Transcripts For CNBC Squawk On The Street 20240712

Sharing demand, david, and today grocery delivery. Yeah, thats what we will be talking to him about of course, was it their second choice is certainly a question we will want to explore and when will the company get to cash flow positive. Remember prior to the pandemic, carl, there had been some important promises made by uber in terms of when they were actually going to get to that point and then of course its all had to change as a result of what theyve seen in their core business which we also will talk about as well. As we take a look, mike, as a market that is going to at least open lower, although certainly unclear whether that will hold incredible momentum yesterday and some of these names, i mean, that we talk about so often, but just this morning, looking at the market caps of amazon at over 1. 5 trillion or tesla at 254 billion it really is quite something. It is, and those are the names, thats the area of the market called secular growth, you know, call it, you know, actually momentum combined with secular growth, i guess. They are definitely carrying things even this morning the nasdaq is outperforming minimizing the early losses. I think context has been its own catalyst here if you want to think of it that way where its the backdrop of fed support, enough better than expected economic numbers to keep people from getting too overly concerned in the near term and then just very strong Corporate Bond marked feeding the same view one month ago you had a similar dynamic, better an expected jobs report on friday, follow through real on monday that was the short term top on june 8th a little bit of muscle memory maybe today of saying shortterm indicators looking a little overheated especially in nasdaq areas, carl, if we look at Trader Sentiment and things like that, otherwise its hard to decide why today would be the day when people who have been buying these things every day stop buying them yeah. And we will get to some of those calls, the jonas note on tesla is remarkable. Harvard going online for the fall, theastros, nationals canceling practice because testing is too slow, miami closing restaurants and bars and now black rock today, mike, down grading u. S. Equities to neutral, europe to overweight. Not because of closures, but in their view the risk of fading fiscal stimulus. As we get further into july and july 31st how important will it be for congress to thread that needle and basically the 11 days they have to do it. Right it seems like the bull case gets a little more contingent the deeper you get into the summer because of all those issues. I do think the market has been operating in this zone if you believe the market looks ahead roughly six months, thats kind of a general assumption out there, six months takes you to this window of perhaps vaccine or as dr. Gottlieb has been saying were kind of almost through this in january, even if it stays bad, just because of how many people have been exposed. Who knows if thats really true but the market has been behaving as if i dont really have to worry about the scary stuff today because our time horizon takes us past when the scary stuff should be over, but in the middle there is a lot of things to contend with. And i do think the sense that the stimulus and support efforts have been enough so far could get challenged as we get closer t does seem that those things did bridge us into the Third Quarter pretty well. Carl, we continue to your point to see, i mean, Even Connecticut also slowing the reopenings that is a theme that were seeing and yet you do wonder when that is going to be reflected in some way in the Broader Market or whether it wont. Weve spent many a morning now discussing of course the fact that the overall economy may not seem particularly strong, even though its better than it was, but the market seems to be playing a very different tune. I dont know i think its tom lee this morning who says in the absence of truly bad news, truly devastating news, there is this general upward drift, david. Certainly the biotech news today, novavax 1. 6 billion largest grant yet from operation warped speed, regeneron getting funding, labcorp with the new home test, glaxo with the new partnership to develop a vaccine. Even though fauci says the immunity may be finite, were getting a lot of encouraging news on the medical front today. We are, and, listen, you know, i think weve tried to make the point or i certainly have, its not just vaccines, it is also these antivirals that are going to prove so important, particularly those that can be given very early in the onset of the virus if we do have the testing that we need and people can know when theyre sick, even if theyre asymptomatic and can take something thats available. That could change both the trajectory of the virus and the psychology around it and could change behaviors in a significant way. So maybe the market is more aware of this perhaps than we think in terms of the efforts being made by the likes of regeneron and others to get antivirals out there or get them through phase two, phase three trials and into the marketplace. That could prove as important if not more, guys, than a vaccine which unfortunately now were hearing how long would it last would you need a booster shot . And clearly thats considered to be something that wont be actually really available in mass until 2021. David, the way to bridge the seeming dichotomy between markets still looking very strong and all these doubts about exactly how fast things come back is to look underneath the surface of the indexes and say the average stock in the s p still down 8 or 9 in the last month or so, those travelrelated stocks that had the huge come back have not really led again so the market is sorting things out in a way and definitely leaning in the perhaps more optimistic direction in terms of what it means for longterm Growth Companies but it also does kind of cover for a lot of kind of potholes within the market that have shown up and have not gone away that are much more related to exactly what the pace of the come back is and also what kind of equilibrium were returning to in terms of economic activity, not just how fast we come off the low, but where were going to settle out at in the coming quarters. Yeah. Thats that sort of brings us to united. Really quickly, mike, as phil lebeau was saying a moment ago, a new statement that bookings have moderated as these travel restrictions went back into effect, sending out warning notices to employees to be at least on alert for furloughs i wonder if you think airlines remain a fulcrum or a pivot point for that exact thing you were discussing. A psychological one, absolutely it also shows how fast the feedback is in terms of news reports to peoples spending plans. Its pretty fragile. We are all for High Frequency data like that, there is no question as we said earlier, ubers ceo will join us in a few moments. We will talk about the companys acquisition of both mates. Ride sharing delivery and what they see for the future of the company when squawk on the street cos ckmeba hey lily from at t here. With some helpful tips. Tip 1 you can currently get the amazing iphone 11 for halfoff on at t, americas Fastest Network for iphones. Second tip you can put googly eyes on your stuff to keep yourself company. Uh for example, thats heraldo. Hes my best friend. Oh, sorry nancy, i forgot you were there. Get the amazing iphone 11 for halfoff on at t, americas Fastest Network for iphones. The xfinity voiceremote will find exactly that. Happy stuff. If the groups happy, im happy. You can even say a famous movie quote and it will know the right movie. Circle of trust, greg. Relax the needles are jumping. You can learn something new any time. Education. And if youre not sure what youre looking for, say. Surprise me. Just ask what can i say . To find more of what you love with the xfinity voice remote. One day after announce that go 2. 65 billion all stock deal to acquire post mates this morning the company says its entering grocery delivery as carl and i discussed, joining us is uber ceo dara khosrowhahi. Great to have you with us. Thank you for having me. I spent a good amount of time reporting on your attempts to acquire grubhub, it didnt happen should your shareholders view this as second prize and if not why not . Well, i think our shareholders should view it as the prize. Listen, every single deal that comes together needs two parties to agree and that requires you to agree on a lot of issues, including price, terms, et cetera we couldnt get there with grubhub for various reasons and ultimately we agreed to disagree with postmates we did agree. We think its an attractive price, the asset is a great asset, we actually think that postmates brand is exactly the kind of brand that we want its a millennial brand, its much younger and the geographic focus that they have and the restaurants, the kinds of restaurants that they have, is pretty incredible. Gets us a very strong market presence in los angeles and orange county. So we think the one that rkd work worked out is a great one. You moved on from grub had you been why ask it been important to you to try to consolidate this industry its not much about consolidation as it is about growth one things that differentiates us from the pure ride sharing players is we have our mobility business and a classic ride sharing area still going to be a huge profit generator of the business but then weve got delivery that has become much larger, for example, our own internal organic growth in q2 was over 100 so this is a business thats accelerating, the profit profile is improving and were confident that we can take the business to profitability as well and we just love the business when you look at covid, covid has accelerated two to three years of essentially consumer adoption into a few months so this is a category that we love, we want to get bigger in the category and scale is how you bring it to profitability but bring it to profitability in a way and margins that work for restaurant partners, cure years and the whole ecosystem. We are confident that this is a good deal in an