Transcripts For CNBC Squawk On The Street 20240712

Yeah, look, we saw the market rally and the vibs rally earlier this week. Just a terrible sign the 6 0 the vix the vix is the gauge, supposed to go in opposite direction. And spear downturns. That said, over bought as we are, its actually good. I went back to 1985 when you have periods where you are as overboard as we were, you tend to have 3 corrections and no more so lets have the 3 correction. Lets watch out for the stocks trading. David portnoy, the most important force i believe in the market by gunning the cruise ships and in gunning the airlines oil. At least his cohort was doing so watching the robin hood margin features again, this is wa we have to do. If we think the market is run by people who trade through Goldman Sachs were fools. The people active, the people trading retail, trading cruise, airline. Trading low price oils its fun for them and great. A lot use big margin calls that are coming, but the market became fun now, the reality is, and david, you know this market well, fun is good when the stocks are going up. Always. Always and then it doesnt becomefun or, you know well, back in the day that i recall most illusively, of course, the late 90s the dotcom craze, sit there and talk about valuation by the way, stocks just continue to go up, for years, in the face of what was seemingly no Business Plans in many of these companies. No path to profitability, jim. I only bring it up because back then id get hate mail that was in the mail now, of course, its twitter. Yes. Its people dont even use email anymore. Mostly twitter we see that but those people no longer are having fun upset by it it is interesting, though, jim, and im curious to get your thoughts here and carls as well is this cohort going to stick around no waiting for basketball you get the camps, camps for football, these people will move on go back to trying to figure out whether you should who do you draft first . A running back maybe draft Wide Receivers i mean, this market is looking at can val cruise line and ca versus, say, zeke. You know, norwegian versus, say, carson wentz when you get that you start getting the draft kings back, that stock very hot. Well see where carnival will trade. Its a proxy the people need something to do. Can you blame them no sports this is. Well, its good when sports comes back, but, yes, david. We are all to blame. Yesterday i told you i felt that the airlines were overvalued mea culpa kind of wrecking game. Hmm im sorry. Yeah. You know, you can only say it. Does mean its necessarily true. No, and American Airlines enterprise value above where it was precovid given all the death added and resurgence in the stock price. Not the case today at all as we watch significant weakness in the markets and airlines taking, not brunt but a lot of it. Keep an eye on financials given the fed and weakness seen yesterday. Jpmorgan all right. Boeing down 9 this morning. Weighing heavily on the dow. Jim, your point about the robin hood traders, i guess, going away. Right. Its not like commissions are going back above zero and that you cant make the trades on your way to work on your phone. No. But still looking at the robin hood, the Googling Robin hood margin call skyrocketing is another way to measure whats going on now, interesting, of course, you could say, wait a second talking about america. I mean apples going to be down a lot. I nvidia down a lot. Weve had a big run. Last friday another spike up there was, has just been a happiness trade out of sync with everything whether hot spots in arizona, or whether it be unemployment or whether it be a higher price in food you have to let it come down and see whether the whether theres anything left of the day traders after they have margin calls. In fact, were going to fill the gap, jim, from fridays jobs number, which, of course, we all know was better than expected. You mentioned the spike in cases. We got at least nine states with strong increases in cases. Texas hospitalizations up 42 since memorial day how much of that is a effefactor separate from day traders . A lot of people are in denial listen, thats what happens when you start testing, they say. More hospitalizations, theyre not really up. Thats not true. The hospitalizations are up. I think that one mof the things that went right in new york and new jersey we started Wearing Masks and social distancing and saw the result it was good. Regarded as people who were overreacting by the rest of the country. And there are people in georgia, for instance, its been wide open and theres been no spike florida was supposed to have a big spike, they understood how to handle nursing homes. We didnt in new york. A lot of companies, with a gen genreon, not so bad. With the market up high, you would have expected what was happening all of california was having, like france which is that no new cases. Its the opposite. We have to watch it, but never like new york and new jersey again, because in new york and new jersey we thought it was a respiratory illness and treated it wrong its not our fault it was a novel corona thing. No one knew what to do, but they did make a lot of mistakes and the race is on for the vaccine and i think were in better shape. I love the fact jay powell gave an answer saying were not thinking about Interest Rates, not thinking about thinking about Interest Rate hikes. One of jays greatest moments. I got johnson, johnson and and trading american and norwegian or whatever, i mean, because we learned from yesterday, dave us, said buffett was called him an idiot no, no said buffett got the airlines wrong. He said he was better than buffett. Of course hes better than buffett wake up and small the coffee, carl much better than buffett there again i love this line david, one of your lines why take profits when every Airline Stock is up goes up 20 every day. David, youve always taught me this losers take profits. Wasnt that one of your watch words from way back, like when you were 9 how do you know, jim . Jamie dimon is telling you that. Always, always. One of his many mantras. Does that guy portnoy still do pizza reviews in the middle of this bets in the world i know that. And buffett blew out the airlines at the bottom and buffett whats he thinking about football season . And dave, portnoy knows how to play football. I wonder whether buffetts even in there i bet he doesnt even know what fantasy is. And admitted gotit wrong earlier. Your friend david tepper any number of people we follow. Smarter the dumber. Right . And as well, jim, every day weve been on of late, its not as though cases, covid cases in the u. S. , have dropped dramatical dramatically theyve plateaued including the steep drop in the new york area. Its back ground noise not as though the u. S. Economy is going to close again. We both agree thats highly unlikely to happen ever again at this point it will continue to move forward and a Certain Group will not expose themselves fully to participating in the world. I think, carls, interesting is that there are places where crowds are there are signs that are building, dont congregate, and then signs in parts of the, of miami which say congregate. We are unable, in most restaurants, make ag profit with half the tables, but because of grubhub, we have been able to, the people who have takeout have been able to make money, and thats why i think that, david, i know once again you canceled your vacation for the show which shows, incredible dedication but yes. Grubhub made a big deal today, thats important, because the way restaurants work, the way retail works including amazon, is is dont come to the store. Contactless. By the way, you know, the cruise lines, theyve been hot but not cruising does that matter well, you would think it does think it does. I fooled you answers, no. Because we look at shares of grubhub, which are going to be up obviously, baltered yesterday once announced the deal. That being, that stock requiring a shareholder vote. Speaking you saw to matt maloney about this deal, we can talk a bit more on in our next segment. But there is a little lemonade out there. Finally got it done. Well see as well how uber performs today, given they did not succeed in getting to the finish line with grubhub. I cannot believe it uber didnt do it. So great for uber. They needed consolidation. What a mistake what a mistake. No guts, no glory. All right well talk more about that, guys, after the break, along with a slew of calls out today on apple, starbucks, campbells soup, General Mills kellogg and a lot more when squawk on the street continues in just a moment. Y nature and stay asleep longer great sleep comes naturally with sleep3. Only from natures bounty. Makes it beautiful. State of the Art Technology makes it brilliant. The lexus nx experience the crossover in its most visionary form. Experience amazing at your lexus dealer. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. 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Claims dropped initial claims for the tenth week in a row down, but 1. 5 million is still a big number. That seems to be the rub even though weve seen a rate of change moving in a positive direction. Ppi elevated but distortions between food and energy. Suffice to say the next chart should give you the information you need starts friday. Unemployment friday. Rates, over 90, actually reached 95 basis points. Look how its moved steadily lower every day going into the fed meeting and accelerated, of course jump ahead to the week leading into the employment report well, the other side of the mountain climbed up pretty much every session. This is fascinating to Pay Attention to, because the markets going to get different rhythms based on what we know and absolute yly what we dont know give you one statistic a chart starting friday, jobs friday, for the boon reached minus 26 basis points that day right now hovering at minus 40 meaning rates dropped 53 in four sessions. 