Transcripts For CNBC Squawk Box 20240712

With looking at you, sorkin you are on a huge, huge screen you havent seen that. No one has a tv set. How big is that thing . 108 can you get one of these. A little too close. Back it up a little. I almost said this morning, futures down this morning after yesterdays yesterdays 300point gain so, okay they are down today. How do you sell this it was weird yesterday, wasnt it all morning long virus and all of this. End of the day, i looked it up up 300 i dont know look, the problem is that these swings we are seeing, weve all become kind of unnerved to it that was only after a loss from the day before we are looking at these up and down swings. The dow right now is still down for the week the nasdaq is indicated up for the week well continue to watch that looking at u. S. Equity futures the dow was up 300 points and the s p up 33. Nasdaq up 107 points also up about 1. 7 this morning, nasdaq is hanging in there up about 6 points and s p is off just over 3. 5 points. Yesterday, the 10year yield fell back below the 0. 7 this morning, still at 0. 676 . Oil prices, which a couple of days ago dropped by 6 down again when we were watching it yesterday closed a little bit higher now up by about 1 back at 39. 7. Still below that 40 we had finally pushed above very recently what a world. Some other top stories to tell you about. We are watching the financials following yesterdays release of those stress tests the fed announcing it would be forcing big banks to suspend their share buy backs and cap Dividend Payments at levels for the quarter. The banks must also submit their payout plans the fed found several banks could get too chose to minimum capital levels in pandemic amid the slow down. If you remember when jamie diamond wrote that letter talking about the worst case scenarios. We may not be here becaused on what he was saying but the fed maybe taking a sharper view themselves yes i was looking at that. You know what else was interesting for me, i thought of an interview i did last week that the fdic and others remove restrictions for how much money could be set aside for swaps thinking about how minorityowned companies doing all of these interviews. Then i thought, maybe this could be a good thing. Did you immediately worry about getting into trouble again and not setting enough aside what was your take on that knowing too well mixed views part of me wants to get that in as soon as possible. Less and less money for a Rainy Day Fund thats the balancing theme in my head i took it as a positive. Stop the presses i thought maybe we overregulated the first time around and maybe we held stuff back a little bit. Just saying it would be better i thought it would be good we need to inspire and fund and support Small Businesses and entrepreneurs across the board urban areas and everywhere across the board they are the ones that will be feeling the most pain they dont have the Balance Sheets to keep them through this if you can make sure thats where the funding goes, that would be a good thing. The fish and rod, not just the fish the hand up, not the hand out. Youve been listening to john obrien. I have. Im getting kudos from my analysis on the calendar that july is next serious on twitter i have a serious point when is july 4 is that on a saturday . Next saturday next saturday technically but friday is the day the markets are closed so we are off on the 3rd . What about the employment report when is that they just said thursday, it is coming a day early. Thats what i was hoping for. Everybody is waiting to see. Dont you know that number of jobs added i dont believe a lot of numbers and i dont believe a lot of the numbers that would be so difficult with the states. It is impossible to do the real time counting like this. Remember when wed get the gain. Where is the margin of error these days will you be adding jobs or losing jobs . Adding or losing . Id say adding probably because of what happened last time normally id say losing. Maybe but i think the real number to care about is the end of july or even end of august. We are still in the world. As a broadcaster you are doing a lousy job of selling that number both of you. Big number to watch it. I do have a life there are so many things going on and all based on whether we get jobs back. It is nike and the u or the l. Last month was such an outliar that im interested. My july analysis speaking of nike. Speaking of thats right the swoosh shares of nike im also told is a dow component. Did you remember that . Yes, i did. They change them too much the company posting unexpected loss. Down 3 . The dow component. I said it before i read it hurt by Retail Store Closures amid the pandemic. Seeing a 50 drop in shipments online sales were up 75 well talk to an analyst who probably had no idea this was coming in the next half hour no, no we have only the best analysts look, i think the street may be overreacting a bit. Looking at a quarter analysts had no idea would be coming. We knew they were going to get hurt the good news is that they were able to see so much in terms of digital sales. Well come out and look a little different. Businesses will try to take advantage of that. Youll see a shift in winners and losers strong brands will come out stronger retailers will come out weaker you see this play out. Real Estate Companies will come under pressure as companies say, i dont need this many people to come back. Movie theaters will not want to be beholden. We still cant put it elsewhere 90 days. The idea that nike can built a direct to consumer link will help them overtime it is starting to look like a swoosh initially, it looked like a v shape. Now kind of a hi brid v swoosh in other corporate news, the ceos of major u. S. Airlines are to hold a meeting with Vice President pence. Talking about European Union travel restrictions. Temperature checking at the airports and Contact Tracing unions are asking congress for a 32 billion additional government aid package unions say this is needed to keep jobs through the end of march 2021 as travel demand remains weak a topic we had this week flight attendants have to go to work as essential workers our jobs are on the line here. 11 Million People count on the Airline Industry for their jobs. We are talking about unemployment roles increasing. We have job security through the end of september we need an ex teks of that the federal government has not handled this properly. Well see mass layoffs in october if this is not extended. Airline stocks this morning have been under pressure they are down slightly this morning. You guys got some other segments we have the chair segment sponsor. What we need to do is figure outweighs to get a special chairs background for everybody so we can put ourselves in the same place can you do that change your back drop on this break. Just check it. Becky is changing it no, we need to get a specialized one to make us look like we are all in the same place. Oh, virtual look at becky, im getting vertigo. A disco. You can move. So sorkin, where is your control . Change it. Dr. Gottlieb is coming up this is how a lot of people base their feelings about stocks and prospects based on the coronavirus. Take a look at this mornings s p leaders and laggards stay tuned we are watching squawk box on cnbc if youve had the coronavirus, youve got a lot of fight in you. And youre in a special position to help us fight back. The plasma in your blood can literally save lives. But we need to act fast. Please donate plasma now. Please donate. Donate. Donate. Donate now. You fought for your life. Now lets take the fight to covid19. Go to the fight is in us dot org to find out how to donate. 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. Florida and texas announcing a pause in reopening plans the cdc says it is possible the number of infections in the u. S. Could be 10 times higher than the confirmed case count joining us now dr. Scott gottlieb, former fda commissioner and serves on the boards of illumina and pfizer. Even at 10 , that still leaves 90 nonimmune that havent seen the virus. So 10 , amazing that it is that high and makes the mortality rate look more manageable if thats a word you can use. It doesnt make it look as bad but still leaves a lot of people that would be obviously vulnerable to the virus. What he said is we are probably diagnosing one in 10 infections the actual number of americans who have had the coronavirus is between 5 to 8 which is probably right. Weve been saying that on the show for weeks now i would say we are diagnosing one in five to 1 in 10 infections right now at the beginning, we were probably diagnosing 1 in 20. The total population i would guess is around 7 right now it was 5 probably at the end of the peak back in may in cities like new york it might be higher. Boston, new orleans, closer to 10 . Why is the positive that deaths are down does that mean these are younger people or we are treating them better or using remdesivir or dexamethasone or getting them to the hospital quicker what is the difference there the mortality rate is down. We measure likelihood of dying from covid is down. The average age of a coronavirus patient presenting to the hospital or being diagnosed is much lower than it was the worry would be that we look a lot like iran. They had an epidemic, started to come down, plateaued but then had another spike in infections. In about three to four weeks after that spike, their death rate went back up to where it was. So there was a delay well see the death rate go back up hopefully it doesnt go back to the levels it was at you think rightnow, we are diagnosing one in five infections so maybe 150,000 deaths in the United States. Reporting about 800 deaths per day. We might be around. 5 which is bad. Not as bad as 5 it is the infection fatality rate not the case fatality rate so it is different the governor of texas does not want to backtrack on reopening. We are hearing that texas is backtracking in terms of not doing elective surgery, that is key capacity. Thats not really enclosing anything thats just in case the Health Care System is strained, you are not going to have patients in there with elective procedures that seems different than going back to a prephased one or closing businesses again most things are open in texas. They didnt close anything they paused continuing opening sporting vents, bars, libraries, rodeos only at 50 . They paused there. Most things were fully open at 50 to 75 . Hair salons, tattoo places are open at 100 with no social distancing requirements. I was surprised by what they did. Before they put an extreme burden on Health Care System they would take some measures to close some of those in the region where this is spreading like houston they told houston hospitals you cant do electric procedures but bars are still open in houston still might they might but they put a big burden on the Health Care System i would imagine in the coming days, youll see Doctors Express displeasure with that. Hey, scott. What do we know about where these outbreaks where they are taking place and whats happening . How are we doing with Contact Tracing . Do we know it is the bars or the hair salons . What do we know . Not much. Thats the problem these states arent doing very good could be tract tracing work they think it is settings where young people are gathering because they are the ones getting infected theyve identified the bars. Apparently most of the people presenting sick have identified theyve been in a bar recently they dont know for sure they just suspect that talking about the next two weeks are crucial. You have even mentioned that what p is going to dictate the next two weeks have we taken precautions to deal are we rolling the dice and just going to see what will happen . I think it is the latter, joe. People will be more cautious on their own. People are talking about you should wear a mask or stay at home many will heed that vice texas is testing a lot and turning over cases florida is not florida may be in worse shape. We just dont have a good picture. I would also be worried about South Carolina and alabama texas, florida, arizona. People are out and about. I see it where i live. I wonder, have we put it to bed here we are never going to put this to bed. With he have to get through one more cycle of this it will take weeks and weeks to get the size of florida and texas. That has taken weeks to build. If we start building, well see the consequences of that in four to six weeks we have to worry about two weeks and then four to six weeks. I think well be okay for a little while here. All right, doctor andrew coming up, well get into chairs maybe figure out some backgrounds. Ford unveiling the new f150 with hightech options including hands free driving well show you the vehicle next. 