attractive industry that we want to grow . You are talking about as much as 200 million or more of run rate synergies one year after the close. Ims that comes as a result of being able to consolidate certain markets and i wonder, dara, in reports on your negotiations with grubhub i know that antitrust considerations were certainly at the heart of some of the disagreements where you werent able to get traction should will be a concern here . Postmates not as large but in certain markets there is still a fear that the city council or state ag are going to say, no, no no, you cant do this or you have to set pricing a at certain level. We dont think antitrust is going to play a big heart here listen, its healthy for any government to take a look at any deal that goes through, but we actually think that this deal there will be three big players in the u. S. , extremely competitive markets, there are many local players as well listen, this food Delivery Market is bigger just than food. You have grocery in there, you have pharmacy in there, amazon is delivering food from whole foods, et cetera the category is a very large category our getting bigger in the category i think will make it even more affordable for consumers, for restaurants, et cetera, and it allows us actually to start pivoting into adjacent categories such as grocery. We announced today actually the availability of grocery in many markets as it relates to uber eats and that just extends the category, increases competition and opens up a whole new multibillion dollar marketplace for us in terms of delivery into your home. I was going to ask you, dara, whether or not there are other pieces of puzzle that are still needed to lower the cost of delivery and improve efficiency or can you incorporate what youre getting from postmates and what you already have . One of the great tool sets that we get from postmates is the technology that they built and optimized. Its a technology around batching and batching is essentially getting two for three deliveries for a single courier and delivering them, lets say, to three homes. Coming from one spot or coming from two spots that are close together the amount of matching that postmates was able to develop in its markets was pretty extraordinary and industry leading, sometimes they would batch an average of three orders to go to delivery to homes that reduces the cost of the delivery, cure years getting multiple tips so it works out. So it works out for restaurants, works out for cure years as well and it reduces cost for consumers in terms of delivery the greater the concentration of business that you have in a certain locality the more batching that you can do and that batching essentially is one of the keys for the business to expand beyond just hot food to grocery to pharmacy to essentially your every day needs. For us the vision is we have one business mobility which is about moving people around, any way, whether its through cars or bikes or mass transit and there is this other business that were developing thats getting quite bit, we are the largest in the world outside of china which is delivery getting anything delivered to you in your home that you want. Were starting with food, but were going well beyond that speaking of rides, i wonder, i was looking at california miles driven today and its hard to tell if its the holiday or what, but it does appear to be rolling over a bit i wonder, i mean, is ride doing any is there more amelioration in the decline we saw in q2 and if there is are you attributing some of the new restrictions on covid to that . Weve seen this picture before and we saw it in hong kong, for example, which is a rides market which is the volumes start coming back but sometimes there are some rebounds as possibly they come back too quickly, people arent quite as careful as they have to be what we saw in hong kong is there was a quick bounce back. Hong kong is back to precovid or close to precovid levels, essentially positive volumes in many circumstances as well so this is something that frankly is not unexpected. I think weve got to open up carefully and its difficult to exactly meter how you open up. The strength that we have as a company is that weve got a global footprint the u. S. Opening is a little bit slower and we do think it will take a breather for a little bit, but the openings that we see in europe, for example, and france and australia and new zealand continue to be very strong, the business is coming back and its coming back pretty consistently so when we look overall at our rides portfolio on a week on week basis, every week is Getting Better than the last. It is dara, on that, you know, i would assume you have granularity when it comes to all your markets, but in the u. S. Yesterday during the Conference Call you said youve seen a steady recovery to a less than 60 year on year decline as of the last few days. I just wonder with the reclosings, with the slower openings that were seeing, are things moving more slowly or going back to levels you may have seen a month ago in the u. S. Theyre not going you know, listen, every day may kind of bounce up and down a couple of percentage points, but the overall trend is an unmistakably positive trend when i translate that to globally, the trend is absolutely positive on a week on week basis we are still not where we need to be, obviously many, many countries out there, societies, cities, need to open up, but the trend is our friend so to speak. Give us a sense for the overall business at this point and including postmates because one of the key questions is when are you going to get to cash flow positive and how much will postmates help you get there and certainly in the face of the pandemic it doesnt make it any easier. Well, postmates gets stronger in the pandemic, right and our Delivery Business gets stronger in the pandemic. Right but 70 is still our ride business yeah, our ride and Delivery Business essentially theyre hedges and to the extent that the pandemic gets better faster our rides business will get better faster, delivery might take a pause. We are in an attractive hedged position here. When we talked yesterday about was a Delivery Business that organically is growing over 100 and is getting to be a real size, you add postmates to it thats running at a 4 billion run rate based on their q2 volumes so you get even more scale there along with 200 ammel of run rate synergies and a rides business that is now down about 60 , if you look at it on an exit rate, and generally its something that we expect to improve. Right. So if you pull that all together were very confident as we said the last time we spoke to investors were going to get to profitability next year and we have enough of a diversified portfolio to make that statement with quite a bit of confidence. Even with rides still making up nearly 70 . You know, is there a point at which you could imagine rides and delivery being equal in terms of your revenue their revenue contribution absolutely. I do i think that this Delivery Business its a huge business and, for example, if you look in china, theres the delivery champion there, a Company Called matwon, thats 100 billion plus company and the Delivery Business you can argue is bigger than the rides business. Thats our ambition here obviously we want to maximize the size of our mobility rides business and maximize the size of our Delivery Business, its a little bit of a friendly rivalry between the two. Right. But i would see our Delivery Business getting just as big as our mobility business Going Forward. I would be disappointed if it doesnt happen. Finally, there is been some people who focused on the fact that youre offering bridge financing to postmates during the regulatory review process prior to close as being a sign they were running out of money was that the case . Well, postmates isnt profitable yet on a standalone basis although their margins are getting much better and their alternative to doing a deal with us was actually doing a financing. This is what i talked about farce two companies coming to an agreement. We had to agree to that to it, and it made a lot of sense, which is we would bridge them and essentially finance them through the regulatory process, which we fully expect to close, and then we would close a deal and start working together constructively. Dara, we always appreciate you taking some time with us, thank you. Thank you dara khosrowhahi, ceo of uber carl all right david, that was good when we come back, we will talk more about some of the sell sight calls we have today. Price target increases on apple, tesla, netflix, amazon, chipotle and thats not thend e of that list futures are red. Were back in a minute devin, did you know geico is now offering an extra 15 percent credit on car and motorcycle policies . Ok . Thats 15 percent on top of what geico could already save you. So what are you waiting for . Dj khaled to be your motivational coach . Yo devin remember to brush in a circle motion. Thank you. Dj. Khaled. Tiny circles, devin. Do another one. Another one. Is this good . Put in that work, devin. Dont give up. Geico. Save an extra 15 when you switch by october 7th. Save an extra 15 when you switch 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. Futures red this morning as the atlanta fed chief bostic on the tape now saying that businesses, quote, are getting nervous again, worried that the virus is going on for longer than theyve planned for on the ilses of an ft interview we wl e if that has any impact the opening bell is in about five minutes experience the joy of a bigger world in a highlyconnected lexus vehicle at the golden opportunity sales event. Lease the 2020 es 350 for 359 a month for 36 months. Experience amazing at your lexus dealer. Announcer the opening bell is brought to you by nuveen. A leader in income, alternatives and responsible investing. Two and a half minutes to the opening bell Mike Santelli i know you were on squawk box this morning talking about 3232 and some of the lessons that history gives us in terms of trying to navigate these markets. 