What to expect from upcoming April jobs report

Marcum, LLP CEO Jeff Weiner joins Yahoo Finance’s Zack Guzman to discuss what investors should expect from the April jobs report tomorrow.

Video Transcript

ZACK GUZMAN: For more on all this and the data should be we should be looking at, I want to bring on our next guest who's been constantly giving us the updates on where the market might go from here, given all the updates we've been getting. The CEO of one of the largest independent public accounting and advisory service firms in the nation, Jeff Wiener, the CEO of Marcum, LLP joins us now.

And Mr. Wiener, good to see you again. When we look at this, what's your take on the way the market's been rebounding? You've got the NASDAQ back in positive territory. We're sitting potentially at an unemployment rate of 16% when we get it tomorrow. How does that add up in your mind?

JEFF WEINER: Well, first, good seeing you too, Zack. You know, it doesn't add up. I think the market-- people traditionally think the market shows a rational exuberance. And I think right here the market is showing a rational exuberance. You know, the full effects of the coronavirus and the various state shutdowns has not been baked into the numbers fully yet.

I think the market is looking post-pandemic for people to get back to work and companies to start up again. But earnings are going to be depressed for a while. We saw a little of it in the first quarter earnings. The second quarter is going to be an absolute disaster. And those numbers won't be out until sometime in July.

So I think the market is just reacting to the positive news that states and municipalities are opening. Companies are allowed to start opening slowly. And we will eventually start to see a reverse trend in the unemployment numbers, where all these people who were forced out of work because of the various stay-at-home and pause orders are going to be called back little by little to their old jobs.

ZACK GUZMAN: Yeah, I mean, you raised that. And I understand the optimism to think about, you know, maybe it's positive that you have people going back and getting out there and buying things. And clearly, that's been kind of the trend here, as we see more and more states reopening here.

But when we look at the actual polls asking people if they're comfortable to go out at sporting events, restaurants, bars, things like that, we're not necessarily seeing as large of a return that I think people out there are expecting, just because the concerns out there are unchanged.

There's still no necessary treatment here that's been shown to help outside of what we've seen some trials so far, from Gilead's remdesivir, a vaccine is still not here. So I mean, when you look at that, maybe what could happen if you do see-- I don't want to say lockdowns again-- but maybe just not the return to normalcy that people might be hoping for.

JEFF WEINER: Well, even the return to normalcy, that's going to take a while, whatever that is, because as you pointed out, the economy is going open slowly. You know, they're opening manufacturing. They're opening construction. Hospitality, leisure, sports, travel, things like that are going to be the last to open.

So I think once the market realizes that earnings are going to be disappointing, and you know, I would think almost every company I can think of, other than people who are making COVID-related products or remedies, but whether you're a travel company, whether you're a sports company, whether you're a bank, you know, manufacturing, most companies are not going to make as much money in 2020 as they made in 2019 or '18.

And at some point, when people are making buy decisions on equities, they've got to look at key multiple or some type of economics.

ZACK GUZMAN: Yeah, And I mean, I guess when we look at the volatility over the last couple of months, it shouldn't come as a surprise that a lot of the IPOs that were planned to come out here in Q1, moving into Q2, just didn't happen. But outside of that, it is striking to see the turn to SPACs, Special Purpose Acquisition Companies. We saw Draft Kings enter the market that way.

I know that you've helped [INAUDIBLE] social capital, a recent SPAC as well, and Marcum-- I should say your firm did. But we've seen a shift to these blank check companies out there. What's your take on why those are becoming so popular and what they, I guess, offer over going the traditional IPO route.

JEFF WEINER: Well, what I was going to say, first of all, we've noticed at Marcum, we've seen an uptick in transactions in the last two weeks alone. People are starting to think about getting back into business and doing things. But the blank check companies are a great vehicle for a management team.

I mean, you're basically betting on the management team that they can find an acquisition, which is undefined at the time the SPAC raises the money. And so you're betting that the management team will find a good company that they can acquire with the SPAC and create value for those shareholders.

ZACK GUZMAN: But I mean, in terms of volatility coming out, I guess if there's maybe a longer timeline for actually acquiring those companies, it does seem interesting to see a lot of companies going that route. It might take some time before they actually find anything worth capturing in an environment like this.

JEFF WEINER: I actually think this environment's going to create opportunities, because a lot of formerly profitable well-capitalized companies, after being closed for two or three months, probably went through some of that capital and could use an equity injection. So it's probably a great time the SPACs, which all they have is cash, to go make some acquisitions at prices they couldn't have gotten pre-pandemic.

ZACK GUZMAN: All right, it's a buyer's market somewhere. Jeff Weiner, thank you so much for explaining that to us. Always good to see you. Take care.

JEFF WEINER: Good seeing you, Zack. Thanks.