Transcripts For CNBC Squawk On The Street 20240712

Thinking about over the weekend . Next week, which is going to be just gigantic we have everything from ibm, we will bookcase ibm on monday and American Express on friday, both will be challenging and i think they could determine things. Carl, i have to tell you, 8 30 santelli comes on and gives you that housing start number, then diana talks about how there are not a lot of houses. I sit here and i think the fed has done a magnificent job, what can they do . They can take rates down to the point where, yes, maybe jpmorgan doesnt make as much money, bank of america certainly doesnt, but people are buying houses and thats whats been working in the stock market this week is the housing trade the lows, the home depot the deere small tractors, that stuff has been flying off the shelves and thats exciting. It was not, of course, the cloud, saas stocks and cybersecurity. Theres always a bull market somewhere. Right weve been taking note of all the upside reannouncements today. Today its daimler, it was freeport the other day, alcoa. Jim, your overall thesis that other sectors would start to catch up with what growth has done is playing out. Yeah, Peter Navarro please hold your ears china is leading the world. Chinas growth is for real, theyre ordering things, theyre past the pandemic. They are really in charge right now. I know that thats not what attorney general barr wants to do and hes in the name names david, did you like the name names black list didnt you feel like it was kind of like what your parents might have gone through in the 50s and 60s when they were outing people where is the who will wood ten we have bob iger. You know, i know, disney and apple. Im not sure you can name two more American Companies so to speak at least. Right. Yeah. Known communists. That was scary stuff, jim. I thought it was really frightening. I think a number of people found that barr is a very smart guy, he knew exactly what he did, he took a page from senator mccarthy it was to me since i grew up listening to the mccarthy hearings, it was very jarring. I was waiting for him to specifically name names of communists within these companies because thats where he was going i found it embarrassing for the united tates yeah, but it does point to the continued increase in tensions between our country and china, jim. But why dont we out the chinese. Its not us. Right. Google said no to china. We talked about it yesterday. Yeah no i know youre right listen, we have to keep in mind what its going to mean in terms of hong kong and whats happening there and the potential sanctions that will take place not for some time but have been put in place to actually take effect into the future not to mention the continued debate about tiktok, for example, which is an enormous media company, make no mistake, and has got to figure out something in terms of navigating these geopolitical currents it finds itself in the middle of. But its not insignificant if you are apple what do you think about that youre scared this is the attorney general of the united states. Even senator senator mccarthy this was more roy cohn if you remember roy cohn i was the villain of that period and, carl, if i worked at one of those companies i would be down right frightened when you read ride of a lifetime by bob iger he talks about the hard bargain he drove with the communist party and how when you think about disney they brought they are like a fifth column if we remember in the spanish civil war there were certain people who actually when they got in did the right thing for your country and in this case these companies are doing the right thing for our country. What do you think about if you make cell phones and youre chinese and everybody wants an apple cellphone. I think that look, i am a trade warrior, but i am not a cold warrior jim, he is the top Law Enforcement official in the country and at some point you have to wonder is he going to accuse these companies of a crime. Exactly right. Certainly yesterday was a step in that direction david mentioned tiktok which did get a shout out from Reed Hastings of netflix last night talking about the fluidity of internet entertainment and the pressure that the Company Continues to face. Here is what he said we want to have so many hits that, you know, when you come to netflix you can go from hit to hit to hit and never have to think about any of those other services, okay, you know, we want to be like your primary, your best friend, the one you turn to. And of course occasionally, you know, theres hamilton and youre going to go to someone elses service for an extraordinary film, but for the most part we want to be the one that can just, you know, always please you jim, stock down premarket but a lot of the analysts have not been spooked. Look, he did call tiktok astounding, i thought that was amazing. Look, it was an amazing quarter. You have to understand that you have to look at this company the way you look at kraft heinz or you look at clorox or you look at kell lock, you look at smucker. These are companies that were very adamant that, look, its pull through and these are companies that said that if your pantry people loaded up, not so much kraft heinz because they didnt load up there, but i do think that netflix said the same thing which is how can you possibly do as well as when people loaded up i think the answer is, yes, you can do it internationally. It was a great call. I cannot believe how many people joined i cannot believe what a bargain people think it is, this he did a lot about how they have content, dont worry about that, theyve got so much in the hopper my favorite line not talked about by the analysts is they actually discontinued people who arent using it. They made it so that they are not paying i cant tell you another Online Company that ever does that. What they really love are people who keep paying automatically like i do with the nba what am i doing . There is no nba and im paying for nba. Com. Mlb. Com. Thats a real treat right now. No Reed Hastings says we are not going to do that, were turning it off wow. What a quarter ted sarados these people dont know who the hell jay hegue is. On sarandos theyve already gotten in a sense succession dealt with, not that Reed Hastings is going anywhere, he indicated on the call he may be around for at least another decade. Hes only 59, david. He is a young man he is a young man. Thank you. You and i are in agreement on all those things at this point everybody is young. Maybe Warren Buffett is getting a little old. Top of his game. Thats it everybody else is young in my opinion at this point. But sarandos will be there potentially as the successor when that day even comes if it is a decade from now, he is 55 years old which is very young by the way we should point out. Guys, it was having to see some of the Free Cash Flow that the company was able to generate as a result typically its content spend in excess of their content expense, but now thats reversed because they are not spending as much on content because of the production hiccups that are happening right now, but there are some investors encouraged by that Free Cash Flow margin was 15 . 700 basis. It did show that it can yeah, it can actually produce free cash below in that kind of an environment they are going to get back to spending more on content once things ramp up again. Carl, one of the things that i loved about the netflix call is they found places without covid to make content. At one point they said we found a place in oregon. I mean, there isnt anything these guys cant do right. I love the call. I think a lot of people just get turned off, they have to watch the call, i watched i get the transcription and i watched the call and people have to understand, especially newbies, that netflix does the most selfeffacing calls. If you are selling it off their humility and selling it off their lack of arrogance youre nuts they just dont do it like that. They play it very differently from every other company they are the antimoderna. Carl, also they are not that great at guiding we know that, carl, too. Yeah. Typically their guidance is not always as good as some companies so there is that and the stock is back to, what was it, carl, about a week ago or so. Terry came out with big guidance or big subscriber numbers, stock jumped up, now its moving back to where it was a very short time ago. Its a game heath went to 670, although, jim, this argument that i men, how many quarters are you going to get where there are no Movie Theaters no cruises, no broadway, no music festivals, really where as hastings says his competition was sleep. I mean, thats going to be hard to get again, is it not . It used to be sleep, now his competition is moderna and j j. J j with a thousand people study. Thats what hes up against. In the Movie Theater its the lean back, it used to be lies, now its covid. How are you getting it from cleaning back . Somebody behind you is breathing on you no, in the head, im one of those guys who watches it like this. Oh, come on. What do you mean oh, come on. What do you mean oh, come on what do you think they need ultraviolet for . Its on surfaces. Get a tie for heavens sake. Its not as much transmitted through surfaces, is it, jim wear masks wear masks wear masks. I wear masks everywhere i know you do. Carl, im the most promask guy in america im giving away a Million Dollars of peoples money if you come up with the right mask. I know. I know the debate rages today, guys, as the governor of georgia suing the mayor of atlanta on enforcement of some of these mask mandates. Its pretty amazing. Jim, you know, we are expecting the lancet to Say Something about astrazeneca on monday, fauci with zuckerberg last night talking about the potential for the