Transcripts For CNBC Squawk On The Street 20240713

Today in some of the comments out of retailers like burlington, anf, dollar tree, and Dollar General yes, if you look at the Dollar General, the numbers are just extraordinary i actually have never seen a Comp Store Sales number this good 21 versus 7 estimate. Dollar tree is going to be the one, david knows this well, people look like, you know what, now the dollar tree Family Dollar merger which had been so on the rocks, the judgment is its working and that stock could power much higher. Dollar tree. The opening trade is sapping the money out of tech. I dont know how much longer it can last thats such a great book in gary because he knows so much about what people are spending theyre essential because they have food, and i look at this market and i think how long with the dow up 4 can we actually say, hey, the reopening trade is just starting . Its already maybe too far too fast its very hard to figure, particularly because faang is being distorted by the president s tweets, facebook locked in with twitter, but the dollar tree is the tale of the tape because that shows what people are doing with their stimulus dollars theyre going, and theyre spending it on those things, jim. Do you think its sustainable . Is it something when you look at the comps there, you expect will continue i have to listen to the excellent Brian Moynihan interview this morning on squawk, yeah, until the Unemployment Benefits run out. Thats the big question, not this we have 40 million people. 1 in 4, i mean, thats the depression okay and the nasdaq is, what, off a few percent from its high. A total divorce from the reality thats on the street but as long as the stimulus stays in, as long as bonds like macys, they had 6 for 1, six times oversubscribe for an 8 bond as long as the Unemployment Benefits remain so high, this can continue carl, i gotta tell you, we have never had such a forceful reaction its the exact opposite of the Great Depression the exact opposite of the great recession. Its confounding people, but boy, theres a luot of money ou there. Youre not kidding. I think it was jamie dimon this morning that said thick might be up 50 year on year. I think were going to crack a trillion in ig new issuance for the year now jim, is your playbook, are you going to wait for corporate debt to tell you its time for equities to take a breather . Im with the barbell trade, which means you can do a lot of opening trade, but you have to start thinking about, if youre rh really going to take recession off the table, it shows a lack of foresight we had a couple Big Hedge Fund managers come on and talk about the doomsbay the doomsday playbook hasnt played out we never played back to the march low. One thing that is incredible is small cap. How are they doing so well small cap represents america, i thought, and i thought america was in tatters so i think im afraid to go all in on this reopen trade since its already had a pretty big run, but theres still some catchups. We havent had the rails go far. I dont know how much further the airlines can go, but if you say that american cutting 30 means that theyre going to actually prosper, then go for it were in a really critical juncture because it feels like that there are a lot of people who want to say, you know what, ignore the unemployment number, full speed ahead, and a lot of other people are saying are you kidding me one in four people are on the unemployment line. July, the numbers go back, the money runs out, and were going to be saying how the heck did we get up this high very split market. Two very opposing camps. Its so vociferous, you think its not argumentative its at this point dogmatic and very philosophical, meaning a lot of people feel that, im going to use a term i shouldnt, but coronavirus was a hoax meaning that it was just a bad cold i think those of us who live here feel that thats an atrocious judgment, but it does feel a lot of people who say you know what, we never should have been closed to begin with. Theres so much pentup demand why do we need social distancing will be the next thing you hear in ten days. Right, and then the question will be whether we get a significant recurrence fairly soon or a big second wave in the fall you pointed to the pandemic of 1918, of course, or whether we dont. In which case, those who question the response may have even more ammunition in terms of supporting their contentions that said, of course, there is also the fact we came into this without perhaps enough of a plan in general to sort of try to understand exactly what it was we were dealing with and set out exactly what we were going to try to achieve its been kind of always evolving difficult, of course, given how little we still seem to know about the virus itself but jim, if i could come back to the markets. Youre sort of painting this picture we have been hearing about lately, which is the economy and the stock market are just not the same thing. I, having done this as a financial journalist for 33 years, i have generally drawn conclusions about the market from the economy or vice versa should i no longer be doing that if im an investor you cant you cant do it. The Big Companies are too big. When Jerome Powell allowed anyone to raise money, it kept afloat a lot of companies i think you and i both know would have gone under. We dont need to list them, but theyre palpable, and it left Small Companies to do terribly you have to think at a certain point the people who work at the Small Companies, after ppp, the paycheck protection runs out, or the employment insurance runs out, this could all be a chimerical we could be on total quicksand, but if you look at the boarded up stores that we see in many towns, theyre the little guy. You have to think the little guy, that those people cant go out, so theyre going to Dollar General. Theyre not going to macys. Right, but you have these conversations. I know you do during the course of the day, because i find myself sort of whipsawed we look at the markets, talk about the fed support, talk about the success of so many of the big Cap Companies in terms of this environment, but then you have during the course of the day, gary philbin, by the way, will be joining us. Ceo of dollar tree, a bit later in the program but jim, you talk to people through the day telling you, well, i got layoffs planned. Im still concerned about whats coming i still dont know about demand. Im still going to cut capx, all those things and then you come in every morning and the s p is up another 1 look, carl, to bring it back to main street, theres a note today on Royal Caribbean so what do we know about the cruise lines epicenter of the pandemic. Japan, about half of the people who got sick were from a cruise line okay, and ill mention, its carnival i think carnival is a wonderful company. I think Royal Caribbean is amazing. Norwegian is my favorite they have all been able to raise money. They all have bookings well ahead of where we would expect them in 2021, and these are not people who the cruise ships are made up of people who are working in the small and Medium Business so i think that the great quandary we feel is, who is booking . And how is it possible and how about we take Brian Moynihans notion of maybe were just a Richer Country or that we have many more people who are doing well or were doing well and actually saved and i think its the saving quotient we dont think of people think of america as reckless spenders. Everybody seems to have learned something from 2008, 2009. The fed learned, people learned to save. They are spend thrifts when we want them to be spend thrifts. The kids are living on the mattress at home now theyre starting to think about 80,000 college, whether thats worth it. Were a country that reminds me of what happened after the Great Depression with our parents and grandparents, where every penny was saved. Were not putting enough credence in what was in the bank account of people before this and how its lasting for them. Plus, remember, no one is spending on anything because there was no place to go the treasury spending and fed spending theyre spending 24 trillion National Debt on our way to who knows where, and a Balance Sheet of the fed is going to be, what, 8 trillion at the end of the year thats where the spending is coming from. We study the Great Depression in school. What did we learn . The fed tightened in 37 thats the only reason the depression ended is because of world war ii we look back and think how stupid could they have been. Now i cant say how stupid they have been. This is what i have been railing against 1937 forever you have to take that course where the fed said, hey, were safe i mean, i think that Jerome Powell, when this is over, hes not going to be known as the guy who created republican wheelbarrow dollars. I think hes the guy who saved us from a level of deflation that would have been very much like what happened in germany and another area you dont want to talk about. Even amid more discussion today that the fed is having actually to not spend the amount of money they have actually spent is maybe lower than you expected the jawboning was just incredibly effective the other big story today, guys, were going to wait for this executive order to come out of the white house. Reports about a draft, but obviously, targeting social media companies, trying to prod regulators to rethink the law that protects them from being sued or being held liable for their content. Sorkin did talk to Mark Zuckerberg about that, about Small Business, and a lot of other things some of that ran this morning on squawk our policies are grounded in trying to give people as much voice as possible while saying if youre going to harm people in specific ways, if youre going to do something thats going to cause violence or if youre saying that something is a cure to a disease that has been proven to be a cure but its not, and that could lead people to either not seek another treatment or do something that could be harmful, well take that down no