Transcripts For CNBC Squawk On The Street 20240712

Ken frazier earlier on squawk on the street, take a listen to this when theres unrest, people put out statements, they put out platitudes they say this is terrible. We decry racism. We believe we ought to build a just society i think business has to go beyond what is required here before the pandemic there was 12 milliontilunfilled jobs in this country and 5 million inner city kids who want access to the economy. They want to be participants, citizens and consumers what they lack is the education, they lack the training there are opportunities for programs ken is so right well talk a lot about how American Business, how the corporate sector tries to heal this country thats obviously broken youre correct. It is the corporate sector and some of us would say other than the Atlanta Mayor who gave such a tremendous speech, were looking for leadership maybe we find it more in corporate or im reminded gina rometty created low income and low opportunity neighborhoods where she built schools, programs to teach people how to become the new white collar economy she called it its inspirational it happens it just happens. Its got to be furthered i know theres a legacy. They have new people but when you listen to what ken is saying, this has to be a national initiative. Theyre in chicago, theyre in baltimore. There are few executives who devote the time and money that she did to make sure ibms legacy was helping these inner city areas i listen to ken frazier from the great city of philadelphia who grew up not far from me. All that he has on his mind. What do i have on my mind . My job is to talk about whether what mercks stock should be. We have to be bigger than that all of us have to be reminded of the role we can play you and i and david talk about that we dont want to be pigeonholed but we have a role to play thats that has to include thi this yeah. Its interesting when you do look at Corporate America in terms of the pandemic, where again i think theres an argument to be made that there was a lack of broad leadership nationally. A lot of corporations did take the lead and continued to in terms of their response, in terms of the protocols and practices theyre putting in place to respond appropriately and effectively in their workplaces and with their work force. It was also interesting listening to mr. Frazier he said its great, you can read tim cooks letter, larry finks letter, on and on the letters from corporate leaders, but the question is will they follow through . Will there be follow through that will be more meaningful than simply words on a page. Yeah. I think that your hope is that you dont get these oneoff statements and that we start to integrate how it can be how this can be part of all of our thinking i think our difficulty is that its so its so one off its not business has been trying i think business tried to equalize where it can opportunity. A lot of leaders i look at are Business People who i find inspirational and theyre doing things that do matter. It took these events to put them front and center its difficult how about the fed we heard from powell last week pre covid, he made a real point of emphasizing the benefits that the roaring economy at the time was bringing to lower income neighborhoods. He took the fed road show to alabama and areas of the deep south, then you listen to elerian and talk about some of the negative externalities of the participation, the obvious areas where those assets will go, its not going to go into inner cities, it will go into stocks and corporate debt. All those business were deemed nonessential businesses so many of the smaller inner city and more troubled neighborhoods, their companies were told to close but they didnt tell walmart to close. They didnt tell other large its not targets gain that they did it it happened to be that was deemed essential we had this in new jersey. So many Small Businesses were deemed nonessential. Theyre the ones who have rent coming up this weekend and they cant pay the rent i feel this became more two societies. We did deem Certain Companies to survive and we deemed Certain Companies not to survive it happened to be a lot of the inner city neighborhoods were deemed nonessential. Now we look and say holy cow our governments put these companies out of business. What did it accomplish and its not clear i dont think anyone out of new york city and new jersey knows th it accomplished anything but wipe out Small Businesses. When you get outside the new York New Jersey area people say i would did you wipe out our stores yeah. That has been its been a tale of two cities in so many different ways in dealing with the pandemic including the geographic dispersion of cases and were watching closely for resurgence or lack thereof and those questions continue as well why was there a lockdown for so long why did you close down these businesses that potentially will not be in position to reopen given that we never saw what other parts of the country did its unfortunate where we find ourselves today. We can agree on that with the pandemic and the divisiveness within the society and within the country. What that actually means for the stock market also adds to this conversation because we have seen this divergence between the performance of the stock market and the economic and social unrest in the country. Yeah. The ethos of what happened this weekend and what happened since the tragedy in minneapolis led me to believe there are people who want the stock market down just for the sake of reverence and for the sake of understanding the pain in the country. That is not what it does now you can say listen what it does is think forward. No its not anything that has a heartbeat. Its not something that has a brain. Its just a group of companies what will you tell the people who are buying beyond meat today dont you understand the problems in our country . I dont want to be too much of a dollar sign represented by a man, but you cant relate the stocks i have in front of me, estee lauder, am i supposed to say im not buying estee lauder because skin care is good . I know the troubles in america they dont relate. Those who want it to relate are missing whats really going on were looking at companies building value were not looking at the government making some companies not do well and the fact that when i look at these companies i think, wow, theyre vir value increase i have ulta on tonight did they increase because the smaller people who compete in hair dressing and makeup, they were deemed nonessential, they could not stay in business while ulta had enough of a Balance Sheet to do so its not mary dillons fault she saved the cash and had the ability to do so its mary dillons gain and all the people who work at ulta. Its difficult to reconcile until you realize these people are trying to build businesses and hire people. Yep weve been here before were trying to do both. Trying to look at Corporate Americas response to social unrest and unease while trying to do what you would call our day jobs thats to monitor stocks your point about retailing is a good one now the process of reopening has been delayed in a lot of cases Courtney Reagan has more on that good morning good morning to you many of these retailers were damaged and looted because of the unrest that ultimately turned violent over the weekend. It comes at an unfortunate time as many of them are just trying to reopen their doors after being closed because of the covid19 crisis. The target store on lake street in minneapolis is near where george floyd was killed. That remains closed along with five other stores until further notice the associates at closed stores will be given pay and benefits for two weeks and can work at other locations if they choose in a blog post Brian Cornell said the murder of george floyd has unleashed the pent up pain of years as have the killings of Ahmaud Arbery and brian Breonna Taylor and nordstroms Flagship Store in seattle also damaged. Nordstrom closed all stoesh sts of yesterday with the opens of reopening as soon as possible. The ceo putting out a ceo saying like so many of you we have been saddened and angered by the recent conditions in our country. The senseless deaths of george floyd and Ahmaud Arbery and others reflects the injustice that still exists in our communities today. Walmart closed several hundred stores, that was mostly as a precaution as many of those stores were not located in the city centers were many of the demonstrations and political unrest and violence took place walmarts ceo did say in a statement at a time when our response to the covid19 crisis has brought out the best in us, what took place earlier this week is further proof we must remain vigilant in standing together against racism and discrimination of course many more retailers are still working through what damage has actually been done and if stores are able to reopen and when well bring you those updates when we have them. Carl, back over to you i guess the other point is a lot of these protests did blow out of the water a lot of these shelter in home mandates that weve been using to mitigate the spread of the disease. That in itself might cause some businesses from reopening in future weeks absolutely. Thats been such a concern of so many businesses. Of course retailers in particular