3232 being the high for this rebound rally back in june what history does tell us focuses in on the extraordinary strength and persistent and breadth of this rebound rally. If you look at similar moves, there really are only a handful of them and they do project out historically to almost a 100 chance if you believe the precedent of 6 to 12 month further gains. You have to believe the precedent is relevant in this instance, thats best quarter ever, 15 quarters, thats, you know, regaining 75 or more percent of a 30 drop. All those things that you would look to the almanac for. I think working against that slightly is the idea that were down still on a sixmonth basis year to date for the s p, thats not typically something that projects to better returns ahead. The election is a noisy factor in all of this and the market in a sense kind of determines if you believe the historians what happens when an incumbent is up for reelection is the market is down in the 90 days before the reelection bid typically the incumbent fails. All those things put in the mix i think net out to a kind of benefit of the doubt for the market, about you without necessarily believing that its from this point on going to be that strong because weve already booked a lot of the projected gains you would expect from the dramatic come back that you got in march i do think you have to kind of look to what history says and recognize that the rhythms and dynamics of this market seem as if they are a bit distinct from what weve experienced in the pas past sort of leads to what miller tabeck says this morning and that is fed Balance Sheet growth starting to flatten out, their words, its not a stretch to think that the fed is satisfied with what theyve been able to do in terms of calming down the markets and wont move to push them a lot higher, in their view thats why numbers like that geunhye of 3232 could get a little sticky. I dont know, is that too simplistic im not a big fan of looking at the absolute level of the Balance Sheet and correlating it with weekly or daily loves in the s p 500. I think if anything you look at what the fed has been saying and theyve been really leaning into the idea that the risks are what we should be focused on and they have no expectation of changing policy soon. I guess i would take that with a bit of a grain of salt, carl. I know thats generally the school of thought you come from. There is the opening bell, guys, and brett filling in a little more negative than at this time yesterday. David, what did we think of dara interesting in terms of their ambitions for this business. Far beyond the delivery of just your food to your home in terms of from a restaurant you know, when he said that he expects and hopes that it will actually equal in size the rides business, thats significant theres no doubt that gub hub would have been should they have been able to get that deal done by the way, getting it done not just with grubhub but then with the regulators both national and local might have made a bigger dent in or a bigger contribution to that ambition, carl, but it is interesting. The stock did react positively yesterday, remember, about 84 million shares being issued here so that is certainly one thing were going to watch overall for the rides business, carl, i guess the key question still is how quickly can you really hope for any sort of resumption of normalcy its funny when a Company Points to only down 60 year over year as being a good thing. Yeah. And that sort of is indicative of the Market Action at the open, guys airlines, casinos, retail, all leading us lower on the heels of what we mentioned about united seeing bookings drop actually, tsa traffic yesterday 755,000 year on year, obviously huge disappointment, but linearly its been holding up above 700 k for the past couple days its going to be fun to drill down for a moment on some of these analysts notes Morgan Stanleys on tesla ups the tries targets to 740, keeps the underweight, bull case goes to 2070 and, david, i mean, the statistics you could pick one, up 43 in five days or as jonas notes adding the equivalent of a forward market cap on a daily basis. We are so far beyond comparisons with the auto market you know, yesterday i mean, i just look quickly and what i have in front of me that i keep an eye on, its bigger than at t, bigger than verizon, well bigger than comcast, bigger than disney, bigger than bank of america, you tell me when you want me to stop and i will keep going until then its not as big as walmart yet, so i will give you that one. Its getting closer. And obviously has a ways to go to catch the likes of microsoft, apple, alphabet, amazon and facebook but its been incredible, mike yeah. As i said, maybe just, you know, there is so many shortsellers along the way here who have been crushed and it does remind me in some ways of some of the thoughts that we had early on, somewhat early on in the amazon life span. Yeah. When people would come out and sort of lack imagination in terms of what the company could become. That is true. And i do think that the experience of people having watched what happened with amazon over the past couple of decades and remembering how, you know, most investors were positioned against it, probably informs the willingness to give tesla this kind of valuation, but on the other hand you really have to keep stretching for what you assume is going to be, you know, some run rate of growth over the long term to dial it back and justify what were worth today. I dont think people are really focused too much on those details. Amazon always had the potential to become the everything store, just doing it more efficiently i dont know that you can really, you know whats your seasonally adjusted annual rate of auto sales . You have to have assuming for the total market for this to actually make sense right here one interesting side element of all of this is a tremendous amount of market value is being built up outside the s p 500 people have talked about tesla going in, if it has a profitable quarter s p could put it in the s p 500. Between tesla and shop a phi and zoom video there is a tremendous amount of performance and value and momentum outside of investors benchmark and it cant be an accident that thats going on and investors try to make hay against their comp tis which is the index. Yeah, indeed. Speaking of zoom, new partnership with service now this morning and you mentioned amazon, mike, baird goes to 3,300 on strong checks you know, we sort of make light of the target changes, david, but in the end the analysts are trying to back it up with signals of demand and thats jonas big point one powerful differentiating factor with tesla is that demand is holding up better in their view than it is versus competitors. Right i mean, of course, when we get back to multiples and growth rates we can still sort of shake our head a bit given a 265 billion market value right now for tesla, which has clearly gone parabolic if you show it for the last i dont know, mike, what it would be, month, two months. You can almost go back i mean, the amazing thing really if you look back is how low it got in march the fact that there is not that much underneath it in terms of, well, we can talk about book value, talk about last years earnings to justify some price no, it was a liquidation back at the lows in march and then it has essentially just blown through the previous highs multiple times since then. China an important market for tesla of course and continues strong there, the shanghai factory is a key part of their strategy there guys, i did want to mention china overall. Even though it figures prominently into some companies that are not public, at least not right now, im talking about tiktok, it is coming up as an important issue for so many Big Technology companies obviously in light of the continuing disputes between the u. S. And china, but even more so now as a result of whats gone in hong kong, the new National Security law i mean, imagine if you are kevin m mare and youve been running disneys direct to consumer business, you are a seasoned executive, now youre dealing with internationally important issues having to do with all sorts of different key constituencies i mean, man, your head has got to be spinning as tic toc no longer going to offer it there, Chinese Company remember facing pressure here potentially as a result that bite dance its Parent Company is a Chinese Company. This he dont necessarily want to be a Chinese Company, i think theyd rather be a u. S. Company if thats possible back to facebook and alphabet and others who are also trying to figure out how to navigate the chinese landscape particularly with hong kong in this National Security law its definitely caught the attention to a number of people ive spoken to this morning. Yeah, Sheryl Sandberg has an interesting post this morning, guys of course, theyre meeting with organizers of the boycott and civil rights advocates today, but says theyre making these changes, for example, david, whats app no longer responding to hong kong requests for user data in terms of law enforcement. Along with microsoft and or twitter and google, but she says were making the changes not for financial reasons or advertiser pressure but because its the right thing to do. Yeah. And thats going to be met with a healthy dose of skepticism, dave. As it should be, i think, as it should be, given what we watch what mr. Zuckerberg has done, says he will do. It typically does come down to making sure the bottom line of the company is protected facebook, you know, we talked a lot, mike, about the advertisers who are at least pausing at this point, so many big names, but really it hasnt done much to slow the momentum of the stock many investors there simply come back to a multiple that they say is 20 times gap earnings. Yeah. No, exactly now, whats interesting, too, you can frame it a couple different ways, with unis that the stock appears bulletproof to these concerns and obviously investors are not registering any real worry that its going to cause the advertiser flight for any long period of time. If you look at it compared to what you might consider its peers google has outperformed and Everything Else in faang and faang adjacent stock has outperformed google. It seems the market is differentiating between ad supported and not ad supported digital platforms. Yeah. Right. Apple google is up or alphabet is up 12 this year, facebook 17 year to date. Year to date. If you dial back a little more to about a year, its a similar story. Okay. Amazon, netflix, microsoft have blown them away. Amazon is incredible, 64 is the increase so far this year, again, still above 1. 