matter who says that. We had a case recently where the brazilian president was saying that hydroxychloroquine was proven by scientists to be safe, and we had to make the difficult decision of taking that down even though we want to provide as much voice as possible. So there are lines and we will enforce them but i think in general, you want to give as wide of a voice as possible, and i think you want to have a special deference to political speech jack dorsey last night tweeting, fact check, there is someone ultimately accountable for our actions. As a company, and thats me. Please leave our employees out well continue to point out incret information about elections globally he said our intention is to connect the dots of conflicting statements and show the information and dispute so people can judge for themselves. Jim, how much pressure do these stocks deserve to be under today . Not that much i think, because remember, theyre still based on earnings. And i think that what will happen is that even if this section 230, thats what the exception they have to basically be like considered common carriers, even if its discussed, it wont be taken away, i dont think. Its interesting the example that Mark Zuckerberg did im not sure whether it was intentional or not, but he said they had to take down that the brazilian president said hydroxy was safe we have a president who doesnt say its safe, we have a president who says it should be used well, kind of ironic, wouldnt you say . I do think, look im sorry, david. No, listen, he also discussed, jim, during the interview with andrew, Voter Suppression and if they see things that would lead to potential sending people the polls at the wrong day or the wrong time, they would take that down as well but jim, i dont know if you had an opportunity to read the order. And section 230 was designed to address Court Decisions really in the earliest days of the internet so that if you engage in editing of content or restricting the content, then you potentially were considered a publisher, and therefore open to liability. And things like defamation and liable for torts but my question is, in reading this, what is going to then they had an out. And they were protected from civil liability when it was acting in good faith to restrict access to content that was considered obscene, lewd, filthy, excessively violent, harassing or otherwise objectionable. So thats your exception there wheres the law drawn now when people say, okay, you have all out free speech, you have to do things that allow free speech and publisher speaker is allowed to engage in whatever they want to say, and you cant edit it . I guess my question is, where is the line drawn here . What constitutes what i just said and what doesnt . I always think marc benioff, who is on mad money tonight, often talked about the notion, look, lets say the New York Times were to take, just print things that were untrue. It would also have a counter saying it was untrue and i think that i totally understand, by the way, the president s view its not outrageous. In the sense that you dont want anyone to contradict you if youre not lying and you could argue that some of the stuff is bias. Im not going to totally dis the president s position, but i think its a dead end because in the end, this is not a theres the first amendment, theres commerce clause. Theres a lot of people and congress, justice, and the Supreme Court are all going to get involved in this thing in the end. Justice already. And an executive order is the beginning, not the end right even as we speak, guys, bolsonaro is on the tape saying his opponents are trying to oust him in brazil by silencing social media that backs him. Clearly a global story a lot more to get to this morning. Well talk about boeing resuming production of the max. Some of the guidance were getting on employment out of the airlines a ton of retail from burlington to a f to dollar tree and Dollar General rba ia mewee ckn mont this moment. This moment right now. This is our commencement. No, well not get a diploma or a degree of any kind. But we are entering a new chapter in our lives. Our confidence is shaken; our hearts cracked. The kind of a crack that comes from the loss of a job; from life plans falling apart. We didnt ask for it. But we are rising to meet it. And how far weve come isnt even close to how far we can go. We just have to remember how patient we were. How strong we can be. how strong you can be. and remember this; theres a crack in everything for a reason. How else can the light get in . Tomorrow starts today. Chinas legislature has approved a proposal to impose a new National Security law on hong kong. Question is what happens now eunice united stat eunice yun in beijing. They defended the sdegz, saying it protects the long term prosperity of the city, this comes after what people often describe as a Rubber Stamp Parliament overwhelmingly approved the legislation 2,878 in favor and only 1 against now, this vote allows beijing to tighten its controls over the territory, which generally up until now has been running its own affairs separate from Mainland China now, top officials will be able to work out the details of this legislation, including what exactly is defined as an activity that would be considered subversive to the Chinese State and when and how they plan to open up intelligence agencies wirn the city as you can imagine, there are many people in hong kong who are worried about the implications this means for their freedoms, many of them are now looking to the u. S. For a response. Secretary of state mike pompeo had said he believed and that the u. S. Believed that hong kong is no longer autonomous from Mainland China, and that President Trump had promised earlier this week that something would be done about it by the United States so a lot of people watching that a loft ospeculation about what thats going to be, whether it means visa restrictions for chinese officials, a freeze on transactions or possibly the u. S. Pulling its longterm relationship and preferential trading status with hong kong. So that has been raising a lot of concerns in hong kong among Business People there who i speak to some of them say that their manufacturing and shipments out of hong kong could face higher tariffs and theyre worried about the Business Climate the American Chamber of commerce said these tensions are now at a whole new level. Guys were going to wait to see how the u. S. Does respond. The president did promise there would be a response of some kind thanks, eunice take a quick break. As we said, futures looking pretty green as nearly all of the names on the s p 500 are trading above their 50day moving average back in a moments. These days, its anything but business as usual. Thats why working together is more important than ever. At t is committed to keeping you connected. So you can keep your patients cared for. Your customers served. Your students inspired. And your employees closer than ever. Our network is resilient. Our people are strong. Our job is to keep your business connected. Its what weve always done. Its what well always do. The data this morning not so good jobless claims, another 2 million. Gdp down 5 one of the worst numbers on record that tends not to get in the markets way dow looks to open up 240 in just a few moments. Okay, give it a try. Between wisdom and curiosity, theres a bridge. Between ideas and inspiration, trauma and treatment. Gained a couple of more pounds. Thats good for the babies. Between the moments that make us who we are, and keeping them safe, private and secure, theres webex. Beautiful. I am totally blind. And non24 can make me show up too early. Or too late. Or make me feel like im not really there. Talk to your doctor, and call 8442342424. Welcome back to squawk on the street. As we get you ready for an opening bell on this thursday, about four minutes from now. Lets squeeze in a mad dash. Last night, the ceo of workday was one of your guests on mad money, and its a feature for you on the mad dash. I know that you know neil you know what a solid shooter he is he delivered a number that was not as bad as feared and an outlook i regard as being even though the headlines said it was not good, really to be spectacular because there are a lot of deals that got pushed out but will be done this quarter. He landed a very big deal, fannie mae he also has announced two market moving partnerships. One with salesforce on the reawakening trade, so to speak, the sales force has a thing called work. Com worth looking for, and microsoft the reason i mention all of this is because this is the stock to watch if the money is going to ever flow back to tech otherwise, you know what, david. Its the recovery trade again, which is the one that confound most americans because how do you recover when you have gdp down 5 . The answer is the things we were talking about, which is liquidity, which is the fact that a lot of Companies Made it that we would have said couldnt have made it, including look at macys, kohls, and thank you, jay powell, because it was you who did it, not the shoppers at macys or kohls as carl pointed out, the jawboning alone was certainly enough, or the idea of fed support being there seemed to be enough to support these Investment Grade markets or even nonInvestment Grade to a certain extent, and the fallen angels is also where the fed said it would come in potentially and help support the market everybody hurts im so glad you brought that up, because we have had our share of bankruptcies, and lets not, of course, forget that it was through no fault of execution on the part of these companies. Hertz had a large debt load. It was backed up by the enormous fleet of cars, the value of which conceivably was going down or their inability to monetize those to pay down debt in an effective way, but the losses there are significant, not the least of which, of course, was for carl icahn he had agitated years ago, had people on the board of directors, of course, and sold stock at 72 cents yesterday. Oh, boy 