Transcripts For CNBC Squawk On The Street 20240712

Lebeau a moment ago on the airlines and he is back with breaking news regarding american. Take a look at shares of american, the airline is announcing starting on july 1st, starting next wednesday, it will fill its planes completely remember until now it has capped its load factor or the percentage of seats that it would fill on a plane, it would cap it at 70 . Thats going to end as of next wednesday, also adding about 1,000 flights to its schedule in july so this is american saying weve got more people flying, weve got more demand and its time for us to fill these planes all the way. They stress people are still going to be required to wear masks, they will still be pushing the fact that theyre sanitizing planes in between every flight, but the time has come for them to sell every seat, fill every seat and no longer guarantee its capped at a 70 load factor. Guys, this is a day with a lot of airline news between this, the unions asking for another bayout and the airline ceos meeting with the Vice President at the white house a little later on today phil, how does it contrast with what delta said yesterday and their guidance about adding flights at yearend, really adding no more than they will have this august well, its unclear if american will continue adding flights in september, october, or november. It may be that, look, we are going up to 4,000 flights in july and maybe we cap it after that nobody expects us to see strong travel demand or what i mean a growth in travel demand in september and october, unless we see Corporate Travel come back if that doesnt come back then youre going to see incremental growth and i think we have the latest passenger numbers in a chart here, its up to 623,000 yesterday. Thats a nice improvement from 87,000 at the low in april, but nowhere close to where we were a year ago still down 77 so what youre seeing right now are the airlines saying weve got to make as much hay as possible in july and august because come september unless things change with coronavirus as well as Corporate Travel demand, were going to have to see things plateau if not pull back slightly. Phil we will be watching that closely. As phil said meeting with the Vice President later on today. Morgan, go ahead no, i was just going to say, phil, when i hear that this cap is being lifted, i mean, it certainly sounds like any kind of semblance of social distancing on planes, blocking of the middle seat, et cetera, is going out the window here the fact that its coming before this meeting at the white house today where i know there is this back and forth around temperature checks and some of the other, i guess, safeguards and who will be responsible for them as well, the fact that they are lifting this cap, i mean, it sounds like american is confident that travelers arent going to mind not being socially distanced and not having some of these other potential safeguards that havent been hashed out yet. Is that the case morgan, i have talked with people who have flown on american in the last week and they have said, look, the guy next to me the seat wasnt empty, there was a guy next to me but he was wearing his mask we werent interacting, werent shaking hands. At some point all airlines will have to approach this question you are not making money if you are flying with the middle seat guaranteed empty i know southwest and delta have said we are going to do that in order to make sure our customers are comfortable. But when you look at united, when you look at american and there will be other airlines, they have made this decision that we are in the business to stay in business and to make money on these flights and if we can sell every seat as long as people are wearing their masks were doing the disinfecting and were promoting as much safety as possible, were going to do tha that phil, that comes on the heels of some reports earlier in the week that southwest has launched a bit of a price war, i think 39. Yeah. From houston to well, houston ft. Lauderdale 99 there will be bargains and a fierce battle for passengers. Thats coming later this summer into the fall phil, we will talk to you in a little while thanks, phil lebeau, with a slue of airline news all week mike, it brings up this downgrade of boeing at bernstein, market perform, second downgrade in a couple days and their general attitude is travel will remain contingent on medical progress and in their words wed rather be conservative here. Yeah, i think it just reflects the general rethink thats been going on for three weeks now, lets say, in terms of pace of reopening, what we can reasonably expect out of consumers willingness to get out and around the Airline Sector as a proxy is down 25 from the highs of early june, yes, up 50 from the lows in march so i think this has been really whats been working its way through the entire market right now, which is just exactly what did we price in with that furious run to the highs in june, especially in the reopening plays and of course boeing being on kind of the far end of this logic chain in terms of what does it mean for near term travel, what does it mean for the Balance Sheets of airlines, what does it mean for longer term demand for aerospace. So i do think that, you know, it pretty much is where weve been for a few weeks. Yeah, i love when my funny faces get caught on camera in odd moments. This is something ive been watching very closely as well, the fact you do have the second boeing downgrade in 24 hours also the 737 max has been back in focus, weve had a number of analyst notes out about that in the last 24 hours as well because there is this expectation at least based on some reports out there that you could as soon as next week see that aircraft thats been grounded for, gosh, how many months now that you could actually start to see those recertification flights happen at least here in the u. S. Next week what thats going to mean not only for boeing and for the airlines if you actually see that come back on line in the next couple of months, but also what its going to mean for a company like spirit aero systems which is the biggest supplier to that particular aircraft you saw spirit pop yesterday, it was up more than 4 , in part because there was news of a deal, a collaboration with virgin hyper loop. Speaking of alternate types of transportation but 68 is what its down year to date, its down 15 over the past five days and thats because it has asked its lenders for Financial Relief earlier in the week after boeing has once again halved its product orders from that name you have seen a lot of pain in the supply chain as well i also would note this downgrade today on boeing one of the things they mentioned was compressed margins in the defense business and defense has been selling off, too, in part because of one of those Broader Market risks that weve been talking about which is the election who wins the president city, what that means in terms of the makeup of Congress Come november and thus Defense Budgets. Actually, morgan, given whats happened to the commercial side of boeing, you had a lot of analysts say that the defense business was actually a larger portion of the overall value that the market is assigning to boeing as a whole right now. It becomes more of a spring factor there, i do believe there was something maybe introduced in the senate about an across the board Defense Budget cut not going to happen very soon, but, yes, that is kind of the unfriendly headline flow with regard to the Defense Industry mike, when you put this week into some perspective, you think whats been handed to the market, disneylands opening delayed, apple is reclosing stores, obviously the record highs on covid including texas and arizona. No real medical news per se in terms of breakthroughs microsoft is on the tape now, they are going to start closing some stores again and yet we havent violated the 200 day what does that say it basically says the market went into the kind of high liquidity low growth mode of leaning on the big Growth Stocks again to some degree also i do think the market is a little bit less sensitive with regard even to the reopenings and the rising infection rates because its waiting to see whether it gets fraction in the consumer data. Its starting to you are starting to see some restaurant reservation numbers and mobility data in certain cities roll over off the recovery highs i think thats one of the reasons that the market has been able to hang in there if you just look at where Corporate Credit is setting the floor on valuations for equities, that gets you some part of the way toward faanglike stocks working in the absence of whether the tanks can take off again or the travel sector or the retails its become more of a split market again you can cast it as this favorable rotationtype activity, selfpreservation of the markets. How many price target increases are you going to get on amazon and we got more today. And the other trillion dollar giants and how often are they going to work . Thats kind of that says a lot about where the s p goes from here. Yeah, and of course the outperformance in the nasdaq which is poised at least now to end the week lower even as, based on the action were seeing in the futures market right now, the s p and the dow are poised to finish this week this last full week of june, lower you know, mike, to that point, it seems like there is just a lot of conflicting headlines for investors to digest here, especially today you have the virus spread in the sun belt states here in the u. S. , you have the Capital Allocation restrictions from the fed on the biggest u. S. Banks and then of course you have this rebalancing by Pension Funds with this russell reconstitution that is expected to bring a surge of volume today. We are going into the weekend given the fact there is uncertain uncertainty around coronavirus this idea that the past month has been consolidation for the s p and yesterday and it looks like potentially today, too, its a pause within a pause. Yeah. Thats the way it seemed, right . The market has gone sideways here and, yes, everyone