Transcripts For CNBC Squawk Box 20240712

Andrew ross sorkin with joe kernen becky is off again today a little in the red. The treasury yields and earnings that may have an impact on all of this. The 10year note, we are now below. 6 we are down to. 592 we can debate what that means for today. Discussing Market Recovery and earnings Kansas City Southern and United Airlines ceo and health and Human Services secretary you want to stay tuned to squauchl the nasdaq down pretty significantly. It was up two or three hundred. It was up and did you know and up and down. It was really crazy. You heard cramer talking about that it was truly crazy. Insanity. The didnt hold on to the big gains. I think it was down almost 300 when cooperating on that at the end of the day, well see. I heard it said, well, you gave him an out he could have been resting on his laurels by now saying i would at least nuance it so i could claim to have been right if we had extended here. Doesnt it feel extended here. If i were paulson. Fur trying to be right all the time what do you think a good average would be a good average of what . Being right about the stock market 70 of the time would be respectable. Young buffett it has to be better than throwing a dart. But it is not i know. Thats what is crazy it is not. If we didnt throw that, wed have one here. I wanted to have a squawk box chimp on the set to throw darts. See who does better. It would be great tv what was the famous chimps name that poor thing. Do you remember . What was it . Im sure you know. Bubbles . Was it bubbles yes that sounds right bubbles how appropriate interesting, they moved the chimp because they were worried that the chimp would hurt the children. They are definitely not like dogs i dont think. Doe meft indicated dogs can snap and stuff but i wouldnt trust a chimp. My Favorite Book was Curious George i always wanted to have a chimp. By the way, that wasnt a real chimp that was a drawing the more you know what aboutrainbow the cartoon. Did you have a yellow hat the guy with the yellow hat. He was a very kindly guy, i thought. He was adorable. Okay well go he was those cute little sounds and everything serious story coming up. The deterioration on u. S. china relations. The u. S. Ordered china to close its houston kons late. The u. S. State Department Said it directed the closure in order to protect u. S. Intellectual property a spokesperson said the u. S. Will not tolerate the safety of our information. A report of a fire on the roof top of the consulate video of someone who lived nearby showed open bins. They didnt even use shredders there you could sort of put stuff back together. But burning is serious i think the way it is being viewed here especially on social media is that the staff were in a rush of the order. There has been some upset because of the way this is being treated. The Counter Measures being called political provocation it is said to be a move by President Trump as a distraction to blame china, yet again ahead of the u. S. Election another popular theory going around is that the u. S. Is trying to force china to allow more american diplomats to return to the country, the negotiations for the return has been very slow going the information is that they will retaliate the embassy is here in beijing but the u. S. Has several consulates around the country. Just the global times editor and chief said that the staff in houston has 72 hours to close shop so if you are in one of the states the consulate cover and maybe have any business there that this cover. This is like alabama, arkansas, florida, texas, puerto rico. What is sad is that this is chinas First Consulate established in 1979 when diplomatic relations had first been established the atmospherics at that point were a lot more optimistic than they are right now that was like table tennis diplomacy. That was probably 69, wasnt it when it first opened i think the chinese have been playing table tennis quite some time, yes. Do you remember thats how our initial overturn to china playing table tennis. You dont remember you didnt see the moon landing either, did you . Admit it i dont think anyone here did, except me ive seen it on tv afterwards i dont mean apollo 11. It happened. When it first happened we had relations i wonder if the very First Consulate survived i dont know. The u. S. Hasnt been clear on why they decided to shut that consulate in houston it sounds like what the state department says, there is some decision around protecting american data as well as American Intellectual property wanting to make sure that information is reciprocal it seems to suggest the reason why. At this point, it is still a guessing game. We are hoping phase one sticks we wouldnt do anything until phase two until after the election at this point, who knows thanks well check back in as this story develops all right, man in the yellow hat. Am i the man in the yellow hat . I dont know it was the whole suit melissa. Remember, you were bidding on the one glove but it went for too much money, right . As a kid. That was me many, many years ago i bid on the glove and i lost. There was more than one, wasnt there there were many, many more than one there are a lot of questions before all the issues with Michael Jackson but a lot of them coming up on the other end, a change in the tone of the president. Well get reaction from dr. Scott gottlieb elon musk qualifies for 2. 1 billion payout after the six month average market cap has reached 160 trillion triggering the second bit of vesting and traunchs to buy teslas stock. He has ever reason to dance at this point well see whether the stock stays where it is at theyll meet a major requirement four straight quarters of gap profits. Well talk about it t sonhehow later. 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. Welcome back to squawk box. President trump is taking control. Yesterday on the Coronavirus Task force briefing. Said americans should wear a mask when social distancing was not available and a warning about the virus. We are in the process of developing a strategy that is going to be very, very powerful. We develop them as we are going on some areas of our country are doing well other areas are doing less well. It will unfortunately get worse before it gets better. California, texas and florida continue to see the rise in cases. California has surpassed new york as the state with the most infections texas and florida hit a grim record with a record of daily coronavirus deaths dr. Scott gottlieb is here with us today want to start with what appears to be a shift on the messaging from the white house the epicenters are shifting you mentioned california, texas and florida. Those states will start to peak in two or three weeks. The virus will shift to other parts of the country georgia looks like it is heating up, missouri, kentucky, tennessee. We have an expanding epidemic nationally even as it starts to peak in certain states and it will take a while to get it under control in florida as it hit the upper limit of Testing Capacity and will run its course for the time being. Youll see a new epicenter for the spread we are far from done with this is there anything we can do about that my question is if we made you the covid czar of the country, what would you be doing to end it without closing down the entire economy right we have the inspector right now where parts of the country are making decisions to close the schools but the bars and restaurants will stay open we need to make a decision of what we are willing to keep open until we get to the other side of this. The other side is probably four to six months. You can control the spread what is happening in the south in texas and florida, california and arizona, the reason why it may peek in several weeks, if you look at google mobility andres everybodiation reservation data declining if we all decrease activity a little bit and adhere to masks, that could adhere things important to us including sending our kids to school there are ways to keep this under control. Some states have chosen not to do that. Thats what we feed to find ultimately in our country. You said and these are hard facts. Maybe as many as 50 of people eventually have the virus at some point as it goes through the population i dont know if youve changed that notion. Ive seen even worse click bait that says well all get it over the years unless you get the