Transcripts For CNBC Squawk Box 20240712

Weve given all of that back and then some. Yesterday, the market was down by 1,861 a decline of 2,443 points. All of that over the previous sessions we had given back futures are up by 626. Normally, thats the type of move that would make you sit up and say wow s p indicated up 69 points nasdaq up 192. Treasury yields have been moving all over the place as well we did see the 10year on monday up 0. 9 . Higher than that this morning, up 0. 2 on trading yesterday. Accelerated on the day everybody was on tender hooks to watch what would be happening here are some highlights of what is on tap car line, former citigroup ceo, former white house chief of staff, founder and chairman of Interactive Brokers joining us there. A lot going on there todays top story, uk gdp following 20. 4 in april the largest monthly fall on record as the pandemic lockdowns have battered the economy. Londons ftse down more than 18 , thats just year to date. Has liesman heard yesterday, the annual kansas fed symposium in jackson hole canceled steve gets to fly fishing out there. Instead, their have a Virtual Meeting navigating the decade ahead where Interest Rates will be zero the entire time. No, no maybe not. He didnt say that but zero for a while thats a big job to go out 10 years on anything. Not necessarily well be zero for a while unless we go negative lets not go negative when people go low, lets go high first year since 1982 and i think liesman has been to every one. It is the kansas city fed. A great place. Great jazz great states i pick jackson hole too right makes sense. Especially in the summer. We do talk about it every year, right . Used to be greenspan and bernanke every year, there is big market news that happens just in time for that. So it plays right into their hands. It is awesome to go to steve and hear everything they are talking about. In recent years, there seems to be market turmoil that takes place around it. Virtual doesnt do it compared to jackson hole it is such a great spot. Dry, sunny it is nice good place fishing for steve room to move. Quicken loans is expected to file as soon as this month reporting the target valuation is still being worked out but still would be in the tens of billions that could surpass the largest which is warner media group. Phenomenal that this company has not gone public just with what they planned to do in this industry theyve moved far ahead of everything theyve seen there. You anticipate that this would be an ipo that picks up a great amount of interest a stock ipo or just based on real estate, mortgages and Interest Rates things like that it is a stock. Based on their book they have a massive mortgage book based on something, not on a cruise ship, a cruise line or something much more. No. This is a real business. With rates being so low, you are seeing demand with those getting more mortgages and refinancing quicken loans has done an amazing thing, theyve done it so big and oner all based on tech theyll give you a delay and tell you they come back in 15 minutes. They realized people didnt believe the numbers. So they slowed down how they do these things theyve been able to do it and build up this huge branch because they rely so heavily on technology how many times did you look at the stock mark between 2 30 and 4 00 i was glued on it the entire time im not going to talk about the past but when you see things like here i go. When youve seen things like 1987, you know anything is possible it just starts snow balling. Ill tell you what i was watching the dow at a high level and those points set up. I was watching the s p one thing i was taking solace from is that it was holding above 3,000. We all would have signed on for 3,000 like two months ago. For a year end 3,000 or anybody who said 3,000, it was like, you are on there 7 when we were up last week, not saying we are out of the wood by in means i did feel a little better not necessarily sugar coating things even Scott Gottlieb said, it is not a second wave but sort of states that have gone through a second wave. Europe has been some what successful in reopening. About two weeks, a month ahead of us or so. They have not had a worse Case Scenario is there still hope. Im hopeful. There is always hope. Well show you some sound that popped up from Warren Buffett in 1962 when the market saw the greatest point drop. In 1962, he was 31 at that point. See it put into perspective. Video too i had never seen video. Ive seen pictures but never video. That should be good look forward to that he was probably similar to what he says now. Ill show you 10, 15 minutes. It reminds you of things weve seen before. That was in the middle of the kennedy slide. From january to june of 1962, you saw the s p drop 22. 5 as of one day, the dow was down 1. 85 . It had people reeling and wondering what would come next where did you find that on twitter. Not all bad when we come back, one of the biggest concerns for the markets. The resurgence of coronavirus cases in about a dozen states. Dr. Scott gottlieb will weigh in next after the selloff, we continue to watch technology. Microsoft, amazon, facebook, apple, alphabet all closing lower. Those stocks this morning, take a look at that in a moment squawk box will be right back. 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. Talk to your financial professional or consultant our Retirement Plan with voya gives us confidence. We can spend a bit now, knowing were prepared for the future. 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Is that a word maybe resurgence or the first wave arizona is reminding hospitals to be in emergency mode over the weekend as they approach 80 capacity the number of cases has risen 300 testing has increased 53 but the actual increase is quite a bit more than that positive tests have been ticking higher as tests have gone up texas set three Straight Days of hospital idsation records surpassing 2,000 a day the ceo of one houston hospital said the proportion of tests positive are all flashing warning signals. Thank you nashville mayor announced a delay of phase three of that reopening plan following a rise of covid19 cases. The majority of the Public Health metrics are satisfactory. 14day new cases remain slightly elevated, prompting us to stay in phase two of our road map joining us is dr. Scott gottlieb, former fda commissioner, cnbc contributor and serves on the boards of illumina and pfizer. Great to see you this morning. Thanks. I dont know that there is anything that really explains the markets huge surge up and decline we saw people will pin it on things saying it looks like in some of those cases with some of those states if there is a resurgence if they worry about a second wave or first wave hitting areas they hadnt seen before. How concerned are you about any of those ideas i dont think this is a socalled second wave. I think we have to look at what happens in the fall with the outbreak of a second wave. They are seeing an up tick of cases. To some extent, some states have isolated cases arizona, they are averaging 12,000 cases and in texas. They are texting more and capturing more cases but the percentage of cases are rising in arizona now 15 , texas around 7 , South Carolina around 11 . The fact that that is going up is concerning. The National Trend is still relatively flat. Around 20,000 cases a day on average. Positivity rate is around 5 perhaps they let their guard down a little bit. They have theopportunity to ge this under control and dot testing at time to trace back their sources. Doctor, joe mentioned this oped in the journal. One of the things the governor in texas mentioned saying it is much more contained than the numbers in that state would suggest referring to 45 , i believe, of the cases we have seen since early may are the function of things that have happened in nursing homes, in prisons and in isolated meat packing situations does that make sense and does that mean it is isolated not really, those institutions have been very hard hit nationally theyve become the sources of larger outbreaks across the country. What often happens is the virus gets into the setting and spreads outward to the community it would be reassuring if they were able to isolate those isolated insofar as the handling of the cities. They have a chance to get this under control when new york had a couple thousand cases. Now they have enough testing that they know the true scope of the outbreak in texas. They have an opportunity to intervene. You saw what happened in oregon overnight when the government put a pause on the reopening there. 170 cases they hit, it is a lot of cases in a small state. Another state that got through the first wave without a major epidemic texas may need to do something similar where they pull back in parts of that state. You have to ask, should bars be at 75 capacity in houston with an outbreak under way . They may want to pause things until they isolate it. If these states are showing much worse levels and potential outbreaks were we wrong to have a National Policy where we shut down the entire country at the same time . I dont believe we are going to shut down again this is going to be the new normal where we have these rolling outbreaks. Im not talking about shutting down the entire country again. Should we have shut down the hot spots before and let other areas go about their business in the outbreak too and then shut down. Sort of like a rolling shutdown or did we do the right thing by shutting down nationally thats the question people will be talking about a lot time could we have targeted better. The problem was we didnt know where the hot spots were we had no testing. We had major epidemics under way. The shutting down was driven by peoples fear and worry thats what happened in the uk. The white house did not shut down the nba the nba shut down the nba as a reaction of what was happening to people. Thats what is happening in reverse they are tired of the shut down most states didnt reopen the criteria or the white house a lot is driven by consumers, School Districts with policymakers can i follow up on this i apologize could you have seen a scenario where, for example, you shut down flights but you didnt shut down huge parts of the country you look at a hot spot in new york, part of the problem was people were continuing to fly in an out of new york for some time and we decided to keep airlines up and running entirely, if flights had been shut, wouldnt it have changed the entire dynamic . Ive heard that suggestion there were discussions about shutting the flights the volume collapsed on flights immediately. Would have denied people who needed to travel for family emergencies by and large, people stopped moving around. Would that have cut down on interstate travel anymore. When policymakers were in place where we would overreach mirroring what was going on. In local communities, where they made the decisions to close the schools, by and large. This will be debated and could we have targeted this for the regions that were hot. We didnt know we didnt. We were flying blind in february and march and take for granted how much capacity right now we did not have that in february or march. Will we be better prepared if there is a resurgence in the fall will we be prepared to better prepare for that and have the ability to do localized shut downs or do what the white house said yesterday, that we cant shut down again and we wont see any shut downs anywhere . Well be much better prepared to identify outbreaks. As we are now. Well probably have evaded our attention. Hospitalizations arent up substantially. We need to be prepared to take targeted interventions in houston, should bars be open to full capacity or would you close them for a week. Maybe or maybe not we shouldnt view targeted interventions seeing these outbreaks occur. To do it and not view it as another shut down. Even those there is a political view with that i dont think people would want that or demand it. At a local level as out breaks occur. The policy framework showing somehow how to defeat against the virus. The last day that was a very good point said her local new jersey deli had shut down after someone tested positive for covid19 that wouldnt have happened if Contact Tracing showed that customer went to a walmart or target is it fair to be shutting down Small Businesses and not the big businesses. I think it is fair for the sources that spread thinking about those establishments that facilitate that. Where there workers that suggested working customers. The essence of the Public Health work would do. Is there a certain facility where there is an outbreak under way, yes, you have to shut that facility down and make sure those workers selfquarantine to shut off the transmission. Thats what we have to do. We have the tools to do that thats better than shutting down the entire city better than where we were in march when we didnt have the tools to do that work thank you. Well see you back here on monday thank you, becky coming up, we return, as becky mentioned, a blast from the past well show you an interview, a rare one with Warren Buffett the day after a major stock market sell off in 1962 take a look at the biggest premarket gainers in the s p 500. Yeah yyeah yeah hey, hey yeah okay, give it a try. Between wisdom and curiosity, theres a bridge. Between ideas and inspiration, trauma and treatment. Gained a couple of more pounds. Thats good for the babies. Between the moments that make us who we are, and keeping them safe, private and secure, theres webex. Beautiful. Welcome back, everybody those who fail to learn from history are doomed to repeat it. A clip from Warren Buffett from 1962 a day after the dow lost 5. 