is expecting this riyal case flow out of equities on a shortterm basis maybe a lot of that has already gotten done, morgan. If you look at the average stock in the market is down 12 or something since the june 8th high sothere has been a little bit of that digestion under the hood, a little bit of stocks coming off the boil, youve skimmed a little bit of the shortterm froth off of sentiment as well, but maybe not all of it. So i think thats allowed the market to kind of get its legs back under it, but very low conviction, very low liquidity, it just seems as if the markets gets a little whippy and not really sure what its responding to in realtime you saw multiple mornings where you get a selloff midmorning because there was some news on texas or florida infections and then it immediately gets unwound. Its a little bit touchy, but overall if you backed up you say, well, the markets acted like it has in these early bull phases in the past, it won the bulls the benefit of the doubt for a little while the interim, though, becomes a little dicey as it tries to digest those fast gains. All right here is some more to digest. Meg ter ril sat down to people with dr. Anthony fauci on renewed covid19 cases and a backtrack in some states with phased reopening she joins us ahead of that discussion meg . Hey, morgan that discussion will be airing at the Milken Institute summer series at 1 00 today and of course the Coronavirus Task force is holding its first Briefing Since late april at 12 30 today. So reflecting some of the concern that is around this surge in new cases yesterday reaching another new high, more than 39,000 new daily cases reported in the u. S. The test positive rate in the u. S. Has also been steadily climbing although yesterday we did get more tests and that rate fell to 6 from 7. 1 the day before, but this as Quest Diagnostics is reporting that its capacity for testing is under strain, citing an increase in 50 in orders for diagnostic testing over the last three weeks. We are hearing some headlines, you know, the Washington Post reporting from an interview with dr. Fauci last night that hes considering something called pooled testing which would be testing larger groups of people at the same time in order to see if they find positive tests that could dramatically increase the amount of testing this country can do meanwhile, the hot spots that weve been seeing around the country continue to be the same in terms of the states like arizona, california, florida and texas. Texas reporting its Third Straight day of record cases yesterday more than 6,000 an hospitalizations as you can see are also increasing, the darker yellow states are the ones that are seeing the biggest increase in the last week texas of course yesterday pausing its reopening amid this surge and halting elective surgeries in hospitals to make space for potential Covid Patients this, guys, as the cdc director in one of their rare briefings yesterday saying there are maybe 110 to 120 counties that the cdc considers hot spots in terms of significant transmission so looking at just the states doesnt tell the story if you dig down to the county level its counties in those states, arkansas, missouri, louisiana, texas, arizona, california that are seeing these problems he also said that ten times more people have antibodies for every case that we have identified in the u. S. And that 5 to 8 percent of the population the cdc estimates based on their serology surveillance probably have been infected with the virus. Guys, that means that ten times more people are infected than we know about which Public Health Officials Say makes it difficult to get our arms around containing this virus. Back over to you. Thats one of the challenges they have had in Harris County for sure in texas, just not enough contact tracers and a lot of those cases just running around without controls. Meg, we will talk more about it this morning thanks for that. When we come back we will get a handle on the Bank Stress Test from yesterday and what its doing to shares of names like Goldman Sachs and jpmorgan. Some of the implications for extreme scenarios when it comes to loan loss ratios later on in the year and the resubmission of capital plans. There is a look at what theyre doing premarket. Were back in a minute 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 on the street. Bank stocks weighing down the market this morning after thursdays stress test which will ford frost breaks down what we learned late yesterday. Hey, will. Hey, morgan so the standout point is that the banks are going to be retested in the fall, markets, therefore, dont have that 12month forward looking certainty on capital levels and capital return plans that they normally get dividends, though, the thing thats grabbed the headlines the banks cannot pay out more than a trailing four quarters of earnings put another way, they cant have an over 100 payout ratio. Here is where we stand based on current dividends and trailing 12month earnings. Most banks look fine for now, that is. A few likes wells fargo dont, they are widely expected to have to cut their dividend. Capital one financial also above 100 on this measure, citizens and huntington above 75 but all banks will have issues soon if they have multiple quarters of low or no earnings like most did in q1. As those quarters will then replace good quarters from last year in that trailing 12month earnings calculation now, on the capital side it looks like Goldman Sachs is actually stressed capital buffer or scb sits below their required one so they have some work to do by october 1st to rectify that, but it should be very achievable work to do Morgan Stanley by the way seems to have the most positively surprising scb result their acquired level falling significantly thats likely because of the etrade acquisition. The bottom line, though, were fine now nor, 2 share price declines not too bad for 2020, but another big round of tests to come in the fall and the fed looks like its prepared to be tough on the banks then if the economy doesnt improve between now and then maybe we will learn some more when powell and mnuchin go to the house in ex week appreciate that, will. Take a quick break on a friday morning as futures continue to be a tad weak. Plenty to get to including this new street high on amazon and an upgrade of ebay, we mentioned the downgrade of boeing again and a new street hh r ap aoment. Sn so im gonna hold on promoting you this quarter. 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. Nike is going to be a story today, obviously big surprise miss as the wholesale model gets hurt by some of these store closures big implications here for apparel especially we will talk about that, shares down 3 when squawk on the street comes back while the future of work remains a question mark, one thing is certain reopening will be a journey. Thats why salesforce created work. Com to help at every step of the process, with tools like manual Contact Tracing to help prevent one from becoming three and three from becoming more. While displaying Key Information in one place on a Customer Relationship platform you trust. Because heres one more thing were sure of. Relationships are the heart of business. So lets tackle this together. Announcer the opening bell is brought to you by nuveen. A leader in income, alternatives and responsible investing. Welcome back to squawk on the street. We have five minutes until the opening bell and right now stocks are indicated to open lower. Investors today will have a new name to consider trading as well albertsons going public in morning in a downsized ipo that priced below expectations overnight. Leslie picker has more on that deal ahead of the opening bell leslie hey, morgan so there is some good news and some bad news here the good news is that albertsons is finally going public after two ill fate add i tempts, the mad news for his private equity offer is that the offer is much smaller. Other private Equity Investors sold 50 million shares down from the 58. 6 million they were they were marketing the price was 16 apiece below the range of 18 to 20 albertsons had been marketing to investors. From what im hearing on the buy side price was a Sticking Point here large investors did not want an enterprise value six times ebitda for a slow growth heavily indebted grocer and that multiple was higher than where kroger is currently trading. They had to lower it and reports show that serbres was unhappy with the lower price and close to walking away again but they didnt, they first invested in albertsons 14 years ago and tried taking the Company Public in 2017. The deal was pulled. Two years ago albertsons pursued a merger with rite aid which would have given albertsons access to the Public Markets but shareholders opposed that deal and it fell apart. This time around the ipo seems to be set with a listing at the nyse, the highest Profile Company to debut there since the floor was shut down. Executives are still expected to ring the opening bell virtually just a few minutes time, guys. Leslie, we will talk to the Company Later on this morning. I think on squawk alley. Leslie picker watching albertsons big deal going on today. Nike is the other story regarding Consumer Spending, that big surprise miss as the wholesale model continues to be challenged by store closures around the world really. Mike santoli, theres two lines of thought, one that analysts were caught offguard regarding the number and also if nike cant survive a period like that who can . Maybe we will see a fair bit of this where the analysts essentially opt out of trying to be too fine is figuring out exactly how the quarter went i do think also with this modest decline premarket in the stock it still shows you how much faith the Investor Base and street has in the brand and its ability if anybody is going to make it work have it be nike because the stock ran up so much it basically was even from before the march crash and, you know, given back a few percent of that right now its a little bit better than, for example, i think a similar type of stock in terms of how its viewed in