vaccine and, again, reiterating that he thinks the trajectory is good here is what fauci said. If everything works out the way we hope and we dont get any unpredictable potholes and bumps in the road, we should know as we get into the mid to late fall, early winter, but probably late fall whether we have candidates that really are safe and effective. And i hope and anticipate that we will have one or more if thats the case by the time we get to the end of this year, the beginning of calendar year 2021, we may have vaccine won or more candidate that is actually safe and effective that being the case, we can start distributing doses widely at that time. Jim, that kind of fits with what Morgan Stanley said last week and that is important phase three data in their view mid to early midnovember. Yes, and dr. Fauci did specifically call out moderna. I make fun of moderna a little bit because they dump so much stock into the positive, whatever, but dr. Fauci also said that he wears a mask when he runs. I wonder if he wears a mask when those sherman tanks run over his body and get up and say hes okay, dont worry. Dr. Fauci is like he takes a licking from the administration, but he keeps on ticking. I thought the interview does all the expression that Mark Zuckerberg had wow. David, did you see that . He was deeply moved. He blinked i think he blinked do we have tape of him blinking . Its a little yeah do you know what, im not going theres no reason to make fun of anybody at all i dont know if thats a real human being or not i dont know i dont know it looks it like it might be a real person. He was very good at it. He was. To be fair, actually zuckerberg did step out a bit and even issued an opinion about the u. S. Pandemic response do you want to take a quick listen to that at this point it is clear that the trajectory in the u. S. Is is significantly worse than many other countries and that our government and this administration have been considerably less effective in handling this. Yeah. Hes going to be blacklisted for that he is. Im not kidding. I mean, im waiting for attorney general barr to say that he is that there are known communists in facebook 57 known communists which is of course how many different tomato tasters in heinz as we know from manchurian candidate he did a great job zuckerberg did great and hes totally right about that he wasnt afraid to say it wasnt that something . Yeah. All right, jim, so when i say right now that, you know, in countries like germany or france or spain or italy, the uk where everybody is going back to school, no problem, and i point out that thats not the case here, am i now on that list . And by agreeing with me which youre about to do, are you on the list you are on the nixon enemies list that hes putting together. Thats the secret list, david. You have to make fun of this because you have to stop it. If we have a House Unamerican Committee we truly have become the joke of a country that all of us are afraid of. Jim, were going to obviously its increasingly a topic of discussion even on a show that talks about stocks we are going to take a break here we will get some some of the other news of the morning, black rock with Interesting Data on throws and 7 trillion and management now, new bans on cruises, clarity from twitter last night on what happened at that hack this week. Back in a mitenu save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, you only have to pay for the data you need, starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. 5g is now included with all new data options. Switch and save hundreds. Xfinity mobile. Twitter says about 130 accounts were targeted in that massive hack this week, including those of prominent individuals like elon musk and joe biden. At yesterdays p g Virtual Conference jack dorsey said we do believe this was through social engineering of our own employees, that is something that no matter how good the technology is theres always a weak link there and we think and we can definitely build around it and are looking at the steps it would take to do that fbi meantime, jim, is going to lead an investigation on this. Have to you have to find out what went on as snared warren talked about the importance of this at which timer is more important in terms of the shock value of what someone might be saying than it is in terms of the earnings per share and the growth its completely its rudderless to some degree, i think ned siegel does a terrific job as the cfo but twitter does not have Artificial Intelligence to be able to stop this stuff even internally. Didnt they realize within their own organization there could be people who sabotage the company . I think there are Many Companies where there are known saab tours, im not sounding like attorney general barr, i just think you have to be worried within any company there are people who can do this but this company in particular if you get the keys to the kingdom you can cause a lot of damage. Jim, we think i think about i think about so many of the breaches that weve seen, different, different, no doubt, this is a hacking, but at the same time breaches, i mean, you go back through the corporate history of so many different names. I mean, so many major companies, consumeroriented companies, and the stocks suffer for a brief amount of time and then they come back. Thats true. Then its sort of over and done with and thats it and you move on. Twitter uniquely has not been able to capture the kind of ads gary v. Was on a special we did last night and ive got to tell you he was talking about the great value of placing ads in instagram, facebook, and next door trying to get in on next door doesnt mention twitter. Twitter has become to me a not great way to get your message out. It was really good for movies and for sports, but name me two david, i know you like jeopardy, name me two things that are not happening. Sports is not happening, at least not yet. How about movies, david no, they are not happening, either thank you for that answer. Other than netflix which is your first stop, back to our previous conversation netflix has become the first stop look they have as many subs now as cable basically. They are almost equal to cable subs in the country. They are going to crush it in japan. They talked about japan being really the next frontier i think that the world is their oyster remember they dont even charge much versus, say, going to the movies they charge as much as a popcorn and m ms forget the ticket. Thats true although there is no shortage, carl, of potential there are no shortage of competitors now out there, although as they say their only real competitive is sleep or maybe tiktok. You have peacock streaming ever s hbo max, disney plus and by the way, guys, we havent mentioned apple, jim, im sure you have seen this is spending real money now for quite some time i made note of the posit of their content offerings and this is still the case but they seem to be spending real money. Amazon, too i think apple is more for real apple is doing things the way tim cook likes to do it, slowly, steadily and the next thing, boom look at all the people where is the see that there can we see the blink again, the zuckerberg blink i wear he blinks i swear. You have guns blazing today for barr, tony. Its friday it is friday. Zuckerberg did talk about i have to hand it to him on the way this this is been handled. Atlanta versus georgia isnt that great what a stand no masks we live free and doo i in georgia. Kind of a twist on new hampshire. We will talk about that. On new hampshire. Later on this morning with the governor of Colorado Jared Polis who did institute a statewide mask requirement yesterday. Thats coming up later on squawk on the street. Stay with us 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. Taking a look at futures here, nasdaq looking to stave off a back to backdrop, would be the first in two months. Netflix shares, though, still in the red in the premarket we wl t e enilgethoping bell in just about five minutes. Dont go away. 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This is the chinese tesla, how can they do that but the answer is that this thing is so much this thing was at 2 not long after the 60 minutes piece that said they were the greatest thing since sliced bread i agree on this downgrade on sale valuation i think its right i think that one of the things that probably does happen soon is that chinese stocks maybe they get outlawed by our administration you really believe that that is a possibility absolutely. Outlawed . I mean, under what law how would that even work i dont know, martial law im not kidding. Martial law. They dont want these stocks trading here they dont want the companies raising money in america and dont want the stocks trading here im not talking about medium ive got guys saying pluto is a known communist, 101 communist, the dalmatians were communists dont you love this. Look at this, beauty and the beast were communists sleepy and happy were communists. That belle, that belle in beauty in the beast, she read books, she had to be a communist. Angela we are going to see of course, tiktok is owned mostly by american pe companies. Without a doubt yeah felipe lafont is on the board, they are a big owner. Yes. Listen, if it comes to the point at which somehow we will not allow the chinese corporations to have access to our capital markets, theres going to be a lot of other things that have to be in a pretty bad place by then as well, jim. That is when i would wonder dont you have to look at apple and wonder whether their business will be impacted. What would be the response i have to hope that the president realizes that we have these great American Companies that are doing terrifically in china and that thats good were trying to block the chinese