because thats been a business if youre nonessential and youve been required to close stores, the worst mightary is to reopen stores, have a reflareup that could continue to cause significant damage remember, a number of these retailers did file for bankruptcy during the covid19 crisis with plans to close stores basically reopen them in order to close them. And if they sustained damage during this unrest that will be the onetwo punch for many of these retailers who were already struggling through this. Courtney reagan, appreciate that thank you for that check on retail when we come back after the break, we have to get to china reports this morning that china asked some of its stateowned entities to halt the purchase of soybeans and pork from the United States. China was a big story on friday afternoon. Well get ism today, set up for a busy week with the jobs number on friday. We live in uncertain times. However, there is one thing you can be certain of. The men and women of the United States postal service. Were here to deliver cards and packages from loved ones and also deliver the peace of mind of knowing that essentials like prescriptions are on their way. Every day, all across america, we deliver for you. And we always will. A portion. A chunk. With dollarbased trading you can spend what you want, even on just a slice of a share. Yeah. This moving trading thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Futures slightly lower this morning, though off of the overnight lows i dont know if you wanted to dive into the basket of china news, heightened tensions or the medical news that we continue to get from the likes of eli lilly and regeneron. Eunice yoon and Brian Sullivan had an unbelievable discussion this morning about how the prc is using our unrest in our country as a way to be able to say listen pot calling the kettle when it comes to hong kong i dont know who that is directly designed to appeal to, but it is kind of harsh to see our the cold war just accelerates at every turn. You mentioned beef and pork, but we are really very much in the soviet union United States state right now. To watch that happen so quickly is to remind us the cold war was not a great thing for business it was about ideology and trying to win over countries. It was something that when the wall came down we realized it would be a peace dividend. We are so far from peace dividends. We have to keep track of this. There was a time when we wanted chinas door to be open is because we thought we would sell more into them and thats off the table the idea that well do more business is over not to forget when the cold war was going on between the u. S. And russia, russia was not nipping at the heels of the u. S. This is a competition between number one and number two in terms of the economies of the world. Doesnt seem to be going opposite directions right now in terms of level of cooperation, whether its supply chains, changing, changing dramatically for u. S. Companies, or global companies, and on and on including now tariffs potentially going to be placed on anything going out of hong kong, which has special status i dont know where it ends up. I know youve been a proponent of being tough on china. During this period of time one would imagine its not the best of times to be having a cold economic war i agree ive been saying, i know people who follow me in washington and think what the hell is he doing . Is he switching directions we have a huge unemployment problem. I think tisometimes you have to say we have to get the working person to have a job this is not a time where we question on whether the chinese might move into taiwan, which is where all the Semiconductor Factories are that we use. Its a time to look inward whats happened with minneapolis, we doubled down looking inward the idea that this is really the time to say to call out the chinese, the chinese are trying to ring fence us theyre trying to say listen, you think theyre the great bastion of freedom this titfortat is opposite of what i was hoping would happen to create jobs here, which is really what matters. I was struck, jpmorgan had a screen last week of names where High Percentage of revenue comes from china but option protection was liquid and cheap names like apple and nike were on the list. Are those kinds of screens what youll be looking at in the weeks to come . Yeah. I think nike sales have been fabulous there apple sales have been fabulous you want to see nike, starbucks, apple, all these companies have a Good Relationship with the prc. Step back and say our companies are not sellouts our companies are doing what was supposed to be great for the last ever since nixon opened china, what youre supposed to be doing is what apple and nike and procter and starbucks have done suddenly its in question. Thats a shame the businesses were a great bridge between our two fabulous countries. I think the people are fabulous. Its the government that is the issue. Another quick break and a lot more of squawk on the street after this short commercial interruption dont go away. Hey you, yeah you. 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For a limited time, get up to 800 when you open and fund an account. Call 8663009417 or visit tdameritrade. Com learn. Welcome back to squawk on the street. Time to get in a mad dash before we get you to the opening bell we were just talking about china. I know yum china is one name that caught your attention along with beyond meat yum china split off from yum. Yum china is introducing for a limited time only a beyond burger at all of their stores, at kfc, pizza hut, taco bell it starts june 3rd i have to tell you, if this is a success, then this is going to be the next level that ethan brown has been talking about, the coo. He was on my show, mad money recently heres what he said. He made the point that theres going to be a number of very Big Investments in the company and partnerships of course theres one with starbucks, too at a time when there is a meat shortage, at a time when people do not trust the food chain, this is the era for beyond meat. I think the idea this stock should be up is correct. This like a number of other stocks, whether its draftkings, whether its tesla, whatever, they caught fire a lot of them younger people like the robinhood cohort who are looking for ideas, not indexing this is a very, very important rollout. If its successful, it can roll out all over the world do they have the capacity to meet that potential demand its a great question ethan is trying to put out so much product as to undercut the price of beef right now because he knows people dont trust the beef chain in america. So i think the instincts that you have are can he really deliver . Hes telling me we can flood the zone he feels this is the time to take it to tyson and maybe to the food chain in china. So beyond meat, they know this is everybodys opportunity when it comes to plant based. A lot of people have had i eat beyond meat all the time tastes fine. People are like have you ever looked at the long list of chemicals . All i know is it doesnt have cow, a nasty distribution of protpr prote protein. If you want the protein, go to the plant. Its not necessarily about health as it is planetary concerns yes people say if you want to preserve the planet, we must eat the plant. Im not against that view. My view doesnt matter its the younger people who do believe in this process. It l. Will go up in this environment carl, we are getting ready for a market open after what was a relatively good week if i recall its hard to keep track. Every day feels like a lifetime. Its true. Coming off two monumental months of gains the s p about 10 below its all time high. Nasdaq closer to its all time high jim, cashin saying the bulls dodged a bullet on friday. You saw the markets flip when the president went into the rose garden talking about china i listened to that speech, it was statesman like, its not how we are going to teach them a lesson i felt the chinese therefore will have to come up with something that is still strong, titfortat. I did not realize they would use the ammo of minneapolis as the challenge. I wonder how the president responds knowing that the chinese are appealing directly to the people of the United States and around the world to kind of disintermediate the president. I wonder if hes okay with that or if hes like wait a second, lets talk about the years of freedom in our country versus the years of oppression in theirs i wouldnt be surprised if he doesnt do that, but hes been quiet. Very quiet of the three big things we have to juggle, the trade war, the reopening and the mitigation of the pandemic and the civil unrest, what is the market truly pivoting around . I would have thought i think its about the reopening, to see how that goes whether the protests make the reopening delayed. Im sympathetic with anyone who is a peaceful, safe protester. I thought this would be the beginning of when we see more nick activity. You want to see unemployment go down i think the only way unemployment can go down is to reopen to make sure the jobs come back. I live in brooklyn, you know, theres a protest on our street. Where my bar is. Its kind of the Small Businesses have to reopen because the money will run out soon everybody has rent due the first two months, its like listen, they got my