vaccine. The latest fatality, the most complete study yet lets do that. 5 and if there are 300 Million People in the country, lets say 200 Million People are not in far out rural areas. Thats a Million People can you flatten. There is one model where you try to flatten it out over time and hope somewhere along the line that vaccine comes in. How do you stop it if the rate of transmission slows down as more people get infected once you get to 30 or 40 of the population, youll see the spread start to slow because of what they do, the way they work, jobs they have to engage in. Once they get infected, it is not going to transfer as efficiently. Well continue to see this spread we are infecting 2 million to 5 million a week right now well see this continue to spread 30 times 25 if you dont change that, you could change the math. We are preserving more lives in the hospital when i talk to physicians treating patients, they say it could be cut in half right now, well break our old record in terms of hospitalizations we are at 59,000 now even if we end up preserving more life in the hospital, which we are doing if we end up hospitalizing more patients, well end up with more casualties arent there documents now in terms of antibodies showing the half life is shorter than we thought. How does that change the notion of a vaccine in even the Research Phase they are vaccines that need research down the line they start to take quickly. Like sars and mers, you get antibody that is enduring. It might be more like a seasonal immunity so people who may have had coronavirus in march or april, by this fall and winter, you may be susceptible if you get reinfected, you might not get as ill you could get infected against and pass that on you could need a seasonal vaccine. Youll get it in advance of every coronavirus season thats what i was going to ask you about. Weve talked about the vaccines and the developments on the they are ptherapeutic end. Remdesivir you can just take in an inhaler you get from walking into walgreens with a doctors prescription that information that could be used as well as the treatment. Those doses not as effective as a prophylaxis. Likely from merck will be and inhospital used drug. It might have activity like coronavirus. It underscores a fact that well improve hospital mortality that death rate that joe is reporting could come down even more that could show improving there. That is the optimistic side of the ee equation coming up, twitter crackdown on a Conspiracy Theory and bill 5 0man talking about his new Blank Check Company debuting today. Well be right back. Announcer todays big number, 7 billion thats the maximum total value of bill ackmans new special Interest Acquisition Companies Pershing Square set to be the biggest blank check holding when it begins trading today. And Northern Trust delivers more. With specialized expertise. Proven strategies rooted in data and analytics. And insights borne from over 130 years of successfully navigating economic turbulence. Giving you new clarity. Inspiring confidence. And helping you uncover new paths forward. Northern trust. Wealth management. My father my grandmother my brothers and sisters my friends for going back to school the bbq the lake the beach my place for my neighbors my community my people my country my home for him for her for them for you. Welcome back twitter announced it has begun to take sweeping action to crack down on qanon content with harassment and the spread of misinformation the action will affect about 150,000 accounts from a twitter spokesperson who asked to remain nameless in fear of harassment twitter has taken down 7,000 qanon accounts for breaking harassment rules last year, fbi labeled qanon as a potential terror threat. We are seeing more ahead of what will happen with Mark Zuckerberg not with twitter but other Big Tech Companies we are a week out from a big hearing that will have something to do with free speech, skensorship and what is allowed on these platforms that and earnings twitter to report after the bell and facebook next week speaking of some movers here, best buy shares are rising sales up. 5 on saturday up from last year online sales were up 255 pirs. Best buy has brought back about half of furloughed employees and will give all employees 4 an hour raise shares are up 2. 2 they are in the sweet spot people have extra money because of stimulus checks and might be spending more on the work from home set up or the school set up that is all of the things we need the demise of brick and mortgage, and especially for people who may not be so great at hooking up my own wifi stuff. Or even just going in and shopping there a lot of people might shop there and buy on amazon. A lot of people actually like the support of the geek squad. Theyve got a unique niche where best buy can add the value waited service where people might not be as tech savvy for people who work from home. You look at the rise of netflix and streaming. We need big flat screen tvs. We need those now more than ever maybe not on this show so much let me back up more here that a little better the lighting is bad back there sorkin, i dont know who does your makeup. Youve never looked better i dont understand this whole thing and nobody knows do you have a hair person . A makeup person . A clothing person . What is the size of the staff. I do it all myself. Ive got the brush here like this has how it goes. I take a shower in the morning, i pat down the hair. Thats how it works. No way. Unbelievable we got three lights not a lot of action here. Three lights and it is better than the studio lighting that is messed up. Maybe the cellings are lower or something. Cellings are lower. Thank you. You are looking good my friend ive decided the hair, melissa, you mentioned it, being whatever you call this ive decided i like my hair longer so im going to go with it i think your hair looks good. Thank you when you say that, it endears me to you indefinitely. Permanently. Coming up, stock strategy. Well hear from microsoft, tesla, chipolte. A look at yesterdays s p 500 winners and losers youre first. First to respond. First to put others lives before your own. And in an emergency, you need a network that puts you first. That connects you to technology to each other and to other agencies. Built with and for first responders. Firstnet. The only officially authorized Wireless Network for first responders. Because putting you first is our job. Apps except work. Rywhere. Why is that . Is it because people love filling out forms . Maybe they like checking with their supervisor to see how much Vacation Time they have. Or sending corporate their expense reports. Ill let you in on a little secret. They dont. By empowering employees to manage their own tasks, paycom frees you to focus on the business of business. To learn more, visit paycom. Com good morning, u. S. Equity futures are weaker on the dow. The nasdaq was down 80 points or so up about 35 today. Speaking of the nasdaq, retail trading sustained record volumes. The report from Online Brokers tdameritrade added 660 new retail accounts after 600,000 were added in the First Quarter. They were acquired by Charles Schwab more than four times the levels from a year ago. Interactive brokers said revenue trades increased 111 year over year last year, Charles Schwab reported similar surges in trading activity and new accounts melissa. Still early but this earnings season is expected to be the worst since the financial crisis well below a year ago levels that hasnt stopped stocks from rising what that means for the market the Portfolio Management the market measure you always want to go to earnings with low xpectations. You have a number of value that expectation is bad some of the Economic Data has improved and been better than what is predicted and yet earnings estimates havent followed better than expected Economic Data. A lot of lower expectations into earning is great that is not true they are much more vulnerable because expectations are sky high you have a very bifurcated market you have a lot of earnings going into the market season right you are more focused on the value stocks on those or positions on high fliers like tesla as well . Im a core manager. We are slowly moving our bias towards more valued stocks coming out of recession, you can make a lot of money out of these stocks they are anxious theyve had a pull back recently