8 at that point in time, that was the biggest point loss they had seen since the Great Depression. Before the bloomberg terminal or the internet and access to stock prices only ticker tape could do that it could take the tapes hours to post that trade. People would know probably three hours after the close how much money they lost on that day. You could imagine what they were feeling. This was a bigger drop thaed seen percentage wise back then, it was a pretty big deal and significant move. Here is what Warren Buffett thought the next day when he was interviewed on camera. The stock market has been a good forecaster in the past and rather poor occasionally the last four or five years, the stock market has been booming along and forecasting Better Business stock prices are 50 higher thereabouts. So maybe the stock market is really correcting a previous incorrect forecast this time rather than making a new correct one. This happened in the midst of what was called the kennedy slide from december 1961 through june of 1962 lost 22. 5 . That was a huge drop in the midst of a massive slide and uncertainty there. The bay of pigs invasion and other things happening after that, there was a huge s p boom that took place in the years and years to come after that a big run up from that time on showing these things to come and go the stock market can confound anybody at any given point i had seen old pictures of Warren Buffett before. Never heard him speak. A lot of the mannerisms are the same he was 31 years old in that interview. Hed probably say, if i knew now hes 31 how much has he learned . Hes learned a lot obviously we shouldnt assume that hes the same person he is now. That was pretty good analysis there and impression but you figure between 31 and where he is now, how many things has he seen and learned and put into his brain to come up with a lot of things he comes up with now interesting to talk about what he was like back then and what he was thinking. Mistakes he hasnt made or mistakes he hand learned yet one thing he has learned is dont come on and do Television Interviews trying to remember what i was doing at 31. I dont think it was good. Definitely wasnt on tv talking about my investments his partnership, he had just put it together in january that year i think he had 7 million he was managing at that point mostly friends and close family he had put together. I guess i was cold calling now that i think about it. Cold calling, prospecting. Using those dale kacanagy lines should i go to break now, would that be better for you looking to stocks and yesterdays 1,800 point selloff. Futures indicated up 560 points. A look at yaesterdays biggest decliners in the dow and the s p 500. 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. Good morning welcome back here on cnbc. We are about three hours before the market opens showing you u. S. Equity futures after a red and down day showing today, the dow would open up by 572 points higher looking at about 62points higher and 175 points higher also showing you a couple of boards higher. About this time yesterday, they were among the biggest losers. United airlines higher showing you cruises and where they stand also pressing higher as well carnival cruises up to 11 a big rebound given concerns yesterday maybe about covid spread and maybe about comments where the economy and unemployment may be later this year. I think we settled on covid i dont know if powell said anything the dow coming off one of the worse percentage losses. The dow only about 7 . Americas cio at dws and global cohead and cio at credit black rock david, maybe, i cant tell for sure he may credit over 100 stocks i want to grill down on that on 3,000 on s p, what would your actual advice be would you be selling to strength on the rebound or if it were to go down another 5 10 , would you be recommending that dip bee bought how do you really feel what should an investor do right now . Joe, it is always Straight Talk with you, i appreciate that within market timing, i would sell this market bounce. There are more days like that to come i think the s p still needs to correct here to be within my estimate of fair value. Within that forecast, you make the point growth is still better if you are going to be in stock market and whole growth risk light assets. I dont think you are talking about that there, you are talking utilities and credit, right . Thats right. Value stocks have been the strike out king for three and a half years now, growth has dramatically outperformed value. I believe investors should stick with Growth Stocks they should find value out of bonds. Particularly from issuers of those sectors. Particularly from Corporate Credit and many parts of Consumer Discretionary like travel buy Corporate Bonds and municipals for value and buy stocks for growth. When i say there are other things in the equity market, utilities and infrastructure, those things, i do like those as well. You are lucky we normally dont book guests based on helping each other out. Jim is here telling you whether or not you are right i dont think hes managing 15 billion in credit. Is david on to something what would you remember him if he wants to stay risk light where should he go with credit i do agree. We do like credit here risk assets are important. You have supported policy and stimulus coming in and the economy reopening. Week on week and month on monday, you have the positively supported data. When you look at the markets right now, you have growth reported you get the return reported what i would call not immune but resilient sectors. Thats a good place to anchor your money at this point you like high quality credit but then some of the high yield and loan markets offer attractive you get morris being yield and you can handle it. I think there is more credit now in certain sectors such as telecom, cable, health care where you can go down on and earn a nice return fixed income rates are sub 1 . You are coming out of the march lows with a very supported fed you can get equity for the return here in what weve seen in the last 48 hours not really making big bets on the recovery rates in lodging and transportation sectors were you advising the fighting irish. They had an interesting way to do it. When i saw it, i was like, good. Were they starting and taking off early . I support notre dame and everything they are doing there. We are learning more and more about the virus. Thats going to affect different states and regions in a different way. At the end of the trend, well start sto reopen and get more normalized open here notre dame is leading the way. You know we have a pretty good relationship. Are we going to be broadcasting . I hope so could there be a year without notre dame football . Are you playing sc this year you know thats almost so much fun. Why you laughing okay go ahead how do you top that . Yeah just wrap it up with the idea on here, dws and black rock are happy to agree, the equity markets are a bit ahead of themselves happy friday, i guess becky. 2 15 to go until friday or the weekend. Take a look at some of the dow components boeing is leading the way on the upside and down side this morning up by 6. 7 . Raytheon up 5. 8 and exxonmobil up as well well be right back. Yeah yyeah yeah hey, hey. Coming up when we return, a cold war with china and new flash points between the two as we head to that break, lulul falling after the company said quarterly revenue fell 17 from last year, an increase of 68 in direct to consumer revenue wasnt enough to offset the loss from Retail Stores closed by the pandemic joe, im wearing my lululemon c ntrit now. I thought i was contributing to help them. At leaf blowers. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. Dont get mad get e trade and start trading 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. Welcome back to squawk box this morning a Bipartisan Group of lawmakers introducing a bill that would encourage Semiconductor Makers to build factories in the United States the legislation taking aim at china where many chips are still sourced. The latest example of consumer tensions which remains a big risk to this fragile market. Joining us is Michael Schulman the contributor to the atlantic. Author of super power interrupted, the chinese history of the world. Michael, welcome thanks for joining us. Thanks for having me. The shortterm issue of the semiconductor issue, but the question is are we decoupling and decoupling forever is this a moment in time what does this look like in your mind well, i think were at a very critical point in history where were seeing a recurring pattern in history thats been going on for the last 2,000 years whats remarkable about chinese history is how often the political elite have managed in this society have managed after times of weakness or invasion or whatever, have managed to recreate their power again and again and restore their greatness. I think youre seeing that happen today after 200 years where china was relatively weak compared to the western powers, they want to get back up on the pedestal. That isnt going away. The question becomes, how do we deal with that do we end up in outright hostile confrontation . I hope not but we do need to approach china in the same sense these guys have their own ambitions these guys want to be a great power and that is not changing whatever happens in washington, Trump Administration comes through, whatever. That is really not going to change chinas on a mission and washington has to find a way, a comprehensive way of dealing with that about what they want their relationship with china to be Going Forward 10 years, 50 years, 100 years right so, michael, then whats the answer what does that look like as people talk about reshoring, bringing things back on shore, more manufacturing like this bill around micro chips and the like, is that going to be the thing thats going to change the dynamic . Can the dynamic be changed you know, i think it makes sense from a purely, you know, National Economic standpoint to think about protecting u. S. Economic interests in that way what do we want made in china, what dont we want made in china . What kind of risks does that prevent . Thats one small piece of what has to be a much, much, much larger comprehensive strategy about what do we want our relationship with china to be . Are they going to be a business partn partner . Are they going to be a strategic enemy . What we really have to understand is that the chinese have their own view of the world and what they want the world to look like and what role they want to play in it i think what this means is the u. S. Has to think broadly about bringing together not just policy in the United States but policy with the allies around the world to really deal with china in a much more comprehensive way than the scatter shot yeah. Weve got only about 30 seconds. If youre a company like an apple or starbucks where much of your business now is reliant on china, what do you do . I think you really have to you really have to think very hard about whether you can lie on china for your future revenue and Profit Growth and as a source of manufacturing Going Forward. You really have to think long term and be like what are my alternatives what can my alternatives be . They are out there i think if youre a ceo and youre not thinking about that right now, youre going to find yourself in troubling in ten years. Michael, we appreciate you joining us this morning live from beijing thanks so much. Thanks a lot. Looking forward to continuing this conversation with you you bet. Thanks, andrew. Throw away is it a friday thing with the lululemon, the abc pants . Ive worn them a couple times. I also will tell you, joe, i know you always say i wear the same shirt. No. Slightly different collar today. Wow i dont know if youd notice. Its a little pointier i know weve had this debate about spread versus pointy. Do you have one pair of lululemon pants, is that it . I own two pairs of lululemon pants. I have five pair. A gray pair and a blue pair. I have five pair, a blue ir there is one pair left at the end of each month that i havent worn in neighborhoods across the country, youll see gratitude. Communities showing support in their own way. Our way is massmutual healthbridge, a free Life Insurance program just for healthcare workers fighting covid19. So to all the healthcare workers on the front lines, thank you. Thank you. 