50 plus million shares. Incredible. Hes got some winners too. A lot of winners we have to go to phil lebeau on this because theres 700,000 cars that theoretically could hit the market thats an actual used car market mov mover. We often forget as we buy the autos and all the oddo equivalents as part of the recovery trade that the autos have not snapped back. There really isnt anything there other than well, maeg m maybe magna because they saved money as an Auto Parts Company we know during the interview you brought to us, where they have too much auto, so we have to watch it here. Watch this workday its going to be the tale of the tape, even more than micron which yesterday preannounced a much better than expected quarter. All right, guys theres the opening bell at the nyc. Live shot of times square. I know, speaking of cloud names, you got sale i know, speaking of cloud names, you got salealesforce tonight. Jpmorgan this week did do their own channel checks, looking at some of crms partners they werent all that optimistic no. Look, im betting marc benioff has a particular plan for companies who want to reopen and reopen in a correct way. And i think if he directs if we see numbers for that that are good, thats going to win over a lot of new customers that he did not have before. A lot of people still feast on oracle there was a subtext about feasting from oracle i think the people going to the cloud, Companies Going to the cloud, its still early. I know it seems like everyone is on the cloud, i dont want to bet against marc, this work. Com initiative is quite impressive its the best way to try to figure out what to do for your employees. Its almost as if the government should have just figured out what marc did or maybe marc is the government in this case because its been so unruly. No criticism of the government, look, its hard. You have dr. Fauci, foremost guy, and i dont want to spend too much time on sooins, but he said dont wear a mask, and now he says wear a mask. He said the fall is definitely going to be bad, now fall is not going to be bad. Hes offering ill advised information. I say that as someone who reveres him. Cdc, too, jim the cdc in particular from the very onset of this crisis has been very hard to follow again, and the mask thing, what i recall came from them specifically dont worry about Wearing Masks. Save them for the frontline, the people on the frontlines then that changed. We look at asia where Wearing Masks had been done in daily life frequently, and the rates there are so far lower than we have in this country look, they would be much better if they just watched dr. Gottlieb in the morning. They should follow him on twitter. They can say, heres what the plan is. Gottlieb has been so much better than these illadvised people, and cdc at one time was a Great Organization and was considered to be the best in the world. And i think when the book is written, they will come under particular criticism for whats happened to them they gave us terrible guidance jim, this is one day where the financials are not leading here we did get a lot of information from the banks today American Express and bernstein yesterday talking about spending improving but still down in the mid 30s. Entertainment still down 90, and Brian Moynihan talking about loan deferrals heres whats he said. You have seen the deferrals in our customers accounts fall dramatically we had probably a million in the first couple weeks, fist three weeks, and then we have had in the next five, six weeks after that, a total of half million. Its really dropped. The last couple weeks in mortgage, for example, very small. Why is that happening . I think people have adjusted asked for deferrals. They were shocked by what happened once they got the deferral in the mortgage area, 20 odd percent of the people who asked for a deferral made their payments, which means they were in a different position when the payment time came than when they asked for deferral he added apparel spending up 50 month on month as people are starting to broaden their spending palterns. Burlington didnt have that great of a number because burlington was closed by the government viewed as nonessential when you interviewed dollar tree, i really am curious what philbin says about apparel they had a very bad apparel lineup during the fall of last year and winter. But if they say that the people are buying apparel there, and tjx, another one to watch, that stock is going down. Stupid bag of hammers. That company is going to have a pretty interesting situation today, by the way, the recession trade is on. Maybe someone is looking at this one out of four people and comparing it to, say, 1931 im busy trying to reconcile, but of course, obviously, what we have now is a safety net, and 1931, the banks all go 1932, banking holiday. 1933, we figure out that we need a bunch of programs to put people to work versus Unemployment Insurance and jay Powell Printing money. But today is day where were seeing the new caterpillars battle the proctor gambles, and i have to tell you, my money is on the proctors if a week ago, or eight trading days ago, i would say go long wells fargo and short peloton, im not sure you would have done that that would have been the most stupid thing in the world, and also correct yes, and also correct wells fargo, we were watching that stock it had a 9 , 9 plus percent yield, now its down to 7. 2 , given the move up in price and the overall rebound of the banks. Look, jamie dimon came out and said v is for victory. He didnt say it was going to be a w, a u, a swoosh he didnt even say it was going to be an amazon. He said it was going to be a v, and when you have a v, you have to sell peloton and you have to buy royal norwegian carnival, which by the way, aint no stopping those stocks now. Isnt it getting tired arent the Airlines Getting tired when american has to lay off 30 of the people even though theyre not supposed to be laying off anybody because they took the fed money, but i know theyre doing buyouts, and what is that about yeah, layoffs at american and more significant layoffs at boeing beyond the 2500 voluntary yesterday we heard about in the morning a lot more behind that at boeing. The numbers are, you know, getting to be fairly large at least in these industries, carl, that have been so hard hit, of course, travel and leisure being the key ones oh, my god, travel and leisure, and you hear moynahan say theyre really not spending that much. I find that whats most daunting is that theyre half of everything i have a friend right now who is doing a cruise the grand canyon, and everything is half meaning not half off but marriott is only allowed to be like half full everything is in half. How do you make as much money when you can only have half your customers . Its the government by fiat telling you youre going to make 50 less, and of course, the way leverage works, your expenses dont go down, but your amount of money you take in, revenue, goes down big. This is the problem i have with trying to understand how the market is going to resolve itself because unless you have a dollar tree, Dollar General, your revenues are going down big and your expenses are staying the same thats not a recipe for good numbers, but right now, good numbers dont matter that much they somehow dont matter. U. N. s got a report on International Tourism which they say will drop 70 this year. The biggest drop since they started taking records back in the 1950s. Which sort of leads you, jim, to domestic travel, right inim sure you have seen the Google Search trends, searches for yosemite and National Parks are through the roof, and now we have mgm and wynn laying out their vegas plans. By the way, read the wynn plan its extraordinary and they bring in the Johns Hopkins guys i was very worried about air flow as a restaurant owner, theres a bad cdc piece put out about if you have air flow done the wrong way, patient one giveatize to patient four but they come up with a terrific plan to save wynn and make you feel like you could go and do gambling and be safe, and i think it will work, but remember again, you need crowds a lot of businesses need crowds. And i think that when you look at the good thing that dr. Fauci has been talking about over and over again is social distancing. And that means no crowds so i dont know how you have no crowds with businesses that need crowds i havent been able to figure it out yet. Jim, one of the strongest performers this morning is the pharmaceutical seconder. Of course, we talked earlier this week about merck, when they, you know, made some moves in terms of vaccines and therapeutics, but merck, pfizer, j j, lilly, of course, which has just been an incredibly strong performer, up over 12 this year, is also up yet again not sure why the move is being made, but thats certainly one of the strongest areas of the market thats the recession trade coming back, david its not the its not the vaccine trade. Because lilly is mostly diabetes and immuno and its not testing its really, you know, how is moderna doing . Anybody selling there today . Good opportunity because oh, moderna is up 4 get your broker on the phone, do a little selling there im talking about the executives and not the owners im still reeling from the selling there. I have never seen anything like it and i know it may have been planned, but you know what, you can plan something thats not right. And they have a lot to answer for. Im going to stay on that story until i actually see someone answer it. It is just not something that should have happened it just shouldnt have happened. Right it wasnt right not to say that there isnt a chance that the vaccine will prove effective. I mean, i know it was eight people were waiting obviously for a far larger sample size, jim, but you know, there are those who do believe the mrna, the technology itself will prove effective. You will have a vaccine in some fashion that is at least quite helpful. You dont come on and be really enthusiastic and do a huge media blitz you speak softly, like a j j, thats doing