Transcripts For CNBC Squawk Box 20240712

Good morning welcome to squawk box here melissa lee is hanging out again with us. Becky is off today for some welldeserved vacation well see her next week. As joe said yesterday, one of the first down days weve seen in a while a little better s p up about 13 and nasdaq looking to open about 45 points higher also showing you treasury yields now you can see where those are standing well flip that around to. 628 on the 10year you thinking about refinancing a mortgage anytime soon, guys . Im as low as they go im good if you have an account where you can use assets for credit line or to make an investment or Something Like that, i remember two or three years ago, i locked this ridiculously low rate if they come to me again and offer another one, it will be lower than it was last time. It was like 2 or 1. 5 when you get money that cheap, dont you think you you are in the drivers seat when rates are this low i dont feel bad about borrowing money at rates like that so you are talking about getting a new mortgage getting more cash back and, say, investing it in the stock market i dont even think of it as a mortgage it could be anything. The sorkin family has always been very conservative weve been the suckers taking 30year fixed mortgages for so long, which is probably the worst thing you can do my guy has told me dont do that you are giving the Bank Interest i know. I thought this was such a great deal for 30 years and now, here we are 10 years later. Andrew, number one, the dow did manage a gain but what about the nasdaq significant pull back but it has been so crazy. Melissa, you are right about waffle house it goes all the way out to new mexico and arizona you can get almost across the country and stop in arizona. You could throw in a couple of ihops and could be blanketing the country. One of our viewers sent it in, a picture of charging his tesla next to a waffle house i dont expect elon to call me or thank me. Hesbuilding places that have food they want to bill out places where you can stop and get a meal i dont see why you dont see waffle house in that context using your noggin melissa, you are very detail oriented like fast money and all of that stuff. All i said was, i like to eat waffles i just want to spend my time waiting and while it is charging, i can eat. You know, the waffle with the whipped cream. Maybe you could build like a waffle stand i wonder if hes up watching. Hes not up this early, joe maybe hes still awake from the previous night is my guest if hes watching. Melissa, you are a new parent. Hes a new parent. Maybe hes up with the baby. Possible. Entirely possible. Melissa, i didnt like that tweet. Either at home or work, you are cleaning up poppy diapers. It was whats worse, joe at 7 00 a. M. Or guy at 5 00 p. M. Or chaining twins, either way, it is poppy diapers can you say poppy diapers she did. And i did. Focus this morning, the big banks will kick off earnings season well hear from jp morgan, citigroup and wells fargo. Well watch for those decisions set aside. Spending and the economy in covid cases. California, just bad news in general. The markets paid attention imposing a sweeping pull back in new openings amid new cases. The governor is closing in door dining, bars, movie theaters and Museum Los Angeles and San Diego School districts will begin the Fall School Year entirely on line basically just los angeles and san diego. If it was all california schools, it would be even bigger but certainly a set back in my house and elsewhere. Once it starts, you wonder whether it is just going to be tough for school maybe not in wyoming but in very populated areas, it may be tough to get in there to school. Meantime, cuomo. New york governor releasing this states plan to allow some schools to reopen this fall. Saying schools that maintain daily infection rates below 5 are eligible to hold classes but warns if the regional infection rate racises above 9 , schools will not be able to reopen houston, texas, Harris County officials activating there an emergency broadcast system sending a message urging people to stay at home saying the virus is spreading rapidly in hospitals where they are reaching capacity. They are asking people to stay home except for essential activities this comes as texas states the first decline. They say the pace in growth had been slowing for several days. Some good news bad news there. Will be interesting to see whether texas, arizona and florida reopen their schools given the spread but also some of the politics. U. S. Health officials and drug makers say they intend to start producing vaccines this summer and some 300 million doses by the end of the year according to one white house official manufacturing process already under way even though they arent sure which vaccine if any will work. This is part of the strategy which is just make lots of the stuff because it is a bet that one of them will and we can get them into peoples hands even faster maybe some of the reagents similar and materials similar. I guess you can start purting some of the stuff together it was a weird story. Go ahead just saying this is the kind of thing we should be doing but we are having signal crossings. Melissa, tell us what dr. Fauci is doing hes giving an update on the coronavirus. He gave it yesterday in a virtual meeting. Saying the u. S. Is experiencing a surge in cases because it never shut down completely but said it is not too late to turn things around. We can get a handle on that i am really confident we can if we step back you dont necessarily need to shut down again but pull back a bit and proceed in a prudent way of observing the guidelines of going step by step all you need to do is look at the films on tv of people that went from shut down to complete throwing caution to the wind bars closing, people without masks. There are things you can do now, physical distance, wearing a mask, washing hands. Those things as simple as they are can turn it around dr. Fauci also spoke about vaccines saying a panel of experts would need to be on hand to decide how to distribute them in an ethical way. Senate to vote on a fifth bill he said something needs to be done before Congress Begins its august recess. The company that we talk about every day, tesla lets talk about some tesla shares the stock rising as much as 6 hitting a market cap of 320 million. The selloff accelerated around 2 00 p. M. When news of californias restrictions hit the wires. It wasnt the only reversals other tech leaders made a little round trip amazon, adobe, nvidia, facebook hitting new highs before reversing sharply. Well keep our eyes on all of them tesla has been on quite a wild ride website blaring that tesla stock is now higher than googles. I saw it on the drudge report i like that report he never gets strings wrong. I went to look like is something going on here . Just to say that, drudge has gotten so hyper just contently. I look at it every day and i think im feeling okay honest to god, this person has a big job now and said Green Mountain coffee is now worth more than starbucks. The stock price splits the stock price is meaningless depending on how much shares are outstanding. But that was the lead story on dr drudge it is like, get a clue i with enter to look like did something happen today drudge is sensationalizing that, imagine what other news . Right theyll keep using that shot of elon like this just very, you know very happy. I am the fan boy. I think hes the coolest tell the flame flower, you thought the same thing about musk i have always said this, i think if you are betting against elon, you are betting against humanity hes just cool. Hes edison. What did trump say and hes good at those rockets and stuff too. Weve got a lot more on squawk ahead. Well talk about tesla again and elon musk as why wouldnt we kicking off the earnings season at 6 45 a. M. About a half hour from now jp morgan talking about those things from citi group and Delta Airlines all the numbers and the reaction talking about earnings and what will matter. Well have the first from cnbc interview with deltas Ceo Ed Bastian. You wont want to miss that coming up next announcer todays big number, 147 billion thats how much trade in value iphone users are currently sitting on according to Morgan Stanley. Thats potential to fund iphone purchases over the next three years. Flub ld you pop the hood for us . There she is. Turbocharged, right . Yes it is. Jim, could you uh kick the tires . Oh yes. Can you change the color inside the car . Oh sure. How about blue . Thats more cyan but. Jump in the back seat, jim. Act like my kids. How much longer . Exactly how they sound. Its got massaging seats too, right . Oh yeahhhhh. Oh yeahhhhh. Visit the mercedesbenz summer event or shop online at participating dealers. Get 0 apr financing up to 36 months on select new and certified preowned models. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. A big test today for the markets. Earnings season getting under way. Shortly, well hear from jp morgan and citigroup wells fargo and delta. The banks could set the tone for the rest of earnings season. Right now with more on Advisors Capital manager. Joining us with chief investments manager. We wont talk about wells earnings, how much are we going to care about these numbers look at them, make a bet and keep going . You know the challenge of this earnings season is that there is so much uncertainty in the market that folks will look past this. The nearterm reality is different than the longterm risk i think folks will primarily look past this as you can see with news about how people are responding reclosing california they are looking to 2021 and how fast we are going to get out of the Health Care Crisis so people can get back to work to recover. There will be information in these numbers. Our view is to look beyond this. Some stocks are extremely expensive. Pick your spot we find there are still some opportunities out there. Banks will be one of those theyll take longer to recover that depends on the economic recovery given that the market wants to look to what these will be or not. Well hear about 12 months or 18 months what do you think the market call now is on in terms of expectations is this a 12month out, 18months out, 24months out what is the best seeing the multiples we are seeing right now . Good morning. We still think it takes a while for the markets to heal. The consensus is down this year. We are slightly below that you dont get back to the alltime etf even this year. We will be 145 to 150. I largely agree with joe aanne,e have a lot to watch. We know companies are sitting on war chests third thing to me is what are Companies Going to do with cap ex . We need to understand that war chests they are sitting on is willing to spend any or all of it in the second half of the year into 2021 im guessing that is not something well see prevalence of we are going to see Delta Airline numbers in a little bit. Getting some semblance of solvency, how much are you going to make heads or tales of anything there you are right to point out that the cash flow is critical we are looking carefully at the Balance Sheets and cash flow you dont want to be in the whole market at this time. Our view is to look beyond this quarter and even this year and find the elements where there is still secular growth where there is plenty we have a few ways to do that much better prospect out of this quarter. Talking about the tech stocks which held the market up or kept things going here. Do you think theyll grow into those numbers and that they are buying into the multiples number what is it your mind . I think you are growing into the story. There is no debate and doubt growth resides most acutely in the tech sector. Until that changes, we are still most favorable in tech have been for some time. It has been the largest and best performer. Solid Balance Sheets and big cash positions we think earning in this story take a look at zebra. If amazon is the great white shark, zebra is the little fish that eats more and is trading at a more attractive multiple so zebra is still focused on retail they make the handheld bar reader and now they are making those for hospital use interesting call to bring us that name. We hope to have you back with more interesting names interesting. Well wait for these numbers coming up, a live report from beijing on the ramp up of tensions take a look at the biggest premarket gainers in the s p 500. My name is christine payne, im an associate here at amazon. Step onto the blue line, sir. This device is giving us an Accurate Temperature check. Youre good to go. I have to take care of my coworkers. Thats how i am. I have a son, and he said, one day im gonna be like you, im gonna help people. Youre good to go, maam. I hope so. This is my passion. If i can take of everyone who is sick out there, i would do it in a heartbeat. The u. S. And china remain at odds over a number of issues including trade, intellectual property and others that has chinese firms rethinking their u. S. Strategy. Eunice yoon has more businesses are rethinking whether they should expand and invest in the u. S. And where they should list increasingly, they are looking closer to home on listings specifically because of the Trump Administrations recent moves to block chinese access that has put a Chilling Effect on several startups. There is an understanding now if you are a business in an area considered one of chinas core pillars for its future, you should reassess whether or not you want to have exposure to the u. S. And just