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. And right now, is a time for action. So, for a second time were giving members a credit on their auto insurance. Because its the right thing to do. Were also giving Payment Relief options to eligible members so they can take care of things like groceries before they worry about their insurance or credit card bills. Right now is the time to take care of what matters most. Like weve done together, so many times before. Discover all the ways were helping members at usaa. Com coronavirus stocks look to bounce back after the single worst session since mid march. Up ticks in coronavirus cases and hospitalizations the white house says the economy will not go on lockdown again. We have an update on cases around the country coming up. Plus, former citi chairman sandy weill on the markets and his attempt to reduce inequality in america the second hour of squawk box begins right now they want me to do this, sorkin i thought you normally did the 7 because sometimes i start and then i realize, oh, no, its andrew now it does say joe. No, no, no. You swap it. Go. Read. We switch. Youre so ready in that new shirt and everything good morning welcome back to squawk box. Im joe kernen along with Andrew Ross Sorkin and becky quick. Rebounding and getting 1 3 back from the drubing up 590 points on the dow the nasdaq up 184. Big move in the nasdaq and the s p. Up 66. Andrew now andrew right okay volatility, as we all know, has now officially returned if it wasnt there already. The s p 500 falling about 6 in yesterdays session. That erased almost 2 trillion in equity values on concern over the economy reopening. The surge in coronavirus cases in some states this morning were getting that bounce back. Right now as joe was mentioning, we have futures looking positive close to 600 points positive on the dow 2 1 2 hours before the open 67 points up on the s p. Joining us to talk about where we are in this economy is david reuben stein, Carlisle Group cofounder and cochairman great to see you i dont know if weve had an opportunity to talk during this pandemic lets start with the basics. How are you thinking about our economy right now . And where do you think were all headed i think the bottom has been hit. I dont think its going to get deeper in terms of a recession than what we have now. I think were coming out of it i think people can overreact and i think there has been some over reaction in the markets from time to time clearly the economy went low we havent had anything like this in generations. I think were on our way back. There will be gyrations as we go through this, but i think generally the economy is in reasonably good shape looking over the next 6 to 9 months. It will take a while to get back to where we were at the height of the bull market david, tell us you have a wide portfolio of companies and you have your fingers in a lot of Different Industries and businesses give us a snapshot, a sense of what youre seeing right now in terms of those businesses. Well, clearly businesses in the United States are down right now in many different categories obviously Technology Companies are doing okay china is coming back europe is not as weak as some people in the United States think. The emerging markets will have some struggle because of their currency going against the dollar their currency might have some challenges generally, i think the worst has occurred already and i think were heading back again, were going to have these ups and downs over the next couple of months and i think we should not over react about the virus being bigger here or breaking out there i think the economy is now in reasonable shape its not going to be perfect for sure and there are a lot of people out of work, but i think were heading back to where we want to be it will just take some time to get there. Let me ask you as an investor, what were you doing a month or two ago and what do you anticipate trying to do in the next several months in terms of putting money to work . In the world in which were involved, private equity as opposed to daily trading, private equity people are making sure the companies they own are in reasonable shape. We learned from the last recession you have to shore up what you already own, and a lot of people have been doing that making certain those companies have enough liquidity, enough cash they might need some additional equity, they might need additional debt. Weve been focusing on that. As we get to the next phase youll see people buying more and more companies that they dont already own probably at prices that seem a little bit cheaper than they would have been about six months ago. Thats what i was going to ask you though how do you feel about valuations while you are playing in the private markets, the private markets i imagine are going to try to reflect the Public Markets. Despite this blip weve had in the past 24 hours, well see whether it gets better or worse, as weve been talking about, its almost as if the virus didnt happen. Well, the markets have the Public Markets have probably been ahead of where the economy is for a while, but the Public Markets, as you know, are a forward indicator. From time to time the markets may get excited but generally i think the economy has probably bottomed out from where its going to go. I think its heading back. As people head back to work, we should recognize you can get a fair amount of work done at home people are recognizing the economy isnt going to be the same economy as before everybody isnt going to come back to work as before some will work from home some companies will not be as successful as before and some will be more successful than before i think the worst part is probably behind us i dont want to make it sound po polyannish i think the federal government has done as good a job as you could probably expect putting liquidity into the economy thats made it possible for us to be where we are today thats what i was going to ask you. A, are you of the view that were going to need more stimulus money from congress and, what you think the Federal Reserve is or isnt going to do Going Forward . I think the congress is likely to pass one more stimulus bill somewhere in the 1. 5 trillion range will be my guess. Well have many components of the programs weve already seen. Some of the ones that have worked successfully. I think there will be some assistance to the states and local governments. I think there will be additional loan programs and i do think some of the issues that have been addressed will probably be raised again in these bills. Not all liability issues will be taken care of. I think the Federal Reserve recognizes that it is a key player and it is maybe the key player i think theyve done a wonderful job of putting liquidity into the market i think thats been very helpful. I think they are prepared to do more if necessary, and i suspect they will. Hey, david, i wonder if you can kind of talk through what you see the longterm impacts being potentially from this. There are a lot of companies that have seen their business e evapora evaporate. Some will be okay, some will not be okay, at hertz as business disappeared, i ask you because you know about the company which company a company like a hertz hertz. Oh, okay, hertz. Hertz and lots of other Similar Companies that have seen you know, if you think travel and leisure, any of those companies, the airlines that have seen business shut down maybe the airlines are different because they get funding from the government those are all ripple effects that were trying to figure out. Well, i enjoyed the interview you showed earlier of warren buffet at the age of 31. He sound impressive and pretty smart then to answer your question, capitalism evolves every company isnt going to go forward perfectly. So clearly the leisure industry, cruise ships, hotels, airlines have been hard hit i dont think theyre going to go out of business, but the ones that will go out of business probably are the small mom and pop companies. In other words, marriott and hilton can get enough credit to go forward and they will come back they have great brands the people that actually own those hotels, theyre going to struggle with that thats a big problem the company will evolve and it wont come back as strong as before then other companies that youve never heard of before, like zoom, will grow. I dont think the mistake in the Great Depression was made here here weve learned the lesson of the Great Recession which is you need federal stimulus if the economy is going to keep going i think the federal government has done a good job. All of the people out of work, theyre going to get their job back quickly its going to take some time for people to come back. Normally when you have a recession it takes about three years to get back to the peak where you were before the recession t. Might take three we think of you as one of the ultimate washington insiders to the extent this pandemic, unrest, protests have taken place during this period, how do you see this playing out politically in the fall and even beyond that . Clearly the racial unrest and tension is something that is you know, we didnt expect there have been these kind of incidents and killings before and it hasnt produced a worldwide revolt and protests weve seen, so this is a real wakeup call as it should be i do think the federal government will do more and society will do more to improve the racial relations were not going to overnight solve all racial problems, thats for certain i think its a wakeup call nobody expected. For that reason i think theres some good that can come out of this the discussion between blacks and white that i see going on, its a very healthy. Everybody will be handling Race Relations perfectly, thats not going to happen. Its an improvement and we have the potential to make an improvement for where we have been for many years. Do you want to given the economy and the way you think its headed, do you want to handicap the situation in november well, i would say its depends on where the economy is at the time of the election but as we know when you have a recession, president s tend not to get reelected. If were in a recession then it will be more difficult when i worked for jimmy carter, we had a recession, we department get reelected. Gerald ford didnt get reelected in a recession. William mckinley was the last one to be reelected i think the next four or five months are going to go up and down and i think its very difficult to predict okay. David reuben stein, always great to see you thanks for joining us this morning. Thank you my pleasure appreciate it you bet. Becky . Thanks, andrew when we come back, stories making headlines this morning, and then more on yesterdays selloff and this mornings bounce back with Mohamed El Erian. Before we head to break, lets get a check on markets watching this morning and a decline of more than 1800 points the dow is indicated up by 610 points nasdaq up by 171 and s p 500 up by 67. Squawk box will be right back. 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. 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. Talk to your financial professional or consultant there are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Heres whats making headlines, shares of lululemon lower in remarket trading. 22 cents a share missing estimates by a penny that was lulus first earnings miss in three years. Andrew, i looked up the top selling lululemon items and our abc pants are not there. Theyre mostly like leggings. No . No. Lululemon fast and free tights, lululemon in movement tights. Okay. Lululemon speed up tights just nothing no anti no abc, not even on there maybe were not helping enough do you have anything, becky . Do you have any lululemon oh, yeah. Lots of stuff. You do . So theyre leggings actually, theyre leggings and actually our daughters have more of them yeah theyre leggings tops. Thats why javers when he hears us talking about this, eamon, you start wearing this when youve given up, he says, eamon. Yeah. I resemble that i dont think thats thats not fair i think its just comfort is what were looking for, right . Maybe i should try some of these sweatpants. Fast and free sounds nice to me fast right, mack . Anyway, quicken loans you dont know what im wearing. Yeah, we dont. We have no idea. And were not going to even were not youre wearing things youre wearing pants right, probably im wearing pajama pants, sure. Have you worn a skirt since youve been remote have you had to . Not really, right . No. No no way. Andrew . Joking no, never mind a kilt. A kilt ive worn a kilt. All right quicken loans is planning to go Public People familiar with the matter tell cnbc the largest you know, after youre talking abc pants, you know what the b stands for tells cnbc the largest u. S. Mortgage lender has filed confidentially for an initial Public Offering and that could happen as soon as next month Food Delivery Service door dash is close to securing new funding that would value this doordash thing at 15 billion im amazed by that doordash was valued at 13 billion last year. Andrew. Coming up when we return, a lot more on squawk. Were going to discuss markets and whats fueling volatility with Mohamed El Erian. Check out yesterdays big drop in tech names. Microsoft, facebook, apple, amazon, all trading lower. As we head to a break, heres todays aflac trivia question. Which publicly traded company was originally named picaboo the answer when squawk returns. A hundred dollars. I had good health insurance. Why isnt this covered . Well, then they started getting bigger. Eighthundred dollars. Eighteen hundred dollars. I saved for this. But not that much. Im glad i had aflac. They gave me money when i needed it most. Thats why aflac is here, to help with the Expenses Health insurance doesnt cover. I love that aflac duck. Aflac get to know us at aflac. Com deposit checks, check balances, pay bills, and more. Explore all you can do with our Digital Tools from almost anywhere. Pnc bank. Across the country, youll see gratitude. Communities showing support in their own way. Our way is massmutual healthbridge, a free Life Insurance program just for healthcare workers fighting covid19. So to all the healthcare workers on the front lines, thank you. Welcome back to squawk box this morning here is the answer to todays aflac trivia question. Which publicly traded company was originally named picaboo the answer snapchat. Sitting off the two week high at 20. 