5 trillion though still trailing apple and microsoft in the market cap leadership wars. Guys, i did want to do a quick faber report here hit an m a situation the contested one that i didnt get to because i was out on the day that the initial bid was made im talking about core logic the reason i mention it this morning is because weve gotten a response from the board of directors at the company to that offer that was received back on june 26th from kanay holdings and Senator Investment Group they offered to buy the company for 65 bucks a share they said they own 15 , they really only owned 12 prior to when they went public with their offer, essentially unsolicited offer is what it was or is then they bourt another 3 in the market, something that naturally core logic makes note of in their will err this morning, they purchased stock, in fact, above their own price, they offer 65 but they did buy stock as high as 68 to get them to that 15 . Core logic says the reason that they actually did so and had to rush it was because we increased our guidance the day before and the affected stock price would have been affected they go into a lot more detail as to why they unanimously reject what they call an opportunistic acquisition proposal from senator and cannae this morning they say as well that the companies are experienced, that is senator and cannae are experienced investors who have an understanding of our business and our industry, they know core logic has transformed its business model, is generating significant momentum and has a health of opportunities across its business go on to say their proposal is opportunistically timed to acquire core logic at a low valuation and take all the upside that is rightfully yours. Very important here. We dont see this this very often in this market but they have given us both increased their current year guidance and given us guidance for 202 1 and 2022 looking for revenue between 1. 9 and 1. 95 billion in 2021 and adjusted ebitda of 595 there you see it to 615 million and, again, an increase in 2022 as well. Both for revenue and for adjusted ebitda and also eps there. So a significant rejection this morning. By the way, they do say it raises serious regulatory concerns as well i always note that because when you do see that from a company it typically means theyre willing to go to the mat this he do put in a poison pill, this remains a defenseless company. Act by written consent, call a meeting with as little as i think its 10 very much open for shareholders if they felt that this was an appropriate offer for the company. Very much unclear whether, in fact, those shareholders will feel thats the case you can see the stock is trading well above now, corelogic will tell you its starting to trade where it should be based on the fundamentals because we have increased our guidance substantially. It is a market without a great deal of mergers and acquisitions one without a great deal of contested situations, this is one of this he and we did want to update our viewers on that, carl. All right, david. Only two dow stocks are green, microsoft and apple. Lets get to bob pisani. Good morning. New highs for microsoft, apple as well as facebook. Important thing today is its one of those risk off days and the market behaves in a predictable way when this happens. So you can see the pattern here. Transports tend to be down on these kinds of days, particularly the airline stocks, take a look at that. The russell 2000 small caps tend to underperform. Banks which never really rallied much at all also tend to underperform energy tends to underperform, another sector that never really has had a significant rally in quite a while. And tech tends to be relative outperformance, thats exactly the pattern you are seeing today. Mega cap stocks once again today tend to outperform, a little mixed performance. Facebook, apple, microsoft all essentially at 52week highs thats whats been moving the market you get these days here, value outperform growth occasionally like today but not very often. Look at the s p 500 ben carl son has a terrific blog, he noted s p 500 down 10 for the year, the median stock is down 11 for the year why is the s p 500 only down 2 and the into he haddian stock down 11 because the biggest stocks keep getting bigger and moving the markets here is a different way to look at it, the top ten stocks by market capitalization are up about 10 so far this year the top 50 are up about 2 remember the s p is down 2 . The stocks that are by market cap 200 to 250 in the s p right in the middle they are down 9 and wait a minute the bottom 50 by market cap are down 40 its often the case where the biggest stocks the top ten stocks, top 25 are a big part of the market cap this has happened many times in the past but this is a very wide dispersion in terms of the Market Performance and i think its notable and we keep pointing out those stocks keep moving the market and here is very graphic explanation of why that is so they are the ones that are really mattering those mega caps we keep putting up guys are talked about pounds here this morning filing confidential we dont know the details of the company, we dont have an s 1 yet but its a good time for a company like pound to go public. Other Data Analytics company like elastic, splung, mongo db all have done very well in the last couple months, this is a threemonth chart, threemonth Price Movement here. You can see have done very well. The second thick thats important about the ipo market is its doing well generally not only is the market done a little bit better in the last couple of months, but the ipo market has outperformed the overall market this is the ipo itf, its a mass ket of 60 stocks that are gone public in roughly the last two years. This is a historic high for this whats happened here is again just like mega cap tech doing well, techoriented ipos have done well this year, the ones that are out roughly a year, i could show you a couple of them, zoom video weve covered many times thats up thats not a typo, 280 so far this year. Moderna is one of the few nontech oriented but obviously Important Company thats done really well, cloud flare, crowd strike, slack, all have done really well so far this year so the market for technology, the market for biotechnology in particular still remains very, very strong. Carl, back to you. All right, bob, we will see you later on, bob pisani. As we said earlier most dow components are in the red for now, seeing good action on semis but travelrelated names are leading the s p lower by about 1 points we are back in a minute. 13 poin. We are back in a minute. While youve been social distancing youve also been, well, medical distancing, too, causing many to go undiagnosed and untreated. Seeking care is safe and telemedicine is available. So follow these steps to stay healthy. Keep social distancing, stop medical distancing stay 6 feet away from others, stay close with your doctor. No more toughing it out. Way more taking care of yourself because when you take care of yourself youre taking care of everyone lets stop medical distancing. Part of a new Public Service announcement from a group led by hunan in a, walgreens, david, trying to encourage americans to go to the hospital when needed the fear is that they are avoiding medical visits because of covid but we know how much hospitals have been under pressure because of exactly that. Yeah, you can talk about things being elective, but there are things that, yes, are socalled elective but are important to get to and the longer you wait the more serious things can become, carl, weve heard that from any number of people who run these Hospital Systems in the country, which is also a key part of their profitability. They are missing that right now. But more to the point as well, there is this other cost that is going to take a toll, which is people not seeking medical care that they should, as a result of fear of contracting the virus. Its interesting that that is beginning to run at this point well see, in fact, if it has any real impact on peoples willingness to go get treated. Yes, absolutely, especially i dont know about you guys, child care, just continues to go through your mind, how much theyre missing in terms of regular visits, wellness visits, ort do orthodontics, dentists if the nasdaq finishes higher it would be the 15th day its higher save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to Xfinity Mobile. You can get it by ordering a free sim card online. Once you activate, you only have to pay for the data you need, starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. 5g is now included with all new data options. Switch and save hundreds. Xfinity mobile. I spent a good amount of time over your attempts to acquire grubhub. It didnt happen should your shareholders view this as second prize, and if not, why not i think our shareholders should view it as of the prize every single deal that comes together needs two parties to agree and that requires you to agree on a lot of issues, including price terms, et cetera we couldnt get there with grubhub for various reasons, and ultimately we agreed to disagree with postmates we did agree. We think its an attractive price. The asset is a great asset we actually think the postmates brand is exactly the kind of brand that we want its a millenial brand, its much younger, and the gee owe graphic focus that they had in the restaurants, the kinds of restaurants that they have is pretty incredible, gets us a very strong market presence in los angeles and orange county, so we think the one that worked out is a pretty great one and one that were excited about shareholders seem to be sharing some of that excitement. The stock is up and that is the best barometer you can usually have, 33 bucks right now uber, and by the way, they priced this thing at 31. 