deposit. Its okay. This is the month where they come after you this is the month where you have to have cash come in thats what im still looking at im totally conscious that my heart is with anyone who protests peacefully because there seems like such the inequalities are pointed out once again to all of us which is necessary. This was supposed to be the week where we found out how potent america is when it comes to business i hope that doesnt go away. Jim, well watch amazon today. News on multiple fronts. One is that Morgan Stanley goes to 2,800 they raise their gmv estimate to 34 year on year. They say some shipments are delayed in some select cities because of the civil unrest. And then the shelf offering, multi part, which is sort of raising eyebrows today look. I think amazon has all that seems to happen is they just get stronger and stronger. Does anyone remember when this country was a bad credit you felt that the one thing you would never do is give them money. They were just the wildest hyg, the one that is that truly cannot raise money the question would be when the Capital Markets are shut out threeyear plus 40 this is the this is one of those credits its almost like apple. I think that any time you give them more money, all it does is make them expand and expand. This is their period lets face it. You see it in front of everybodys door they got the amazon box. They want to keep it out there 24 hours its more visible. It is their time so why not bulk up, spend more money. 4 billion on safety yes, theres going to be some routes that are not great, but this makes you more want to stay in your house. You pointed out the 4 billion number its a large number. Theres a lot that they need do. Theres been some unrest and people have gotten sick and or the companys response, jim, as you know and there was a period there where they were unable to fulfill requests given that every day suddenly became like black monday for them. But that said, theyre not going to have any trouble raising capital in any form they might choose shelf registration for those unaware gives them the opportunity to raise debt quickly because its on the shelf. Already registered they have not yet decided in what form if any theyre going to take advantage of the Capital Markets. One of the things thats incredible i was in the parking lot of the supermarket i asked my wife, you want me to get the stuff . She said come on thats not what you want to do its the racetrack, the mask lets order on amazon. Anything you need today . No you could do a target. I know target has been targeted. She said listen i said i need vitamin d. She said how many days do you have i said i got five days she said go on amazon. You dont go into a store to get vitamin d. I said think about that. Three months ago, right in front of the supermarket, are you kidding . Now its like youre right what was i thinking . The world has changed. It keeps changing in amazons favor. Theres a level of lack of safety that you feel in places where you always felt safe thats the way it is im laughing because because a lot of households are having that exact conversation, the theory of how badly do you need the good to do the risk of going out versus ordering in its sort of where all of our heads are now. What do you think is happening with semis today leading the Broader Market lower. Some incremental news about the Industry Association starting to gear up, asking for support, if theyre going to start bringing some supply chains back home i thought it was unbelievable we have incredible tax breaks. Every one of these Companies Got great tax breaks now they want more to build foundries. Theyre making fortunes. I thought this was unfortunate i think that when we look at what theyve gotten and how well theyve done and the leaders in the stock market, do they need a handout from the government to build foundries . Yes. If the government decides that its going to make taiwan the issue, and the chinese will retake taiwan, which would be amazing thats not a cold war anymore we would need to have foundries built with tremendous Capital Equipment that we all make here. I thought that was greedy. I thought it was greedy that the Industry Association wants more money. This is not the time for the government to give money to industry that has been incredibly lucrative and hitting new highs. Thats kind of like the thats the opposite of minnesota. Were still trying to figure out the impact of various restrictions on huawei its not just chip sales to huawei, its if you are a manufacturer using u. S. Equipment to make your chips you cant sell to huawei then theres taiwan semi you mentioned taiwan with the plan to open that plant in arizona. Wont create that many jobs but its a big investment. Not completely clear how much aid is being given there then taiwan semi, one of the biggest customers, its apple and huawei are the two largest customers. Taiwan semiis t is the best semiconductor. How could they not get exempt from the huawei ban, they are coming here, building a plant in arizona. Doesnt all add up theres a lot going on in that industry again in the withov versus the u. S theres some Great American companies when you talk to them, you say what are you allowed to do with huawei i dont know what do you think . What do i know no what are they thinking you think washington whats navarro thinking . I dont know we have these people in washington who are they dont realize how powerful they are. They dont understand the power. Right now a lot of American Companies are trying to figure out who they can sell to given the fact that huawei was the best client of everybody how about the huawei nonmilitary, cell phone handset. Nobody has a good idea and i think instead what happens is people pull back the reins, and i think thats you know, thats just a shame. No one knows what to do. We need clarity from washington. I know. Huawei i think, carl, has two years worth of chips already on hand to weather any potential short fall that it might have. So theyve been preparing for whatever is coming their way for some time. Yeah. It was hard not to notice merkel regarding the president s invite to a g7 later on this summer a lot to touch on there. I want to talk about travel. Specifically airlines. United is bringing more flights, transatlantic. Delta working with its pilot union to avoid furloughs then carry kelly of southwest saying the fare war were about to witness will be brutal going into the summer. Never bet against gary kelly. I know people are flying again people are flying in not in numbers that you would be drawn to by lower by lower fares. Kofrnlg i listened to dr. Gottlieb today. Hes on every morning and amazing. He said listen, these are the regions that are okay. I think that the south, where southwest air is doing so well doing well relatively, it seems like theyre more inclined to fly. I know not a lot of when i look at american air, thats doing well united is doing well the market leaders with the exception of gap, which was an upgrade by matthew boss over at jpmorgan, the market leaders are indeed the airlines. So i think people feel emboldened then carnival, which is double from that bottom, royal caribbean, you cant stop that one. Because theyre so far from their highs. He did sell them pretty badly. He might have yeah. Before we get to bob on the Broader Market, a couple of quick names to hit cody up about 13 . Beginning towards the beginning of may, the Company Announced that deal with kkr they had not actually signed the definitive agreement its now a done dell kkr making a billion dollar investment to coty via convertible shares, a 9 coupon and the conversion premium is 20 , 6. 24 when the deal was announced, coty stock went straight down. You can see what its doing there. Straight down after that deal. And its come back a bit today peter harth, the guy who oversees j b is coming back, hes coming back as cotys ceo kkr is making this majority investment in the wella brands, the professional air dresser brands, and others for 4. 3 billion, thats cash, about 12. 3 times the companys adjusted ebita from last year but there you know, they delevered, they got their Balance Sheet in shape, now the question is whether they can get the business in the right place. At the end here of all of this, j b will still own 50 of the company, and kkr will be the second largest investor at 17 but they didnt bring anyone in from the outside. He is 74, and obviously they have tremendous faith in him i would have hoped they were bringing in a rock star from ulta i dont know just its i fear its more of the same. Yeah. That may very well be the case however hes a pretty well respected guy being one of the founders founders they have petes coffee and so many things. 