Transcripts For CNBC Squawk On The Street 20240712

Johnson johnson better than expected, it doesnt matter. Taiwan semi last night fantastic, doesnt matter. Apple price bump doesnt matter. When you get like that that says, let the sellers get their job done, there is some agenda here, theyre obviously not caring about news, not reacting to better retail sales or jobless claims down again. Every time that happens theres usually a great trend up someone is a seller. There is big money that wants out right now, i think a lot of people are confused about whats going on in nasdaq, amazon down 10 since the week began consequently there is no bid underneath no matter what the companies say. That will change probably midday i think its an okay day all right well see, jim obviously we talk about the market looking forward through some of the news flow and, you know, you take some of the Bank Commentary about second half growth versus first half,its not nearly as constructive and we will see whether gorman backs up what citi and wells and jpmorgan have said this week. I do think, david, you have to chime in on this, that the losses are far lower than expected and yet theres a kind of an each bank has been saying we just went through the greatest stress test in history and we came out with flying colors and that is equal to a down 1 to 2 for all of them. Thats not what i would have expected people just do not like this group, david, and they are still not giving jib their due james gorman, whole new model, less risk, nine times earnings, why . Well, i think in part its got to be that people dont expect anywhere near the level of financing activity that we saw in the first half of the year and certainly in that condensed period from, lets call it, mid march or late march until end of june, jim you know, you just cant maintain that, or can you . How Many Companies are going to need to go become to the equity and or debt markets to raise more money we see norweigian filing for another 250 million worth of stock, but, you know, theres that, so its seen as perhaps a oneoff, theres still a lack of m a activity here im talking more about the likes of Goldman Sachs and Morgan Stanley that do rely a lot on that, jpmorgan to a lesser ex at any time than some of the others. Theres that and theres the concern given the uncertainty out there, given the rising caseloads in so many states and the prospect of potentially future closures or lack of Economic Activity or lessening of Economic Activity. Well, i think, carl, those of us we all bank at different places bank of america its completely its so easily digitized, isnt it terrific, its like paypal no it doesnt matter that Brian Moynihan has come up with the digital bank Goldman Sachs unbelievable what theyve been able to do is be able to make it so they have a giant Wealth Management business that doesnt have a lot of business and they did great in m a. Doesnt matter what they do. Bank of america the stock this quarter wasnt that bad, down 3. Motor vehicle al core vath did a pretty good job at citi group, charlie scharf, wells fargo, they trade as if there is one bank it aint faang, i will tell you that much. There is no faang here and i just if i was one of these banks i would be like what do we have to do any ideas . Again, jim, it goes back to what theyve said on the calls this week, wells, our view of the length and severity of the downturn has deteriorated considerably citi, the pandemic has a grip on the economy and it doesnt seem likely to loosen not to mention the data that just that david just mentioned, 31 states with rising caseloads, records states getting religion on masks, governors at least some of them. Thats what maybe the market is keying on, dont you think yes, and i think that what we have to try to do as people who interpret and report the news is decide lets just say shine some light on the Bank Executives who have tried to deal with that headon ten years gorman, and we will be hearing from him, has made it so that he is not one of those banks. His bank is a flow of fund not credit risk bank and no one cares. We have to start distinguishing because this is not just this etfization. Im not saying starspangled banner for Morgan Stanley but they are not doing it the same way. We have to stand up and Pay Attention to that because that bank should not be valued as low as it is when we ask gorman, we have to try to figure out whether he himself just says, i dont know. I throw up my hands. Buying etrade, make it so we dont have credit risk, i guess it doesnt matter. If you are at paypal youre paying were 200 billion going to 400 billion. If youre Morgan Stanley or Goldman Sachs were 77 billion and going to 77 billion how is this possible all right but, jim, does the lack of response to what has been largely positive numbers from the banks and im excluding wells fargo from that, is it a reflection of the economy overall . Can we expect to see that that went of sentiment is starting to creep into other areas or are they going to continue to be this group that is penalized because of concern about the future, concern about things like their roes and their capital retention and the election and, i mean, you can throw in a lot of different things, or is it a sign of what may be coming . I think its more of the former not the latter because other than jamie dimon did have a gripping moment where he basically says we dont know whats going to happen and therefore that gives you a 12 multiple as soon as you say that, but i just think that some of these banks have worked very hard to not look like what they used to be and nobody cares. Will one day people care do you know something, i have to believe they will. I have to believe that you cannot kellogg used to trade with General Mills which used to trade with kraft which used then they became differentiated and suddenly they dont trade together kraft upgraded today, i dont know why, i think its just because the others have broken out. We have a company tonight today, david, that makes lysol all of a sudden they are worth a hell of a lot more than a company that makes corn flakes so there is differentiation occurring in some groups. There is. Jim, do you think also the governor of georgia will not prevent people from using lysol, hes telling them that they dont actually have to have masks thats an amazing story. Isnt that . On a day when georgia has had its second highest reported hospitalization. Jim, do you think there is a suppressive nature that david mentions the election, to biden with 11 point lead, worries or thoughts at least about who might be treasury secretary under a Biden Administration well, they are building things, people are beginning to build that theory in and people are struggling which of the things that matter most, the inn consist ensees of the president versus a consistent but not necessarily stock friendly agenda of candidate biden. I think were vaccine no vaccine and today was a day that Johnson Johnson put out some very good news about the vaccine, but they did not moderna it that means we are the best, we know more than everything, we are fantastic, you dont know anything j j is a very nonpromotional company but what they said about two two tests not only for people who are id say not going to be knocked out by this thing but the plus 65 cohort they are also going to give a test to, they have billions of vials, they are ready to go, moderna to ramp up i think would take forever. Yet because the people who are gripped by day trading and gripped by the stuff that meg tirrell talks about, its not exciting enough. No one is buying the stock market because of j j. They bought the stock market because of moderna and thats not making a lot of sense to me frankly. Guys, we have a lot to get to as we said we will talk to james gorman of Morgan Stanley after the break, we will get to some of the down grades, peloton, disney, cisco, you wont believe the comps out of dominoes and of course wt ppedhahaen at twitter last night back in a moment of it. Its a thirteenhour flight, 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. I mentioned a moment ago its our job to put these Bank Earnings in some sort of lets just say so you can understand why one goes up and the others go down Morgan Stanley posted Second Quarter results that blew past analyst estimates, stronger than expected trading revenue lets get some context here. Joining us now first on cnbc is Morgan Stanley chairman and Ceo James Gorman james, always great to see. You great to be with you, jim. Thanks for having us. All right, james, we have seen terrific top line growth, much more than i thought from almost all the banks but a lot of that growth is credit based and that means its got risk. Yours is fee based which to me is more constant and sticky. Tell us about the changes you made and why your bank should not necessarily be valued like others. Thanks for that observation couldnt agree more right now. You know, the whole Business Model changed in the last decade was to move us into stable recurring feebased revenues to give us the balance at the same time to have a lowcost Investment Bank which has always been our core dna. And this quarter you saw exactly the culmination of both of those. So, you know, we havent been in the unsecured credit Consumer Credit space, were very small in the emerging market credit space, were basically nonexistent in Small Business middle market lending. They are not bad businesses but they are not our businesses. When we produced the revenues, we didnt have the credit losses that would typically come in this kind of economic scenario. Thats what i want to drill down on. When i looked at the provisions of the other banks that reported they are rather large, some people said, jim, we have to be conservative, but your provision is actually, remarkably small versus the other banks. Its just business. If we had a large card business, for example, credit card business, with he would have provisions that would reflect that you know, most of our Wealth Management lending is to our existing clients, highly secure, collateralized we had basically no defaults, no provisioning across all of that franchise. Thats the Business Model, its with intent. You have spoken to me many times about the idea of Wealth Management management that doesnt have government risk a Wealth Management business that is really sticky. So lets talk about the etrade acquisition. I feel in many ways that etrade is a feeder, its the place where people cut their teeth, they get started you dont want to seem to wait until people get wealthy like the old days to get an account at Morgan Stanley. Will etrade be part of a continuum where you get them young and then they continue to grow and you hold them all along . Yeah, you know, i mean, listen, people find their financial Wealth Management in three different forms basically, one is some sort of advice, financial planning, weve nailed that, weve got that clue the combination of smith barney which weve built and the last decade, that business is doing great, 2. 