terms of this enduring grand value like a starbucks when they had a furious run up and the numbers werent that great, they had a couple warnings and backed off more from there. All of it makes sense but it is a reminder of incredibly tough environment. Writing off the second and third quarters in terms of any progress aside from anecdotal in getting business back, but maybe a decent test case because always a premium baked into nike shares. No doubt about that bernstein goes to 115 this morning even though some are raising the prospect of challenges down the road, hype they had calls, what if the olympics gets blade again next year, that would be an incremental negative for the stock. But i think youre also talking about as you just mentioned this is a very big company, a big brand name, a company that the dividend for which i think is considered pretty safe at this point. They emphasized the digital sales, 75 increase last quarter which accounted for 30 of total revenue and the fact that they are going to double down on direct to consumer which has better margins than wholesale. Here is the opening bell [ bell ringing ] albertsons there ringing the bell, as we said, we will talk to them later on this morning on this friday where we will get a russell rebalance, it brings to mind the conversation thats been going on not just about todays close but about the months close, jpmorgan suggesting there needs to be 170 marlie hall in riyal case, goldman not nearly as high, closer to 76 billion, but given the run up to what degree are people going to have to move things around and what impact might that have . I think its been considered a likely shortterm headwind, it probably will continue to be a lot of that activity and the discrepancy in terms of the estimates is some is done and theres models in terms of how much these asset allegation funds have to move arent necessarily all agreed upon, but stocks outperform bonds quarter to date by 13 or 14 percentage points, its a mirror image of the First Quarter where you had massive underperformance of stocks and have these funds needing to buy its a secondary point of how almost the entire game in terms of calling the market on a tactical basis is about positioning, who needs to buy against their will, who wants to buy, who is underexposed, who is more exposed, who is going to get fomo if the market doesnt come in. More so right now because nobody feels anchored on the near term fundamentals i do think this can play out over a couple days doubt its going to be a determinate of how the summer goes in general but it shows you there is an argument here as to whether big money, retail money remains underinvested or overexposed to stocks. Its having that you can have that debate and not just say there is an observable reality here yeah, i have a feeling we are not done talking about any of that meantime, just to take a look the major averages are opening the day lower in the red although just fractionally the dow is down 166 points, the s p is down about half a percent, 3070 is the level and the nasdaq is down by a quarter of a percent speaking of one of those mega cap tech components of all three averages, microsoft getting news on that name, specifically on store closures for that we turn to josh lipton. Morgan, some news right here from microsoft, just now saying its going to permanently close its Microsoft Store Retail Locations saying its going to instead focus on online store at microsoft. Com where customers will still be able to go to get support, sales an training microsoft saying its Retail Team Members will help on the website instead of the store unclear from the release if there would be layoffs involved here we know in the past few years of course microsoft looking to compete with rivals like apple and has opened these stores up, an important place customers can go to test drive to experiment with new products. Perhaps more important now, we know there are big products on the way like microsofts new xbox console which is slated to arrive later this year in time for the holidays microsoft saying the closing of these physical locations will result, they say, in a pretax charge of approximately 450 million or 5 Cents Per Share but again the headline here microsoft just now saying it will close permanent Close Microsoft store Retail Locations. Guys, back to you. Josh, interesting pivot there by microsoft of course, nowhere near the retail presence of apple, but interesting nonetheless. The other story this morning, morgan, is gap 25 gain leading the s p in morning as they announce a partnership is condition yea west who is going to design clothes for the retailer it just shows you just how much pop can be and what ordinarily would not be a maybe fundamental change to the story. No, and i guess you can put kanye west in the same bucket as the family in which he married, the kardashians. Given the fact that every time we see some sort of deal with his wife, Kim Kardashian or one of her siblings we tend to see those stocks, those consumer name stocks pop as well. Perhaps not that surprising here i mean, the stock is still lower on the week but its up 30 over the past three months. Speaking to everything weve been talking in terms of the changing retail landscape, the power of brands and just basically what all of these shifts towards ecommerceaway from things like brick and mortar, reopenings, how all of this is factoring into names like gap which is popping as you said up 25 today on this kanye deal. One amazing thing, morgan, yes, 25 move is significant for a company like gap, gap trades at 30 of revenues, its been valued by the market as being in shrink mode for a long period of time, but there have been six other sessions this month where gap was either up or down 8 its part of that binary its either the reopening is strong or the reopening is off type move and you see gap and kohls and tapestry always at the top or bottom of the s p 500 today, though, gap is bucking that because it really is not part of a group, its just because maybe they think this will give gap brand a little more relevance than people thought it could have in the future. Yeah, really only gets you back to levels of june 8th or so mike, you mentioned amazon earlier today. Its been an amazing chase in terms of price targets for amazon earlier in the week we had six firms above 3,000, then web bush went to 3050 earlier in the week, today deutsch goes to 3333 and suntrust goes from 2700 to 3400 really, mike, on its essentially survey data. Yeah. They polled consumers, found that of those who have heard of amazon 10 bought from the retailer for the first time in the covid era. Just more of the i guess wellknown narrative that this pandemic that we are in is accelerating the drive for ecommerce and within ecommerce the biggest player. Absolutely. The catalyst for this, carl, is the share price of amazon above 2700 bumped right up against the consensus bright target. Which means pretty much everybody has to assess whether you want to downgrade the stock or find a reason to upgrade it and say theres still upside you doing back to the similar longterm themes which have worked incredibly well nobody had an edge or observation about amazon besides the big picture dominant story and their ability to deploy capital in a very aggressive way over the long term you have more than 90 of the street has a buy on amazon it almost always has for the past few years. Theres not a lot of two and fro about the bull bear case, its about finding reasons to say stick with this stock. For everybodys mental math it works out neatly, 4,000 a share, a 2 trillion market cap pretty much for amazon. 2 trillion what is that going to do to the s p and nasdaq the same process with apple recently because it was a similar case where the consensus price target was basically where the stock got to yeah. By the way, amazon now confirming morgan, real quick. Yeah. They are confirming the acquisition of zukes they have taken stakes in rivy and morgan, electric trucks and now this startup in mobility which again leads you to that conversation of the competition that bezos and musk have in mobility on earth and mobility in space oh, im so glad you brought that up. There is another name to keep an eye on as well, its private, not publicly traded, but, you know, it was one of those mega unicorns within the space sector that went bankrupt due to the coronavirus and that is one web and today those bankruptcy bids are due and we have had reports in recent weeks that amazon is one of those companies that has looked to put a bid in on this satellite operator they already had a couple hundred satellites in space, was looking to do broadband and is essentially seen as a hot commodity, soft bankbacked, reports this morning that the uk is also looking to put a bid in as part of a bigger consortium that would give the uk a 20 stake, too whether it is on earth or whether it is in space, this is just a company that continues to try to reach out its tentacles and i think ultimately its all about connectivity in every aspect of our lives. Carl morgan, just shy of 10 k on the nasdaq lets get to bob pisani this morning. Hey, bob. Good morning, carl. Happy friday, everybody. Sort of a mixed open but downish two to one declining to advancing stocks look at the sectors here, its defensive largely. Retail is on the upside because gap is being pushed up, we already talked about that, but Consumer Staples doing all right, mccormick has had a great couple days on its earnings, a new high there tech is holding in there industrials and energy, sorry, folks, these are in decisive down trends for the last couple weeks. Want to briefly mention nicki earnings mess because it illustrates the problem were having with this earnings continue and the relative cluelessness of analysts here. Nike reports a loss of 51 cents the estimate was for a line of 7 cents. The low analysts didnt get it anywhere near what the actual number was you are talking about an 80 cents range in the estimates and they still couldnt get it right. 