100 billion in assets. I forget which firm upgraded keurig today i think keurig is a good situation. I think keurig has a lot of moving parts, but youre right j. A. B. Is to be reckoned with. This is one Free Cash Flow is great at these places. Always delevering. I dont know coty is a spec i find that industry has vicious competitors. They dont want coty to win. Youre right, jim lets get to rick santelli, got a couple of big pieces of data coming up in the next 15 minutes, including pmi in just about a minute and a half. Hey, rick. Yes we have market coming up, that series of data points started in 2017, much bigger data point will be coming top of the hour, ism. The long end of the market is where all the action has been. 10s and 30s, not just domestically, its globally. If you look at a twoday chart of 30year, were up a handful of basis points today. Its been the active part of the curve. One month chart of t10s on top o 30s, the longer maturity looking at the one month chart for tenyear bunds, it like 30year bonds was aggressive moving from minus 60 to minus 40 thats because the stimulus is starting to get active things are starting to get historic for the european union. Look at whats going on with regard to their currency this is a onemonth of the euro versus the dollar. Thats a wild may. 108 to 111 if you zoom it back, these are twomonth plus highs going back to the 27th of march. Now those data points are hitting on Market Manufacturing pmi, their may final comes in at 39. 8, which mirrored their mid month read, and that contrasts against aprils final at 36. 1, the lowest read ever going back to 2017. So like many data points, the worst level at least seems to be in the Rearview Mirror, but only by a small margin. Carl, jim, david, back to you. Rick, well see you in a few moments. Check in with bob pisani on the other side of this break as the market is hanging on to just slight losses. Dow is down 52 dow is down 33 points to start the morning. Lets check in with our bob pisani hey, bob hello, carl happy monday, everybody. Flattish open but still 21 advancing to declining stocks. The market is struggling to understand how all the protests over the weekend might be impacting the reopening plans. On a broader level, might be impacting whats going on with consumer confidence. Courtney was talking about retail talking about nike, adidas closing stores, amazon scaling back amazon just modestly on the upside sectors, banks tending to do better they were outperformers last week, even retail better Consumer Staples up. Energy is lagging. Oil is holding in there. Health care lagging mod leestlys well want to point out, eurozone, Japanese Equities did well china near a 10week high, japan near a 12week high. The u. S. Is sitting near the highest levels since early march. Theres been a global rally thats affected the overall market the one thing i can assure you this weekend that i heard a lot about is more interest in investing in social justice and inclusiveness. This is what esg is all about. Thats environmental social and governance issues. And that simply talks about impact on the environment, looks to investing on those levels, social in relations with employees and holders and govert issues on leadership and pay and shareholder rights and inclusiveness. A lot of what we were talking about over the weekend for investors fits into the box. How do you wait those weight those things into a model. Heres one of the largest etfs out there, the symbol is susl. You can see the largest products are largely meg cap stocks microsoft, alphabet, visa, Procter Gamble they tend to be heavily weighted toward tech, underrepresented emergency and industrials that underperformed the funds have generally outperformed this year thats because of the waiting on tech that has done well during the stay at home thing theyve done well on contingency planning, Balance Sheet issues have helped. Its hard figuring how to do this on an issue of inclusiveness. They encompass many issues that include aspects of social justice. I can assure you inflows are increasing and theres more pressure on companies to acknowledge that as an issue of investing. Well have the head of esg on etf edge today at 1 05 eastern back to you. All right. Bob, its a big topic. Well see you later. Another quick break. Obviously a mild losses to start the morning. Dow down. 4 tech and industrials lag im kent coloma, its my job to make sure all the packages that go out today get delivered. There are people who can only get food from amazon. When you come into work, thats what drives you. My little one, i would say hes definitely proud of me. Every time he sees the blue prime trucks, he says, daddy, theres your people i know every single one of us is here busting as hard as we can go every day to make sure these packages get delivered. Yeah. This movingan go thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Starting the week, pfizer at the top down 7 . The target cut names related to d deere on china trade news and federal back in the red. Were back in a moment astounding the three big firms downgrade canopy today thats canopy groceries. They reported a truly terrible quarter, and the aspect of it that most troubled me was that the revenues are going down. They also had a giant impairment clause theres a lot of people who feel that maybe canada is slowing down now people are saying no, canopy is slowing down. I think the desertion. 2 billion in Canadian Dollars but wow, i mean, this is just a massive abandonment of the company that was considered to be the de facto winner because it had the relationship with n Constellation Brands wow what do we say about the story overall . Is it over i think there are a lot of people saying you know what . Maybe theres profitability, but it will never be big time, and are there other people saying listen, without a democrat in the white house, a democrat in the house and the senate, it will never be big, but i do think that theres been some misunderstanding about the way these companies have to be valued its not taking off the way we thought it would some of the companies will tell you we talked about i was going to say we had this discussion you me and david last week. I never thought canopy would be as bad. Theres a couple companies that i regard as being a smaller under the radar. But the one thing that is astounding is that this company had the blessing and 4 billion Canadian Dollars it fizzled a lot of it away. It has Good Management now theres not a demand they have drinks they have cbd drinks and trying to make thc dinks. Im going to try to get him on its astounding. Not the demand . Theres not the demand really or is it just theres too much supply the demand wouldnt seem its not as though demand has declined thats what i want to know. Whether its the shares declining despite all of that capital. Because i always thought it was a per se growth industry it has medical and i dont know, recreational how about that yeah. I thought the one jim i have two companies that i think have unique situations in terms of the inner city. Theyre companies deeply committed. Mary dillon is putting more people to work when it comes to retail and brian niccol has the moral high ground when it comes to what businesses should be doing. I want to know what they think this is the time where everybody has to be thinking what are we doing . Why werent the other policemen indicted why other than when theres violence, why are we not saying what are these people telling us i think its a huge wakeup call that we got to address it. All of us. Cant you cant look away from it. Yeah. At this point, silence is no longer than option exactly according to many leaders well, dr. King told us it wasnt see you tonight yep mad money 6 00 p. M. Eastern time welcome to squawk on the street. Im county county with david faber coming from separate locations. We have pmi and now is and manufacturing. Once again, rick santelli. Yes, looking for april read on production spending thats minus 2. 9 miebs 2. 9 thats the weakest level since october of 2019. We were looking for a number more than double down minus 2. 9. Were looking for more like minus 7 like many numbers, this particular number in the Rearview Mirror still hasnt tested its worst Case Scenario that goes back to 93 at minus 4. 2. Our may read at 43. 1 43. 1 this follows 41. 5. How does it stack up with history . Well, 43. 1 actually isnt so bad. Our april number of 41. 5 seems to be the low water mark were coming back a little bit lets go through new orders. 31. 8 that improved from 27. 1. Prices paid. Improved from 35. 3 to 40. 8. And on a week with two employment reports, ism employment moved from 37. 5 to 32. 