5 trillion of assets the second is through their place of work, usually on the back of 401 k type plan, stock option plan, so those kinds of businesses and weve now got that through the solem acquisition and etrade has that and combine those two together we will be number one i think in the whole stock plan business in the country. The third is the digital platform and they tend to be as weve noted over the years active traders, options traders, emerging investors and they have a younger profile and thats what etrade has so it gives us a channel into that Investor Base which we didnt have before some of them will over time become full Service Advisory relationships, many of them wont. And we are agnostic to that. So its a really terrific opportunity to participate in some of the fast growth in this segment. Hey, james, its david. You know, lets start on stay on etrade for a second. You said during the call that they have attracted hundreds of thousands of new accounts. You also said its real money, not just kids playing. Yeah. Which i would assume is maybe a reference to what weve seen in this robin hood phenomenon, this level of speculation in certain stocks in the market what do you make of that when you say not just kids playing . Yeah, i mean i was probably being a bit flip and certainly not digging on anyone, but theres been a bunch of stuff written and you guys probably talked about, a lot of people sitting at home, markets get crazy, everybody gets excited, people put their 2,000 of savings in thats not a strategy. With he saw that in 2000 with the dotcom thing, we are seeing a little bit of that now, etrade is a more mature Business Model than that, has hundreds of thousands of active traders, professional traders, it has as i said the workplace business and people whose money goes into stock plans, vests into their etrade account and it has the folks who want to invest and want to have a relationship online. Whats different about their Business Model i think from some of the pure electronic plays that have started up in recent years is the dollar asset per account. They are attracting several billion dollars a quarter right now, almost to the level that we are across all our Wealth Management business. Thats what i mean by real money. Right when are you closing that deal lets see, i think the shareholder vote with etrade is imminent, july 17th, so its tomorrow just talking to my calendar here, been a bit distracted. We hope to get fed approval, im highly confident we will get the approvals im not sure the exact date, david, but somewhere in probably the first half of the Fourth Quarter so its coming really soon and it helps our funding profile and helps our ratios so, you know, im really excited about this deal. I just think its a great transaction, it was stock for stock, weve got to know their management team, i really like these folks, i think its just culturally going to fit. Its going to be great. I want to switch to the financing markets which were incredibly strong, i want to get your take on it. What are your expectations for the second half of the year . It would team almost impossible to maintain the same rate of momentum and activity we saw for that three or fourmonth period or is it possible . No, i think its its possible, its highly unlikely, though you know, i think this quarter has started off, you know, very solid, but not at the lerl that they are in i trying to think what the most embulum month was, march, early im sorry, april, early may theres a lot of financing going on, a lot of m a deals getting signed up, which is interesting. That sets up you know, its the pipeline for next year we wont see those revenues in the back half of this year but we are going to see them next year you know, somebody said recently m a doesnt go away, it just takes a hiatus in times of absolute uncertainty because ceos dont want to commit. As the economy continues to strengthen and as hopefully we get past the worst of covid, although the outbreaks in the south and west parts of this country are troubling. M a will come back more strongly so do i think were going to repeat the first half . No, i dont. Do i think were going to have a poor second half, no, i dont. I think business is very stable. James, i was listening to Brian Saltzman this morning, amazon, if you put 10,000 in amazon then you have 12 million. I hope you did that, jim. I bought 10,000 worth of books, not stock have we seen the peak in indexing youve got great advisers, etrade has a lot of interesting things to be able to help you pick individual stocks there is great wealth being created if you bought apple or facebook and amazon, but if you just bought the s p not so well. Are you set up for this new generation of people who are just really enthralled with individual stocks and we dont talk about them that much . Yeah, i think theres clearly a pipeline to the next generation which is really exciting and people want to be excited about the financial markets. We can help both in the education, the research and obviously we bring so Many Companies to market youve got pipeline, youve got flow, youve got product but just talking become a testify management, i just want to give a call out to dennis lynch, unbelievable his growth funds what he has done number one again this year across all of morning star you know, you can create alpha through a smart long term investing and dennis and his team have done an unbelievable job and thats created enormous wealth for a lot of our clients. There are ways to navigate these markets rather than just being an index now, ive always said if you have 39,000 to invest you dont mess around with individual stocks, you should be an index and unless youre very young and dont have financial responsibilities, but as you start developing your portfolio you can create alpha over time and our platform does that as well james, you were recorded on the call this morning saying you would love to expand the dividend in time and get back on the buy back train we dont want to sit on this capital you said can you talk about the likelihood of either of those two things happening yeah, it sounds like, carl, i cant see you guys on my screen here, but. Yeah. You know, carl, its interesting. Our dividend is a buck 40 a share, weve got a billion and a half shares to a total payout is a little over 2 billion we just earned 3 billion this quarter, you know, First Quarter were roughly 5 billion through the first half of this year so weve made almost 2. 5 years of dividends in the first half of this year. The Federal Reserve results show we had about 300 basis points of excess ses capital on our c t1 ratio, will have further capital with the consolidation of etrade in the Fourth Quarter. Im thighly confident were going to create earnings in the third and Fourth Quarter of this year were already sitting on, you know, 6 to 10 billion of excess capital, we create high ratios with c t1 from etrade, weve added another 3 billion net of our dividend already this year you know, we are talking about 10 to 15 billion of excess capital plus were still arguing for some relieve on the ppr, not to get too weedy about it but the way it capital clats fa compensation we can invest in our business, we want to have world class technology, were going to invest in that, we are investing in the next generation of investors that jim is talking about, thats critical to our future growth, we also should increase our dividend and we should be back on the buy back trail. Not just yet, lets get through the new stress test in september, lets see how the economy performs in the next three to six months, but 2021, you know, Morgan Stanley should be doing something with this capital for the benefit of our shareholders and for our clients. Jim, lets talk about the growth side because i think that no one is going to give you credit for a future dividend risk but they should have been giving you credit for something you mentioned as a throw away which i thinkis most of the exciting acquisitions you you have may made which is the solium tell people what Workplace Wealth Solutions mean because thats one of my favorite businesses that you have listen, its a great question you know, there was interesting story, we had workplace business, we werent managing it great, we outsourced it to solium which is a Company Based in calgary in canada, they did an unbelievable job. I dont know if you remember the ads, i remember growing up in australia watching victor kiyam with the razor company, he said i liked the razors so much i bought the company i always loved that idea well, solium did such a great job managing our stock plans we went and bought the company. So we bought them back, paid about 300, 400 million premium on the tokyo stock exchange. A lot of people thought it was expensive. I could care less. What we were buying was a platform combined with etrade that makes us number one in the workplace. What is workplace . Its where you have money in a stock plan or Stock Options and those vest, etrade then converts them into etrade accounts we didnt, they went to whatever bank or institution somebody had a relationship with. We can then provide research, we can provide product, we can engage with the c suite to manage their personal wealth its a great growth story. A lot of money comes through where people are working