53 in four sessions 14 basis points against minus 26 basis points and finally, foreign exchange. You know, risk on, risk off is a big deal everybodys talking about the dollar index weakness, how many days in a row it was down. I was leading that charge. Today its up a bit as you look on the 24hour charts. Two peaks there. Twin peaks, both unchanged on the year around 96. 40. Risk off in the dollars benefit. Risk on, the rest, somewhat ignoring the u. S. And goes on a merry way to positive numbers is something to pay close attention to carl, jim, david all three of you, back to you. All right, rick see you later on. S we said earlier, futures are weak we havent had a 3 selloff on the dow since april 1 for the s p it was april 21, but well see what happens when the opening bell rings in just under 15 minutes. Hey lily from at t here. Im back and 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. Yeah yyeah yeah hey, hey futures are weak this morning. In a moment well talk to the treasury secretary Stephen Mnuchin a day after talking to Small Business saying he would seriously consider more direct payments to individuals. Drill down on that and a lot more when we talk to him in just a moment. Announcer the opening bell, brought to you by nuveen responsible investing. Welcome back to xwsquawk on the street. Get in a mad dash. Fo focused on this for a number of weeks. Banks down from comments from powell its your feature. Morgan stanley talking about a dividend cut, david. 51 cents to 30 cents betsy grass, a very good analyst. A long time since weve seen a company in a group where the dividends have been steadily rising, to where we hear about a cut. Now, charlie sharpe, ceo, has been noticeably silent stock went from 22 to 32 everyone said, you know what in good shape. Charlie bought stock a lot of stock in the 27, 28 region, but the stocks not ready for a dividend cut and the group has been too hot jpmorgan up 6. Citi a quick 20 points i think this is going to be the thing that knocks this group down i dont think i think its isolated, but i think its important to point out that wells did a lot of things that nobody thought were any good, but never hurt them. Seems to be coming home to roost. Be careful of wells. Do you think that a dividend cut youd expect mr. Sharpe to be quiet on the matters no reason to comment, i guess, jim, one way or the other on speculation about the dividend you want to give yourself optionality, but what do you think . You know, i think hes got a really good board, its his own board. I think hes getting out of some risky lending. I think their Oil Portfolio has done much better since oils come back. Could he do a reset and start right now . And and cut the dividend and then work its way back up . I dont know. You know its a sign of weakness when you cut a Bank Dividend and then the sharks come out and circle so i think that youve got to hope that he can come out, say you know what . Ive spoken with the board ed board feels comfortable at this level a dividend cut, the stock can go back to about what it was previously. Carl, peeople say obviously you wont get the economy fully rebounding unless the banks come along. Sort of a reflection of Overall Economic growth. We have been keep ag close eye on financials for many reasons, including that. Yeah. And that, jim, was why powells q a yesterday was so critical. Not just talking about two more years of zero rates but in mohammed olairians view, noise dissuaded investors thinking assets are on the primary of the perimeter of the envelope. I heard someone speaking yesterday talking how he has to buy common stocks. Thinking, wait a second alltime highs i dont want powell in there buyi buying what is he top tesla . Is is in the time video, take some down . I mean, it was kind of like naven johnson was speaking really, incredible just, buy tesla honestly, can we admit that part of the markets doing fine what it does worry, to me, is terrells reporting is more important than what the fed chief says lily work, moderna work or merck. Somethings got to work. 0ing okay if we get that well go back to the way it was and dont have to be so focused on every minute of our lives. I mean, we had a Backyard Party the other day at my place. Why . Because governor murphy said youre allowed to gather i mean, you know thats what matters. Is that, i dont want to hear from governor murphy i cant have ten guys over and not worry about going to jail. We have got to get back to where theres some normalcy, but its not the fed coming in saying, that looks terrific. What is hthat lets just go buy some long grubhub did that hit that one . No. I dont think the fed is playing risk on these days pretty confident. Who says this stuff they come onair and honestly, come onair. Im thinking, wait a second. Is this a comedy show . You dont want the fed to be buying stocks here were at alltime highs the fed should be selling. But they have bolstered the financing market you know, of course, in a significant way even without committing that much capital in turn has sort of gotten a lot of things moving, including speculation. Great we dont need the 22 million unemploymented to have everybody who works for an airline having to worry what we need is people who take trips. And we need people who feel theyre note covid incubators. I continue to want to id like to be tested every two or three days if i can, and ive got my daughter flying in from madrid i want her tested. I want everyone tested on that plane. And thats not happening yet until that happens, i do not think youll see a return of the casual traveler. As we know from zoom, business is i mean, i was with someone who was ceo of a company, 100,0e hes tired of zooming. I dont want that anymore. Give me some 5g or let me travel go into the airport, hey, whats this like the airport is horrors seclusion. I mean, lets take starbucks as an example. Closing 400 in the u. S. And canada basically, deemphasizing that sort of thirdplace model where you hang out right . I mean, the companies having to put money on the table make a bet about that exact dynamic youre discussing doesnt sound theyre betting that regeneral ro regenreon. And walk through starbucks, dont have the to worry about congregating everything is taking longer than expected when you see jackinthebox being a company the most strong because they have high single digit numbers, then you know somethings awry in that group i think Kevin Johnson is doing a good job, but, boy, they hated what he had to say yesterday and particularly the fact he was saying this is not a change in our forecast i dont want Kevin Johnson to lose his credibility. Because when everybody says its a change in forecast except for kevin, well, then, you know, you have to wonder whether kevin should start thinking maybe has to wake up and smell the triple vente cappuccino yeah. Listen, you, youve lauded his leadership the last couple of years, jim, and it was a rough go there, but well have to wait and see. Yeah overall you know, carl, awaiting the opening bell this morning, of course, we continue to look at a market that the s p is only down 1. 26, only i say, given everything also seen that move yet again out of value back into growth. Its been a twoday period i think thats been pretty violent, guys, after the trade in value was the one working at least for a little while. Well, at least grubhub is up, david. Must be more people theres [ opening bell ] well, certainly, guys, as we look at breadth weak at the open the call out of bernstein on campbells, smuckers and kellogg, best of the fundamental news is over at this point all going to underperform. Thats center a commentary, yeah, were start eating out. I read that piece and i know look, talk in that group came when campbells report add great quarter and got slammed. Smucker reported, a great quarter and got crushed. That was beginning of, well, wait a second. Nice while it lasted and now were back in a world where youre going to go back to work. Its not happening yet i also think that the idea that there is just people who are just going to go right to the office is fanciful, but, yeah. That was the talk of the group and the pantry moment came and left even though i think a lot of people sampled some of these things and like them more than they used to campbells will do better, but it went up too much. That seems to be a common refrain, as i look at the red wall things did go up too much. And theyre coming in, except for some of the companies that you that you think about with a recession or that might have a vaccine, or at least, flow of antibodies. Yeah, yeah. I peemean, on that note, ebay oe winners, so to speak in this period, of course. Up 36 yeartodate is up ever so slightly. Whats happening in jim, youve got a special guest to bring in for us. Yes absolutely someone whos quite pertinent prtly with the market down treasury secretary steve mnuchin. Mr. Secretary, thank you so much for coming back on squawk on the street. Of course, jim. Great to be back with you. Theres been tremendous success with ppe few kpips hacompanies that havee under. Money left when frankly the money is something that keeps businesses alive seems quizable whats going on . Jim, first of all we couldnt be more pleased with the success of the ppp you saw that in the unemployment numbers. We saved millions and millions of jobs, no question in my mind increase in jobs was a correct result of the ppp and reopening the economy. Both very important factors. Youve got to remember, when we asked congress for money, they were afraid we were going to run out again and gave us an extra 60 billion. So when we modeled this, we didnt think wed end up spending all of this money, and now that weve given the restaurants more flexibility of 24 weeks, which that was the number one ask they had for the president when they came in, my guess, youll see the restaurants come in and now take up a bunch of this money, but were in productive discussions. Yesterday i was at the s. B. A. Economy, huge bipartisan support for this program. As someone who follows the Restaurant Community well, and is involved with associations, i think it