100 of the analysts were incorrect in their numbers this illustrates a real problem that were having for earnings season 40 of the companies have withdrawn their guidance if companies dont know what to expect how are the analysts going to know what to expect this is a problem not just with nike, its with dozens of companies where the dispersion, the range of analysts estimates are at levels i have never seen before, four, five, six, seven times the normal dispersion, thats because they dont have any idea whats going on and its going to be a problem and it goes into the third and Fourth Quarter and i think it will because the reopening story is difficult, it highlights the fact that theres going to be more continued volatility down the road we just dont know how to price the stocks right now nike has been a big winner on a relative basis banks you heard wilfred talk about this, i will make it simple for you theres relative relief because wells if a rg goe is the only one thats likely going to have to cut its dividend. We need to see some kind of growth in the loan situation or some kind of steep thing in the yield curve, other than that it may be very difficult for banks to move forward from here. The bank index kbe ive been showing inverted vs for the last two weeks now but there is a good example of the inverted v, thats a problem because now we know there is a cap on the dividends and theres not going to be a lot of loan growth and probably not much in the way of any significant help with the steep thing of the yield curve here i just want to mention here leslie gave you a great update on what was going on with albertsons this is not a disappointment, it is good news here for everybody when there is push back on valuations so people will say, oh, this is a disappointment, they didnt get the price they wanted. Wait a minute. Retail investors are buying this now and its very good when you get a push back like this on the valuation. The ipo mechanism, the pricing mechanism is working its not a bubble, folks, when investors push back on the valuation guys, you know, carl, morgan, mike, ive been amazed when people say this is a disappointing ipo because they didnt get the high price they wanted no, the market said we want a better price, with he want a reevaluation of that and it got it people will buy this at a lower price today and after all, folks, its buy low and sell high and the ipo etf just off historic highs so those ipos are doing very well recently back to you. Lets see how it does later on today, bob. Bob pisani. We got good numbers on relatively speaking good numbers on Consumer Spending plus rick has the stress test to talk about. Hey, rick. You know, carl, you phrased it perfect, the numbers werent terrific but on the income numbers they were less negative than we expected and on the spending numbers they were solidly positive, maybe less positive than we had expected, but both numbers were really pretty decent considering what were going through. Market looked right past it at least the treasury market and you could say that globally, as a matter of fact, on all Interest Rates for the month of june as you will see in a second lets look at a month to date of tenyear notes we are hovering basically at the lowest yields and here as we hover at 66 basis points, remember, we are only a dozen basis points above the all time low closing yield for tens if you look at shorter maturities the amount we need to cover to make new all time historic lows is even smaller. Less than 3 or 4 basis points. All except for the 30year bond. Lets look overseas, lets look at a onemonth chart of boons, they are hovering at a one month low almost precisely at the beginning of the month they were minus 27, now they are minus 47 thats a rather significant change and a good lesson why not to use statistics when looking at low yields. Lets look at a year to date of tens minus boons with he closed 210 basis points of difference. Are yields higher at the end of last year, its basically half that at 113 basis points as you see on the chart what happened is when the virus hit our hates really moved aggressively lower catching and getting much closer in distance to bund years. This virus knows to positive and its basically its a leveling process with regard to all the disparities that existed between our rates post credit crisis and europeans and how they dealt with it. Finally lets look at the italians, it was the big talk for a while, this is a threemonth chart, threemonth lows the high is 215 basis points they are now at 127 the point is all Interest Rates especially soveriegns are low, theyre staying low and the volatility is getting smaller. So if youre looking to our fed to acknowledge the fact lower rates for longer, it really is a global dynamic mike, back to you. Sure s rick thank you very much. For the breakdown. Look now at where we stand 15 minutes into todays trading you see the s p 500 basically giving back the last hour rally that we saw yesterday, its down about 0. 8 , down down a little more than 1 , nasdaq composite back under 10,000. 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. 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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. Welcome back to squawk on the street. The flight to the suburbs is real and growing as coronavirus changes the way people live suburban housing is seeing an uptick in a postpandemic america and leading leaving the future of dense metro populations in question. Joining us to discuss that is dan t dallas hall thank you for being with us. Thank you for having me this morning. I want to get into this flight to the burbs and what that means for your company. First more broadly the fact we did get another round of housing data this week and it certainly indicates that at least based on that data that the bottom is in and that housing has at least so far proved to be more resilient in this country, in the wake of this recession than perhaps previously expected. I want to get your take on the health of housing and given the fact that you have so Many Properties in presence and so many markets across the country what you are seeing in major areas. Youre exactly right. We have an interesting Vantage Point as we look at 16 markets whether we own roughly 80,000 homes. We get good insight in terms of transaction velocity, supply and demand imbalances and others things like that theres a couple things you have to keep in mind. First, we had a lack of supply going into the pandemic with which i think, you know, given the pressure and the different thought patterns around how to push supply or bring supply to the Market Going Forward will be a little bit tricky. I think you will see builders be a little more cautious about which parts of the country they will bring in more development which will also add to that supply constrained feeling thats out there theres less than four months of resale supply in the marketplace today so i agree with what youre saying, things actually feel Pretty Healthy on a relative basis. Of course, those tight inventory levels have been in focus even before the pandemic hit. I wonder what that means in terms of singlefamily rentals right now, especially as we do hear increasingly about this flight to the burbs by so many different families and so many different americans who are leaving the metro areas right now. Yeah, i mean, remember, we have 127 million households in this country of which roughly 48 million shape, or form. Single family leasing itself has had a tremendous amount of demand with roughly 17 million families that lease that way going into the pandemic. That demand is continuing to grow as you think about the millennial cohort of roughly 65 Million People between the ages of 20 and 35 that want flexibility and want to be down payment like you mentioned the flight to the suburbs. Weve seen prior to the pandemic, a tremendous amount of demand for our product today we sit roughly 97. 5 occupied with residents staying with us almost three years or more in all of our markets that speaks to the strength of for lease property in general and also for that flexibility that i think a lot of people want in todays environment. Tens of millions of americans are unemployed and some reports that more home buyer are extending or seeking mortgage forbearance. What are you seeing on the rental side . A ton of demand were seeing our application ratios as high as theyve ever been, Even Stronger than this time last year this is our peak leasing season. Well see 60 of our portfolio either renew or look for other Housing Options between march and august so were right in the middle of what we consider our peak season it feels like demand is healthy. We are undersupplied in the country and a lot of that stems from the housing crisis in 2008 and 2009 builders, developers, people in housing have been cautiously growing their footprints and portfolios since, but have been scared to be overextended. With leasing and the Single Family leasing environment, things feel really healthy we could use more product to come into the products but if youre positioned in parts of the country like we are where 70 of our revenue is in the west coast and parts of florida. Those are high demand where household formation is almost two times the National Average all of this is to your earlier point on the call, pushing toward an early recovery hopefully in housing relative to what we might see across some of the other sectors . So wrap this up but drill down, you mentioned florida and the west and your heavy presence where were seeing the increases in coronavirus cases, increases in the percentage of positive tests and increases in some cases in hospitalizations j is that something that is impacting your business there . How are you navigating that possibility . Well, first and foremost as we went into this, our first focus had to be on our associates and our residents making sure we could provide as safe measures as possible given the unknown of what we were all facing weve done a really nice job with that. I think its been evidenced by the fact that weve been able to have mps scores high internally and our general communication with our