and we want to be part of that channel. Fidelity has done a grit job in that space, with he want to do a great job in it. Oh, come on james james, real quickly, the world we live in right now, you know, and the world that weve been a part of, you are working from the office, i can see it. How many people are going to be working from your office, lets say, at the beginning of this year, how are you viewing things at this point . Yeah, its its tough, david. I came in, ive been coming in a day a week for the last few weeks just to get in the flow, do the temperature tests, go through the app that we ask all our employees to do, you know, see how the elevators are working. I want to live and experience it and i want the Senior Management to do that i dont want to be here all the time, thats not because i cant be, but i dont want everybody to feel like they need to be in the office all the time. Im not sure the infrastructure in the city and in our building can absorb the number of people that were working here precovid until we have some level of immunity or treatment. Give you a sense of numbers, up until the start of july we had about 250 people in this building, including a lot of security and health care workers. On a base of 5,300 today we are probably, i dont know, mid 300s, we will be, you know, 600 to 1,000 i think through the early fall and, you know, my longterm sort of start of year globally is we would have about 50 of our employees in the offices not every day of the week, but about 50 of employee hours worked would be in the offices but, you know, a lot of ground to cover between now and then. All right. Were going to go really slowly, david. The plan is working well, people are working well. Okay. What i care about is them feeling safe and sound. Unfortunately, james, were going to have to cut short. No woierrs. Congratulations good quarter we will talk to you soon we have to take a break. Experience the adventure of a bigger world in a highly capable lexus suv at the golden opportunity sales event. Lease the 2020 nx 300 for 339 a month for 36 months. Experience amazing at your lexus dealer. Announcer the opening bell is brought to you by nuveen. A leader in income, alternatives and responsible investing. Lets get to the opening bell here in just a moment busy morning as weve been talking about earnings from j j, Morgan Stanley, bank of america. Retail sales up 7. 5. Obviously not as good as the prior 17. 5 and claims 1. 3 million is the first rise in unadjusted claims since early april. People watching that theres the opening bell at the nyse Digital Media solutions celebrating its ipo and at the nasdaq oncology biotech, relay therapeutics, also celebrating its ipo david, interesting to hear gorman coming back to work, because yesterday amazon said they see work from home through 2020, as did viacom in an employee memo. Yeah. Theres a lot of companies, i think, and by the way, its 25 years since they began the website, the company went public in 97 but youre right, carl, quite a few employers in new york city and you would imagine in other areas as well given this is not now a new york issue at all, are delaying what was seen as the reentry of many of their employees and mr. Gorman seemed to indicate the same for Morgan Stanley. Really amazing when you think 5,300, they are at roughly what did he say 300 or so in the building, perhaps ramping that up to as much as 1,000 in the fall, but nowhere near capacity. It continues to be a question and, jim, you know, we havent talked as much about the virus of late, but its raging in a lot of states that we know well, and were not even near the fall and flu and cold season when, by the way, if you were in an Office Environment and people start sneezing or coughing because theyre sick, youre going to be overly concerned perhaps or very concerned even if they dont have the covid virus. Look, i think, david, one thing weve seen, especially for goldmans quarter, big transactions are occurring via zoom, some places via webex and cisco. The idea that you have to go back, i know jamie dimon would like to go back, a lot of the guys at goldman want to come back, the bosses want people to come back but they dont want to go back. The work from home thesis since friday has been in tatters, i question whether that should be the case given what weve seen in florida, arizona, texas, california i think the work from home thesis is alive and well we will be speaking to david, lysol is killing in. Lysol is. People should not abandon the work from home thesis. Its too early. No. You know, its funny because foreman mentioned mergers and acquisitions there is a hope it will pick up at the beginning of the crisis i was referring to a slowdown there in part because of the lack of facetoface meetings. Like so many other things everybody is adjusting you heard earlier this week when we had Analog Devices on the ceo indicated that entire deal had been done virtually. He did have a relationship with maxim ceo but im hearing that more and more. There is a willingness to move forward with major transactions where none of the principals get in a room together it is the current reality. Jim, to your point, it just indicates behaviors change and willingness to engage in these things changes in terms of people staying home. Yet at the same time the nasdaq where theres so Much Technology thats meant to be able to make it so that you can do that, whether it be the zoom or whether it be the cyber we will have to talk about cyber attacks, its relentless the selling in the nasdaq, the dow is doing so much better and the nasdaq is the repository that makes it so you can do those deals. Carl, what it shows you is i think right now the market, the big buyers, have had it with the idea that the nasdaq is so much better and when you start doing this price to sales, peloton downgrade today, price to sales too high people want to go back to price to earnings, but when they want to go back to price to earnings they are not willing to go back to banks, which have the lowest priced earnings. They are kind of huddled in different areas like a caterpillar. Its very hard to understand what people want right now, carl, and i think that thats one of the reasons why the nasdaq is going to continue to go down until people say, hey, amazon, lets go buy microsoft amazon is telling people what to do. Its not a clear picture. You mentioned the peloton downgrade to ubs today, they cut to neutral but raised the target because they were at 48, they go to 58, this he raise their numbers but when youre trading at 4 times 22 revenue, they say its expensive. People are sick of that they want dollar tree, this he want lowes, they want the outside trade. They want thor another upgrade for harleydavidson, its getting so much love you have to believe its going to go higher and they really dont have any love for faang right now. I think that the love for faang always teams to come back, but there is omwi, instead theyre revisiting quarters that werent that bad when stocks went down United Health had a dynamite quarter and people said they borrowed from the future and analysts come back today and say, wait a second, that is one cheap stock. Im looking for companies that are being rethought about as being cheap. I pre day of the accident that Morgan Stanley tomorrow will be higher than it is today. Interesting guys, i will give you one stock thats a lot higher today than it was yesterday and that is dell weve talked about this previously a few weeks ago of course the journal to give them credit broke the story, i followed perhaps with a little bit more detail, but thought people certainly believed the likelihood was high that they were going to pursue the spinoff of the m ware. Yesterday the company essentially saying it is at least investigating that now, the question as to why they felt the need. Vmware does have a program, they do need to buy back stock, perhaps that was part of it, they wanted information out there into the marketplace before they did this as we pointed out at the time, guys, the transaction itself cant occur until september of 21 due to tax reasons, got to be five years since they bought the asset before they spin it off. What will take place now and gives it what im hearing at least is a high likelihood of occurring is the negotiations about how you keep how you make dell an investmentgrade company so you offload debt or send in a big dividend from vmware that allows it to pay down a significant amount of debt could it be 12 billion . 15 billion that will be a negotiating thing. Governance they will have to negotiate as well in terms of whether they will give up their super votes to some extent a lot to come here talks with the rating agencies but you can see the response once dell made public what we already had told people was likelihood it doesnt mean its going to happen but it does appear to be on a track as this year moves ahead and as next year does for september of 21. David, this is one of those, again, its driving me crazy that thing is not going to happen for a very long time. In the interim youre going to get several delivers will dell deliver good quarters . I think vmware is doing incredibly well, its been a little bit suppressed by this, but in a couple days we are going to forget that this market has no memory even for the good i just i question whether dell can sustain this rally given the fact that there is tremendous selling pressure on any stock that goes up very big. Carl, we are at a weird moment and the best example is theres just a huge amount of day trading right now and i am not against day trading, its incredibly fun, can be incredibly lucrative, guys and women who do it please dont get mad at me. Lets talk about norweigian cruise lines for a second. This company docannot sail. The day traders bid this up furiously so what does norweigian do . Hit the bid for 250 million they jammed the day traders. Its hilarious they took advantage of guys who dont understand the Balance Sheet, carl. 250 million in i think new common. Right. Another 900 million in debt. Yes. Royal caribbean, memo to richard fien, the day traders took you up gigantically yesterday. Do your work, call your banker