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. And their financial wellbeing. Since our beginning, our business has been people. Its evident in good times, with decisions focused on the longterm. And crucial when circumstances become difficult. That continued emphasis on people our advisors, associates, clients and communities gives us purpose, strength and a way forward. Today. And always. To save on auto insurance. Theres lots of ways really . Yeah. Very proud of that. With smartride® from nationwide, they can get discounts for safe driving. Does she get one . Mrs. Carmichael . Safest driver in peytonville. Takes a lot of work and effort to be the safest driver in peytonville. What about this guy . With nationwide smartmiles®, the less he drives, the less he pays. The list of Inspiring Stories goes on and on. I bet. Ive never seen anyone do more with their retirement. Than you. I. Concur. Get a shot of andrew quickly. Welcome back andrew is trying im in the chairs im in a different location run and get the rest of the family this is worth getting them for this is what we do all the premers. They are in different places we need to practice. Now i have to read this thing without a desk right here. It is a whole different skill set. Andrew, you look like santoli. Im in the barn im in the barn. For the f150 story perfect. Absolutely. Ford unveiling the first redesign of the nations topselling pickup truck being turned into a rolling work station. Pickup truck buyers crave technology and comfort as much as brawn and towing pour will have a brad band connection and the area between the front seats that can make into a desk. Making up for a third of u. S. Sales. Well have more on this. Keep in mind, lebeau is coming on at 8 10 the ford coo jim farley is coming up at 8 10. I read all those futures i dont know whether they have a vacuum cleaner or not. Thats all i want you know i think youd like broadband with a work station. I dont see myself in an f150. I dont either. I could pull it off better than you could you dont think im handy maybe you said super duty. I have a german sheppard. Two of them. I see a lot of super duty. If im not, hes not andrew is more of a pick up driver than i am im not arguing with you. I would buy a pickup truck. My kids want one i would buy one before either of you i could put the golf clubs there maybe. Im not handy. I admit it i get the shakes when i go to hoax depot looking for a light bulb costco has started to bring back the popular free samples but it is no longer the open place it used to be. Items are prepackaged and kept behind plexiglass shields. Hard pass on that for me get this, guys new york city, private electric scooters and bicycles have become legalized in all fiv five boers lime, bird, lyft and spin owned by ford will soon apply. Food delivery has called for these changes. Tweeting yesterday the bill delivered justice for the workers that kept the city running during the pandemic. Ed the world has changed in just the past couple of months. I just saw one scooter go flying up. What is that, Seventh Avenue you can tell there, more activity out in front of us, the guys with the beg als and sandwiches are back there are about eight people in line these are things we havent seen there is some traffic going by our times square indicator is definitely coming to life. Most have masks on and there are a lot of police. I will say that. They are always there. We have a satellite, as you can see. That building there. Across the street from the armed forces recruiting place. Thats new yorks finest right there. How many times do we see these for anybody thinking i can finally get out of the house and go back to the beach, were going to scare you again check out this terrifying footage off the coast of south africa. This is drone footage of a big shark swimming below the group of surfers one of them spots the sharks fin. He pushes his kayak forward giving the rest of the group time to swim away. Sometimes sharks get a bad wrap you dont know what hes thinking nothing against the sharks. They are just doing their thing. I just dont want to be near it. We think look at that horrible predator. Hes entitled to be there. Probably more than they are that still doesnt make you feel great if you look over and see that next to you yeah, that would be scarey. That looks real. I dont think zakarch really di. Andrew, you are leaving the barn going back to the studio. Going back to the studio. Okay, now i have to get back to being used to being in a desk there are a lot of skills there. You are so smooth at this no one will even notice no one. Folks, when we come back, well have more of this mornings stocks to watch including a big boost for Virgin Galactic well take a look at yesterdays s p 500 winners and losers where will you go first . Wherever you may go, lexus will welcome you back with exceptional offers on exceptional vehicles. Get zero percent financing and make no payments for up to 90 days on all 2020 lexus models. Experience amazing at your lexus dealer. Experience amazing yeah, everything is runningis smoothly with the now platform. bling see, incident resolved. How did you. Gotta enjoy the small wins. You keep being you, derek. Keep being you. Yeah yyeah yeah hey, hey welcome back to squawk box. A little deal news amazon has reportedly agreed to buy selfdriving zoox that would help with autonomous vehicles. Shares up. I dont know if it is on the back of shares being around and rumors we asked march yiranda mary a about it well see what happens next. Albertsons will be a publicly traded company again the china pricing offering at 16 ra share. Below the expected range albertsons worth about 9 billion. The private equity firm had been trying to take that Company Public since about 2015. Joe . Barn. Missed the barn. Shares of virgin right . Thats very cosmo. I miss it too a beautiful barn it takes a long time to get from the barn back to the studio. Thats the hardest time. The commute. Get yourself a golf cart. Green acres from one side of the estate to the another now you are back at the city sky line you played along in that thing. If it wasnt friday, would you have played along . You know what it is, joe. My readiness number this morning is down to a 77. I could just be going with the flow you are vulnerable. The thing you had a 9 92 on was a 77 . As the week progresses, i get worse. It is a sleep issue. I look forward to sleeping tomorrow but i might have some red wine or something or a margarita and then i dont sleep well im trying to figure out shall you got any solutions to that . Dont drink. I cant do that on a weekend just start earlier in the day, joe thats the trick earlier in the day then i wont make it until 6 00 p. M if you stop drinking by 4 00 p. M. , it will help you sleep. When are you starting is that what you do out in the barn just giving you some idea s. U i bet that is the cleanest barn you dont have any animals in there. Hes got a bunny. We have a bunny im supposed to read this shares of Virgin Galactic rising the Company Successfully completed the second glide flight test in new mexico. That is cool looking now getting ready for full rocket powered test flights plans to begin more this summer and plans to be profitable by next year. Back to the Broader Markets, joining us is ryan payne, president of Payne Capital management i want to talk about your call you are stepping out with a pretty bold call a lot of people are looking at the markets and said, hold up, lets take a pause, a breather you are looking at 33 of 50 states with higher coronavirus number but you are saying right now is the time to buy and investors will regret if they dont to it. I called back for the record on this network that well see a vshaped recovery, which most were pretty negative i think the mistake you are going to make right now is think, okay, the market has had a huge run up but we are not going to see any dips. There is so much money in cash right now. Looking at the 5 trillion in cash so many are getting out of the market Retail Investors as well as our firm are afraid to get back in the market i remember from 2008, 2009 with the stimulus the news was this bad and sitting in cash, it is just rocket fuel to push markets higher in 2008, 2009, you did see some steep drops as investors got spooked. Do you think well ride that out more now that the federal government spends an inhe had kribl amount of stimulus i dont think investors ever learn their lesson at one point, gdp was calling for a 50 decline in the second quarter. I think it will be bad but not that bad when you saw that jobs number come in in may, which was so much better than expected. Talking retail sales, they were double than expected i think you are going to see strategists looking at the dire news i dont know about you, ive been hearing about that second wave since march what your biggest risk here is surprises in the positive. That is what we are seeing all along here with that cash where we are waiting. They keep coming in and buying because there is so much pressure to buy here we were talking about the jobs report you mentioned the last jobs report was so strong if we see worse numbers for the report that comes out on thursday, do you think thats just a head fake along the way i do. That data is backwards looking i wouldnt be too concerned with the numbers coming in. Based on the outlook, i think it will be hard to hit those lower numbers. But, yeah, a head fake on that absolutely ryan, bold call you did call this early and youve been right. It is good to see you. Thanks, becky so someone has an idea here that i think has a lot of merit. You see the little bugs there. What about your readiness indicator if we were to put it on the lower side of the screen, so people does it change all morning long you could do it you could do a live reading. If you did that, youd have to try to do like some sponsorship arrangement with one of these companies. What is your number again hes at 77. Thats awful i like you at 77. It is fun. It says your overall readiness is good but your resting heart rate is above average. I had like a cereal binge last night. If you feel tired, skipping the gym could help the problem is i skipped the gym yesterday, the day before and the day before that. Dr. Gottlieb told us it is more important to take a nap than workout do you mind disclosing what it was im sure it is no sugar. Life cereal right now is a time for action. Thats why usaa is giving Payment Relief options to eligible members so they can pay for things like groceries before they worry about their insurance or credit card bills. Discover all the ways were helping members today. Welcome back to squawk box. Verizon says it is going to pause advertising on facebook calling out the social media giant for not going enough to curb hate speech saying it is halting ads until facebook can create the streets stake well talk about it next youre first. First to respond. First to put others lives before your own. And in an emergency, you need a network that puts you first. That connects you to technology to each other and to other agencies. Built with and for first responders. Firstnet. The only officially authorized Wireless Network for first responders. Because putting you first is our job. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Welcome back to squawk box this morning. Nike reporting a surprise quarterly loss this is the second time in eight years it missed bottom line estimates. Online sales rose 75 . On a Conference Call with analysts niek kaes ceo talked about the strength of the digital operations weve seen the strong digital momentum continue throughout the quarter and into early june even as stores have begun to reopen joining us right now is our own director of Consumer Research at refinitive good morning to you. You speak about the earnings is it that analysts and investors were so off on this. How were we supposed to think about this given the pandemic . Indeed. Nike did miss earnings and revenue, but i think whats more powerful is the message they made during the earnings call. They are positioning themselves from the long term and they have learned from whats going on and theyre using the strategies to better position themselves our latest refinitiv survey tells us consumers are missing experiences and health and wellness is on the top of their minds. Nike does just that to gain through the digital platforms. Through the nike training app they were able to gain significant new customers in china where the coronavirus first hit and as a result that translated into strong sales in china that helped offset the weakness of the 90 stores that were closed in north america, europe, and latin america. So that tells us that nike is learning that because we said that Going Forward theyre going to be investing heavily more on these experiences and these memberships in order to cater better to the consumer which in the long term will be a better strategy that consumers are gaining right now. I have to ask you a question, which is what percentage of their business actually comes from the nikeowned stores typically . Right so in north america its about 41 and when you combine the three areas that were closed which is europe, latin america and north america, that would have been 80 of their revenue so when you take into consideration the numbers that they posted based on the strength in china, which, again, was the first place hit, so its telling us about the recovery, then you look at those numbers closer in different perspective and say nike is a very strong brand and they are very theyre positioning themselves with a direct to consumer strategy very well. What do you think the stock is worth Consumer Behavior is changing well, this is a stock that what do you think the stock should be worth. A year from now will probably be thats why. Strange times like these, a smart estimate, this company has a strong Balance Sheet the leverage when you look atley quit at this, its very well positioned to go not now you say buy the dip i think the stockstill has room to grow great very nice to see you always great to get your perspective. Hope to talk to you soon thanks becky . Andrew thank you. When we come back, blackrocks rick reader and former barclays ceo bob diamond. The stocks are pointing to a lower look well continue to watch this the dow is implied down 64 points you e tcngarwahi squawk box right here on cnbc since my dvt blood clot. I wasnt sure. Was another around the corner . Or could things go a different way . I wanted to help protect myself. My doctor recommended eliquis. Eliquis is proven to treat and help prevent another dvt or pe blood clot. Almost 98 percent of patients on eliquis didnt experience another. And eliquis has significantly less major bleeding than the standard treatment. 