how much for example, those core pillars are data, national security, finance and media. The way it was explained to me if you are a financial, alibabas payment arm looking to list in new york and hong kong, how much do you want to make due to the fact that you are one of the biggest financial players in the country, how big do you want to be . A lot of startups encouraged here on the main land and hong kong or to look as preferable several of them are. Who is really being hurt the markets are listed and deep. On the other hand with this approach, you are seeing American Companies could lose out on business and Chinese Markets could ramp up. We are already seeing that here with reforms expected to take place with shanghai in hong kong, ive been told regulations are becoming much friendlier. And at the same time, the Trump Administration has skramed an agreement basically paving the way for more crack downs in terms of investigating publicly traded companies in the United States it seems like the u. S. Is making it harder and the government is encouraging them to stay in china exactly the dynamic and why so many startups are telling me once they had planned for sure to list on the nasdaq because that was the go to place to go ive been speaking to a lot of these startups a lot say, there are bad actors among the startup crowd that maybe started too quickly and werent very Good Companies in terms of quality but there is a concern about the tensions that they are seeing and that even if they do meet the accounting standards the u. S. Puts in place. The a the e at the end of the day down the road, with current problems with current tensions they see with u. S. And china down the line eunice, thank you from beijing. Coming up, futures this morning, no longer triple digit gains. At 84. And nasdaq managing to ink out a smaller gain s p up 10. And that was before turning down after the big news from california jpmorgan and citigroup, i will not call it citi that word is taken to mean a large place people live and there are big buildings. You cannot take the word citi because you call it with an i instead of a y im sorry. It is citigroup. Those numbers as soon as they get the take youre first. First to respond. First to put others lives before your own. And in an emergency, you need a network that puts you first. That connects you to technology to each other and to other agencies. Built with and for first responders. Firstnet. The only officially authorized Wireless Network for first responders. Because putting you first is our job. Good morning u. S. Equity futures are rebounding in the nasdaq it felt like a loss after opening and trading section higher the dow turned negative and managed to eek out a 10 plus point gain by the end of the session. Looking at it now, it is green not wear it was yesterday. Tech stocks will continue to carry the market we are joined by tim lesko, granite investment advisors. Weve talked about this before it is either on the flintstones. This is a solid outfit tim welcome. You dont like a couple of high fliers which ones have moved too far and which one continue to help the averages the easiest one to pick on is tesla. They dont make money. So it is hard to put the pe ratio on something that doesnt make money and also makes 4,000 to 5,000 cars still needing to supplement the earnings and get back the bulk is the rest of the technology with very low Interest Rate environment. Like if you had money you wanted to put in the market today, you would by which three or four. Weve had discussions about the trillion Dollar Companies and what has happened to them. It is hard not to look at those. Youve got intel earnings. Plenty of cheap stocks that arent subject to massive change due to coronavirus that are pretty cheap. Do you keep going down the food chain from suppliers to chip makers, do you just buy everything do you go all the way down you try to sell the ones at higher valuations and sell those suffering at low valuations as long as they are not suffering from a massive secular change. This earnings season will show us which companies will come out of this and which businesses are fundamentally changing and which we are seeing from the cyclical reaction it will be interesting to find out what is change for good and what is cyclicality. The reason the valuations are so stressed, the story you can pick up for both is so exciting. Amazon, when they build out everything, distribution, already it is discounting an incredible future. Then i start thinking about tesla. If you power the grid with Clean Natural gas and charging stations everywhere. Batteries are better, you wont hear any cars ever again driving by it will be hmm everywhere you look they are first to entry but sooner or later, doesnt everyone get their act together with evs there aretwo sides to that the hard part, if we look at the eq but sis, we have a lot of infrastructure to build. 50 or 60 increase of electric capacity we are just not ready for it it will take a little while before tesla deserves that kind of capitalization. Rumors of the waffle house tie up have been affecting that. Im kidding. I like waffles, i guess. Thats why i keep bringing it up no sign that elon cares or hears anything we are saying im like an Investment Banker. Just a suggestion. People like to veinvest in disrupters thank you granite investors. See you. Coming up, Jp Morgan Chase well thing you those numbers. Looking at google and various tech deals that can be completed in the next 3 to 6 months. Equivalent to a fouryear degree and a role at their company. Stay tuned, you are watching squawk when we started carvana, they told us that selling cars 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. Welcome back to squawk box. Take a look at equities. S p up about 12 points, nasdaq up about 30 points after a reversal japan tracks a new outbreak of coronavirus to a theater performance. They are asking now 800 people who attended those shows to get tested there on top of it, joe. There is a sense there on top of it in japan yes you saw what is going to happen at laguardia and jfk how long will it take to get off a plane and come here. We just need to drive. Whatever it takes to drive, it might be better for a while. Unless you are leaving the country, obviously ill get you an rv. Get the squaurk rv and power it up the trash builds up quickly with a waffle iron in it. Well bring you the numbers as soon as they cross. Jim, could you uh kick the tires . Oh yes. Can you change the color inside the car . Oh sure. How about blue . Thats more cyan but. Jump in the back seat, jim. Act like my kids. How much longer . Exactly how they sound. Its got massaging seats too, right . Oh yeahhhhh. Oh yeahhhhh. Visit the mercedesbenz summer event or shop online at participating dealers. Get 0 apr financing up to 36 months on select new and certified preowned models. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Jp morgan just out with results. I think the biggest headline here is that it is quarter, so an extension of the buy back program there jpmorgan shares are trading higher it looks like eps of 138 a share. We were looking for 104. Revenues coming in at 33 billion. We are expecting 30. 3. So a beat on both the top and bottom lines and an extension of the suspension of the Buyback Program through the end of the Third Quarter. The headlines are just coming out so well continue to monitor them as we have them but, again, a beat on the top and bottom lines. We have jpmorgan trading higher by 1. 4 now. Were still expecting citi and wells fargo. Lets bring in someone for instant reaction joining us now, marty mosby. Your first reaction to these numbers . Yeah, so the things that were looking for is how do we preserve our capital, which means you have to earn your dividend or better jpmorgans dividend is 90 cents a quarter. They just earned 1. 38 so theyre preserving their capital and theyre creating a cushion to sustain the dividends those are the things were watching for that one number tells you pretty much all you need to know. The only other thick were going to be looking for is how much they put in provision. Last quarter was 8 billion. They were growing allowance, loan losses significantly, and thats covering those potential losses that well eventually see on the credit side which wont materialize until later this year or the end of 2021. Are you thinking Second Quarter will be peak provisioning for jpmorgan as well as the other banks or is it so much of an unknown that we could see even more in the back half of the year well, this is a very interesting dynamic thats going on were looking at this loan loss and the provisioning because of the new accounting, it accelerates a recognition of losses because of the way this economic recession is occurring, the drop so quickly, unemployment went historically high so theres many metrics that will generate extraprovisioning given what w have in the new accounting so were probably going to have the biggest gap historically between what were providing and the losses that we actually realize. For instance, let me give you an interesting statistic. This quarter were estimating that the banks in the United States will increase their allowance for loan losses to loans from around 1 to 2 increasing 100 basis points, almost doubling in two quarters versus what we saw the last cycle, which was about six quarters for them to get to that level. So the incremental provisioning will generate that coverage for those losses which will occur later and then what we do believe is the improvement well see in the Third Quarter could actually let that provisioning go down from second to Third Quarter. Marty, were getting some more headlines here from the release. Pardon me. We havent i havent seen the full release yet so these are headlines. J. P. Morgan chase Second Quarter credit costs 10. 5 billion including reserve builds of 8. 9 billion. Firmwide reserve builds due to covid19 cut by 2. 19. Those reserve builds of 8. 9 billion, marty, sounds like more than what many on wall street had been expecting many were expecting on the order of 8. 1 billion in loan loss reserves. Thats exactly right, but thats even better when youre seeing that those loan losses and provisions are going through and yet the earnings were still, you know, over what they expected, they had the extra fees coming from Capital Markets and from mortgage so those are things that are kicking in, which are helping us cover some of these expected losses Going Forward. So what were watching for is can we provide the most for the expected losses . Can we still preserve our capital what theyre doing tangible book value will grow this quarter again, not go down, and theyre over earning from their dividends. Sustaining of dividends is in place. Those are the three things were watching and theyre checking off all those boxes right now. Second quarter provision for credit loss is 10. 5 billion return on common equity, 7 . Return on tangible common equity of 9 . In the Conference Call, marty, what will you be looking for specifically what do you want to hear from jamie dimon about . Well, again, what were going to be able to get is some color to what theyre seeing inside the loan book in the credit losses that are kind of going through and percolating through as were starting to see some dislocation, what are deferrals. So how are they managing the credit cycle the second thing well be looking for is Net Interest Margin once the credit cycle finishes next year, the exit velocities will be predicated on what is the Net Interest Margin . As theyre managing have they recalibrated their deposit rates back to zero again are they able to defend what they have on the loan yield . Those are the two variables we have to watch closely to get a feel for the real valuations here all right marty, were going to see you again later when we get the other banks reporting now. J. P. Morgan chase holding on to a gain premarket 1. 6 andrew okay. Thanks, melissa. Coming up when we return, dont miss the other two big bank reports coming out this morning. Citi, ill call them citi call them citigroup and wells fargo coming out in about an hour first, delta reporting quarterly numbers in a couple of minutes investors looking for continued cash burn and what sort of passenger demand the company is seeing plus, its Ceo Ed Bastian will join us with a first on cnbc interview that you wont want to miss hes going to tell us how the signals theyre seeing for the economic reopening are going youre watinchg squawk box on cnbc two big hours ahead. Good morning a big day for the big banks. Reporting just moments ago, jpmorgan out with a beat on the top and bottom line sending those shares higher. Were still waiting for wells fargo and citi before the bell Delta Airlines ceo will join us live. Plus, it is a question on everyones minds right now will schools reopen this fall . Weve been crunching the numbers and well talk about the economic costs of that answer. The second hour of squawk box begins right now. Good morning and welcome back to squawk box right here on cnbc. Im Andrew Ross Sorkin along with joe kernen and melissa lee whos hanging out all day with us again beckys off today. Meantime, take a look at u. S. Equity futures we just got the Jpmorgan Earnings and weve got citi coming and wells and so many others in just a minute. Well see what happens with the markets. Right now the dow looks like it would open higher. 