jam it jim, you know, boeing is the dow laggard this morning youve got warn notices out of american now, united is at work on it, we have a code share between american and jetblue for the new york area and thats all leading to worries about overcapacity delta will keep the middle seat up beyond september, not giving an end date to that. The disney downgrade today saying there is a meaningful chance that the parks could be forced to close again. Florida and california housing their two parks account for a third of the new case growth so all of this sort of funnels into the same space. Vaccine you need a vaccine got to have one no choice. We will take a break here, guys, i think im hearing music. We will talk about twitter of course and the impact on that company and facebook and then as jim said, the ceo of the maker of lysol in a market that is definitely coming in their direction. Down is down 150 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. Sole yum sole yum sole yum firstnet. Ium. The only officially authorized Wireless Network for first responders. Because putting you first is our job. Last week lysol was approved by the epa for use against covid19 joining us now is Laxman Narasimham the ceo of reckitt benckiser. Nice to have you this morning, laxman. Its great to be here thank you for having me. Have you seen a bump up in lysol sales since the epa says this is an effective way to get rid of the virus on surfaces i think from the time of the start of the pandemic we have seen a lift in sales of lysol as well as other products like detol. Again, it gets to Consumer Trust in brands like this that have been earned over a long period of time. Lysol over 140 years, ever since it was introduced and detol which is a brand over 80 years these are brands available around the world so yes. You know, of course, that gets us to the sales of the company which were up sharply in the last reported quarter as we might expect given what you just mentioned but the key question is will that continue . Are people just loading their pantry with many of our products or are you continuing to see significant increases in usage our portfolio has been set up to capitalize on four tail winds as we see it the first tailwind is, you know, demographic change, urbanization, globalization that is making infectious diseases, Communicable Diseases an important thing. We couldnt have predicted this but brands like detol, lysol and others that play in that space the second port of our portfolio is in the area of sexual well being. There are 1 million sexually transmitted infections every day and we have a portfolio of products in that Space Available globally a third part of the portfolio is around selfcare with he see hospitals under pressure, medical systems under pressure, we see selfcare otc, brands like mucinex, nurofan, gaviscon, again, available around the world that is the third part of the portfolio. The fourth part of the portfolio we see nutrition, emphamil, that part of the portfolio is wellset for this time what were seeing consumers do is clearly a bit hygiene sensitivity, a greater increase in penetration and frequency we dont expect that to stick for a long period of time but we do expect it to be at higher levels we saw that happen during sars and mers we have products like finish, people are cooking at home, with he see that. Right. And we do see, you know, some pantry loading happen with otc and thats playing itself out over time. A question i thought i would never ask, laxman, which is are people having less sex during this pandemic . Oh, geez. Well, let me just put it this way, this is a family show, i would imagine, the number of intimate occasions is down in a few countries because think of it, the level of socialization is low and so it has had an impact on durex, but we have an ecommerce business which is very strong, ecommerce is a single teen spot of our entire business, in the First Quarter it grew at 50 if you think of durex it is absolutely set up for it we have operations in 53 countries, durex had a big quarter online and we continue to see great progress in that direction as people look for privacy as well in this area im not as interesting as david, laxman. Im holding up something, though, that is borgt me about your company, i am holding up airborne when this pandemic started i used to take an airborne gummy every single day and i was thrilled to have them because i had them before. I cant get them how does it work whats the hold up why cant you work 24 7, maybe you are, so that i can get my gummies . Jim, first of all, im sorry you arent getting your gummies. Airborne has really taken off as you can well imagine, people are concerned about immunity our factory in Salt Lake City is working around the clock to ensure that the gummies are in your hand, we have increased lines, we have increased capacity, our intention is to do even more. I think that im kind of thrown off is that there are products that you have, lysol, for instance, i hate to say it but i cant get lysol. I want lysol i did hoard lysol initially. Ive gone through all my lysol again, i know you probably have some factory working 24 7, but i dont get it if we think that hygiene is important, why cant you do greenfield build in america of new lysol plants because you dont have enough lysol and if were going to stay high jen nick and deal with this pandemic we need more lysol jim, you will be glad to know that we are, in fact, doing just that we have increased capacity just so you know in q1 lysol grew over 50 year over year we are investing in lines, we are investing in capacity, we are changing the way we work our first focus clearly is the protection of our people, but we are doing things as well in order to ensure that that happens. We have a factory just out of wuhan, outside of wuhan that mention detol. We cut our sku count by 80 , in some skus were making ten times what we did. When you look at the amount of sanitizer we are making we are making 20 times the amount of san r sanitizer in july sthaz we did last year. It gives you a sense of the demand that there is and we are responding theres more capacity coming along every single day we hope as we get into the fall there will be even more and there will be more coming on next year. Both the cold packers as well as lines we are putting on on our own. I fully get you, jim we want to be sure you get the gummies and the lysol and we will work hard to make that happen. And the sex jim, thats in your hands, jim. Im pulling for you and david to really make a difference here. All right. The reality is humans are humans, its going to come back and it is coming back this places like china. I take responsibility for taking us there. But it was a reasonable question given given the importance of some of those brands in your portfolio. But, laxman, you mentioned digital sales, for example, you also have been an aggressive user of tic toc, for example, i think you had a campaign that had 88 billion, i think im reading this right, views which seems almost hard to imagine yeah. Is that an effective way to get to consumers there is a lot of talk amongst in administration of potentially closing down to some extent tiktok in the u. S. I wonder what your thoughts are about that in terms of its effectiveness as a media platform. Part of the reason im also here today is to talk a bit about our record Global Hygiene institute. You know, we feel that evidence needs to be sharpened and a partnership with a range of universities that are going to help us get that evidence, but also we need to communicate it in a way that people change their behavior and this is where this campaign that you talked about, the Short Video Campaign that you talked about in india that we did. You know, its an ear worm of a song my kids like it, but its an ear worm, 20 seconds we thought it would be a few billion, the number is updated its 124 billion views of people learning how to their hands. This is as simple as that. And it gets to this notion that we have to make a difference, not just in creating evidence, but also using behavioral science and insights in order to get people to behave differently. Were seeing a lot of difference in the way individuals and by the way groups are behaving. Weve got to fix that. This form of making that kind of communication happen in simple, effective engaging ways is a great way to make that happen. Back to how you view the second half of the year and beyond, you were talking about tin crease in capacity you were focussed n how do you make sure you dont have too much out there if, in fact, we do get a vaccine and behaviors change, or do you think it remain the same even after a vaccine. We really hope we get a vaccine and treatment. Whats happening out there is way more important than whats happening with us. In the meantime, we have products that can meet what consumers need weve seen if behaviors change for 6 0 to 90 days, they stick we saw that with sars and mers i dont think youll have the peak you had you will see a change in behavior and were seeing that with the penetration in frequency in the cases we see if you look to the end of the year, were continuing to make progress to ensure that jim gets his airborne gummies thats a big priority. And we want to ensure the consumers get all the lysol they need, but were being thoughtlful. Building with flexibility perhaps at higher cost to make sure our supply chains are resilient to get consumers what they need but having flexibility. You have the Global Hygiene institute. Its terrific. While weve interviewed you i had an statement from uber theyre now clorox clean when is the Institute Going to be able to say like others that look, its lysol clean because this is a great new business if you look at the work what weve done with the hilton chain, its mayor, hilton, and us they made an announcement of hilton stayed, its a state program with hilton endorsed by lysol. We made a variety of other announcements as well. Ive avis will be ie lysol clean. There are others were in discussions with we believe lysol has the trust credentials to help get to the anxiety that sconsumers feel they know a hilton has been cleaned and lysol has provided