incredible stuff. When you talk to j j, listen, you have to speak to this harvard professor. He lectures you about how dumb you are, and thats okay, i can handle that. I was told that at harvard myself so i got an extra dose, but i do feel the stocks going up in the drug group where the ones who say listen, were going to have a recession. Enough with the reopening trade because in the end, its too far too fast i think it is too far too fast by the way, pfizer is quietly in the lead, i understand, with the vaccine. And glaxo offered some good news the ceo said a couple things one, no geographic preferential treatment in terms of Vaccine Distribution Clinical Trials would begin soon in france and belgium and move on to the u. S. , but merck is up 2 i want to turn you quickly to housing because toll did report, and you asked whether its a counterurban trade, because we thought about toll in many ways in the last few years as an urban trade. I know, because they did all these fantastic projects we see them in new york. They ring new york city, and of course, theyre in brooklyn and hoboken. Toll was up 2 it was up 2 last night, and all on one figure. The figure was up 13 in may and thats really rather extraordinary. People feel that the rates are working. Low rates. But this counterurban trade is really fear of virus and as long as theres fear of virus, there will be people who say im done with urban. I dont know how long that lasts. For about as long as the i dont know, people dont fly i think that what does matter is that the rates are so low, people feel this is a once in a lifetime opportunity because a lot of housing is depressed. Theres some real buys out there, and also, doug, the fantastic ceo, poinls out theres not a lot of inventory, but what is there is down a little bit i think the housing may number is extraordinary i didnt expect it to be up that big. A lot of people shopping for houses pentup demand is what we keep hearing. No kidding. Mortgage apps up six straight weeks. We talk about High Frequency data, but everyone points to mortgage apps, puncrchase apps, more than anything in keeping with the rally in wells, which is mortgage centric, wells taking a little bit of a breather here, still yields 7. 4, david. But i do think that housing is surprising spending is surprising Balance Sheet is surprising. The ability of companies to be able to raise capital when they shouldnt be is surprising the big omni channel move is surprising and thats whats made it so the hedge funds who have made these horrendous bets against this market just have to be reeling they have to be reeling. They just got the wrong side of the trade. A lot of them, jim, took risk off, but i dont know that a lot of them were actually short. A handful were, certainly. We heard from some people who were quite negative around the very bottom of the market, but you know, i think what you may see more is underperformance as opposed to actual significant designs. That seems reasonable i just keep going back to the reverberation of the hedge funds that came on and you know, i dont even know if its fair that Stan Druckenmiller was painted with that brush because i was rnt at the club if you dont Pay Attention to ray dalio, i think youre pretty foolish. But there was the rich people who came on were very scared how about that for the correct generalization yeah, but they may still be, and they may have reason to be i mean, all right, so we had this incredible move from the bottom we talked about it we talked about the divergence between the real economy and the stock market and so many other things here it is, the s p is 3,042 a number i think many people might not have anticipated we would see again for quite some time even six weeks ago but is this a number indicative of where the market is that you tell people come in now, the water is safe . You just had a vicious rotation you could come in to workday as of now, still even up 12 pause the stock is down 50 from its high, and neil laid out a longterm course but lets talk about disney for a second i dont want to talk about the actual firm that downgraded, but if you look at disney, carl, this is something that i really need your help on. Lets say youre opening a slow opening of parts of disney thats taken the stock from 90 to 120. Now, is that a slow opening where we have no take your temperature, thats the biggest ruse of all. Taking temperature what does that mean . The people who give you the disease are the people who have no temperature, but they take temperature. You need blood tests im laughing because jims referring to a downgrade out of imperial today we dont talk about them very much, but they go to underweight, and jim, they say its up 20 in a few weeks because of disney springs, which we admittedly can say is immaterial to the income statement, but their argument is that you want to trade it, not own it, which i think goes counter to your more secular views. Look, disney is going to be open some day. Lets not forget, a lot of stocks are going up because they survived and if we if the virus is didnt come back, a lot of states opened. There were a lot of naysayers. Then survival, we get to a bridge with the unemployment and the economy does open and the companies are deserving of where theyre selling. I get that i think it makes sense, and now that dr. Fauci, who again, i mean, he is still the expert dr. Fauci said it may not be bad this fall. Lets just get to the fall and a lot of people can do okay. Yeah. Lets hope we dont become brazil, which is increasingly a topic of discussion, too lets check in with Rick Santelli who brought us all the data this morning. Not much of it good. Hey, rick. Well, not much of it was good, but the market thinks otherwise. Look at intra day of tens. Yields moved up a bit. Is the sovereign data the safest its where the people go, and they seem to be leaving. They look to be closing at a tenweek high today. I think a lot of the people globally that were buying some of these sovereigns have moved into the equity markets because its an unloved space but you still can cash a check its been long since midmarch if you look at tenyear in particular on the french side, this is really revealing look at the tenyear, this is a month to date chart. Theres been two sessions all of may so far that have closed above zero, and by above zero, one was. 004, and one was. 002. We want to watch because theyre going to be throwing 2 trillion into the system. My guess is much like many global markets, theyre going to take off and rates are going to start to move up again hint, hint, they cash your check even if it doesnt make economic sense. And finally, the euro versus the dollar closing at a twomonth high, which means the dollar index is closing at a twomonth low. Back to you. All right, rick, well see you in a bit s p, 3039 is off the initial bounce were still hanging in above the 200day moving average, which at this stage is about 3,001. Were back in a moment this is a tempurpedic mattress. And its mission is to give you truly transformative sleep. So, no more tossing and turning. Or trouble falling asleep. Because only tempurpedic uses proprietary tempur® material. That continuously adapts and responds to your body, to relieve pressure. So you get deep, uninterrupted sleep. All night. Every night. The tempurpedic summer of sleep starts now, with all tempurpedic mattresses on sale, and savings up to 500 on adjustable sets. With all tempurpedic mattresses on sale, iits not acceptable oor nothing. And its definitely not close enough or nothing. Mercedesbenz suvs were engineered with only one mission in mind. To be the best. In the category, in the industry, in the world. Now, get 0 apr financing up to 36 months on most models and 90day firstpayment deferral on any model. Mercedesbenz. The best or nothing. Movies the journal this morning reports the company has napped killers of the flower moon. Apple beating out netflix which produced the irishman. Were back to intellectual property in the bidding wars apple likes to start slow they want to be sure they get it right. Its not unusual for them. Now we see them coming on with the tom hanks movie, with this theyre going to be a major force. Theyre going to be major in movies and podcasts. They have the more fire power that be anybody. Obviously theyre making this as part of that Service Revenue stream they realize has great gross margins. This is important. Im glad were talking about it. This must have been a jump ball, carl, and the jump ball went to the guy who had the most money thats a big change. Because someone was playing with borrowed money the other one was playing with cash thats a good point it remind me yeah. It remind me, carl, of my interview with john malone last november, i guess. We sat down for our annual interview. He talked about remember, jim, he talked about optionalty and their efforts. He said theyre sort of testing the waters theyre going to see and be deliberate, but they are going to make moves based on what they see in terms of consumer response clearly, they are starting to spend more money weve seen that in terms of filling out their library a bit. Bidding here and then this will raise that question that Everybody Loves to ask, will they look to make an acquisition of some kind in this area i say it seems small in likelihood, but its interesting to note what apple is doing here well watch the dow here. Boeing is in the lead along with a few of the pharma names, merck, pfizer, unh and proctor a mix. Boeing stuck in there. Back in a moment turn on my tv and boom, its got all my favorite shows right there. I wish my Trading Platform worked like that. Well have you tried thinkorswim . This is totally customizable, so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. S p led by dollar tree up almost 19 for the week to date were going to talk to gary p l philbin about their comp nbeumr of 7 this moment. This moment right now. This is our commencement. No, well not get a diploma or a degree of any kind. But we are entering a new chapter in our lives. Our confidence is shaken; our hearts cracked. The kind of a crack that comes from the loss of a job; from life plans falling apart. We didnt ask for it. But we are rising to meet it. And how far weve come isnt even close to how far we can go. We just have to remember how patient we were. How strong we can be. how strong you can be. and remember this; theres a crack in everything for a reason. How else can the light get in . Tomorrow starts today. Lets get to jim at stop trading . An upgrade. Its an election year. Thats when the farmers do best. I had the largest seed company on this week they dont do as well. They buy equipment, you get a check from the government. You buy equipment, you vote for the incumbent. Buy deere. Interesting call. Bloomberg has a piece china is buying soy from the brazilians im calling that relationship sup optimasuboptimal whats tonight . When you go through the drive through technology, thats Zebra Technology b benioff, reporting earnings. And maybe we throw in a question about twitter and facebook why not . Yeah. And media. Tieing in all the rest thats a show. Well see you tonight. Okay, thank you mad money at 6 00 p. M good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with sara icen and david faber 3 k on the s p now pending homes about to cross. Lets get to diana hey, carl pending home sales in april fell 21. 