144 points higher right about now. Nasdaq trending up as well, 26 points the s p 500 looking to open 15 points higher. Had our conversation about Mortgage Rates in the last hour, but if youre looking at the 10year note this morning it is at. 632 right about now. Joe . Thanks, andrew. Delta airlines posting Quarterly Results and phil lebeau joins us with the numbers just out hey, phil. Reporter weve talked about q2 numbers being ugly and not meaning a whole lot for the airlines that may be the same for delta and the peers. A loss of 4. 43 a share. Yes, that falls or thats worse than what the street was expecting with a loss of 4. 07 keep in mind the 12i789s were all over the place revenue a little better than expected at 1. 47 billion. The pretax loss of 3. 9 billion in the Second Quarter, think about this, covidrelated expenses and charges, 3. 2 billion. Those are the items directly related to covid19. A couple of data points here q2 revenue the lowest since the mid 1980s for delta. Its liquidity stands at 15. 7 billion at the end of june that is enough cash to get the airline through the next 19 months if it doesnt raise anymore capital. The cash burn at the end of the month, 27 million a day to put that into some perspective. At the low point in the early to mid april days it was 100 million a day what they were losing so 27 million a day at the end of june. The august schedule, now this is an important piece of new news, it has been slashed in half in terms of the additions they originally said were going to add 1,000 flights a day in july and 1,000 flights a day in august now theyre saying in august because the summer demands appear to be slowing down from previous expectations, it will be 500 additional flights per day. Dont forget, were going to be talking with delta Ceo Ed Bastian coming up in a little bit. Well talk about where the company is now, guys, in interprets of the currently quit at this but the all important question of staffing cuts and what the airline may do. How many of those employees may be taking voluntary leaves of absence. May be taking an early out well discuss all of that in just a few minutes a first on cnbc interview you do not want to miss we look forward to that, phil Delta Airlines shares in reaction to those earnings slightly negative. Also this morning, Quarterly Results from some of the biggest banks in the nation. We got jpmorgan a moment ago wilfred frost has been looking at the big headlines and breaking down the numbers. Wilf. Reporter you hit the key numbers, 33. 8 billion was a comfortable beat close to 1. 38 its a beat either way i think peter focused on the credit costs what everyone was looking at coming into this the theme is they are higher than q1 and they are higher than expected for q2, which kind of shows how impressive it was to have a beat with that in mind. Provision for credit lost, 10. 5 billion. The forecast was for about 8. 7 q1 was 8. 3 quite a big jump people have had to focus on how theyve had to build their reserves, 8. 9 billion. The forecast was for 8 billion q1 was 6. 8 billion also you would say jpmorgan provided quite a lot in the First Quarter. This is quite a big jump if you look at where this comes out of mostly, its mainly in the consumer business where by the way average loans down 7 , credit card sales down 23 both of those a little worse than expected. If youre a region nal bank with focus in those areas, you could be set for a difficult quarter if youre an Investment Bank with trading, youll offset those difficulties trading is frankly insane. We had 30 year on year growth in trading growth. The forecast was to see 40 yearonyear growth. Jpmorgans trading is up 9 . Maimly coming from fixed income and commodities. Thats up 100 if you ship off a one off, its up more than 100 . Coming in at 7. 3 billion, the forecast was 6 billion equities doing well. That was up 40 , only be as good as expected, 2. 4 billion for that the strong tilt there to performance in fixed incomes going to do well for citi, going to do well for Goldman Sachs clearly not going to do badly for any of the Investment Banks. Investment Banking Division turning in 5 billion of revenue forecast was for half of that. That was up 46 . That was more of a surprise. Trading expected to be good, incredibly good. Investment banking wasnt expected to be very good and was quite good huge, huge gains in the Investment Bank offsetting struggles and issues in the corn summerback, Corporate Bank well have to see whether jpmorgan was alone or themes will be repeated by those going through. Ill say what i said in closing bell last night, 13 days, 14 days has never been so long in terms of these results already being somewhat out of date and the theme for what these shutdowns weve seen over the last couple of weeks on the commentarys management call will be absolutely crucial. Wilf, before you go everyone will try to extrapolate out even before the next hour and later in the week with some of the other bank reports. What element if you need to if you were going to try to handicap it, what typically can you look at jpmorgan can you look at and say you are going to extrapolate and what is jpmorgan and jpmorgan only . Reporter jpmorgan is the ultimate bank that does all of this none of it is them alone higher in q2 than q1 and higher than expected. The focus seems to be in consumer and their credit card numbers just on the surface down 23 year over year is a bit worse than expected. You dont want to have High Consumer and credit card exposure, the likes of capital one, for example, might struggle because of that. In trading, insane numbers we knew they were going to be good because q1 was good up one month in march. Three months like that no one put in that theyd be this good. To have trading revenues up 18 and the fixed income up quite so strong should bode very well for all of the Investment Banks but particularly goldman still did more towards vix than equities the Asset Management number is pretty good. We saw the assets growing even though markets fell in q1. That was because a lot went into safe haven products, things like cash products and bond products. Aum has grown 15 again this quarter presumably because markets have rebounded that bodes well for Morgan Stanley which doesnt have the consumer business. Up 3 , big revenue beat. Largely because of trading bank shares up year to date. Well have to see if this is thhas repeat consumer facing might be struggling relative to jpmorgan. Okay. Wilf, thank you for that analysis and the news. Want to bring in peter kraus right now, chairman and ceo of Aperture Investors and a longsuffering banker. Can i say that youre a sure. Former banker. Do you consider yourself a banker, peter . Once a banker, all tways a banker. Always a banker give us your analysis of those numbers. You heard you know, on the trading side theyre killing it, and i imagine youre going to see that at the other banks, including your former bank Goldman Sachs. I dont know does that mean that you want to own those banks . Separately, the credit card data was pretty interesting given that it came in worse than expected given what seemed to be the strength of the consumer at the moment look, i think we expected trading income to be pretty robust and it turned out to be the case thats not surprising. We had an enormously fast moving, very active market over the last three months so you would expect trading ref news revenues to be good. Is that trading revenue really sustainable . Youre going to see that going into the future. Thats where the consumer income is actually more predictive of what we might actually see in the next three months and six months look, the weakness in the credit cards, again, im not im not surprised by that. I think we still havent seen any losses of any significance jpmorgans provisions are up and theyre sizeable we havent seen an increase in delinquency. Thats mostly because of the stimulus thats out in the marketplace that the government has provided what i think is difficult to ascertain, ill be very interested to hear what the ceos have to say, is what is going to happen in the next two quarters to those losses because unemployment, while it has gotten better, is still not low and the covid issues still remap and there is every reason to believe there is more stimulus but not at the size that weve seen the last three months the challenge which wilf said, the challenge is really whats going to happen in the consumer area and how does that flow through to other businesses that rely on consumption which is 70 some odd percent of the u. S. Economy . So, you know, i think the trading stuff is good, but the question is is that level sustainable . The real issue to me is what do consumers say . On the consumer side, the other component that wilf mentioned, ive been looking through the numbers, is the aum piece on the Asset Management piece is up and so what does that say to you right now . Thats the market thats the market. Thats the market. You mark down the assets as of the end of the First Quarter march 23rd was the low so all the Equity Assets were down 30 some odd percent maybe they had come back a little bit from the bottom but now youre just witnessing a 40, 50 run in equities and if you took that out, you know, that i think thats what that really means. That of course has a wealth effect and so people may spend some of that wealth, but were still not above where we started the year or the high we were at the year the markets more stable right. But i dont think thats going to change peoples peoples spending. You know, savings the Savings Rates are higher people are saving a lot, and i think that is reflective of the facts that theyre concerned about whats going to happen to them in the next six to nine months so in terms of allocation or reallocation of the way youve been thinking about your portfolio, obviously the tech stocks have been on quite a tear we had that reversal yesterday im curious what you thought whether you think thats a breaking point in terms of how people are thinking about all of this or Something Else and whether you would actually move into some of these bank names. I think the bank names are interesting, and i think ive mainly said that last time we were on. I think the banks are very ip expensive. Look, the issue with the banks are whats the catalyst for the earnings youre not going to have a steep or rising yield curve. Pretty much the fed has said were just going to sit on the yield curve here, so its not going to come from that. Is it going to come from a consumption increase, increase in credit cards . Yeah, you might see that, but thats probably, you know, nine months out, maybe further out so its hard to bet on that at the present time youre still a quarterly review on whether banks can pay dividends. Not that im expecting banks will be prohibited from paying dividends, but theres not an all clear sign with regards to that whats the catalyst thats going to drive the Bank Earnings faster than other companies or other organizations earnings that if there was a vaccine and people went back to work and consumers started buying, you know, would banks actually be the best place to actually put your money i think thats the question the markets arguing about the banks are cheap, theres no doubt about that the question is whats the catalyst thats going to drive those earnings faster than the catalyst that drives the earnings and other investments the tech names are expensive theyve run. Weve seen them come back. They might actually retrench and more people might be selling winners right now because theyre, you know, concerned as to whats the effect of the covid that the renewed covid state at home issues right now its tough to say im going to allocate from technology and the banks basic industrials are where theres still some value and some recovery stocks where Balance Sheets are Strong Enough to basically maintain their capacity through the next six to nine months. Hey, peter, just before you go, market psychology question, which is to say the closures or the reclosures that were starting to see around the country, is the view in the market that that extends out the time period with which we recover or is the view that were still betting on a vaccine and or a therapeutic come this fall which is binary, its either going to happen or its not, and that 12 months from now well be no different . I think theres an internal fight in the market on those two issues you just mentioned. The increase in the infection rate, the positivity rate, those are all bad facts. Theres nothing good about that. But we are closer to when a vaccine may become available having said that, you know, nobody really knows the Practical Application of the vaccine. Okay, we dont even know when were going to have one, but when were going to have one, you still have to you have to give that vaccine to an awful lot of people and its not clear that consumers are going to go back to consuming and people are going to go back to behaving just the way they did precovid any sooner as a result of that so i i think that this is a fight that youre going to see play out in the market and investors are less willing to put capital to work or not put capital to work based on those two things and are looking more at what are ceos and management saying about their own businesses and their own activities in the next 6 to 9 months i think the future views are going to be critical now if management say we just cant tell, i think thats going to be a negative if management say, no, things are beginning to pick up we see the earnings will continue to rise we see some stability. We see people coming back to buying our products and doing things, i think that the market will continue to grind up. And i were waiting to hear what people say in the Second Quarter. Thats going to be the key issue. Okay. Peter krause, nice to see you back at the office, right . Thats your office, right . Yeah. Yeah this is my duchess county office im not back at the office, and certainly in summer work rules, no tie no tie. Okay peter, nice to see you and i should have thanked wilf earlier so ill thank him now. Thanks to both of you. Looking forward to seeing you again very soon. Melissa, over to you. Thank you. Coming up, Delta Airlines posting Quarterly Results as the travel industry continues to deal with a plunge in demand delta o ceed bastian will join us live next 49. 