1 the main read on the ism leaves lower numbers in the Rearview Mirror none of these are an expansion mode far from the 50 mark. Carl, back to you. All interesting numbers well talk about them this morning. Well begin with the civil unrest in america. Mercks ceo was on squawk box earlier this morning talking about potential solutions and how all of this has affected him personally when theres unrest, people put out statements they put out platitudes and say this is terrible we decry racism. We believe we ought to build a just society i think business has to go beyond whats required before the pandemic there was Something Like 12 million unfilled jobs in this country. And there are 5 million inner city and other African American kids who want access to the economy. They want to be participants and citizens they want to be consumers. What they lack is the education. They lack the training and there are opportunities for programs lets bring in jim stewart, columnist with the new york times. Thanks for the time today. Good to talk to you. Sure. Good morning kens point is that the protests are not going to be around forever the virus is not going to be around forever and whats going to matter is what the companies do in terms of action. What do they need to do . Thats a great question could this be a catalyst along with the pandemic for somehow finally addressing some of the systemic issues . And i think there are lots of things that could be done. I would love to see done it came as a shock to me a simple level there are so many School Children in this country who dont have access to a country thats astonishing how much would it cost to put a laptop in every School Students home i dont know but to me that would be an investment worth making in education. The Health Care Inequities where minority neighborhoods have been hit so much harder by the virus because they dont have access to health care either the kind of Preventative Health care that makes them healthier to begin with or the kind of care once they get sick. That we have to finally address that thats been kicked around forever. And making jobs available. The more people working, ive noted the protesters are not the ones in the essential industries those people, they have jobs and theyre working. Theyre not out rioting. I think theres a lot of lessons well hopefully take from this we need leadership so this, is this something that you think Corporate America can organize without direction from the federal government . Well, i think that it depends. I mean, obviously in some communities yes, i think there are things that companies can do but on a national level, no. No one corporation the government has to step up. They can lobby and pressure. I mean, it is i am sympathetic to some of the protesters weve been down this road so many times and then nothing really happens and yes, i think they can lobby. One other thing i want to mention is the kinds of people who we have in the police force, its a bad apple here. I agree most of the Police People are fantastic Public Servants we have people in those jobs to put it mildly with anger management issues, and if not more serious psychological problems and as long as we have them and as long as police humans are protecting them, even after multiple disciplinary actions, were going to keep having these incidents. I think that also has to change. Thats going to take major leadership on the local elected level. Again, i dont think companies can do that, but they can put their weight behind it and step up and advocate and push for change and they can keep doing it even when the mediate threat goes away david, i know you as an astute fellow. When you say we need leadership nationally in d. C. , i would assume you dont necessarily think were going to get it. Were not seeing any. It leaves me somewhat speechless that in a crisis like this we arent hearing words of calm, words of reassurance, and specific programs to address some of these serious underlying causes of all of this. I mean, i never aspired to be a politician, but there are moments when i wish i was, and this is one of them. Because it seems to me they people are so hungry for both reassurance and some sense of a path forward thats going to make this country a better place. And its astonishing to me were not hearing it jim, mike here. I mean, obviously the potential solutions or responses to whats going on right now, they run across so many fronts. Criminal justice reform. You mentioned about reforming Police Tactics but also, of course, companies talking about greater opportunities for jobs and then even broader kind of fiscal support, structural fiscal support, things like reparations. Coming at a moment when you might expect people in washington to say hey, we just threw trillions of dollars out into the economy i wonder what kind of political will theres going to be for very complicated longterm policy solutions that take money. Well, i think youve to separate and people in washington i think will be able to do that, separate where you rightly called a complex systemic issues. From the concrete things that could be done now. And you raised like the issue of reparations to slavery that to me is now not the time thats a hugely dwusiivisive is, but there are things that can be addressed. Its requiring spending from washington and its a longterm investment in the future vitality of this country and its got to be done. I dont think youre going to have to look very far to find some clearly bipartisan programs that would address some of the issues let me make the awkward turn to what we would normally discuss. That is impact on markets. Theres a note out this morning describing the unrest saying it would be most impactful to markets if it starts to impact election polls how do you think investors are supposed to process this along with the china trade war and the continued process of reopening the economy . Well, i did do i would i looked back at 1968. That came to made. And the 68civil unrest was much longer term more significant than this but the market peaked in december of 68. There was really no Immediate Impact there were a lot of issues, but then caused a long bear market that began in december of 1968 i couldnt find any discernible impact of the civil unrest itself i also looked at some of the comments that year out of curiosity. Nobody mentioned in talking about the stock market the issue of the Civil Rights Movement and the Martin Luther king assassination and all the other things going on in 19 the 68 1968 there were a lot of things i dont honestly see any immediate stock market impacts than the civil unrest. Longer term, i think the healthy economy is going to depend on solving underlying issues. Finally, i am getting ive been sort of accepting the fact that we have this china trade war going on we have some huge issues right now. We have the virus. We cant thats not manmade thats a separate issue. But the china trade war, the civil unrest, thats an issue thats beyond our control in many ways, but the china trade war is selfenflikted. Why when the other major issues are confronting us, do we want to manufacture another one and get in a trade war with china . That to me to unfathomable and makes no sense whatsoever. I mean, i guess the counterargument is what are you doing to do, simply let them blow up a trade war we thought we signed in january if you believe these reports that they were putting the halt on orders of soybeans and pork doesnt their behavior need to be held in check if not by the u. S. But at least by a consortium of nations that agree on it . Im not saying let up on the legitimate issues, but the sort of tit for tat kind of confrontational elements going on, and by the way, you know, i dont follow in detail, but this is a back and forth process. It isnt like this latest move from china just came out of the blue there have been provocation, retaliation. Im saying with china and saying lets put this on hold for now and confront our common enemy which is the virus, and when that is vank wished and behind us, then we readdress the issues that divide us this should be something we can unite on its in everythings interest to pool the resources and stop the virus. And then go back to the bargaining table and by the way, having done that, we might have discovered in that Common Ground that we have other areas of Common Ground we could work on. They could lead to more productive negotiations. Im saying way not provide that . Right thats acen aek koe of what jims saying thanks as always look forward to talking to you soon jim stewart. Thank you bye. Well, with the ongoing protests and continuing fear over the coronavirus, state budgets continuing to hemorrhage we have more on that side of the story. State and local governments are not only facing political and social stress. Theyre also facing financial strain state and local governments have had to lay off more than 1 million workers since the pandemic began and many of them are hitting the Police Departments and Fire Departments that are being called to respond to the protests and the deep unrest thats rocked the country over the past six days just as one example, baltimores revenue short fall is expected to reach 69 million this fiscal year next year the picture gets worse at 103 million. And all of that red ink is going to lead to budget cuts the citys proposing laying off 240 workers, reducing overtime pay for police officers, and also getting rid of Graffiti Removal Services all of those are important in the Central Services during normal times they are more critical than ever at this moment over the weekend, the u. S. Conference of mayors put out this statement it said our cities need healing and our people need to be heard. This must be done without bringing greater pain and destruction to our cities. The president will hold a call with state governors in about an hour there had been a wide expectation in washington that the bipartisan pressure from local leaders to pass another coronavirus package is what would eventually send millions and billions of dollars in aid to state and local governments, but President Trump in recent days has been framing those protests as an indictment on some of the democratic mayors in the cities david, that does not bode very well for compromise down the road back over to you yeah. And something that bears very close watching maryland does have a republican governor at the least, although, it doesnt seem to necessarily be going to help them. Ylan, thank you. That important story well continue to monitor. The s p, we monitor that every day. We have social unrest. We have a pandemic still of course, weve got deep Economic Uncertainty we have an s p thats up and only down 5. 