in a set up. Where you make the biggest money. That happened in 2009 and in the year 2000. The flip side, you have expensive stock. Skyhigh valuation i think they are getting to a level they were in the year 2000 before the bubble burst. You have a very, very big spread between the reopening stock and the nasdaq the s p 500 is high for the year and hit a fresh record high for the session. Are the markets looking past right now. The november elections are around the corner. We have increasing tensions with china and the closure of the consulate in houston the markets dont seem to be factoring in any of these. I think expectations are down 44 worse than 2009. We talked about the trade war with china which was at a worse place now than in 2018, 2019 when p this story drove the marketevery single day talking about the election and joe biden with significant lead of growing polls on President Trump. Higher taxes and regulation. We were seeing Fund Managers in my inbox talking about this socalled blue wave, which would really give biden a way to some of those taxes when you talk about where the market is and the fundamental factors and plan on expectations from more stimulus from the government and more action from the fed should the s p 500 go down it is hard to make the fundamental story when you look at the eps and the nasdaq and where that is on the levels and really the s p is up there as well it seems like we are in sort of a sweet spot for the markets. The chinese tension, the stock market was up. Taiwan was up. Shanghai is up 13 this month. Tensions certainly havent deescalated this month it is the second largest market in the world behind the nasdaq Something Else is going on to cause these asian markets to do well while many are focused on the po politics, the thing is that the dollar is decreasing thats the bigger story as it pertains to those investment markets. Even this morning, we are seeing the euro hit the highest level against the dollar since 2018 it seems like we are in this sweet spot for the markets in that we are in the midst of an earnings season. Expectations are down to the ground before the period of time where the markets start thinking about the election and deterioration we are in this lala land where we have the fed at our back. Certainly you can talk about the weakening of the dollar, if you want lets look at the big picture here thats stimulus. Whether it be from the fed, the peoples bank of china the Chinese Party or the u. S. Government you are talking trillions of dollars he floi dollars flowing through the market now the fed has made its presence known. The same thing made in china we talk about what is happening there. Central banks getting involved in u. S. And china, we are seeing stocks jump up because they have gotten more expectation from the stimulus and governments as well well leave it there. Thank you. When we come back, a realtime read on the economy. Kansas city southerns talking about the impact on the freight industry the supply chain rocked on the virus. A look at the biggest decliners on the s p you can watch or listen to us live any time now or on the cnbc app. Well do it when we come back in a moment welcome back take a look at u. S. Equities this hour. About 40 points higher the dow off several points some earnings news well see where things land. A little over 2. 5 hours away from the opening United Airlines says it lost 1. 63 billion in the Second Quarter. The company cut thousands of flights to cut costs and expects to reduce the cash burn from 40 million to 25 million this quarter. They did say cargo revenue jumped 36 from a year ago kirby will join us at 8 00 a. M. To talk about this in an exclusive interview. Have you seen this . This is called a sports page that is someone playing a sport. It is possible there may be something to bet on this week. Do you know anything about this . A question from my twitter people Detroit Tigers plus 155 at the reds minus 190, what does that mean, sorkin if i bet 20 on who is the underdog someone send in on twitter and let me know how to bet on. Nasdaq is up because people have nowhere else to go to bet. It is as simple as that. That, i think may be right. Sick society, sorkin. Kansas city southerns ceo will give us a real time look a look at the companys results and freight traffic and what changes the pandemic is bringing to the transport industry in terms of logistics pretty interesting well be right back. E future. Surprise we renovated the guest room, so you can live with us. Oooh, well. Im good at my condo. Oh. I love her condo. Nana throws the best parties. Well planned, well invested, well protected. Voya. Be confident to and through retirement. Second quarter marked the first full quarter impacted by the coronavirus for many companies. For the rail sector that meant a decrease in volumes, supply chains were disrupted and then an immediate increase after that its crazy Kansas City Southern is seeing a recovering joining us now Patrick Ottensmeyer ceo of Kansas City Southern we were hoping for a v in the economy in general in your business you did see that didnt you volumes fell off a cliff and then they rebounded almost as quickly. Is that fair or is that a u . No. It was a very wild ride Second Quarter. You hit it on the head we started to see volumes fall off in the second half of march. April, the word collapse wouldnt be too strong to see what happened to our volumes we reached a point of stability in may for a few weeks, a short period of time then business came roaring back in june. So we fell 30 in april. Hit a plateau for just a few weeks and then we were up almost 40 from the lower level in early may to june. And that recovery has continued on into july so now we are roughly 5 or 6 below in terms of our cargo load volume, 5 or 6 below precovid levels pretty amazing. What you described it would have been nice if you called us. The s p sold off 35 , 36 then came back. It almost mirrors what youre seeing im not sure its correlated in any event your earnings in revenue probably reflect more of the downturn than the snap back at least in the Second Quarter but whats interesting is the way youve had to manage through it and what it means about what your company will look like from here on out because some of the changes you made and its a fascinating industry in terms of, you know, how many locomotives, how many cars you put on a train, whats in those cars, what youre using and the whole mix changed and it may change permanently can you tell us about that from logistics and what covid has done for your business well, i would say that we showed amazing resiliency and very nimble through this 90day period when you think about the roller coaster ride of volumes collapsing, the things we did to consolidate trains, to park load automotives, take assets out of the equation in response to very rapidly declining volumes and then, again, just a brief respite at the trough, and then be able to handle all the business that was coming back to us without adding all of the cost and assets. So if you look at where we are now, again, in midjuly our volumes are running about 6 below precovid level but our train starts are down by 25 our active locomotives are down by 20. So as we are recovering we are trying to pull and main in the freighting efficiencies we produced on the down side and bring those assets, bring those costs back more slowly i think whats going to happen is all the railroads are doing the same thing by way of the industry in full has shown amazing resiliency and it will make rail more attractive option more competitive with other modes of transportation. If we can do that, become more Cost Effective and without sacrificing Customer Service should be a very good thing for railroads. We got to go. I guess we can see from the pin the usmca is going to make a difference in your business. It sure well. Long term a very positive for us and i like one of those pins. Where do you get one of those . Ill send you one, joe. I like it ill send you a couple. Okay, thank you i appreciate it. Please come back and give us another update thank you. Coming up two more big hours straight ahead including rbclusive interview with scott kiy. And about bill ackman and alex azar stay tuned, youre watching squawk box the state Department Orders china to close its consulate in houston. How will they respond . Plus a closer look at tech stocks