Transcripts For CNBC Power Lunch 20240712

Coronavirus vaccines produced neutralizing antibodies in all 45 trial patients. One analyst just gave it the highest price target on the street he will join us. Power lunch starts right now welcome, everybody great to be with you the Federal Reserve has released its beige book for a closer look at the economic recovery well have more on that as we dig through the headlines. We want to get it to you fast, we want to get it to you right we want to go to bob for a check on the markets hello there, tyler. We are sort of right in the middle of our 40point trading range in the s p 500 weve been stalling out at the 32, 33 level thats where we started the year thats where the june recent highs were were having trouble getting over that. The s p this week, about a 100point range. The good news, optimism on vaccine. The bad news is the reopening reclosing story is murky, causing a lot of stocks momentum apple up tech down today. Travel stocks, you see the optimism on the vaccine front, travel stocks go up. They are 60 off where they were back in february, so bear that in mind. Bank stocks, good news is the Regional Banks had provision for loan losses but not as bad as wells fargo. Thats helping them out. The problem is the trends are rather troubling for all of these Regional Banks loan losses generally still have higher provisioning. The average amount of loans is still going to be lower. The fees is lower. The news is not good for Regional Banks and the net interest theyre getting off the yield curve, still weaker in general. Theres nothing to offset the lower interest, the lack of loan growth and the flat yield curve, guys thats one of the problems Regional Banks have been having for a while. Back to you. Thank you, bob pisani lets get to Rick Santelli for the beige book, which was just released moments ago. On one hand, fed says activity increased in almost all districts. On the other hand, it increased but still well below precovid levels theres your tug of war with regard to headlines. The fed, of course, is implementing lots of programs. I believe theres nine of them about half of them are functioning. And things have worked out pretty well. If you look at how the markets reacted to some of these early headlines on the beige book, you know, two years havent moved much theyre a little down on the session. If you look at tenyears, virtually unchanged at 62. Go down the curve, 30year bonds are getting a little frisky. The dollar index is like a third of a cent off its lows today it was well below 96 its firmed up none of that is beige book responsible. In the end, if youre going to walk away with a notion on the beige book and the feds next meeting, things are looking good, but theyre not going to look nearly as good as they did in february. Back to you. For more now, lets bring in Steve Liesman whos been tearing through this report. What have you found . Yeah, pretty much that same split there which is this idea that things did pick up pretty much across the board. Consumer spending picked up. Most districts reported manufacturing moved up again, its a level issue but from a very low level. Construction did remain subdued though it did pick up in some districts. Home sales increased modestly. The ppp and loan deefrls by private lenders reportedly provided many firms with sufficient liquidity for the near term, it says however, theres some concern it remains uncertain because they grappled with how long this covid19 pandemic would go on and the magnitude of the implications unemployment, it increased in all districts as businesses reopened and ramped up activity. Most would have come before the surge. In is an interesting line, it says contacts in nearly every district noted difficulty in bringing back worker because of health and safety concerns, child care needs, we talked about that yesterday, and generous Unemployment Insurance benefits they said they have been retaining workers with the help from ppp, but Going Forward the strength would determine whether they can avoid layoffs thats another interesting cliff theyre facing there good growth from the level but the level remains low. Tyler . Thank you very much, Steve Liesman. Here to react to these Economic Data weve just received is seth carpenter, chief economist at ubs and ron insana, schroeder north america. Ron, my reaction to what i just heard rick say is, tell me something i dont know in other words, the idea that the economy is performing better than the prior beige book but not back to precovid levels is about as obvious a conclusion as i suppose you could anticipate and i think, tyler, also those data were compiled before we had the reemergence, if you will, of lockdowns in states like california, arizona, texas and florida, which have dialed back their reopening measures. Clearly thats not reflected in the beige book yet, nor, i think, will be this fiscal cliff that everybodys talking about being a Small Business person myself, one can attest to the fact that any kind of deferrals on any owed payments