has been miraculous thats where 13 million, 14 Million People are working rent talk rent throughout the system. Its been okay a lot of for giveness the last couple of months and you cant evict. That should be next. Great flexibility with ppp, allowed more money to go towards rent what do you do with the landlords who have mortgages themselves and restaurants that may not get in the traffic but have to pay that rent . Jim, let me first comment on the residential side, and i think the moratoriums helped on the residential side, and when you look at the numbers and the number of people it was not overwhelming the number of people that needed to do this thats an indication of the 3 trillion we pumped in to the company both in terms of the Economic Impact payments and ppp and extended unemployment. On the commercial side, youre right. It is more complicated you have companies particularly in retail that are having a lot of issues. Theyre going to have to deal with the rent. The landlords then have to deal with mortgage payments thats why i said yesterday when we look at the next round of c. A. R. E. S. Iv, we need to be focused on, how do we help the industries that are especially impacted i would say, hotels, travel, entertainment, restaurants, right up there be much more targeted in making sure that we get people back to work and we help these industries, and the president and i wont be done until we get every Single Person back to work. And mr. Secretary, how closely did you follow things line Monoclonal Antibody tests by lily and j j. Give us the bridge, including the unemployment and we get to the end of 9 bridthe bridge, in to say, things are going to be spectacular . Keep this thing going or does there come a time, weve done everything we can and lets hope science prevails were never going to say weve done everything we can well do everything until we get this on the economic and medical side we knew issue with unemployment. Some people getting paid more to stay home than to work whatever we do with unemployment were going to fix that. On the medical side, and i cant comment on any specific one of these, but i can tell you we had a very productive update this week at the task force, the Vice President led us and we had a presentation on both the viral and the vaccines and the investments that the u. S. Government is making, and im quite optimistic in the medical progress that we have made and what will be done between now and end of the year. Jim, let me just say as we reopen the economy, you know, as i have said before, i think youre going to see a pretty big rebound in the third and fourth quarter. I know the blue chip survey for gdp has a growth rate of 17 in the Third Quarter. So with the reopening of the economy, with the 3 trillion, plus a new round in c. A. R. E. S. Iv, i think year going to see a lot of americans getting back to work mr. Secretary, when you look at the increases in cases in certain states, largely in the south what do you make of that and how is treasury modeling for a potential second wave . Is that something youre actively trying to model in and what would policy look like if that happened . Treasury isnt modeling the medical side were leavingthat to the task force. The good news, again, plenty of hospital capacity. A lot of progress on testing i think were over 20 Million People that have been tested and well continue to test people. So the good news is, you have a lot of capacity of testing and hospitals. That was something that was the big problem and the reason why the president needed to close down parts of the economy. I think now youre going to see with the reopening, yes, you will see, theres areas, but Contact Tracing is getting much better. The technology is getting much better so i think well deal with that in the appropriate way. Mr. Secretary, i would assume that means were not going to shut down the economy again . In your opinion . We cant shut down the economy again. I think weve learned that if you shut down the economy, youre going to create more damage, and not just economic damage but there are other areas, and weve talked about this, medical problems and Everything Else that get put on hold i think it was very prudent, what the president did but i think we learned a lot, and i also would just say the fact that congress, the house, the senate, responded with the administration in an unprecedented way to put 3 trillion into the economy, i heard you had ron johnson on this morning, and he said this we discussed this last night, actually theres only about 1. 6 trillion of that money actually in the economy. So you know over the next month youre going to see over another 1 trillion pumped in to the economy. Thats going to have a big impact we have the fed program. We have main street which is going to be now up and running. And were prepared to go back to congress for more money to support the american worker. So were going to get everybody back to work thats my number one job, working with the president , and were going to do that. Yeah. Well, when it comes to getting back to work, mr. Secretary, and this is a question i asked the Vice President last week when he joined us. I think ive asked you as well the states many are in fairly dire fiscal situations in terms of not collecting anywhere near the tax revenues brcht revenues budgeted this year and cuts to their workforce. Part of the last deal, may not in many ways be nearly enough. Are you considering that in the next goround . Of course, subject to a discussion you know, weve talked to senator kennedy, who has a potential bill that will create more flexibility for the money that weve already given out. Thats something thats being contemplated and theres other things now, i will say the flexibility weve already given from treasury, make sure that all of the policemen, firemen, first responders, get paid weve also put out guidance that we expect the states to send money down to cities and local communities, a lot of that money is still being held at the state level. Bit this is a complicated issue. You know, if the federal government sends more money to the states, its in essence some states subsidizing other states. Again, where there have been hot spots weve sent a lot of money to that area for hospitals and other things, but this will be something well discuss on a bipartisan basis and make ag decision wh making a decision when we go forward. A man i know and you know, a man in the city, a tightening of the industry, and he talked about minority investing talked about minorities and minority business and how theres not enough reference to it i know you care passionately about this, too. I am concerned that it is great that youre doing ppp and you know i think its a good program and you know i think the programs youre doing are really bridging us to when things get better how about the minority Business People that did get hurt in protests, in riots that followed peaceable protests that i supported. Any way to earmark i know you care about this what can you do personally to direct the money towards the minority businesses that were really hurt well, ive known ray for a long time and it was great to hear him on the show he is a Great American Success Story and we need to make sure that more people have opportunities for education and have opportunities for the success that hes done hes a great person. Let me just say that we all need to do a better job at creating opportunities. But having said that, thats very different from the looting and the damage that went on to Small Businesses, and we shouldnt confuse these two issues there was no excuse for the looting and destruction. One of the things i got asked yesterday at the s. B. A. Hearing was what have we estimated the damage on the looting . Were looking for that some discussions whether we should allow for that to be picked up in the next bill, but weve got to make sure the people hurt by looting, whether minority businesses or not, that thats just, we cant go through that again, but we all need to do a better job and were focused on cbfi lending to all businesses. Last question, mr. Secretary. A bunch of us are trying to frantically figure out what we can do as restaurants, Small Business owners. The patchwork is so hard, sir. Jerseys different from new york state. New york states different from new york city. What do you think we should do i mean, honestly, youre a straight shooter can you help advise some of these governors and mayors about what the right thing is . We want to open. We want to do business, and we dont know if were doing it right, if well get in trouble we dont have a clue, and you can help us. What should we do . Jim, restaurants are a big part of the economy. And a big part of Small Business, and employment so its an area that we very much want to support we made a change to the ppp. The president wants us to very seriously bring back the deduction for people going to restaurants. Thats something that, thats very important to spur it, and ive gone out to local restaurants the last few nights, because i want to support local restaurants here and let me tell you, ive been impressed with the social distancing and how theyve been able to do it. What makes no sense to me is you can eat outside, but you cant eat inside and i dont see why we cant have proper social distancing inside in restaurants, and obviously if it rains outside, you cant eat outside. So i think i think that restaurants can open in a safe way, but this is an industry thats going to need a lot of help, continued help, until we have a virus and a viral which im very confident were making incredible progress on those fronts. Thank for calling in today to squawk on the street. Thank you well well, jim, i mean, a couple of the headlines prepare to be we are prepared to go back to congress for more money and 1 trillion pumped into the economy in the next month. That, of course, the answer to davids question, too, david we are not going to shut down the economy again. Something weve been trying to highlight. The political will