from dumping here, not block the American Companies from doing fabulously there. But they disagree with that. Guys, there is the opening bell at the nyc biden financial highlighting the ppty u. S. Diversified real estate etf and berkeley lights celebrating an ipo. Jim, the president speaking of which hasnt tweeted a lot this week, but just retweeted the article from sky news about the oxford data that we are expecting in the lancet on monday you always talk about underpromising overdelivering. How much is on the line . I dont know. Theyve got both t cell, they have t cell antibodies, too. The word on that vaccine is very, very positive. So i think that astrazeneca has got something. Oxford, pretty Decent School i do think that as dr. Fauci said theres going to be multiple multiple vaccines. I thought j j if you go over their Conference Call yesterday, a very good Conference Call, they talked about being ready to produce they are ready to produce a couple billion vials what its going to come down to is who can produce the most. I dont think you will be able to beat this thing until everybody gets a vaccine i was hopeful from j j and i hope to have good news astrazeneca. David, the number of companies and firepower thrown at this thing does make me feel like there is going to be good news by the beginning of the year which would be great. Jim, do you think we end up in some sort of a situation where if, in fact, things do continue to progress in a positive manner that there are more than one vaccine, theres, you know, numerous Vaccines Available somehow . Does that work how does that work yes, because regeneron will have something, astrazeneca will have something, pfizer, moderna, j j will have something, all the docs i talk to say you are going to have to take at least three shots to beat this thing, one will be a booster shot just because its not going to be enough, the skeptics say theyve never beaten anything this fast. Ive never seen this is dday. These companies are approaching theyre throwing an endless amount of money, theres no limit to whats being spent. There are Smaller Companies that are people are ee no, maam moored of, but i say stick with the majors theyve developed it before. Jim, do you think that the full economic recovery is contingent not on the development, not on the approval, not on the manufacturing, not on the distribution, but on by americans saying i will wait until my neighbor gets it and see how it works out wow whoo i had thought the full recovery will come when we know that we have masks, everyone we know tass headachen the vaccine reminds me when i got the polio shot we knew that everyone got the polio shot, there were no antivaxers there and then you could go outside i ate the sugar cube for salk and saban and people didnt want to go out because they were afraid their neighbor would give it to them i think it will be a little like polio. I think people will say, do you know what, everybody has to take this and thats going to make things very positive for our country. Zuckerberg is right, though, right now we are in disarray zuckerberg how do you like that gottlieb versus zuckerberg, how about that well, no, they seem to be on the same page. Im saying as a fun thing to do theyre fine. Right. Blinky i mean, zuckerberg and gottlieb, it could be a very i like the fact that fauci sat down with him. Fauci is a creative guy. And hes still there isnt that incredible. Carl, isnt it amazing he is still there after what he has had to deal with yeah. I mean, he was on the cover of in style magazine this week and kind of talked about the fact that, you know, i think how did he put it, this is life in the fast lane and i dont think hes going anywhere, jim i dont know about you. I attribute everything to the fact that he went to regis which i regard as being the best school in new york city. Its certainly up there as one of them, dwrim he has hes not allowed to go on tv so he does everything like he did with zuckerberg he streams it. The work around right, streaming they havent figured out that thats it. V, i guess not youre good. Lets talk more about chinese stocks i want to talk about alibaba actually this morning. We havent spent that much time on it, such an important holding for soft bank softbank has been continuing to monetize certainly assets but not their stake in alibaba. Jack moss selling an awful lot of stock its underperformed when you look at it versus j. D. Com it has underperformed rather significantly. Ecommerce in china the same way as that had happened here, when they shut down, that was the foremost way that people were doing business, its been the foremost way anyhow but even more so. But there is a look at what j. D. Has done during that same time period im mentioning it this morning i know. Its funny, did they take market share . Its a little higher end some of their somebody somebody will deliver you in a nice uniform your apple phone, back to apple, right to why you are home when you order it on j. D. But there could be more buying coming into baba shares, some are anticipating due to something called the hk southbound connect, thats the channel through which mainland chinese investors can trade stocks listed in Hong Kong Alibaba is now listed in hong kong the free flow in hong kong is currently said to be around 70 billion but they are not yet authorized, that is, mainland chinese investors, to buy via the southbound connect shares of alibaba. You can buy shares of any number of other companies so if and when that approval comes through, theres thought to be additional buying power in the hk market for alibaba and potentially could help that stock price, which, again, has done fairly well, but not nearly as well, jim, as some of the others in chinese ecommerce. I didnt realize the underperformance because the last couple Conference Calls, last quarters were really fantastic. Dominant. That may be a great opportunity. Its still dominant. Ive ordered stuff from alibaba that does not make me a known communist by the way and i do think it is an Incredible Company and its got american financials, david, it reads like an american company. You know all the people who are on it. I mean, they kind of get the program. Yep yep. Now, listen, we dont talk ten cent is one of the other giants there, they have announced something, they will launch an Online Shopping feature in their chat app to challenge will the likes of alibaba and j. D. An important one, one that we should stay focused on talked a lot about china this morning, havent we . It is the most important noncovid story, yes right . I mean, in the financial world the trade war against china is going to be a cold war and we all have to recognize that because of apple, because of intel. Because of nike, because of starbucks. These companies have a lot on the line and i imagine they didnt call out starbucks yesterday which i thought was really interesting i guess thats today and nike i guess thats today look, other than that, i was very encouraged by all the lets put it this way, the earnings so far have been terrific and we have to recognize that they were supposed to be really bad. The banks were great lets call out Morgan Stanley for an incredibly quarter. David, Morgan Stanley is changing stripes and when they get the etrade deal done we are not going to be talking about robin hood, we are going to be talking about, i dont know, morgan hood, david. Rate. Yeah, what did gorman said, its not just kids trading some stocks there. Right. Your point on Morgan Stanley well taken, jim, although the stock is down today. It was an interesting week for the financials and not a great one in terms of the performance of the stocks overall other than Morgan Stanley, even what were very strong numbers from Goldman Sachs got a muted response from the stock market, jpmorgan led us off, muted response as well wells fargo we know was not particularly good but it actually did just as well if not better than some of the ones i mentioned. Theres a look at citi. I dont know as we come out of this week having heard from all of these companies in terms of their earnings, bank of america as well, jim, do you think about buying them at any point i think the big issue yeah, i would buy jpmorgan the big issue is they took such huge reserves. If you get stimulus these stocks take off if you get a change. And by the way not if you get the payroll tax cut. My friend larry loves the payroll tax cut but if you get something similar to what mnuchin already gave you you want to buy the banks because then the credit reserves will be overstated and too conservative and thats when you would buy them goldman, by the way, had a 1. 