and any assistance a Small Business person could have gotten is now gone what Small Businesses and individuals do Going Forward is going to be interesting because most of this runs out between now and the end of the summer. Most deferrals run out, because if you got one, they were three months in length thats it. I dont think the beige book captures the moment. It captures the past two months. I think the real question for the markets, as much as theyre cheering the fact that the fed said activity picked up, picked up in past tense, might be the operative phrase. Seth, pick up on what ron has just said there. That is, it is a backward looking survey, which it certainly is, but drill down a little bit as we look at the path forward here. Ron identifies the idea that some of the stimulus is going to fall away. There is the, quote, fiscal cliff that may fall away what do you see over the next, lets say, four months, 100 day dids to election day in terms of the economy . Yeah, i think theres a lot here thats critical i think the levels versus change thought perspective is exactly right. Were still weak i think the other point the beige book makes that i think is critical for the 100 days is theres turnover in the job market thats super high we saw two months of strong job gains. We have more people employed than we did a couple months ago. But youre still getting Unemployment Insurance claims of 1. 5 million per week per week thats just a huge number. And so whats happening is everything is changing some parts of the economy are opening up, people going back to work but then the Small Business concern that was just mentioned is absolutely critical and all the while, while the Small Businesses enjoyed the initial pop of the reopening, you still have 1. 5 Million People per week getting laid off. I think its going to be a rocky patch. We had two months bouncing off the bottom that looked really good Going Forward Going Forward, i think things have to slow down. Steve, up to what point do the surveys capture the Economic Activity in these districts . Usually a couple weeks before i didnt check the exact dates but usually a couple dates before the selected on or before july 6th, so its about nine days old is the amount of time i was just reading the dallas Federal Reserves report in this thing. I dont see much in terms of discussion of a resurgence in there, at least not immediately. But it does give us some information about the months ahead, which is the idea that these ppp loans are going to run out and thats going to be an issue. You have ben bernanke writing today about his concerns state and local government layoffs, which are already happening. And you have concern about whats going to happen with the Unemployment Benefits running out. These are issues that, i guess, the market is looking past, melissa, in my opinion it feels as if these things are going to be resolved we talked to bullard yesterday he talked about the idea that he expects additional fiscal stimulus or Fiscal Relief to come from congress and the president. So, it seems as if the markets baking that in that theyre not going to allow these things to fall off in a cliff sort of way. Sure. But theyre going to have to happen in order for the economy to sustain the momentum in this report. It may not be a cliff, ron, but it could be a small dropoff i mean, its interesting that the markets assume, that the consensus is there will be a continuation of Stimulus Program of some sort yes, that may be true, but the degree of the stimulus is the real detail that needs to be figured out. Because if youre talking about something that Mitch Mcconnell has been talking about, stimulus for 40,000 income and less as opposed to what it is now, 75, thats a big difference. The difference in terms of the number of people being helped. Yeah, listen, it goes to the people who need it most and living paycheck to paycheck. When you consider Small Businesses in excess of 75,000 or 100,000. If they already spent their ppp, its all been spent, no extension of that, no extension of Unemployment Insurance benefits that have been as generous as the ones weve seen. Yes, it might have provided some shortterm disincentive for people to return to work their return to work may not be guaranteed either. What we saw in the last unemployment report, despite the fact we saw a rebound in jobs, there was 6,000 permanent layoffs on are firings these numbers, you really have to sift through them closely i would argue that unless you match the size of the benefit package weve seen before or something that bridges us to a vaccine or a bulletproof therapeutic, theres going to be a falloff in Economic Activity and the market is looking well past that. In my estimation, maybe a little too far past it. Seth, the market tends to focus on i think we would have to say, larger companies. Not that all companies that are measured on the stock market are large, but many of them are. Ron talks about Small Businesses and i wonder what the toll economically is going to be as Small Businesses