37 i kind of like picaboo. New coronavirus hot spots are emerging meg tirrell joins us now she has more on the story. Meg, what are we seeing right now . Reporter hey, becky. Yesterday the u. S. In total reported more than 22,000 new cases. That was up from 20,000 the day before about 17,000 on tuesday. You can see here the seven day average, this is a chart from evercore i. S. I. What we see when we dig into the numbers state by state and deeper than that, its a split of a tale of two countries in the northeast were recovering and in the south and west you are seeing states start to increase. Here we have the sort of hot spots pin pointed by evercor evercore isi theyre seeing the fastest time of doubling. Phoenix is the fastest, followed by tampa, charlotte, riverside, california, and the Dallas Fort Worth area added the most new cases pretty much california added 3,000 yesterday. Texas, 1800. Florida, 1700. Arizona and North Carolina as well now texas, weve been talking about the hospitalizations there. We actually saw them decline yesterday. California, similar. Hospitalizations were down arizona is concerning with a new high at case numbers how much of this is testing. How much of this is other factors driving these numbers. There are some areas where the increased testing and Contact Tracing, which is whats supposed to be going on, is driving the numbers higher they pinpoint oregon, for example, as one of those states. In other areas, arizona in particular, the test positive rate is 13 and increasing so Public Health experts say they are catching probably more Community Spread many peg the wild selling at least in part on coronavirus case growth. Joining us to talk about the markets volatility, allianz chief Economic Advisor Mohamed El Erian i guess we both have ideas about covid, mohamed im not sure we should either one of us really are that much more valid than other people but you are a genius at all things fed related. So thats the latest thing youve been writing about. Lets assume some of it was based on what powell said yesterday and talk about the virus at the end if you want, but your point, you just recently wrote a piece on this, id like you to explain it, that bad things happen when finance front runs the economy and its simultaneous right now. People are embracing it, but it could turn out badly could you go into that please . Joe, at some point whatever finance does has to be validated by the real economy. Finance adjusts more quickly than the real economy. It anticipates the real economy, but at some point it has to be validated by it. And what weve seen over the last ten years that all thats validated is more leverage, more debt and theres a concern that there is an ultimate point to that that you cant continue. And what makes this particularly important at this stage is the uncertain economics of the coronavirus. If you get this right, the payoff is huge because it turns out that your debt has stopped liquidity problems from becoming solvency problems. If you get this wrong, not only do you end up in a big mess on indebtedness, but you harm the real economy and you harm society in a fundamental way so thats why this is a particularly important moment. And its playing out in the marketplace on a daytoday basis, joe. Fiscal or fed is more concerning to you in terms of the explosion in the amount of money sloshing around . I mean, our national debt, what is it, 23, 24, Something Like that when it went over 20 we were and then theres unfunded liabilities. Medicare, things like that social security. But then youve got the feds Balance Sheet. You add it all up and it if rates go up, it could be a problem, could it not . Yeah. I think the fundamental issue is growth if we dont get high durable and ip inclusive growth, then we have problems on both sides. On the fed side we have a problem of distorted markets you know how strongly i feel about this what makes us special in this country is the role of markets, the pricing signals, the ability to mobilize and allocate savings. So i worry that markets will end up being highly disstored and we are going to lose something very special that drives growth and productivity on the fiscal side its there but the main issue is Economic Growth so far we havent yet transitioned to that phase. So yesterday i dont know if youre as hawkish or as worried about debt as someone like jim grant, but hes very worried and he says there will be a clue that things are starting up to get out ahead and he said watch gold and silver. Do you think that is the canary in the those are the canaries in the coal mine so i watched that interview i think his thinking is that if debt becomes too high, then people lose confidence in treasury and then the only hedging mechanism at that point is gold and silver my main focus is growth, not debt i want to stress this. Its growth. Look whats happening in the marketplace. Look at hertz. Look at airlines they give you a really good illustration of the risk to market functioning what youre getting right now with this great disconnect between fundamentals and finance. Take the example of hertz, a company in bankruptcy procedure that saw its share price go up almost ten fold in less than a month, came straight back down again and now theyre talking about issuing stocks, warning, warning investors they may be worthless. Look at airlines, this week alone weve gone up 7 to 15 to down 20 what that tells you, its not about the fed. Its not about the markets conditioning to buy the dip, the fear of missing out. Its about the special moment right side but the up side is huge theres a whole new school of thought in economics that you have too much debt and you permanently dampen growth because youre using so much of what youre generating just for debt service i think its all related, but that your growth forecast has to do with what we do with the virus. And policies. And policies, joe. And policy. All right. I didnt notice where was theres no animals behind you in those pictures, and we always a week doesnt go by when we dont send each other pictures of our dogs. Where is it . Shes sleeping under the desk and shes snoring. If you listen very carefully shes with you. Shes always with me. Shes always with me. I get teary thinking about it i love that dog so much. Its weird, isnt it i mean, i like people too, mohamed, but just so pure, arent they . Just so pure im with you. On that point we can agree all right many points. Have to take a shot, did he . Anyway, thanks, mohamed. See ya later. Thank you that wasnt a shot thank you. All right becky. This is i like people, too yeah, right. Still to come on squawk box, the markets, the economy and finding solutions to economic inequality. Former citigroup ceo sandy weill and j. D. Hoye will join us for an interview. In the meantime, check out the futures. They have been up but not necessarily to yesterday p bup by 583. S upy 66 nasdaq up by 185 squawk box will be right back. Breaking news on the Housing Market diana olick joins us with the numbers. Reporter good morning, becky. The weekly numbers actually look promising. The number of borrowers in coronavirus related mortgage relief programs fell for the second straight week as cities began to reopen and some americans went back to work. There are now 4. 66 million borrowers though in government or private sector forbearance programs that represents 8. 8 of all active mortgages all according to black knight, a mortgage data provid provider these programs allow borrowers to delay their Monthly Payments for at least three months and as much as a year the numbers are down by 77,000 and down by 112,000 since the peak in may. Loans backed by fannie mae and freddie mac showed volume. While borrowers can delay their payments under the programs, mortgage servicers still have to advance the payments to bond holders for a maximum of four months and at todays levels, servicers will need to pay 8. 8 billion in advances over that fourmonth period. Back to you guys okay. Diane, thank you great to see you this morning. Have a great weekend meantime when we return, coming up well talk to former citi chairman and ceo sandy weill and the ceoj. D. Hoye will be our guest e bcppn watch us on the go o thcn a right back after this. Yeah yyeah yeah hey, hey welcome back to squawk box. Lets take a look at some of the big premarket movers boeing leading the way bouncing back from yesterdays big slide. Worth somewhere between 80 and 400 according to the efficient market hypothesis. Crazy. Anyway, were back 13 points today after a big selloff. Walgreens Boots Alliance is up in the premarket it was up by 1. 5 exxon mobil bouncing back as aisle prices rise slightly well talk about the market and the economy and finding solutions with the former chairman of citigroup ndy sa weill. Big interview coming up on squawk box. Stay with us yeah hey, hey you have the support of a, probiotic and the gastroenterologists who developed it. Align helps to soothe your occasional digestive upsets twentyfour seven. So where you go, the pro goes. Go with align. The pros in digestive health. And if stress worsens your digestive issues, try new align digestive destress. It combines aligns probiotic with ashwagandha to help soothe occasional digestive upsets, plus stress that can make them worse. And try align gummies with probiotics to help support digestive health. Bbut what if you couldg do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Welcome back, everybody. Our next guests say that education actually holds the key to creating a more equitable society. Brookings calls the u. S. Education city system the most unequal. Joining us right now is sandy weill. He is the architect of the modern day big banks hes the former citi bank ceo and founder and chair at naff. J. D. Hoye is the ceo of naff welcome to both of you sandy, i hope that given what weve seen in the markets yesterday you dont mind if i ask what you are thinking about. Go ahead. Okay. Great. Sandy, first of all, its good to see you its been far too long weve been watching the financials get hammered just as much as any industry we think were going to see zero Interest Rates forever and were worried about the fallout from the coronavirus and the economic shutdown if you were looking at this, looking at the financials, do you think they have been unduly hammered at this point or do you think that theyre down and theyre down with good reason . I dont first understand that i dont have any inside information but i do think that the financial industry is in very good shape this time and i think that the stocks are selling, a lot of them, well below book value some of them have created different models for example, i think Companies Like Morgan Stanley and schwab are really very good buys for the long term because they really represent the building up of assets, recurring income. I think theyve made a lot of very smart moves and the stocks are really, really cheap relative to the potential. I think that the industry is in good shape and weve got to see whats going to happen, but i would expect they come out of this and people will make some decent amount of money owning financial companies, including some Property Casualty companies. Lets talk a little bit about what we have seen from the big banks to this point, and thats tens of billions of dollars that theyre taking in lost loan reserves and getting ready for what could be a difficult year or two years to come if you listen to some of them on their Conference Calls they talk about how the recession could last until 2021. Sandy, if you were still running a big bank, would you be that conservative i think banks always have to be responsible so i would assume and hope that theyre not making loans with the understanding that they cant be paid back i think that our government, both the Federal