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Get 0 apr financing up to 36 months on most models, and 90day firstpayment deferral on any model. Futures under pressure to end the week we will talk about the big drivers with black rocks rick rieder still ahead financials down on this news a look at the sectors coming up. Plus, your money, your vote. How much will the president ial election play in the market . Pollster frank luntz joins us with data as the second hour of squawk box begins right now. Good morning welcome back to squawk box right here on cnbc im Andrew Ross Sorkin along with becky quick and joe kernen. 2 1 2 hours before we open the dow looks like it will open off a little bit, 40 points. Nasdaq looking higher again. Keeps moving higher. S p 500 higher as well joe . Economists looking at alternate data to better gauge the pace of the economic recovery and to measure the impact of the recent rise in covid cases, Steve Liesman joins us now with his backrometer. Thats a new one, steve. The road back barometer, thanks we have the rise in cases and what we have as a result of that is not a decline but a flattening of the curve of opening up the economy here. Lets take a look at the covid data right away from the covid tracking project we are now running at 106 of the april average in terms of new cases. What we have not seen yet is a spike in the number of hospitalizations or deaths they remain at around 30 of the april average which was the worst month so far you can see that in the chart as the seven day average of these cases spike up and rise. Big jump hospitalizations and deaths not following along, thank god, obviously. Well see if that becomes a delayed indicator. Looking at whats happened on the economic side. The apple mobility index continues to decline some gains in transit and walking requests for walking directions as well as driving directions remain above the january average that they measured against but its the home base employees working thats down 24 . This has been coming up and now youll see in a second store closings, yeah, continues to register. Store closings on a week over week basis not a net gains nationally heres the employees work home base that economists like because it did a good job of telling us there were jobs created in the month of may. And so now thats flattened and it actually has gotten a little bit worse. So thats something that may be related to the covid spike i want to introduce you to a new barometer here tech startup burbio, they aggregate calendars from all over 3100 counties around the country and what they look at is Community Activity schools, libraries, chambers of commerce, all civic stuff. You can see its opening somewhat or getting towards 80 opening in the some of the smaller areas with the bigger cities, the bigger towns have not really been open this map needs to go big really dark green in order for the u. S. Economy to be open. On the one hand i think these libraries and schools will be very cautious. This may be a leading indicator, guys theyre picking up calendar events it goes in the calendar and its going to happen as a live event. They will tell us that its opening. So you can see there we need to get dark green on this map in order to get it back so right now majority of the country remains closed some gains in this index but its another thing, becky, that were going to be following. If the schools arent open, i dont think the country can be open steve, if you pull that map back up for a second, just glancing at it, it seemed to me like the areas that had the most dark green also happened to be the places where youre seeing an increase in cases at this point. I think 33 states are seeing an increase in cases versus decline but places in the northeast like new york and new jersey and connecticut where youre actually seeing fewer cases, its because theyre still shut down i think the big question is what happens. Right. You can see some of the areas like in florida, texas, where the darkest green is, thats why theyre seeing increased cases its inevitable. Its can you avoid the outbreaks and the real hot spots. And what we can do, becky, is come back in a week and look at how this map has changed what i think also is out there is theres a sign of confidence that you can get from this map in the sense that, you know, if youve got a guy or a woman whos a director of a library and they schedule an event, theyve got to be pretty confident in that. The schools when they open, they have to be pretty confident. When we start to see this go darker green, well have some confidence that some of the most cautious people in the country are ready to start scheduling live events. Its not the case right now and youre also right to point out those dark green areas if they start to go the other way on that, that would be a bad sign steve, have you been out . Have you had dinner at an outside restaurant yet i have not, joe i did last night. It was good. Im telling you, youre going to love it. How was it . It was unbelievable. In the car im passing them and im looking in the restaurants literally, how are they doing this . Im wondering more importantly is my stella blues band, were trying to schedule some concerts, you know we dont know what to do were waiting to figure out what to do. Should we to it or not ive seen youve seen comments, Eddie Van Halen no, the other guy, sammy hagar making weird comments. Yeah. I went it was just two of us, but i gave money they brought me food and i gave them money. It was unfortunately it was a bring your own and i didnt know it was deep. It was really good really, really good. No dishes to do. Thats nice. It was a beautiful night, cool breeze. And people waiting joe, i want to run this by you. My drummer says what she should say when we do our first show is no masks, no music, which means we have to stop the band if people in the audience arent wearing masks. What do you think about that thats a good idea. You going wear a mask when youre singing turning someone down without a mask, they got a bunch of tips, 21,000. With you id get confused between the stella blues band and the mud rakers. No, its the moon cussers. Moon pies depending what you play, either one or the other is it the same group of guys one is sort of original music. The other is a hard core grateful dead cover band as you know, joe. Thats from waco flood, is it not . What is it from . You know, people dont know youre a closet not so closet dead head out there, joe. Thats true you know my favorite song, unbroken chain. Phil didnt sing a lot but beautiful. Sorry, beck. Thanks, lies liesman. Joining us right now so is the producer, as we know were moving on joining us no for more on the markets is rick rieder he is chief investment operator of blackrock ive taken to think of these weekly sessions, this is like sitting down with a shrink to figure out whats happening with the markets. We were told you cant fight the fed in this position we learned this from 2008, 2009. He said dont wait for a dip to buy. At the same time were looking at coronavirus cases rising in more states than not and looking at some hot spots and wondering what thats going to mean, if theres going to be a roll back in some reopenings of the economy or if consumers will get nervous and not show up for any of these things. Where do we stand right now . How are you feeling . So thanks for having me, becky. I didnt do very well in psychology classes so i hope im not acting in that regard. I would say a couple things about markets. I mean, you brought exactly the right point. You know, the economy has changed in the way you think about it the economy can still operate. One of the things weve seen, this phase one hopefully only we dont get a significant reverberation in terms of corona, but parts of the economy are still operating very well. Obviously whats happening with retail sales online, whats happening with seeing things like the trucking side, et cetera clearly what is going on, you are going to stretch out a lot of the development, whether its travel, whether its hotel, whether its leisure, et cetera. Restaurants while reopening, you clearly are going to slow that down the equity market has been reacting to that, i think rightfully so. The interesting thing about investing, you have the playbook because we watched it play out for the last two or three months the markets are more comfortable with ive seen what happens, ive seen what really slows and the places where the economy operates are doing pretty well in the markets so that sounds like you agree with ryan that you wouldnt necessarily buy wait for a dip to buy so i actually i agree with a lot of what he said. Listen, we were hoping, in fact this week we got a bit of a pull back the liquidity thats coarsing through the system is interesting. One of the metrics i use is pretty powerful. I look at not just where Interest Rates are today but where forward Interest Rates are. If you take where Free Cash Flow is in the equity market relative to forward Interest Rates, equity market is not high. From a pe ratio its not that attractive love to get some pull backs. Youll use the Options Market to try to get some convexity into the market when we get dips we try to buy it, particularly in names. When we get dips in the names, we try to buy some stuff the hard thing is, im not into a lot of fixed income. If you have to generate return in your portfolios, which is what our clients want, you have to be more in equities. Rick, one of the things im trying to kind of figure out is how the worlds going to look after this because even once we get back to a more normal live, i think there are so many changes that have been set in place or fast forwarded by what weve seen happen. You think of the nike story today where nike is under pressure because, shock, they didnt sell a whole lot in stores during the quarter. Digital sales were up 75 . I think thats a big move for brands brands versus retailers are coming out much stronger with connections to their customers youve seen it play out in places like movie theaters versus movie studios where movie studios are saying, hey, consumers are looking for different ways to get this it shouldnt necessarily be only 90 days that its going to be in movie studio before it gets to the rest of the world. You think about things like real Estate Companies theyre going to have to probably change their relationship with landlords, and i mean that for not only retailers but for businesses, too. Theyre going to say we dont want the same number of people that are back there. How do you kind of get your head around some of these and figure out where to invest long term . So, you know, i think its funny, you know . We like simple things, we like to say the economy is a v, u, other shapes that have been described that way, but when we think about the economy, its a compilation of a series of different shapes like you say, some industries are going to have a very, very different recovery pattern than others and the ones we talked about are going to be, you know, we think continue to do well. Technology the change in technology, we were going through something evolution of commerce and evolution of virtual and evolution of how you Data Transmission works and that is just going to push it yet further. Its part of why i think performance is showing up where it is in the markets becky, one of the other things thats happening is people are realizing, this is the sad part of it, you can operate with fewer employees and in a lot of industries, you know, the Unemployment Rate is going to be stickier to come back because of this dynamic of you can operate efficiently that way that is, again, some of the disruptive nature of it. Part of why the fed has to continue to execute on their mandate. But i think youre right i think theres some real permanence were trying to evaluate in a lot of commercial real estate how do people think about office, hotel, youre seeing the markets bifurcate themselves by industry, company, quite aggressively so the most important take away from this conversation, rick, is, again, fixed income, you cant beat what the fed is doing there. The fed is taking up so much of the market that you have to look for other equities to do it. Every time we talk i get some incredibly useful thought like that. Thanks a lot, becky its an interesting time flr things to do in the bond market that are more attractive than the equity market part of what we think in investing is where are you supposed to optimize your return and do it in whatever market lets you do it. Thank you, dr. Rick im going to call you that. Thanks, becky talk to you later andrew thanks, becky. Coming up when we return, the election and the potential market impact. Frank luntz will join us with Interesting Data including how voters are feeling about taxes, the economy, protests. Before we head to that break though, shares of nike dropping this morning the company posting unexpected loss poredow component hurt by retail exsus amid the pandemic. Squawk returns right after this Payment Relief options to eligible members so they can pay for things like groceries before they worry about their insurance or credit card bills. Discover all the ways were helping members today. Deposit checks, check balances, pay bills, and more. Explore all you can do with our Digital Tools from almost anywhere. Pnc bank. From almost anywhere. 