50 i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. Welcome back to squawk box. Delta airlines posts a bigger loss phil lebeau joins us with ed bastians ceo. Reporter ed, lets bring us in the conversation. Wider than expected loss, 3. 9 billion pretax is what you lost in the quarter give us a state of the business right now. Well, phil, as you were mentioning earlier today, this is all about cash. Its about protecting the Balance Sheet, raising as much cash as we can knowing its going to be a difficult winter and certainly the next 12 to 18 months is going to be important to have a cash reserve for delta and all the airlines, reducing the cash burn while it was a very difficult quarter for us, the worst quarter candidly in the companys history, proud of what the company did. We took the cash burn numbers from 100 million down to 27 million for the month of june. That provides us a pretty good baseline as were going into the summer. Ed, you have 15. 7 billion in liquidity at the end of the quarter. At least 19 months worth of cash on hand thats if you dont raise anymore capital. Whats your expectation in terms of how much more you will have to raise, whether its this quarter or in the Fourth Quarter . Well, were certainly going to be looking at that over the next few months. I anticipate we will raise some additional funds as you mentioned, 19 months buys us time, assuming no progress from this point. We will certainly be looking to redhus cash burn level, 27 million a day in june. Expect july will probably be about the same level as it was in june. Certainly as we get towards the end of the year our goal is to get our cash burn down to zero and we can start raising cash to pay that debt down. Ed, your august schedule. You were supposed to add 1,000 flights. Youre adding 1,000 in july and you were supposed to add 1,000 in the month of august now youre trimming that back. Youre just adding another 500 cutting that in half is that a reflection were starting to ceedee manned slow down again and youre not seeing as many people fly this summer as you previously expected well, at the start of the pandemic we said this recovery was going to be choppy indeed, its been choppy in june we saw nice momentum build as we went through the course of the month. Numbers are low relative to any historical scale we still have some nice build. Then we get towards the end of june, early july, demand has stalled as the virus has grown, particularly down here in the south across the sunbelt coupled with the quarantine measures going in place in many of the northern states. Those two factors are causing consumers to pause were not going backwards. As i said, our cash burn in july is looking to be about the same level it was in june in terms of taking the next reduction of that cash burn down, were going to need to see renewed Consumer Confidence and some additional travel Going Forward into the back end of the summer. Dare i ask, are you seeing any corporate business or how much corporate business are you seeing right now its very slow. You know, its less than 5 , and were not anticipating through the summer seeing any of it. Through the summer is a relatively slow travel season for travelers. Come labor day will be another good checkpoint as we start to see how the fall looks for their schedules, what level of businesses are actually open. Conventions are not going to be starting up necessarily in the fall and sales activities and resorts though, you know, interesting, phil, one of the things we are monitoring is while corporations may not be traveling, their individuals are traveling for leisure and for personal we monitor the sky miles activity of some of our highly active members and we see they are traveling. People are starting to get out into the environment but its a still relatively low numbers. Ed, youre almost hitting the point where you have to make tough decisions in terms of how much of the staff have to be eliminated either they take a buyout, voluntary leave of absence whats your sense of how many people may be furloughed, how many may take an early buyout versus an unpaid leave of absence . Weve said throughout the last couple of months, our goal if we can, ambitious goal, audacious goal, is not to have any furloughs in the company and i think we have a shot at that remarkably enough given how low our revenues are were offering an early retirement and at this point we have over 17,000 people have voluntarily agreed to take early retirement thats about 20 of our entire company will be leaving the company starting august 1. In addition to that, weve had really good subscription to voluntary leaves of absence, unpaid leaves of absence our people are amazing what theyve done for the company month of july we have 35,000 people out without pay voluntarily. We see thousands more continuing into the fall even on top of those that are going to be retiring the other third thing of that is weve got a lot of flexibility in our work schedule so to the extent we have certain parts of the business where we may not have enough, we can move our Staffing Levels around across the company. A lot of good work and creative thinking going on, but we wont know until we get close to the october 1 date im optimistic if we have a furlough it will be relatively minimal numbers. Ed, its melissa lee. Things sound pretty dire out there and things are still very uncertain given all the spikes around the country that we are seeing what can you tell investors about how deep these cuts are and how drastic the measures are that youve taken to date and whether or not the worst is behind you in terms of how deep and how drastic those measures are . Im just trying to figure out if the road ahead is going to be easier for delta than what youve gone through so far well, we certainly hope so. When we got through april we were down to only about 5 of our normal volume, and this summer were anticipating our volumes being somewhere between 20, 25 of the normal summer activity in the space of a few months a relatively significant increase off of a low base going into the fall the size of the airport we wont know i do think there will be some Behavioral Changes to travel schedules, particularly Business Travel as we go forward and well need to understand that. We are preparing to be a Smaller Airline over the course of the next couple of years, and thats why weve already had 20 of our people voluntarily retire from the business its going to help us deal with a lot of the cost reductions in a voluntary manner for the Current Quarter that were in, the june quarter, we were able to eliminate over 50 of our total operating costs in the company. We are doing a good job of managing the operating costs we are only putting out about 25 of our available capacity for sale this summer were going to manage this thing forward as Consumer Confidence starts to return, well be ready to serve them. Hey, ed, Andrew Ross Sorkin here nice to see you. Hey, andrew. I think one of the last times we spoke was right before this pandemic began and i remember giving you lots of kudos because you had come on our air and announced a plan around esg and the environment and buying these Carbon Offsets in af year. I got a lot of people writing in, what happens top esg and if they are challenged and they cant pursue some of these things were in it for the long view right now our focus is stabilizing the company and getting our business back and Profit Sharing which is one of the big shining lights at delta over the last decade isnt going to pay, because were not profitable when we do return profits, our people will continue to get the 15 profit at that point the environmental condition and the offsets are still important to us. At the present time we need to sustain have a Sustainable Business model before we start to focus on the sustainability of our environment. And, ed, just a totally separate question. I dont know if you saw the news about ted cruise on an American Airlines plane without a mask. I know a lot of airlines have strict rules and say were never going to allow people to be on the plane again if they break the rules and then you get into a situation where you have a sitting senator maybe flouting the rules. What do you do what would you do in that situation . Masks are really important. Theyre important not just on air travel, theyre important in any kind of interaction around the public and weve heard and talked to all of the doctors in the medical community that indicates if we were more compliant with masks we wouldnt be dealing with the i shall uf on virus on delta, we are requiring masks. If you get on the plane and decide not to wear the mask, we ask you kindly to put it back on if you insist upon not wearing the mask, were going to insist on you not traveling on delta in the future. Ed, its joe kernen im just wondering about what air travel looks like if this is beginning to look like something not gone in a year or 18 months. A lot of carriers were building out and retrofitting pods for lack of a better term in Business Class that seem ideal for a covid environment. Theyre separated. Youve got walls youre kind of sequestered will that continue and maybe all planes should have lower capacity because of those pods and you just charge more. Is it possible that the model changes . Because youre not going to make money if only one out of four seats in the normal seats are taken anyway why not charge moreand put people in those pods is that going to happen . I dont think so, joe the pods are not for Health Reasons as you can appreciate. They were there for Business Travel, for International Travel we are continuing obviously to anticipate International Travel to return probably on a smaller scale than domestic, but for the aircraft that were flying today, weve capped our load factors at 60 so people do have space on board flights weve seen pictures with crowded individuals on none of those are delta flights. Weve made a commitment to our people and our customers, we will not board a seat more than 60 . Every middle seat is blocked we will continue post september 30th to do that. Every other flight you will have the seat next to you available that space is meaningful for customers. What were hearing from customers, joe, is that while, you know, im not in a position to say that everyone should get out and start traveling again by air. For those that need and want to travel, its actually the best time to travel our Customer Survey scores are up markedly. All of the planes are clean. Theyre electrostatic fogged the hepa air Filtration Systems we have is cleaner than the air you and i are breathing. We have space on board and our people are doing a really good job of managing safety protocols. This is a crisis we will get through but, you know, i dont think we need to make large scale modifications to the physical configuration to get there. How much do prices need to go up though to make it just so you can stay in business with planes that are 60 full . You know, i would think its necessary. People need to fly i think a california flight across the country is about the same as it was in the 80s or 70s almost. The fares havent gone up, do you think . Fees need to go up 20, 30, 40 in general as youre trying to bring demand back, confidence back raising prices 20 to 30 isnt going to help. It will be a continuation of building Consumer Confidence, having a competitive fare out there. By the time we get over the next 12 to 24 months well be back in a sustainable position may not be at the same level in terms of scale but i think we will have a Business Model that makes sense given how were managing this. Hey, ed, you had indicated before you had hoped the worst was behind delta at this point, and im wondering if you think the worst is behind the industry as a whole or if you think there still could be bankruptcies to come also, could there be some benefitto allowing airlines to file for bankruptcy in that you can get rid of debts and emerge more stream lined . The airlines have done it before and emerged stronger on the other side well, there certainly will be a difficult path here these next 12 months. Thats why you see delta as well as all carriers out raising cash and capital to get through the difficult winter i dont know the state of the other Airlines Delta will not be in that condition. Weve got, as i think phil mentioned earlier, 19 months of cash assuming no improvement from todays level and no more cash raised at delta. So im not kerntds on the delta side of that, but the longer this thing takes, i think theres going to be some challenges the other thing i want to raise about debt levels which is interesting at delta, weve raised 14 billion since the start of the year. Our net debt has only gone up 3 the size of the debt rate seems difficult and we hope to pay down the debt next year as things improve. Ed, one last question and then well wrap things up. Any chance of another stimulus or a specific targeted bailout, if you will, in washington or do you think that that ship has sailed and youre not going to see another round . Id be hard to prognosticate what the appetite is in washington for another bailout i know theres been discussions. The first plan, c. A. R. E. S. Act, was well received, gave us six months to hold our staff in place. You heard me say earlier because of that stimulus we may be in a position at delta not to have to furlough anyone and i dont know what the appetite for another round would be. Ed bastian joining us first on cnbc. Were watching the daily cash burn and twell send it back. Thank you, phil and ed. We wish delta and all the airlines and everybody out there lots and lots of luck. Still to come, Quarterly Results fromcitigroup and well fargo. Shares of jpmorgan are up after the Company Posted record trading revenue this morning stay tuned well bring you those numbers when we meacco bk. Experience the adventure of a bigger world in a highly capable lexus suv. At the golden opportunity sales event. Get zero percent financing on all 2020 lexus models. Experience amazing at your lexus dealer. On all 2020 lexus models. 