45, the stock price for the 84 million shares to make the consideration equal to 2. 65 billion. So uber doing better than anticipated in terms of their tenday weighted average that they went by for that, guys. Well see if it continues. Mike, i dont know, could it one day become equal to the rides business he says so it seems the calculus if youre an investor in uber yesterday is okay, were spending 5 of the market value of uber in stock to get bigger in a business we were already in, and that maybe is going to scale some day and so it seems like that might be worth 1 or 2 of the stock but very much jury is out to whether the business will reap rewards down the road one of the big names to watch in the meantime, more squawk on the street continues after the break. Dont go anywhere. The ppp data from yesterday had something for everybody. Were going to turn to robert frank to drill down on that this morning. Hey, robert. Good morning, carl. We should make clear that all the people in Companies Mentioned herefollow the rules of this program. It did help retain jobs and of course, many of these people had an obligation to do whatever they could to save their companies, but some of these names that got taxpayer money now raising eyebrows, among them billionaire ron buerkle, soho house received between 9 million and 23 million by applying through each Club Location from miami beach to manhattan and hollywood. Over 400 country clubs and golf clubs receiving funding. The famous Greenbrier Resort in West Virginia owned by governor jim justice that got between between 5 million and 10e million. Billionaire developer joe pharrell who builds Hampton Homes got nearly 12 million private jet companies also received money from ppp. Clay lacy aviation which flies celebrity athletes and wealthy vips got 27 million from the Aviation Fund and 5 million and 10 million from the ppp fund. Nobu, the famous sushi empire received loans between 11 million and 28 million and jeff koons, Famous Artist whose work sells for tens of millions of dollars, received up to 2 million and finally perhaps most famously, yeezy llc owned by kanye west received between 2 million and 5 million guys, back to you. Thats quite a list, its going to continue to get scrutiny all day today thanks for that. Before we start the new hour, mike santoli nasdaq covering weakness in banks. A lot of people noted with the volatility index was also green, thats also staying true today its been resilient in the high 20s. Whether that means theres a high wall worry for the market decline, or people are viewing some stressors out there, i think thats one question this market probably has to answer. Well get more information obviously later on today at the close. Mike, thanks well see you later on good Tuesday Morning welcome to squawk on the street. Im Carl Quintanilla with david faber and Morgan Brennan live from separate locations. Its a pretty familiar story, maybe some underperformance on the broad markets but the nasdaq is trying. There have been 46 trading days since may 1st, and the nasdaqs record over that time is 3610, david. Obvious huge influence from very large names. Yes, and we talked a lot about them, as we continue to and they have a disproportionate impact on some of those indexes of course. Apple is up again this morning, 1. 62 million market value amazon is not up thats one of the few days im not seeing that stock actually positive, at least not yet, down about twothirds of 1 its taking a pause after crossing the 3,000 mark per share that we saw yesterday, hitting a new alltime high. Nasdaq 100 is actually fractionally higher. It is the lone average in the green. U. S. Average is in the green today. Thats what youre seeing, the s p and the nasdaq composite breaking a fiveday win streak, and i think its really those coronavirus case counts that were seeing thats kind of driving the action today, whether its airlines that are lower, cruise lines that are lower, energy, some of these other names, other stocks that have been tied to the reopening efforts. I think when you have the atlanta fed president bostic saying the u. S. Economic recovery will be bumpier, on a day like today, after several days of decent gains, investors are taking a pause carl morgan, lets bring in Goldman Sachs chief u. S. Equity strategy david costin on this tuesday. Welcome back good to see you as always. Nice to see you thank you for inviting me, carl. David, when we think about your coverage so far this year, it seems like theres been a few threads that have been pretty consistent one is increasingly election risk the other, depressed buybacks year on year, and as you said early on this year, narrow participation that needed to get broader, if the gains were going to be sustained. We just got done talking about the nasdaq are you seeing any change on that front i expect that is likely to continue the market in our forecast is likely to be a range bound somewhere between 3,200 on the upper end, and 2,750 or 2,800 on the low end. So thats the expectation in terms of the range or the path as we move forward into the rest of the year. As you pointed out, the narrowness of the market is really pretty striking in terms of the leading stocks. You talk about it every day and certainly investors like to discuss with me and the other members of the team, up by 28 year to date but the typical stock is down basically 8 to 10 . So i think that narrowness is likely to continue i think the characteristic that is most prominent that we focus on is basically the duration of the cash flows, or the time into the future in which the average level of cash is being generated by the company what do i mean by that the market is focused on the longer term growth prospects, and companies with or perceived to have superior longterm growth have done well, similarly those with stronger Balance Sheets have done well, and in contrast, thats i think why some of the nearterm or Cyclical Companies havent generally done as well because the market has gravitated toward that longer term growth. So i think thats i think a theme likely to persist for the rest of this year. We mentioned a few moments ago the fed, atlanta fed chief bostic in some comments said he felt that ceos were coming to grips with a virus that is lasting longer or at least the effects of which are lasting longer than they originally thought. Does that kind of color match with what youre hearing from clients . That is i think the characteristic has been most surprising to me is we had a zoom dinner, i could imagine what we are having a conversation now, but each person in his or her own home, and a number of those investors, very prominent investors do expect a virus, a vaccine for the virus to be approved or developed by october, by the fall, which surprised me, and its not necessarily our view. Im certainly not an epidemiologist, but they were talking about some of the positive aspects of a vac secin what that would do until that time, a number of businesses we talked about, you look at the performance, the Conference Calls, the transcripts, things like that and their interaction with investors have been relatively more subdued about the path of the restart, if you will, in the economy. A lot of the data, the Economic Data has been strong, stronger than expected, so thats a positive i think thats lifted the market certainly in the last month or so, been supportive of that. By looking into the latter part of the year, the question is just how resilient it will be, why the single biggest topic of discussion relates to the profit level in 2021, and looking out into next year, so on that basis, in our estimate of Something Like 170 a share in earnings for the s p 500, the markets trading roughly 19 times forward year ahead levels of expected earnings, which is high, relative to history. Thats on an absolute basis. If you want to think about it relative to the low Interest Rate environment, the equity market is still more relatively attractive at the index level, and thats why we sort of focus inside of the market, focusing on the duration, longer term more secular Growth Companies, largely thats in technology, and some of the stronger Balance Sheet companies, but that indicates, carl, to your point that actually the investors arent that optimistic, because if they were really optimistic about economic activity, they would own weaker Balance Sheet stocks thats not happening those Companies Traded much lower valuations theyre not as, theyve not doctrine theyve done poorly, down almost 20 yeartodate in contrast, stocks with the strongest Balance Sheet up 10 yeartodate, trading almost 35 times earnings, so big premium being paid for that longer term growth david, youre making some really key points there, and i find it especially important for investors right now to be sort of keying in on that relationship between low rates and how those are pushing and incentivizing investors into some of the more secular growth names on a longer term basis i am curious about what you think overall about fed activity right now. Weve heard the fed say over and over again that its going to remain accommodative, that theyre going to be more engaged in terms of dovish rhetoric, but if you look at the Balance Sheet over the past month, its largely been flattening out. So how do you balance that, the Balance Sheet against what weve been hearing from the fed, and is there some point at which this entire conversation, the thesis around this conversation shifts well, my response to that, morgan, is that really some of the programs that the fed has put in place were vital for both the restart and basically solvency and liquidity for so Many Companies the back stopping of the commercial paper program, some of their initiatives on backstopping and supporting the Investment Grade bond market, where theres been record issuance this year, and some of the higher yielding bond issuance, and some investment break. That to me as an Equity Investor has been critical to understanding broadly the Market Recovery its been those actions that they think are critical. The economy and data is Getting