the trust mark really appreciate you taking time with us today and all the different places that this interview went thank you. Thank you very much, david, and jim, my sons a fan. Ill let him know that i saw you, and, well, and yeah. Take care you never know if you dont ask, david in the meantime, we briefly took out yesterdays low on the dow, the nasdaq and the s p, holding 3211 were back in mitea nu rough this hours for twitter as the unprecedented hack disables many accounts last night. Although market seems to be taking it in stride. Really, no lower than it was a couple days ago. Well talk later on this morning about Cyber Security and how it pertains to social media these at cinup thsomg you cant predict the future. But a resilient business can be ready for it. A Digital Foundation from vmware helps you redefine whats possible. Now. From the hospital shifting to remote patient care in just 48 hours. To the university moving hundreds of apps quickly to the cloud. Or the City Government Going Digital to keep Critical Services running. You are creating the future on the fly. And we are helping you do it. Vmware. Realize whats possible. In a highlyconnected lexus vehicle at the golden opportunity sales event. Lease the 2020 es 350 for 359 a month for 36 months. Experience amazing at your lexus dealer. Lets get to jim in stop trading. This twitter hack i think you need an outfit like palo alto network. We have to figure out if this is nation state akaye yos ahead of an election or they have 50, 75 pass words we dont know. We probably havent seen the end of this. You have to bring in Cyber Security this is too big for twitter and we dont want nation state ahead of an election does it sour you on twitter in general no. Twitter has become, i think, its not a farce, but its like, but i dont like the fact that it was so maybe they have a couple people inside, i dont know, but i think that the company the much more of a its more of it needs something. It needs sports to go with its not a place people are talking right now. And this doesnt help. Not at all sure. Well, we hope to learn more from twitter support. Palo alto tonight . No. I wish it were nick, if youre out there, explain what to do i have mark bristow, barrick, a special program tonight. Acorn. Rich allison, dominos. Nick, ill find room because this hack was a bad one. David . Never mind yes it was bad. It was a bad hack, jim it was they hacked you they hacked your brain no, they didnt tonight jim with mad money, 6 00 p. M welcome to squawk on the street. Business inventories, lets get to rick. Yes, business inventories, now, this is a may number. It doesnt dismiss how important rebuilding our tearing down inventories is down 2. 3 . This is not only exactly as expected its the second worst number going back to 1948 for this series the worst level is down 3. 2 of june of 91. You could definitely see were losing a little ground that follows minus 1. 4, but dont lose sight of the fact it is a may number now, for a much more realtime number, lets go to a july read on National Association Home Builders index and for that, we go to diana. Diana . Yeah. Rick, home Builder Sentiment jumped 14 points to 72 in july thats exactly where it was in march before the pandemic really hit the academy. Now, anything above 50 is considered positive sentiment. The index plummeted to 30 in april. So there is your vshaped recovery now, of the indexs three components, current Sales Conditions jumped 16 points to 79 sales expectations in the next six months rose 7 points to 75 and buyer traffic rose 15 points to 58. Builders point to strong demand, urban flight, and low Mortgage Rates setting new record lows almost weekly. They are struggling to ramp up production after shutting down in march and april, and that means for builders, finding labor and land again material prices especially lumber are soaring lumber at a twoyear high. Producers did not expect this swift a recovery the biggest gain in the northeast, up 22 points to 70. The midwest jumped 18 to 6 the south up 10 points to 73 and the west increased 14 points to 80. Morgan yeah. Key reading. Especially one where the consumer is concerned. Housing has been a bright spot at least based on this reading it seems to continue to be the case thank you for bringing us the late latest numbers now to twitter shares under pressure after a security hack that targeted some of the companys highest profile users. Impacting former president obama and elon musk. We are joined with the latest. This hack was really a reminder and a warning in both in one the reminder is a reminder of Cyber Security best practices for people in companies around the country. This work from home environment lends itself to vulnerability for the type of hack that we think we saw in the case of twitter. Its also a warning for what we could see in this country going into a tightly contested Election Year in which hackers and nation state Intelligence Services may be trying to play a role heres the latest information we got from twitter overnight in terms of what happened here yesterday. Twitter said this was a coordinated social engineering attack they said it successfully targeted some of the employees with access to internal systems. And they say theyre looking into what other malicious activity they may have conducted or information they may have accessed its when the attacker uses your network of friends and associates against you by creating communications that show up in your inbox or email or slack or what have you that look like theyre coming from people that you know and trust they may even reference details or Previous Communications that youve had with those people it makes it really tempting to click on the links or open up the access or even reply to the email perhaps giving some security information away in the process. All of that is standard fair for hackers. Its easier now in this work from home environment that were all in everybody is using new software. Theyre in an unfamiliar environment. Theyre not having the face to face communication with their teams as much as they are used to all that sort of disorientation plays to the hackers advantage here as they try to get into companys information and convince someone to click on a link or reply to a potentially nefarious message. Theres a lot to Pay Attention to back to you. Yeah. And i know you will pay close attention. Im curious, is there anything in terms of the high profile names that you showed there that connects them in some fashion or that could lead to some not conclusion, but census as to who might have been behind this . We dont know for sure. One thing a former fbi agent pointed out was all the people that were hacked appear to be sort of left wing or left of center figures in American Society with exception of maybe of kanye its hard to tell where he falls in the political spectrum. That might give you an indication of the motive of the person who did this or what the person wants you to think their motive was the real concern here is that this could have been some kind of dry run this wasnt all about trying to steal bit county from unsuspecting people. This is about testing capabilities for something that you might want to do later so we do see a pattern here in who was hacked but that could be intentional misdirection yeah. Eamon, the fact that it does seem potentially like this access happened through employees within the company, if it was, for example, an inside job, what could be the ripple effects. I ask because if this is a dry run and were coming into the elections, i would imagine thats going to bring a world of scrutiny not just from within a company itself but also from the government and political entities and make this potentially into more of a National Security conversation yeah. Theres going to be a couple conversations that have to happen one is inside twitter and the other social Media Companies about who has this kind of access and how those people are monitored. And whether or not theres anything that the companies can do to reinforce sort of overlapping layers of security to make sure the people arent able to just on their own go off and do Something Like this the other conversation thats going to have to happen is more broadly in the society right i mean, imagine the political or economic damage you could do by taking over a number of social media accounts of high profile figures and coordinate them to put out actions and reactions among those high level officials. You could cause massive economic chaos, massive political chaos were going to have to figure out as a society how to deal with that. It took twitter a long time to deal with it yesterday the country figured out pretty quickly there was a hack going on yeah. Its one thing to target a bill gates account. Another to do the treasury secretary or the president or other world leaders. Hopefully we get more from twitter support in the coming days the twitter hack last night. Important to keep an eye on the markets as we did take out briefly wednesdays lows lets bring in citis National Rock dales tom galvin and i think rad diate for more good morning good morning. Tom, i want to get you on the banks here its just been a week of blowout numbers. I guess decent commentary going forward. Why isnt the market giving at least that particular sector a little more love or confidence in leadership . As it relates to the banks, i think its a tale of two cities. Theres a lot of winners those with capital markets, trading, Investment Banks, those with Asset Management divisions that have benefitted from the fixed income markets weve seen. And those strengths are overcoming the pressures in the core banking business. Loan growth is lackluster. Reserves are building. I dont think the banks are yet to take off from here. Weve been underweight because we think the reserve building is still yet to come. Challenges in the fundamentals are going to be here for a while. Huh ingrid, on that front, do you think some of the Loan Loss Provisions on the commercial side are overdoing it . Exuberance of an abundance of caution, or is this really being done because they think theyre going to need it i think jamie diamond said