to do that. Amen, in the fall, its just not there. We just cant i mean no. I do think that, i like what he said very much about also the idea that we can open up, but theres just a vast confusion, and, of course, his comments echoing ray mcguire, the city m a principle about what has to do with damage of riots for minority and for all businesses. I think many Business People are very grateful for. Yeah. You know, listen, i think its been made clear, and he obviously is leading the charge. This economys not getting shut down again regardless of what happens in terms of the caseload on covid19 state by state it would appear. We are moving forward in terms of reopening the u. S. Economy. We talked with the secretary of the treasury about restaurants which actually is a good segue to our next topic which involve as big deal announced late yesterday. Requiring grubhub, fresh off the Conference Call and when explaining some of the merits of the transaction, is grubhubs ceo matt maloney who joins us now first on cnbc. Matt, nice to have you this morning. Reporting on this a good deal on the last few weeks, you may no uber engaged with you for quit ti time you chose to go in this direction. You believe and the board believes this is necessary in your business, yet you chose to go with a company thats not going to consolidate the level of competition in the u. S. Probably only will exacerbate that competition why was this deal the better deal than uber had on the table . Yeah, dave. Great to finally meet you. I have been watching your reporting, because frequently, the breaking information, before i even find out about it, which is a unique position to be in, but, let me just start it this way. The board had a very easy decision to make. Regardless of our options, we went with a much higher offer with much more deal center that brought us significantly more, i should say significant financial strength and flexibility to continue doing what were doing now. So if you read our shareholder letters, Third Quarter last year, we outlined the challenges and opportunities in front of food ordering and Meal Delivery in the United States it clearly laid out our strategy and it was working precovid, 150 to 200 basis points ahead of our plan that we put forward. Obviously through this covid crisis in the stayathome orders, delivery and pickup has really accelerated, and put us in an even better position so we werent looking to sell the company. We were actually drawn into a process. By the time the board evaluated numbers you are clearly reporting on, that allowed many other players in the world to realize what was potentially about to happen. I can say yitsa moved very fast. Aligned visually, ive known it a decade and they know the bogey and they came in and destabilizing the u. S. Food Delivery Market and strategic comparative for them, and you have to think about the Global Dynamics and the Global Leadership strategy at play when you put the most valuable food ordering platform in the world potentially on the market. You know, its something they have been emphasizing in the comments at least briefly here that weve had from them on the call and press release and the like, matt, theres going to be a transformation in execution. Of your business does that imply that somehow you have not been effectively executing . Are you saying those are comments from the takeaway yes, yes. Quoting from some of the things theyve said that this will include a transformation and execution. Okay. I just got off the investor call with them and thousands of investors, that definitely was not the story. The story is, they believe in our strategy, they believe in our execution. I had a conversation with yits sa the d the day of the letter, we executed against very successfully to date there is no transformation and execution. What this is is increased financial strength and stability to continue doing what were doing right now. We are winning back share. Winning back share it the top three markets and broader markets our strategy of successive to incense vice diner attention and attraction is working. Were working towards giving away 1 billion this year through our loyalty pipelines from restaurants to consumers. This is not our dollars. This is not our shareholders investment this is directly supporting loyalty from independent restaurants and enterprise restaurants to consumers this is all working with the shareholder transformation does is it allows us to continue on this strategy as a much broader more diversified organization where we can tap into revenue and profits from other places. Right, but it would seem to imply that the u. S. Market is going to become even more competitive. Im stead of taking out a competitor, for example, as the uber deal would have done which was going to raise antitrust concerns, youre going to be bringing even more money in and am i wrong making it even more competitive in terms of pricing . I think that helps us, because i think we were winning. And so by doubling down on a winning strategy, i feel like its only going to be positive for our shareholders but i think you still need to take a step back and think about we are the most valuable asset in the world, because we are the only profitable player in the Worlds Largest food delivery and takeout market and so if you think about the ramifications five years down the road, the u. S. Is a mustwin market for anyone who claims to be the Global Leader and so allowing a u. S. Competitor, specifically uber, to rationalize the u. S. Market and generate hundreds of millions of dollars in profit, that would be transported to other countries and specifically european capitals. That was an unacceptable outcome for any of the Global Leaders out there right now. So you have to think about the broader workings and how and how this process unfolded and why theres so much value being created for grub hub shareholders it was at 75 deal on the table before i get it, but you were close, you were really close with uber. 1925 you had the ratio done it was about them not agreeing to your concerns on antitrust no. You couldnt get there about that, but it wasnt about price. Thats not true at all. See, i think unfortunately youve been privy to a onesided narrative, at least thats what ive seen through your reporting. Well, no, thats not true ive been speaking to both sides. Matt, thats not fair you know all the time come on. You know that. No way ive been presenting, in fact, your valid concerns about antitrust you know that. Come on. That is so im not going to debate that with you. What i will say is that the offer was dramatically different. It was a much higher offer it was a mid 60sish offer versus a 75 offer there was no comparison in terms of economics there was no comparison in terms of confidence to get the deal done, and then here we are in a position where we can continue executing across our aggressive financial competitive strategy and win. All right, matt other than that, i think quizzical dispute with david who i think has reported on this excellently, you have a new owner. Youre going to own 30 . Can you just dramatically discount what you charge minority restaurant . Can you go to the new owners and say we have to do something. America is a country thats torn right now, and we want i want to just say personally, were going to cut the fees to the restaurants . Jim, as you know, all restaurants are hurting. You were just talking to the secretary mnuchin. All restaurants are hurting. We have already given over 100 million to independent restaurants. I recognize in the middle of the pandemic were going through major struggles in terms of our Race Relations and were doing everything we can to support minority owned restaurants as well as the broader restaurants. We are trying to figure out a way to deconstruct our pricing to make sure that our pricing is extremely transparent. Theres been a lot of misunderstanding as you and i have talked about before in terms of what we charge and how we charge. Its resulted in multiple regulatory situations, attention being placed on us during the crisis and we think its all misconstrued were trying to break it down. We all know, look, to deliver food it costs 25 of the order so any fee cap thats lower than 25 doesnt even fund the literal delivery of the food so there a lot of misunderstanding were trying to break it down. We make our profit through advertising. We help restaurants sell more food being able to have the situation for restaurants to understand what theyre paying for is what were trying to solve for. Look, we dont have a business if restaurants dont have a business, and thats what we keep saying. We just had the treasury secretary on a possibility of Third Quarter growth of 17 . Thats the blue chip survey. Might it have paid to hold on . You had solved the promiscuous diner problem. You saw what you can do with growth coming back why not hold on . I thought the world was your oiser . Oyster were doubling down were seeing growth accelerate dramatically you dont take away Just Announced in april and may they had nearly 50 growth. In markets in aggregate larger than where we are. We had incredible growth in april and may as well. Were doubling down on a strategy, and its working we have the financial strength and flexibility now to execute like this, hyper competitively for years upon years thats what was weighing our stock down as we outlined in the Third Quarter. Right and we should point out the stock is up to your point, of course, given the ratio here, it is in euros for people who may be a bit confused when they just apply the ratio to just the take away share price matt, you seem to be saying youre going to bring even more competition to the u. S. Market is it going to be a blood bath in terms of what occurs in pricing . Well see i mean, i think you have for years have competitors that dramatically subsidize the transaction, the fulfillment, and oftentimes the food. That is not sustainable. I have said this quarter in and quarter out. That the current methods of execution