The market’s internal push-and-pull became clear on Thursday.
Stocks ended the day higher despite another weaker-than-expected jobs report that sent the major averages lower earlier in the session. Gains in the bank stocks and the oil market helped drive the positive action.
With Wall Street still largely in wait-and-see mode when it comes to the coronavirus pandemic’s ultimate impact on the economy, market analysts and strategists still see a tough road to recovery.
Here’s what four of them told CNBC on Thursday:
“I think that, at this point, we know that the ‘V’ is off the table. The struggle here is whether we have a U-shaped recovery or whether we don’t have a recovery. And … there are two things that can happen: You get a vaccine and you’ll have a V; you don’t get a vaccine and you’ll have an L. And I think that on days like today when you see the unemployed number, you say to yourself, ‘Without a vaccine, this is going to be a very, very long slog,’ just like what [Federal Reserve] Chairman Powell said [Wednesday]. Chairman Powell’s giving you the straight stuff, and this number should not be a surprise to people who listened to him.”
“We’re going to focus on telehealth, essentially broadband and access to broadband, and how and where we work. … Now, telehealth — well, 80% of the people are going to the doctor electronically because they don’t want to go to the doctor’s office in case they get exposed. Well, that’s a net improvement in efficiency for everyone. It’s so much more convenient to see the doctor virtually than to have to go to their office and wait forever, right? That seems obvious. Your previous guest talked about the scale of broadband and how many people are using it and how many people are getting used to it. Those changes are not going to go away. And then we are going to change the way we work. An example is that we’re going to have less density in these buildings at least until there’s a vaccine, which is probably a year and a half, two years kind of time frame. And less density means literally more office space, not less. It also means a different architecture. Because of this transportation problem, some people are not going to want to go into the center of the supercities. They’re going to actually want to go to hubs, so, you think of it as a hub and spoke system. So, when you reimagine all three together, you get a pretty good city and you get a pretty impressive state. And don’t bet against America. Don’t bet against New York state. We are innovators. We can solve this problem.”
Billionaire investor Nelson Peltz, the CEO of Trian Partners, said the pain wouldn’t last forever, adding that he was bullish on a vaccine coming together in the near term:
“There is so much doom and gloom, and this thing is not going to last forever. There’s still loads of value in the market, because the market is primarily a tech market. And there is still good value out there, and I do believe in America … and I do believe we are going to get a vaccine. I spoke last night to a friend of mine. He’s a good friend. He’s CFO of Pfizer. And he’s not a young suit. He’s an old timer. And he didn’t tell me anything he didn’t tell everybody else, and … I have no Pfizer in my books or I’m not talking my book. … But they say by July they’ll have three or four substances, and hopefully by September they’ll be down to one. And they’ll make tens of millions of vaccines in the fourth quarter for America and Europe and then 100 million next year. And I don’t know if it’s going to be Pfizer, but it’s going to be somebody, because I’ve never seen more cooperation between pharma and government, more cooperation between government and industry, more cooperation between Treasury, the Fed and government. So, we have everybody pulling on the rope in the same direction for the first time that I can remember. So, I think we’re going to come out of this. I think, you know, it’s going to be a while, but I’m not a doctor or a scientist and I can’t tell you how long. But we are going to come out of it, and it’s going to come out of it because of our research, our pharma guys. Our guys are going to come up with something, and ‘Made in the U.S.A.’ is going to mean something again.”
Gabriela Santos, global market strategist at J.P. Morgan Asset Management, emphasized the importance of being selective:
“If we think about the long term, we absolutely do believe we’ll get through this. The economy will recover, earnings will resume their long-term trend, and equities are so important for long-term portfolio growth, even more than normal now that yields have fallen even further year to date. But we have to square that with the uncertain next 12 months or so while we try to figure out how we reopen, what the policy response is, and with valuations that after the April rally had gotten a little bit stretched and left little room for disappointment. So, we felt like we still need risk assets for the long term, but it was not the time to ramp up the dial quite yet and go all in on risk. So, we still focus on quality bonds for protection, and I’m really thinking about sectoral and regional differences for this Covid world we’re still going to live in for another year.”
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