find that they just cant make it there are big employers. A lot of people will be out of work there are places that are going to go bellyup and not pay their rent and just close up shop. So the landlords of those places are going to be in trouble how do you see this playing out . And what might it do to the social fabric in this country, frayed as it already is . I really do worry about that. Youre absolutely right. From my perspective its all about employment, which then feeds into people spending in the economy which leads to more employment thats just absolutely key and i do worry about you said the social fabric. I think the friction is sand in the gears and then eventually causing the machine to break one place i look is the Labor Force Participation rate it did come up in the last two jobs reports but Labor Force Participation rate fell for seven straight years after the financial crisis and it dropped like a stone with covid. If we dont get people coming back into the labor markets, dont have jobs for them, that really retain them, then i think part of that underlying potential of the growth of the economy gets lost. I think it is a key consideration. Folks, thank you very much. Ron, seth, we appreciate your time weve got a news alert on china. Lets get to kayla taufor the details. President trump yesterday signed into law legislation that would allow the white house to place sanctions on chinese officials for the actions theyre taking in hong kong. Im told by two sources briefed on the matter that the white house is holding on of on actually moving forward with those sanctions for now. They have assembled a list of potential targets for those sanctions if and when they decide to move forward, but that the Trump Administration at this moment in time does not want to worsen relations with china. Especially given everything going on in the u. S. Economy, the months leading up to the election, and the uncertainty about how china would respond to that were they to do so. Certainly, an Interesting Development considering the bill he signed into law last night. The powers it gives the president and the fact he is holding off on doing that, for now, according to my sources back to you. Kayla, thank you. Still ahead, the s p 500 briefly turning positive for the year before giving up all those gains. All 11 sectors are still positive with industrials and materials leading the what i here plus, shares of moderna higher today on vaccine results. The stock is up more than 300 this year. A top analyst says its got more room to run. Hell join us after this quick break. S. Welcome back rallying today, moderna after releasing positive data results for its Coronavirus Vaccine as it gets ready to start phase three of its trials. Lets get more on this exciting story. These are the full phase one results of modernas covid19 vaccine trial. The first one they ran in humans we got a peek at these results back in may, but this is all 45 participants worth of data. What it showed is they generatesed a neutralizing antibodies at levels that were two to four times higher than in patients who have actually recovered from covid19. Those are the important antibodies thought to block the virus. They also did observe side effects in the dose level that theyre taking into the next large stage of Clinical Trials particularly after the second shot things like fatigue, chills, headache and muscle pain so, those will be watched closely along with other signs of efficacy as they go into phase three. Thats expected to start july 27th pfizer also expected to start a large phasethree trial in july followed closely by astrazeneca where its just been reported their phase one data will be published in the lancet on monday there are a lot of questions, though, about how will we supply the world with these vaccines . And the fda commissioner was just asked about this at the Economic Club of new york. Heres how long he said it would take the it will take months to get that weve got a head start, which is great. But, obviously, we want to ramp up as quickly as possible. And the as much as we can do to shorten that. The challenges, the logistics here is why he says everybody is hoping multiple vaccines will work certainly, there are a lot of shots on goal, guys. Meg, thank you. Well, Piper Sandler is raising its moderna price target of a street high to 131 from 100 other Companies Working on a covid19 vaccine are up as well. Yeartodate gains, novavax up 250 , inovia edward, great to have you with us thank you i wanted to pick up where meg left off and that is the challenge of the logistics and manufacturing part of it even if moderna gets it past the finish line and every successful Clinical Trial it seems closer and closer to do that, its never produced a commercial product before will it have to partner in order to get this done actually, melissa, theyve already partnered with lanza, which is really the largest Contract Manufacturing organization between modernas facilities outside of boston and the lanza facilities, they expect to be able