on my competitors will not work in the longterm. There is no intention of driving profits. We have been able to be incredibly profitable while being incredibly competitive and we turn into that to become more competitive and dropped our profits down to an arbitrarily low number what we said yesterday was that the take away team agreed with the strategy and fully support us for years of investments, leveraging profit pools across the globe. So we will have much more as i said, financial strength, to be as competitive as we need to be to make sure we continue to take back shares in what is now the north American Market because well execute in canada as well. Right and youll be running that part of the business. Matt, final questions on the deal itself. Theres some concern that the take away will not get a vote. They have the 11 founder vote with them. Is that a concern, and also theres issues we call flowback. The shares are issued here and end up going back over there because there isnt a u. S. Listing. Is that a concern as well for you . Flowback is not an issue. We committed to the list on the new york stock exchange. Flowback, i dont think theres any problems we cant manage we appreciate you taking time to us. Congrats on getting to the finish line with a deal and thanks again matt maloney, ceo of grub hub. Carl thanks, guys. All right currently worst drop for the dow since april 1st. Whats on mad tonight, jim we have we have adobe. I think its going to determine whether we can turn around why . Because adobe is a lot about ecommerce adobe has been a leader of the cloud kings. It will matter manny chirico, pvh, will there be a comeback for apparel, and l3harris, one of the remarkable m a markets. Its been a big winner ryan has given away more to poor schools than anyone. And hes a great equalizer, and you know, this is a focus for all of us now. All right jim, indeed. Well see you tonight. Mad money at 6 00 p. M. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with sara eisen and mike santoli s p the worse since may 1. The cruise lines lead the decline. Only about 20 s p components are in the green worries about the fed worries about more infections in the country. Lets continue the market conversation now and bring in our first guest Jeremy Siegel joins us, a professor. Professor, nice to have you here do you see this as a turning point for the market which has had such a stellar runup from the march lows it got a little bit ahead of itself, but i think the trend is up i think this is what wed call normal profit taking after a huge runup the runup on fridays unemployment was excessive i wasnt as excited as several others but the liquidity thats provided by the fed, and powell, you know, continues to say you know, were not even thinking about raising rates. Thats going to feed this market i look at m 1, not just the Balance Sheet of the fed it is up by over 257 in eight weeks. Which is much more than the whole year that followed the financial crisis of the Lehman Brothers bankruptcy. Were just putting so much liquidity in, and i think once this economy opens up, as it is opening up, next year, its going to be pushing right into the economy, and sending stock prices higher. There is a school of thinking that the fed did not sort of deliver on what investors wanted in terms of the economic projections. Did not follow through on the optimism, even though investors seemingly also want the fed to stay in stimulus mode. The banks are getting hit particularly hard this morning, professor. You dont see any reason to fear the fed at this point . I dont believe he will be able to keep that short rate as low as they say all the way the next two or three years, because i think theres going to be inflation next year, and in 2022, the long rate is going to go up, and when the long rate goes up, and i dont think hes going to get into trying to control that long rate i think then youre going to start seeing that shortterm rate goes up why the banks are down because the yields are back down on the longterm, and that margin is really important for banks. So i mean, im not surprised that banks sold off today. Ten years back at 70 basis points, but i think we saw the low in march on the tenyear and i think thats going to be a fourdecade year low and were going to start seeing that rate rise we saw it on friday. But i think were going to start seeing that rate continue to go up that actually is going to be good for the banks Going Forward to have a little bit of that Interest Rate margin so this is temporary, i think. In terms of the market so would you tell investors to go out and buy some of those riskier pockets of the market that have been sensitive to covid19 and Consumer Behavior changes, the airlines which had a strong runup and are getting slammed today . The cruise lines, the Hotel Companies . These are in the eye of the storm. They are right. And they have come back. I think they overran a little bit. Because were not going to get that unemployment down to 3. 5 for a while. Because theres going to be permanently unemployed people. I also think theres going to be a jump in productivity of a lot of firms theyre going to see they dont need all the people they had hired but the people are going to have to find alternative jobs all that is going on i think whats important is with my look at yields, i think the fed keeping shortterm rates low, longterm rates rising which means its dangerous to be in longterm bonds, where are you going to get yield i think its dividend paying stocks i know they have underperformed the last five or six years, ten years really, but right now in the mildly moderately inflationary world, theyre going to be the source of income in 2021, 2022. My feeling is thats where youre going to get yield. Dont try to stretch too much in the high yield market. Certainly stay away from longterm treasuries i think theyre the most danger part of the market right now yeah. And maybe a new generation of Companies Want to start thinking of themselves as dividend payers i know target had a dividend hike this morning. Jeremy, i wonder, atlantic has a big piece up this morning. Its the number one story on their website called the looming bank collapse. Its largely about clos. The argument is the its just as dangerous maybe more dangerous than cdos were in the financial crisis i mean, to what degree if youre right about rates does that become a liability for the trillion dollars in leverage loans that are out there i think its more important for the financials two things. One is the economy is not going to collapse, so a lot of that provision for bad loans, i dont think theyre going to have to make more and maybe they overprovided already and secondly, really important, the margin because you cant really pay less than zero on checking accounts transaction accounts, but you can keep them low as loan rates start rising up and the long rate rises up, and that gives them margin. I think that those two factors stronger economy and all that, will offset any problems in the clo market in that sense so my feeling is that financials are still, perhaps, going to be an outperforming sector in the rest of 2020 and 2021 because of the fact well see longterm Interest Rates rise. I was going to say, it sounds like you would not dissuade anyone from considering the banks as potential leadership going into the next year or two. Im not a big sector. Im mostly a macro guy i dont look so much at the sectors, but just in terms of what that margin is, its so important for the banks, and a stronger economy, because i think those two things are going to be positive for financials going into 2021. Jeremy, we all know valuation for the stock markets is a louzy timing tool and when earnings fall apart like they have right now, not necessarily trustworthy. Right now the s p above 22 times the next 12 months expected earnings if you actually believe that bond yields are headed higher, i mean, its on a relative yield basis is the only way you can make stocks plausibly seem attractively valued. Is that not going to crimp where the overall market can go as we wait for earnings to slowly recover . Mike, thats a good point one thing is if inflation goes and i think its going to exceed 2 , i think were going to 3 , 4 bond yields at 2 are not the way to go while equities, which are claims on real assets with Pricing Power returning in that moderately inflationary environment, is definitely going to still be in favor of stocks take a look at the 1950s and early 60s where you also had that moderate inflation, bond yields were down 1 or 2 a very good time for the stock market until the long rate gets to 5, 6 6, 7, 8, then the fed will start tightening then you have to worry, but i think thats years into the future yeah. But if the idea is that the fed is going to continue to throw money into the system, the way its doing it is by buying a lot of bonds and theres an interpretation of what jay powell said yesterday, that they werent that pleased with longterm rates going up recently, and maybe they want to try to tamp it down. Wont that restrain where yields are able to go its tricky for them to try to control that longrate. Its an operation twist. Its been tried a few times in history. Not with much success. Theres not that much support. And my feeling is theyre not inflation as it exceeds 2 , theyre going to let it run. Using the excuse, for years we were below let it run a little bit high theres a contingent that said look at the inflation, 3 Going Forward. I see that short rate going down them letting that long rate go up until it gets to a big ouch position which could be 4 on the longterm bond, far above where it is today. Its tricky for them to try to do an operation twist. They tried it in the 50s they did a little bit of it after the financial crisis not big enthusiasm on the fed for that sort of pursuit can we talk about the virus for a second, professor . I mean, thats what got us into this whole mess. And all the economists said were not epidemiologists. We cant project the path of the