Reserve and the congress and the president ial operation really have done a lot to try and get our system back on track the Federal Reserves Balance Sheet has increased from less than 2 trillion to over 7 trillion already and theyre adding to that by the rate of about 20 billion a day. Stocks paying a lot higher dividends. Im hopeful were on the right track. What do you think weve heard from jay powell about how well be keeping Interest Rates for quite some time. Do you think its possible i think its great that we have the head of the fed thats not an economist and i think hes been really terrific and how fast we acted and i think that has put us in a position to be able to do better than people could have expected in a recovery i think the fact that we have really embraced a Public Private partnership where the government is working with the Farmer Companies and Biotech Companies to come up with solutions to the covid19 both in the form of medications as well as vaccines and what appears to be happening in a very, very fast way is making an enormous amount of progress in that direction great lets shift gears a bit and talk about why you were booked to come on in the first place thats to talk about naf, which originally started out as National Academy foundation. J. D. , thank you for being with us this morning, too pleasure. Sandy, lets just talk a little bit about what this is, why you founded it and what youve been trying to do at naf. Well, we started naf in 1980 in new york city with one high school in brooklyn and basically it was started to try and encourage our Education System in new york to teach young people about the opportunities in the financial industry and how that works because a lot of companies were thinking about moving their back offices out of the city at that point in time and we created a partnership that worked with the board of education and naf and also with the teachers unions and the teachers unions at the beginning encouraged teachers to take courses in the financial industry so that they knew something about what they were going to go and teach. And over the next 40 years weve expanded from that one school in brooklyn to about 600 and some odd academies in 32 states with 112,000 students and expanded the subjects that we teach from Financial Services and hospitality and tourism to engineering, Information Technology and health sciences, which are where a lot of the jobs are so about 2 3 of our students are in s. T. E. M. Type programs. Our students that get to the ninth grade to the 12th grade, rather, 99 of them graduate about 85 of them go on to college. So we really believe that mentorship and summer internships are really an important part of a Young Persons education and companies now feel the Business Roundtable has said and a lot of company ceos have said that they really think they have a social responsibility to work with the part of the American Population that really does not have and has not had the opportunity to learn about the future of digitization and whats happening in our economy. So i think that were really in a terrific place i think its about time that companies understood that its much more its just as important to have social responsibilities as it is to have a responsibility to share our vision to employees. And i think that for that statement to work, i think the ceos of companies have to be involved and because they are really the leaders and thats what leadership is about leading a subject like this that has not been focused on as much as it should be as well as coming up with a way to grade people so that their compensation is based not just on how they do as far as creating financial profits but and new products but also what theyre doing in being socially responsible and getting the under served to participate in our economy on top of that, i think its very important for Corporate America to give High School Students summer internships even though theyre younger than 18 but theyre very, very eager by doing that theyre opening these students eyes that they will want to go to college and get the kind of education that will give them a chance of being successful and participating in the Great American experiment. Hey, j. D. , i spoke with the ceo of dow component yesterday who pointed out that the solutions for the problems were looking at cant be created overnight. I think youre an incredible example of that starting in 1980 and building your way. What kind of cooperation have you gotten from the Business World along that way and what are you seeing now that so Many Americans and so many businesses are looking for ways to help immediately . Let me give you one example is that weve spoken to greg hayes who runs Raytheon Technologies about opening some schools in puerto rico where they have some plants and we opened two schools about four months ago right before the pandemic broke out and the young people there are really, really terrific and we hope to do a heck of a lot more in puerto rico because theyve had the problem with that big hurricane that they still havent recovered from theyve been having earthquakes over and over and a lot of industry left the country because of phasing out of rule 936 which allowed companies, mainly pharma companies, to produce pharmaceutical products in the country and not pay taxes and pay the money out in dividends that they made down in puerto rico. And when that law went away, i think it created what we see now of a supply chain for supplying drugs in the United States is based on operations in china and other parts of the world rather than something that is home grown. So i think that and i think we should work on bringing back that law so that industry can come back to puerto rico and that we bring the Pharma Industry back to puerto rico so wed be in control of our destiny, so to speak, and be in control of the supply chains of a lot of different products and yet creating an opportunity for the young people that live in puerto rico and giving them a chance to rebuild their country. J. D. , what do you hear from students who you talk to in these programs what do you watch as they kind of go through the four years and then how many of them do you hear back from once they go out of college and beyond . Yeah. We have a really nice alumnae and we have great examples of students that have been highly successful to connect. I think the real magic, the real brilliance in what sandy put together for naf 40 years ago is that this is a partnership this is not waiting for schools to get their work done and then employers hire people they want. This is an opportunity for employers and schools to Work Together with communities and inspire young people to engage more officially and formally in their education and also in their career planning. I cant tell you the number of young people who say they just they had no idea of what it was like to work for a Given Company and its changed their aspirations, its changed their viewpoint and from the companys perspective they have been thrilled at getting the future consumers viewpoint into their work and covid has put us on a i mean, its weve been talking for 30 years about the importance of technology and how it needs to do better. Well, covid shut our schools down and i am very concerned that we have to lean in hard and fast right now to make sure that we do not lose the gains that weve made in education and we need to amplify, get technology, get access and connectivity to every student. And part of that can be tied to internships. It can be done virtually were doing it now where is that happening virtually now . Because thats been another big question about coronavirus that, you know, schools that have the money were already set up and had their kids already had laptops. Right ready to go, right right right. What have you seen its the brilliance its the brilliance of sandys design by saying partnerships matter, by bringing companies to the problem. Bringing companies in, solve the problem, identify where there are gaps, bring companies in to help build the pipeline and we have companies leaning in. We need more we need more companies willing to say hi School Students matter in our longterm diversified pipeline strategies to the future were not going to wait until College Students get the internships. Were going to start earlier and were going to inspire them around our work and were going to take advantage of the brilliance that they bring to the table. Hey, sandy, i have a management question for you, sandy, based on a comment you had made earlier when you were talking about inequality and sort of the move towards stakeholder capitalism ive talked to a number of ceos throughout this pandemic who have said, look, were realizing maybe we can do more with less meaning maybe we dont need as many employees we can be productive with less employees and yet many of them have signed onto the Business Roundtable pledge and the like, which puts employees on i dont know if it puts it on par with shareholders and the like or other companies saying do i cut my dividend or do i cut employees . And so the question id ask you, what do you do in this type of environment on these type of thorny questions well, i think that a ceo of a company as i said before has three real responsibilities. One is to their employees to have a safe environment to work in and to do the right thing the second is to responsibility to their shareholders because if they dont do well in that regard, theyre not going to be able to raise the monies in Public Markets that theyre going to need to grow their company in the future third, this he have a social responsibility that really hasnt worked as well as it should have because a lot of ceos turn it over to somebody else in the company at a lower level and they dont really need it themselves. Whif when i was running citigroup, we had over 200 interns over the summer where they worked, the morale in that office was much higher and the productivity was much better than any other place because the people felt that they were really doing something good to make their Company Better and make and feel better about themselves hey, j. D. , ill ask you one more question just about things youve tried that have worked and things youve tried that maybe havent worked just for other businesses that are watching to figure out how to get along with this and what they can do and are reaching out to you okay. Im sorry, j. D j. D. And sandy sound so much alike. Were all working from remote on this j. D. , ill ask you that question thats right. Sure. So whats worked and continues to work is designing strategies together i mean, i think one of the big problems we have, especially in this covid moment when people have been shut down, they cant meet together, is people try to throw ideas out and launch things independent of one another. And i think what weve learned in the process with the power of this design of bringing industrybased content into an educational experience, that it is the relevance of what is currently the current reality of work and not maybe what we did ten years ago. So i think what weve really learned is we have to plan this and build this together. Sandy puts it under the auspices of leadership. Its clearly important, Leadership Matters building these designs together so that community leaders, local elected officials, School Leaders and Business Leaders are all leaning in on the same objective around young peoples success i think is the real win that weve seen. The losing strategy that weve seen, i think, is everybody wanting to start their own thing. I think one of the things that we pride ourselves on is our willingness to partner with others and make sure that we get to all of the students who need this and not worry so much about it being solely our brand but we are working in Partnership Within our communities. J. D. And sandy i think we can take the organization to have a Million Students involved rather than 112,000 and that would make a difference sandy, im so impressed with what youve built, the idea that you had this vision 40 years ago to see it in so many places. I want to thank you both for being with us today. We hope to talk to you both again very soon. Great to see you, bye. Thanks, becky really appreciate it. Take care andrew okay thanks, becky. A lot more coming up on squawk. Big hour ahead we have former white house chief of staff Mick Mulvaney next. Futures in the hour. Back in the green. Back in a moment vo at audi, we design cars that exhilarate with versatility, whether on the track, or the everyday drive. Today, that philosophy extends to how we connect with you. We call it, audi at your door. Whether a remote test drive, shopping, tradein, or even service pickup, audi at your door can do this and more at participating dealers. The premium audi dealership experience, on your terms. Audi at your door. Try natures bounty sleep3, a unique trilayer supplement that calms you, helps you fall asleep faster and stay asleep longer great sleep comes naturally with sleep3. Only from natures bounty. Good morning call it a comeback or maybe dont. Dow futures surging this morning, but thats after a massive market drop yesterday more than three times as big the enthusiasm for evs tesla and a potential electric vehicle rival sucking up huge investor cash. Are the Companies Strong enough to sustain the interest. Well go inside the investor Interactive Brokers chairman Thomas Peterffy. The final hour of squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc im becky quick along with joe kernen and Andrew Ross Sorkin. The u. S. Equity futures picking up some of the ground that it lost yesterday for the markets yesterdays losses were significant. Were talking about the dow down by more than 1800 points just for the trading session yesterday. This morning the dows indicated up by about 467 points but that is below some of the higher levels we had seen earlier today north of 670 points. S p up 55 and nasdaq up 153. Treasury yields for the 10year, we watched them climb as high as 0. 