associates and our residents has been really strong we are sensitive to the fact that there are a lot of parts of the country that are spiking and weve modified our operating procedures so we can make sure that we can still ensure homes are safe, functional and available to residents or people that want for lease product but also be sensitive to the fact that we need to operate differently during this period of time. So weve done things virtually and been able to update processes and the like whats been interesting is even though we have these spikes in some of these things happening in parts of the country, it hasnt impacted our demand thus far. Weve seen healthy demand. We are a smart home company. We use Smart Home Technology for people to get ingress and egress out of our homes we can do it without physical contact. Those kind of things are certainly helping. All right dallas tanner, ceo of invitation homes. Thanks for joining us today. Thanks for having me. Dow is down almost 300 just about every component is red. Goldman and jpm responsible for 100 points apple, microsoft, unh, nike, and visa are the gainers for the rba ia wee ckn moment Class Service will do. Thats why were expanding your range of choices. Many dealers now offer optional pickup delivery and athome maintenance, as well as Online Shopping with Home Delivery and special finance arrangements. So, whether you visit your local dealer or prefer the comfort of home you can count on the very highest level of service. Get 0 apr financing up to 36 months on most models, and 90day firstpayment deferral on any model. 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. 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With more standard safety features than any other car in its class. The list of boycott advertisers on facebook added a big new tenant, verizon saying theyre pulling ads, quote, until the company can create an acceptable solution that makes us comfortable this is both on facebook and instagram. Mike, some Third Party Data this morning suggested verizon spent about 2 million on the platforms over the past month. Not a huge number, but a constant advertiser. If it becomes the vogue for Large Companies to make a show of walking away from the platforms, maybe it does snowball into something investors care about here. Its a big name, as you point out. Meanwhile, good friday morning welcome to squawk on the street. Consumer spending earlier today. Now its time for consumer sentiment. Back to santelli. Yes june final mid month read was 78. 9. 78. 1 is the number its positive when you consider were coming off 71. 8 from april was actually the lowest level since december of 11. Weve come back a bit. Lets go through some of the internals. Current conditions, they move from 87. 8 to 87. 1. Expectations 73. 1 to 72. 3. Now, heres whats fascinating many are talking about deflationary times that doesnt seem to be showing up in this survey. If you look at the oneyear inflation, its 3 according to respondents. 5 to 10year inflation, 2. 5. Theyre both elevated considering where it was precovid. Carl, back to you. Rick, thank you about an hour ago phil brought us the News American Airlines is going to stop capping Seating Capacity starting july 1st this is not a surprise given the fact that american has said all along at some point it was going to have to fill up all the seats on the planes. Whether that was july 1st, august 1st, at some point it was going to make that decision, and all airlines will make that decision at some point delta and southwest said were keeping the middle seat empty for now. Starting next wednesday american will be selling all the seats on all the planes, lifting the cap on load factors. Which up until the end of june has been at 85 . In other words, if the plane was over 85 sold, they werent going to sell those seats. By the way they will notify passengers and they can say im not comfortable with that. I want to take a different flight or make alternative plans. They are going to work with the passengers theyre not just going to stick them on seats. This comes on a day where passenger levels have risen to over 620,000 yesterday thats the most recent number you see on the far right hand side of the screen there were still down 77 compared to where traffic levels were a year ago. In terms of american and the flight schedule, keep in mind that next week its going to be adding about 1300 flights per day for the month of july relative to where they are in june and thats still down 49 compared to where they were last year as you look at the Airline Stocks which are under pressure again today. Remember that the airline ceos including doug parker from american airlines, they will be at the white house later this afternoon. They will be meeting with Vice President pence, one of the topics thats going to be coming up, the question of whether or not the tsa or the airlines or should somebody do passenger temperature checks and if youre going to do that, do you also do Contact Tracing this has been a discussion in the Airline Industry that has been pushed around for some time, guys whether or not the tsa should do it should the airports do it . Should the airlines do it . Ill be curious to see if anything comes out of this meeting. Wow the logistics of an effort like that would be Something Else well look for that information later this morning phil, starting us off this hour. Lets bring in our market panel, david kelley among with mark mahaney. Happy friday good to see you both good morning. David, the american story illustrates the markets overall struggle with weighing safety and reopening. Weighing safety and profits. What does it say absolutely. I used to be very familiar with the Airline Industry i think that what it says is the airlines are trying to do this a lot of businesses are trying to do this, but will they fill the seats . I dont think its safe sitting in the middle seat on a transcontinental flight for five hours beside somebody. I dont think it works unless im missing somebody. I think thats the clem ma the economics say they have to fill the planes, but the reality is the flying public and also businesses with people traveling are not going to feel comfortable with a lot of proth protocols. A lot of businesses are going to have to do more, increasing costs if theyre going to get people to use their services in a pandemic environment were not in a post pandemic world yet. Were very much in the midst of this pandemic. Is it your view the market is taking seriously the surge in cases in Southern States or is it do you think the selloff has been moderate given the possibility because the market knows that a broad reclosure of the economy is not going to happen i dont think we should attribute too much wisdom to the market with regard to this look, the stocks are a very longterm asset. This is a bookended recession it started with a virus. Its going to end with a vaccine. Its what we do after that matters with the value of stocks vshape recovery in stocks were down 10 from alltime highs, but that kind of recovery in stocks does not translate into recovery for the economy. I think there is a certain amount of complacency built in theres a second wave of cases fatalities are likely to go up in the next week or two. And were really not in the clear i think until we have a vaccine and theres so much uncertainty out there. I think there is some danger of a correction in the stock market given how much the market has come back and how much uncertainty remains about the virus and the economy here yeah. Where you look at where weve seen recovery, its been megacap tech names and what theyve done to buoy the market i want to get your thoughts on something we talked about a few minutes ago, facebook, the ad boycott and the company saying theyre taking the concerns seriously about hate speech. Theyre not going to make any policy changes tied to revenue pressure is this a risk for facebook or do they have the leverage . I think its a risk for facebook and impoogl this is a long standing issue. The challenge is technical the amount of content put up on facebook and twitter and google and monitoring it, policing it, censoring it is an extremely hard thing to do theyre trying to apply artificial intelligence. This is probably the greatest application of it were seeing across the media landscape, and its still hard to do. That issue, if youll recall three or four years ago we had a short boycott on youtube by General Motors and other companies worried about their ad showing up against offensive content. Its the same issue today. Its hard to solve i think its not going to be material to facebook nearterm if they handle it right. Were talking about a hand full of advertisers remember, these are markets that have got millions of advertisers. Thats facebook and google our guess is that the fundamentals will be for a name like facebook. This is the ad names on the internet were negatively materially impacted by the covid crisis early on we think theyll be back, one of the reasons is political advertising. We think near term in terms of the boycott, we dont think its going to be material on one hand we for years have been trying to navigate headlines like this, that technical challenge, the political pressure on Something Like facebook, and then on the other hand, just in the abstract the market says its a 3 Free Cash Flow yield as far as i can see. I dont think anything to change that but its interesting you said theres so many advertisers. Its not concentrated. A few months ago people were concerned about Small Business exposure has that not come to pass for Something Like facebook . Thats a good point it hasnt come to pass yet the question is whether it will. The question is whether we see the second wave and im talking about the economic wave, the real impact of a couple months being shut down for Small Businesses whether that could impact we havent done that if theres a risk, my guess is its not the political boycott risk its the second wave Economic Impact of the millions of advertisers. We have yet to see that, and if were wrong in terms of there being a vshape