driving the market higher as we get ready for microsoft and tesla earnings today bill ackman ready to make history. Well hear from the underwriters and well hear from bill ackman himself as the second hour of squawk box begins right now. Good morning, welcome back to box right here on cnbc. Im Andrew Ross Sorkin along with joe kernen and melissa lee who is back with us. Becky is off take a look at u. S. Equity futures at this hour we do have some green arrows on the nasdaq side up about 50 points joe, we were talking about betting. Maybe thats whats happening there. Dow, though, looking like it will open off 82 points. S p 500 down about five points and maybe some of this coming off of the news that you got, joe. Yeah. The news i have is i got about 150 twitter things about how to he bet on baseball so, everybody is willing to offer me, i dont know the hyperdermic needle to get me addicted but i never got more of a response with an offhand comment. Im excited. Because its not that bad. Theres no spread. Let me get to this news. Well talk about this later. Breaking news on the deterioration in u. S. China relation china confirming the u. S. Ordered it to close its houston consulate. The state Department Said to close it in order to protect americas intellectual property. The u. S. Will not tolerate chinas violations of our sovereignty or intimidation of our people the move follows reports of a fire at the consulate last night with video apparently showing chinese officials burning documents in what appear to be trash cans like Everything Else, we knew something, theres retaliation im hearing theres threats to close the wuhan consulate. Have you seen that reporter yep yeah thats right sources are telling reuters that china is now considering closing the u. S. Consulate in the epicenter of wuhan in response to what they see as a political provocation. Thats the way the Foreign Ministry described it, the Foreign Ministry also said that this was an unprecedented move by the u. S. , and online, joe, you were talking about how you were happy that you got a lot of strong reaction on twitter there were so far 1 90 Million People have respond and discussing hash tag about the closure of the houston consulate. People are angry about it. Theres an upswell of blaming and accusations that perhaps this is political as the Chinese Government is suggesting, this is President Trumps way of creating a distraction ahead of the u. S. Election, and from chinas perspective blaming china once again and trying to appear tough theres another major theory that not only in social media but justin past hour or so has now moved on to state media and that is that china that the u. S. Is looking to try to force chinas hand and allow more american diplomats into the country. The u. S. Had evacuated several of its diplomats, if you remember, because of the pandemic, especially at the epicenter of wuhan and since then the discussions to try to bring the diplomatic corps back have been painful. A lot of discussions about quarantine, whether or not the chinese authorities should be allowed to take a dna sample, for example, from american diplomats. So a lot of Big Questions going on right now only very small number of american diplomats have been able to come back. And that has been one theory why the u. S. Might have made this move the global times editorinchief was describing this very short time frame that the staff at the consulate have. They now have 72 hours to try to he close everything down hence from chinas perspective a lot of anger over the papers being burned in the trash bins because from chinese perspective it looks like their people are in a rush and that this is really unfair. One note, joe, that we were talking about before is that this particular consulate has significance because it was chinas first in the u. S. Established in 1979 when, you know, relations had just been established and the environment around the relationship was much more optimistic than today a lot of, you know im in the United States. When i say misinformation im talking about china. It goes both ways depending where you are. Remember, we were talking about the virus and then there were a couple of high ranking diplomats that said the u. S. Army introduced it into china and that just seemed so flamboyantly false from my viewpoint. Maybe its not but you just wonder, were not sure what to believe and i guess china is not sure. Theres finger pointing on both sides. Whats happened is the burning of the papers is after the order to close thats the way it works. So they got to i dont know reporter thats the way its being seen here. In terms of those government officials, those people described here as wolf worriers and being portrayed in the state media as people who can stand up to the big bad bully the United States so, yes. Its a very different perspective, but, yeah, at this point its looking as though its not moving in a very positive direct. One thing, though, i would say, joe, what i thought of interesting with the leak of this being the wuhan consulate is that it could be a way where china is angry but not so angry because if it was beijing or shanghai, these are much Bigger Missions than the one in wuhan wuhan is significant in that its the epicenter of the pandemic, but actually at this point its been closed weve been hearing some diplomats have been able to make it back to wuhan but the actual consulate is closed. So wouldnt actually be a significant move, and so in that way it could be more symbolic whereas china is retaliating but giving some wiggle room so that the relationship can move forward. Okay. The whole backdrop in hong kong. So, you know, stay close we need to talk to you a lot thank you. Melissa . Lets get Market Reaction to this breaking news on china. Futures moved lower when that news broke earlier this morning. Joining us now paul hickey, and mike santoli is here as well mike, ill start off with you. It feels we get this drip, drip, drip of titfortat back and forth with china we have indictment of two hackers stealing information on Coronavirus Research it links hackers to a Foreign Government the Market Reaction is pretty muted. It is the market kind of looks at the headlines and theres a reflex reaction, okay, we werent prepared to have another round of aggression even if it is theatrical reaction. It doesnt translate into something the market needs to price right now. We came in today with this assumption we have this flourishing Global Growth picture and trade floss are a big part of the growth story at this point so i think its a little bit or maybe excuse as we get to the top of this trading to pull back a little bit or maybe reorient towards other names that are not going be as economical lly sensitive. Ive been looking for a couple of clues to see if Global Markets are trying to say this is a heightened risk situation dollar has been down semiconductor, they are not selling off. Those are the tells, i think if it were something bigger yeah. I mean, obviously, you look to cyclicals and semis, all of them had strong either preannouncements or results the dollar has been weak for some time really being driven by strength the at the euro whats your take on whats going on with china and why the markets are looking past these headlines as well as looking past or maybe not looking to the elections . I think to what eunice was saying its more of a gesture and theatrics whats going on obviously were looking at strength in the tech futures nasdaq hasnt seen much of a pull back. I wouldnt read too much into it here as far as, you know, the overall market picture is concerned. Were to concussion on bigger things right now, the u. S. Economy. And the big question here is how is, you know, we want to stay in tech throughout this earnings season or do we want to rotate towards more capitol hiyclical. Were rotating out of technology and into more reopening areas of the economy and that will benefit from better headlines on the covid outbreak so to that end, paul, were looking at tesla and microsoft reporting after the bell today tesla trading higher premarket in advance of the results. You dont think they will deliver and provide the results that investors need to stay invested in these stocks that had mega runs . Not necessarily deliver theyve had very strong runs heading in to earnings season. The tech sector we talk about expectations being low the