it the best no one can predict the future. And you really need to figure out how to position your business to meet the uncertain times. Its highly volatile theres lack of visibility and from our perspective, this is the time for active management youre focusing on fundamentals and Balance Sheet strengths and trying to find businesses that have the ability to withstand another economic downturn but also those that not just standing by but those that can participate as we have a recovery because we view this covid as finite i cant tell you the scope and duration, but we do know theres enormous amount of money being poured at this problem, and right now were overweight health care because we think health care is a good place to be both in this current environment, but on the other side we have diagnostic Companies Keep in mind diagnostics only account for 2 of health care spend but they inform 77 of decisions. The longterm secular growth is strong and we see this as a primary market for active managers tom, whether its the diagnostic piece or the treatment piece of it or now all the vaccine news weve been getting in recent days as well, the fact that this does move markets, not today today much more focussed on the economy and where its going with the recovery potentially looking like as we get more data, but overall the fact that the market has been reacting to things like vaccine news, is that warranted to you or is it an overreaction . Great question. I think its premature to project that progress being made is going to produce successful results on the scale thats necessary to really change the fear that people have and get the world back to normal yes, were optimistic well have a vaccine mid to late 21, but theres going to be a lot of losers theres over 100 Companies Seeking the vaccine. A few will win and produce many are going to lose and those companies are going to have to step into the confessional, tell their investors, whoops, we failed, so our approach has been thats like going to the craps table and gambling you really want to focus on the Companies Helping the companies that are trying to develop the vaccine. We want to focus on companies that are providing the covid tests and also the companies that will ultimately be the manufacturer of the vaccine once the winner is finally determined so tmo, Charles River stocks, things we like very much tom there are strong players in the current environment and as we get to the other side tom, i can remember the mid 90s and your name, and the market, of course, at that point where we saw significant level of speculation as the decade came to a close. Recently weve seen some price to earnings or price to revenues multiples that at least are rim nis end of that period im curious about your thoughts of similarities and differences right now between some of the Technology Names were seeing and what we saw during the bubble period in the late 90s. David, you are absolutely right. Ive been investing in tech since the early 80s. Youre right the similarities to the late 90s are very really. Today as i look at it, there are a lot of stocks out there that have what i like to call bubble valuations theyre rising up on short coverings, on hopes and a dream. Not on cash flow earnings and other real metrics now, the investors have to be careful to not want to chase the stocks you want to be focussed on companies that have real sustainable Business Models. Dominant of businesses that have the secular trends behind them, and the valuations, theyre a bit high, but theyre not exceptionally high so theres many similarities to the late 90s i think investors have to be careful. Tech stocks are overdue for a correction and when that comes the bubble stocks are going to get hurt instead, focus on real leaders in software, payments, mastercard, microsoft, for example. Finally, ingrid, were going to get fed Balance Sheet today its down four weeks in a row. And theres this running theory that the commentary this week has been on the dollar side. Many believe theyre that foaming the runway for Additional Support once they see what happens when the programs run out at month end does that make sense to you . I think the fed, the Central Banks, the government will do everything they can to throw money at the problem to get us through this challenge it creates lots of opportunities for businesses that have good secular growth and strong balancesheets, and were optimistic that we can find companies. One thing that is going to be front and center is our sustainability issues. Electrify kags, fuel efficiencies these are all good as tom was mentioning, finding secular growth it doesnt just reside in technology its across sectors. We have a ton of companies in our portfolio going after that opportunity. Texas instruments and even Boring Companies with dividend yields like utilities that are part of the solution so yes, we think both Central Banks and the government will come to the rescue but scope and duration of this virus is really uncertain. Yeah. Great conversation, guys thank you for that ingr ingrid, tom, hope to see you again soon thank you very much thank you morgan . Coming up, the covid spike in florida one Restaurant Owner in the state tells us about the impact on his business. Stay with us major averages all in the red. 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. [presenter] stand up if you are. on all 2020 lexus models. audience applauding dramatic music i will tell you this. Southern New Hampshire university can change the whole trajectory of your life. Welcome back florida continues to be one of the hardest hit states in the country as covid19 cases see a resurgence in the sun belt over 10,000 new cases reported on wednesday bringing floridas total case count to more than 300,000. Some political leaders in the state have called for the governor to roll back reopenings or at least roll them back further. Joining us on the path forward is Burt Rapaport president of a Restaurant Group based in florida thank you for being with us this morning. Good morning. You have three restaurants in palm beach county. They are open for dinein and takeout, but obviously at limited capacity are patrons coming . Are consumers coming right now so, actually, we have four restaurants. And people are coming. But since the resurgence in the virus, our its been very quiet. We are at about 60 of what we were last year at this time. And have you found theres been a direct correlation in that i guess weakness between the increase in coronavirus cases or is it more an effect of the fact that there are capacity constraints on your restaurants . Its totally people are scared to go out we have enough seats to do three times as much volume as were doing right now. But since the resurgence, people are just scared. Yeah. You know, i wonder how do you make plans for the future whether its nearterm or even longer tmpl right now. Given the fact that there is so much uncertainty in a place like florida that the case counts and other data continues to increase what does that mean in terms of the plans youre making for your restaurants, whether its from an employee standpoint or an operational standpoint i guess how long can you be sustainable in this environment . We did our cash flow projections through the end of the year we based them on being 50 of what we were last year were actually a little ahead of our projections. We planned onramping up starting in october, and by the end of the year getting back to where we were last year at this time so based on those projections, our cash situation looks okay. But weve had the benefit of the ppp program, so that took a lot of pressure off of us. Yeah. I want to follow on that given the weakness youre seeing right now in traffic, you mentioned you took ppp would it be helpful if there was another round . Absolutely. It would be great. Its a win win but you believe you can stay at least in business it sounds like, given your projections on what youre seeing right now through next year, hopefully to what is a better time . Yeah. Im not worried about going out of business. Were fortunate that when we originally shut down on march 20th, it was the peak of our season, and we had Ample Capital that we are using to help sustain us. And as long as theres no major hurricanes this summer, we should be fine well, we wish you the best of luck thank you for joining us today burt rappaport who owns four restaurants in florida thank you. Thank you its now time for our etf spotlight. Taking a look at the Airline Sector ticker jets. Under pressure today still looking to rebound for the year down more than 40 in 2020 its down about 3 just today as you can see. Two names in the group teaming up American Airlines and jet blue into enter an enhanced coshare agreement allowing the airlines to sell seats on each others planes and earn and burn frequent flier miles were going to take a quick commercial break meantime, stay with us as you can see a mixed picture. A bit more red on the realtime exchange back at our head quarters. Lets get to sue herera with a news update. Good morning, everyone. Heres whats happening at this hour the u. S. Canada and Great Britain are accusing cozy bear, a Hacking Group believe to be part of russias spying apparatus of persistent and ongoing attempts to steal covid19 Vaccine Information from researchers russia responds its unclear following two decades of new executio executions, the second person is killed by federal officials this week after saying he was deeply sorry and, quote, this sanitized murder really does not serve no purpose whatsoever, end quote, he was killed by lethal injection. He had been convicted of raping and killing a 16yearold girl gop officials are limiting attendance to 2500 delegates for the first three nights of a convention in jacksonville a larger crowd will be allowed when President Trump accepts the nomination you are up to date ill see you again in an hour. Ill send it back to carl. All right. Sue, thanks. When we come back, well talk about the twitter hack from last night. Obviously in some high profile accounts targeted and then disabled by the company. Stocks under pressure down 3 . Dont go anywhere. Experience the