8 . Thats much wider than expected. And were down 33. 8 year over year now, these pending home sales represent signed contracts people out shopping in april there are forecasts of what may close sales will be. In the northeast down 48 for the month and down by 52 year over year. Also very big drop in the west down 20 for the month and 37 annually all this said, the realtors seem optimist optimistic they expect this to be the bottom for home sales. We saw that in newly built homes. Theyre saying may will be the bottom for closed home sales and theyre revising their forecast for 2020 slightly higher to just an 1 1 drop in sales and prices up 4 annually so a huge drop in april pending home sales not only the largest onemonth drop annually but also the lowest level of this index since the realtors began tracking it in 2001. But signs things are already coming back. Sara diana, thank you. Well begin with todays Market Action thats just the latest data point. The dow and the s p 500 extending yesterdays gains a little bit here. The nasdaq not joining the party. Bank of america ceo joining squawk box earlier discussing todays jobless claims number and the effects of the pandemic. Bank of americas consumer accounts take a listen. If you look at our customers checking balances, say, under 5,000 and under, average balance they were running before the crisis, theyre up 30 or 40 in average balances in their accounts today versus 12, 13 weeks ago. That means the stimulus is in their accounts theres more to come well see if that stimulus can hold on long enough until the reemployment comes back. Kbwco tom joins us now. That statement about better Checking Account balances, the stimulus checks working, the latest in a string of positive comments including from jamie diamond this week. Do you think the market got too negative on the state of the banks and the overall consumer picture . Good morning. And absolutely i dont know if investors realize the First Quarter of 2020 was the worst quarterly performance ever since weve had the bkx index. The index was down over 40 in the First Quarter. There was a lot of unknown and a lot of really bad news was in the bank stocks. I think what brian said this morning is what were hearing across the industry. Weve had two conferences in the past two weeks we keep hearing things about cash in consumers accounts. We hear that deferral requests are down significantly we hear that banks which scramble excuse me. Corporate customers of banks that were scrambling for liquidity right when the crisis started are now starting to pay the money back and were also tracking card flight data which is a service that looks at what Small Businesses are doing with sales, and youre seeing that Small Business sales have bottomed and theyve been up for five straight weeks so theres a lot of optimism that the worst Case Scenario could be off the table and yet, we get another 2 million americans filing for Unemployment Benefits last week bringing the 2 and a half month old to 40 million unemployed there are some signs of recovery, the continues claims number feel. Its a good sign of a rebound. Still, tom, i mean, how do you take that economic carnage and marry it with the optimistic outlook youre painting on the consumer well, first, i dont mean to be painting an optimistic outlook. Frankly, the bank stocks went down so much that there was so much uncertaintythat it was forecasting an absolute worst Case Scenario. And yes, thats terrible that that Many Americans are out of their jobs at the moment, and the second and Third Quarter are still going to be choppy quarters and we think provisions could be higher in the second quarter. But i think the relief rally that weve seen in the bank stocks recently is that there are some signs that its stopped getting worse and were seeing stability before it could get better were not forecasting in our numbers i wouldnt call it a rosy scenario, but our forecast for the consumer is similar to what i think others have said which is we think unemployment will probably peak now the government stimulus programs will help. And that youll see some improvement or youll see improvement by year end. And i think thats the type of inflection that was driving the bank stocks and the reason why weve had somewhat of a rally over the last several weeks but no, there are still head winds it will be a distress scenario i think the point is its just that weve seen some stability yeah. Tom, its david. Its not somewhat of a rally its been a furious rally. Although, as you say, off lows that we hadnt seen for quite some time. Weve been focussed on wells far fargo. It had a 9 dividend yield a few weeks ago. Are the dividends safe at the banks . Well, heres thats a great question we believe there are two aspects to the payment of dividends. The first is does the industry have enough cap can tall the answer is absolutely yes the second element is can the banks earn their dividend . And i think thats the critical question thats going to determine which banks cut dividends. We think, i think, there will be more di dend cuts, but we just recently completed an analysis we think the average meeting payout for the 2030 banks we follow is 60 mind you, before europe cut their dividends, their payout ratio was 150 so we believe that 90 or so of the banks of the 230 we follow will earn their dividend this year its that 10 to 12 that may not for consecutive quarters and look, wells fargo did not earn their dividend in the quarter. If they have a continuing track record if not earning their dividend, then i think their dividend is at risk so they would be on that list. It doesnt mean theyre going to cut it the other point you and others in the market should remember is that in a couple weeks time, were going to get the fed answer to the distressed and c car analysis where the regulators are going to approve capital plans for the big banks. That is going to be very telling for wells fargo. Tom, you know, we tend to focus on the larger cap banks. Even though wells market cap for a while was below 100 billion. You mention some 200 odd some banks in your universe is there a part of the banking universe you think is particularly cheap right now i think its the middle bucket so im going to have three buckets. The first is the highest quality banks. So jpmorgan trades at 1. 7 times tangible book right now. We have jpmorgan, collin frost, First Republic the market has gone there first. Ill talk about the bottom bucket there are a couple of banks, and ill take the 12 of the banks we follow that might not earn their dividend this year or banks that may have an unusual concentration of hotels or Energy Lending or lending that investors and we know are of great concern. I probably think you dont need to go that far down the value opportunity in bank stocks theres a middle tier of really high Quality Super regional banks that are trading 80 to 100 of tangible book at dividends north of 5 . Stocks are still down 35 on the year if the worst Case Scenarios being taken off the table was still a challenging environment for the next several quarters, i think those stocks are going to continue to keep working and david, thats where id look for the best value right now tom, we heard from goldman yesterday. Theyre going to start bringing traders back to the floor in limited fashion, phasing it in in new york and london what do you think staffing is going to look like going into the second half of the year, the back half, the back quarter, and implications for spending and head count yeah. I think first of all, i think most firms are doing everything they can to keep their colleagues employed. This is an unforeseen situation, and the good news is that the Financial Services industry had a good amount of profitability coming into this which should give them a good wherewithal to keep folks employed and not have to let people go because of the pandemic okay i think generally firms are the managements i talked to are working hard to do that. I think were not going to get back into areas where mass transit is required to 100 restaffing until theres a lot of comfort about how mass transit is utilized. And i think that is one of the tightest constraints so i think youre going to see offices, folks start to return to offices, but theyre going to practice social distancing, and i think you probably wont have 100 in Office Attendance which will have an impact on Small Businesses that provide lunch to those folks. All around the eco cycle and have a positive impact for others but i think youll see Corporate America come back but not necessarily ramp up to 100 in the next several quarters tom, as we think about the longterm changes to our society