Better but ultimately its a medical issue that is going to be determining the pace of the restart, and i think thats why it comes back to that secular growth, where are some of the companies where they can grow more steadily irrespective if you will of the impact of the virus, which is clearly substantial, and you know, its interesting, were having this conversation today the lerks is more than four months away and it is now becoming and i expect it will become the dominant topic of conversation with investors. For a while in january february, that was a conversation about policy initiatives, things like that, and of course inappropriately it shifted dramatically towards medical issues, the virus, the economy, et cetera, and now i think the policy questions about the different candidates and the prospect of a senate, which party will control that, i think is becoming the dominant conversation that im having with portfolio managers. Hey, david, i want to divert for just a minute from the market talk, you had mentioned a moment ago a zoom dinner, which i assume is not something you ever thought youd be doing with clients and cure yugs as a chief strategist, somebody i assume traveled a lot, a lot of inperson time, dinners, lunches. How do you see how you do your job changing when we do get to the other side of this pandemic, if at all . Its a great question i did reference a zoom dinner. We have Conference Calls and zoom calls much of the day in this environment and youre right. I used to travel an awful lot and see people face to face. I think the efficacy of these meetings is quite efficient. I can be middle east, europe and asia in the span of 24 hours and not on an airplane its effective its not the same. Ive been an analyst for 35 years so i have a lot of relationships, built over a long period of time inperson so i think its perhaps easier or less disruptive for me to have a conversation i think its harder in terms of developing relationships with new clients but this is likely to persist for some time, david. Maybe well invite you to one of the zoom dinners in the future i look forward to it. Finally, david, on election risk, youre aware your peers at jpmorgan yesterday or over the weekend said that a Democratic Victory in november is neutral to slightly positive because they saw a lessening of u. S. china tensions, offsetting the risk to corporate tax. Is there a good rejoinder to that i think i would make the following observation, carl. The market trades on expectation in the news. If you look at the predicted markets and you look at the polls, it current ly predicts polls and predicted markets likely to have a democratic president and a democratic controlled senate. So the market is pricing that in tod today, and today the market trades at a level 19 times earnings id argue the market has already given its view that its not as concerned about which Party Controls the presidency and the congress obviously the american citizens will vote on that in november, but the observed reality of how the market trades tells you the answer, it is not that concerned based on that information. We can debate on the level of earnings and the profits and what policies may be initiated by the different parties if it is controlled by a democrat or split congress, if President Trump wins reelection, all of those are subject to interpretation, and baseline forecast of 170 earnings is assuming the current tax rate for corporations is in place some of the proposals have been to roll that tax cutback in different ways and some minimum rates and things like that, where you could have a potentially higher tax rate, therefore lower earnings the bid ask spread for earnings next year is between 150, assuming a higher tax rate or 170, which is kind of our base case scenario. So the market is trading somewhere today between 19 and 21 times earnings. Its expensive on an absolute basis but as we talked about with morgan earlier, the idea of Interest Rate environment has to be incorporated and we traded still a meaningful, attractiveness relative to bonds, equities that is. Thats how i think about it. As you point out, david it will get more and more as we get closer to november see you on zoom, david talk to you soon, thanks okay, carl. After the break, the ceos of Royal Caribbean and Norwegian Cruise Lines together. Well be back in two minutes in a highly capable lexus suv at the golden opportunity sales event. Lease the 2020 nx 300 for 339 a month for 36 months. Experience amazing at your lexus dealer. For four months amid ongoing discussions with the cdc, rivals Royal Caribbean and Norwegian Cruise Line are teaming up to form a panel of experts they hope will get them get back to sea this fall. Will it work im joined by the ceos of both cruise operator, Royal Caribbeans Ceo Richard Fain and norwegians frank del rio. Good to have you on cnbc today richard, ill start with you help us understand, whats the objective of this panel, and why now lean on the expertise of these health experts, when cruises have been grounded since mid march . Well, thank you seema, good to be here were quite excited about this panel. Weve actually been working on it for quite a while, almost two months now, to assemble a team of experts that could really help us develop the very best protocols to ensure the health and safety of our guests, of our crew, and the communities that we serve in. We actually have a while, because the covid19 continues to expand, and so theres going to be a while before we can come back into service, and were taking advantage of that time to put together some of the strongest names in this field to put together a Blue Ribbon Panel that help us to develop the very best kinds of protocols. But frank, obviously the longer you wait, the more the financial losses add up. One scenario that continues to come up im hearing from my reporting with the cdc is what happens if there is an infected passenger on board can you walk us through how that would work from isolating that passenger, medically evacuating that passenger to ground what level of confidence with you give travelers booking cruises for this fall if there is an infected passenger, that that person gets the treatment they need . Look, were learning every day more and more on how this disease transmits, what are the repercussions, so what you saw happen several months ago, when the virus first struck america i think will be quite different in the future its one of the things that the panel will be working on, quite frankly. We think that is a challenge we believe there are mitigating circumstances that we can overcome that challenge, but the reality is that the pandemic now is something that we all are having to live with, on land, at sea, everywhere, and were all learning and we believe that Going Forward through the learnings of not just what the panel is working on, but society as a whole will be able to come back strong, safe, because at the end of the day, we have to build confidence in the marketplace, confidence with our travel agent partners, our guests, our crew, the communities we serve, as richard mentioned, and so were very confident that there will be a robust and comprehensive set of protocols, procedures, policies, standards, if you will, that will allow us to cruise safely richard, shed some light for us on what those protocols look like, will the passengers have to wear masks, will crew have to wear masks is that buffet going away . Talk us through some of the changes that are going to be made on board. Well, i think part of the point is were not prejudging we have told the panel, take the resources, take the time you have the expertise, bring in additional expertise if needed so we dont have the answers today. Were really only announcing that the panel is only just started on that process. So i dont have all the answers. The one thing i can tell you, though, is that interestingly, one of governor leavitt, the cochairs have themselves experienced cruises and wanted to bring that experience and we look forward to doing so the experience has to be appropriate for a cruise now, it is going to change in cruising, seema, you know cruising has changed over the last number of years cruising last year was quite different than it was a few years earlier and i think it will be different in the future as well. We are looking to establish protocols that protect the health of our guests and crew, and do so without undermining what makes cruising so special it will be different look, it was not long ago when the ship only had one dining room now we have 26 on some of our ships. Wasnt that long ago when the buffet was the midnight buffet was the big thing. We havent had a midnight buffet for years. You talk about buffets, its one thing, if im guessing, i would guess we would not have selfserve buffets but maybe something where the buffet is provided with individual service in a healthy manner. So there will be changes, but i think the changes wont undermine the fundamental fact that people are buying a cruise for a marvelous experience, and we understand we need to deliver that marvelous experience. We just need to do it in a healthy way. Frank, walk us through some of the changes youre looking at on board especially for your customer profile that tends to skew a little bit higher with your luxury sailings should passengers above the age of 70 with preexisting conditions feel comfortable getting on board look, i think that the panel is working on all these questions. I think early on some conclusions were jumped to that perhaps are not valid today. The most resilient customers that we have across our three brands are those on the upscale brands of oceanic regions. These are ardent traveler, almost cultlike, and they want their cruises back, and i will tell you that our bookings for 2021, given the circumstances that were seeing, where there is literally no marketing, travel agents for the most part are locked down as well, the industry has been, has suspended service. The level of activity for new bookings for 2021 sailings and beyond is remarkable, given the circumstances. This gives me great encouragement that people understand that the virus is all