to make 500 million doses, sufficient supply for 250 million vaccines by next year. Even though they havent done this in the past, they have a very Strong Management Team with lots of people who are very experienced. They have gotten money from the government as well as investors to start already stockpiling commercial supply in the event that the phase three is successf successful so, i do expect theyll be able to deliver large quantities of vaccine. In terms of the side effects, meg mentioned this as well, at the desired dosage, the intermediate dosage, there were severe side effects reported 40 actually reported fever of over 100 degrees is that a concern and could that be a stumbling block to fda approval, even though the fda has said it will approve vaccines that produce antibodies, have an immune response yes so, the important thing is at the 100 microgram dose, which is what theyll be using in the phase three trial, there were no serious adverse events the most common adverse events were injection site reaction and also, as you mentioned, these flulike symptoms, so fevers and chills and aches those are very common with vaccinations, including the flu vaccine every year the reason for them is actually because the vaccine is stimulating the immune system, so those are actually immunemediated adverse effects and actually shows the vaccine is working. There are a number of bears on the street when it comes to moderna, edward. Im sure youre aware of them. They often point out the companys i dont want to say proceed clifty but the fact the last time the Company Released topline data it went to market with a secondary offering. Taking a look at the Company Filings filed with the s. E. C. , you see a lot of Company Officers selling stock i went through those filings this morning since the beginning of july, they have sold more than 71,000 shares since the beginning of july should investors be leery of a Company Whose insiders are so quick to sell the stock, even though its part of a planned offering it seemed there were five different filings just from july, from the ceo alone. As you mentioned earlier, the stocks that are working on covid vaccines have all performed exceedingly well i cant speak to their mindset for selling the stock. I think investors need to focus on the fundamentals here, which is that moderna could be either the first or certainly among the First Companies to deliver a vaccine that could have profound benefit to the United States society and economy. So, to me, you know, i think the last fund raise was done below where where the stock is trading today. We just increased our price target to 134 thats a 12month price target, but we believe shares could be over 100 with the launch of this successful sars cov2 vaccine. The other companies you cover, do you find insiders sell to that degree i mean, to have five different s. E. C. Filings to sell 72,000 shares, that seems like something you might look at and say, that seems peculiar or maybe it doesnt no, we look at those and ive been a biotechnology analyst for over 20 years. Insiders sell stock, thats how they make the majority of their money. So, i cant speak to these individuals or reasons for selling. To me its whether or not this company is going to get a vaccine that could generate billions of dollars of revenues and what that is going to equate to in terms of Value Creation for shareholders. Edward, great to speak to you. Thanks for your time. You bet we have a quick news alert on amazon. Amazon saying it will extend its work from home policy through january 8th of 2021 and will continue to restrict nonessential bilgts Business Travel this amid a rise in coronavirus cases in the u. S the company says it continues to prioritize the health of employees. It says that in a statement. Still ahead, chinas stock market near fiveyear highs with the large cap china etf up 10 just this month. We will tell you what is driving those gains. Plus, credit card sales plunging, according to jpmorgan. That could be a warning sign about the strength of the consumer and this recovery and bad news for American Express. More details right after this quick break on power lunch. 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. I was drowning in credit card debt. Sofi helped me pay off twentythree thousand dollars of credit card debt. They helped me consolidate all of that into one low monthly payment. They make you feel like its an honor for them to help you out. I went from sleepless nights to getting my money right. So thank you. Welcome back to power lunch. U. S. china relations growing increasingly tense over disputes in the South China Sea that hasnt stopped chinese stocks from outperforming large cap chinese names. Flat today but up 10 so far this month more than double the gains of the s p 500. This comes ahead of a key read on chinese gdp tonight lets bring in the trading team to discuss, mark tepper, and by phone, Delano Saporu is there a name you recommend for clients to invest in at a time where we get more signs that the Chinese Consumer