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. Verizon says that it is halting ads until facebook can create an acceptable solution that makes the Telecom Company comfortable enough to return to the platform shares of those companies this morning, you can see verizon shares up by 12 cents. Facebook shares down by almost a percent. Andrew, its not the First Company to say this, but it is by far the biggest weve heard from other Companies Like ben jerrys, patagonia, probably not a surprise to see some of those Companies Pushing back, but to see a Major Company like this does make you wonder what happens i think ultimately it comes down to whether the ads are actually effective or not, if people feel like the Companies Feel like putting their ads on this platform makes people feel mad at them, then they wont put their money there. If they feel its effective, most companies will probably go down that line. Right well see how long this is a monthlong effectively boycott but at the same time some of the language arg dwug that theyre not going to come back on the platform until things are fixed, well see what that looks like. Well see whether others join or dont. That will be a big issue thanks, becky. Meantime, Business Executives and the markets, they are bracing poor potential joe biden win in november as the president s numbers slide in national and swing state polls let me get to frank luntz, pollster, political strategist hes been spending a lot of time, all of his time thinking about what is about to happen next frank, walk us through the polls because a lot of investors are now focused and at least if you look at the betting sites and the polls, it now appears that biden may win. Im not surprised because the National Numbers really dont matter and this is where joe biden has surged to a 10 to 14 point lead what really matters is michigan, wisconsin, pennsylvania, north carolina, florida, even ohio is up for grabs states that donald trump won in 2016 have now shifted towards joe biden by anywhere from 6 to 10 points, and thats significant. Thats beyond the margin of error. Second is that trump goes to tulsa, oklahoma, which should be a rock bed of republican support. He doesnt even come close to filling up the arena and this is in his core constituency third, joe biden has been pretty quiet. We havent seen much from him and yet the quieter he is, the better hes doing in the service. That ought to tell you something. The more that donald trump speaks, i think its the message, i think its what hes saying, the worse hes showing up now its very early. Hes still got more than four months to go there have been a number of elections, 76, 68, 1984, even 2016 where the numbers changed in the last 30 days. So you never, ever count anyone out. These have not been a good two weeks for donald trump. So, frank, just explain this. You said it was that theres a margin of error there in terms of these numbers and, of course, we talked about lots of margins of error and it surprised a lot of lot of people why are you convinced . Just so we know. So i look at the spread i look at the trends where things are going over the last couple weeks and i watch what the president says, and quite frankly the language that hes using is not language to the American People. Hes being very tough. The public wants empathy they want understanding. He talks about law and order he should talk about Public Safety he talks about people being warriors he talks about draining the swamp when the swing voters, the people who are going to decide this election, they want someone whos going to fight for hard working taxpayers. The president s language is off. Frank, let me ask you this. What about the gaps that biden makes and makes repeatedly i believe it was just yesterday or the day before he made this reference to 120 Million People dieing of the coronavirus. He missed that and should have taken a zero off of it what he was talking about was 120,000 people do you think that the American People are going to look past those mistakes they are now because bidens been quiet and trumps been very loud i guess is the best way to put it, and during the debates you know that bidens going to be held accountable for that yes, this election is absolutely not over but its joe bidens right ow, its joe bidens to lose if i were the trump campaign, i would demand five debates, not three. Number two is that i would change my lexicon. I would communicate much more with heart than with a fist and number three, if im joe biden, i am honestly, im staying in the basement im staying away from the media because every time they film me i make a gaffe every time they film me i make a serious fundamental mistake. Let me ask you, frank, theres a strategy question. It goes to what youre saying in the Trump Administration and the Biden Campaign needs to do youre saying biden needs to effectively disappear, but the other issue is that i think trump has been historically most effective when he was going after Hillary Clinton, for example, of really hitting and hitting hard that was a successful strategy, at least four years ago. You dont think that same strategy can apply in this case . Thats exactly the point. Thats exactly the point, that things have changed. Conditions have changed. Our economy has changed. The way we relate to each other has changed. There is a realness, an anger, a frustration, an anxiety that exists in the American People that did not exist in 2016 and Hillary Clinton was very easy to dislike. Donald trump had her number. He knew exactly what to say. Now in 2020 we have all of this ugliness in the streets all across the country and the public is looking for something different. Andrew, dont rerun the campaign let me ask you about Economic Issues though, especially given this audience thats watching us now. How do higher taxes play and what do you think that the Business Community really thinks about the way they want to vote right now . So weve been measuring this, and i will tell you that theres greater acceptance for higher taxes today than there has ever been in my research. This goes back to ragan mondale in 1984. Thats how significant this is a willingness to pay for the spending, a willingness to keep the economy going, a willingness to keep something going because of all of the unrest thats out there, number one. Number two, the Business Community just wants predictability they just want to know whats going to happen and if they get that, at this point theyre willing to support anyone who gives them a sense of stability and a sense that things will calm down and thats why biden has actually moved in the Business Community people now are considering voting for him again, it is Donald Trumps languag language, it is not his policies that matter. Okay. Frank, we will talk to you again soon, i hope, as these campaigns heat up and we learn more. Thanks so much for your perspective. Joe . Thank you. I think biden immediately corrected that, but no one put it he had to take three zeroes off, andrew im correcting you take one zero off youre at 12 million. Yes yes, youre right. Now im youre correcting me, im correcting me. Dont feel bad. Dont feel bad because its an informative interview and it took me four minutes to get that you needed three minutes im going scientific notation. He corrected it, i think, right away you know, that reminds me of why say trillions. Coming up, the Federal Reserve putting restrictions on Bank Dividends after signs of stress for the pandemic as we head to break, heres a look at the banks in the premarket not pretty squawk box will be right back. Time now for todays aflac trivia question. What global Car Manufacturers also sell motorcycles under the e sw wn bcsqwkthe United States . Thanerhecn ua box continues r bills. Fifty dollars here. Eighty dollars. 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 yeah yyeah yeah hey, hey cool . Drop the taco. Get in the car. Does this sentra feel like a compromise to you . Wait, what. . The handling is good, right . No compromise there. Nope watch this. Umm. Bbrie. Brie brie rear automatic braking. So if this Nissan Sentra isnt gonna compromise, why should you . Youre right atta girl. The allnew Nissan Sentra. With more standard safety features than any other car in its class. With more standard safety features yeah, everything is runningis smoothly with the now platform. bling see, incident resolved. How did you. Gotta enjoy the small wins. You keep being you, derek. Keep being you. Now the answer to todays aflac trivia question. What global Car Manufacturers also sell motorcycles under the same brand in the United States . The answer, honda and bmw. Bring up joe. Like a cat nap. I didnt notice. Its not you, greco if its not going to bother you, were going to stop especially to get you back especially after reminding us the days are getting shorter. Its offset by it is friday nice to get back to normal things if we can annoy each other about normal things, great to be a friday. Still to come on squawk box. Financial stocks under pressure as the fed puts new pressure on the banks. Speak to bob diamond about the nations financial system. New Jersey Governor Phil Murphy ready to outline guidelines for reopening in the fall. Thats a big precursor we will see what he is looking for on that front and how things are going. Well speak with him ahead of the announcement check out the futures at this hour dow futures down by 76 s p futures down by 1. The nasdaq is indicated up by 10. 5 points. Squawk box will be right back. With smartride® from nationwide, they can get discounts for safe driving. Does she get one . Mrs. Carmichael . Safest driver in peytonville. Takes a lot of work and effort to be the safest driver in peytonville. What about this guy . With nationwide smartmiles®, the less he drives, the less he pays. The list of Inspiring Stories goes on and on. I bet. Ive never seen anyone do more with their retirement. Than you. I. Concur. The Bank Stress Test results are in and the fed has ordered banks to limit dividends and halt buy backs warning that a prolonged downturn driven by the pandemic can result in deep losses wilfred frost, im excited by this, because hes on the squawk news line. It means were going to use this picture that is so amazing, wilf i dont know if youve seen it you may not know what im talking about, but i think its my favorite of all the phone pictures that we use for phoners. Its un youre kind, joe. I have seen it because, in fact, im in it, but im just grateful to mary duffy and team for that helpful air brushing. No, its not. Its not i know you and its not air brushed. Oh, my god well, im sorry im not with you in person. We had a problem tech wise lets get to the stress test under the rules fed vice chair said, quote, the Banking System remains well capitalized under even the harshest of down side scenarios. It was headline grabbing aspects that have put pressure on Bank Share Prices overnight most important was the fact that given the uncertainty created by the virus, banks will have to resubmit their plans and be retested again this year likely around september markets, of course, want certainty. We only have it as it relates to capital plans for a few months as for the current capital levels, they announced that individual fed results next week but based on analysts estimates it looks like Goldman Sacks is below the required scb they will not need to raise new capital. Theres plenty they can do beforehand to rectify the situation. Jpmorgan also caught them a little bit more than expected. On the flip side, the biggest positive surprise is morgan stanley. The required scb fell rather than rising likely because of their etrade acquisition citis required scb increased relative to expectations cannot be higher than trailing 4 quarters of earnings, the limits on dividends theres plenty of head room. Each quarter low earnings replaces good earnings from last year, the numbers could get tougher, especially for wells fargo. Dividends, 51 cents. Trailing 12 cents earnings its widely expected theyll have to cut their dividends. Share prices overnight down a couple of percent. In the scheme of 2020, not enormous fall back in their share prices guys wilfred, thanks were going to get this to someone who i hope has been pouring over these numbers im sure he has. Bob diamond, ceo of Atlas Merchant Capital weve talked about this a few times on the air, bob. That is that because of 2008 and what happened, these banks are better capitalized than in previous times when weve the economy has come under a lot of pressure weve taken that as a given and im hoping that the stress test proved to you that narrative is correct, that the industry is in pretty good shape to withstand everything thats being thrown at it this time around yeah, joe i think from the feds point of view its all about capital. I think the tweaking they did with the vulker rules was about derivatives, not proprietary that freed up 40 billion in capital for the big banks. So i thought this was the kind of action you would expect from the fed during a crisis and this is a you know, in many ways a crisis and i think it was prudent it was thoughtful. And i think the results show that we have a well capitalized Banking System at this time which is, as you said when we started, very important. Okay. The way that they have decided whats prudent for banks, no buybacks but you can keep paying the dividends. That didnt go far enough. We know that the last obama holdover i think at the fed thinks that they should be paying dividends either. Is that grossly political or is that prudent you dont want to get to the point where the people that have once again, the asset holders of the banks, they get their dividends. If the banks get into trouble, then once again the public ends up bailing them out and normal people didnt get any of those dividends and here they are bailing them out again is that likely to happen yeah, i think all of