7 for the year of 2020 were back after this. A slice. A piece. A portion. A chunk. With dollarbased trading you can spend what you want, even on just a slice of a share. Time now for etf spotlight this is the xle up only 2 last month, but bolstered by crudes biggest monthly gain on record that up nearly 90 that is the actual underlying commodity in may brent had the best month since 1999 with us to talk about the upswings over the last month is dan everheart. His book out now dan, nice to have you this morning. Thank you its funny. Your book, of course, the energy renaissance, which we talk about so often here, the Permian Basin being one of the key parts of it but being able to turn off production in the permian seems to also be one of the key reasons why the commodities have had a move, hasnt it . Yeah. Weve turned off a lot of production, in the permian and the eagle for the industry really works on a quite a crazy fast fashion to refuse demand at unprecedented speed. Do you anticipate that will continue we were at 13 Million Barrels. Where do you see things evening out . I think in june well see another d i think were down 3 Million Barrels a day from february, but i think somewhere around july or august, youll see producers start to turn it back on, and the production rising how quickly can those wells get back in production i think its something that at the right price could happen in a 30 to 45day window youre looking at probably 10 or 15 of the wells are going to have a lot of trouble getting back on. This has never been tried before at this kind of scale. At this kind of pace i think its not quite as simple as turning a faucet on and off youll have 10 to 15 of the wells not come back online fully, and youre going to were going to have the seeds of the mini here because of a supply crunch. I hope you wont mind if i ask about putin. They said july one for that referendum that could let him stay in power until 2037 in what way is he manipulating or weighing in on the ongoing discussions about the extension of potential cuts . Well, first of all, you know, i would say that opecs compliance in may is coming in at 74 there were several cheating countries, particularly iraq putin has been driving assault and battery saudi arabia and opec production. It was putin that held saudi arabias feet to the fire to get what they wanted out of the last deal i think well see putin exert an oversized influence on saudi arabia and the rest of opec in terms of if the cuts continue and where the production numbers go now mentioned shale producers had a dramatic decline in supply, but look what it look. The futures going to zero. You had the cash spot market at record low prices. So you say maybe production starts to increase july and august would that happen at current crude oil prices what has to happen with the price for that to occur and what does it mean in terms of cappin out . The demand is coming back i think the gasoline usage is somewhere around 85 last week of where it was in february. So were starting to see demand come back. I think obviously the jet fuel component is going to be really lag for quite a while. But the producers are really depending on the price i think youre going to need to see prices north of 40 to have the taps turn back on, so to speak. Youll see a number in the 45 to 50 range to really see the Oil Companies put their backs into turning the production back on how do you see the rest of the year going are you expecting demand to come back more quickly perhaps than some anticipated i think weve already seen the i think the main place to look right now is china and whats happened with demand there. Demand there is nearly recovered. May is up about 11 from april in terms of oil consumption. Demand is nearly covered in china with the exception of jet fuel i expect us to see a similar amount of curve here and weve had more stimulus. So i think were going to be back to something in the 90 to 95 usage range. Im a little more optimistic iea is somewhere around 10 reduction in total demand, and i think well be somewhere in the 6 , 7 , 8 in total demand when you step back and look at 2020 as a whole what about the u. S. Producers again . Particularly the smaller ones. Weve seen restructurings and bankruptcies there was fairly abundant access to capital i cant imagine thats the case going forward. I dont think its going to be the case going forward. I think a lot of the returns were weak post the 2015 bust i think the returns were weak, 2017 through 2019, return on cal tall invested. I think youll see a lot of brup bankruptcies, particularly in the Service Sector if oil prices dont climb dramatically this summer appreciate your time this morning. Thank you. Thank you for having me on. A short break here as stocks have gone into the green dow with a 50 plus gain to start this monday. Dont go away. Right now is a time for action. 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The audiologist was so incredible shes full of all kinds of little helpful hints i love it. Theyre a game changer for me. I feel like i can take on anything. It feels great to be in control of my hearing. Better hearing has never been this easy. Try lively riskfree for 100 days. Visit listenlively. Com find a stock basedtech. On your interests for 100 days. Or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. Welcome back heres your cnbc update at this hour communities across america are assessing the damage after another night of damage. In the chicago area a Dollar Tree Store still burning this morning. The chief of police in louisville, kentucky says police and National Guard fatally shot a man after someone fired a at them early this morning. Officers and National Guard were called up to break up a large group that gathered after the citys curfew. Its unclear if the person killed was the one who fired at law enforcement. And the large protests of the death of george floyd are likely to lead to new flairups of Coronavirus Infections on squawk box this morning, former fda commissioner warned the risk is particularly high in minneapolis and other areas that were already struggling to control the pandemic you can see his full interview at cnbc. Com. Carl, see you next hour. Ill send it back to you sue, thank you. Social media is at the center of so much of the conversation. Well talk about the president and social media when it comes to regulation with fcc commissioner brendan carr. Back in a minute ever since weve gone mobile on the now platform, somethings gotten into the office. I hear you. Feels like theres no barriers between departments now. Servicenow. The smarter way to workflow. Protests happening around the country as the economy was trying to reopen steve has more on the potential impact good morning. This was a week where the economic question was whether were bouncing off of the bottom and that reopening we talked about. Now the country faces deep and daunting issues of race, accompanied by widespread demonstrations and calls for social justice obviously loss of life and injury, the most important concern, but new concerns have arisen including the riots and demonstrations can lead to renewed infections and a greater challenge for the economy. There was a tweet, today theres little question the horrific events of the weekend be exacerbate the economic pry sis. Started as a Health Crisis is still a crisis but much more this issue is acute in urban centers that were always going to struggle with reopening and stood to lose longer term from perhaps a shift away from high density populations centers. We got the first bit of data that markets were looking for in the past hour. The ism data, again, it shows the paradox thats out there between awful numbers coming in at 43. 1 which is a bit lower than expected. But above the prior ones thats still an awful number but its better than it was. Ism services, going to be an awful number by the consensus, but better than it was 1. 