and consumer behavior, one of the things that some of these bank ceos have talked about is the shift to Online Banking happening at a much faster and broader speed, especially among older americans. Do you think that sticks and how does it change the trajectory . What happens to Bank Branches . What happens with the outlet to m a . How much does it change things thats a massive trend that was already underway before the pandemic and you are absolutely right its accelerated it. Its bringing new users who would have not adopted Digital Technologies but had to. Thats a whole new universe for this moment. I read a great report recently about Small Business there is a great thought piece that said the main street banks, these are the banks that did the small triple p loans around the country. They need to be digital mainstream banks and every bank in the market today needs to make sure they have a very strong Digital Strategy and i think that some banks are going to realize thats an expensive thing to do, and i think this will accelerate consolidation on the back end of this, and then the other thing is i do think were going to have lower for longer rates on the back end of this that will probably be a factor that spurs consolidation i think the Consumer Reports ive been reading see that consumers like the digital connectivity with their financial institution. Who are the buyers and the sellers in your consolidation outlook . The best way to do it, i think so this is just mathematical weve gone back and looked back over the last several years. Typically what happens is a Banking Company or Financial Services company with a stronger currency will acquire a company with a weaker currency and i think you could see how the market has stacked up the banks by a price to tangible book value would be a good first step and the banks that have a currency are going to have the advantage versus the banks that dont. And thats how i would probably think about who the buyers and sellers may be tommy, thank you for joining us thank you all right. Lets get to elon with the details on the president s signing of an executive order this morning that targets social media companies. A lot going on here, elon. Thats right, david i was able to get a draft copy of the executive order and the way it would work is the administration would ask the fcc to write new rules about how and when they can remove content and remain the shield. And looking into companies that might violate the rules. The doj would have to create a working group of state attorney generals to look at any relevant local regulation and all Government Agencies would be required to review their digital ad spending to see its on platforms with viewpoint restrictions its not final until the president signs and the signing is not yet on his public schedule however, the president did tease that an announcement to coming today on twitter, of course. He wrote this will be a big day for social media and fairness. Now, this all comes after twitter flagged two of the president s tweets about mailin voting as potentially misleading and the twitter ceo put out this statement. He said this does not make us an arbiter of truth our intention is to show the information in dispute to people can judge for themselves more transparency from us is critical so folks can clearly see the why behind our actions i want to point out once the president signs this executive order, theres nothing thats going to change immediately. The administration has 30 days to ask the fcc to write the rules. The fcc has to decide whether to comply and write the regulation. This battle is definitely far from over. Back over to you elon, its david. Just a quick question. What are they trying to rectify here what do they believe in the administration has been wrong that this would correct . Well, there are two sort of different but related issues here sort of broadly republicans have been upset with social media companies. They feel there is bias against conservatives. Evident in the platforms, that they unfairly target conservatives in flagging information that they feel is inaccurate or misleading but i would az also point out that these particular tweets, theres lots of debates about things the president has tweeted but these were related to the election process twitter said it felt in that case, thats what crossed the line here. Its not sort of the broader political debate, but the specific information about elections that was concerning and so thats what this is technical fight is over. But certainly its in a much broader political context. All right elon,well look for more developments later on in the course of the day. The executive order, potential out of the white house today when we come back, well check in with dollar tree not only leading the s p its up 14 . Its gone from 72 to 100 in the last couple weeks. Today responding to their earnings were back in a minute for business as usual. Or is it . What if business as usual means putting people first. And understanding their needs . If thats your business. 365 days of every year, then business as usual is precisely what these times require. Which is why your lexus dealer will do what weve always done. Put you first. Find out how we can service your individual needs at lexus. Com peoplefirst. Were committed to makingce college more affordable. , thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Across america, Business Owners are figuring things out. Finding new ways to serve customers. Connect employees. And work with partners. Comcast business is right there with you. With a network that helps give you speed, reliability and security. And enough bandwidth to handle all your connected devices. Voice Solutions Like remote Call Forwarding and readable voicemail. And safe, convenient installation. When every connection counts, you can count on us. Get the connectivity your business needs. Call today. Comcast business. Shares of dollar tree are surging. Comps up 7 Family Dollar up 15. A remarkable quarter despite the head winds related to the pandemic gary philbin joins us. The ceo of the dollar tree i think we talked a few weeks ago obviously when things were just torrid in terms of sales growth in the month of march and april. Can you give us color on how the trajectory has changed since then sure. Its been a bit of a stage as weve gone through this. I have to just call out thank you to our 190,000 associates. 15,000 stores, two countries we wouldnt be where we are today without their dedication but as we called out early on, its all the essentials folks needed cleaning, paper towels, kids got done with school more meals at home but it has changed the customer has moved onto how do i make my home, dress it up around bedroom, bathroom, kitchen, Outdoor Living and even called on graduations today. As resilient as folks are, they still want their celebrations. As weve seen drive by graduations, birthday parties and even our Party Business has recovered from where we started. On the categories where we saw real supply restraints, we talked the first of april, have they caught up in the most extreme cases . Were doing better. I would not say were caught up. And we are working hard night and day across the country you know, it varies by vendor. It varies by geography we are getting all those essentials into stores and maybe what used to run out in two hours we certainly are seeing folks now last a day or two. But im going to guess on some of the essentials to get back to what i would consider our normal end stock, its going to be another several weeks before we get back to that normal in the most critical items. Its interesting across the items people need. Whether its cooking at home or buying a comforter for their kids bedroom, those are the types of things were seeing an up surge now in. It shifted away from essentials. We still need the items but people are buying more of the things they need to go on with their lives right now. Gary, its sara if you look beneath the surface, i mean, Family Dollar, very strong Dollar General, excuse me, very strong 15. 5 comps dollar tree was negative why such a big divergence . To be clear, Family Dollar and dollar tree and i think it spoke to two things that happened during the quarter as the pandemic started off, people just bought essentials and that continued to where we carry a broader assortment we Carry National brands and clearly our customer needed that assortment. For dollar tree, we were faced with our biggest holiday until you get to christmas, easter holiday. And for easter, it basically evapora evaporated its when most of the shelter in place orders occurred and people did not buy easter products anywhere close to what we would have expected. But post easter, we started to see that dollar tree is starting to get back to normal. As we called out today, today as we go into may, its certainly a much more normal cadence post easter from where we were headed before that. For Family Dollar, quite frankly, its been strong but same thing, shifting from a very high surge on consumables, but now really the things that people are buying is outpacing our consumables part of our business as they buy for their home and Outdoor Living. A year from now when were looking at same store sales comps, are you going to make an exception saying that was the pandemic and dont and now our numbers are x. You cant compare to what they were a year ago, or is this sustainable . Well, clearly, weve had a spike in unusual demand. Weve set an all time record one week for Family Dollar in the history of the company id look at it this way. Its a different crisis. But in 2008 when dollar tree was gaining the right type of format we saw our customers discover us and stick with us. All the work weve done on the investment of Family Dollar around h2 innovations i look at through a similar lens i think people are going to find us, like what they see and stick with us. Well figure out the quarters but were building this for the longterm, and well navigate through the balance of this year first. And