pace of positive visions to negative revisions in the Technology Sector going back 2009 only three other quarters where there were more positive he visions for Technology Stocks than negative revisions at this rate expectations are high. When you see that expectation you tend to see the market, you know, see a little bit of a sell the news reaction those earnings like we saw with netflix well see what goes on here. More of a short term play than a longer term play tesla, i think, its up every morning. In anticipating of earnings or whatever who knows what the catalyst is. The catalyst after earnings is whether or not they report profitability and that sets the stage for possible inclusion to the s p 500 which would be truly, you know, a stand out situation for a company so large getting out of the s p 500 the only situation thats pretty similar to that is berkshire in 2010 in late january from the time it became eligible in late january 2010 after its 51 split of the b shares to the announcement and then until it was add in early february s p did fall 5 as Portfolio Managers had to make room by selling other positions in the index to make room for berkshire. Likewise you can see that sort of situation play out here for the Broader Market to make room for tesla. Right mike, for tesla and microsoft i feel they are in different boats from some of the other faang stocks netflix had an issue pull forward and well have that issue in other results as well we sort of saw that snap in terms of the q2 versus q3. For microsoft and tesla no pull forward simply this whole Notion Technology provides the greatest future returns in an environment where Interest Rates are low and capture sort of the growth way out in the future because we dont have earnings right now for any companies. We dont have clarity. So the importance of these stocks to the market, mike, pretty up there, right i think for microsoft its very crucial for the markets i would make the distinction for microsoft the earnings power and the cash flows and the stability are visible and people are projecting them ahead many years in the future. The question really is only how much you pay for that certainty and reliability whereas for tesla the story hasnt changed much in the several weeks since it went from under a 1,000 to over 1500 or 1600 thats more about the speculative future and how big this can get market share wise but comes back to the same place. The market is not trading who beats bay penny this quarter if im looking out in the world of scarce cash flows where can i capture some of those in equity form i think microsoft is like the universally beloved stock of this market so im not sure if that raises or lowers the stakes for this one quarter because nobody is buying it for this quarter. Good to see you both. Thank you. Really interesting news out of pfizer. Pfizer and the government reached an agreement to produce doses of its vaccine it will driver 150 million dose in the United States once the vaccine is approved. The agreement allows the government an option to acquire an additional 500 million dose vaccine would be available to americans at no cost biontech up 5 well have secretary alex azar joining us in the next hour. At no cost you wonder, just every where you go in . You wonder theres a lot of concern and worry and questions about who gets it first. How its allocated all we know at this point its at no cost unclear when youre starting with 100 million dose how it will work. I dont know how Many Americans want it initially as well. Ive seen conjecture about some people are implying that maybe the side effects havent been highlighted enough and whether if youre if you feel crappie for a day or two, i mean really bad, over 100 degrees temperature and chills and Everything Else, you wonder does everyone get it or do some people sit back and say hey everybody else can get it, im not going to get thats what happens sometimes. Thats the issue that dr. Dr. Scott gottlieb and dr. Fauci talked about parts of the country wont get it a lot of people still dont get the flu vaccine. Will people wait three months, six months to see how other people do on it. Obviously well talk to the secretary in just a little bit about it but i wonder when they say its going to be a no cost to the American Public, is it at no cost to the American Public meaning am i not paying myself, or are taxpayers not paying, is pfizer doing this as a gift or is the government . I assume some economic transfer of money from taxpayers. The government. This is the federal response that so many people have said is lacking. There has been a federal response for trying to get the vaccine. The question, though, from the pfizer perspective though is how much is the government paying and are they going to be making any money you see this great response in shares of pfizer but the outstanding question is will the companies actually end up making money from this pursuit and, yes, they get to say we found the Coronavirus Vaccine and they probably gain a lot of goodwill from the government doing that, participating in all of this but do they actually make money . Thats a big question especially for investors of a company like moderna and the smaller ones where the vaccine is really the ticket for that particular ticket for a 30 billion market cap on moderna, for example. Yeah. Has to sell some stuff and has some pretty good margins coming up next nasdaq ceo Adena Friedman the ipo landscape. Techs record run. And then a read on the Housing Market and the impact of the pandemic the latest numbers are out well look at the data and outlook for house. Squawk box is coming right back stock slices. 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. Schwab. Lookentertainmentour experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Earnings just out from biogen the drugmaker profit came in at adjusted 10. 26 the consensus estimate was 8. 03. Revenue was also above forecast. Biogen did say 100 million of revenue during the quarter came from accelerated sales due to the covid19 pandemic. Stay on this topic, nasdaq out with Quarterly Earnings moments ago beating estimates on the top and bottom lines joining us now to discuss that plus the nasdaq composite record run, Adena Friedman, president and ceo of the nasdaq host of this, at least where i am on squawk box, adena, good to see you. I didnt have a maverick on but you stayed ten feet away die we like some day to have you back here on the set but, obviously, its still too early but that day may be getting a little bit closer. I tell you, im trying to figure out how well the nasdaq is doing and how much trade is going on because the numbers are like 100 that were seeing from a lot of these Online Brokers, et cetera so technology has led the rebound. And technology that focus on the Digital Transformation and stayathome and doing things online stories have gotten sexy about a lot of those companies is that what you attribute this increase in volume and trading and new highs on the nasdaq . Has it been helped by the pandemic well, first of all, its great to have you in the studio. Thanks so much for being there every day. I would say that nasdaqs performance for the quarter actually is driven by all four of our Business Segments we had strong trading. 