9 now theyre 0. 7 yesterdays market tumble came as some u. S. States reported an uptick in coronavirus cases spotlighting that the disease is still causing considerable uncertainty for the American Economy treasury secretary Steven Mnuchin says that the white house is seriously considering another round of stimulus checks the senate the debate over additional relief has been put on hold until sometime late july joining us with his thoughts on another potential round of stimulus and other issues, former white house chief of staff Mick Mulvaney. Good to see you again. Morning, joe. You like my backdrop this morning. Is it better than sandys . Yeah. You know what, were going to focus on your message. Certainly no distractions there, mick anyway, so were talking about not returning, these lawmakers, until july 21st. So nothing could get done before then is it stalling do republicans really not want to do anymore because the deficit hawks, whatever you call them, theyre winning the argument within the party at this point the calendars going to drive a lot of this. Keep in mind how congress works. Most of the heavy lifting, the big bills, bad bills, bills very controversial typically only get done twice a year, right before the christmas break and right before the august break. Keep in mind you mentioned july theyre not back all right were going to four or five weeks until between now and the election we got part of that were going to take this as we go forward, mick, because you froze a couple of times and we missed some of your answers. We had senator johnson on. He either wants a redirect or repurpose whats already part of the 2. 9 trillion do you foresee more money being directed or do you think people in his camp are going to win out on this . Well, i hope the camp takes the position that we need to wait i think its too early right now to make the decision yes, were going to spend, no, were not. I think less than 1 3 of the money has already flowed out of the i think were going to mick, this is not youre freezing up. What are you coming in on, skype or something maybe we can try and come back to this because i did want to talk to you about a couple of other things let me try one more question, mick, to get to the nittygritty were you in contact with people in the white house this week, because you usually are, with the current chief of staff, et cetera are you up to speed on their current thinking about a lot of issues the one im thinking about is is the one in the post. The post has a piece that the president might have lost the confidence and a new direction in the next four months . No, i think mick, were going to take a break and see if we can work on i dont know what maybe well get you on the phone i think that would be a good idea this is not going to work for us lets try and do that, andrew, and maybe we can get some responses or answers or whatever if we take a break and try and work on this perfect yeah. Well, thats a heck of a tease. Mick mulvaney with some provocative views, i know, on some of the provocative questions that joes asking him. Well be making news on the other side of this break in addition to that, were going to go inside the recent habits of Retail Investors and how theyre contributing to big moves in Retail Stocks first, well focus on tesla, an up start in the electric vehicle and then Thomas Peterffy will join us. Futures up big yesterdays market wipeout, the five most valuable Tech Products lost almost 2 270 billion combined well see if they can make some of that up today stay tuned, youre watching squawk box on cnbc this is decision tech. Find a stock based on your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. 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. Bbut what if you couldg do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Were going to try this again with mick mulmulvaney. We saw exactly what you looked like and there you are look at you. You have an american flag. That might even be better. Anyway, so ill tell you what this article says. I dont know about its in the new york post. Theyve talked to some sources that there is some dissatisfaction with brad parscal. Then another individual, jason miller says, look, hes been doing a great job, its been a Global Pandemic along with the protests just being in it at this point means hes doing a pretty good job. What do you think the administration will do whos going to lead this Campaign Going into november . Will it be parscale . I think it will the president likes a lot of dynamism on his team, a lot of energy look to the larger trends, which is is he is getting rid of the old people or is he bringing some of the old people back . Its the latter. Copix is back, there are folks on the Campaign Team who have not been there theyre rebuilding the same team that won in 2016 i saw the posts story i dont put too much credence in it i think the president s very comfortable. He likes having those familiar faces around and hes probably there for the ndur rigs. If you were chief of staff, seems like theres been a Seismic Shift in the way people view systemic racism in the country now. Do you think the president fully grasps that at this point in terms of his response to the protests and to some of these issues im thinking about i even saw some republicans consider changing the name of some of these military bases for maybe some of the individuals that actually were accused of treason or whatever, and the president says absolutely not. Do you think that at the risk of satisfying certain people in his daze base that there are other people that could be Trump Supporters that will be alien e alienat alienated. The president is a lot more comfortable working in other areas. Hes much more comfortable working in tax policy, Foreign Policy those are the areas hes comfortable with a lot of us are like that. The president has a difficult time understanding the perspective of some of the minority communities we dont have those experiences. Its a different type of topic for him and for many politicians to be dealing with i think theyve dealt with it as well as you possibly could under the circumstances. Face t its a very difficult, difficult time i dont think the president is out of touch, i think its going to take a while for him to get his voice on this particular topic. I dont think ultimately that the election is won or lost over this i think its going to be won and lost over a variety of things. Yeah. Lets go into that incumbents usually do pretty well but we have seen that incumbents that have an economy that we thought was going to be president trumps strong suit, nobody knows where well be four or five months from now. It looks like we may be the economy could be rebounding already. What will it be, the Covid Response will it be the Economic Situation in september and october . What do you think will dictate how the kun have i is going. The betting odds have flipped in favor of joe biden in the past several weeks pretty significantly. I think, joe, if the election turns out to be a referendum if its donald trump running against joe biden, if its a binary choice as many elections are as it was in 2016, i think the president comes out on top of that. Face it, below all of these issues were dealing with, we have progressives saying lets defund the police, lets get rid of the police is the message that elections do have consequences if you elect a Certain Party or a certain ideology, you will get a different outcome. If the president can make it as a choice, he stands to do extraordinarily well if its a referendum on his performance, its going to be a bigger challenge. In terms of both houses, you used to be very involved with trying to figure out, you know, how to keep one or the other chamber. How do you handicap that how do you handicap the senate right now, mick . I still think what you see what you saw in 2016 has a really good chance of playing out. We forgot what happened and he got hundreds of thousands of people to vote who had not voted before and they lifted a bunch of republicans into office who otherwise might not have won that dynamic has not changed the president will get people to show up to vote and they will lift other republican candidates we are a divided nation. Washington the countrys not divided because of the country the republicans have done a better than average job. Nancy mason of South Carolina just won a primary election. First female graduate of the citadel. It will be very close. Anybody who tells you where they know where its going to go in november is lying to you. I just wonder, i remember not everyone remembers the 60s. There was a real tension between law and order and just letting things play out. Weve got a part of Washington State now or seattle that is like autonomous or something theres one . Tread lightly. Go in and secure that area and just do what heavy handed, whatever needs to be done. I say this somewhat facetiously. A little bit of tongue in cheek and i know you cant get away with this in Political Climate maybe minneapolis should defund the police go ahead and show people what its like when progressives run the place. I saw the chair woman being asked a question defund the police, someone breaks into your house, who do you call that clearly rises from white privilege. Theres a real privilege in the countrys history. I would be focus on that if the republicans make themselves out to be the party of law and order, safety and security, they stand to do extraordinarily well. Mick mulvaney, thank you. Appreciate it. You always say thats why we love having you on you will say what you mean and we appreciate that and these are extraordinary times. Just they are. Appreciate your time today thank you. Finally got it right on the phone anyway coming up, much more on the markets as we look at a good session. Stay tuned yeah yyeah yeah hey, hey try natures bounty sleep3, a unique trilayer supplement that calms you, helps you fall asleep faster and stay asleep longer great sleep comes naturally with sleep3. Only from natures bounty. Welcome back, everybody. An update on a stock that has quite a volatile trading week and that is under selling the story. Rental car hertz has asked a bankruptcy judge to approve the sale of 250 million shares that is hertz could raise money without some of the conditions it might have to abide by in bankruptcy yeah, i guess if you have people who are willing to buy at this point. Earlier this week the stock traded for around 6 a share you can see right now it dropped pretty precipitously from that and its now trading at 2. 