these actions mean that our banks and the government are working much more closely together. I think if im not mistaken, joe, most of the big banks that agreed not to do buy backs and i suspect theyll be fine with a period of more caps and more you know, more focus on the amount of dividends because as i said at the beginning, i think for chairman powell, this is about capital. This is about keeping as much capital in the system as possible during this period of a crisis so i think its an appropriate discussion i dont think theres any perfect answer, but i think the way that the fed has gone about this is both prudent and thought full and i think theyve come up with a pretty good solution for now. I wouldnt be shocked if down the road maybe they did more limiting dividends. Yeah. Im sure Elizabeth Warren doesnt think that we should keep that they should keep paying dividends just on the chance that this lasts longer. Sherod brown, i read, from ohio doesnt think why not take a step back on all shareholder distributions, not just the buy back listen, in all of these actions theyre already limiting them, joe. Theyre eliminating buy backs and theyre eliminating the amount of buy backs. Theyre already in that position the democrats would like them to go further of course they would that comes back to the same core issue. That would leave more capital in the system. Andrew . Bob, i wanted to ask you just about consolidation sort of given where we are, given the conversations weve probably had now over the last 12 years since 2008 and just how much consolidation there is and whether you think that poses any risk at this point. So i dont think theres risk at this point, andrew, but i think the facts are kind of clear. As i look at Andrew Ross Sorkin, the author of too big to fail and i think of 2008 and 2009, the whole focus from elected officials, not just regulators, was we will never have too big to fail again. And i think today if you look at the siffy banks in the u. S. , the eight institutions, theyre all bigger they all have more concentrated risk i think the amount of deposits of the top four banks in the u. S. Are now double. They own 45 of dtc. I think the risk is more correlated with a National Government and, you know, thats not those are just facts. So if the goal was to eliminate too big to fail, i dont think that thats been accomplished. But if the goal was to make the banks extremely well capitalized and more aligned and interconnected with public policy, that probably has been accomplished bob, weve talked a lot about what the fed has done, extraordinairy things the fed ha thought necessary to handle this situation. Do you have any issues or just kudos for the feds handling of the pandemic and the shutdown . So this far i think the grade for the fed and the treasury has to have an a in there somewhere, whether its an a or a minus i think their actions havebeen phenomenal i think theyve been fast, joe, in terms of getting right off the mark i think theyve been very, very broad. Of course all of us are going to want to see a full four years of university, if i can use that example. And over the years we also have to make judgments based on how this plays out down the road, but right now i think were already in economic recovery i think it will be jagged. I think it will take a while for all the reasons that we have talked about, but you have to give credit to the fed and the treasury for the actions that have been taken. Theyve been phenomenal. Hey, bob, just really quickly. We had mike mayo on yesterday. I asked him which banks he thought could be in the worst potential place if we saw loans go bad, some of the areas hit hard if they have bigger exposure to it he said the banks he would be concerned about would be the Smaller Banks because maybe they would be in a position to have a lot of Small Business loans. The businesses wouldnt be able to open up again it made me think, you know, we get concerned about banks being too big for sure, but maybe being big has some definite advantages, particularly in a pandemic like this. Well, i think right now the size of the banks and the capital levels that weve talked about mean that the kind of the Banking System, particularly around the larger banks, is very safe im not as close to the Smaller Banks, but i think the trends that were seeing are trends toward consolidation of the Smaller Banks. So i think directionally i would agree with mike. Bob, thanks were going to end it here i mean, that was just you just brought up too big to fail on your own. I know andrew talks to you at times. He didnt ask you to plug that or anything . You cant look at Andrew Ross Sorkin, the author of too big to fail and not bring that up. Now youre just piling on here. I love this guy. So he didnt ask you that was you being a good guy, huh . Youre binging billions this week, too . Do you want to get that in while youre at it, bob . Never never seen an episode of billions. You dont have me. I took it too far sorry, andrew. Lets get out of here. Lets get to break thanks, bob. Thanks, bob. When we come back, a new report from mckenzie on the growing achievement gap and the impact on the economy. When we come back, youre looking at winners and losers on the dow this morning usaa was made for right now. 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 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. Yeah yyeah yeah hey, hey welcome back to squawk box. Futures actually i think turned positive just briefly about a half hour ago, back down on the dow. The nasdaq finds some buying most mornings when you dont see it evident i guess thats not surprising with all the technology and the stay at home sort of plays that weve talked about so much s p is basically unchanged lets take a quick look at oil this hour, which has been problematic if youre looking for a big vshaped recovery in the last couple of sessions. It was above 40. Almost got to 39 which is not a prleobm. Probably pretty good to when we were down in the teens well be right back. 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. 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. Shutdowns caused by the coronavirus could exacerbate existing achievement gaps in education according to a recent report by mckinsey its not going to be a temporary shock but something that could translate into longterm harm for individuals and impact future salaries and Economic Growth for the entire country. Joining us is the coauthor of the report, jimmy sarakatsanis thank you for being here with us. Thank you for having me. I know you are a former middle School Teacher and youve been working to try to help people understand the companies and the schools understand better how to do online education, but i know youve also taken a step back to see what coronavirus has meant every parent worries about this. What does it mean for kids to be out of school in general yeah. I mean, look, we were all caught off guard in the spring and when schools closed there was a lot of work, a lot of teachers and other educators scrambling to figure out how to best educate children the reality is it wasnt as good as being in school and its likely that if that continues into the fall, which is where were headed, that were going to still continue to have disruptions, students are going to have less access to learning, particularly black and hispanic students and low income students, that theyre going to have, you know, tougher times learning remotely than they are in person and this is going to lead to not just learning loss overall but exacerbations of achievement gaps our estimate is if this disruption in schooling continues even until january, were looking at overall black students losing ten months of learning, hispanic students losing nine, white students losing six what can we do about that as a society . Yeah, i mean, right now, look, School Systems are scrambling to figure things out. Figuring out, number one, how to get all students access to devices. We have evidence that in the spring 90 of white students were able to log in to learning apps and 60 of black students number one is getting closing that access down number two, its likely that not all students are going to fit in schools based on many of the physical distancing requirements according to cdc and that the states are putting out so we need to figure out how to prioritize space and capacity for those students who need it most and then, third, we have to figure out ways to surge finding extra tutors to spend oneonone time with students who need it the most finding time over the summer, getting more students in summer school, making sure summer camps or any of those activities have more learning in them and then in the school year, you know, experimenting with extended days doing many accelerators during time and above all making sure our teachers are ready to teach in different ways and to target those students that are going to have increased learning gaps than theyve had before. Jimmy, this week we spoke with senator Lamar Alexander on the program and he said he would like to carve out additional funding to make sure schools are up to snuff and ready to go in this coronavirus age is extra funding from the federal government enough or is there more the states need to be doing and maybe more companies can do to help out, too . Yeah, look. This challenge is coming from all sides. Not only, you know, do some of those things that i just described cost money but also if budgets are down, thats also known in the past from past recessions, thats widely exacerbated achievement gaps as well we think there is a case for investment those learning losses that i described before we think could cost the country up to 100 billion in lost earnings over the lifetime of this current generation of students which could translate into about a 200 billion hit on gdp which is a 1 knock on u. S. Gdp. Theres absolutely a case for investment here. Its likely going to have to come from all sides. What would be an investment that would help bridge the gap what amount . We havent created an estimate, but there are many groups out there estimating in the hundreds of billions of dollars. We have not done an estimate ourselves. In terms of companies, is there a program you could look to, a place where some companies are stepping in . Is this about trying to make sure that the Digital Access is there or is it even more broad who that company should be looking for . Yeah. I think its time for us as a society to get creative and certainly for companies to participate in that. The Digital Divide is certainly one of the more concretes finding ways to make sure that every student has a device, not just a device they can share with their siblings but a device they can use throughout the day and high speed internet. But also we need in many places were going to need more space. So to the extent that companie or others can help free up space, thats another way to contribute then finally, you know, we need more adults, more humans interacting with students, especially to give those that are further behind oneonone Time Companies not just donating resources but their company and time to spend time with students, spend time with students and helping them run what is operationally a more complex school day the more our organizations, our companies can pitch in with their people in addition to their money, itll be a benefit. Jimmy, thank you very much for your time today. By the way, speaking of education, new Jersey Governor Phil Murphy will be joining us this morning to talk about the states plans to try to reopen schools in the garden state in the fall thats at 8 30 this morning. Well have much more coming up. Such a critical issue for our kids and our economy. Much more on the markets this friday morning. Take a look at the biggest losers in the s p so far this week let of course by travel stocks well talk more about that and well do it next. Later, dont miss our first on cnbc interview with ford, jim farleys coo the veinunilg of the new f150 truck. Squawk box returns right after this in peytonville, theres lots of ways to save on auto insurance. Really . Yeah. Very proud of that. With smartride® from nationwide, they can get discounts for safe driving. Does she get one . Mrs. Carmichael . Safest driver in peytonville. Takes a lot of work and effort to be the safest driver in peytonville. What about this guy . With nationwide smartmiles®, the less he drives, the less he pays. The list of Inspiring Stories goes on and on. I bet. Ive never seen anyone do more with their retirement. Than you. I. Concur. 