is, in fact, coming back . Yeah, sewe believe in baba were looking for insulation from the broader macro events and they provide that with the strong ecommerce strategy we believe in sticking with that trend. Were really high and bullish on baba mark, do the increase in geopolitics concern you as an investor or continue to build on chinese stocks we already own a lot of these storks through the china etf kweb geopolitical issues are always an issue when you look at chinese stocks are up 12 , s p up 1 . I think a lot has to do with the covid narrative. It is front and center right here in the u. S. People are afraid, you ba irly hear about it in china im not saying its not as bad there, im just saying you dont hear about it. Regardless, i mean, theres definitely Growth Opportunities in these names i also like baba thats our favorite. Look, theres no doubt chinas middle class is growing. And i think baba is the best what i to play it. We own the company not just for ecommerce but for the cloud and food delivery, pay when you look at every single metric, whether its revenues, earnings, ebida, i think theyre going to mroe through earnings. Its up 18 this year great to have you both on. For more trading nation, head to our website for more realtime analysis or follow us on twitter. Ahead on power lunch money in the banks despite Economic Uncertainty Goldman Sachs and jpmorgan beat expectations google betting on back too school the tech giant working to improve its classroom offering as schools prepare to go virtual in the fall. A new cnbc survey shows an overwhelming amount of swing states support an additional round of stimulus. Those results are next announcer and now the latest from tradingnation. Cnbc. Com and a word from our sponsor. Overbought and oversold indicators are generally used differently depending on whether the stock is range bound or trending look to buy a rangebound market when, such as an rsi falls into oversold territory and look to sell when the oscillators rises in overbought territory and then drops below it im lee bohl and schwab is the better place for traders now is the time to support the places you love. Spend 10 dollars or more at a participating Small Business and get 5 dollars back, up to 10 times with American Express. Enroll now at shopsmall. Com. 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 im sue herera heres your cnbc news update dr. Anthony fauci says the u. S. Needs to hit the reset button on its fight against the coronavirus. He says whats needed is to get all states on the same page, also saying efforts by some president ial aides to discredit him do not seem, quote, prudent be and reflect negatively on the white house. He says his input to the president is now indirect and goes through the vice president. Teslas ceo elon musk was not at risk of catching the coronavirus when he met oklahomas governor on july 3rd, according to the Governors Office he is the first governor to test positive for covid19. San francisco students will probably not start the school year in the classroom. The School Board Recommends starting the year with Distance Learning the superintendent says inperson classrooms could start in october but on a limited basis. You are up to date thats the news update ty, back to you. You lets take a look at the markets right now. The dow higher but not as high as it was earlier. Now up about 112 points or 200 i cant even see anymore 212 points nasdaq is higher as well the russell 2000 up and a big mover today, up 3. 5 oil market closing, too. Lets go to the cnbc commodity desk and rahel solomon. Oil prices getting a nice boost with wti and brent, finishing around 2 higher wti around 41. 13 a barrel of brent around 43. 75 a barrel u. S. Inventories giving support to prices as well as optimism over a Coronavirus Vaccine although analysts are also keeping a close eye on news out of that opec plus meeting. Saudi arabias Energy Minister saying that the group would move ahead with its next phase of the Oil Production cut pact in which theyre expected to ease production from the nearly 10 Million Barrels per day theyve been cutting since April Dow Jones reporting opec plus will loosen the caps by 1. 6 Million Barrels a day. Four months since the coronavirus shutdown and stimulus money has run out for many people. Now calls for another round are growing. We have a look at that in our states of play. Kayla . The final weeks of the c. A. R. E. S. Act program are now met with increasing covid caution, and given resounding support for more stimulus to americans. Thats according to exclusive polling from cnbc and change research the ninth round of our surveys of likely swing state voters found 81 support direct checks to American Families another round of those checks. That support was bipartisan. Nearly all democrats and more than twothirds of republicans 37 of respondents have said they or a member of their household has lost wages or a job because of covid and businesses will likely need more support, too, with americans pulling back from activity as