5 bill and i think people were not expecting that at all. Yeah. Thats going to be one of the key stories of next week, jim, not just the eu summit over the weekend, but Congress Getting to work on stimulus five, there seems to be a brewing tug of war between mnuchin and kudlow about whether the white house would demand a payroll tax cut as part of it. How much of the 600 gets reduced per week thats going to be key, right . Come august theyve got to give us something. We need a bridge to the a bridge to the vaccine. And its got to be the mask and its got to be stimulus. David, the idea the payroll tax cut that larry likes, you know, that benefits you and me i dont know how that and it doesnt get into the economy that quickly. No. I dont get that one. Jim, how many people are going to face potential eviction when those moratoriums are up and when theyre no longer receiving the 600 additional benefit from unemployment how many people in this country are going to be at that level because i think the numbers are staggering and very scary. You are so right. I dont know what it means. Look, the banks can offer forbearance but a company that has a mortgage thats that is renting apartments, they cant offer forbearance, they have to kick them out. Wow. Some of the Census Household survey data yesterday, guys, suggested that i think its 22 million households said they were not confident of being able to meet next months rent. It kind of points to what larry fink told the guys on squawk box this morning about the recovery being a lot more muted, they believe, than consensus might suggest. Here is what larry said. Blackrock has never believed were going to have a vshaped economy. We believe this is going to be a slower more persistent rebound, but we do believe there is a rebound but its just going to take longer. Kind of fits with a lot of the commentary this week, jim. Yeah, but larry was very thoughtful as i wish we could all have a transcript of the things he said i found larry the most imperative thing was he said a lot of money was taken out with this market it means that a dip is going to be met by new money which is kind of extraordinary. People pulled out money in that last week of march david, remember, i think people came on our air in the last week of march and they were somewhat negative yes, i do remember that bill ackman, mr. Chanos. Yeah, that was not great timing. No. You had yeah, there was a lot of a lot of rich people. A lot of negativity in terms of the market. Their view on the economy may end up being correct but certainly their view of what would happen to the stock market has not been. There is a classic chasm between what the stock market is doing except for the banks this week and what the economy is doing but thats not unusual people dont understand that if you are buying z scale and buying octen, if you are buying Palo Alto Networks and buying fort net, youre to buying that because of something that happened at twitter. If you buy paypal its because of something that happened with the banks. Octo is a company that does identity wasnt that the problem with twitter . Bring octa in. I just saw that tweet, jim. Interesting. We are on track for a third week higher on the s p. Lets get to bob pisani this morning. Good morning, bob. Good morning, carl. Happy friday everybody. Yeah, we are up about 1 for the week, have he good start to earnings season. Its nice to see the Banks Holding up relatively well they tend to dip going into earningsen is this week, not so this week. Thats a good side sign. A bit of a reversal for the trend which has been towards value. Early on tech has been a relative outperformer, energy is underperforming and banks are underperforming as i said thats a little bit of a reversal of the trend for this week, theres been this value rotation we talk about, tech cooling off, industrials, energy doing better look at the numbers for this week, transports, classic value, have had a great weekover all, up about 5 , small caps are up about 3 you see industrials, energy and technology lagging so this is in a nutshell your value play, your value win hard to believe, though, the value rotation is going to last. Im sorry. I know everybody has been waiting for ten years for value to outperform but the simple fact is the numbers. The weightings of the s p are so big towards tech and so many now own passive index funds that these kinds of breakdowns become very important tech is 28 of the s p the top two sectors are almost not quite but almost 50 of the s p. The bottom five sectors, energy and materials, look at how small those numbers are, energy, materials, real estate, they are 17 or 18 of the s p, top two r50 almost, bottom five 18 that becomes very important when you have a passive index kind of person like a lot of people are. The heart of earnings season is next week, no you we will start getting most of the faang names report the week after next, but ibm, microsoft, intel, twitter next week and of course those momentum names really mean a lot at this point. Speaking of the rise of passive index and passive indexing and investing, nothing illustrates that whole theme better than blackro blackrock. Terrific numbers, significant inflows, increases in asset under management, even in the pandemic money still keeps going in here. They are the largest etf provider, that is out there, they have the strongest brand i shares, they are very diverse, they are in passive which is the big area but also in active and they are the leader in esg they hold the largest funds in the esg etf space here and thats been growing leaps and bounds this year and here is something important that buried in their numbers, what i Pay Attention torques the base fee rate is 17 basis points. Its a blended average of what theyre charging 17 basis points, 17 if you invest 10,000 put 10,000 in a fund they charge you 17 a year. 15 years ago, 10 years ago typical funds were 100 basis points, 1 , 150 basis points larry and blackrock have taken a piece out of the vanguard playbook and kept fees really low and that has a attracted assets undermanaged. Thats one of the big keys ivv this is one of their biggest etfs youre basically buying the s p 5003 basis points you can get this for a 10,000 investment 3 a year is what they charge you you can own the s p for 10,000 for 3 a year. Think about what that means and what a revolution that has been in the last 1r5 years. Blackrock is opening today 580 i think it opened at here. The historic high is 590 back in february of march of 2018, carl, i believe or maybe it was january, but we are 10 away from a new high and with very good reason. Big leader in that whole etf area guys, back to you. All right, bob, see you in a little while lets get to rick santelli, brought us Housing Starts earlier, we will get Consumer Sentiment in a few minutes hey, rick. Hi, carl. Indeed in the housing data is pretty good. Inter day of tens you see the yields have popped but the fuse was very long because they popped an hour after the housing data was out and mostly because of the next charge here is the s p futures on top of ten year note yields. The s p futures like dow futures popped right away on the 8 30 eastern data but it did take a while for treasuries right now two year note yields are unchanged, Everything Else on the curve is lower in yield, higher in price. If you look on the week all maturities two through 30 are lower yields muted responses to good data, we know outflows are still the big norm when it comes to equities despite how well theyve done and treasuries, sovereigns in particular, global, are still quite popular. The next chart everything is about Foreign Exchange really. We have the eu summit coming up, all 27 countries will be there trying to hash out how to throw everything they have including the kitchen sink at this coronavirus affected group economy. But they have havent really decided yet but the market is pretty optimistic. The euro versus dollar starting at early 19 and realize we are not far away from testing levels we havent seen since then 114. 50 is that pike this year and the highs today are getting closer to that level euro versus the yen from early 2019 euro doing well euro versus chinese yuan same effect even though their leaders havent decided how they want to use the stimulus the fact of the matter is maybe later to the part is more optimistic at this point in eyes of global investors. Carl, jim, david, back to you. Rick, we will see you in a few. Rick santelli. When we come back later this morning think of the states that have implemented mask mandates in recent days alabama, kentucky, montana and colorado where yesterday we will talk to governor jared polis later this morning. Dont go away. Were carvana, the company who invented car vending machines and buying a car 100 online. Now weve created a brand new way for you to sell your car. Whether its a year old or a few years old, we want to buy your car. So go to carvana and enter your license plate, answer a few questions, and our technowizardry calculates your cars value and gives you a real offer in seconds. When youre ready, well come to you, pay you on the spot, and pick up your car. Thats it. So ditch the old way of selling your car, and say hello to the new way at carvana. You can take a personal assessment to get a customized plan. The assessment takes into account the things that matter to you the most. Ive lost 101 pounds. Its incredible. Summers on us. Get your first three months free hurry, offer ends july 20th. Any idea how much it will cost . You have a choice. Insurance or goodrx. I have insurance. Insurance is not what it used to be. People struggle to get their prescription covered and prices keep rising. I recommend goodrx. You get free coupons to save on your prescriptions. [narrator] compare prices to get the best discounts. Goodrx, smart. [narrator] stop paying too much for your prescriptions. Download the free app today. I miss that show but i was able to see it last night. It was streaming on peacock. That was a nice mention for it i put in apple 200. Got on facebook around 70. Super cool i really do miss 30 rock. You can watch all of it on peacock any time throw in a promo there david, that was really sly. You like that thats synergy yeah. Got peacock and an announcement that the olympics has dates skks and venues set for july 23rd to august 8th of 2021 take a look at the laggards. I think the dow week to date squawk on the street in back in a moment. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, you only have to pay for the data you need, starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. 5g is now included with all new data options. Switch and save hundreds. Xfinity mobile. Heres a look at netflix for the week f. Down about 10. 