around us, and the cruise ship is no exception, and as soon as we can provide definitive proof that it is safe to go on a cruise, and thats what the panels mission is, theyll be here theyll be back. Theyre back now theyre wanting to cruise with us, and so we believe that the longterm viability of this business is intact, and were going through a rough patch with this virus, but were confident that this rough patch will not last forever yes, morgan here. Great to have you both on. I just want to note as well in terms of this healthy sail panel, you are announcing and giving us detail, the other chair is dr. Scott gottlieb, who say cnbc contributor that being said, richard, Something Back to 9 11 and the air travel change, you had safety protocols and new regiments put into place and became much more permanent i realize youre still sort of in early days with healthy sail panel, but the protocols you put in place here, do you expect hem to become permanent . Well, you know, actually, morgan, thank you for raising that, because the metaphor of 9 11 looking back, the comparison is actually quite apt, because there we had a time and when we were in the midst of it, it looked like this was something that would last forever and life would never be the same, people would never fly, et cetera, and what happened was we adapted. We adapted as cruise liners, we adapted as airlines. We adapted as a society, and things did change after that you have much more safety protocols at the airport, but theyre just now part of life. There was also overreaction at the time i remember back after 9 11, when if you boarded a cruise ship, we took away your fingernail cutters, your little clippers, and that was kind of silly, but that was the attitude, because we were in the midst of it, but we did learn the industry adapted im talking about society adapted. Im talking about the airlines, and we have a new way of doing things, and i think were going to see exactly the same. Were going to see new protocols put in place its going to be different, but its going to become part of who we are and what we are, and i think the comparison to 9 11, life goes on, and our earlier predictions of people who are going to fly again proved not to be valid then either yes, frank, im curious, the other piece of this is shipbuilding, right . Carnival cruise lines came out today, another company came out today and announced further ship delivery changes, altered deployment plans, cancellations, et cetera. Certainly weve seen some impact, theres some interruptions to the production of new ships that are expected to come online in the coming months, coming years how does this change the way ships are constructed, if it does well, as you know, ships have a long lead time these are 30yearplus assets, and the order book as of today is as deep as its ever been, and so i think whatever disruptions there are to the delivery schedules are going to be temporary in our case, our next new vessel arrives in july of 2022, and we expect it to arrive on time, and we look forward to bringing her on, on our fleet, but like anything else, we evolved, and we innovate, and i think its one of the great points of the cruise industrys success over the years is the innovation. As richard mentioned, cruises today are different than they were five, ten years ago and for the better, and so i do believe that in the future, as new vessels get designed and ordered for delivery beyond 2027, 2028, because thats how deep the order book is today, that you may see changes in the way that the ships are constructed in reaction to this virus, but at the end of the day, cruise ships are a fun palace, if you will, floating palace at sea and thats never going to change its only going to get better. Frank, of the three publicly listed cruise lines, your company is the most levered. Your stock is also fared the worst so far this year, down about 70 . Given that, theres still a lack of clarity around what this new cruise experience will look like once sailings resume are there plans to raise more debt inequinec and equity to co financial losses we feel confident of our Liquidity Position today when we raised 2. 4 billion in the first ever simultaneously tranche in early may. We said we had a runway that would extend through the end of 2021 we believe thats still the case today, and certainly we hope to be back in action and sailing across our three brands, waiting for that so i do feel very confident that we have the financial wherewithal to sustain us while we wait for the panels recommendations, wait for the authorities to open up cruising again and wait for the worlds ports to reopen to cruising. Richard, i also want to get your take on the case count that continues to rise in states like florida, where you operate out of, where a significant share of your passengers come from as well how could that slow down the reopening and sailings resuming this fall, if the case count continues to rise . Well, i think that demonstrates the need for looking at this very seriously obviously the rise in caseload across the country is concerning but were not really focused on the next couple of months. We think we have time ahead of us to really do this right look, no one hates being idle more than i do, but given that were going to have to be idle and this increased caseload obviously dictates that for a while, this is an opportunity to look at innovation, look at new ways of doing things, and when i see the panel and the passion they bring to it, you know that our company is marked by the passion of our people. To see the passion for the panel is invigorating, and theyre determined to come u Innovative Solutions cruise something actually a unique environment and that brings some unique challenges but also brings some unique opportunities to do things differently than you have on land, because we control our environment, so what we are seeing now, weve all talked about, weve been talking about the likelihood of a spike or a second wave. We understand that thats a possibility, and we need to have that as part of our thinking with all that needs ta be done in the next couple of months, the discussions with the c cdc, richard, also using the recommendations from this panel, what would you say as you sit back and watch this industry sort of reinvent itself . What is your biggest fear right now . Well, first, let me make it clear. I dont think were reinventing ourselves. I think were doing exactly what we did after 9 11. I think were doing exactly what we did after the Lehman Brothers collapse i think we are adapting. Going on a cruise, i mean, who would have imagined that on a cruise ship, youd have ice skating rinks and zip lining. I forget, zip lines and norwegians gokarts gokarts. Our surfing, all of these things are novel and different, and its going to change, and we are adapting to it i dont think were reinventing it i think we have been in contact with the cdc the panel has been in fact with the cdc. Theyre well aware of it and they have reacted warmly to it im actually quite positive that were doing exactly what we should do. Were taking an innovative step with some of the great minds, with some of the best judgment, with some of the best experience to find solutions to problems that were finding in the United States one of the reasons we were able to attract these people was because they said they were interested in not only what they could do for the cruise lines but together, this brain trust could come up with solutions to things that would help other industries around the country and around the world well, as you come up with those solutions, richard and frank, please keep us up to date clearly a lot of challenges ahead but perhaps together you can turn this tide frank del rio and richard fain, thank you for joining us today thank you thank you seema, thanks were well off the session lows of it down 240 sue we rah has has a new update. Good morning, carl, good morning, everyone. Retailers want some help getting shoppers to wear masks the Retail Industry Leaders Association has sent a letter to the National Governors association asking governors to require the use of face coverings. Atlantas mayor keisha lance boss toms says she tested positive for the coronavirus she is asymptomalic and does not know where she was exposed she has been discussed as a possible running mate for democratic president ial candidate joe biden. Melbournes australias second largest city now back in lockdown after a recent surge in new cases of covid19. Those restrictions are set to last six weeks officials reported a record 191 new cases over the past 24 hours. The premier of the state of victoria says the move is needed to stop the outbreak from spinning out of control. You are up to date i s y alleeougain in an hour. Squawk on the street is back in two minutes time 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. I know that every time that i suit up, there is a chance that thats the last time. 300 miles an hour, thats where i feel normal. I might be crazy but im not stupid. Having an annuity tells me that im protected. During turbulent times, consider protected Lifetime Income from an annuity as part of your retirement plan. This can help you cover your essential monthly expenses. Learn more at protectedincome. Org. Welcome back to squawk on the street. It is time now for our etf spotlight, looking at the etf ticker xbi, up 40 since early april. A big standout in the group today especially is novavax, getting a huge boost after receiving 1. 