Expert on IPO pipeline: 'There's a lot of pent up demand' as second COVID-19 wave fears loom

Marcum, LLP CEO Jeff Weiner joins Yahoo Finance’s Zack Guzman to break down expectations for the May jobs report and his outlook on IPOs for 2020.

Video Transcript

ZACK GUZMAN: I want to discuss what we should be expecting for tomorrow's big-- Friday's jobs report with our next guest, the CEO of one of America's largest independent public accounting and advisory firms in the nation. Marcum LLP CEO Jeff Weiner joins us now. And Jeff, when you're trying to gauge what to expect, as Heidi noted, potentially a 20% unemployment rate when we get it tomorrow, what are you thinking about that number and how the market should be bracing for it and what it says about the current state of the economy?

JEFF WEINER: Well, you know, first of all, thanks for having me, Zack. Good seeing you. I think the market knows what to expect tomorrow. You know, the unemployment rate has consistently gone up since March. The coronavirus pandemic has resulted in unprecedented layoffs, you know, mandated business closures. But I think it's more important to focus on the coming weeks and months.

You know, many states are starting to open up again. I live here in New York where we're in phase one of the recovery, in many places entering phase two. And as we go through the phases and things as we reopen, I think the market is going to be more interested in how the numbers start to go down from here, which shows people going back to work, rather than what's already baked in.

ZACK GUZMAN: Yeah, you talk about a lot of that being baked in. I mean, we have recovered on the S&P that 76% retracement level from the lows, recovered those losses. Fundstrat's Tom Lee pointing out that once you do that, likely to see, again, new all-time highs on the S&P. So I mean, is that kind of the case? I mean, since we had, as Heidi noted, seen the weekly number of initial claims come down pretty much each week since this started after we hit that peak, is it kind of that nothing right now aside from, I don't know, maybe a second spike in coronavirus cases might be able to knock the market off its current recovery?

JEFF WEINER: No, the market really is looking for the recovery. The market expected the recovery. The market is seeing the recovery. And you just said it, as long as there's not a second wave or a second spike, it doesn't matter whether it's a U or a V or a W. As long as there's steady progress and people are getting back to work and businesses are allowed to open-- remember, a lot of these businesses were closed by government mandate. There was nothing wrong with the economy prior to March of this year.

So as these businesses start to open-- you know, the one week place you're going to see is going to be the travel, hospitality, leisure, entertainment, sports. You know, those businesses where you have mass gatherings and you're really-- you know, social density is going to be a problem, those going to be the last businesses to open, which is maybe why the results in Florida, which is heavily reliant on tourism and travel, you know, the numbers aren't getting better as quickly as they should. But I think the market is seeing exactly what they want to see. And as long as the unemployment numbers start to go down, there will be a point in the not-too-distant future where we turn negative and there are more people going back to work than filing claims.

HEIDI CHUNG: Jeff, I want to get your opinion on this because last week, a lot of economists were saying, OK, it looks like we've turned a corner because when we take a look at the continuing claims number, we saw that decline. But this week's report, we saw another uptick in that regard. So is that telling us then that these reopenings aren't really impacting it as much as we would like to see, and our people just not rehiring quickly enough?

JEFF WEINER: They-- you know, Heidi, it's an interesting question. They may not be rehiring quickly enough, and they may not be rehiring everybody that they laid off or they furloughed. You know, there are a number of businesses that will figure out that they had too many people and they can actually accomplish the same with less. I've spoken to a number of Markham clients who've said, you know, we used to have 100 people at our factory floor, and we're doing just fine with 40 now.

So there will be a certain segment of the population that one, you know, companies realize they can be more efficient. There will be certain businesses like baseball stadiums and movie theaters and hotel resorts that don't open at full capacity for the next couple of months. But I think you'll see a slow, steady climb starting some time the end of this month into July where the numbers are going to flip and we're going to realize-- because it's happening.

It just may not be-- there's always a lag in the numbers. You know, when the economy is good, the employment numbers lag the good economy. And when the economy's bad, they lag the economy. So I just think that we're going to start to see a slow, steady change of direction. And at some point in the not-too-distant future, the unemployment numbers will turn negative because more people will be hired than are being let go.

ZACK GUZMAN: Yeah, and we continue to wait to see that. At least in this next report, the trend not expected to show a bottom yet. But when we do look at the market itself, it's interesting because last time we had you on a few weeks ago, we were talking about the trend of SPACs and the way that companies have been going that route to access the public market. And just this week, we got the biggest IPO of the year in Warner Music Group, shares again higher. We got Zoom Info Technology is just debuting a few moments ago. That stock up about 75% in its debut. So what's your take now on how it seems like we've reached a relatively stable point here in June? It seems like the IPO window is back open again. What are you seeing on that front?

JEFF WEINER: Well, it it, and there's a lot of pent-up demand. There was money sitting on the sidelines before the coronavirus pandemic started, and that money is still on the sidelines. The market's, you know, has recovered basically almost everything that it lost, and people are looking to put the money to work. You know, you talk about SPACs, you know, that's all about management team. And there's a bunch of good management teams out there looking for transactions, and there's money to back them. So I think the IPO market will be strong through the summer. You know, everything will recover slowly. Everything is going to stay strong as long as there's not that second wave and, you know, something else extraneous that affects the market that none of us are thinking about right now.

ZACK GUZMAN: All right, there you go, the latest in terms of trying to gauge the recovery that we're seeing here from Jeff Wiener, Marcum LLP CEO. Appreciate you taking the time to chat with us.

JEFF WEINER: Good seeing you, Zack.

ZACK GUZMAN: And while we are on the topic of tomorrow's big jobs report, we should note that tomorrow we will start coverage here on Yahoo Finance a little bit earlier than usual. To bring you that coverage here on Yahoo Finance, we'll begin at 8:30 AM Eastern time tomorrow. You will not want to miss that. We'll be digging through the report and bring you the headlines as soon as they cross.