more cases rise across the southern part of the country. Take a look at what some of these americans say they are doing. Our poll found most people are going to the office, but not doing much else. 61 say they are not going to restaurants and bars and more than half of respondents say they are now sheltering in place. Take a look at the stat thats on your screen right now despite the administration arguing for more targeted aid for the hardest hit businesses, more than half of respondents say that President Trump is not assuring the money is getting to those who need it most that is going to bea focus of these next negotiations, trying to hone in on who exactly needs the bulk of this money and how to get it to them. It is worth noting, 57 of respondents are still very worried about the economic outlook. Back to you. Kayla, what is the latest in terms of the Sticking Point between democrats and republicans in getting an extension of stimulus through . Is it the size is it how its done . Well, i think theyre going to be starting with the overall price tag, melissa you know, youve had the white house lay down this trillion dollar marker as what they want. The house back in may passed a 3 trillion package. Theyre probably going to try to meet somewhere in the middle once they have decided on what exactly that number is, then theyll work on filling in some of these programs and the parameters of the programs to narrow those who qualify to figure out how they can get the money into the people who are struggling the most right now and who are unable to work from home, who are unable to make adjustments to their lives to cope with where the coronavirus is right now its a lot to hash out in not too much time. Thank you. Folks, banks are higher today after Goldman Sachs posted blowout results amid the coronavirus pandemic, although the stock is well off its earlier highs. The beat was driven by gains on the trading front with ficc revenue, up 4. 2 billion thats a massive 250 jump from a year ago jpmorgan and citi also posting strong numbers the big banks warning the trading boom wont last so is there still money to be made in those banks . Lets bring in jason goldberg, Senior Analyst at barclays good to have you with us is the answer on what were seeing from the big banks as simple as if you have good Trading Operations and good Investment Banking operations, you do well, and brokerage operations, and if you dont, you do less well to the extent you are more dependent on consumer and commercial standard banking . Thanks. I think thats an accurate statement. Clearly in the Second Quarter youre seeing very robust results in Investment Banking. Very, very strong trading results. On one hand. The other hand, results are being pressured by significant reductions in interest margins as well as, you know, pretty sizeable increases in banks loss reserves as they try to get ahead of eventual increases over the next several quarters due to it the downturn in economy due to coronavirus the regional bapnks dont have the air cover to help them this quarter. I was going to go there next. Why dont we look at the one that feels to me like it may be the odd one out and that would be wells fargo they do have asset management, but they are not really a player in Investment Banking. You know, certainly, you know, for 2q, you know, the index in banking and Trading Operations at wells is certainly not as big in that area. In addition, they were a bit slow in terms of building the reserve in the First Quarter so they had to build it significantly in the Second Quarter and, thus, ended up reporting a loss for 2q. As we move on and look at some of the big region at banks, i would infer from what youre saying that they, as you said, dont have the air cover of some of the kinds of operations that have done well, whether its fixed income, currencies and so forth or trading or Investment Banking. So, the big ones, i cant even think of the names right now off the top of my head, but we know who they are yeah, correct i mean, you know, youve had most of the big banks kicked off the earnings season yesterday and today, jpmorgan and citi, Goldman Sachs. Next week you get more Regional Banks reporting. We expect results to be a bit more pressured given you wont have the benefit of the Capital Markets related revenues at the same time, you know, theyre in the same types of credits that the bigger banks are and will have to put up pretty sizeable reserves to look at the losses. How do you explain their moves today in light of what were talking about there . The index fund not the index fund the etf that tracks them is higher some bigger names like regions and m t are doing pretty well today, 5 , 4 . Keep in mind, these stocks Regional Bank stocks are down 30 , 40 yeartodate. One of the things you heard from bigger banks, post the big loan loss reserve we have in Second Quarter, the back half of the year they dont expect much in the way of excess provisioning so, you know, 2q could end up being the worst quarter of this cycle. In fact, you know, i