then i think its going to suit us better going into next year knowing that customers are going to be probably tight on budgets, needing value, needing convenience, and i would even add in being feeling safe in a small box environment. So i think those things work in our favor. Did you see a specific bump in sales after the stimulus checks were mailed out in terms of discretionary items and how do you look at that . Is that a onetime thing i would say weve always called out tax time refunds when they come. We certainly see that with the stimulus from the covid relief. Its been that on steroids its gone a long way to help our customer have money in their pockets during this critical time and we see that. And thats really not just whats driving essentials. I think its a lot of what people have been able to spend money on, you know, regarding their homes, and having celebrations and categories outside the home without a doubt, we see it so the further we get away from that, it will be interesting to see how customers respond. And thats why i sort of call on 2008 its another data point where customers came to us more foot traffic back in that time. Right now its more about people are coming in and shopping with intent so as we look through q 2, well be further away from covid stimulus we will also have Unemployment Benefits at the higher levels and at the end of july, so that will be another marker for us to watch how our customer responds. But i think were geared up with the right kind of values and convenience for these customers. Many of them seeing us for the first time i dont think we got guidance from you this time in part because of the uncertainties youve been talking about. The timing of government stimulus, unemployment rates, shelter in place mandates, vendor supply. Of that list, which to you is the most important puzzle to get an answer to i think its Customer Sentiment as much as anything. How does our customer shop the further away we get from covid . And there may be a bit of a chop there as we get further away from it and the unemployment stopped at the end of july over the upcoming months were in the right place and the right segment. Small box value discount i think it serves our customers well supply chains will catch up. Have no doubt. Its taking longer than we would all like, but that will be tail wind for us this time next year. We always appreciate the color and insight. Dollar tree leading the s p this morning. Gary, thanks thank you, folks. Lets get a check on where we stand across the major averages were positive for the s p 500 about a third of one percent the nasdaq has also gone positive the dow is up 62 points. Just building on recent gains with the s p above 3,000 we got a close above there yesterday. The dow above 25k. Utilities, health care and Consumer Staples in the lead energy, financials and Communication Services are all lower. Nt go anywhere. Squawk on the street will be right back you should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. Dont get mad get e trade and start trading iits not acceptable oor nothing. And its definitely not close enough or nothing. Mercedesbenz suvs were engineered with only one mission in mind. To be the best. In the category, in the industry, in the world. Now, get 0 apr financing up to 36 months on most models and 90day firstpayment deferral on any model. Mercedesbenz. The best or nothing. Jcpenny which is reorganizing in chapter 11 bankruptcy, opening stores, bringing the total to 300 nationwide it plans to have nearly 500 stores open by next wednesday. International tourism expected to fall 70 this year about 110 million jobs are estimated to be at risk worldwide. The 70 forecast is based on countries reopening their borders in august. Cnbc. Com has more on that story. And south korea reporting 79 new cases today. The most in nearly 8 weeks officials have tightened restrictions amid concerns of a second wave of covid19. At least 82 cases this week have been linked to a logistics facility of one of that countrys Largest Online shopping firms and in part of south western japan, Tourist Attractions that reopened tuesday are closed today after officials confirmed eight new cases of coronavirus the local mayor warned of a second wave if new infections cannot be traced youre up to date. David, back to you thank you, sue. Sue herera this Company Recently provided guidance of 20 to 25 same store sales comps for the quarter and 24 to 29 Revenue Growth shares have done well since the pandemic began well talk to the ceo of Tractor Supply after this. Record breaking sales and earnings taking shares of Tractor Supply to an alltime high this week. Stock up better than 50 since the nationwide lockdowns began in mid march and it is the best performing stock of any in the Retail Sector in the s p 500 lets talk to the companys ceo who joins us now on cnbc nice to have you with us this morning. Thank you, david, for having me on today. Very happy to have you on i assume youre happy with the landscape that you see out there, no pun intended i guess the question would be how have you pulled forward demand given just the unpress lented demand youre seeing in so many different areas and geographies or is this sustainable . First, id like to thank our team members to serving the essential needs of our customers during this time and always just impressed by the service theyre providing our customers, and as a way to your question, we saw pull forward in demand at the end of q1. We gave back some as we started in q2 as our customers stocked up on food and animal feed like many of us did since then, for the last eight weeks, our volume has been consistent and very stable at these kind of escalated comp levels and weve seen that escalated growth really across all channels, all geographies and all product categories as we look at the business over the last eight weeks, we dont see a pull forward from future weeks and months and youve discussed as well, i know very recently, categories such as homesteading, poultry, do it yourself i mean, is any one sort of a real focus or is it simply across the board that people seem willing to come in and spend money on these different categories i think in america right now were certainly seeing a rural revitallizati revitallization. Were seeing the summer of yoush home and the summer of your backyard were seeing people embracing Sustainable Living and to all the categories you mentioned play to that the homesteading, the chicken poultry, food and feed and coups and people buying chickens were seeing incredible garden activity but were also seeing really nice strength in our core businesses in things like pet food and animal feed really across the board. All categories are doing quite nicely even our big ticket items like Outdoor Power are running strong like some of your retailers like kroger have given onetime bonuses to employees, the hazard pay bumps. Theyre temporary. Are you making moves to extend that, and what do you see to people who say theres still a risk operating on the front lines of the stores where people need the essentials so badly that employees should be paid more for longer . Our team members are the heart of our relationship with our customer and were committed every single day to delivering legendary customer service, and over the last three months, we will have provided over 30 million in appreciation po bo nuss to our team members on the front lines, in our Distribution Centers as well as in our store support center all team members since mid march through the end of june received 2 an hour in additional wages. We announced yesterday two days ago in the afternoon a permanent wage been fits increase for all of our team members on the front lines there are three components the first was for a dollar per hour wake rate increase thats permanent. Many of our team members will receive 1. 60 and up the second thing was for our store managers theyll be receiving restricted stock grants Going Forward with one in the next four weeks to start the process. And we really feel its powerful for them to be owners of our Company Moving forward and then kind of the third component of our announcement was kind of an enhancement of benefits for parttime team members. It was a robust enhancement including access to medical, dental and vision, Life Insurance as well as sick pay. And its the first time our Part Time Team Members have had that. To your point, we firmly acknowledge that our team members are a strategic part of our Customer Value proposition theyre the heart and soul of our company. And were committed to supporting them and leaning into them during this time. Not just with these part time appreciation bonuses weve been doing but with permanent increases across the board on wages, benefits, other means of compensation thats good youre making it permanent. My other question was about the move to the burbs. Do you see that trend lasting and how are you seeing it in terms of what people are spending on their lawns and their properties i think the coronavirus has either exacerbated trends that we have in the market or has created some new trends. So in terms of an exacerbation and a pull for it is around technology we see our customers embracing technology more and more and we probably moved the adoption around Technology Forward two or three years in terms of same day, next day delivery and curb side pick up the same is true on shopping trends we saw this rural revitallization. We see this embracement of your backyard and home. It can be a safe place for you and we see people bonding with their families and Tractor Supply is just a great format for those customers. We have convenient locations and a format thats 15,000 to 18,000 square feet. Its not intimidating and weve been very much out on the forefront in terms of safety and health both with our team members as well as creating a customer Shopping Experience on the front edge of this with plexi glass and with ppe and we added a greeter role to the front of our stores to wash carts when customers come in and