7 million jobless claims 8 million unemployed that would be fewer unemployed or fewer rise in unemployment than the prior month but still an enormous, enormous number with an expected 20 unemployment rate. One other piece of data to kind of crystallize all of this this new jpmorgan credit card data we get which shows that spending fell 50 compared to a year ago on a 7day average, and its up from the bottom, but still down almost 20 from where it was and one quick comment. You can never draw a Straight Line from the economy to any kind of causization. Its clear as we watch the social unrest. African americans and the inner city poor have been hit hardest by the crisis economically and from a Public Health standpoint. Steve, among the numbers that got attention last week and it bears on all the issues is the decline in continuing jobless claim. There was a significant decline. There was a sense that some of the jobless are coming off the roles, and obviously that might get a little more attention going into the coming weeks as we try to figure the effects of whats been going on in the different cities thats definitely the case. There was some concern that maybe that was a technical issue related to people coming off the roles and having to come back on i wanted to give it another week before looking at it i would say that the keys to this week are that continuing claims number, if it continues to go down im look agent the temporary lieoffs and also watching new orders in both indices for signs of whether we are, indeed, seeing a reopening or having a real pickup in business. I think its possible, mike, and i think youve heard and seen this businesses may open, but consumers may be more reluctant to come. Thank you, steve. President trump set to regulate social medias content decisions. That could face an up hill battle from regulators lets bring in the fcc commissioner been such for a number of years, brendan carr nice to see you this morning forgive our viewers if theyre confused about the various things about section 230 what it allows and doesnt allow. If you first put into words k t exactly whats at stake and what people should try to understand about the current debate yes section 230 was a law passed by congress in the 1990s. They had in mind back then the messaging board. And they drew a line in the sand they said good faith conduct, thats the language in the statute, gets these special immunities and legal privileges. By implication, that means theres a set of things called bad conduct. Well, Flash Forward to today and the messages boards have become facebook and twitter some of the most powerful corporations in the history of the world. The most control over speech weve ever seen in history, and theres been little guidance at the federal level about that line in the sand that Congress Drew between good faith and bad faith contact. Thats one of the chithings the executive order would ask the fcc is look at how are you going to go about that theres been bipartisan really consensus, or at least concern about the scope of section 230. No other figure other than Vice President joe biden has said that section 230 should be revoked immediately. Thats not a step were going to take at the fcc. Thats for congress toi take. We have petitions where we look at the questions of the inner play of the good faith term in the statute. A lot of the headlines on this are collapsing the First Amendment with section 230 in an unhelpful way. No one has a constitutional First Amendment right to section 230. 230 singles out one group of speakers for special treatment above and beyond the First Amendment rights that everyone else benefits from in this country. So when you say take a look at questions regarding it, excongress action, what could you do are there any hypotheticals you can give as an example would they revolve around particular tweets or particular holders of accounts . Yes good faith language, for instance, any business in this country is held accountable to the public commitments that it makes including the terms of service. If you have a term of service out there that defines what glorification of violence is for a recent example but youre not applying that evenly or in the case of the president s tweet, youre applying it to a tweet that on its face doesnt seem to line up to that. If you look at that from a good faith bad faith sukt or executive order also brings in the federal trade commission and says is it an unfair business practice twitter, jack dorsey, they have First Amendment rights this is about treating them equally to the public commitments and accountable to commitments they put out there the chair tweeted last week asking twitter if the standards are between something the president might write and something that a Supreme Leader in iran might write. Is there a global standard or are we going to do this country by country look, i think the selective application of the rules is troublesome. Given the bipartisan concern, i dont see a path forward where the status quo is maintained i think all of that is something we have to take a look at. Jack dorsey retweeted a falsehood having to do with the protests the mayor of st. Paul said every protester arrested was from out of the area, out of state. Theres reporting showing that not the case i didnt see a falsehood label put on jack dorseys retweet of that the president is focussed on the perceived political makeup of employees at these companies. Is that anything the fcc would take into consideration . I think if youre holding yourself out there as a neutral platform from a political perspective and you stack the deck with hardened partisans, it undermines the user bases competence facebook put on an Oversight Board ahead of the 2020 election, handing the keys to the content decision they put on people that have fantasized about President Trump getting shot so i think that raises a lot of questions about whats going on. Ultimately, how that may or may not factor into the rule making at the fcc, well have to see. Do youven have does the fcc have the authority to regulate content on social media platforms . Many think that will end up in the courts in and of itself. We dont have a roving mandate to go around like a speech police, but what we do have is section 230. Congress drew a line in the sand that was their decision. Good faith conduct gets the special protections. We are asked to provide clarity as to the line and the individual ajudjudications or theres a clearer standard to articulate right but what do you think of the various standards being applied by the companies themselves . I mean, facebook and mark zuckerberg, the founder and ceo, have come under criticism for saying were not in the business of deciding whether something is true or not. There seems to be an effort on the part of twitter to make the decisions. I think zuckerberg is right facebook is wrong. Theyve kind of veered from some of zuckerbergs instincts firom time to time hes been in favor of more free speech he said hes not the arbiter of truth. Theres been a distinction between facebook and twitter thats not how im going to run my business. My business is about supporting free speech. Contrast that with jack dorsey who looks like hes weaponizing his corporation to pursue his own partisan political beliefs but when it comes to political discourse in this country and these platforms which obviously are extremely important in terms of it, doesnt truth matter i mean, there is a truth there are facts. And there are things that are lies how do you view that yeah. Its a great question. Look, theres no or cal of truth that makes the decisions for us. These are people these are people in power. And theyre either biassed or theyre fallible take a representative that tweeted at the beginning of coronavirus, dont wear masks. A couple weeks later he said you have to wear masks in theory, people get this idea of separating truth from fact. The question is who is the best person to make that decision i happen to think more speech is better and lets let the American People decide for themselves so when the president says his inauguration crowds were the largest of all time or he says there were 3 million votes that were illegally cast in the last election, or i mean, on and on, those are from many years ago. Its make your own decision, even if theyre not correct . Its always going to be people making the decision its the question of are people making the decision for you . Are you allowed to make your decision for yourself . Thats why i called for the idea of turning off the bias filter if you dont want others Fact Checking your twitter feed before you read it, you shouldnt have to. If you want to, people should be empowered to make that choice, but leave it to people to make the decisions for themselves finally, you said you dont have a constitutional right to section 230. If either twitter or facebook or another high profile platform suspends the president s account, will the fcc react . It would depend on whether the suspension relates the 230 petition my instinct is that is more in line with the Federaltrade Commission are you following your terms of service . Are you accountable to your public commitment . Thats why i think the executive order things the fcc in for those types of activities. Mr. Commissioner, appreciate your time this morning weighing in on this important issue, one were all trying to understand, explain and certainly going to be watching as things progress thank you. Thanks very much. As david said a new moments ago, markets handling a lot. A big wall of worry over the past year and even todays session alone. Dow hanging onto 72 points rstl ov3051 while most stores are open, im working from home and here to help. Heres a tip get halfoff the amazing iphone 11 on at t, americas Fastest Network for iphones. Second tip you can put googly eyes on your stuff to keep yourself company. Uh for example, thats heraldo. Hes my best friend. Oh, sorry nancy, i forgot you were there. Get the amazing iphone 11 for halfoff on at t, americas Fastest Network for iphones. Retail is on track for the best quarter ever. And a few winners are leading the charge find out which ones on tradingnation. Cnbc. Com more squawk on the street coming up. Our Retirement Plan with voya gives us confidence. We can spend a bit now, knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Im good at my condo. Well planned, well invested, well protected. Voya. Be confident to and through retirement. Take a look at the top stocks on the dow for the month of may a mix of reopening consumer plays as well as tech. Home depot up about 13 year to date