for facebook, by q4 the growth rates are similar to the back half of last year, if were wrong, its because of the issue you raised which is that too many Small Businesses have had their legs cut out from under them and cant advertise on facebook. David, weve continued to see the market move on coronavirus headlines and certainly this week with the fact that you have cases jumping to record levels and in a number of key populous states the latest one this morning is th Governor Abbott is taking executive action and going to it looks like roll back some of the phased in reopenings where certain types of bars, restaurants, it looks like outdoor gatherings of 100 or more people are concerned. Also rafting and tubing businesses are going to have to close. The fact were starting to see this take place in some of these key markets, how meaningful is this to not only the trajectory of the economic recovery but also the trajectory of the market i think theyre linked. This is why we have a big plunge and were looking at the Consumer Spending data for may theres going to be a big bounce thereafter, its a crawl in terms of a full recovery the reason its going to be slow is precisely that. You cannot get back to these mingling activities. A lot of activities basically involve getting lots of people exercising in one place. Thats hard to do. I think theres a big division between the states where people have worn masks. It turns out to be very important. I mean, look at this internationally and in the united states. Were seeing very significant statistical work shows literally the mandate of Wearing Masks and social distancing seems to work very well. So its terrible to see both the human cost of this and also the Economic Cost of this, but a lot of it could be mitigated if we were already disciplined about all Wearing Masks and social distancing then a lot of businesses could get up and running with less with less of a health risk finally, mark, on amazon what goes through an analysts mind when you get three rounds of price target increases in a single week . Its like watching an auction at sou southebys thanks for not calling out my price increase from a week ago that was kind of you i get it look, amazon is a buy for us its been a buy for many years this is not a strong buy opportunity on amazon. Its not a dislocated stock. Amazon will be dislocated again. Its a small buy for us. If youre going to own one asset in the internet space over the next five years, its amazon yes, i get the point theres a little bit of chasing performance in the name. But this is a structural winner from the covid crisis the Cloud Business may have accelerated this quarter i dont see why you wouldnt buy Something Like that. Measure it really small given its at an alltime high the zooks purchase . Yes yes. This is fascinating. Yeah. Yes no, i think this is ive been surprised. Ive been almost disappointed that amazon hasnt made a bigger push into Autonomous Vehicle technology theyre a logistics company. If anybody could justify the spend in this, its amazon im not at all surprised i dont know if this is the right company to buy im not surprised theyre doing something. It makes a ton of strategic sense for amazon to buy szues thank you well talk to you both soon, i hope thank you you too all right. A gamble of a different kind Atlantic City is reopening for business the ceo of resorts casino will join us on the measures its putting in place to keep you safe well does it after the brk. Ayitusea welcome back to squawk on the street. Just getting a look at the major averages we are at session lows with the dow down more than 400 points or 1. 5 a similar move for the s p down 1. 2 its time for our etf spotlight. Well look at the Consumer Discretionary spyder, ticker xly. In the green for the month two of the top holdings. First up amazon, sub trust raising the price target to a street high 3400 there was another price target raise today too, but nike under pressure after posting a big miss with a surprise quarterly loss you can see that stock is down about 4. 5 well take a quick break and keep an eye on the markets stay with us 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. Talk to your financial professional or consultant its totally not the same without you. We miss your lets do this look and cant wait to get you back, so weve added temp checks, face coverings, social distancing and extra sanitizing to get the good times going again. Were finally back. And cant wait until you are too. Our next guest installed new ultraviolet technology designed to screen guests as Atlantic City begins to implement reopening plans. Joining us mark. Talks through some of the efforts youve taken to prepare and what youve learned from casinos that have reopened in other parts of the country so far. Thank you for having me on. Its hard to imagine weve been closed 3 1 2 months in fact its an unimaginable situation. I saw the governor earlier today. You have to credit him for the tough decisions he made to allow us to get to a point where were reopening. Weve excited about that i work for a guy who very much runs a familyrun business you couple that with our marketing and management partner, we want to do things the right way. Early on in our closure, we worked hard to research some of the technology thats out there that could potentially make the environment more safe. So weve spent a lot of money the last few months to prepare for the opening. Were instaulging uv and bipolar ionization technology. I think its going to set us apart from the industry to create a safe environment for our guests and employees alike and you know, on the one hand, i mean, youre going to find people given that new jersey and the area was hard hit who might be hesitant to go into that environment on the other hand, Atlantic City doesnt rely as much on people who have to fly in right . Its mostly a day trip so what indications do you have in advance of your reopening next week in terms of demand initially . Demand is great all the while we were closed weve been in touch with customers. We have a Loyal Customer base. This past memorial day weekend we would have celebrated our 42nd year in operation weve spent a significant amount of money to be in play and compete with the bigger guys in Atlantic City. The demand is great. We feel exactly basically what you said which is the air service is going to be throughout the company and trips to europe and the like and were going to hopefully take advantage of that to some degree were positioning in the Northeast Market where its densely populated. We expect right out of the great were going to be quite busy how important is it to see different types of sports come back and come back quickly and in a meaningful way . I ask that because i know you have a sports spock. Thats been a key in recent years for Atlantic City and potential foot traffic well, its very important im sitting in our draft kings room were looking for sports to come back our Online Gaming business has been exceptionally doing well. And we think now that sports, mlb coming back and hopefully the nfl season, we can start to really begin to pick up the volume here in the sports book and certainly online with draft kings. I guess on sports, how wor worrysomeis it when you get one or two players whether its golf or tennis or baseball testing positive do you think its a real setback at this point or is league is to committed to the r opening that theyre going to try to wall the cases off and plow ahead yeah. Its like anything i think that Everybody Needs to be responsible including professional sports players, and the more everyone is responsible, were better the Sports Industry will be and certainly our gaming customers were prepared weve done a lot of things to create a play safe work safe environment where we are going to require all of our customers and employees to wear a mask its going to be a requirement were going to take their temperatures upon entrance to the building we are going to enforce social distancing we have plexi glass that will separate the consumer to the employee in many locations, and we have a whole program that i think will help keep those that come to the casino here, resorts very safe. With all the changes that youre implementing and the Safety Measures are you able to bring all your employees back . Well, right now the good news is our employees are very excited about coming back. We have been recalling them as you can imagine over the last month or so. And those that have come on, theyre all being trained. Were partnered with the Largest Health care system here in south jersey to train all of our employees and we really feel almost Everyone Wants to come back, and as business grows, right now were going to be opening with some restrictions in capacity. For example, restaurants will be limited indoors to 25 capacity. So as hopefully the numbers in new jersey stay stable and we can begin to see an increase in our capacity levels when the governor sees fit. That will allow for us to recall hopefully at some point all of our ways can you make that work . You know, financially for any period of time, 20 capacity, keeping a slot machine empty between players . Well, look, you hit it on the head every other slot will be turned off. And the table games will have three to four positions. I think we can make it work. Anything is better than the burn rate weve been going through closed so as we reopen, you know, the path is to find profitability as quickly as possible and build upon that. This is not going to be in my opinion, a vshaped rebound. We would like it to be but were dealing with a worldwide crisis and a pandemic that is no one would have ever imagined. So were prepared. As i said, we have spent a lot of time researching on making this property one of the safest that it could potentially be and we take this very, very seriously. So im hoping right out of the gate come july 2nd, next thursday, we begin to see our friends come back and from the sounds of it, it seems like they want to come back. We just have to do be pretty diligent in keeping them safe. All right yeah its a spot a lot of the Hospitality Industries good luck with the reopening thank you so much take care. Session lows right now as were getting new data out of texas. Lets get a news update. Heres your update at this hour a Police Officer has been stabbed in scotlands largest city during a Major Incident the situation is contained the police say the bbc reports its believed three people are dead after being stabbed in the stairwell of a hotel the Trump Administration urged the Supreme Court to invalidate the Affordable Care act now that theres no financial penalty for not having coverage the government says 500,000 people have signed up for coverage under that law due to pandemic related job losses. Hundreds gathered to demand justice for breona taylor. Only one of the three officers has been fired nasa restaurants began a sevenhour space walk to replace batteries that power a structure. Squawk on the street returns after the break. 