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 up at 169 points a ways to go before youre up. We probably need another 300 points or so to get to yesterdays highs. Nasdaq adding to its gains this morning after a big reversal yesterday. And well watch the s p which was up for the year interday yesterday, which is shocking enough stay tuned u wchg quk xn yoreatinsawbo o cnbc welcome back to squawk box. Look at the big banks. Jpmorgan getting a boost beating the top and bottom lines well hear from citi and wells fargo at the top of the next hour. Up next, bob johnson with a look at how he wants to help u. S. Workers move 401k assets from one employer plan to another. Stay typed, youre watching squawk box on cnbc coming up, investor and entrepreneur bob johnson on how he wants to help americans save more for the future. U wchg ed yoreatinsquawk box right here on cnbc car vending mg a car 100 online. Now weve created a brand new way for you to sell your car. Whether its a year old or a few years old, we want to buy your car. So go to carvana and enter your license plate, answer a few questions, and our technowizardry calculates your cars value and gives you a real offer in seconds. When youre ready, well come to you, pay you on the spot, and pick up your car. Thats it. So ditch the old way of selling your car, and say hello to the new way at carvana. Save 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. Welcome back to squawk box this morning enrollment and contribution rates are effective ways to encourage workers tobuild Retirement Savings a new feature on 401k plans do it automatically personal finance correspondent Sharon Epperson joins us with more on making some of the 401k plans more portable. Sharon andrew, when workers leave a company or change jobs they have several options about what to do with their 401k. They can move the money to a new 401k at a new employer if they have that job or they can leave it in a former employers 401k plan or they can roll it over into an ira plan or they can cash out completely. Over a ten year period 40 people cashed out. That number rose to 80 for those with a balance under 1,000 and over 51 for those who had a balance of 10,000 thats where this comes in encouraging workers to hang on its called auto portability there are not a lot of employers that have adopted this yet, but researchers say that adopting this technology that allows auto portability in 401k plans could keep as much as 2 trillion in the u. S. Retirement system, andrew. Before you go, sharon, are fidelity and vanguard, which are of course two of the biggest in the 401k plan world, are they offering this auto portability feature . Reporter fidelity, vanguard are not offering this feature yet, but there are others that are looking at this very closely and today light solution said this will be offering this to 185 companies, 5 million workers by the end of the year, beginning of next year its starting to gain some traction and they seem to be the first out of the gate doing it on a large scale sharon, you heard her mention alight solution. Were joined by allison boreland she is spearheading the launch of the auto portability program. Also joining us eric johnson, founder of r. L. J. Companies. Majority owner of Retirement Clearinghouse. Theres the connection there bob, this is something for a long time that has been an interest of yours, and that is the retirement plans and the savings and the ability of minority participants in these things to build up the same type of savings and assets of that we kind of take for granted. And this is a problem. It seems like it should have been built in. If you change jobs, by definition it seems that that money isnt kept in a 401k it either goes into an ira or you can invest it in a safe harbor ira this seems like a no brainer. Joe, youre absolutely right. The most exciting thing to me about this is at a time when this country is focusing on Racial Injustice because of issues involving the police and the criminal justice system, we also have to address economic injustice in terms of income inequality and this program, Retirement Clearinghouse has pioneered with enlightened Labor Department to move the new regulation forward to make this possible as a way of dealing directly with the income gap between black families and white families. Africanamericans, black americans cash out at a level of about 63 cashing out when they move from job to job if that if auto portability were adopted on a national basis, what andrew mentioned about the big record keepers along with the light whos joining with us today in being the first, this would put approximately 191 billion of Retirement Savings into the pockets of black americans and that is something i think this country and the Business Community and the record keepers and the plan sponsor should absolutely support and one of the things im most encouraged about is this is a question of this is just the start. In conversations i had with the Business Roundtable, particularly jamie dimon, doug mack mill lon of walmart and Brian Moynihan at b of a, the Business Roundtable has announced that it is in full support of a National Policy of auto portability if that happens and all the policyholders and the people from the Business Roundtable and beyond adopt this, you are looking at a huge Financial Impact towards solving the retirement crisis. Thats why im so excited about it. Bob, especially during covid. So many people are waiting to get new jobs just hold on one second, allison. I want to get to you melissa has some earnings that weve been waiting for i promise ill be right back we need to do this melissa . Wells fargo a miss in both the top and bottom line. Bigger than expected loss. 66 cents a share analysts have been expecting a loss of 20 cents a share revenues coming in at 27. 8 billion. The estimate was 18. 4 billion. As far as noninterest income, that came in at 8 billion and what was expected was but we do see wells down by about 4. 4 the big headline that were still waiting is what are they going to do with the dividend. It is widely expected they will cut it in half were still awaiting news on the dividend again, though, wells fargo bigger than expected loss and also a miss on the revenue line. Joe. Great, melissa. Thanks okay back tole a lis so to allison. Lets say people lost their job. Who knows how lock it will take. What actually happens . People will say, give it to me then you pay taxes, fees, a lot of it goes away and youre not saving it anymore. What would happen . Would it stay with the Previous Company while youre looking for a job for the next three, four, five months . How does it exactly work thats exactly right. What auto portability does is it changes what happens if the worker does nothing. Today they either get a check with taxes and penalties withheld or the money goes into a safe harbor ira, right for balances of less than 5,000 there its invested in money market Stable Value Fund and its eroded. What happens in the new world with auto portability, if the worker does nothing, when they find a new job, the 401k automatically follows them this is all about making the choice thats in the best interest of the worker, automatic choice and default just like automatic and how that transformed plan participation, made it easy to invest wisely. This is all about making changing jobs to job going from job to job actually good for the participant from a Retirement Savings perspective it just sounds like its a pain and thats why it hasnt been done. I guess its expensive 678 why wouldnt this because its a pain, i guess thats why. But youre going to make it possible to do it and much easier to do thats right. Well, to be fair, bob did most of the hard work two things were required Public Policy change was needed, so bob and his team worked with the department of labor for a number of years to implement the changes needed on that side. Second, there was innovation needed really outside of the recordkeeping community. We need i a third party to create a centralized clearinghouse and to make a bet if they built it record keepers would then join. So we had the easy part. We just have to join the network, share the data, connect with bob and then basically offer the opportunity to our clients frmpt our clients perspective the feedback has been overwhelmingly positive so we expect high adoption and we expect this change in the industry to be able to happen much faster than automatic enrollment happened now 75 of organizations offer automatic enrollment, but it took years and it was a similar path for target date funds. New innovation and new things in the 401k space often take a lot of time. But to your point, joe, this was your word, you said its a no brainer. Thats how were thinking about this opportunity, it just took several years of work, focus and innovation by bob and his team. Bob, will it take inducement for people to do the right thing . If i got laid off and someone said you have a couple of grand in your 401k, do you need that money . Yeah, i need that money. How do you get it so people say, no, i dont want it. Ill forego it i know i need Retirement Savings. It seems like thats something you have to try to select for. Well, joe, the innovation and focus of auto portability as a design by the ceo of the company, spencer williams, it comes down to a simple Human Behavior if people know that they have an alternative to cashout, that they know their 401k will follow them when they move from job to job, believe it or not, Human Behavior says, let me think about this and in the thinking about it process we continually communicate with those workers to say, here are the options were in touch with you. If you go someplace, dont worry about it, we will find your plan at your next company that comfort that somebody cares about their future retirement needs is the behavior change that drives people to make the right decision so its not very complicated the technology, electronic record transfer, and the more of the companies and record keepers that are engaged, weve simply know where every workers 401k is at any time when they go from job to job so the beauty of this is all workers benefit. Minority workers particularly benefit to the tune of 191 billion if you think about the total work force that would be a part of this, and because they tend to be low wage workers, there is no 401k accounts. This is the free Market Capital system should do find innovators like Retirement Clearinghouse, go to regulatory agencies, Labor Department who believe the regulation will solve Business Solutions to solve socioeconomic problems and bring the entire u. S. Economy to bear to say we can come together and solve an economic crisis called Retirement Savings and at the same time no tax requirements from the general public. No brainer, bob efficient business. Seems like a no brainer it was a great presentation. I think everybody agrees weve got to run allison, thank you bob, we want to see you again soon see you both we have to go right to break thank you very much. I appreciate it. Rteenhour flig, thats not a weekend trip. Fifteen minutes until we board. Oh yeah, we gotta take off. You downloaded the Td Ameritrade mobile app so you can quickly check the markets . Yeah, actually im taking one last look at my dashboard before we board. Excellent. And you have thinkorswim mobile so i can finish analyzing the risk on this position. You two are all set. Have a great flight. Thanks. Well see ya. Ah, theyre getting so smart. Choose the app that fits your investing style. Big banks. Citigroup, wilf. Yes, indeed, joe. Citigroup showing similar themes to jpmorgan. Provisions better than expected albeit less pronounced revenue 19. 8 billion above a forecast of 19 billion and eps around 50 cents per share. Thats nicely ahead of expectations again, with all of these huge range of expectations on the eps line lets start with the provisions for loans. That came in at 7. 9 billion. Last quarter was 7 billion the forecast was 7 billion same theme, higher than the First Quarter and higher than expected for the Second Quarter. Not at the same scale as jpmorgan in terms of the trading, nice big beat driven by fixed income. So weve got trading on fixed income of 5. 6 billion, up 17 year over year equities was in line Investment Banking doing nicely, 1. 