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. Good morning futures volatile this morning. Had a nice rally in the last few hours, then they lost some steam. This as the dow and s p 500 are on pace now for their second negative week in the last three. Couple of important transportation stories this hour Major Airline unions calling for a second federal aviation bailout for tens of millions of dollars. Here on the ground, ford launching an all new f150 pickup into the truck wars. Company coo jim farley joining us phil murphy is going to join us to talk about the new travel advisory asking people from virus hot spots to quarantine when they arrive the final hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc im joe kernen along with becky quick and Andrew Ross Sorkin u. S. Equity futures have moved into the at least the dow, moved into the red, triple digit numbers. The nasdaq continues to be in the green. Up about two points. Has been relative its been noteworthy that its been relatively stronger than the dow in recent weeks. The s p now negative as well down 3 and change, now down 4. Becky. We will continue our focus on the markets. Thats where we start this hour. Specifically, how it remains top heavy in terms of what investors are looking at cnbc senior markets commentator mike santoli joins us with more. Top heavy, some people might consider that an insult. What do you mean, mike reporter top heavy, the s p 500 and index is still to an unusual degree dominated by very large stocks s p year to date against the equal weighted version of the s p. These are the same stocks just the lower one here is equal weighted this is market cap weighted. Its an answer to the question, becky, that everyone is asking, how can the market be so close to the highs or down 5 year to date the market, so to speak, is here june has been a month of choppy pull back consolidation in this market, whereas, the regular s p has more or less gone sideways thats because of the dominance of the very largest stocks so we actually have had some recognition of the economic difficulties, especially the reopening issues, if you look at the average stock. To illustrate this more closely, microsoftjpmorgan. Two best in class companies. One is up almost 30 this year, one is down almost 30 this year the market cap gains in microsoft are double the market cap losses in jpmorgan for every percent that microsoft goes up, jpmorgan has to go down 5 to offset that. This is whats going on stock by stock, sector by sector. The overall s p 500 helps explain how this very concentrated market is able to hold together anchored by a strong Corporate Credit market and everything going on by the fed as stocks like banks and other cyclical stocks suffer and struggle through this environment, guys. Hey, mike, just in terms of what this is reminiscent of, when markets get top heavy like this, what does that lead to traditionally . You can look back the last time you had a real bout of this was the late 90s not the end of the internet bubble but as you got into the late 90s, this was the case if you want to look at the top ten or top five, whether they dominated the s p the way ours do, you go back to the 70s and 80s and there were periods like this in the 70s and nifty 50 era. Giving way to a Broader Market that happened in 2016. You did have a broadening of the market and a value trade theres no particular script it follows. The way to think about it is the large stocks for now are insulating the index against more pain than they would otherwise be feeling the question is can they really bridge us over to that point where Everything Else benefits from a recovery. Thanks, mike. Well see you. Meantime, we are now joined by a very special market guest who warrant of the systemic market risk. Joining us is kassim taleb the author of black swan. Its great to see you this morning and great to just check in and understand whats going through your mind and how youre looking at both the economy and the markets right now. Hi. Thanks for inviting me what is how are you looking at this given where we are given how much stocks have run and then recently, of course, what looks like a little bit of more spread and potentially even more than that and how the markets are reacting to it . Im not you know, im i dont follow noise in the markets that we are witnessing now as noise lets look at the fundamental issues that were facing bonds practically have no up sides structurally because you may have some negative Interest Rates for frictional reason but you can be it cannot have really negative Interest Rates fixed income instruments have pretty much run their course so you no longer are able to hedge using fixed income instruments. They ran their course. Your bonds went to whatever the maximum value they can have. And, of course, federal policy by putting Interest Rates at zero, they also lost a weapon they have. So an investor no longer has a traditional hedge of having a big stock portfolio of using bonds. So whats left is only one thing, you know, make sure that you dont you know, the thing we do for a living is make sure were not blowing up and you keep your stocks for the up side and protect your down side but how do you protect your down side in this market then . I mean, if you dont have a tail hedge, i suggest not being in the market. Thats the idea. And if you have a tail hedge, then of course youre going to have the opportunity we really what were facing is a huge amount of uncertainty for many reasons theyve been printing money like theres no tomorrow. Theyre going to print more money. They have no other possible policy other than just print money and distribute it to people they cannot lower Interest Rates. As weve said, theyve lost that Monetary Policy tool and the covid seems to be thinner. I mean, even if the pandemic the rate of contagion, that dies out, you will still have people cautious enough in their behavior that the pandemic will be there and affecting a lot of industries so given that, you may expect some kind of inflation i dont know we may be now in a deflationary phase, we dont know but the notion that you may have mild inflation is lunacy because there is no such thing as light inflation. Either you have big inflation or you have a very large deflation. So typically mild inflation is a trans is a tori state that doesnt seem to exist outside conversations. So you need to in a very inflationary stage, stocks pick up you cannot lose your stocks. Hedges cash burns very quickly. Deflationary stage also, you know, you may have a problem so you need to balance all these things out by having the most possibly conservative portfolio today. Im not just talking about individual institutions today you need to be vastly more careful about what portfolio you have and make sure your down side risk is protected naseem, can i just if youre looking at a market where we would be potentially dealing with extreme inflation, it seems like you would have to be in the market because if youre keeping money in cash thats going to be worthless and less every moment. If youre looking at a situation where we have zero rate increases, then you cant keep money in the bank because youre going to get nothing for that either its really complex and its confusing, but if we are looking at potential hyper inflation, youve got to be invested in something because you cant keep cash. Exactly you have hyper inflation or mild inflation or youre going to have continuous deflation. You need to be hedging for these two states, which makes things very delicate. The first thing i would say is bonds will hedge you against nothing from here on nothing. Naseem, you were very smart early on to call for masking, masking across the board to the extent that youre focused on the covid numbers and thinking about second waves or second order events, how do you see it right now okay. The first thing is its quite offensive to see that people are politicizing Something Like transmission of a disease like if you belong to a certain political viewpoint, then masks are bad and for the other one masks should be mandatory. I believe without masks we cant pull out of this because it is effectively transmitted in a certain way that require masks people fail to understand the payoff of masks. Masks are a free option. I think that we can really reduce the rate of transmission via masks. There are lots of papers and evidence around. We analyzed it i said masks are very complex. They block just half the virus load they may reduce the infection up to 90, 95 . I have a mask, you have a mask jointly we definitely bring the rate down. Theres also the ethics of it. If im not wearing a mask to protect myself, i am wearing a mask to protect society from a pandemic, first order to protect you if i run into you but also to protect society because every person we infect if you dont have a mask it infects many more its much more than one. You have to wear a mask and i think that had they realized early on that would have saved us a lot of money, a lot of trouble, a lot of money would not have been printed had they understood the role of masks look at asia, taiwan, places that were very, very, very nassim, love talking to you love your perspective. Love to continue this conversation we appreciate it have a great weekend talk to you very soon. Great thanks a lot have a good day. Thank you you bet. Coming up, a fork in the road for ford. They should take it. The automaker completely revamped one of its cash cows. The f150 pickup truck but its also facing increased competition in the red hot pickup market. Anyway, more in a first on cnbc interview with fords chief operating officer, jim farley when squawk box returns. 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. Ford launching a new entry into the pickup wars phil lebeau is here. Good morning. Reporter good morning, becky. Lets bring in jim farley. Coo of the Ford Motor Company. Jim, everybody has been waiting for this, the first redesign of the f150 how critical is it for this truck, which has so many functional and useful features that youve added, how critical is it for it to corrennect to buyers very critical, phil its important for the u. S. Economy. No one builds more trucks in america than ford. We build all of ours here. Its its almost 1 million units. Its the u. S. Most favorite automotive product and number one for more than 40 years huge for ford. Reporter so when you look at this and you look at pickup prices, full size pickup prices, averaging around 40,000 at the same time is there going to be resistance how much more are people willing to pay for an f150 they start down closer to 30,000 if you are getting base model. If you are getting these loaded up youre going well north of 50,000, right . Yeah, absolutely. You know, what we found, phil, is many of our trucks are used for work partially or fully, and its a work tool in that case. People are happy to pay if the product is more productive now we have an on board generator, for example those generators cost 10,000 or more you dont need one anymore with an f150. You can power the whole job site its an optional package its a small portion of what an online generator would cost. We see this as content like we have with aluminum f150 with more pay load and towing this is a content people want and theyre more than willing to pay for it. Jim, lets talk about inventory. Adam out quoting a ford dealer anonymously in the northeast saying, look, i am not going to have enough inventory in order to stay open next weekend. Im going to shut down on the 4th of july weekend, which as you know is one of the top two or three sales weekends in the u. S. How tough is it with inventory and why are you guys, according to this dealer, struggling to come up with enough of the key models like pickup trucks . Well, actually, our production is up to essentially full capacity now, phil. This week was a really key breakthrough week for us in capacity and our production. Were in good shape across the country. Were about 75 day supply. Its a little bit light but compared to some of the competitors, theyre out were not. Helping our dealers move product from one dealership to the next and making sure we have inventory. Were open to business and were in good shape for inventory. It is different dealer by dealer so well call around well get that inventory hey, jim. You guys give us the q2 sales next week. There has been a rebound especially coming off the shutdown in april for the economy in most parts of the country. Do you expect that to continue in july and august or how concerned are you that as we see these cases flareup, especially in the south and southwest, we might see a pull back in demand. Its too early to tell, phil. I mean, the Retail Industry has come back, as you said its still lower than precovid levels were planning our business at that kind of lower level but for us whats really encouraging we saw in june and we expect it to continue is recovery of fleet. Not rental, but large fleet deliveries government large oil and gas. Companies like uhaul, were starting to see that demand come back ford is number one in that market very important to our profitability. June really saw that business come from like 30 of normal to more like 45 or 50 of normal. Thats an encouraging sign for us retail, too hard to call hey, jim. Weve only got a few seconds here are we on track to see that electric f150 within two years you betcha and it is a spectacular product. A lot of attention on battery electronics. Ours is built ford tough not anyone else can say that. Theres a tease for you jim farley, coo of the Ford Motor Company talking with us first on cnbc. Thank you, jim i know well be talking with you more as you work towards that electric f150. This will be interesting because it is really heating up in terms of the competition okay. Phil, thank you so very much is there a vacuum cleaner . Do we know oh, god lord. Youve got a generator you can bring one of those little vacuums if you are worrying about vacuuming a truck when youre tailgating, something is wrong something is seriously wrong. These are the questions that happen in the sorkin family. Were having a conversation about a mini van in our family thats a different equation have a good weekend. You, too. I know, i know. The kids would like the pickup better than a mini van. Coming up when we return, verizon becoming the latest company to pull its ads from facebook well tell you why the Telecom Giant is pulling away. New Jersey Governor Phil Murphy talking about the reopening in the garden state and what school can look like for your kids next year and new guidelines for travelers to selfquarantine Massmutual Healthbridge is a free Life Insurance program just for healthcare workers fighting covid19. Learn more at massmutual. Com healthbridge calling on the social media giant to take steps to pull down racism and hate