think when all is said and done, it will be the highest loan loss provision since the financial crisis but down significantly in the back half of the year and interest margin will be significantly pressured this year, perhaps the largest decline weve seen in recent memory, we do think the back half of the year there would be better as well as banks benefit from reduction deposit costs. Do you have its always darkest before the dawn. Right do you have a favorite among the big banks, jason yeah, you know, jpmorgan has been our top pick. But were constructive on all the bigger banks, just given where valuations are currently and the fa account that we think theyve gotten the bulk of the loan loss reserve build behind them. Thank you very much we appreciate your time today. Melissa . Right now markets Holding Onto Gains but some of the Early Morning optimism over a vaccine seems to be fading, at least when you take a look at the broad esh averages the reopening stocks, those that need a vaccine desperately, they remain higher. Darden, brinker, bloom and brands posting nice gains. The cruise lines all rallying, 10 or more. Well get more of todays big movers, so stay with us. Welcome back, everybody. Time for todays power movers starting with waters naming a new ceo and issuing better than expected sales guidance. Bloom energy, hydroenergy with partnership with a south korean company. Zoom video trying to take advantage of the prolonged work from home trend. Its introduced a zoom from home device with a 27inch monitor and three builtin cameras 600 is the price tag. The stock is falling today, though, by 5 . And a bonus tax day power mover for you, h r block even with three extra can months, many people waiting until the last minute to file the stock is up about 10 today. Lets get to a market flash and a possible marijuana merger. Aurora cannabis and aphria rising on reports of a possible merger aurora is up nearly 6 rumors of a merger have been swirling for weeks shortly before the close yesterday, a report said those talks broke down last week however, a note last night said this deal could still come to fruition it added that data suggests this combination would establish a clear leader in the canadian adult use market with 30 of the market it has been a rocky road for the Canadian Cannabis industry this year with with the country slow to roll out licensed retailers and inventories building up. Aurora shares are down more than 85 yearoveryear while aphria shares are down more than 20 since last year. Aurora had no comment on the reports while aphria tells us there is no agreement between the two companies. Well be watching it, though back to you. Thank you. A big part of stock market investing right now is trying to figure out what the world will look like in the postcovid future google will be helping those from home and jpmorgan downgrading American Express as they expect companies and people to cut spending. Turn on my tv and boom, its got all my favorite shows right there. I wish my Trading Platform worked like that. Well have you tried thinkorswim . This is totally customizable, so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. This virus is testing all of us. And its testing the people on the front lines of this fight most of all. So abbott is getting new tests into their hands, delivering the critical results they need. And until this fight is over, we. Will. Never. Quit. Because they never quit. Even if schools do open their classrooms in the fall, it likely wont be full classrooms for five days a week a lot of learning will be done virtually which is why google is making a big push in education deirdre with what is in it for google deirdre. Google in it for the long run, a way to hook the next google users the classroom makes up tiny portion of overall sales, one of the small components that fall under other revenues which accounts for 10 of alphabets total sales. The hope here isnt that it could make up for Something Digital advertising but increasing popularity amid the pandemic will continue to have students use g suite into the workforce and encourage companies to do that in the space relative to big tech it has certainly reaped the benefits this year more than 100 Million Students and educators active on classroom, thats up for 50 million from the beginning of march. G classroom, if youre not familiar with it, if you dont have kids in the classroom, its whats called learning management, software hub to manage courses online. Other players in this space include edmodo and blackboard. While google does not break out revenue Public Companies in the space like chegg and k12 has surged. How are they paid recurring revenue in that they get the Program Going and continue collecting revenue in the years to come or is it a oneoff. Google classroom, for example, they actually dont charge for a majority of the educators that use the program like i mentioned, its really about the long game. They want students and educators to use their programs in the hopes they will pay for g suite when students