6426 new cases on thursday and the governor ordering bars to close beginning at noon today. Our next guest is a celebrated chef and restaurant person tim love joins us. Tim, its good to have you back. Welcome. Thank you how are you this morning watching texas closely. I wonder what the mood is there now. Is the sense that the pauses that abbott is putting into place are zefbed and appropriate . As ive said multiple times as weve talked before, safety is of the utmost priority. I feel like no matter what and if anybody knows me, im the one thats hard charging id love to open up as much as i can, but safety has to come first, and we have to trust in our governor in making the right choices, and weve got to adapt. Its not something that im going to jump for joy about or open up champagne about, but at the same time im going to get together with my team later this morning and make adaptations and keep the safety protocols in place and keep moving forward. Is this kind of thing still confusing . Are the rules still cloudy or at this point has your industry become so nimble that when there are shortterm adjustments you can get on track with them pretty quickly well, you know, to be honest, when we first opened back on may 1st, the new talk now is that the mask mandate when i wrote my safety protocols, 18 pages, and we were already in an anticipation of the fact that people were going to be Wearing Masks to come to the restaurant anyway we have disposable paper bags for people to put their mask in while theyre at the table they can put it onto go to the restroom, or whatever it might be thats in place for us weve been there this is not anything new it may be new for other restaurants but the only thing that really were disappointed in is that were shutting down the bars i have a couple bars myself. We follow the rules closely. We didnt have any problems. We take temperatures of everybody. We do Contact Tracing. If anybody happens to come or happens to test positive, we let the people know that person came in touch with. Were adamant about knowing exactly where everything is and where everything goes at this time to keep safety paramount for my staff and the guests that come in. Right now in this world right now, we feel like we get a new rule every day we actually as a Leadership Team for my company, we have a meeting every day of whats todays rule on fridays we drink screwdrivers while we do it you have to make it fun somehow. Right . So we want to make sure that Everybody Knows that were pushing forward, but were going to push forward with the rules and safety first i think anybody who doesnt have a restaurant can put themselves in your head and think about all of the temperature and safety precautions youve got to take, and i guess one thing i wonder is where does that leave bandwidth for menu innovation and making it fun and getting things out of the business that you originally got into the business for thats a really, really good point. I said that at the Leadership Meeting yesterday. Its crazy that our concentration is based on everything but the operations at this moment. And but at the same time, and well discuss this here in 45 minutes at my Leadership Meetings, what are we doing to innovate create new delivery options and Outdoor Dining spaces. Things we can operate been the rules. Tomorrow is saturday they dont like to make rules on saturday so maybe monday well have a new rule. Well face that one on monday. The main thing is weve all got to stay positive we get in this doom and gloom. Its easy. The headlines are extraordinary. Even though theyre not. I mean, were setting records, and i could say that every day we had a record high of temperature yesterday in texas and everybody thinks that the whole state is going to burn up. Thats not true. Its one degree higher than 26 years ago. Weve got to take things into perspective. We also have to keep in mind we want to be safe and make sure that our employees are safe, number one, and if our employees are safe, then our guests are going to be safe im just going to take it one breath at a time and try to innovate and try to create new ways to not only please our guests but also create revenue for us and stay within the rules. And support our governor and keep moving forward. I can see you have a pretty innovative menu there already. Im a fan. Im curious, obviously were getting mandates from the government right now on the consumer side, even as weve seen coronavirus cases tick up in the state, have you continued to see demand . Have you continued to see people come through the doors or has that been ebbing given the fears around the virus spread . Well, i know Everybody Knows this but texas is a really big state with loot lot of people in it and a lot of diversities. Im in most areas of the state and so in fort worth where im based, our sales are on an upward trend and have been for six weeks. In houston where things have been a little more a little more fear, i would say, we see things have really levelled off. And same with austin although not as much you know, i think theres a lot of factors that contribute to why were seeing a lot more positive cases i say this all the time. The problem with the data that were hearing especially through the media is its very onesided and you can make it whatever side you want, because theres seven variables that go into whats happening with the coronavirus, and a positive case is one of them people going to the hospital is another one. And people dying is another one, and people getting false positives is another one and people getting reported as a positive case even though really theres reporting they have the antibiotics. So theres a lot of factors that go into it its a really large calculus equation that most people cannot understand so therefore, we report one thing. Oh, my gosh, we have 5,000 positive cases today, but how many of those people are really sick not very many. Its just its a tough thing. I wouldnt want to be the governor right now its tough to make decisions i want to be a Good American and support whatever decisions these experts decide we need to do and then figure out ways to innovate within the rules thats all we can do we support each other in the Restaurant Community doing the same thing we have to come up with new ideas. Thats all we can do yeah. I am curious at 50 capacity, bar business being closed down. I mean, bar business is high margin business typically. How sustainable is it especially if heaven forbid this situation goes on for a long period of time well, you know, going from the big one that everybody thinks is going to hurt everybody is going from 75 to 50 which really is not that big of a deal. Because we have to have a six foot distance. When we went from 50 to 75 in the restaurants, that department change a whole lot theres only a certain amount of space. If you have six feet between the tables, going from 50 to 75 , you didnt gain much the closing of the bars is a big deal my two bars we do well at, its great margins, and its too bad that so many people were breaking the rules that he made that decision to go ahead and just cut it out. But i do understand it and im trying to stay on the positive side. I have to do it for my team. We have 420 employees. We started with 500 before it started. Were putting people back to work and doing things safely as safe as we can. We want to maneuver, the rules to what we can do to make things better not only for employees but for the guests were going to continue to push forward and trim and cut and add and do whatever we can to make a little bit of money. I mean, i havent taken a salary in three months. Its tough, but were going to weather through it thats what we do as texans. We weather through it and support each other and were going to come out good on the other side of this i promise. Tim, what are you seeing in the areas where you operate in 2er78s of the competitive picture . I mean, you have a pretty sizable operation. You have multiple locations almost 500 employees are smaller players, have they stayed closed . Are they not able to weather it . Well, smaller players, you know, if theyre nimble, theyre going to be really good. But if theyve just gotten into the business, itsmaybe tough for them i think the thing youre going to see is as the Paycheck Protection Program money runs out, around right now, this is where things are going to get really dicey for a lot of people, and those who carry debt have deferred that debt for three months, you know, things are going to start coming home to roost if there isnt another Paycheck Protection Program, i think you see in august, its going to be a bit of an armageddon for restaurants. Its just the way of the world theyve deferred a lot of payments and vendors and they deferred everything. If you carry that debt, then youre choosing who youre going to pay, and its just its sad to see i have this very bad feeling that were going to see some restaurants really start to fall off in the next 30 to 45 days. I think everybody has been nimble and converted to this and that and faced every new rule weve had every day. If you didnt carry through, your werent able to pay your bills earlier, and it starts to come