade" front page. Nearly a dozen states have now seen an uptick in the number of new coronavirus cases, including California and Texas.
And the Trump administration is telling people planning to attend rallies that it can't be held accountable if they catch COVID-19. The pandemic is also changing up this year's economy policy symposium, which is usually held in Jackson Hole, Wyoming. This year, the event will be held virtually due to safety and health concerns. It will be live streamed, though, August 27 and August 28.
And Starbucks sparked a backlash after it was revealed the company will not allow employees to wear Black Lives Matter clothing or accessories. Starbucks reportedly cited its policy prohibiting political attire and said it was necessary to, quote, "create a safe and welcoming environment for customers." Some people now calling for a boycott of the coffee chain.
All right, let's get back to the market action now with Matt Maley, Chief Strategist at Miller Tabak & Co. We also have Jared Blikre and Brian Sozzi with us. Good morning to you all. So, Matt, what did you make of the return, I guess, of volatility to this market? The volatility index at its highest level now in months, and we have the market trying to bounce back from that big, big sell off yesterday.
BRIAN SOZZI: Matt, does it make sense to you to hold stocks into the election? The divisiveness, I think, we're about to see, at least to me, it is just underpriced in this market that has rallied so hard off the lows with really no indications we're past COVID or anywhere past social unrest-- you name it-- lots of concerns out there.
MATT MALEY: No question. And I believe this whole thing with the tensions between China and the US, which has gone completely off the headlines, or it's off the front page, I should say, over the last week or so. Those are not going to go away. And to be honest with you, the way this whole Civil unrest has not gone well for President Trump.
You see what has happened in the polls. And he's coming-- a winning issue for him has been China. He's going to go back to that. So it's going to come back in, I think, a significant way this summer. So just say should you dump everything? No. But the same time, the level of uncertainties-- combine that with the level of the stock market and what it's pricing in-- I think people are getting way ahead of themselves and should be much more cautious than they have been the last month or so.
ALEXIS CHRISTOFOROUS: All right, at least for today, though, stocks are rallying big as investors jump in there and take advantage of some opportunities. Jared Blikre, I, myself, looking at the NASDAQ here-- up better than 2%. We know that it hit a record high earlier this week. What's leading us higher today?
JARED BLIKRE: Well, it's the reversal of yesterday. We have tech and high-- excuse me-- some of the bigger cap stocks here. They're leading. We have Apple up over 2%, along with Amazon and Microsoft. Facebook nearly there. Only one red stock, and that's Lululemon after reporting earnings that disappointed a bit-- kind of the inverse of yesterday, where Zoom was the only green stock.
Looking at the Dow, we have all 30 members in the green. And just looking at the sectors that are leading today-- again, its energy, materials, financials, and industrials, then tech, and then staples to the downside along with-- excuse me-- utilities and communication services. Those are the laggards. But everything's up at least 1%. Talked about crude oil a little bit earlier. Energy is leading the way here. And also if you want to see the risk on nature of today, just look at the travel stocks. We've got United up 10%, Delta up 9%, Royal Caribbean up 10%.
And let's take a look at the bankruptcy trade, too, as a gauge of risk sentiment. And we see Hertz is up 50%. But it's been an extremely volatile week. And I wouldn't get too excited about this rally right now because, to Matt's point earlier, this volatility spike that we've seen just doesn't go to bed overnight. Anytime we have such a strong day down like yesterday, usually you get a little bit of a snapback here.
ALEXIS CHRISTOFOROUS: Thanks, Jared. Matt, what do you make of that-- the fact that investors seem to be piling money into these companies that are going bankrupt? You know, we have Hertz's stock up three-fold, JCPenney also rallying. What's the mindset there for investors?
MATT MALEY: Well, you know, of course, we've heard a lot about the Robin Hood effect with a lot of people who can't bet on their sports games or just are at home-- even they weren't sports betters, they're sitting at home with nothing to do, and suddenly they're getting more active. You know, whether that's having the big impact or not, I'm not sure. But all I do know is that when you see this kind of froth in stocks that are basically have declared bankruptcy, and then they have this kind of volatility with huge moves, that's never a good sign.
You know, when the public gets in a much more aggressive fashion, we've seen it a gazillion times over the last 100 years, the biggest times it happened, of course, the 1920s and the late 1990s. I don't know if we're back to that level, but we're certainly on the kind of speculation that by people who really are not used to being involved in the market-- I'm going to say the amateurs-- that's usually a very poor sign for the length of a rally to continue for a whole lot longer.
BRIAN SOZZI: Matt, you're a veteran of the battles. What's your best advice headed into the weekend for that retail investor? They came into the week expecting a sizable rally. Now you have those Robin Hood traders looking for a market decline. They're going to see a lot of negative headlines over the weekend, I am sure. What's your best tip to them?
MATT MALEY: I think you need to raise some cash. Take advantage of this nice little bounce. I mean, the market is still well off its lows. And we really have to question them. The big thing that people are banking on is the Fed, and I understand that. The Fed's liquidity is very helpful. But, you know, the Fed's liquidity in the past has fixed both situations.
It's fixed both some of the problems with the market freezing up and helped the economy recover, because the problems it was facing at the time, in the last 12 years, have been financial. This time, it's a health care issue that they can't solve. The economy is not going to bounce back. You know, Chairman Powell basically told us it's not going to bounce back the way the bulls think it's going to, that we're going to see a big return to 2021. They're talking about, you, unemployment 9%, 10% at the end of the year.
In a consumer-based economy, that's not going to be enough to get the economy to bounce back to the levels that were-- or that it was that in 2019, which really wasn't all that great anyway, to be honest with you. The market was already expensive. It's now even more expensive even though it's lower than where it was in February. So I think you should take some chips off the table, because that's going to give you the ammunition you need to take advantage of opportunities like we saw in March.
ALEXIS CHRISTOFOROUS: Hey, Matt, real quick-- now Treasury Secretary Mnuchin saying, perhaps, more payments to individuals will be coming down the pike later this year, talking about another check. This time, it would include people who were not included the first time, like undocumented immigrants and college students. Is that going to make a difference in the overall economy? Are those people going to go out and spend and really boost things?
MATT MALEY: Not in the long term. This is the worst-- I mean, I understand why they did it the first time, and I, you know-- do we need more checks? But we can't keep doing this. The fiscal stimulus has to go to things that are actually going to be turned into self-sustaining income. The stimulus has to go to things that will create jobs, so that once the stimulus has been pulled away, people can actually have incomes on a continual basis. If you're just asking for handouts continually, once the handouts end, they stop spending. That doesn't work in any kind of intermediate or long-term basis.
ALEXIS CHRISTOFOROUS: Yeah, absolutely. Matt Maley, Chief Market Strategist at Miller Tabak & Co., always great to see you. Have a wonderful weekend.
MATT MALEY: You too. Thank you.