graduate and enter the workforce and are having addons for it as well of course this is still a very fragmented landscape because it is early days. Models are being sorted out. Google unlike smaller players has ability to use income from other parts of the business to offer services for free. Deirdre, thanks. Shares of the square have doubled this year. Paypal up 60 . American express down more than 20 . Are Americans Still spending and paying differently downgraded ahp dont forget you can always watch or listen to us live on the go on the cnbc app well be right back. Introducing stocks by the slice from fidelity. Now you can trade stocks and etfs for any amount you choose instead of buying by the share. All with no commissions. Stocks by the slice from fidelity. Get your slice today. Online Payments Companies like square and paypal benefiting from Contactless Payments on the coronavirus. On the flip side American Express shares are down about 22 this year. Jpmorgan downgrading the company today saying highincome consumers will continue to reduce discretionary and Leisure Travel and corporate travel. Expense pressured into the first half of 2021 rick shane of jpmorgan a man behind downgrade he joins us on the phone rick, great to have you with us. Great to be here and thank you for having me. I think one of the points you make is really interesting it captures sort of what many people dont really factor in when it comes to the bacteria of the pandemic that time is a multiplier on the economic impact. Youre not just taking a look at the number of jobs lost but the amount of time people are dealing with this pandemic that really changes their behavior like spending. Thats exactly it im glad you picked up on that look, i think that one of the things that sort of shapes the models that we typically use is that downturns normally run a sort of standard cycle its probably 18 to 24 months. I think there was a perception at the beginning of the covid19 crisis that this would be a crisis that was a downturn that was much shorter. As a result people were really dismissing the idea of t we also, rick, got a lot of data from American Express this morning. Among the data, the delinquency rate in june is 1. 5 , it edged slightly down from 1. 6 in may i think the piece of the puzzle that we may be missing in the numbers are the number of card holders that may be in some sort of Forbearance Program as an analyst, toufl like you have clarity on these sort of metrics when it comes to Consumer Finance companies no. Look, i think theres two things there. One is youre exactly right on forbearance. Thats going to be a big question as we move to earnings across the states. Really the uncertainty is how consumers who are in forbearance will behave. We have a pretty good idea if youre 60 days delinquent what the be probability of you defaulting is 120 days later we dont have the same level of experience with forbearance, but thats a big change. The other issue particularly with American Express is the credit is only one part of the story. You take a lot of credit card and 80 is from lending. At American Express, 60 of the revenue is driven by spend i think thats where at least in the near term we see that vulnerability. American express tends, richard, to cater who higher income individuals youve also granted to Consumer Finance and synchrony which offers cards to the lower spectrum how do you think gets hurt the most where are you most concerned sure. You know, make of that youre looking at is a little idiosyncratic in terms of returns in the context of valuation. I think that what you are likely to see in the near term is the highend Consumer Behavior change a little bit more, particularly in the case of American Express when you think about corporate p e. Thats the driver here some is consumer but some is corporate behavior ill give you perfect example. Ive typically felony 100,000 miles a year San Francisco based and im in new york six or seven times a year i have not been on a plane since january and i dont know when that will change the one issue in the near term is how this impacts my behavior. The other issue is when we sit down and says your p e fell 90 and business wasnt off that much, should we change our behaviors Going Forward. Thats the uncertainty here. Rick, were going to leave it there. Appreciate your time richard with jpmorgan. Finance comes doing well. Youll have a lot to talk about. Jpmorgan and others later to come this week dow off the high. Underperformance of Big Cap Technology continues and thats something to watch into the close, ty. Good to be with you. Likewise. Closing bell starts now. Welcome to closing bell. Im wilfred frost with sara eisen. Dow set for its fourth day of gains in a row lets look whats driving action first vaccine showing promise raising hopes for a faster reopening. Travel stocks, retailers, banks all rallying banks, by the way, we saw Goldman Sachs blowout reports trading numbers and the sector is moving higher big tech was showing signs of fatigue. Nasdaq has rallied sharply