stay with us stay with us blkt you doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Blkt welcome back stocks are slightly higher this morning with financial and Consumer Discretionary stocks among the best performers. Some of the big gainers in Consumer Discretionary are travel and leisure under enormous pressure. They are trading higher today. But the best consumer performer is gap up more than 13 after an upgrade from jpmorgan citing the retailers valuation jpmorgan raised the price target on gap to 11, up from 7. Back to you, carl. Yeah. Thank you for that gap an outperformer today along with other stocks that suggest consumer spending. American express the second biggest dow gainer well take a break and be back after a commercial interruption. Dont go away. Woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Georgia reopened for business over a month ago but some businesses have taken their time getting back to full service. Our next guest facing civil unrest and covid19 in his city of atlanta joining us to discuss this weekends demonstrations and kepts path forward during the pandemic, atlantic restauranteur fred kastaluchi. Thanks for having me. What state of reopening were you in you have multiple locations and different concepts in atlanta and what is happening in those neighborhoods as youve observed on the ground . We took a little extra time while we kind of put together our strategy for reopening and it was actually our reopening weekend this past weekend for two of our restaurant concept and then the rest of the restaurants are coming online this week. As you can imagine a challenging weekend to relaunch the restaurants. Challenging weekend, but anything that would derail those plans or whats your perception of customer response and any physical damage . Absolutely. So we took our time because we did we surveyed our customers and it was clear most people were not ready to dine in restaurants again. We felt as june 1st, this was the time people were requesting to start feeling comfortable dining in restaurants again. Some of the business is coming back but it is anemic compared to where we were before. Takeout sales have been pretty strong then the riots on top of that and people, you know, are truly afraid to go out of their houses especially in certain neighborhoods. Were in the buckhead neighborhood where there was significant amount of damage and thats been challenging for that neighborhood for sure. The restaurants that you did open this weekend, did it seem as if customer response was affected by what was going on in the streets or can you gauge what reopening demand looks like from those certainly for friday night demand was very strong and we felt like the business was starting to come back then the curfew was issued and saturday similar situation where there was, you know, obviously the civil unrest and so business eventually just evaporated some testimonials from restauranteurs, one in businessweek about one in seattle who are not only trying to reopen but physically redesigning their space for a postcovid era are you in a space where you can make longer term decisions like that absolutely. I think the entire crisis has forced us to adapt extremely quickly and those that survived this crisis are not going to be the biggest or the most well capitalized. Its going to be the people that are going to be able to move fastest and design their business for this new era. One of the things that we really looked at is, how do our businesses look in a social distancing environment can we design Ecommerce Solutions and things we can sell online that will use our physical space to bring in some dollars that can, you know, afford to pay our staff and ultimately make us a Sustainable Business once again. Yeah. We keep asking restauranteurs this question because our thinking is probably youve gone in the business because you wanted to host, people, right. Its hospitality and you want to show people a good time. Now the model is about managing risks, biohazards, peoples temperatures, getting their medical histories. Has the game changed so much that its no longer the business you fell in love with . Clearly that hasnt happened to you . No. Because for me, i love how challenging this business is and it was challenging before covid19 margins are tough. I mean labor, model, everything about the business is challenging. You have to be creative, you have to love people and want to serve people, but at the end of the day it challenges me on every level and this has pushed that to the extreme. What i love about this business is that it is hard and, you know, theres a lot of other things i could have chosen as a career but i would love to do this because of how challenging it is and fun it is and, you know, ultimately we have to adapt and have a positive attitude and be optimistic and do our best to survive and ultimately thrive in the future. Yeah. Speaking of the future, fred, i wonder how many, if any, of the things that youre doing now, whether they are Safety Measures or other things, do you believe will stay with us once the pandemic has passed . I think, honestly, its likely to subside and i think once we get on the other side of this, whether thats six months, a year, 18 months, were actually going to i think see kind of like a renaissance of boom of, you know, behaviors that are were no longer allowed in the covid era and youre going to see bars and risky behavior and all sorts of things, you know, boom once again. I think its going to the pendulum will shift. Its just a matter of time right what about, you know, server contacts during meals . I know youre trying to lessen that i mean is that something that conceivably weekend see kind of beyond the crisis or even that goes away . Yeah. Sadly, we realize that we servers about supposed to be at the tables very much anymore because theyre getting in peoples personal space. We designed little cards, green, red, whether you want service or not, trying to reduce that contact as a point of hospitality. Ultimately i foresee that going away we dont want to be, you know, a chain restaurant and have things like that. You mentioned that takeout has been strong and youre thinking about other types of Ecommerce Solutions to connect customers to the restaurant. Do you have a cesense of what t mix is going to be longer term, whether takeout is a viable Business Strategy as a larger proportion of what you do . Certainly during the shutdowns, supermarkets cannot feed 350 Million People in the United States theres has to be restaurants to fill a void. Even if that void is takeout, theres a substantial business there for those that are able to get it now the dining rooms start to open and you will see that takeout sales start to decline, but our hope is we can create a business mix that can give us a Sustainable Business, at least for the next 6 to 12 months and well see how that shakes out. I see takeout being here to stay and i think its going to be a substantial part of the business, but the way that business gets distributed across the players in the industry is going to be interesting to watch. I think youre going to say players that used to be strong with takeout actually decline because so many other people that really know what theyre doing are getting into that business its going to be really interesting to see how that shakes out. Yeah. Then the whole, you know, argument about Unit Economics are so different in takeout delivery than in dine in you dont have that table of ten people hanging around for an extra bottle of wine you cant get them to have a cocktail in advance. Does that mean that pricing is goes up just naturally you cant afford to charge any less or is the demand so weak you cant charge as much as you would like to . I think you have to ask yourself how long is this recession going to last and affect people. Once the spending power starts getting hit thats when you see the pricing challenges i would like to think weekend continue to increase our prices for that Premium Experience of dining in a restaurant, but its concerning to me, for sure fred, thank you very much for your time this morning and good luck with the rest of the reopening. Well see you later this afternoon. Good morning, welcome to squawk alley. Im Carl Quintanilla with jon fortt and Morgan Brennan from separate locations markets are handling a lot, the china trade war, the ongoing process of trying to open the economy. 3050 the magic number on the s p and the dow just a shade below 25,500 lot to discuss regarding stocks and markets and the role of American Business in addressing the sickness that has ineffect the country. I see president obama out with a post right now talking about not just the importance of voting but voting at local levels where a lot of Police Departments get regulated and monitored and we know what voting participation rates are like in this country on those down ballot names. Thats right. If this is a sickness that our country is experiencing and were talking about that in the social sense, i dont think this infection is recent. Its been here for a while i think technology, smartphones have allowed us to see it and see its progress or lack of regress in a way that perhaps we couldnt before. Ive been thinking as we do about how to frame this in economic terms and i think this is about two things from my