sanitize them and do things like head count counting. Were seeing a lot of trends and shifts in our customers and Tractor Supply is there for them in a convenient format for the needs. Finally, you said recently in a virtual retail conference that you think the strong will become stronger through this pandemic and you indicated your willingness to invest more in the business now youve outlined investments youre making in your associates but whatre investments are you making during this period . Yeah. As you indicated on our analyst call yesterday, we talked about the momentum we have we talked about our commitment to investing in the business to emerge stronger from the pandemic we believe theres a big opportunity for us out there as we just discussed, we did invest in our team members, a strategic asset. That was a 5 5 million annual invest were also investing in other areas notably in technology. We announced two days ago the relaunch of our website with brand new architecture and open source, cloud based and site speed and search relevance of the site would be so much more crude to new experiences we announced the launch of our first ever mobile app. It will be in the available in the Android Store in a couple weeks. We pulled this forward by three months it will be tuned around our Neighbors Club where we have 16 million members and also around bio line pickup and curb side. Youll hear more and more about investments from us in the next six two eight weeks in other areas but we believe we have an opportunity to lean in the business and emerge stronger from the pandemic. All right well, we appreciate you sharing time with us thank you as the stock hits a another new alltime high. The ceo of Tractor Supply. Thank you david, later today on the closing bell, dont miss the ceo of Restaurant Brands Parent Company of burger king, pop eyes, an interview with an update on sales trends at the stores that have reopened. Its coming up at 4 30 eastern time s p up about. 4 . Nse e lead well be right back. Stay with us when the world gets complicated, a lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. Some of the hardst hit corners of the market could be vock in far. Find out more on trading nation. 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Joining us now is the ceo of Bright Horizons steven cramer. Welcome. Are you opening 80 of those centers that had to close . So, we absolutely are starting our reopening plans and so families and employers that have always relied upon us are going to start to see us reopening our centers throughout the summer into the fall and certainly going to be doing that in a very safe and healthy way for children and families. How do you do that . So we have been operational in 150 centers throughout this crisis, so i think we have now deep experience in understanding how to operate Child Care Centers in a healthy and safe way, and what we did right at the outset of this crisis is we implemented protocols that are very specifically aligned with making sure that we can keep children and families safe we certain are following cdc guidelines as well as local Health Authorities and in addition to that, we have a direct relationship with dr. Christi Christian Moffit who has helped us ensure that we put protocols in place that absolutely keep everyone safe. Are you expecting a change in demand with so many people now working from home and Many Employers allowing people to work from home even in states that have reopened so i think its a great question at least what were hearing back and what we are certainly working closely and listening very closely to our employer clients and also doing surveys of families that were previously enrolled in our centers to understand what those patterns are going to look like, and what were hearing from families in particular is that the last couple months have been incredibly challenging as theyve tried to stay productive at work and at the same time they have been the primary caregiver for their children on balance, families are very excited for us to reopen, regardless of whether or not their offices are reopening, because they ultimately are looking for a safe and healthy place for their children to grow and learn. Yeah. Tell me about it we talked to Melinda Gates a few weeks ago and she was making the point that key to reopening, one of the keys economically, is to fix what she called a broken child care system in this country, that in so many cases its unaffordable for parents to send their kids to these kind of Day Care Centers and in many cases the Day Care Centers themselves will not be able to reopen as a result of how hard theyve been hit over the crisis how do you see the system in this country working for Everyday Americans so for the past, you know, 30 years, we have been focused on partnering with employers because we see them as an important source of Financial Support for employees and for working parents in the process of child care, and so i think it is very challenging to think about what nonsupported Child Care Centers look like and the tuition and fees that they have to charge because, again, delivering high quality child care is expensive. In most child care settings across the country all of those costs are borne by the individual family. We, for 30 years, have gotten employers to invest billions of dollars behind the idea of supporting their employees and child care in a way that i think is really critical as we look forward to the success of employers, employees, and ultimately the equation between the two. I cant get my 2yearold to put on a mask. Do you get the kids to wear masks, stephen, at the school, and the teachers as well is that something that works okay for the kids to see their teachers in masks . Absolutely. Our protocols call for all of the teachers and staff in our Child Care Centers to wear masks and that is different for children to see our teachers and the staff in masks on the other hand, the way we are helping our parents to educate their children before they come back is that heros wear masks and ultimately our teachers are heros and so the children see their teachers as heros and so that makes that adaptation a bit easier. Certainly children are very resilient in that way. Our protocols absolutely do not have children Wearing Masks. I think that it is absolutely understood that the idea of Young Children Wearing Masks is not productive and causes more challenge than it does good in that the children are constantly fidgeting and touching their face and ultimately are not comfortable Wearing Masks, so again, within our Centers Children will not be Wearing Masks. And what other changes do you have to implement, for instance, with toys or art supplies that, you know, everybody touches . Can you have more supplies or people can have their own or shift to other activities that dont require such high touch activities sure well, i think our safety starts at the front door and so for children and parents who arrive at our centers, we are undertaking Health Checks and we really first and foremost are looking to make sure that the children who are attending the programs are healthy and the same is true for our staff we start with a group of individuals both staff and children who are healthy and then ultimately throughout the day, wereally are working hard to make sure that both the provision of food as well as the work that theyre doing throughout the day is done as separate as possible the reality is that we cant have social distancing of children, that doesnt work, and part of the experience of coming to a Child Care Center is that social experience, but we are taking a lot of precautions to make sure that, for example, snacks are individual and theyre individually wrapped and done in that way so we are taking the precautions that are necessary to keep children and families safe. Remember, weve been doing this in 150 centers over the last couple of months through this pandemic and are really quite expert making sure were doing things in way that work for children but also make sure that everyone stays healthy stephen cramer, thank you for joining us a real pleasure thank you for having me. The ceo of Bright Horizons. Bright horizons does do business with Nbc Universal and our Parent Company comcast, like so many other employers david . Yeah, sara, one name we havent gotten to this morning, sorry i didnt bring it up with jim on how closely we covered it when it was fighting off xeroxs bid for the company is hpq it did report numbers not being well received by investors and a downgrade from jpmorgan and they say they downgraded to neutral, not a great help at this point, based on a lack of catalyst following the second earnings quarter print that met low expectations with positives on the personal systems segment offset by setbacks in printers and a lackluster outlook for Third Quarter in terms of what they expect for printers they have a roughly 4 dividend yield. Jpmorgan notes their price target goes to 20 bucks. Of course that is a significant personal increase above the 15 the stock currently inhabits, carl yeah. A lot of discussion about when youre working at home, you dont use as much paper or printer ink. Thanks see you later on good morning, everybody. Welcome to squawk alley. Im Carl Quintanilla with Morgan Brennan and jon fortt live from separate locations we begin the hour with facebook this morning and at controversy surrounding social media and censorship of political speech Mark Zuckerberg talked to Andrew Ross Sorkin about twitters move and its Fact Checking of the president s tweets we are Different Companies but weve been pretty clear on what i think the right approach is, which is that i dont think that facebook or internet platforms in general should be arbiters of truth. I think thats a dangerous line to get down to in terms of deciding what is true and what isnt, and i think political speech is one of the most sensitive parts in a democracy and people should be able to see what politicians say meantime the president is expected to sign an executiv