speech verizon saying, quote, we have strict content policies in place and have zero tolerance when they are breached. We are waiting until facebook has a solution that makes us comfortable as is consistent with youtube and others. Rei, ben jerrys and patagonia have the Antidefamation League and naacps blessing to stop advertising during the month of july verizon is pausing its spending indefinitely now facebooks advertising and verizon is also the biggest advertiser of the protesting brands spending about 2 million between facebook and instagram in the last month. Facebooks advertising chief saying in a statement, quote, we respect any brands decision and remain focused on the important work of removing hate speech and providing critical voting information. Now in an email everson sent last week, she wrote, quote, boycotting in general is not the way for us to make progress together, we do not make policy changes tied to revenue pressure we set our policies based on principles rather than business interests. Now everson stressing in this email to advertisers, facebooks making a lot of progress on these issues getting rid of 89 of posts that violate the rules. Facebook is really trying to show advertisers that it takes their concerns seriously but also that it doesnt want to just fold to pressure. Becky . Julia, they can say that all they want, but if you see other big Companies Like verizon that step into it, do you think that behind the scenes this is having an impact at facebook . Reporter well, its certainly having an impact in the way that facebook is reaching out to advertisers. Its not just this email that i obtained i know that everson, sharyl sandburg have been calling many people across the industry, brands, agencies telling them they take these concerns seriously. I think part of it is showing how much they feel theyve already accomplished in terms of how much hate speech theyre pulling down i think its possible we will hear more from facebook, either about how theyre trying t improve diversity internally, which theyve been talking about, or how theyre going to be more transparent about what it is theyre taking down. This is definitely something theyre watching it will be interesting to see if anymore really big advertisers join in this boycott in the next couple of days thats scheduled to start on the 1st. Julia, thank you. Good to see you. When we come back, new Jersey Governor Phil Murphy joins us live on the garden states reopening process and that new travel advisory for people arriving from virus hot spots in new jersey, new york, and connecticut. Stay tuned ghhe ocn tching squawk box rit ren bc n 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. Im an associate here at amazon. Step onto the blue line, sir. This device is giving us an Accurate Temperature check. Youre good to go. I have to take care of my coworkers. Thats how i am. I have a son, and he said, one day im gonna be like you, im gonna help people. Youre good to go, maam. I hope so. This is my passion. If i can take of everyone who is sick out there, i would do it in a heartbeat. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. Welcome back about half a minute away from personal income and spending data for the month of may and a new look at core pce prices. The futures are about where they were nasdaq just barely hanging on to a fractional gain while the dow is down triple digits. Down 143 points. S p off 6. 10year note santelli, oh, devilish 666. Rick santelli. Rick, the numbers please reporter yes our may read on personal income and spending we know the spending accounts for 2 3 of the economy consumption driven economy and what were waiting for, of course, is ah, here we go minus 4. 2 on personal income minus 4. 2. If there is any good news here, i guess the good news would be that minus 4. 7 is the alltime low going back to 1946 we didnt quite challenge that the worst feature is were having the backtoback issue. The 10. 5 for this time still unrevised. Last time was all time high. We go from all time high to all time low on spending, in any states that are partially reopened like parts are where i live, its like stores cant keep inventory. 9. 3 expected, 8. 2. Bit of a disappointment but its still of a whopper of a number on spending. 8. 2. The alltime high going back to 1959 is only up 2. 8. We just kind of blew that record away once again, it is following a 12. 6 that is the worst ever. So the same dynamic in reverse with income. On the yearoveryear issues we really want to Pay Attention to on the deflator, it is up half of 1 . The reason i find that important is because were trying to all handicap what the world of inflation, deflation is going to look like as we get through coronavirus. Yields, yes, 66 basis points whats interesting is that most maturities outside of 30 year bonds. Theres settlement yesterday and friday were the same we are down on the week and down on the day on all maturities maybe the most depressing news that i think the fixed income sovereign market is sending everybody is that with yields so low, so close to alltime low closing yields it isnt instilling confidence. You can say what you like about rising rates, but rising rates in the current environment were in, even acknowledging that the fed could squash any rise in rates it wants at any point, im not sure thats their desire, but that would give us a little bit more confidence. Of course, that needs to be paired with an equity market that seems to get its sea legs back well have to Pay Attention if it could turn into green today becky, back to you rick, thank you very much go ahead, joe trying to say the stock market, it would be better if yields were higher okay thats all, beck is that right, rick . Have i got that was in summary for a friday i heard you say desire yes yes. You didnt say hier yes, you have it right. To get our moods higher. To get the economy higher we want stocks and Interest Rates higher now hes on a roll. Everybody get back together and play a little baseball in the future, huh . 60 games maybe, cubbies. See ya. Beck thanks, joe we are now going to get an ontheground look as the economic recovery is progressing as States Embrace phased reopenings we welcome Governor Phil Murphy from new jersey. Hes been watching his state open up after four long months thanks for being there im still recovering from joes mariah carey impersonation so please bear with me were a little goofy this morning. Its friday. Its been a long four months for all of us. We have been talking today how when you get out there you really start to see people back out in restaurants again, going out shopping, out at beaches and at parks and i just wonder, as you watch this if you worry that were going to see a rise in cases and what numbers youre watching, how youre measuring this to decide if were doing this the right way. Yeah. First of all, seriously, its good to be back with you, and we do worry, which is why weve been taking this in very specific phases in terms of reopening. Outdoors is a lot less concerning than indoors. Thats not to say there arent concerns outside, but the concerns pale in comparison to say, inside, lacking ventilat n ventilation, sedentary, close proximity. Those are bad characteristics for this virus the things we look at most closely in terms ofour guides are rate of transmission if its under 1, that means less than one other person is getting infected if theyre in contact with someone who has got the virus, the spot Positivity Rate, meaning what percentage of folks getting tested are actually positive for covid19 and, thirdly, is new hospitalizations those are the three data points. We look at a lot of data but those are the three that matter the most we have seen things get a little out of control in states like texas, florida, arizona, even california youre starting to see some real pickups in these things earlier this morning we spoke with dr. Scott gottleib. I know youre familiar with scott and you know him well. He said that Contact Tracing is not being done very effectively in a state like texas. They dont know why young people there are getting it or where theyre getting it, if its from bars, if its from being outside, if its from anything theyve done at parties and a lot of places. Its a lot of guesswork. How prepared are you in new jersey in terms of Contact Tracing to try to figure out if theres a spike in cases, where its coming from and why yeah, i cant speak to the specifics of texas scott is a great guy and has been a great advisor, a jersey guy, by the way. We have said since day one, remember, none of us said any of this at the beginning. If youre looking for a source of comfort or silver lining, its testing, tracing, plans to isolate folks who have the virus. We had none of that as a country or as a state three or four months ago we now test in the top couple per capita states in the nation with the great help of rutgers, our flagship State University were adding meaningfully to the already 900 contact tracers we have we hope to get up over 2,000 within the next couple of weeks. I hope and believe that our approach will be effective again, our numbers have gotten notwithstanding the loss of over 13,000 people, its hard to believe weve lost that many in new jersey alone, our numbers have gotten dramatically better. So weve been able to do the Contact Tracing up until now at least with local and county tracers. We have 900 of them on the field. So far so good, but we want to make sure weve got a capacity that looks like our Testing Capacity just in case, and i think we all have to be prepared for this we hope for the best but prepare for the worst that this is going to flareup and we need that tracing infrastructure in place. Anecdotally, again, its far more concerning inside than outside, at least in new jersey. I cant speak for texas. Thats where our biggest concerns are governor, you have a press conference later today to talk about the schools and a plan for getting the schools ready for fall do you think the schools will open in september . I do. I do, becky. We want them to, and i do believe they will. Again, you cant you know, were a couple of months out so imagine predicting in late april what late june will look like in america. Probably none of us would have gotten it right, good or bad so with that big caveat, two months out i believe we will be back in school it will be a new normal. There will be protocols in place that have not been in place before, but as good a job as our state did under really challenging circumstances in terms of virtual learning, theres an enormous desire and appetite from educators, parents, kids to get back to school, and god willing, thats what we will do. How do you do that and properly social distance is the school day going to look the same will the kids be there together . Or are you looking for other places to try to house students . How are you proceeding well get into that in a fair amount of detail this afternoon, but it will be a combination of some of those very things. There will be obviously a big emphasis on social distancing. The hardest nut to crack, weve seen this in longterm care, weve seen it in society generally, is the asymptomatic, healthy young person unwhitingly passing the virus to someone whos in an older generation and or someone with other Underlying Health issues and thats the one that weve got to be most cautious about again, well get into that later on today how does that play out just in terms of sports because for high school sports, a lot of those practices start next month and well into auk watching how weve seen some of the concerns that have cropped up with College Football thats already back practicing and some of the Coronavirus Spread there, do you have a plan for that . Well, we started noncontact sports this past monday in termgs terms of practices. We are going to go live with games and there will be a great basketball tournament called the last dance which will mimic what would have been a High School Tournament in the state. Weve got to do it carefully though all of this is you know, weve got to take incremental steps. This is a virus that no one knows anything about, even the experts like scott and others. Were learning as we go, and weve got to again, the benefit of being incremental is you can learn more easily from a given step that youve taken and sports will be no different from that governor, watching whats happening with the travel advisory, that you along with the governors of new york and connecticut are putting in place now for anyone who visits or comes from a state with high transmission, theyve got to quarantine for 14 days when they come back to one of these three states is that pay back for what florida was doing before, for what rhode island was doing before how do you actually enforce this President Trump says when he comes to new jersey to his golf club it doesnt apply to him because hes not a civilian. How will you be out there enforcing this we had a little bit of a different take than the president , but there is a carve out for any essential workers and he is an essential worker. The president is welcome, obviously, in new jersey no, this is not pay back at all. By the way, we wish nothing but we pray for florida we pray for any of the other states that are having outbooks that they please, god, are able to get to a better place as fast as possible. It is very simple. We have gone through hell. As i said, new jersey has lost 13,000 folks, new york more. Connecticut a huge number. None of us want to go back through that hell again if we can possibly avoid it. What were asking is for folks to do the right thing. Personal responsibility. If you know youve been in a state with a high Positivity Rate or a