virus so thats whats its going to take for the economy to come back. We heard similar comments from powell yesterday the path of the virus is unpredictable in this country and we have a dozen states with rising hospitalizations. Dont you think that could have an impact on Consumer Behavior, even if the bar is higher for the country to shut down again, as we heard from the treasury secretary and the president , clearly that has to get in the way of the recovery. How should the market think about that how should investors think about that i think the mood for a total shutdown which was done at first is not there i think if we do social distancing and other measures, we can control it without a total shutdown you guys have been reporting some really good news on the vaccine front. Ive been talking to some doctors that, three drugs in stage three trials and without the drugs, we know how to treat it better. Its not going to be the fear factor as it was in the middle of march were not going to engage in that total shutdown. We just have to be careful, protect those vulnerable portions of the economy of which im one of them being an older person to be safe, and take a look at europe opening up and doing so much better than we in terms of virus control. Theres no reason we cant get to that position yes,theres going to be cautio for a while, but by 120i 2 1 2021, therapeutics and vaccine, my view is liquidity, theres not a big tax increase to pull it back. My feeling is the its going to be a leash on the economy next year and produce a much stronger inflation rate than the fed believes and most forecasters believe at this time well, i hope youre right on the therapies and the vaccines finally, in the interest of transparency, we all see you on the commercials for wisdom tree and the markets. Some people say professor siegel is always bullish. Hes always bullish. And hes representing wisdom tree can you clear up your position for us i wrote stocks for the longrun, addition number one. In 1994. It was way before there was a wisdom tree. And my research showed that longterm holdings ved all other and panics our times to step in rather than get out. It preceded my association with them its really based on my Historical Research and my beliefs in whats good in the market always good to have you here. Professor of wharton thank you mike . Here are the biggest laggards on the dow as the market sells off a lot of big industrials that have done well this month boeing, dow, caterpillar and raytheon all down more than 5 mar on the market pullback next. 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. And tailored recommendations. Were committed to making 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. You say that customers maklets talk data. S. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. Switch and save up to 400 a year on your wireless bill. Plus get 200 off a new Samsung Galaxy s20 ultra. We all need to do a better job at creating opportunities. But having said that, thats very different from the looting and the damage that went onto Small Businesses and we shouldnt confuse these two issues there was no excuse for the looting and destruction. One of the things i got asked yesterday at the sba hearing was whether weve estimated the damage on the looting. Thats something were looking for. There was some discussions whether we should allow for that to be picked up in the next bill, but weve got to make sure that people who were hurt by looting, whether they were minority businesses or not, thats just we cant go through that again but we all need to do a better job. That the treasury secretary with us in the last hour as we continue our discussion at cnbc about the corporate response to two crises covid19 and Racial Injustice in this country joining us this morning is the president and ceo of nrg energy. Its great to see you again. Welcome back thank you for having me nrg has cited the names of george floyd you pledged a Million Dollars to organizations. Where do you think we are in the conversation and how does Corporate America keep the conversation alive when we know over time these issues at least historically have faded . Yes well, i think that as leaders for black energies like nrg, we have significant influence in the communities where we operate. It is our responsibility to speak out against the Racial Injustice that exists in our society, but also to talk openly about what were going to improve diversity and inclusion in our own companies we need to lay the change, not just with words but also with actions. Im very encouraged, although im not surprised but encouraged by the as you were saying, the response for Corporate America regarding these recent tragedies. I think companies have evolved their statements of purpose to be more inclusive. Not just to create value for shareholders but to all stake holders. Employees, customers, suppliers. Our communities. I think were seeing the ceos exercising the responsibility by addressing issues that are important for their stake holders. Its funny. We talk about stake holders and say the stock is one thing, and then stake holders, community is another, but i wonder if youre beginning to see the groups comingle and become examples of where people are drawn to, for instance, the equity because theyre impressed by what youre doing socially well, i mean, i think its clear that if we want to create sustainable longterm value, we need to make sure that we also create value for those stake holders that we were just talking about. I mean, we cannot create equity value if we dont take care of our employees or if we dont serve our customers, our community. So i think youre correct, but what youre seeing is this the i guess the result of the evolution in Corporate America to recognize that creating value for equity holders is also creating value for all stake holders. Meantime, we have the virus to worry about as we look at the up tick in hospitalizations in states around the country. You were able to maintain full operations although you moved about 95 of employees who can work from home to their home is the reopening tracking with your operations the way it appears to be from some of the shelter in place restrictions that have been lifted . Well, if you think about it, the Power Industry never shut down we have to continue keeping the lights on, and power is a critical part of the infrastructure of our economy. I think its fair to say that people didnt have to worry about electricity during the pandemic and i think that is a testament to the response that the Power Industry had we were as well prepared as we could. We had our first share of challenges in the past with weatherrelated disasters. I think its put us in a good position during this pandemic, our number one priority was directing the safety and well being of our employees so we could continue providing the Critical Services to our companies and to our communities. We had to implement things we were discussing, we had to implement realtime in our Power Facilities from social distancing to our screening. This is something that we i think we did very well, and i am very proud of what we have done. Also as part of that, we supported our communities. Understanding our customers. As they were impacted financially, we didnt want them to worry about electricity. We worked with them, providing them options we also worked closely with our communities. I mean, you mentioned the Million Dollars we pledged for our organizations that support social justice during the pandemic, we also provided 2 million for first responders, small wizes, and teach Small Businesses and teachers i was not alone in the Power Industry as i said, i think we as an industry really rose up to the challenge. How the economy might be slowly coming back, one thing people are watching is electricity demand and usage where are you tracking in terms of your customers, industrial customers perhaps in terms of normal relative to normal seasonal demand . The impact to electric demand does mixed close to large metropolis, we saw the impact like in new york city, but all of us are working from them. So residential demand was higher thats where nrg focuses on, but Small Business was significantly impacted by it large commercial and industrials tend to be more cyclical, but were seeing some of the impact now. As were coming back to the economy, i think its going to be very regional we have different states that are coming back at different rates. Were starting to see a pickup in small commercial demand like, you know, dry cleaning sort stores, but i think as a company, were going to take our time were going to be thoughtful about it you just mentioned that almost overnight we had 95 of the people who could work remotely working remotely i think thats one of the things we all have. The technology is here i also recognize that many of our employees are impacted by other things you know, lack of child care, home schooling so were going to take our time. We want to be very thoughtful about how we do it i feel very comfortable that all the steps we have taken to ensure to our facilities, our offices protect the safety and well being of our people, but i cant ignore their personal situations we want to be very mindful about that and perhaps not Everybody Needs to come back to work i mean, there is one thing that we all learn, that the technology for remote work is here, and were going to be thinking about that. When we actually come back to the new normal yeah. As we track the number of businesses that are going to start bringing workers back to the office in the next few weeks to some degree thank you for the time we look forward to checking in with you again its a great picture of how the economy is operating at this moment in time appreciate it. Thank you great seeing you sara . The dow down more than 800 points lets hit the etf spotlight. Were looking at the transportation sector. Ticker iyt its under pressure. Down more than 15 now for the year its down about 4. 