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Friendly’s files for bankruptcy, stocks predict presidential election

Yahoo Finance's Myles Udland, Brian Sozzi, and Julie Hyman break down what stories they're watching on Monday.

Video Transcript

MYLES UDLAND: As we wrap up today's program, let's talk about one part of the market that we haven't touched on today, and that is what's happening in the restaurant space and particularly in brands that are struggling and unfortunately filing for bankruptcy. Brian Sozzi, a name that's mixed in there is one that I know you and I both remember from our childhood here, and that would be Friendly's.

BRIAN SOZZI: Yeah, all about that $0.75 Fribble. Yeah, Myles, certainly went to-- had enough of those growing up as a kid. But, yes, Friendly's-- the parent company, Friendly's Restaurants LLC filed for bankruptcy yesterday. And here's a fun fact-- or not-so-fun fact if you're remotely involved financially with Friendly's-- they list estimated assets of $1 million to $10 million in their bankruptcy filing. Liabilities? $50 million to $100 million. So you're getting a clear picture on why this company is borderline irrelevant and why they have factored-- or why they have filed for bankruptcy protection.

This continues. I'll have a story going up soon on Yahoo Finance. This is the 12th major restaurant bankruptcy of this year, and it's large part, Julie-- it's because of the COVID-19 pandemic. These businesses were struggling, these sit-down diners, and the fact that you can't go in there eat and get fat on buffets, it hurts the business model and puts them out of business.

JULIE HYMAN: Yeah, although this is the second time that Friendly's has been-- has filed for bankruptcy. I think it happened back in 2011 also.

Speaking of the pandemic, Torsten Slok, our old pal, chief economist at Apollo Global Management-- he's going to come join us on Wednesday, but he's been sending out some notes and his musings. He is looking at the different phases of the recovery following the pandemic. He thinks that vaccination could start potentially in the second quarter of next year, but I'm more interested in what he is seeing even further out. He thinks the so-called new normal will be in 2022, and he's looking at what's going to happen with rates at that point.

He says short rates are going to gradually begin to price in Fed hikes. The curve will flatten. And then he's looking for overheating of the economy and potential inflation coming, but not until 2023. So looking out past not only the election, but over the past couple of years to try to figure out what happens next, Myles.

MYLES UDLAND: And you know, Julie, I saw that note from Torsten, and he followed up this morning with a note about vaccine development. And that all seems very, very positive, and I think you look at the number of vaccines being developed and you feel good about things. But reading his outline here of, you know, the different phases, I'm fearful that new normal is not 2022, that it's 2023, 2024. Maybe, you know, Tim Cook kind of said on the call. The new normal is probably nothing like the old normal was, right? And I think that the more time that goes by the more I think I certainly personally fear that, you know, 2019, whatever that was, is never coming back. And I quite liked the way things were going in 2019, but such is life.

And of course, we're all thinking about the election that of course is coming up tomorrow. And this one stat that I've been thinking about the last few days is the idea that the White House flips party control if the S&P is down three months before the election and it retains control, the incumbent party, if the S&P is up. And we've seen this happen in every election since 1984. And well, the S&P 500 closed on August the 3rd at 3294, and today it sits at 3311. So you're up 17 points over that period. I guess history says this means Trump's going to win. On the other hand, you could say it's basically flat and who knows what's going to happen. And of course, that is a very 2020 thing to be thinking about as we head towards this day.