5 of course, subscriber guidance for q3 was below expectations. Credit swiss cuts to neutral on what theyre calling the first half full forward of sub growth. Well be wac in a minute 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. Take a look at Morgan Stanley today. Only one of the banks thats up. Jim gave a shoutout earlier as one of the blowout reports of the week i think thats going to do stop trading today . Once they close the etrade deal they vote on a deal this morning. I think the stock is going to get another bump i think people want to be in this one it distinguished it as having the best growth with the least credit risk. Thats what you want out of a Fin Tech Company which is what Morgan Stanley is becoming market cap going to go up a lot to add another 12 billion to the market cap goldman was bigger for most of the time, but now Morgan Stanley is 10 billion more in market cap and could add another 12 given its an all stock deal ive been moving closer to a swap in terms of getting a higher price its my favorite one my travel the u. S. Doesnt own it bad by me. I like it. Whats up tonight nutanix, its got all the buzz words you need to put out an interesting movie this morning if you follow it mr. Pandey knows about Data Processing and knows about the great areas that are like vm ware with dell that you have to be in. Its the neverending cloud growth it doesnt end watch ksu, a railroad. Its cyclical. Great quarter. Theres a lot thats exciting here next week is going to be terrific i believe that i think its going to be an incredible week. Yeah. I think eight dow stocks report. 73 s pers. Csx and union pacific. Well get transports microsoft in the mix, ibm, tesla, chipolte. Next week is when it gets interesting. I love next week. Its just so much fun. I mean, you cant sleep. I usually dont sleep. I do an allnighter between tuesday and wednesday but im going to wear a tie because i like to look respectable on tv its what i do this, by the way, is a brioni david. Thank you for that. I appreciate that. Your suit alone is well for a man with 17 houses now, 17 houses and counting . Yeah. The stock you sign, shes like oh, i bought a house, oops. Oops, i bought a house thats what happens with docusign, but she rented it when the 30year is 2. 98, i think a lot of people are looking to buy a house oh, yes im going to miss you over the weekend. If you want a show on saturday, im game mad money at 6 00 p. M. Eastern time jim, well see you later good friday morning. Welcome to squawk on the street. We are live from strat locations. Interesting market day as we look for a third week higher on the s p and getting confidence data from rick santelli. Lets go to rick yes, carl this is july preliminary that means well toss it for the final read at the end of the month, but at this point, 73. 2 thats a bit lower than the 78. 1 that we finished off for last month, and the month before that was 72. 3. You get the idea we are firming 71. 8 was a low water mark that was in april. We want to Pay Attention to the confidence numbers they same to correlate inlarge part with equities thats the current sentiment lets look at the conditions down the road. The conditions for current are 84. 2 thats versus 87. 1 expectations, 66. 2 versus 72. 3 last month final in inflation, the oneyear outlook is a 3. 1 remember, 3. 2 in the series was a couple months ago. That was going back to july of 2014 and five to tenyear inflation at 2. 7,. 2 higher than the 2. 5 we experienced at the end of june. We want to keep an eye on inflation. It doesnt seem to be a problem now, but more indications seem to be that down the road past coronavirus should demand pop before the supply of everything that we want to get our hands on after the coronavirus chapter ends, that, indeed, may lead to some higher prices morgan, back to you. Yeah. I suspect well talk more about that, rick thank you for bringing us the latest data. One average thats poised to break a twoweek winning streak is the nasdaq. Its down 1. 4 week to date one reason is netflix. The stock is under pressure as Third Quarter guidance for new sib scribers comes in at less than half of analysts expectations mark and simon are with us now to break down the results. Gentlemen, happy friday to you both good morning, morgan. Simon, ill start with you. The fact that weve seen in the first half of the year huge subscriber additions, and then you get a disappointing forecast for q3, how much of this is actually pull forward in demand versus the company just being cautious given the fact that theres so much uncertainty in the coming months . I think theyre being cautious like everyone else. I dont know where covid19 is going. They dont know which sports or the level theyre going to co coming back. Theyre being cautious because of the unknowns in their number. On the flip side, it could work in their favor yeah. Mark, the same question to you, and specifically going through the pros and cons of the quarter, are you sticking with your outperform rating . Yeah. We raised our price target to 610. We think the fund taamentals ha gotten record. We had record free cash flree cash flow margins. Theyre starting to show the Free Cash Flow power of the Business Model theyre talking about a pandemic pull forward of demand they dont know and we dont they were surprised by how many subs signed up when they warned about a pandemic pull forward. They have tough comps in terms of big marquee content shows launched in the Third Quarter last year. Stranger things and the money heist series. Theyre comping against difficult churn issues im calling a little bit of b. S. For the september quarter. I think theyll have a record high subs growth year, and i dont think its just a one trick pony i think theyll had 25 to 30 million subs each year for the next five years. We like the asset. Simon, you cant talk about cash flow this year and not talk about the plans for production as you start to see more productionsing come back online, but also not a lot of clarity about what it looks like for 2021 for new content to hit the platform how are you thinking about it . How much of a risk is it that you see delays on new offerings . I dont think thats going to be the case. They indicated most of their 2020 productions is already completed and just waiting to go to air they had 200 scenarios and films in various parts of production around the world theres a number of countries around the world where theyre unable to be in production i think that it moves forward, and i think theyre not going to have too many bumps in the road. And also because theyre being mindful about the production space booked well in advance, not just on a show by show basis but netflix is going to use sound stages for the next two or three years. So unlike other streaming services, i think they have preferential or theyre more organized for their production space. Mark, you know, we thought netflix might be done sort of growing in the u. S. Prior to the pandemic now theyre at 78 million, but there is an argument that at least here theyve pulled forward demand when you think about and you shared your subscriber estimates with us. Is it almost all outside the u. S. Or do you still think theres room to grow despite the fact that theyre almost equal to how many cable subs there are in the country theres two points. You pointed out something i thought was interesting in the print last night they had record ads in north america in their most mature market so i think thats a bullish indicator for the rest of the regions. But no doubt about it, the real story for netflix i think over the next five years is international. They kept mentioning that word at the beginning of their management interviews during the Earnings Call last night thats why rolling out local language originals, thats where the battle is for sub growth i find it interesting the other streaming services are launching and putting out new shows in the u. S. , netflix is two years ahead of most people and rolling out new content shows in korea, mexico, poland, and turkey and south africa they are rolling out content thats where the sub growth is in order to get to the 500 million subs long term, its got to come from international markets. The track record there is pretty good but theres going to be more execution risk, no doubt about it, in those markets than in the u. S yeah. Well, speaking of execution risk, curious, i mean, coceos now. Theyve worked together for years. It takes out concern for succession, even though hastings is saying for he says potentially another decade its another mixed picture, the rare times of coceos. Do you have any concerns, mark i guess i dont ted has been with the Company Since 2000 he was running i think dvd rental centers in arizona when he bumped in reid. That means theyve been working together for 20 years. You have no real Material Change in management at netflix other than cfo transitions, no Material Change in management there for a decade when you find companies with the right team, whether its amazon, thats been a Consistent Team as you know well, and netflix, you stick with them. They figured out magic, and anyway, thats one of the most important factors i always look for, consistency of excellent management teams you have it in netflix mark, really quick. What do you think the schedule is, the timeline for further price increases . Boy, they teased that out at the very end of the call so theyve recently implemented price increases in mexico and chile. They got aggressive with the price increases about a year and a half ago in the u. S. It caused problems to the stock and fundamentals my guess is well see a broad base rollout i think its next year we think they have pricing power. I think thats the next major catalyst simon, back to the coceo appointment of ted sorandos. Does it signal that netflix sees it a media entity tied to hollywood versus a tech company . I think it does i think its been that way a couple years now and certainly hes been incredible able building relationships across hollywood but also been well respected by the other communities. Youre not seeing the same number of Technological Advancements in terms of the platform that happened five, six, seven years ago most of those have been they continue to work on the platf m platform, but i think the content background, i think youre right its more of a content company than a tech company. All right simon, mark, thank you for breaking down the numbers and joining us shares of netflix are down 7. 