12 overall revenue growth, 26 earnings growth. Certainly trading was a big factor in that but all four of our Business Segments grew in the quart including our Technology Business as well as data busine business so it really was across the board. That was all in the context of all of our employees working from home and having remote relationships with our customers. Im proud of the team. I think in term of the performance of the index and performance of the markets, i think there are three things driving that the first, of course, is fiscal and monetary stimulus. Making money cheap making it easy to continue to borrow money, raise capital and making it so that theres an attractive element of liquidity in the markets i think the second is this idea that there are a lot of companies in the tech world and in the biotech world that are driving the economy forward and i think investors are looking beyond covid and saying what are the trends that will persist beyond covid not every sector has performed equally well i think were seeing investors leaning into those types of trends the third is just that theres a lot of money still in the system to be put to work and when Interest Rates are near zero, if you look at the alternatives for investment vehicles, its very attractive all of those things together bind to for the nasdaq were looking at nasdaq stock, not quite the nasdaq, but really up nicely over the last year not so with most your competitors and i under futures exchanges are not necessarily going to be doing as well with Interest Rate futures. Is there any action cant be any action there in fact, i mean the nasdaq has outperformed almost all of your competitors in term of the stock price and probably results i think our diversified Business Model is really getting rewarded by investors right now. We have about 75 are of our revenue is reoccurring in nature white trading is having a very strong year, so the resiliency of the rest of our business i think is shining through so its really a combination of all of our boats rising as we have been manage through an unprecedented period of time i mean, long before the pandemic you didnt need to have a specialist standing on the floor three feet away from other people so it kind of played into your hand lets talk about ipos. You mentioned health care. Biotech, ipos, Everything Else they are favoring at least to some extent relative to the big board or other places that they are coming to the nasdaq mostly. What are the numbers there so far this year nasdaq had 87 ipos. When we look at the operating companies that have gone public we had 85 of the Companies Come to nasdaq. Four of the top five by dollars raised i think that seamless transition that we were able to create for our clients as we all moved online, the ipo opening process is a process weve been able to manage and seamlessly transition into in a remote situation weve been able to run ipos remotely leveraging our power here in times square but allowing our clients to remain safe in their homes or wherever they are as they are managing their ipo process. I think that seamless transition has been helpful we provide enormous amount of support for companies after they go public and clearly understanding who your investors are, how they may be changing, making sure that they are maturing as Public Companies a big part of the service that nasdaq offers and i think thats a big differentiator for us. All of those things are combining togenerate a really strong week for nasdaq the fact it had 87 ipos in a year like this i would not have expected that. In march but i would say that investors are looking to put risk capital to work particularly for companies that are leaning into trends that will be coming out of covid when you watch, have been watching the nasdaq and im not talking about the exchange, im talking about the index over the past six weeks, what have you been feeling, when you watch it are you like yikes or are you like yeah, it all makes sense. This is where the action is. Does your eyebrow get raised in comparison to 199 . Were operating in an uncertain environment and an environment that changes pretty quickly. I think on the one hand i do think investors are looking long term when they are making some of these decisions to say what are these Companies Going to look like on the back of the current pandemic what are the trends in the economy that are shifting, that will be leaning into these types of companies that are driving index performance . At the same time i do hear people try to compare it to 1999 when we look back at that time we had about 150 times price attorney generals ratio on the nasdaq 100 and today its 30 times. Additionally the companies that are really driving the index today are the Largest Companies in the world and the minimum size for the nasdaq 100 index is around 15 billion these are very strong, growing companies. Recognizing also that the nasdaq 100 is a fixed number of 100 companies, theres been some rotation in the nasdaq 100 where some of the really strong growers like docusign and zoom have come in to the index and helped drive it. Ive seen the confetti come down we can have a confetti canon go off every morning for you, joe. Every once in a while a little piece comes flying through. Gets dislodged from the ceiling. We will eventually have in person ipo experience as market opens again. Were ready for the nasdaq. Were ready for anything. Party like its 1999. Its a song i think. Thanks, adena. Great to see you we got some breaking news in the Housing Market diana oleck has the latest on mortgage applications. Home buyer demand is heating up with the mercury this summer after pulling back slightly the previous week. Mortgage applications to buy a home rose 2 for the week and a remarkable 19 higher than the same week one year ago thats the ninth straight week of annual gains and one of the highest annual jumps weve seen. Low Mortgage Rates didnt hurt average on 30 year fixed inched up one basis point to 3. 02 3. 19 the week before was a record low thats an average. A lot of folks are getting below 3 at todays rate 60 of all outstanding loans can benefit from a refi. Thats according to fannie mae with 122 stronger than the same week one year ago. These are applications and not all of them will translate into closed loans credit is still tight. Well get a read how sales existing homes did this morning. Thats later this morning at 10 00 eastern time on squawk on the street. Back to you. Are we expecting this momentum to continue in the fall or is this left over from the spring selling season . You know there was certainly a lot of pent up demand from the spring because in march and april there was no activity at all. Thats the biggest question. Will this continue into the fall will it continue to be people who want to move and get out of cities into different, larger more hitech homes builders are still seeing very strong demand. Well see if it can make it through the end of the year. Prediction it will stay strong through the summer thats the big question, can it hold into the fall diana, thank you. Coming up, when we return, the stimulus debate raging on in washington president of the American Action forum will join us right after the break to debate it all were back in just a moment. Announcer time now for todays of a flack trivia question on this day the aviator return to new york after flying solo around the wldor who is he . The answer when cnbc squawk box continues aflac. These are all the cab rides to my physical therapy. And aflac paid me directly to help. Aflac. What he said. And this unexpected bill is from. The twothousanddollar specialist. Thanks. Aflac. When youre sick or injured, aflac is there. We can help with Expenses Health insurance doesnt cover. Get to know us at aflac. Com and now the answer to todays aflac trivia question. On this day, this american aviator returned to new york after flying solo around the world. Who is he . The answer, wiley post he was the first to accomplish the feat and did it in seven days, 18 hours and 49 minutes. We got some news in from pfizer pfizer and the government strike and agreement for phaser to produce millions of doses of its covid19 vaccine pfizer would deliver 100 million duces. The stock moving on that news. Hhs secretary alex azar will be our guest and join us in the next hour to talk all about it, the arrangement. An important conversation. Squawk returns after this. Where are you . honey, did you hear about these new geico savings . Mom . Youll get an extra 15 on top of what geico could already save you. Can i call you back . You know your fathers learning to make sourdough. Even though he knows i prefer rye theres never been a better time to save with geico. Switch by october seventh for an extra 15 on car and motorcycle insurance. Hey, next time lets do a face call come on in, were open. All we do is hand you the bag. Simple. Done. We adapt and we change. You know, you just figure it out. Weve just been finding a way to keep on pushing. Welcome back to squawk box as lawmakers in washington debate the next round of relief spending there are growing questions now about how much support the government should be providing and whether its better to let the market figure out which businesses survive Steve Liesman joins us right now with more on that. Steve, its a big debate reporter yeah. Its going get bigger. Kevin oleary, aka mr. Wonderful declaring yesterday on box that its time for the government to cut the cord in helping some businesses