around now. Were seeing it. This is a cash business, and you can only defer for so long and eventually the landlords is going to say i need my money it starts all coming home to roost. And luckily for us, weve maintained our cash flow through this whole thing and were going to continue to do so. Were going to continue to innovate to get there. But its really i have a very im the most optimistic person you know. Identify grim outlook for some of these groups that had a lot of debt to begin with that just arent going to be able to pay the debt thats when it starts getting really rough yeah. No, the market is starting to zero in on july 31st to your point. We hope to check in with you before that time we appreciate the guidance and all the intelligence on a story that everybody is watching thank you. You bet appreciate you all have a good one. You too well, with most travel on hold these days because of covid19, whats going to happen to all of those hotel points you may have were going to tell you that after the break. Just taking a quick check on the markets as it looks like stocks are taking a lag lower with the dow down nearly 600 points automaj losses for the month june stay with us while the future of work remains a question mark, one thing is certain reopening will be a journey. Thats why salesforce created work. Com to help at every step of the process, with tools like manual Contact Tracing to help prevent one from becoming three and three from becoming more. While displaying Key Information in one place on a Customer Relationship platform you trust. Because heres one more thing were sure of. Relationships are the heart of business. So lets tackle this together. 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. Could the big banks face a makeover moment . One technician takes to the charts to determine where theyre heading next on trading requk t seeco mo sawonhetrt ming up stock slices. 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. With spray mopping to lock away debris and absorb wet messes, all in one disposable pad. Just vacuum, spray mop, and toss. The shark vacmop, a complete clean all in one pad. Now that most travel plans have been halted delays or canc cancelled, what happens to the hotel points youve learned . Good morning, mike. Its a big question. Hotels are under pressure to retain their Loyal Customers who have built status with them. An account for a disproportionate amount of sales. Marriott saw 58 of roomed booked for hilton over 60 one way travel companies are attempting to keep this Customer Base engaged is by extending the status through the end of 2021 and pushing back the Expiration Date for redeeming the points. M marriott you can book theyre adding credits to members accounts that help them maintain their status but with case counts rising and significant adoption of zoom and online meetings, the question is not only when business and lease yur travel resumes but to what degree travel is not expected to fully return until next year with a majority of americans saying they have no plans to travel the rest of 2020 thats reflected in shares of the major Hotel Operators down around 35 or more this year now, in addition to updating their Loyalty Programs an editor at a travel site says over time hotels will have to change the perks they offer members like that complimentary breakfast and lounge access which will likely be less appealing in the post pandemic world. A lot of changes that the hotels are certainly working through right now. Yeah. If those facilities are even open its a good point. Thank you. Seema. When we come back later this morning, the ceo of albertsons biggest ipo of the year, pricing 50 million, indicated 16 to 17 as the dow is down 525 and now lower for neju along with the s p. Back in a minute i remember setting up shipstation. One or two clicks and everything was up and running. I was printing out labels and saving money. Shipstation saves us so much time. It makes it really easy and seamless. Pick an order, print everything you need, slap the label onto the box, and its ready to go. Our costs for shipping were cut in half. Just like that. Shipstation. The 1 choice of online sellers. Go to shipstation. Com tv and get 2 months free. 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 as calls to cut Police Funding grow in the wake of recent protests, how exactly are major Cities Funding their Police Departments we have a look at that good morning. The nations biggest city spends hundreds of millions of dollars if not billions on their Police Departments. And that makes them big businesses as well we took a look at the budgets. The nypd operating budget is about 5 of the citys overall budget that number is a lot smaller than many other big cities which generally spend 15 to 17 of their budget on police where does the that money go in los angeles the l. A. Operates a fleet of 4700 vehicles spending about 5 million a year on new vehicles. They also spend about 4 million a year on firearms including shotguns and handguns, and they spend 1 million on field equipment like hazmat suits. Los angeles is now looking at cutting up to 150 million from its Police Budget and companies are facing pressure to end their contracts with Law Enforcement as well. Employees at google and micro soft have been circulating petitions on this issue. Google employees said they were disappointed that google is still selling to Police Forces and say kuss them of profiting off of the racist systems. Google says theyre committed to combatting systemic racism, but i think you will see more of this type of scrutiny over where the Law Enforcement dollars are going. And youre talking about cities and states that are already facing big budget deficits it seems like a perfect storm right now. Thank you for bringing us the latest on this it has been one of the highest flying stocks of 2020 and one of the most popular among new investors. The ceo of virgin georgalactic l join us on the other side of this break 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. Welcome back to squawk on the street. Virgin galactic has performeds at the time, with us now in a cnbc exclusive is george whiteside. Thank you for being with us. Adulthood morning, mor ban. This wasnt a test that took your vehicles and your pilots to the edge of space, but it was a key test and a key milestone how quickly can you analyze that data and what does it mean for next steps the analysts are hard at work analyzing the fliegtt. It was the second stand alone flight it is an operates base that we have in southern new mexico. Theyre going to look at the data really intensively and assuming that we get through everything we need to get through there we would move toward the next flight when will we see commercial Service Launch will it still happen this year were working as hard as we can to get richard and the 600 plus other customers were making great progress and the fact that we got a second flight off also in the middle of covid at a time that is very busy is a great testament to the work that the team can do and the operational protocols. So the service that you are working on is sub or bbital, but it put you in the orbit game as well, but youre launching a training tram for private astronau astronauts when does this launch, who is involved, and who are you speaking to about the potential transportation we have been focused on flying our passengers, but some of them would love to go into orbit to visit the International Space station. So now were on the final run towards commercial operations, we felt like it was a good moment to take a look at this and see if we can extend our brand into this area the announcement that we made around this partnership for orbital training and provisional services is exciting in that context. It sets us up to become a player in the provision of that service. I think were going to see folks from our existing customer space. People flying on the spaceship that want to do that, and potentially even government thats are not currently involved into the International Space station. So we will be working with anyone that comes to us to sort of pick them up and as you say work with other partners on that experience from a financial standpoint, how big is this opportunity. Well, i mean the provision of human space flight, or rather, i guess here is the way i would break it down. Nasa spends a few billion dollars a year on lower orbit human space flight including the International Space station. In the next ten years they will spend several tens of billions of dollars in this area. This is just an initial step into this area for us, but i think that the general area of space flight is a tremendous market if we can play a useful role yeah, and nasa put out information about sub orbital flights. What does that opportunity like like to start sending astronauts on behalf of nasa to the edge of space in part for training yes, im really excited about this one they thought about using the vehicles that we have to train their astro naugnauts and other employees. So they announced setting up property access for a procurement in that respect. You can imagine that right now it takes a bit of time to go or bittal you have to wait for your slot and things like that if you play a useful role, i think it would be tremendously useful we appreciate the partnership, and it is exciting an a great endorsement of that step by step ecosystem of services. You can talk about orbital, sub orbital, and going out to the moon there is a great swell of activity and which is terrific we appreciate you coming on to talk about all of it. Thank you for being here all right, guys, happy friday, welcome to squawk alley. Market not having a very good friday as the focus once again is on case counts out of texas and florida. 6426 in texas, a new record. Harris county going to declare a top level emergency. The governor there closing bars effective today. All dow components are red were going to watch this 200 Day Moving Average we certainly are and im watching two of the biggest stocks that we talk about, apple and micro sofsoft and part of the reason ith