5 . When we come back the governor of colorado will join us on the mask mandate joining a host of other state in the steepa wk. Jared polis is with us after the break. [narrator] this is kate. Hey. [narrator] she takes two prescriptions. Kates son jack, takes one too. Kate works hard, and thought she had good insurance. But she still pays too much. Thats no good. So kate downloaded the goodrx app. Now she can compare prescription prices, to find the best discounts. She even beats her insurance price. Good for you kate, good for you. Goodrx, stop paying too much for your prescriptions. Download the free app today. The colorado governor mandates all residents over the age of 10 must wear a mask while occupying any indoor space or using mass transit the governor joins us this morning. Thanks for the time today. Always a pleasure your executive order is a fascinating read you cite the foldmGoldman Sachs report about the efficacy of masks. Was this a big political lift . Yeah. I mean, look, before we even have to talk about or any state has to talk about closing down certain kinds of businesses or preventing people from dining in restaurants, it seems like the mask wearing is a simple step to take we hope it enough. And to be clear, the mask wearing alone without behavior changes isnt enough, but mask wearing with additional atentativeness to people staying six feet apart, we hope thats enough to avoid further economic devastation and save lives do you expect enforcement to be difficult we had about 60 of our state under a mask order before i went statewide with the other 40 we found Something Interesting if that is correct of having that mask order increased mask use by 15 to 18 in the areas of the state that have it. Thats over several weeks. Its not because of enforcement. None of them are issuing more than a ticket or two out of 100,000, but what it is is just the moral clarity, and the fact that many coloradans and americans just want to follow the law and realizing mask wearing is a law, i think it will increase mask wearing by 15 to 18 statewide wow why do you think the debate is tortured in certain states id love for you to comment on whats happening in georgia but even in states like alabama which had the mandate, the governor emphasized she didnt want to allow an enforcement and hoped its more of an encouragement. Why are we seeing the resistance do you think its backed up by anything in science . Well, no. Theres fake pseudo science. We all see it on facebook. Its terrible to see people spreading lies about masks you know nurses, medical professionals, they wear masks every day for their careers. Theres to detriment al Health Impact from wearing a mask it protects others from you and it protects you. It reduces your risk of contracting the coronavirus by as much as twothirds when you properly wear a mask that covers your nose and mouth. So the data is clear masks are more important than Health Experts thought three months ago its successful and a successful strategy to combat coronavirus in america yeah. Governor, its david faber do you think well be successful in combatting coronavirus . We dont seem to have been at late your case is not high, but many of our larger states are facing their highest cases every single day. Well, america is failing. We are one of if not the worst in the world we still suffer from lack of a coordinated national response. I think were doing the best, republican and democrat. We dont control our borders and that hundreds and thousands of people coming into colorado over july 4th weekend, he had between 50,000 and 100,000 visitors from texas, california and florida. Good for our economy but bad for the virus. We need to show precaution, but we need a National Approach for testing and tracing. People move between boundaries and states can only do so much you mentioned your economy, of course, and tourism im curious what are things looking like in the state of colorado at this point we know many states are suffering significant budget deficits as a result of the virus. How is it looking in colorado . And do you want to see significant aid coming from the federal government for states . Well, of course theres pain all around. Its appropriate for the public to share that pain and tighten their belts as many businesses and families are i was glad to see our unemployment while unacceptable at 10. 5 was about 3 or 2. 5 less than the National Average were in this together as a country economically and health wise in colorado i want to be a positive outlier and have a little less unemployment and disease than the rest of the country. No state lives in a bubble maybe hawaii has a little bit more, but the other 49 states really dont live in a bubble, and we live or die together literally, and while colorado can and is doing a little bit better than other parts of the country, we cant be in a different dimension altogether its not possible. Governor, to go back to the mask mandate and the idea of pseudo science, i probably argue its more about the emerging debate on the overreach of government and this debate around constitutionality and Civil Liberties and thats why youre seeing some of the lawsuits and some of the Court Challenges that are emerging in different parts of the country, but that being said, i know youre moving forward with the mask mandate, but how about school reopenings, quarantine, some of the other things were seeing being put in place in other states as you assess the coronavirus data on a daily basis, what are you thinking and whats the game plan in the near term yesterday i was joined by a democratic and republican mayor from our biggest cities. The republican mayor pointed out Small Businesses are feeling pain if we can take a simple step like Wearing Masks to help protect Small Businesses and encourage Consumer Confidence, thats a small thing we should do were hopeful that schools are going to be in person, and much of our state, not everywhere all the time, obviously when theres an outbreak, we need to move quickly. They need to move to virtual for a period of time while they test everybody. Like the rest of the country, were grappling with this. Yesterday we had a stable partner with districts we are sending them medical grade masks in a regular stream, and they need to augment that with masks they purchased. It will help for those who choose to be in person, keep their staff and teachers safer theres some who argue that the up tick in case load we see in certain states is the result of protests that we saw in the last couple of months. I wonder if you are drawing a line between that even i know denver had sizable protests, mostly peaceful. Did you see a result in case load after that . Well, were seeing the increase in places that had the demonstrations and places that didnt id say its probably one of the three main things thats leading the up tick. Its probably the least of the three, but one of them the other is tourism and movement as we said colorado had between 50,000 and 100,000 from people from hot bed states. The third one is just people are tired of this thing. I am you are. And naturally, were just lapsing in our social distancing and our precautions. People need to avoid having parties, avoid being in large groups and making an extra effort to keep six feet away from others. Coloradans a and americans were doing it in may as the businesses were open, but it lapsed here. We have to get back to the new normal of being careful about that social distancing, the six feet, reducing our social interactions and mask wearing. Thats really the only way we can beat this thing. Yeah. Governor, Something Else that would help is the ability to get testing and get tested and get the results quickly. Its been left of the state. Some have had a secure testing on their own and were hearing more often than not now and we all have this anecdotes, that it takes a week sometimes to get back if you can get a test that wouldnt seem to be a great environment to be able to understand where the virus is, how its spreading what do you see in colorado . What have you done when it comes to testing and what are your thoughts broadly speaking . The National Testing is an embarrassment. Theres no excuse. We had a dry one in march and april. We should have scaled it up. Every other country did. Its not that hard its an infrastructure issue yes, the National Labs take naive, eight, even ten days to turn around test results as a state were running three shifts in state labs with results in one or two days 24 hours a day, seven days a week, limited by the equipment that we have, we are running everything at full speed to be able to produce as many tests as we can within a day or two every test we send out of state. The National Back lolog of 7 to0 days by that point the person has spread it or not were telling anybody who thinks they might have it, quarantine and stay home as if they have it until we get the testing scaled up we missed our first opportunity to do that america has to do better every other country has. Finally, governor, i wasnt planning on asking you about squirrels, but there was this squirrel in colorado this week that tested positive for bubonic plague can you assure us that theres no worry there there is fortunately unlike coronavirus, there are antibodies that are effective against the plague the trick is to catch it early, and anybody who has the early symptoms, many doctors in the areas that have, weve had bubonic plague for many years, every year, every couple years it breaks out somewhere. Early diagnosis and early treatment. Close to 100 recovery its just a matter of identifying it the danger is if its unidentified for too long. Its happened before and people are more comfortable with that one because we have a cure and were aware of it coronavirus, a cure remains elusive and were eagerly awaiting a vaccine that works. Right governor, thank you. And i appreciate you coming on and talking about the mask mandate. Hope to talk to you again soon thank you, take care. The governor of colorado. Its now time for our etf spotlight. Were looking at the transports. Transportation average etf ticker iyt up 6 . Two of the Biggest Holdings reporting in the last 24 hours and more set to do so next week. J. B. Hunt continuing the climb higher hitting new record highs after beating street estimates thanks to trucking and intermotol results kansas commodity carloads fell 24 in q2 stocks up 1. 