6 billion in federal funding for covid19 Vaccine Development under the governments operation warp speed program. Stocks up 24 right now, soaring more than 550 in just the past three months. Another name to watch, regeneron, which is also up 3 after receiving operation warp speed money this morning for its antibody cocktail. Keeping an eye on all of tt,ha and were back in a moment healthy for any government to take a look at any deal that goes through, but we actually think that this deal, there are going to be three very big players in the u. S its going to be extremely competitive markets. There are many local players as well, and listen, this food Delivery Market is bigger just than food. Youve got grocery in there. Youve got pharmacy in there amazon is delivering food from whole foods, et cetera the category is a very large category our getting bigger in the category i think will make it even more affordable for consumers. Interesting comments there from ceo of course Uber Dara Khosrowshahi talking about the antitrust amp indications of postmates that was announced yesterday. Our viewers may recall the long conversations they had with, longrunning conversations they had had grubhub that did fall apart because of concern about antitrust opposition to that potential deal, not just at the federal level, if it would have been there, but also more at the state and even local level, and i asked mr. Khosrowshahi if hed ask that for the postmates deal. They will be large in San Francisco and new york but he said is he not concerned because of the competition from three big players and the fact he believes it will become more affordable perhaps for more consumers as a result of that. Yes, it was a great interview, david i was amazed, he was so bullish about food delivery and kept going back at it and mentioning the fact that the Delivery Business is growing organic at over 100 before mostmates enters the fray for uber what he had to say about getting to profitability next year and that was still the plan and he could make that statement with quite a bit of confidence, i thought was striking as well particularly when they are just given the fact particularly when theyve got go ahead. Down 60 year over year. Exactly which looks down 70 in the ride business. His point is we have a hedge with our Delivery Business that will benefit from covid, while the ride business doesnt, but of course, it is still a 70 30 mix, even more so in terms of the revenue contribution from those two businesses yes, shares of uber are up fractionally today again, david, great interview. Thanks for bringing it to us speaking of uber, dont miss early uber investor jason kalkanis at the top of the next hour hell weigh in on the postmates deal and daras comments this morning. Thats coming up on squawk alley in just about 20 minutes. Stay with us i dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. Now offering zero commissions on online trades. We charge you less so you have more to invest. Were helping members catch up by spreading any missed usaa insurance payments over the next twelve months so they can keep more cash in your pockets for when it matters most find out more at usaa. Com one under the radar chart pattern could point to highs ahead. Adgniout more on trinatn. Cnbc. Com more squawk on the street coming up. Woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. This mornings report on First Quarter state gdp is just another sign of the fiscal crisis that is hitting u. S. States our scott cohn looks at the state of the state, something well be doing all day long today. Hey, scott hey, carl normally this is a day wed Crown Americas top states for business cnbc decided not to do that this year, a year that is starting out really horribly at the state level. Take a look in new york and nevada, where Financial Services in tourism, ground to a halt in the First Quarter. The gdp dropped 8. 2 every state saw declines with the smallest in nebraska and the dakotas. Alaska posted a 4 decline, 3 drop in new mexico and a 2. 5 drop in texas, all those states grew solidly in 2019, and that takes us through march in california a 6 billion Budget Surplus to start the year turns into a 54 billion shortfoshor shortfall that led to massive pay cuts for state workers, cuts to Higher Education and some increases in tax tax in new york the budget holds 61 billion. Governor cuomo is withholding budgeted aid to cities and mayor de blasio is warning of potential layoffs in the city of 22,000 workers in hawaii where the Tourism Industry is decimated a 2. 5 billion state budget gap they drained the Rainy Day Fund and the university of hawaii is bracing for a possible 18 budget cut some states are projecting revenue declines up to 20 between now and the end of fiscal 2021 and in comparison during the great recession, state revenues declined 11 , so were looking at sharper revenue declines than what we saw in the great recession, along with increased spending demands and we are seeing the effects already since the start of the pandemic, state and local governments have shed 1. 5 million jobs guys the numbers are just staggering, scott, really ups the ante for some sort of bailout deal in another fiscal package by the end of this month. Well see what we get. Scott cohn, bringing us the latest coming up, a miami Restaurant Owner as that county prepares to shut down again, following resurgence of covid cases, what needs to change the Second Time Around were going to be discussing that stay with us experience the joy of a bigger world in a highlyconnected lexus vehicle at the golden opportunity sales event. Lease the 2020 es 350 for 359 a month for 36 months. Experience amazing at your lexus dealer. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. And tailored recommendations. You say that customers maklets talk data. S. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. Switch and save up to 400 a year on your wireless bill. Plus get 200 off a new Samsung Galaxy s20 ultra. The premarket looked weak but the nasdaq has done it again, going for six in a row, going for 15 out of 17, and that is a new alltime intraday high on the comp. More squawk on the street continues jt montinusa me one deal we want to talk about today, we got a tie up of two providers in the solar industry, sun run, which is a provider of residential solar Battery Storage and Energy Services is buyi buying vivint solar. Both stocks are up quite a lot you see there in terms of the premium, at least. Take a look at shares of sun run as well. The market responding quite nicely but bringing consolidation in this industry which has been somewhat hard hit. Solar city is now part of tesla. Meantime miamidade rolling back their reopening progress. This is the country and state continuing to see a spike in coronavirus cases. Joining us now to discuss the step back for Small Business is restaurant and resort manager, geni geniveve were seeing the closing of spaces like yours, how many time did you get in terms of being able to make this change and how long do you expect it to be in place . We were supposed to close again yesterday. So we had like two days to react on the news. Previously we had more time, so the first time we reopened was actually better, if i may say, but right now we have to just adjust quickly our team is wonderful and works around the clock so we are going on a day by day basis and were grateful to. We were able to remain hope. And were going to become our guests and of course all of the cdc guidelines and make sure we remain safe. Given what we have seen in the increase in cases in south florida and florida in general, what has consumer demands been like what has foot traffic been like to the restaurant . Was it starting to slow down before the mandate was put into place . Has it been busy the guests were very happy to go out again it wasnt like prequarantine, but we have been unexpectedly busy compared to what we were expected which was a spike of the current coronavirus. However we have amazing customers. Were grateful, and we have been great. We are at 50 capacity and were great outdoor. So just at the request of the cdc guideline and it is debated again. Yeah, when i see all of the actions youve taken to be able to open in the first place, touchless resceptaclesreceptacls you flushed the plumbing system out to prevent bacteria build up taking temperatures, do you feel like youre being as a restaurant given the fact that youre a Restaurant Owner, do you feel like youre being unfairly targeted . What else do you feel like you could do to add more safety protocols to your business number one priority is to protect our staff and our guests and we were taking this very seriously. However according to the news we are left a little like we dont know how to we response. Things are changing very, very fast sometimes it is difference and we have to adjust quickly. Thank you for joining us. Good luck as you navigate what is on a daily basis a changing set of guidelines. We appreciate you taking the time thank you all right, david and karl, before we wrap up the show, touch on another potential unicorn, tech company, that filed with the fcc to potentially go public perhaps before the end of this year ending an extended wait. And that of course is on, i dont want to say its on a spree, but it has been rewarded quite a number of defense contracts in recent months as well with a National Security community. For the National Security side of things it is being watched very carefully as the first in a wave of next jex ration defense tech so this will be one that i think will really get investors attention right now and of course theyre doing things in the midst of the coronavirus pandemic yeah, yeah, they have been out there for quite some time discussing this potential ipo candidate in years past. They do allow for that some time back, but to that point, the d. O. D. An important client so much of the work was done to help them identify things like terrorist cells. They always have a pretty significant curt mandate for them as well and that certainly is a topic of discussion in silicon valley. Well talk about it more on squawk alley in a few minutes. Joining us for the hour, and interesting market day once again even though were giving back a little bit of the gains on the s p and the dow the dip got blocked. 15 of 17 sessions are green, john, and the sale side continues to raise the ant on apple, tesla, amazon, and a lot of the targets getting met before you could even look twice. If you just look at the biggest market caps in tech, at least what we tend to think of when we think of tech, apple, microsoft, facebook, theyre all up except for amazon this morning. Plus at or near alltime highs i also look at adobe which is a momentum type but a lot of success in the cloud and also being able to their business into new