high number of new cases, do the right thing. Come back. Selfquarantine and get tested you know, in new jersey, as i mentioned, we have built a testing asperatus unlike any american state lets use it if folks have been in a highly infected part of the country, lets get them to get out and get tested be by themselves let this period run through and, again, do the right thing and be responsible. We call it common sense for the common good, not just for yourself or your family but for the community at large governor, i just wanted to ask you about the voluntary approach to all of this and the idea of common sense and, frankly, i think if were being honest with each other, theres been a lot of common sense that has not been used throughout this pandemic around the country and thats one of the reasons were in this mess and situation were in the reason i ask it or the reason i raise this question is to the extent there are going to be people coming in from states that are high risk, in other countries, and we can talk about liberties and freedoms, but in other countries if you were going to have people flying in from florida rather than do a 14 day quarantine, you would test them on the spot when they landed at newark you would test them and then you would trace them and it doesnt seem like theres any actual procedure or mechanism to do that it doesnt even seem to be a tracing americanism for people flying into these places people can drive in from other places i know, but why arent we being more stringent about this . Listen, we dont have the constitutional ability to put roadblocks up on our borders as you rightfully point out i would just say this. Common sense and personal responsibility have actually overwhelmingly been the words that have defined how new jersey, and i know new jersey the best bein, obviously, has performed over the past three months weve asked folks to stay home theyve stayed home. Weve asked them to keep social distances, they did. We asked them to wear face coverings when they go out, they wear them, particularly when theyre indoors. Wash your hands with soap and water. This is yet another ask of ours. And, again, its a lot of responsibility we get that. Folks have overwhelmingly done the right things and i believe they will continue to. Its not a hard one, right you know that if youve been in the state with a high level of infection, you know youve got to say, okay, i get it im going back in, too i dont want this to get into my family or my community im going to do the right thing. Folks have done that i have we put a lot of faith in our folks so far it has paid off have there been knuckle heads . Folks who didnt comply . Of course. Overwhelmingly folks have complied we wouldnt have the numbers today which is among the lowest rates of transmission, among the lowest new hospital rates in america if folks hadnt done the right thing, and i believe theyll continue to. Governor murphy, thank you for being with us this morning obviously were watching this state and every state very closely as this proceeds, but we appreciate your time today and well talk to him soon again, that was governor murphy from new jersey. Andrew thanks, becky. Coming up, is the aviation sector about to get another federal injection of cash . That is the question coronavirus still weighing heavily. Unions representing tens of thousands of workers are calling for billions in new aid. Well bring in the details on that next. As we head to a break, check out shares of nike dow component missing estimates badly on both the top and bottom lines for its latest quarter with sales hurt by the lockdown related store closures stay tuned, youre watching squawk box right here on cnbc. In peytonville, theres lots of ways to save on auto insurance. Really . Yeah. Very proud of that. With smartride® from nationwide, they can get discounts for safe driving. Does she get one . Mrs. Carmichael . Safest driver in peytonville. Takes a lot of work and effort to be the safest driver in peytonville. What about this guy . With nationwide smartmiles®, the less he drives, the less he pays. The list of Inspiring Stories goes on and on. I bet. Ive never seen anyone do more with their retirement. Than you. I. Concur. Welcome back to squawk box. Red across the board nasdaq has turned negative down two points this will be a down week if we were to end this way the second the last three weeks have been down weeks the dow is indicated down 165 points and the s p indicated down about 9. Toss it over to my knucklehead friend you notice when im noticing, andrew, knucklehead is making a comeback its oldfashioned. It is oldfashioned. Cable ready i was talking to the producer about all of the words that are not cable ready that it replaces have you thought about it. Im going to start using it. Its gentle. Knucklehead. For people on the air, if youre groping for something and you dont want to have an hr problem, what is a knucklehead im trying to figure that out. This is i want to hear lets start using that if we are ever mad at each other, im going to say, knucklehead. Knucklehead knucklehead. Ill use it well use it a lot we may need more than one, but i like it. And i like the governor. Lets lets talk about retail for a moment because gap shares are jumping on news that the retailer is teaming up with, ready for this, guys, kanye west in a multiyear partnership. He will create an easy line of clothing aimed at young shoppers they will receive royalties and equity they say the brand is valued at 2. 9 billion and, guys, this could be a big bet for the gap, you know its arguably had a fallo period and maybe kanye will bring it back wow you know, kanye, the kardashians, this is like when cody was up 16 on news that on, was going to be getting involved with it, too 16 is the basic improvement in market cap if you get involved with the kardashians or with kan kanye . I mean well, look, you could argue, by the way, what he did for adidas even. I mean, if you think about where adidas was probably a decade ago now before yezees and the ascension of that brand, could happen to the gap. Well see. Could use it, yeah. Yeah, it would be something to watch also, guys, some worrying news for the housing sector the number of borrowers delaying their monthly mortgage payments because of the coronavirus rising sharply data and Technology Firm black knight says that active forbearance plans shot up by 79,000 in the last week, that erases roughly half of the improvement that we have seen in those numbers since they peaked late last month. As of tuesday about 4. 7 million homeowners were in forbearance plans or about 8. 8 of all active mortgages that represents 1 trillion in unpaid principal mean time, there are new calls for billions of dollars in aid from unions representing tens of thousands aviation workers. Phil lebeau is back with us and joins us with the details on that phil. En a drew, this is a letter that has been sent by the representatives who lead six airline and aviation unions, we are talking about the pilots, the flight attendants, the ramp workers, so many of these Union Workers who have had their jobs guaranteed through september 30th will not have those job guarantees come october 1st. As a result they have written members of congress and they have said, look, with he would like you to extend that payroll guarantee through march 31st now, the amount they are seeking is not clear in the letter, but they seriously believe that they have a shot at getting washington to provide another airline bailout. Im not sure thats going to happen when the first one came around everybody said, well, this will tide the Airline Industry over until we see demand in travel come back and many people early on thought it was going to snap back this summer take a look at the latest passenger levels, we just got this from the tsa, the most recent level is 326,000, thats down compared from where the airline friday was the index had a little bit of a come back three weeks, four weeks ago. It has basically flat lined there at the level you are looking at they have increased their debt borrowing, the airlines have they have now borrowed more than 40 billion in order to get the airlines through the next couple of years and part of their equation right now is if traffic doesnt come back, they are going to have to cut payrolls substantially. Come october 1st thats why you have the unions, guys, going to capitol hill saying lets have another round of payroll benefits extended to the airlines which would likely be for billions of dollars as i said earlier there is not going to be a whole lot of appetite in washington despite the importance of the Airline Industry a lot of people look at it and say we gave it to you once, im not sure we want to go back to the well and do it again. Phil, what about the appetite just from the Airline Executives themselves, are they on board with this or is really this coming from the union saying this is coming from the unions this is coming from the unions. And what have the executives said about it . Officially they will sit there and say it would be won r wonderful this congress would help us, unofficially Airline Executives said, look, it was a Herculean Task to get washington to give us a bailout back in march and in april im not sure they will be on board again. How much Political Capital do you want to spend trying to get that to happen they dont want to lay off people but at the same time they realize the landscape that is out there politically. Yeah, and not to mention that every time the bailout money comes it comes with a lot of strings attached. Yep. I think the executives are not fond of. Exactly. Okay. Phil, thank you. We will continue to watch. You bet up next, we will tell you what to keep an eye on ahead of the opening bell on wall street. Weve been watching the futures this morning and for most of the morning the dow has been under pressure, all morning, its down by 180 points, s p futures down by 10. 5, the nasdaq is indicated down by about 10 points as well. It is friday stay tuned, you are swachg squawk box on cnbc 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 half hour from the opening bell on wall street joining us now is paul zem ski, cio at voi i cant Investment Management you have about three minutes, a little bit less, paul. So you favor stocks over bonds, we just had someone say bonds got nowhere to go and it shouldnt be hard to figure that out when we are range bound almost down at zero. So stocks look good, but what about the move that they have already made you dont think a huge pull back is in the cards, you think 2,900 would be healthy or normal. Absolutely. I would be a buyer at 2900 the market is getting a little spooked by whats happening with covid, thats the rise in cases, i think thats perfectly natural. I believe that were not going to see wholesale shutdowns of economies anymore, there will be regional hot spots and thats giving the market a little spook. We could easily trade off to 2900, i think we will see buyers here, i think a lot of people missed this, it was a rocket ship up from the lows and he think a lot of people would like to get back in you might buy some high yield or Investment Grade Corporate Bonds or maybe some cyclical stocks, that might be part of an asset mix . Absolutely. Id be buying Corporate Bonds here i dont think you need to wait to buy Corporate Bonds there, youre still getting 2. 5 yield on a ten year triple b, inflation will be zero to one so youre getting a nice real yield and the fed is on your side. The fed is doing everything they can to keep the Corporate Bond market stable. Fed has your back and thats also going to help high yield as yields come down in the Investment Grade market, people will buy high yield bonds and that will be supported as well. For risks you mentioned that covid could be more serious than what youre expecting, you also mentioned the election yeah. What do you think how does that play out, do you think . Well, you know, in the polls you see biden doing better if he was to win and there is a good chance the democrats take the senate i do think we will see reversal of tax policy, less favorable for corporations, Profit Margins will be hit so that is starting to be priced in by the market but its really not fully priced and probably wont be until after labor day its really going to go bidens way. Thats a risk, but i dont think its front and center right now. Do you think in some of the parts of the world that had the virus earlier youre seeing what may happen here and its positive to you whats happening in europe at this point . Yeah, so europe, you know, we were very worried about europe, given their they were late to the policy table, the ecb was late to ease, late to bring fiscal stimulus. You look at the purchasing manager indices that came out earlier this week and europe is in a v, too. Europe is bouncing back, great to see i still think the u. S. Markets will do better than the european markets but they caught up this month. Europe is up while the s p is flat. Paul, thanks, we will appreciate it. Becky and andrew, happy friday great weekend. We will do it again. Happy friday, guys. We will do it again. Fourday weekend i mean fourday week next week. What malarkey will we talk about next week . Trying to use an old word. I wish we knew Going Forward. Squawk on the street is next Going Forward. Good friday morning, welcome to squawk on the street, im Carl Quintanilla with mike an tolly, Morgan Brennan coming to you live from various locations. Futures south of the flat line once again as the market digests Bank Stress Tests, another record high in u. S. Covid cases, that earnings miss at nike and we will get a russell rebound into the close oil is hanging on to 38