5 as i speak investors are trying to gauge the current state of the economy. Freight data helps serve as one of the realtime gauges of activity and june saw a sequential increase, but still down 18 year on year. And that report did warn that u. S. Freight volumes will not return to 2019 levels until 2021 at the earliest. Keep an eye on that. In the meantime, were going to take a quick break with all the major averages now dipping into the red. 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. Welcome back im sue herera, heres your news update the National Football league says allegations of Sexual Harassment targeting women working for the team in washington d. C. Are, quote, serious, disturbing and contrary to the nfls values, end quote the league will wait to take any action until the law firm hired by the Team Concludes the independent investigation. New York City Police have arrested the personal assistant of tech entrepreneur who was found decapitated and dismembered in his apartment this week. Thats according to nbc news and other reports which say Police Believe the murder came after he discovered his assistant had stolen money from him. Theres a settlement in the ghost ship fire that killed 36 people during a dance water in a warehouse being used as a residence for artists. The city will pay be 33 million. You are up to date thats the news update david, back to you okay sue, thank you very much zbrnchts the debate to reopen schools amid the pandemic is an important one. Ahead the nations Second Largest School District will join us next well be right back. To the extent possible, our default should be to try and get the children back to school. The reason i say that is that the unintended ripple effects downstream consequences of keeping the children out of school can be profound the American Academy of pediatr pediatrics as talked about it. The impact on parents who have to modify their work schedule if their children stay home there are a lot of unintended negative consequences. Only about 80 of your part b medicare costs. A Medicare Supplement Insurance Plan may help cover some of the rest. Learn how an aarp Medicare Supplement Insurance Plan, insured by Unitedhealthcare Insurance Company might be the right choice for you. A free decision guide is a great place to start. Call today to request yours. So what makes an aarp Medicare Supplement plan unique . These are the only Medicare Supplement plans endorsed by aarp because they meet aarps high standards of quality and service. Youre also getting the great features that any Medicare Supplement plan provides. You may choose any doctor that accepts medicare patients. You can even visit a specialist. With this type of plan there are no networks or referrals needed. Also, a Medicare Supplement plan. Goes with you when you travel anywhere in the u. S. Call today for a free guide. Welcome back to squawk on the street. With coronavirus cases continuing to hit record levels, schools are scrambling for ppe supplies as districts attempt to reopen we have that story well, morgan, back to School Shopping normally means notebooks, pens, maybe a couple glue sticks. In thor ra of covid, it makes han sanitizers and masks the costs can add up quickly and they can be hard to get. For the average School District the cost of enough gloves for the janitors is over 1,000. Hand sanitizer for the classroom is more than 39,000 masks for the staff is about 44,000 and of course, you got to have extra masks for the students who lose or forget theirs thats another 148,000. Of course, that is all assuming you can even find all of this equipment. We talked to one educator in florida who had to convince a local paper mill to manufacture disinfectant so she could make her own wipes. I was the one ordering the stuff. I wouldnt get it. I did ding, there we go. This is what were going to do the cdc was supposed to release new guidelines on schools for reopening this week. I can confirm that is not going to happen. Its been delayed to later on this month david, thats cutting it awfully close for a lot of districts back over to you it sure is. Thank you. Well, speaking of schools around the country. Many are announcing they will remain online only this fall on tuesday President Trump was asked about this issue during an interview with cbs the Los Angeles School is the latest to say theyre not going back to school in the fall mistake joining us now is the superintendent of the los angeles unified School District. Its the second largest in the country. Has almost 700,000 students. Austin, nice to see you this morning. Good morning. Thanks for having me whats your response to President Trump when he says its a mistake for you not to be holding school in person with teachers in the classroom . I think we need to stay with the science fact, not the science fiction. We based our set of decisions juggling three priorities. The learning needs of students, the impact the virus is having on working families. We took a survey more than 50 of the survey had parents lose work, and then the health and safety of the school community. If you look at where we are in los angeles, were at twice the levels of infection rate that the World Health Organization say its safe to reopen. Weve seen what happened in israel where infection rates skyrocketed when they opened schools. Weve seen the recent data in florida where more than a third of the children tested, tested positive for the coronavirus you look at that altogether and say we cant bring people back to schools and turn schools into infecting the whole community. Yesterday the spokesperson for the president said the science, and im quote yg, the science is on our side i encourage states to just simply follow the science and open our schools youre saying the science is not on your side right now i think the science is clear children can become infected and spread the disease its clear from studies in italy where they quarantined a village of 15,000 people and tested those who had the virus. Of those who tested positive, more than half showed no symptoms its not safe to bring people back together. I think the conversation needs to pivot to what do we do to get back to school as quickly and safely three Things Health practices which have been well chronicled. Keeping student and staff further apart. Sanitize the surfaces, wear the masks. We also have to test for the virus and have Contact Tracing in place schools are uniquely situated to be part of that. We exist in cohorts. Group of ten students and their teachers easy to trace who might have come in contact with someone who tested positive. Tested schools protect the few to protect the many. We have a high school of about 3,000 students and staff who conduct to 100,000 other people every day if we test the 3,000, we keep 100,000 people safe. All three pieces get us back to school safely. If theres a role for the federal government, fund a comprehensive nationwide program of testing and tracing in Public Schools and get us back faster and safer. Right well, until then, it would seem the economy, for example, in los angeles and or new york as well cant really fully function until everybody is back at school, austin as well, and we know certainly plenty of parents out there who have experienced the Remote Learning that we saw in the spring its not ideal far from it. There are some kids who thrive, but there are plenty of others who may lose would you agree and whats the downside from moving in the way that you are to given all of those potential negatives . Well, theres no substitute for being in the classroom we can all agree on that the best place for students to learn is in schools. And in particular, those who are struggling most with Online Learning ear early learners those learning to read, those learning english those with disabilities and struggling even if were in school if were not back to school soon, a Health Crisis will become an education crisis the conversation has to be about how to do it safely. We cannot compromise on health and safety of the school community. Its not negotiable. We see a path to get people back safely thats what we have to work towards. Austin, is there a generally accepted number or metric that would explain how much kids are being held back by being online . We know its not perfect, but is there an estimate of how much theyve given up in terms of the curriculum trajectly they ordinarily would have had nonpandemic . I think this is unprecedented. Theres a lot of studies about the summer slide where students miss a couple months in the summer and how much theyll regress by the time august runs around. Never before have we seen such a gap in being in