91, which is up 41 from where it was yesterday. So some big swings and hertz is just a number of stocks that have seen volatility like this, andrew its been fascinating to watch. Meantime, speaking of some of this market volatility, Retail Investors may have cashed in on the sharp comeback for stocks but what goes up of course well, not of course. In some cases does come down some Small Traders got squeezed hard in yets tumble kate rooney joins us good morning, kate reporter hey, andrew good morning bullish robin hood investors were on a role they picked some of the stocks with the best returns over the past few months. As the markets momentum reversed yesterday, some are getting squeezed the top names on robin hood as of the close were all in the red according to Third Party Aggregator robin track ford was the topic down 9 the airlines which had been a winner for robin hood investors as those rebounded were down double digits. Carniv carnival, another topic, down 15 . Barclays saying robin hood and other retail traders not behind this years rally. Their favorite picks tend to under perform. More robin hood customers moving into a stock has corresponded to lower returns rather than higher two other speculative robin hood favorites seeing a dip, nicola and tesla. They have been soaring in tandem this month yesterday they closed down 7 and 5 respectively. Some of the top stocks looking to open higher as futures rebound. Guys, back to you. Okay. Kate, great to see you we should mention, by the way, kate was our producer for so many years were so proud of her. Thanks for joining us this morning. We will see you in a little bit again. Thanks, andrew. Absolutely. We want to talk more about the retail trade and more importantly money pouring into electric vehicle stocks and nicola two big calls Morgan Stanley downgrading tesla to under weight. Lowering its price target to 650 a share Goldman Sachs downgrading tesla to neutral raised the 12month price target to 950. Its positive on teslas longterm outlook. We have vlf auto ceo and cnbc contributor, and our own mike santoli senior markets commentator is with us bob, i cant imagine what youre going to say about nicola. What do you make about whats happened over the past couple of days with this stock well, i dont know whats causing it, but nicola has yet to produce a vehicle everything is built on future expectations which of course is the story with a lot of ev stocks if you are looking for a rational economic explanation for the valuation of tesla or nicola, there is nothing to be found. What it is, it is a form of mass psychosis where enough people believe that the stocks going to go up, everybody wants to own it, so it does go up it becomes a selffulfilling prophecy again, if you look at it rationally, future earnings, future profitability, et cetera, et cetera, it makes no sense but thats not how the market operates the market operates on psychology, belief, expectations of a brilliant future. Its sizzle as opposed to steak. Can one explain the valuation irrationally no, one cant, but it is what it is bob, just before we go to mike, do you put tesla now in that same category youve been skeptical of tesla throughout and yet there is an argument to be made theyve done a remarkable job you can question valuation but go ahead. Yeah. I am i fully admit that i was one of the tesla skeptics when it looked like they were running out of cash and elon musk was behaving somewhat erratically. I didnt think the company had a chance, especially when they had when they had to raise money when they were under federal or sec investigation. I tried to do that once as a ceo and i was told you cant were not going to let you raise capital while youre under investigation by the sec somehow he managed to dodge that bullet, and i give him all the credit in the world. Theres no question that elon is brilliant. And like many brilliant people, he has a somewhat erratic side it doesnt change the fact that hes brilliant hes done a remarkable job tesla products have improved vastly in quality over the past 18 months. His design work is terrific so theyre good cars. The Company Appears to be stable electric vehicles are probably on a growth trend, but all of that does not explain a valuation like that compared to Companies Like general motors, volkswagen, mercedesbenz, so forth. Yes. Yes, many people were wrong about tesla, myself included yes, theyre doing a remarkable job with the vehicles. Yeah, they probably have a pretty good future, but nothing just no rational explanation can explain a valuation except everybody thinks its going to go up. Mike, let me ask you about what you think this represents in terms of the speculative activity taking place in the market you talked to us and the bankrupt companies that people seem to be speculating about like nikola, whats the float in terms of or even the percentage if you think retail versus institution obviously there are people on the institutional side who are believers. Above a 250 billion valuation almost instantly mostly tells you that its kind of enjoying a little bit of the glow from what tesla did. The fact that tesla went all those years with people doubting it, tesla didnt get to a 20 billion valuation until three years after it was public. That was 2013, went public in 2010 all along the way people rightly had some scope at this civil about whether they can do it theyre giving nikko la the go ahead. Its a rooting of the business more than an evaluation. Mike santoli, i want to thank you. Bob lutz, longer conversation, come on back, well do it again. Dont mess Trevor Milton the founder of nikola on fast money monday night at 5 p. M. Eastern. I know a lot of people are going to be watching becky . I like how they chose the name nikola. Nikola tesla they were trolling tesla when they chose the name. When we come back we have breaking data on import prices expecting a bod reunfrom the drop in april. Stay tuned, you are watching squawk box right here on cnbc. Yyeah yeah hey, hey while also capturing the possibilities. Even Something Like co2. Chevron has spent over 1 billion on Carbon Capture projects. And is investing in Startup Companies working to transform carbon into new forms of energy. To help address climate change. 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. Welcome back to squawk box. Breaking news. Friday last trading day of the week after a wild thursday. May import prices expected to be up. 6 of 1 are up 1 . Certainly seems as though the last couple of months down 2. 6, down 2. 4 maybe in the rearview mirror. Now lets talk about petroleum up. 1. We can see the difference headline up 1 and on a yearoveryear basis they were down 6 . Now lets switch gears to export price month over month expected up half of 1 . Exactly as it arrived, up half of 1 . Sequentially following a big down 3. 3 . On the yearoveryear number which is the same as the import yearoveryear number. The most amazing story were hovering at 1. 4 in 30year bonds which means theyre down 23 basis points in the week 10s are down a similar amount. In the week, huge drops. Last week, last friday it was a jobs report that was rather powerful and the leadin to the jobs report not only void of course of stock prices but it certainly pushed stocks up interday over the 90basis point mark we definitely have lost some ground as a matter of fact, maybe the most important thing is look at is that 54 basis points is the alltime yield close and 99 basis points for a 30year bond. The difference is between those points and where were currently trading and 30s to 10s has widened out over the last several months becky, back to you. Rick, just asking looking at this increase, sharper than expected in increased prices, put that together with ppi. Do you worry about inflation at this point or is this just something because of all of the unusual activity that weve seen and maybe troubles in the supply chain at this point . I think the latter is most definitely true, but i do think in the grander picture, the Bigger Picture that ultimately the big growth in debt liquidity thats sloshing around and especially how long it takes to get on the other side of the coronavirus, all those issues together will give us an inflation surprise the question is when okay. Rick, thank you. Good to see you. Have a great weekend thanks, becky lets get back to this weeks wild market action, and specifically the Retail Investor trade. Retail investors are making big gains but taking some huge risks and potentially taking it on the chin joining us to talk about that and much more is Thomas Peterffy the chairman of Interactive Brokers. Thomas, what youve been thinking about in watching this, i know in recent weeks youve said youre a little concerned about whether this rally could hold up. We did see a huge selloff yesterday. Is that what you were worried about or theres potentially more to come well, i think that this is just the beginning i think that more is going to come but, of course, ive been wrong all along. You cannot be sure so now basically two schools of thought here one of them is that the new economy emerging from the ruins of the pandemic is going to be a different kind of Digital Economy that will be much stronger and more productive and a new environment, new Work Environment will evolve and everything will be just absolutely wonderful and if you dont buy these stocks now, you will never see these prices again. Other folks believe that, yes, well eventually come but there will be much suffering and failures and bankruptcies and problems, many problems between now and then then we have the fed in between trying to bridge the gap between those two visions. And i hope theyll be successful hey, thomas, lets talk about whats been happening with Retail Investors this week i think thats particularly concerning for people who watch the amount of risk theyre taking on sometimes with not a lot of Due Diligence and what might happen from that if you look at some of the stocks, weve talked about hertz several times ago. It went from 88 cents. You saw delta airlines, from 27 to 36 in five days. Amr went from 11 to 22 in i think three days and most of us are thinking that it was Retail Investors who were doing those things some of these stocks were too risky for the likes of carl icahn who i think sold out at 72 cents or something, his share of herds. People did their homework and were concerned about what they saw. Are you worried about what Retail Investors are doing right now . Ill tell you frankly, our investors, our customers basically cannot be called retail they have an average account size of 230,000 even though, you know, many of them are much smaller but that is the average. So the Largest Holdings are basically amazon, apple, tesla, alibaba, microsoft, facebook i didnt see any of this trading at hertz and the airlines that you usually mention so these are mostly invested in Tech Companies and the largest Trading Volume is in tesla and tesla basically incorporates the ups and downs of the entire market its an exaggerated picture of the entire market. So it was interesting to hear the previous segment about tesla. It is sort of really hard to believe that its happening the way its happening, but it is quite conceivable that in 20 years everybody will be driving a tesla, if well still be driving. It may not be something thats taking place necessarily on your Trading Platform if youre not seeing it, but we do know robin hood. You have free trading. You have people locked up at home they dont have things like sports to watch. They dont have sports to gamble on like they used to i just wonder when you hear things like that, like the statistics that i just kind of ran through, does that give you cause for concern . Well, of course you know, we have free trading, too. People are free to choose zero commissions in which case theres High Frequency traders like other brokers do but as i say, yes, its concerning but we dont see a heck of a lot of this so i really cant tell you margin borrowings are high the leverage our customers assume is fairly high because we have thats basically because our margin rates are between half a percent and 1. 5 . They are much lower than the rest of the industry and, yes, the speculation is concerning but, you know, things happen though as always happens its its you know, its just par for the course. Why do you think the markets have been so high . Up until yesterday we had seen a pretty incredible run. Still, if you luke over the past through months, things have picked up. Why do you think that is well, as i said before, it is this notion that this new dick tall economy is emerging from the wreck of the coronavirus and some people say its because people are at home and they have nothing else to do but trade i dont know that is so. Basically our customers at Interactive Brokers, they have 35 cash on the average. So i would say that they are extremely over extended but, you know, maybe other brokers you have a different picture i really cant tell you. It is a problem, i think we were just talking with rick about the potential for inflation and watching just some of the recent numbers that weve seen in and also watching the amount of federal spending and deficit spending do you worry about inflation if you do worry about inflation, are stocks the right prailace t be absolutely. By the end of the year the fed will have pumped into the economy maybe 10 trillion and that money is going to stay there and it will cause a low inflation. There are people who seriously believe that stocks are a safe haven. And thats a good reason to buy. Thats a good reason to buy stocks but, you know, on the other end you create a you cant disregard the fundamentals which are very, very, very weak and you still have to surface. All of the weeknesses still have to surface eventually there will be a high rate of inflation in the years to come and at that time stocks will be a good place to hide depending on the political situation of course. What depends on the political situation . Well, the question is whether were going to have a business friendly government or not, right . That is a very serious issue thomas, were out of time but wed love to have you come back and discuss this a little more in depth thank you for being with us today. Its good to see you. Thank you andrew . Okay thanks, becky. Coming up when we return, key Technical Levels that could make a big difference for your portfolio following yesterdays washout for stocks the s p 500 now on a threeday losing streak. You might not realize it, but this is the first time thats happened in more than three months if you can believe that. Here are this mornings biggest premarket right here. Stay tuned, youre watching squawk box on cnbc. Dont forget to subscribe to our podcast. Youll get interviews, original content and behindthescenes access look for us on Apple Podcast o your favorite podcast app and subscribe to squawk pod today. But explore new terrain. Helping you fill portfolio gaps. Connect to client goals. And strengthen confidence in you. Flexshares. Powered by over a century of investment expertise. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Welcome back to squawk box. Futures back to premarket gains of over 600 points we were here earlier, got a little less bullish, a little less positive as we were up in the mid 400 range. This is after a near 1900 point loss yesterday check out how some of the biggest banks are trading in the premarket. That was a weak spot yesterday they are getting back some of those losses even those big gains there probably will bring us even for the two days andrew okay thanks, joe. Meantime, todays biggest stock mover, shares of Dicks Sporting Goods jumped this morning. Lets tell you whats going on here the company has reinstated the dividend program, this after stopping it in april it will pay the next dividend now on june 30th take a look at shares of american airlines. Theyre rising sharply they see a 90 plunge in q2 revenue. On an optimistic note theyre expecting to reduce the cash burn rate to about 0 by the end of the year as travel demand expects to improve shares of boeing are also on the rise despite the plane maker pulling back on the restart of production for the 737 max jet thats according to the wall street journal which says boeing also told key supplier spirit air systems to freeze the restart. This is as they pressure travel to move. Becky. Andrew, thanks. Quicken loans, in the meantime, is planning to go Public People familiar with the matter tell cnbc that the largest u. S. Mortgage lender has filed for an initial Public Offering confidentially and that it could happen as soon as next month the targeted valuation is still being decided. Its likely in the tens of billions of dollars. That could make quickens ipo the biggest so far this year joe . Skbl thanks, beck. Coming up, were going to check in with jim cramer for his take on the trading day following yesterdays action then the most importan Technical Levels you need to be aware of as extreme volatility returns to wall street, at least for one day, yesterday check out the shares of lululemon. Just missed Quarterly Earnings expectations for the first time in three years Digital Sales rose 70 the company was hurt in the First Quarter by physicastl ore closures stay tuned, squawk box will be right back i have an idea for a trade. Oh yeah, you going to place it . Not until im sure. Why dont you call Td Ameritrade for a strategy gut check . Whats that . You run it by an expert, you talk about the risk and potential profit and loss. Couldve used that before i hired my interior decorator. Voila maybe a couple throw pillows would help. Get a strategy gut check from our trade desk. Ever somethings gone mogotten into the office. M, i hear you. Feels like theres no barriers between departments now. Servicenow. The smarter way to workflow. Welcome back to squawk box this morning want to get to cnbcs headquarters where our friend jim cramer joins us. So much to talk about on this friday morning ive got two stocks i want to talk about and then give you a market prognostication for how to head into the weekend what do you make of this hertz news, the idea that hertz, basically a bankrupt company is now asking the judge if it can sell a billion dollars worth of stock. Would you buy that stock the question is did pt barnum become the ceo im checking to see. Is it pt barnum . No, its someone else. How do you like that maybe they ought to bring in pt barnum because thats exactly what it takes to be able to have the guts to do that offering there is a possibility thats worth nothing. I mean, its kind of funny when you think about it, andrew, if it werent people that are actually going to lose a lot of money. Its bankrupt. There any way for that to work out for the shareholder maybe a sudden surge of rental, they undo the bankruptcy, maybe the common stock is worth something in the redo, but, you know, it seems to be if i were one of the large bondholders i would be so glad that theyre doing this because then i think that theres more money coming to me now, look, maybe they say, hey, listen, were going to reserve this for the shareholders, common shareholders, but thats certainly not in the bankruptcy code, maybe they have to undo the bankruptcy code. Im sure some lawyer says its fine because if you pay them enough they will say its fine. Help me with this one also, american airlines. Thats a funny one. American which by the way, it was the illusion that the ceo of boeing was saying they got 5. 8 billion in total payroll support, 1. 7 billion paid as a loan, came out with numbers today, down 90 . Someone was i know you guys were saying, listen, there is a silver lining, but, you know, i mean, 90 if youre buying the stock i guess you thought they were going to come in down 100 now, this has been going on for a couple of days i dont know who does it, you go and you buy these stocks early on, you ferment and that is a technical term as you know, andrew, you ferment interest and hope that people come in who are, again, using a pt barnumlike strategy, not Warren Buffettlike strategy. Often confused there is a fellow out there who thinks hes better than Warren Buffett, dave portnoy, who thinks Airline Stocks are going to the moon. Yes, they are right . Hes better than Warren Buffett. Does he have a big thing, i dont know, where else would you do it, des moines or something i dont know does he own a Furniture Company . Burlington look, this stuff is its a game if it werent securities, lets say it was monopoly, lets say it was draftkings and i happen to like draftkings, it would be so much fun, wouldnt it pick a couple stocks, gun them in the morning. Yep. Hope people are stupid enough, they buy them and doesnt even matter, like american wasnt even down when they came out, which was far worse than what i was looking for. Its a different world now, andrew, and you and i are relics we did rule the world for a while. Here is the thing, we always wanted to democratize the market, we always wanted more Retail Investors to want to get into the market and to be able to benefit from it and now we have people in it and im worried. I know im a professional for worrier but im worried. I think you should be worried for people who do think that theres something great going on in the airlines. How about carnival do you think theres anything great going on carnival . The last news about carnival, the line is not sailing until november 1, the queen mary 2 youre handicapped by youre doing homework, you say you talk to ceos. What the heck is that about with with you talking to ceos i want to democratize, you cant talk to any ceos what do you think of that . Jim, you and i, we think alike. Youre much smarter than i am. No im not. But we do think alike. Im trying to get a dinner invite over at your house. My wife is out at the island, i never see her. You pick any night you want, jim. Really . Socially distanced, you have to stay on the other side of the picnic table but we will do it in the backyard. I am ready, ski daddy look, let people have fun. Okay, jim. You are the one that wants to kill the fun who do you think you are, the sec . People can have fun. You landed on boardwalk, what do you want, oriental do not pass go, andrew. Jim cramer. Have a great weekend, my friend, and i do hope to see you come on up, im not joking we will see you in a couple minutes. Im there. Joe and becky, the invitation is being extended so we have a group dinner how about an Outdoor Group dinner this weekend . How about a zoom . Can i get a taker. Where you are i think its okay jersey, not quite its coming i think 50 people or less or something. What is it theres been some new dictates. Its 50 people but in some cases you can do 100 and then if its either religious or political i think youre allowed to have any number of people at least is what i was reading. Lets not make it either religious or political that makes it too tough. Good idea. We have patio furniture, were ready to go . Really. Okay. Zoom. Zoom im in zoom. I hate to ask you, are you serving rabbit anyway, stocks are coming off their cooper is such a nice little rabbit. I know. Im kidding. My Kids Really Want cooper to go on tv so we might have to do that at some point. Boiled rabbit, do you remember that scene . That was scary. Yes, it was terrifying. Stocks are coming off their worst day in three months, our next guest told clients earlier this week that she saw sell signals in the market, no at bad call here, teaks are signaling next, katie stockton, i wish everything was simple, katie i initially thought, wow, a big scary correction like yesterday or a big scary pull back like yesterday that rings out some of the bullishness or complacency and youre still having s p above 3,000. Maybe thats the way things are supposed to work in an uptrend maybe not. What are the technicals telling you . Well, we did come into this week with a gap up on the s p 500 and sometimes after prolonged up moves when you see these gaps on the chart they tend to be exhaustive. Thats what we were looking at of course, there is an overbought extreme, nobody would argue against that, however, sometimes those overbought extremes can be a good thing, i would argue that this one is good but just not in the short term intermediate term, weve seen intermediate momentum improve, long term momentum neutral as of yesterday the market does have some excesses built into it and that decline left what we call as technicians an island reversal on the chart and that supports another couple weeks of a pullback we had initial support right around 2955 for the s p 500, that seeming a bit more conservative than we had hoped so now we are looking at support just below about 2800 and thats where the market held in may, which is when we actually got that momentum by signal that has now switched to a momentum sell signal. So you would expect that you would expect to see 2800 before 3100 on the s p i think that does frame down side risk based on yesterdays gap, based on the fact that we do have these shortterm momentum sell signals, but what i want to do is frame it as a pull back that would be an opportunity to add exposure given the fact that the pull back did follow a lot of breakouts. The breakouts were short term in nature, we are not seeing too many stocks at new highs, but indeed weve seen a lot of stocks clear their 50 day moving averages, clear their april highs and those are incremental positives, we are looking at the pull back right now as countertrend from an intermediate term perspective, but, yes, that down side risk does seem to be framed more by 2800 possibly than by 2955. After last week were measures of bullishness getting stretched or at least some of the action in some of the speculative names, some of the bankrupt companies, some of the, you know we saw some crazy moves in a lot of parts of the market that some people thought was froth. Was it did bullishness go up by last friday it did. You know, it went up but not as much as you would think based on the frothiness in those types of names. We saw sentiment gauges get very close to what we would consider an overly bullish reading but not quite there. Thats a good thing, it suggests the pull back should be shortlived. We saw the vix come down to its 200day moving average and it had a little oversold upturn so an oversold bounce, if you will, in volatility makes a lot of sense here, but as something is that would be temporary so sentiment was not as overly bullish as you might think. Do you do work on gold, katie, or not . I do. You do . What are you seeing in terms of upside there you know, its a gradual longterm uptrend. I always believe it makes sense to have some gold in a portfolio. Shortterm more of a neutral bias, consolidation phase. Theres some resistance around 1800 so its maybe not the most exciting chart out there, but certainly seems to be solid after having broken out from that very longterm basing phase last year. Katie, thank you. Were going to end it there. Have a great weekend its friday. You, too. Thanks. Andrew, rabbit, i dont know. How many people are coming you only had that one little guy. We will keep it tight and we will make margaritas. Do you know what come on you are a sucker for a margarita. I have a new drink. Poloma for anyway, try it look up, try it, grapefruit, splash of lime, a little seltzer. Have a great weekend. Becky, you can come in person, you can join by zoom. Squawk on the street coming up right now good friday morning, welcome to squawk on the street, im quintanilla with jam cramer, faber has the morning off. Futures up 600, we will claw back some of the pressure from yesterday as the market again wrestles with economic reopening, Technical Levels, some down grades of cat, united and tesla. Oil is above 36,