8 billion up 14 citi similar theme to j. Pmp morg jpmorgan mentioned wells fargo which you hit because they tonight have this strong trading base to offset the struggles in the commercial bank and their provisions are way higher than expected 9. 5 billion. That compares to 4 billion so more than double in q1 the expectation was a big range but was around about 5 billion came in at 9. 5 relative to expectation of about 5 last quarter 4 and thats why theyre well behind expectation. Theyre cutting their dividend to ten cents it was 51 cents. Big range of how much they would have to cut. Most didnt go beyond a 50 cut. This is clearly more than that, from 50 cents shares down 2. 5 . Wilf thank you. Wilfred frost with us. Marty mosby is with us and joe ta taranova marty, ill start off with you i feel like citi and jpmorgan are in one class and then you have wells fargo what do you make of what wells fargo is telegraphing, particularly when it comes to the much much bigger than expected Loan Loss Provisions . Well, one of the things that you have out there is given all the uncertainty, there is a wide gap of being able to estimate how much you expect to have in losses were not seeing net chargeoffs move up at all so it really is what do we think is going to happen you have a Management Team here that wants to get the bulk of whatever losses or whatever situations they might have to get the Regulatory Burden off of them so i think theyre reacting probably nmore aggressively than what were seeing with the other two. You have sustaining dividends, tangible value its very clear which ones are being able to kind of push through this situation now joe, where do you stand on the banks, particularly after the Second Quarter results weve seen this morning . Well, i agree with marty. Theres clearly a bifurcation between winners and losers just listen to the commentary from charlie shaw who talks about being unsure about the length and severity of the economic downturn and read what jamie dimon says where he talks about the fortress Balance Sheet and being a fork in the storm. On the money center banks, i think clearly jpmorgan is benefitting from trading revenue as a catalyst. I think that the technological investments that they have made over the prior years is allowing them during this pandemic to reach their customers in a more efficient mannerism than the other money center banks, and i think thats the reason why investors should be owning jpmorgan, and i do i also believe that the premise that strength in trading revenue will disappear quickly is an incorrect one and i truly believe that that is something that is going to continue with us in coming quarters. We have never seen volatility at the levels that it is currently trading at with the equity indices concurrently trading at those levels so whether its a Goldman Sachs, Morgan Stanley, some of the exchanges, i think they will continue to work when youre allocating towards the Financial Sector how about the outlook for the size of the loan book, marty you have to wonder whether consumers are going to have appetite given the uncertainties to increase the leverage that they have. Weve seen payments down, credit card balances so far and we know that at least for companies who are going to be issuing followones and debt issuance that that might have peaked in the Second Quarter well, what you have is a couple of things one, the Capital Markets are liquid you can go out and raise capital that way youre seeing that not show up on the banks Balance Sheet that is not an option. On the other side, what you see is deposits are growing very rapidly. Money supply is growing. The last time we went through this process the fed increased the Balance Sheet. Just kind of absorbed into the Financial System and pushed right back to the fed because we needed to increase our liquidity. These banks arent in that position so money supply this time is growing. Deposits are growing so Net Interest Income is actually not getting hit as hard as what we would see Net Interest Margins because of what you said on the loan side. Joe, is jpmorgan an investable stock no matter what the scenario is . You mentioned jamie dimon saying its the port in the storm and it has a lot of liquidity. The Conference Call hasnt gotten underway or is this really a bet that the economy is going to be stronger in the second half of the year . Were going to see that flow to the banks . No, this is an investment specific to jpmorgan itself, and in the way that they have been able to conduct themselves as a moneycenter bank over the prio years, it was interesting as well to hear jamie dimon to read jamie dimons comments where hes talking about the stakeholders so were not talking about the shareholder anymore, when i hear talking about the stakeholder, that reminds me of the importance of esg investing. It does apply in Financial Services again, that is where jpmorgan will be found at the top of the list melissa, i believe that jpmorgan because of the franchise, that is the reason why you want to own it will you have to endure some potential lower pricing because it correlates with declines in the equity market . Of course you will thats where you take advantage and youre going in and youre adding to your allocation to jpmorgan, because over the long run this stock has proven to you that it will reward the stakeholder and the shareholder. Marty, you had indicated that you believe that some of the measures these banks are taking are extremely conservative, maybe in part to get the fed off their back, so to speak. For instance, wells fargo bigger than expected Loan Loss Provisions could this actually be a trade here the stock is down 3 but if you believe that they are being conservative in what theyre doing right now, then maybe theyre better off in the long run. Well, wells fargos a longterm turn around story. Well have to see how, you know, the Management Team can now go from reconstructing and really not having any expectation in what they do this year to what theyve built towards an earnings power as we go into next year. Cutting the dividend to where it is gives them a little bit of wiggle room. This provides a base gets their yield down to where the market is. Theres several other banks that have done what i think get ahead of the curve in a sense of the credit the market is discounting them more because they think theyre going to have credit from the last recession so theyve done a lot better they restructure the Balance Sheets those are the banks we want to look at now. Wells fargos a play as you go into 2021 or 2022. All right guys, thank you. Marty mosby and joe taranova later do not miss wells fargo cfo john sh rrewsberry. One step forward, one step back for disney. News of Hong Kong Disneyland closing again. Just as floridas disney world reopens. Well speak to someone who was at the park this past weekend to give us a little bit of on the ground feel for all of it. As we head for a break though, check out shares of Delta Airlines whos posted a wider than expected loss for its latest quarter beats slightly on revenue. Ed bastian outlined the modest recovery the airline was seeing until the end of the month demand has stalled as the virus has grown particularly down here in the south across the sunbelt coupled with the quarantine measures going in place in many of the northern states those two factors are causing consumers to pause take a look at airlines this hour youre seeing all of them in the red, not terrible but up by 1 virtually across the board quk xn bc, youre watching sawbo ocn 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. Welcome back to squawk box. On the high side of the premarket trades the nasdaq indicated up about 75 s p up 15 or so. Shares of big banks that reported Quarterly Results this morning, we want to give you a quick look at those. The ones weve seen, citigroup, wells, jpmorgan. Problem with the charts . No, the problem is fixed wells fargo notable in being down 4 . Gains in citigroup and jpmorgan. Andrew, the liesmaniacs have been clamoring, wheres steve, wheres steve, wheres steve finally, finally theres an answer to that question. I believe youre going to intro. There is an answer to that question were going to bring you the answer right now nice way to segue. Two largest districts, los angeles and san diego are moving to online only school in the fall economists trying now to figure out the Overall Economic impact if more schools follow suit and we get Steve Liesman with that very story right now what a setup, steve. Reporter andrew, thank you yes, i am at a ubl right now keeping schools closed will be bad for the kids and its going to hurt working parents really hard the impact on the overall economy is not overwhelming and manageable if its only for a time these are the numbers as estimated by barclays. 14. 4 million married parents where both are employed. 8. 2 singleparent households that are employed. Total, 14 of the workforce. Low income workers, minority and singleparent homes will be the hardest hit. The u. S. Economy will lose 1. 2 . And there are ways families and businesses can reduce that loss to make it even less here are some of the mitigation strategies people are talking about. Obviously some percentage of those can work from home its not easy but some can sharing child care, using nonparents and older teen in the house, grand parent and then you have surplus existing workers, of which there are many now, they can take up slack at work joshua epstein, he is at nyu professor in epidemiology has modeled the effects of National School closings. He said, quote, this is not an enormous impact to the level of gdp and the risk of massive schoolage con taj gons and the further transmissions to adults is very great. Take a look at the map of School Reopenings the Online Community Calendar Company verbio four states with districts start in july compared with ten starting in july last year those early start dates keep getting pushed ahead 23 states now have start dates after mid august compared with 17 last year and the first start dates, again, keep getting pushed back. Its a terrible sell the of choiset of choices around. If you think schools can go online like los angeles and others, consider this. Tens of millions of kids are estimated to lack either the devices or the Internet Connection to do effective athome earning. Melissa. Are there industries that are most impacted by these School Closings its interesting. Deloitte did a study increase in tech spending. An expectation for decrease in spending for back to School Clothing so thats a way that theres an adjustment going on in peoples spending patterns to perhaps prepare for the online more online schooling, less going to school okay. Steve, thank you appreciate it. Meantime, we should tell you that epcott and Hollywood Studios, theyre set to reopen at disney world in florida tomorrow this after the magic and animal kingdoms opened last weekend heres the contrast, folks Hong Kong Disneyland is going to be reclosing because of coronavirus fears. Joining us right now to talk about how disney tries to navigate its way through all of this uncertainty is Brooks Barnes who was at disney world over the weekend our own Julia Boorstin is with us as well brooks, you were on the ground you saw it live. Would you feel comfortable sending your family . I would i wouldnt have said that before i went it was a little nerve racking driving up to the gate, but especially compared to the rest of florida and, you know, what i saw outside, disney world felt sort of like a hospital. The safety protocols, at least on opening day, were rigidly enforced who knows how long as it goes on theyll have to keep that up i read the story families seemed to be having a good time. In terms of the quote, unquote experience, if you will, worth it you know, it i have a hard time understanding why you would go anywhere right now. Im much happier in my little bubble here, but i try not to try not to judge people who felt the need to go and those hard core disney fans you know, it can be like a religion to them i saw multiple people crying when they came in. There were entire families in mini ears, mickey mouse ears and for them, you know, as i listened to them, they said that, you know, ive heard people saying this was courage for them to go on. Some sort of hope. That any type of fun they would take and that disney was really the only for them disney was the difference that they trusted. Talking about trust julia, lets talk a little bit about the role that the disney brand and from a management perspective the two bobs, bob iger and bob chopak are facing in terms of trust in part because on one side we have Hong Kong Disneyland closing down thats because the governments telling them to do so, but the cases there are a lot lower, right . And meantime you have cases at the highest level theyve ever been in florida and some people looking at that going, is that responsible . So how are they thinking about that inside of disney right now . Reporter well, look, i think its worth noting also that here in california where i live and the cases are surging again, the state is not allowing disneyland in anaheim to open up. I think what were really seeing, andrew, is sort of casebycase basis the parks really reflecting whats going on in that local government. And floridas a very different situation than california right now. In terms of the management, i think the fact that bob chopak was in charge of the parks for so many years, that was his domain, that was his expertise, i think