School Facilities we tried to offset that. For the first time in los angeles we offered Summer School for every student in an attempt to catch students back up, help them accelerate their progress when we are in online, well also have individual tutoring and saturday school and extended day. Things we can do to try to help. But theres no question were talking apples and oranges as we try to compare online at school. At school is the best. But we have to do it safely. Thats the part we cant compromise on. Were left juggling the health and safety of all, the learning needs of students, and the impact the virus is having on working families and the best way to remedy that is to get us back as fast as we can to School Facilities austin, you mentioned israel and the fact that we saw outbreaks largely in high schools in that country. But there are examples of a number of countries that have reopened schools whether its germany, singapore, norway or finland where we havent seen outbreaks. It raises the question, whats the specific criteria youre working off of to see the reopenings take place in los angeles . North star is the science lets look at the World Health Organization if the rate of the those testing from the community is at or below 5 , reopen if its at or above 5 start closing down in los angeles area, were at 9 approaching 10 . When were headed back to 4 or 5 well have a path to open the schools safely austin, appreciate you joining us and well, want to continue this conversation as we watch. So important overall for not just students obviously in your district, but students around this country austin, thank you. Thanks for having me. Take a break here. A little bit of a muted day in terms of intraday price action on the major indices we didnt get any mileage out of that Consumer Confidence number. It was a miss out of michigan. Were back in a minute after netflix earnings report, one market watcher sees a different faang stock that could be the best trade right now. Find out more on trading nation. More squawk on the street coming up. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. 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. Welcome back we all know about the stay at home stocks. What about the companies that could benefit from employees gradually returning to work . We have that hi, morgan. Offices are starting to incorporate different products and technology as employees return to the workplace. Its everything from acrylic safety dividers, high grade disinfectant, safety goggles and gloves which has seen sales grow 160 already in the Second Quarter compared to the same period last year and hvac air purifiers created by trained technologies. They say it can mitigate the risk of exposure to infectious aerosols inside. We spoke to new lab in brooklyn. People who work out of this office space are offered wearable sensors which alert you if youre standing within six feet of someone. They come down to about a dollar a day. It lights up and vibrates with different severity. And when we opened, the first week of operation we had 8,000 triggered alerts so 90 people had 8,000 incidents where it vibrated and said you need distance. Youre too close to someone. Honey well reports earnings next week and makes a similar sensor that uses Artificial Intelligence and detects elevated body temperatures seema, thank you. Take a look at shares of shopify. Theyve almost doubled theyre up 180 just this year that stock has been a monster. Eclipsing a 100 billion market value. There you see it 130 180 or less in 12 months. Well talk to the companys coo tethis save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, you only have to pay for the data you need, starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. 5g is now included with all new data options. Switch and save hundreds. Xfinity mobile. As you can see the dow is negative end of the week, its down 67 points. Keeping our eye, though, on this S P Health Care sector its on pace to close at a new record its up 1 right now dating back to the inception of the sector in 1989, its up 4 over the last week higher today means henry schein, mylan all up me anorth 2 . Well be right back. Stay with us 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. Experience amazing 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. Liberty mutual customizes your car insurance, so you only pay for what you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Shares of shopify, shares have gone from 300 to 900 in the last few months alone. Joining us this morning is the shopify coo. Thank you for being here thank you for having me on the show we talk about the stock and the company all of the time. Can you reflect for a moment on the future and what has happened to your business in the last couple quarters. Great question. The Commerce World that would have existed in 2030 has been pulled into 2020 we have seen ecommerce go from 15 to 25 that is the same growth we have seen in the last ten years or so there is a tale of two worlds. On one side you have resilient retailers. On the other side you have re s resistant who as you have spoken about often have not made it many in ways it is the most exciting time for retail in a long time. Is it too late to Start Building this . Five years out it is so much larger than it is today, some may argue that maybe it is not that is another good question we talk a lot about these direct to Consumer Brands becoming category leaders the gym sharks and more that have started small and become incumbents on their industry so we talk a lot about those new start ups and brands and were also seeing lindt chocolate, chipotle and five days from contract to launch theyre changing their businesses so it is not just the smallest of brands, Big Companies are also thinking more about it and theyre moving well beyond e commerce so so no, i dont think it is too late, but i think they have to rethink their strategy. We talk about big macro tail wednesdays, but youre also making stra deegic choiszs can you talk about the calculus behind that and what you see them doing i think most people assume theyre an immerse provider. If you were to ag agragate them but we have great economies of deal is that were using for entrepreneurs. So were trying to figure out what do bro brands and retailers need in the future we think it is a brand that will be successful in five, ten, and 15 years from now that need to sell across any channel with customers. So the idea of enabling them to easily push their products, that gives them access to a new set of consumers, but it all feeds to one back office which is shopify. And then we went ahead and said what can duo can we do capital . Were doing fulfillment, shipping, and were increasing the shipments and it is allowing them to become category leaders. The stock has been on a tear. From wall streets perspective, it is considered stretched to say the least right now is the market getting ahead of the Competitive Landscape and the fact that you have am zon, facebook, intuit and now fighting to go public as well. I think for a prong time shopify was misunderstood. Behind your favorite direct to consumer brand, your favorite store, and now youre seeing things like shop pay, and they are now about consumer facing products it is so much more than an e commerce provider and that all of your Favorite Brands are powered by shopify so i think people are starting to understand what it is and if you took our business, each of them on their own would be very large independent companies, but the fact that were doing it all together is part of the reason that people are waking up to the story. Yeah, hi, i know in your Conference Call in may, brands you were after for years came to the platform in ways you didnt expect years had been accelerated into months, but i are you concerned that some of your growth has been lettered into a short period of time but do you feel kft that you can do it despite the incredible surnl yeah, i made a opponent recently that you have to think about categorizing it should have happened years ago in my view im glad theyre doing it today but i dont think theyre going back to the precovid world and i think even in terms of new merchants coming on were seeing restaurants that are changing their Business Model to become retailers. Theyre selling cook books and products i think they are really exciting right now if you look at the resilient side and not the resistance side. Amazon is facing crosssuitny right now, how do you see the direct to consumer marketplace right now. Is it more row bus than some people are thinking . I think consumers are wallety never had before they know they have amassed kmokmo economies of scale were not keeping them to scale for ourselves. Were distributing them to level that Playing Field so entrepreneurs can compete with the largest marketplace. They say we would prefer to buy directly from our brand and i think all of that is leading to incredible tail wednesdays were seeing across commerce and retail absolutely. Were going to hopefully check in with you often about how the trajectory changing up or down as we get further into later chapters of this pandemic. Thank you as always for the insight. Have a good weekend. David, morgan, you have a good weekend, too. See you on monday. Welcome to squawk alley. It is a summer friday so youre not seeing huge swings, but a lot of interesting narratives at work mainly whether or not the netflix categorizes growth, cyclicals and value. I tell you im skeptical, though netflix lost their gains for july, but it is still up nicely. This market, to me, seemed to be saying investors seem to be saying that we expect the rich to get richer in the nasdaq and the s p 500. The big tech stocks, or just looking at the market itself versus what is happening o