adventure of a bigger world in a highly capable lexus suv at the golden opportunity sales event. Lease the 2020 nx 300 for 339 a month for 36 months. Experience amazing at your lexus dealer. Welcome back lets turn back to that massive hack that twitter disclosed yesterday among the accounts affected joe bidens, jeff bezos, elon musk, kanye west, and many others. Twitter shares are down. Although, not too badly. A tech analyst joins us to discuss. Mark, i guess how serious is this for twitter first, thanks for having me its serious in a few ways and perhaps not in others. Clearly on the first side, very much Public Perception this is very visible its not the first time this has happened we had the saudi arabia incident earlier this year and a few years back there was a contractor that fledeleted trum account for a little bit more names involved. Feels more coordinated for stocks and companies, i expect twitter will make the necessary changes to adapt i expect users will stick around and perhaps some of the higher profile names may think twice about using the platform and what they communicate. Overall, i dont think this is similar to the call it the kylie jenner moment that snap chat had when she announced she was leafing the platform and the stock tanked its moderate and visible, but i think tits something i believe is solvable. But the idea of high profile users having second thoughts about using the platform does not seem to be an insignificant concern. I think its fair do i think theyll continue to use it i do i think it will take time. You need to regain trust this is top of mind. I think the way twitter has been, its reflective. As al trtruistaltruistic you dont consider there are bad actors that manipulate the platform weve seen others come out the other side when they regain trust. I think its top of mind right now. A lot of attention this may be similar to the advertising boycotts for facebook which are barely discussed anymore. Yeah. Mark, i mean, you just rattled off a number of different examples of hacks or attacks or incidence that have happened at twitter in the last couple years. When i hear you talk about it being solvable, i wonder why maybe security hasnt been beefed up more ahead of this moment in time, and i also wonder whether other major social media platforms could be susceptible to something similar . I agree for me it was disappointing to see that Something Like this was still able to occur, and especially given the previous incidents. You would hope in would be the urgency and attention to be more pro active right now i fully expect all social platforms are looking for internal vulnerabilities on their platforms. You mention you dont expect a lot of user erosion, but how about advertiser erosion twitter is already in a unique moment in time. Many advertisers are pulled off the platform theyre closely tied to events and brand based and have stipulated a lot of conditions around ajay sen sis. They dont want to appear next to content that may include covid, et cetera. And so i think those affects will persist i dont know if any advertiser will look incrementally closer at this and say is it a place i want to advertise if the events come back . There is some potential. Clearly we saw it with the ad boycott on facebook. There was some but also included twitter in the group. If you expand this enough looking at Data Security, but the overall almost as an investor and esg metrics and say what are they doing around Data Security and is that a place i want to advertise . Certainly thats up for dakota as we go through the rest of the year if its a place they want to come back to as the events and sports come back mark, you know, its not the first time people have looked at twitter and noticed that its buggy occasionally there was the problem with the ad product a few years ago obviously its resurfacing questions about dorsey splitting his time do you think there is a pattern of either lack of attention from the chief executive, or lack of requisite spending to make sure these things dont happen . I cant comment on executive attention. There is a history of moving a touch slow on some of the issues clearly for the last couple years we know that health of the platform is top of mind. But i dont think anyone could look at twitter and say they solved all the Health Problems on the platform. It could be a very expensive issue to solve for example, facebook has more content moderators than twitter has employees. Thats looking at content moderation you look at protocols and rights and you can expect an increase in at least some expenses to comply and to try to get ahead or catch up on this. Absolutely right i think historically there has been that pattern of just moving a touch slowly to address some of the issues. So i guess in the coming quarter, i mean, were going to watch for earnings and revenue, but expenses it seems to me just took a leap up in terms of metrics people are going to want to talk about. Yeah. I think its something people will want to talk about. I dont know if theres going to be a lot of clarity around what the expenses look like theyre already spending quite a bit on Data Security and infrastructure and you could absolutely expect some incremental spend to comply, but no one knows the level, if its going to be a small kind of 50 to 100 increase or something a little larger i tend to skew towards perhaps the conservative side of expense growth, given what i know theyve roughly developed today and at least for my own point of view, what i think would be acquired to meet the needs of whats currently happening as the earnings season for tech names gets underway to broaden it out a little bit, whether its twitter or other names, what are you most bullish on going into the print . You know, going into the print, this is separate, i guess for the longer term view of some of the names i was bullish on twitter on this print, because i think theyre going to be the net winner in terms of user ads off the back of all of the covid and the stay at home we saw this in japan with the fukushima disaster new users came onto twitter, stuck around, and now theyve got better on boarding tools to keep the users for engagement bump weve talked about across all the internet names, when things go back to normal, assuming they do, a rot of that engagement lift with dissipate. Twitter should be able to come out ahead on that metric i very much like facebook. Going into the print here. The reason is i think i was called the Rubber Company in this space nothing seems to stick to them all the head winds we continually talk about all my conversations with ad buyers and everything ive seen suggests theyre going to do well on beating some of the elevated expectations on ad spend on the plat form those are the two names i probably highlight that could potentially do well this earnings season. Got it, mark. Just quickly, then, do you think parlor is going to become a bigger part of the conversation here potentially i think whenever the example ill point to is in india when we saw kind of the tiktok ban taking place, local names popped up to the top of the google play store. Still early days to be determined if theyre going to get traction to be a threat in the space. I think youll see a shortterm bump in a lot of hype around using it a bit more. Im still skeptical on anything coming up truly to become a real competitor or displacing twitter. Mark, preerappreciate you ta time with us thank you. Thank you very much watch Morgan Stanley stock here a fivemonth high on the blowout record 21 higher revenue than their prior record on that metric. We talk with james gorman about that as well as employers coming back to work i think the last few weeks, just to get in the flow, do the temperature tests, go through the app we asked our employees to do. See how the elevators work i want the Senior Management to do that. I dont want to be here all the time thats not because i cant be, but i dont want everybody to feel like they need to be in the office all the time. Im not sure the infrastructure in the city and then in our building can absorb the number of people that were working here precovid until we have a level of immunity or treatment fascinating comment there, david. I mean, you got to imagine chief executives are going to want to experiment and understand what their employees are going to be asked to do once they all come back to work yeah. And what their employees are comfortable doing. So much of this goes back to the fact that at Morgan Stanley as we are here, remote work is working pretty well. Its funny, in fact, when i speak to Investment Bankers, some of whom employed at Morgan Stanley, they tell me theyre as efficient, if not more, in part because theyre not traveling at all, and everybody has gotten much more comfortable with doing Serious Business virtually but it will be interesting to see. Particularly in light of the fact morgan that the virus case count in new york is very low right now unlike other parts of the country. Youd imagine that other chief executives are having similar thoughts about their Office Environment. Yeah. Knock on wood. It is. Its low at least for now, and something i think certainly many of us are grateful for its going to be interesting to see how many of thee companies do, and weve had the reports in recent weeks, how many of the Companies Start to think about moving, shifting or expanding their footprints outside of the city to, for example, the suburbs which we know in the new york metro area, many people have relocated or are considering relocating out of the city given everything weve seen with coronavirus. Just in general, though, i mean, looking at Morgan Stanley, 68 jump in trading revenue. 