that gives him an advantage in knowing the people and knowing how to make these decisions and then really knowing how the parks operate on the ground so that is working to his benefit right now. But bob iger is certainly involved especially on the creative decisions deciding what films should be going on disney , which ones will hold for theaters and trying to navigate those new waters as well the reason i ask about the responsibility, because its a trust issue. I think brooks might have written it in his piece, that people who go to disney say if disney is doing it, therefore it has to be safe, right . That disney is the gold standard, if you will. Forget about the Government Role in all of this so to have two places closed where the spread is lower ostensibly than in florida, what does it say about the longterm sflus and what a trust . What if somebody can try to tie an outbreak back to one of these locations and maybe tying the outbreak is very hard, maybe thats part of the gamble here i agree with julia about bob chapek having the operational experience, but at the same time its a breathtaking risk that theyre taking here with the disney brand and really, you know, if something goes wrong, thats a jobending decision depending on how wrong it could go and the disney brand here is taking a hit if you look on social media, people, you know, disbelief and sort of horror from a lot of people judging from afar is pouring on out, and disney is not used to that certainly not in a sustained way. And so its difficult to julias other point about different parks being open disney has a hard message right now. Hong kong closed california closed. Mulan isnt in theaters like it was supposed to the corporate offices are still closed yet its safe to go to disney world its a hard message for them julia, before we go yeah go ahead i was going to say, one of the analysts said that the risk to disney is so great if there is an outbreak tied to them that their most important priority right now is opening very, very slowly to ensure that they can really control the situation, keep the capacity numbers very low to make sure that that doesnt happen right then real quick, julia, in terms of production because i think we had news earlier that the disney is going to have a new star wars feature coming up early 2021, how is disney approaching production relative to all the other Hollywood Studios . Are they more aggressive are they less aggressive reporter well, i think netflix has been the most aggressive theres been a lot written about how netflix is ramping up production internationally they have a number of productions underway right now i would say netflix has been the leader in that theyve been in production on many things for months now disney of course with some of these high tech productions, a lot of them can be done not on a physical location which can limit the number of people who have to be together and i believe that will likely be the case when theyre doing star wars. It was certainly the case with man delorean. Julia, brooks barns, thank you very much. Appreciate it. Thanks coming up, can americas big three automakers grab significant electric vehicle share or is tesla too far ahead . Check out the shares of tesla. It is higher by 6. 6 premarket heres an eye opening stat according to the site robintrack, in one span an average of 10,000 users added tesla to their robinhood rtli ppofooser hour. Stay tuned, youre watching squawk box on cnbc wilfred frost just got off a call with j. P. Dimon. Lets start there in terms of the increased provisions for bad loans. They said in q1 we expected a sharp down turn followed by a rapid recovery now we expect something more protracted in terms of the provisions for bad loans saying the q1 provisions are focused on the hardest hit sectors. Its much more broad based theyre assuming there will be more stimulus to come but they dont know that for sure said, visibility on economic damage not very good in terms of comments from jamie dimon, he said his traders with strong numbers did an extraordinary job. 80 from 20 in the office my guess he said one day well be back at work. Maybe 10 will be always done at home i asked him whether the moves in stock market, tesla up 17 , down 3 at the close was a sign of a market bubble. He said its a mistake to look at one stock that doesnt represent anything. Did say trading levels will likely revert to more normal levels Going Forward and said we just had the biggest downturn in march and april ever the biggest up turn in may and june we just dont know the future was his sort of closing theme. Wilf, thanks. Weve got some data coming up. Breaking Economic Data june csuonmer prices are out in a couple of minutes. Were coming right back. Welcome back to squawk box. Rick santelli with breaking news Consumer Price index for the month of june. Headline expected up half of 1 . Up a bit more. Up. 6. This follows minus. 1 that made me revise before completing the rest of the internals here if we scoop out the important food and energy, its up twice expectations for year over year, expecting up. 6 year over year headline. Thats exactly what we received. And year over year strip out the food and energy components, up 1. 2,. 1 higher than expected the economists did a pretty good job of calling these numbers they were only. 1 off. Cpi is running a bit hotter than many expected. Of course what exactly is going to occur with prices is anybodys guess because pre and post covid once we get our arms wrapped around this change the dynamics i will tell you this, some of chinas trade numbers have been out. Their imports of u. S. Products has actually surged a bit. Exports were higher but not nearly as high as imports. Things like beef, so its going to be very difficult to handicap because its very difficult to handicap which economies are grabbing and which ones are still a bit compromised by covid. Melissa lee, back to you rick santelli, thank you. Youre looking at a board of the futures. Hotter than expected cpi data. Steve, you have more of these numbers. Steve liesman. Reporter the big propellant to the increase here was gasoline up 12. 3 on the month, and thats after being down 10 in march, down 20 in april you know the volatility in the gasoline and the oil business. About half of the gain that rick reported there, that 0. 6 gain comes from gasoline. So thats the reversal overalthough gas prices down 22 . Some other areas where there were increases food has been up 0. 6 remember, we have two issues going on we have a huge demapped shock to the economy but also a supply shock. It seems like the supply shock is working its way through the food and the food at home price channel which is up food and home is up 5. 6 year on year even restaurants are up 3. 1 year over year one other place i saw an increase where its going to power prices up 1. 7 but that followed three big down months do you know 2, down 5, down 2 again on apparel not that big of a deal overall inflation or disinflation remains the pro do predominant force. That gives them credit to the economy. Its looking over its shoulder and wondering will there be inflationary response from all of the trillions that its spending and infusing into the economy. Melissa . Steve, thanks Steve Liesman. Joe . Thanks, melissa. Tesla coming off an extremely volatile session volatile couple of months. Mostly volatile, if that means up, according to the site robintrack. N robintrack. Net an average of 10,000 robinhood users buying into tesla an hour. Stock popped 16 at the high but then it began sinking almost as a proxy for the frothy nasdaq. Finished lower on the day, is my word, frothy obviously one mans opinion. Were going to talk about whether tesla has faded to completely come to dominate or if the big three can get their way in joining us is bob lutz and phil lebeau is back with us bh bob, its good to see you. Good to be here we always talk about tesla, and whenever youre on the musketeers, teslareans, they say, hes from the old school, the big three, the dinosaurs, he doesnt get it youve always been very skeptical and looking at i and i would say a nonbeliever in the face of what youve seen the last three months, are you at all changing your viewpoint or do you think sooner or later youll be proven right about tesla . Well,e both. First of all, i will freely admit that elon musk has done a brilliant job. He produces very good cars he managed to avoid bankruptcy and he managed to avoid the feds preventing him from raising capital after he was placed under sec investigation and so forth so hes dodged a lot of bullets, done a lot of great things and i give him credit for that and the cars are very good and he has built a very valuable brand. One of the smart things he did was he started at the top of the market with a large, expensive car and he got a lot of, you know, thought leaders, wealthy west coast people and so forth and then he started going down in size. What everybody else did with electric cars is, well, lets make it tiny and cheap and ugly because people want electrification. No, people dont want electrification that badly, they want a nice looking car with great performance. And lets face it, elon musk has done that. But the rise in stock price and the fact that tesla is now worth more than fca, gm and ford combined, worth more than volkswagen, worth more than toyota has nothing to do with reality. When you look at reality, tesla, albeit still alive, is not ill say this kindly tesla is not a very Profitable Company that creates a decent return for its shareholders. Tesla is always struggling for profitability and yet its got this huge market cap and its referred to as the electric car giant. Well, they may be giants in the electric car business, but annually they do 300,000 cars. 300,000 cars compared to 10 million a year for toyota, about 8 million a year for gm, fca, ford, gm combined about 20 million a year so tesla is not very big they have very good technology, but so does gm, so does ford, so does toyota, so will volkswagen and porsche. Bob, at 300 you thought it was way, way, way over valued. So i dont know what you say now. Let me get over to phil lebeau and you hear bob mention that band, they may be giants youre very hip, bob you like musketeers . Teslarean . Whats your name for the bullish tesla people, phil do you have one teslafarians. Thats pretty good. On the other side you have teslaquers you hear from both of them. Joe, i think the most interesting thing, im not going to get into whether tesla shares are over valued or not you can sit here and discuss that all day long. Bob makes some great points on that i think the issue that he touched on is the one that ought to be of concern for the rest of the auto industry. They know that they have to catch tesla in terms of technology and in terms of the styling of the vehicle that they bring out, and for years they sat there and said, trust us, were going to come out with these vehicles so far they have swung and missed repeatedly. It is time for them to either step up or stop talking. And were going to find out with the gm hummer and were going to find out with the electric pickup truck coming from gm and ford and the other automakers. Overnight well hear from nissan out of japan they have a new electric suv heres the question. Are these truly going to match up not only in terms of range and performance but technology thats the bottom line here. Because at this point teslas way ahead of everybody else and im he sorry, i hear this all the time, especially from people in detroit, they say, weve got Great Technology show it. The time has come to show it the market is developed. You have got to show it. Wow, the dow meanwhile has given back almost all of its gains this morning i dont know if its after those numbers. Were only up 15 melissa, do you want to talk to bob lutz or phil i think phil makes a great point in terms of technology especially as theyre gearing up for the battery day september 22nd some are expecting a million mile battery announcement from the company, bob you make the point, bob, that tesla is not a gieant. Its a giant in the ev world. Thats true. Compared to the total number of cars produced by the big three, sure. Gm last year i believe only sold 25,000 volts for the whole year, 2019 im rounding up, compared to tesla which delivered 90,000 cars in a single quarter but to phils point on technology, bob, i mean, when are the big three when is gm going to come out with technology that will wow it sounds like you concede that maybe gm and others had missed steps in the launch of evs in designing these ugly little boxes that are electrified when people really wanted something really nice. Are they going to close the gap . Theres the issue of ugly little boxes and then theres the issue of technology. Im sure that the appealing design part will definitely be solved the electric hum mer im guessig is going to be a huge success because people always liked the vehicle. They liked what it represented, but then it got a bad rap for destroying the planet. Now that negative is gone and i think if priced drk if priced high enough it will become a beloved toy of the wealthy having said that, people go on and on about Tesla Technology, Tesla Technology i would like to ask my erstwile colleague and things automotive phil lebeau, exactly what technology are you talking about . Battery management software, bob. Battery management software. Look, everything we have heard from people at your own company, general motors, i hear it from people and ford is we have software as good