4 airlines among the mornings biggest laggards including united and american. Getting hit pretty hard. Were going to take a quick break on squawk on the street. Stay with us as we continue to monitor the selloff. All sectors are in the red 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. Tomorrow music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. We thought you can help ray bring hiwhat . S to school. Kelly, do you know him . Hes a new friend. You ok . You know you can tell me. Im ok. Oh, i trained her in the car. Shes not gonna break. [ laughing ] good morning, everyone im sue herera heres your news update. Confirmed coronavirus cases in the u. S. Have topped 2 million new infections are hitting record highs in states like arizona and texas as reopening efforts intensify. Nationwide, daily newly reported cases have roughly been unchanged over the last month. You can check out a map of u. S. Hot spots by going to cnbc. Com the nations top military officers seen here in a camouflage uniform is apologizing for taking photos in front of the church last week. Jen milley said it created the perception of military involvement in the domestic politics he said i should not have been there. President trump signed an executive order against the International Criminal court over the investigation of possible war crimes by u. S. Soldiers and Intelligence Officers in afghanistan. Youre up to date. Ill see you again in an hr. Ou ill send it back to you guys. A grandfather of 14. A newlywed. A guy who just got into college. Thats why behind these masks, Johnson Johnson scientists are working to accelerate development of a covid19 vaccine, drawing on decades of experience responding to Public Health emergencies like ebola and hiv. For the life behind every mask, the clock never stops and neither do we. Sawithout evenon yoleaving your house. Just keep your phone and switch to Xfinity Mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Lets turn to todays Market Action the s p down 2. 7 threatening to post their first losing week out of the last four gregg and urean are joining us we had a literally unprecedented rally in terms of the power and persistence off the lows march 23rd where does it leave us in terms of diagnosing what the pullback is and what it might become . Were following the analog of the 2009 bull market closely back then the market rallied about 45 in three months like weve done now and then in june of 09, market took about a 10 correction over about a month. And so i think thats a pretty good road map here the market is overbought but in a good way 95 of the stock of the s p 500 stocks are above their 50day moving average 75 are at new forward highs these are all really good signs of a broadening market but the s p looks like five waves up things are overbought. We hear the headlines about the kind of day trading mentality. It makes sense, especially as people get concerned about a second wave here that the market takes a breather and consolidates the gains that weve seen over the past few months gregg, of course, that rally off the march 2009 low was decisive that low was never reapproached and the economy did kick in to gear shortly thereafter, even though it seemed as though the market ran ahead of us whats your thoughts of where we are in markets relative to the economic underpinnings i think in some ways there are comparable features to 2009. What weve seen is a much more rapid selloff in terms of march and a more rapid recovery. I think the stock market to a degree duh coupled from the economy and has been driven by the fed. In the last week weve seen a recoupling what weve seen is that big positive surprise in the labor market data an friday awokened things like the value factor which has been volatile recently i mean, one of the problems with knowing what to do next is that no one really expected that massive rally. Everyone we spoke to on this air, whether they were the most Famous Hedge Fund managers in the world or strategists like yourself were surprised by the scope and the scale of the rally. What did we learn at that point that can help inform about what to do next yeah. I mean, its a really solid point. And this has been a very unusual cycle because it was such a shock and the market fell 35 in i think 24 days. It ended up falling further than this years earnings are likely to be. I mean, we dont know what the earnings are going to be yet, but earnings estimates for 2020 have fallen 28 from the highs and the s p fell 35 and then it recovered fairly quickly pricing in an ultimate recovery and now were down or at least we were as of last night, down 6 from the highs. And that actually exceeds 2022 earnings estimate. No matter how you slice it, the market has priced in a lot of recovery very quickly, but it goes to the chaotic nature of this cycle, and, of course, the very significant monetary response from the fed. I mean, that should not be discounted because it was when the fed really jumped in in late march that it allowed the market to kind of look past the abyss and on to the other side so the timing and magnitude of the decline and even the recovery dont surprise me that much, but its just a question of how much recovery, how much, and how soon, and at this point, we have no idea whether the 2022 earnings estimates which i think is what the markets are running on, whether theyre going to be accurate or not. Theres no guidance, and they could be too high or too low in 09 the earnings estimates for the next two years were extremely high, and i dont think anyone would have believed them, and it turns out they were actually too low two years later. Were stabbing in the dark here, but i think a period of consolidation over the next month or two or three makes it makes a lot of sense to me. Gregg, how do you look at what weather the earnings estimates are right now and put that next to the fact that the fed has made another pledge pledge to be all in to keep or up its amount of qe or bond buying stimulus and keep rates on hold for another two years. Well, i think tackle the fed question first the fed has been hugely important. The reason why the market has rallied so fiercely from the lows we saw in march is primarily i think the policy intervention i think what the fed has done has to a large part fueled this risk on rally weve seen in the s p. The interesting thing is looking forward, how much further marginal impact can they can the take away from yesterdays meeting and the price action today is its harder for them to move the needle. When we look at earnings estimates, were looking through this year. I dont think its whats driving the market at all. Its really going to be the extent to the recovery and i think at the moment the market is pricing in a very vshaped recovery. Its a Glass Half Full view, that the equity market is taking for earnings next year and the year after if we start to get more guidance from corporates, theres a good chance we see downgrades to 2021 and 2022 estimates and stocks that look expensive are going to look even more expensive recovery. We could be talking about many things theres recovery from case load with regard to covid. Theres recovery in Economic Activity we had the treasury secretary on this morning he said were not going to shut the economy down again even if there is a big spike in cases. Isnt the market looking more to that and not whether or not hospitalizations and positive tests go up . No, i 100 agree. Its the Economic Activity thats the driver. Its the impact the virus has on the economy that translates into the stock market but i think with the massive rally weve had in the market, what we think is being priced in is return to normal. The its hard to return to normal social distancing, changing behavioral patterns are going to be something that are at least semi permanent we think the earnings expectations and the price action weve seen from the market is looking very steep v i think its too optimistic. A lot of folks are looking at the Market Action the past few weeks and suggesting it was encouraging because the value sectors were outperforming it was not the defensive tech stocks doing it. Has it run its course . Was the football pulled away again for the value trader or is this a pause i think probably over the nearterm, thats correct. If we look at the rally off the march 23rd lows, its three phases first you had just the market was really oversold. You had everything snapping back if you look across the 11 sectors, it was all green for a few weeks. Then the market got selective and it was the secular growers and gold bitcoin running the show which was its an odd couple but it makes sense. Secular growers are a slow growth play. And then in the last four weeks or so as you point out, market really broadened all green across all 11 sectors. My guess is as the market takes a rest, if you will, as everyone worries about the magnitude of a second wave and what the response will be from the government in terms of lockdowns or no lockdowns, my guess is that the leadership goes back to what was leading in that middle part of the rally, and that the cyclical Small Cap Value side takes a backseat for a while yeah. Here we have the nasdaq down half as much as the dow. Thank you both for your time this morning coming up later on the closing bell, an collusive with former National Economic director gary cohn on the path forward to reopening america and what needs to be done to fix the systemic issue of racial bias in this country were also going to talk about what happens when the stimulus runs out it begins at 3 00 p. M. Time. Oil prices down 7 as the overall market tumbles in a more than 3 decline for the dow. Well be right back. 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. Are traders digging into stocks that led the charge and xteg out which can carry the ne l of the rally . More squawk on the street is coming up. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. 