168 jump in bond trading. Equities trading revenue up 23 . Investment banking up. Wealth management up it really sort of speak to what weve seen all week play out which is kind of the tale of two earnings tapes for the banks whether its Morgan Stanley or Goldman Sachs performing better than many of the main street rivals, whether its jpmorgan, bank of america, citi, which all have had to build the massive reserves for loans, i think one of the key questions now is going to be how long this trading boom is going to last and what a company like a bank like Morgan Stanley is going to see in the second half of the year which he talked to you about. Shares are up 3 were going to take a quick programming note as we head to break. Today cnbc in partnership with acorns is hosting a virtual live town hall special bringing together americans affected by the health crises. Financial experts will answer their questions to help them reset and rebuild their financial futures. Thats tonight at 7 00 p. M. Eastern. Mustwatch tv. In the meante, wlle ghime brit back stay with us experience the joy of a bigger world in a highlyconnected lexus vehicle at the golden opportunity sales event. Lease the 2020 es 350 for 359 a month for 36 months. Experience amazing at your lexus dealer. Were committed to making college more affordable. , thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Welcome back the debate on whether or not to reopen schools this fall has become the new political litmus test in the president ial election we explain in the latest states of play survey from cnbc reporter morgan, there is at least one area of bipartisan agreement, and that is that the cost of a College Education is just too high. That is especially true right now in the middle of a pandemic with 40 of institutions planning to go either partially or fully online this fall. Our exclusive polling with change Research Across six Battle Ground states found an overwhelming majority of likely voters believe that Online Learning should come with a lower price tag. 7 2 said studentsshould not b charged full tuition for virtual instruction. And only 16 of students think that they should be paying full price. Now, that Strong Majority does hold whether youre looking at republicans, democrats, or independents the bad news for students, though, is that many big names dont agree. Harvard, rutgers, California State University is all going online and charging full price despite pushback and petitions from students. Colleges argue students will have the same access to the same teachers and curriculum they would have in the classroom and theyre already facing a massive financial hit from the virus in the cares act colleges received 14 billion in funding, but institutions say that the cost of reopening safely this fall is more like 74 billion. And guys, that is two or three times higher than the number that republicans are reportedly talking about in terms of aid in the next Coronavirus Relief package. Back over to you youre seeing it on the Community College front, especially on the International Student front. Thats notable especially with the visa issue between the government and the institutions. Many of the schools did take cares act money. What did that money maybe im throwing a curveball your way, but what did the money actually go to if tuitions are going to be staying in place at many of the colleges so theres a number of different costs. Some of that money went toward helping students who are financially strapped colleges say theyre going to face physical costs of social distancing, investments in technology, testing, ppe, all of those safety measures. Thats whats adding to the 74 billion they estimate will be required to open safely in the fall now, i understand that colleges are actually going to be advocating potentially for a smaller amount because they know the dollar figure is likely not going to fly on capitol hill but they are saying they will need additional help in order to get through what is going to be a tough school year for everybody. Yeah. Rice university saying theyre going to hold classes in tents outdoors for the entire school year thats something you can do in texas. Well keep our eye on that watching colleges and reopening today. Well take a short break as we said earlier, markets doing okay financialsho sw backbone were back in a minute knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Im good at my condo. Well planned, well invested, well protected. Voya. Be confident to and through retirement. 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 alsave without evenls. 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 Virgin Galactic announcing a change in leadership you can see shares responding positively up 12 the ceo12 George Whiteside stepping aside after spending ten years in that role but staying on as the companys newly created chief space officer. Former disney executive to take over at the new chief executive. Thats going to be effective starting next monday i think the bottom line is this move signal as shift from development of that suborbital space tour iism thats been at bransons. Virgin galactic is moving closer and closer to actually launching service and recruit more customers there was a note this morning saying basically colglazier is an outsider. There are similarities between fourday space port experience and a disney vacation and also mr. Colglaziers experience. Its also considered a positive by the street that whiteside ar u stay onboard. Shesp 13 . Well be back in a minute. So stay with us. And youre technically a genius. And it appears youre quite the investor. I like to trade. Well, Td Ameritrade has pros ready if you need help, say talking through a new strategy. Just in case things, you know, get a little rocky . Im sorry on the upside i think thats waterproof. Maybe not. In a highly capable lexus suv at the golden opportunity sales event. Lease the 2020 nx 300 for 339 a month for 36 months. Experience amazing at your lexus dealer. It remains a remarkable story. We bring in the ceo to talk about not just the phenomenon that its become but the investment led by blackstone that includes luminaires such as oprah. Welcome. Good to see you. Thank you so much glad to be here. Youve been with the brand and company for many years you see it at starbucks, you see it at the grocery store. My wife doesnt use anything else in her coffee but can you talk about the origins for where the idea actually came from this whole company was based on the idea of just making a better milk, milk that was designed for human beings and better for the planet, and thats what i think we do, you know, with our pro sechls we make it liquid throughout that whole process. We keep the goodness of oats without adding anything. It was born out of swedish skriechbl science. You know, it doesnt really get relevant, you know, unless you really connect with people, so that part, the emotional part of the business is super important for us as well. We follow meat as well. A lot of the research around it used plantbased measurements as a template they say look what they did in replacing a product. Imagine what meat can do i wonder if you think that second wave in meat has sort of accelerated and rejuvenated maybe the trend beverages had to begin with. Absolutely. Youve got to remember, this is just the beginning of the whole curve. Were still in the early stage its about 15 , 16 . If you look at yogurt, cheese, its less than 4 . Less elsewhere theres still a lot to do. We havent seen the mass generation yet thats still to come what are we doing in the meat Replacement Base or plantbased milk, its just its just an expression of whats going on in the world today, how people are becoming more conscious and aware of their own consumption, how it affects the world. Toni, i have to tell you, i have oatly in my refrigerator right now. Huge fan i use it every morning in my coffee. Great. How fast are you growing . There are a lot of copy cats in the market how are you navigating that . Hey, you know, in terms of copycats, were the original you have to have a fantastic and amazing product. Its more about who you are as a company, what you stand for. Yeah, we might make oat milk, but the idea of the company is way bigger than that, and its based on sustainability. We all know what needs to happen is the shift from animalbased food to plantbased food i think thats what were driving, the bigger picture. You want to drive it into a bigger dimension i think thats whats happening and thats why i think were working so well versus the competition. Mr. Petterssopettersson, the industry will say theres only one kind of mill, that attached to a cow is. That an issue for you or could it be in the future . Hey, i dont think its fair we cant call ourselves milk you know, i think thats the right word for what were doing. Does it matter you know, im not sure obviously, you know, i think cows milk are designed for baby cows what were trying to do is design something for human beings and our bodies and what we need in terms of nutrients, proteins, carbs, fibers. I know its a debate, but i think the science you know, what science says and what we believe, i think its the right direction. Finally, toni, the covid disruptions, having to shift as all product makers have had go do, shift away from food service and go into retail, not to mention the capacity constraints, how do you manage that being relatively new to traditional rivals going back to the other question about our growth, we grew almost double the growth last year. And despite the pandemic, we expect a similar result this year you know, were humbled by the situation were in as a company. Its a tragedy whats going on in the world today, you know, but as a business, were performing really, really well given that the major part of our business comes from coffee shops and food service, it didnt collapse, but the decline was heavy both in asia and the u. S. , but weve seen how its been absorbed completely by retail. We routed the biz into china as more oecommerce and europe. Its about things the last months events are acceleratiin the shift that was already happening, you know. And the growth for our business is one way of expressing that. Right, right. Toni, congratulations on everything so far, certainly on the blackstoneled investment. We hope to see you again toni pettersson of oatly thank you. Have a good one. Thank you so much. David and morgan. Well see you later. Good morning welcome to squawk alley. As the markets try to work their way to the flat line, we took out yesterdays flow intraday. Looking back, banks showing life even amazon is on pace for a fourth day down, something