as teslas. Trust us, its going to be there. Look, they may they may very well, but my point is and if you talk with analysts, you hear this all the time, which is we think that theyre going to be there in terms of the software. At some point you have got to start showing that i know were in that period in the next year and a half where we will start to see if, in fact, that is the case. Exactly you know what, theres a Battery Management software thats trans 35ir79 to the c parent to the consumer the media agree the chevy bolt, bolt with a b is an outstanding little ev. It gets in an urban environment about 280 miles range. Its wonderful to drive. Battery doesnt heat up. Many journalists have described it as actually a better vehicle than a tesla model 3. Then why dont they sell more of them, bob exactly. Why dont they sell more of them exactly. Its great on paper heres the problem. Its just like remember the days of hybrids . Remember the toyota prius . Well, a lot of other people had hybrids as well utilizing much the same technology as toyota, but when it came to selecting a hybrid, hybrids, toyota. And i think for a while its going to be that same automatic reaction, electric, tesla. And it is going to be hard to break in, but not hard i dont think the challenge is going to be the vehicle, its appearance, its technology, its rage or its attribute. The technology is the problem is going to be opening peoples mind that there is now there is now a wide selection of excellent electric vehicles available because whats happening and what may be the most important thing that elon has done is people arent buying an electric vehicle, theyre buying a tesla and it happens to be electric. They are the kleenex of the auto business. So the difference between yeah the difference, bob, between a tesla and, say, a chevy bolt is marketing then no. Its the baggage that people carry around in their mind, plus of course plus, of course, the question of aesthetics i mean, many people believe that the chevy bolt is a cute little hatchback but it doesnt have the presence of a tesla model 3, especially not model s which remains one of the most beautiful sedans of all time i mean, other people make other people make selfadhesive transparent tape, but the name that youve got embedded in your brain is scotch tape right. When somebody gets a psychological lead like that, its very hard to break down. Hey, phil, so an electric hummer, does it look like the old yeah. Let me ask you a quick question, phil some people are writing in if youre going from new york to florida, is that really is tesla is your tesla ready to do that . Theyre saying its a city car and it would take five extra hours added on to your trip time and if you get stuck behind a bad accident, youre going to run out of juice and your air conditioner is not going to work im seeing things like that. Joe, im sure you could find some scenario where Something Like this plays out with any electric vehicle, not just tesla. In terms of the recharging network and driving long distances, you have to do a little bit of planning if i were to go from here to boulder, colorado, i have to do planning. Ive got that all figured out with an ihop, waffle house combo for charging stations because i in fact, i might i might plan a longer trip to take like five breaks and just go ihop, waffle house ihop, waffle house bob, i think you all the to go into selling used cars, i do working on those right now. I know some 78yearolds that are nothing like you not going to mention any names, 88, ten years older. Great to see you, phil lebeau, as well. Andrew coming up when we return, much more on the markets following the powerful and mid afternoon selloff yesterday. Take a look at futures this morning. We are about 45 minutes before the open right now dow looking higher 50 points higher s p 500 up 2 points. We have been moving around as we get earnings check out shares of spotify. Ubs downgrading the stock to sell from buy to double downgrade. They say spotifys long prospects are solidly reflected in the stock price already he also thinks the ben fitefitsf an expansion in podcasts are over estimated we love podcasts make sure to subscribe to ours, squawk pod. You can get it anywhere you want to get your podcasts, including ayunpofy st ted, youre watching squawk on cnbc the volatility. The ambiguity. This moment calls for more. And Northern Trust delivers more. With specialized expertise. Proven strategies rooted in data and analytics. And insights borne from over 130 years of successfully navigating economic turbulence. Giving you new clarity. Inspiring confidence. And helping you uncover new paths forward. Northern trust coming up, jim cramers first take on the trading day. After the nasdaqs huge reversal, is the tech rally finally starting to show some cracks well talk about that next when squawk box returns ul construc. Infinite what ifs . And contingency plans. Creating funds that help target gaps in client portfolios. 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I want to get over to cnbcs headquarters to talk to our good friend, jim cramer, get his take on whatg on jim, you know, we had this reversal in the markets yesterday afternoon, we had these Bank Earnings this morning, whats your take away first i didnt like the cpi number, it looks like people are being paid not to work right now and obviously price right side going up someone is going to craft a stagflation argument i thought that given the fact that there are a lot of people who are unemployed the forbearance for loan losses would have been far worse at a bank like citi, i thought the numbers were fine. People want to see great trading, jpmorgan gave us that that reversal yesterday, stocks got too high tesla up 200 points it was too easy and when it gets that easy there are who say ive had enough, im getting out and its never been wrong to do never. On the banks, though, the thing that i cant figure out is on one side of jpmorgans house you have the trading news which is good news and i think you will see that i imagine across most of the banks. Right. On the other side ithought the credit card numbers were not as good as people wanted to see and what you take away from that well, look, i was looking at going over citis credit cards which i thought were actually how many people elected forbearance versus actually said, listen, we do want forbearance showed that things were pretty good i think these will be very granular and very different, but one thing is for certain, andrew, wells fargo, when you have a guy like charlie sharp who says, listen, we did terribly you cant say, lighten up, charlie, lighten up, you did well wow, that was a wakeup call charlie is a very good banker. That is theyre doing terribly andrew, though, the benchmark. They are the benchmark. But then here is the question, were going to get a lot of earnings over the last couple eeks. Most likely. Are you supposed to put your blinders on . Is this a see no evil, hear no evil and lets just try to look 12 months out and get more spread do you say to yourself that the recovery is going to be slower do you say im going to bet on a vaccine and a therapeutic so i dont care about whether theres more spread right now because im trying to look out what do you do that is what people are doing and thats what happened yesterday midday was that the stock that sold off were the ones that were covid, covid explosion, and the stocks finding their footing were companies that are Covid Vaccine and thats the big look, the big theme in the background now, andrew is its too late to start making money off of covid, now you have to start making money on the vaccine and what the world is going to look like. I think that is a bogus analysis we dont have a vaccine. We just have a lot of companies coming on saying were doing great with the vaccine its too early its too early, andrew too early to bet on that. Okay. The nfl cant even figure out how theyre going to test. They dont even know how to test i mean, this he cant even test, theres hardly any tracing. Im with you on all of those scores im with you, im just praying, im crossing all my fingers that we actually get a vaccine but though youre hearing about debates about who is going to get the vaccine and the ethics of the its going to be i would tell you lets go out to dinner and talk about it but thats the last thing i want to do i went out to dinner last week, andrew, it was the most frightening thing ive done. It was frightening there were people to the left of me, people to the right of me. Jim, lets do zoom drinks, virtual drinks. A boozy brunch on sunday, you are down for it. Okay. Deal all right. See you in just a couple minutes with the gang on squawk on the street. Joe . Thanks. Lets get to apple, amazon, facebook, netflix touching record highs yesterday before they reversed, closed down for the day. Lets talk to krishna, the nasdaq had an all time high yesterday closing down 4 . Were joined by krishna ma manny, i think your view from what i can tell is that the markets are looking through these the earnings reports as backwards looking and at this point anything less than a total lockdown maybe the market isnt necessarily out over its skis or is it . Well, no, i dont think the markets are over their skis. Theyre not focusing on the earnings and the draw down in the Second Quarter and rightly so you know, trying to figure out the cash flows of businesses off of one quarter when your risk is for 30 years doesnt make much sense. I think the consolidation in technology yesterday was actually a really good thing if it continues the way it was over the last few weeks, we would get ourselves in real trouble down the road. So i think the market needs to consolidate at this place and we just need to focus on the Economic Data. All this talk about virus i think is somewhat irrelevant because unless we get into a lockdown and if we get into a lockdown it doesnt really matter, its all over. If we dont get into a total lockdown whatever we need to do we can get that through we can get that through the Economic Data just as much so im ignoring the virus this, virus that, we will just focus on the Economic Data for the time being and focus on the virus for a risk perspective. Its hard to do with the lady lines, but yesterday the s p traded at a it was up for the year either the fed is just dumping so much money into it that its just all artificial and all disconnected, or the markets are able to see through this period that were in right now and eventually, you know, we are going to either live with the virus or have a vaccine, right yeah, so i think the fed is certainly the biggest driver in the marketplace by a wide margin at the end of the day we are here because of the backstop that the fed has done and you cant ignore that, but at the end of the day if things are going to work out for the equity markets we have to see a revival in the economy i think on that front, you know, despite all the virus thing that you were talking about, things are looking much more from my perspective much better than i would have expected at this point. For the near term i think im focused on banks because i think they will tell us whether the draw down in the portfolio is going to be as large as we really we were really thinking beginning of the crisis and i think things are looking much better on that front. So i take some solace in that. You like tech, its a much cheaper as of yesterday well, not much not as overdone as maybe in the midday yesterday it was down and now its selling off right now, if you can see the nasdaq, krishna. Would you wait a while for your favorite names because it seems like that may have been significant yesterday in terms of these things just being too extended. Well, so i think if youre buying tech you are not buying it for two days, youre buying it for ten years so and, you know, if you want equities its because youre looking for growth and i think these Tech Companies are delivering significant level of growth, but much more than any other part of the u. S. Economy and, therefore, buying it for the long term makes a lot of sense. I think you use nier term trading patterns more for your entry and tactical points, but from a strategic standpoint tech is i think where the action is going to be for the foreseeable future. And you like the banks, too. Yeah, i like banks and i think i like specialty asset managers, people who are you know, if you look at individual portfolios what is most critical now is finding ways of generating income and if you just buy a regular Corporate Bond thats not going to be the case so i think people who can provide other sources of income like aries and the private equity people those are very attractive in the Asset Management space. Very good krishna, thank you. Thank you. We appreciate you being on this morning we want to thank mel sachlt i saw a couple overdue books in the stacks behind her at one point. I dont im at the library, joe. Sorkin, see you tomorrow. From your compound, the undisclosed location were going to do it again make sure you join us, squawk on the street is next. We will do it again tomorrow. Good tuesday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer and david faber coming off that big nasdaq reversal on monday, worst day since june 26th. Futures have lost a little steam as banks are in focus, jpmorgan, wells, citi, along with covid as california the nations biggest state economy closes indoor Operations Oil is above 40, we watched cpi, jim, but once again, we are prepped for another day of interestin