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. Andsnhu lets you transferns. Up to 90 credits [announcer] if youve tried college but never finished, toward your bachelors degree. [woman] it doesnt matter how old you are, you can do it. You can finish. [announcer] finish your degree at snhu. Edu. You may have noted at the Grocery Store food prices are rising fast. The latest data showing that while Consumer Prices overall in the economy are falling, and soft everywhere, with lack of demand, food away from home which is basically a measure of grocery prices shot up 4. 8 in may from a year ago. The highest level since january of 2012 on top of a big pop on april. Beef prices leading the charge up 18. 2 . Chicken pork and eggs all affected too the me the meat shortages certainly a human impact and even as the plants come back online, prices are high as production is running behind but its not just in the Meat Department dairy products, fruit and fresh vegetables climbing. And total consumer packaged goods prices rose 6 over the last week. Food and beverage up the most. Why the surge . Demand is hot and as a result, companies are scrapping their typical promotions whether thats special deals on package sizes or coupons a snack maker behind oreos saying generally were not seeing some reduction in promotion the in the last few weeks as retailers, forrers all focus on availability and ensuring we have products on the shelves. Bottom line, these Companies Want to make sure the shelves are stocked so the promotions are going away but they did add the promos will resume at the end of the year, the second half. Higher shipping and logistics cost are getting passed on to the consumer who benefits the Food Companies which have been strong in terms of the stock market kroger reports in a week from now analysts are looking for double digit sales but does it last there are signs the food prices are peaking as the economy reope reopens, people have started going out to restaurants theyre not hoarding as much groceries as we saw in the beginning of the crisis, and the deal declines are slowing on the shelves. But like most trends, with the market these days, if theres a second wave or a worrysome trend with reopening, Consumer Behavior could shift back to loading up on groceries and cause a price spike. No coincidence the Consumer Staples group is holding up the best in the market selloff, potentially on the idea that if there is a shift on the spike in cases, we could see more Grocery Shopping and more reluctance to go out and eat yeah. Which was why its a weird timing that bernstein took time to sell. Inflation in all the wrong places were holding 3100 on the s p. Some of the laggards in there. Nowherwegian and carnival both n more than 11 . The lexus nx experience the crossover in its most visionary form. Experience amazing at your lexus dealer. As business moves forward, were all changing the way things get done. Like how we redefine collaboration. How we come up with new ways to serve our customers. And deliver our products. But no matter how things change, one thing never will you can rely on the people and the network of at t. To help keep your business connected. Want to get you up to speed on areas of the country where new covid cases and hospitalizations are on the rise meg has that good morning, carl. Theres kind of a tale of two parts of the country right now when you look at the trends in covid cases here in the northeast we are kind of in a recovery, but if you look across the south and the west, a lot of states are starting to see spikes a few weeks after lifting the stay at home orders. Some of the states we should be paying attention to are florida, texas and arizona. If we start with texas, we were talking about them yesterday they were seeing record numbers of new hospitalizations. And you are seeing cases rising there after the stay at home order expired april 30th and theyve progressed to reopening. New cases yesterday accounted for 12 of the u. S. Daily total. And hot spots around dallas, austin and houston doubling cases are just over a month. In florida youre seeing cases rise that could be due to some increased testing. And an increase in Contact Tracing which is a good thing. But their test positivity rate, even though its under 5 is increasing thats concerning some experts around there, the tampa area is the hot spot with the second fastest doubling time for cases of 21 days in fastest doubling of cases arrest is seeing quite a high spike in cases, and theyre increasing there i spoke with the doctor at the university of arizona who attributed these numbers to moving around more and youre seeing data there as well. And new information that came out this morning, that ihme model that has been sited by the white house has come out with a updated forecast for the next four months this morning projecting seeing a second wave start to happen in mid september. That is around they expect to start to see deaths increasing, again, this is going to change based on what we see from states in firms of mobility and relaxes their social distancing guidelines they say theyre taking into account the gathering theyre seeing already including protests and making these forecasts. They hope to see their model proven wrong that is a scary second wave theyre forecasting in second. Back to you. Scary looking numbers even coming now im just wondering how the experts are interpreting the fact that texas and arizona are seeing surges and places like georgia that opened early and aggressively are not and europe is operating smoothly. Japan, china, not huge surges and yet were seeing that in some parts of the country. Yeah, they dont have great explanations if why youre seeing differences in areas like georgia and florida, for example. Youre seeing cases rise in georgia, just not the spikes youre seeing in other places. Scott gottlieb says theyre not out of the woods, but theyre not as bad as other states one interesting thing that were seeing is we expected a seasonal shift that the hotter states would not see as much transition states like arizona where the temperatures are over 100 degrees and theyre entering their indoor season and that is bad when it comes to the transmission of these disease. Yeah, getting the attention of these investors as well one more check on where we stand in todays market. The s p 500 down just about 3 dont go anywhere, were back in 2 00 a newlywed. A guy who just got into college. Thats why behind these masks, Johnson Johnson scientists are working to accelerate development of a covid19 vaccine, drawing on decades of experience responding to Public Health emergencies like ebola and hiv. For the life behind every mask, the clock never stops and neither do we. Every state in the u. S. Is now partially reopened texas, george, and florida are seeing a spike in cases. Our next guest manages Shopping Center properties in over ten states president and ceo josh po joins us now we know you run different centers. What are you seeing in term of Consumer Behavior as the case numbers start to stick up. It is interesting i am answering that question right after we see dramatic increases across the country so we have multiple properties in texas, georgia, and those are the ones that opened in late april and early may. And to the point where we were down to 20 to 25 from last year it is a lot better than what we are expecting 75 days ago in the middle of the pandemic referee it is really interesting to see the levels come back so fast. Are consumers spending as much are there patterns changing at all . The patterns are much different. So the best example is for retailers that are best at emers the retailers have dramatically shifted to the pandemic to fulfillment, e commerce, and some of our restaurants take out 10 to 50 of sales last year. Now that theyre opening up they have limited capacity and theyre keeping their takeout levels high and their sales are comparable to last year. Others may not be as conducive to takeout and their sales are directly impacted by what is allowed, but there are a lot of changes in the retailers and how they treat customers and they go to stores and some retailers are only doing appointment only in their stores some are requiring massive work. Every retailer is different but the evolution of retailers has been fast and dramatic just want to point out what is happening on the other side of your screen the market taking a dip lower here were down 1,000 points on the dow. 1012 point points. Josh as you talk about reopening and traffic returning, are all of your tenants paying rent again . That is a good question in april and may, no we probably collected 20 to 25 of our rents, but now as were reopening, elections are at about 49 spkt for june 10th or june 11th. So we still have a few days ahead of us. Were expecting to hit 55 or 60 or collections so were still way off, but it is more optimistic than we were 75 days ago. Finally anything you can tell us about whether or not consumers are Wearing Masks, whether or not theyre following social distancing, whether or not your stores do Contact Tracing or if there is a consumer that gets infected, whats the best practices for trying to mitigate the spread that are sighing high cases . And so the fight against covid starts on the property itself it is fresh air and you dont have to touch a handle to get into our space so were allowing the retailers and the restaurants to come out on the sidewalks restaurants are expanding patios, we have taken over parking spaces, we have taken over drive aisles. But once you get into the store itself, that is up to each individual retailer at the local jurisdicti jurisdiction i was at one Shopping Center the past weekend and some would not let you in the door without a mask some were not as dramatic, but every retailer i went into, people were coming in the store and they were limiting occupancy. People in the store were allowed that were allowed to not wear masks, i would say that 75 were and there was some that are not. As far as contract tracing, i am not qualified to answer that every jurisdiction is different on that front. We appreciate the color, josh, keep us posted thank you