survive the pandemic shutdown i actually dont want the government to prop up Zombie Companies any more stop doing that. Let the market be the market figure it out. A new america will emerge in 36 months its going more profitable what were about to do with this next round of stimulus in my view could be a mistake. Reporter i contacted several Top Economists yesterday most thought oleary is ahead of his time theres quite a bit of sympathy. They said oleary hit on the biggest debate about to happen in washington. Its about time to let businesses go under to avoid creating Zombie Companies in specific industries compared to what was happening with the entire economy and thats where not all businesses will be viable there was a tough response to oleary. He told me people calling for the government to get out now are quote being terribly naive how efficient the bankruptcicy and liquidation business will be he said there will be fire sales and prepare for a massive second wave of unemployment if aid is cut to business. Glenn hubbard says to me its really important to help the longstanding midsize businesses which the fed is doing that do not have access to equity if aid is going to be cut to businesses and companies the economists said prepare the government the government must be prepared for massive support for workers because there will be a lot of unemployment also for credit losses at banks to skyrocket joe . Theres some expression, steve. No atheist in a fox hole pretty much no atheists in a fox hole no capitalists its a pandemic but, you know, if youre a pure capitalist i dont know how you handle it steve stay with us joining us now president is the American Action forum. Initially we indiscriminate lending, we want employees to keep their jobs. Everybody is involved. Does there come a time where you say some of these Business Models arent going survive and were throwing good money at bad and when i said that yesterday to kevin he said capitalism has no conscience or compassion, it is what it is. They allocate resources where they are treated the best for return the middle ground. Its nuance, isnt it . I think theres a middle ground the key is that in the firstround of response the c. A. R. E. S. Act the thoefrt cases there were no zombie cases we indiscriminately handed out cash to keep workers attached to their firms, to keep those firms afloat for two and half months but were in a different situation. Looking forward its easy to identify some sectors where we feed some restuck during airlines wont look the same restaurants wont look the same. That means you dont keep workers attached to those same businesses you have to move them elsewhere. You dont want to make sure every restaurant survives. You need to have some way to allocate the capital in the economy. Its fine for the government to subsidize it but you have to have the market picking who gets it it is time to have that enter in the equation steve, do you think adam smith or Milton Freeman lets go back to the financial crisis where, you know, it could be argued that some of it was brought on by some bad players themselves should we have found the bottom really quickly rick at times has said just let the system clear and well come back more quickly and get rid of the bad actors and thats the way its supposed to work. Should that have happened . Should it happen now i think this is very different than the financial crisis the financial crisis was a selfinflicted wound where we really had some bad practices. Steve, what do you think we should do as our resident philosopher . Reporter thank you i actually have some thoughts on this and my conversation with people like doug yesterday and glenn and all those folks got me thinking about this. So one idea which kind of incorporates what he can inventory oleary is talking about is when you make somebody take a loan out and put equity in, that person is making a judgment or a statement on the viability of that business if you have to pay it back, you think you would be thinking about whether or not the business itself is viable. In this regard the private sector or at least in this case the private entrepreneur would be making the judgment as to the viability of the business and not the government so what i have this idea i have and adam doesnt like it because he thinks people will throw hail marys and take the loan out and default my idea is increasing equity riermtd requirements over time the further we get from the pandemic the more a person should have to put up or business have to put up for government assistance. This lets the private sector headache the choice and let government continue to aid and help businesses that are viable. Thats my thought. Sign me up for the Steve Liesman plan thats right way to think about the problem. What it means in particular is that ppp no longer hands out loans and will be forgiven it makes loans and makes them on stricter terms as time goes on and allocate capital based on viability of business. Not all of them will make it and we need to start accepting that fact and encouraging those workers in businesses that will not make it to look elsewhere, support them in their job search and let the economy restructure. Creative destruction that d engen denver engendered itself. Is anyone ever should we have tried to keep those youre laughing, seriously, thats just one example of a lot of different businesses that maybe made sense before the pandemic joe, kevin very smart in this regard i dont know if hes right, but were on the cusp of a debate. I have to say austin pointed out the me had we solved this virus in a similar way that other European Countries we wouldnt have to have this debate because its gone on longer and its going to have a more wrenching impact, were going to have to make choices about use of Government Funds and it wont be easy. Theres a moral imperative the government shut it down the government ought to finance and keep it alive and thats something that will be around for several more months. Steve, one more thing if were going to have Government Support and well need Government Support for the economy as we go through this, you support people and you also support companies. Companies come, companies go investors take risks and lose sometimes. To frame it which Companies Lose is wrong take care of workers make sure we have opportunities to start businesses and have opportunities to work in them. Thats the key you look at the china model where they dig holes sometimes just to fill them back up. Make stadiums, nobody sees sports build apartment buildings. A lot of times youre propping up Companies Just to keep employees but employees do need jobs Creative Destruction is tough on people getting displaced and nowhere to go. I hear the music playing, joe. But real quick everybody i talked to yesterday agreed with kevin about avoiding wide longstanding zombie company. They dont want a zombie corporate apocalypse we dont want a walking dead apocalypse either. The way you rank things. Dont give loans to the walking dead. Okay. Thank you. Appreciate it. The philosopher. Maybe professor of philosophy. Yeah, oh, thats good. Melissa . Coming up, special purpose Acquisition Companies are increasingly popular today the largest of its kind will hit the market. Well speak to bill ackerman in just a few minutes first on cnbc, squawk box will be right back. Achievable steps along the way. So we can spend a bit now, knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Oooh, well. Im good at my condo. Oh. I love her condo. Nana throws the best parties. Well planned, well invested, well protected. Voya. Be confident to and through retirement. Now you can trade stocks and etfs for any amount you choose instead of buying by the share. All with no commissions. Stocks by the slice from fidelity. Get your slice today. Welcome back to squawk box special purpose Acquisition Companies are increasingly popular and now on track to eclipse last years deals also known as blank check Companies Investors put money into spacs the kwool is to acquire a private public and convert it into a public one. Notable spacs is being taken public bill ackmans is the largest one. Its selling stock of 20 looking to raise 4 billion in outside capital. So total value could reach 7 billion. Bill ackman will be right were us in the next hour. Two underwriters, joins us this morning to talk about the popularity of spacs. This spac in particular and what trend were seeing here. Ill start with you, suzanne this is a pretty unique deal spacs for many, many years had very bad name. People thought they were effectively a Compensation Scheme masquerading as a Compensation Scheme because they typically took so much, such a big piece of the deal. What do you think is driving it now . Well, the thank you for having me. Spa skrrch a great market environment in general now for spacs. Financial investors have significant liquidity, you know, Interest Rates are low, public equity market valuations are at all time highs, the number of Public Companies available to own has declined steadily, and, obviously, the covid pandemic has challenged the financial position of vast majority of companies. So all of these factors create tremendous opportunities for a great sponsor, the right sponsor to get a deal done let me go to jim on this those. Jim, the big question about a spac you can either go the public route, go the ipo route, requires a lot of diligence and a lot of exposure to the Investment Community this short circuits that but theres oftentimes a cost for it as well. Why is this the better path if you well than the ipo route . Well, first of all, thanks, andrew for having me and its good to come on and talk about this particular spac because its so unique and different generally speaking, spacs had a very, very bad name going into it because it was viewed as sort of a vehicle for of a promote of the sponsors now youve had several legitimate investment professionals and youve outlined several managers accomplished investors promoting the spac structure this is just a very easy way to get a deal done if you are a company, if youre looking to go public, if you want to access the Public Markets because its already a public vehicle all of the regulations, all of the things that you have to do to go public, its avoid because its done already. So i think this market is actually here to stay. Its become legitimatized because of the players that are now in the market that actually have investors that are significant investors entering the market so if you stop and think about it, its like going to the ipo route except tremendously easier. So its got significant appeal now. All right what do you think i dont know when well have to merit but three years out what do you think performance, though of these are going to look like relative to companies that went the more traditional ipo route well, i would tell you this i think its going to depend on the manager significantly depends on the manager, the investment manager depends on the thesis. Depends on the sponsors. The line of interest and performance of the company i dont think that its going to come down a spac versus an ipo for performance. I think its going to come down who you invested in and why you invested in them and what business they buy and how they ran it i think thats the metric. I would agree suzanne, one of the other go ahead i would agree with that a spac is only as good as its sponsor, its structure and Market Conditions in which its operating. And, you know, the average spac size so far this year in 2020 has been roughly 300 million. What makes this transaction so significant as you noted was the size, and its the largest amount of committed capital ever for a spac so given the size and the fact that the strategy is to buy only a minority interest rather than a controlling interest in a company, is clear the acquisition target will be a large and high Quality Company that should perform very well. And we should make mention, well talk to bill about this later, thats the unique part about this its not necessarily a take over of a company but the strategy hell here is to take a majority position in a private company that therefore turns it public two quick questions for you suzanne and for jim. One of the things that bill ackman is doing this transaction which is unusual and hopefully is the beginning of a trend is that he isallocating about 20 of the underwriting fees to minority firms you know, minority firms have oftentimes been incorporated into ipos but oftentimes at much lower levels whats happened here youre exactly right. Both of our firms have participated in a number of sizable ipos we have investor relationships that add value but usually limited to tiny percentages. And in essence, bill ackman has blown up the traditional rules and limits of wall street and expanded his team by hiring Diverse Firms in a significant role hes hired black own firms, womenowned firms, veterans own firms not only to help economics which are great but a meaningful role you basically have life long entrepreneurs who have built successful careers on wall street now invited to the dance in a meaningful way and able to add real value to the prospects in identifying pent up demand. Okay. Suzanne and jim, we want to thank you for joining us this morning. We wish this transaction lots of luck and we will be talking as we mentioned with bill ackman in just a little bit in the next hour but thank you, guys, for spending time with us this morning. We will see bill at 8 15 to walk through this transaction, also get his thoughts on the markets. His first since his now famed conversation on cnbc back in march when he said hell was coming melissa . Also coming up, andrew, United Airlines scott kirby joins us in an interview you dont want to miss pfizer and the government struck an agreement for the drugmaker to produce millions of doses for its covid19 vaincce. Alex azar will join us to discuss that squawk box will be right back. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. Good morning it is 8 00 a. M. On the east coast and we got a very big hour ahead of us. First, well hear from United Airline Ceo Scott Kirby on the Airline Industry plus an interview with the health and Human Services alex azar and a cant miss interview with Pershing Square ceo bill ackman. His message to ceos. Hell is coming okay and i felt i never had this experience before in my life the closest was the financial crisis where i said bad things are coming well find out what ackman thinks four months later as the final hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc im joe kernen along with Andrew Ross Sorkin and melissa lee. Becky is off today the futures are now downtown dow. Nasdaq continues to trade positively this morning. Opposite yesterday dow ended up about 150 or so, nasdaq ended the session down. Treasury yields earlier in the session were actually lower than weve seen recently down under. 6, now. 589 is where were seeing treasuries this morning melissa . We have a developing story were following for you this morning. The u. S. Has ordered china to close its consulate in houston within three days. The state Department Spokesperson citing the need for u. S. To protect its intellectual property and americans private information. Commenting the spokesperson said the United States will not tolerate the peoples republic of chinas violations of sovereignty and inat the my dafgs our people just as we have not tolerated their unfair trade practices, theft of american jobs houston media said firefighters respond to reports of papers being burned on the consulate grounds last night but denied entry. This is the latest example of deteriorating relations between u. S. And china since the outbreak of the coronavirus. China blasted the order. A Foreign Ministry spokesperson called the order an unprecedented escalation of americas recent actions against china. Andrew okay. Another important piece of news just a short time ago. Pfizer and the u. S. Government have struck an agreement for pfizer to produce millions of doses of its covid19 vaccine. Pfizer would deliver 100 million doses in the United States once a vaccine is approved. The price tag for the government nearly 2 billion. The vaccine would be made available to americans at no cost well speak with health and Human Services secretary alex azar about this deal in just a little bit later this hour melissa. United airlines reporting what it described as its most difficult quarter. The carrier saw revenue drop 87 as the pandemic ground air travel to a virtual halt unite the expects its Liquidity Position to improve and forecasting a lower daily cash burn phil lebeau joins us now reporter lets bring in scott kirby. We talked about the numbers. Massive loss in the Second Quarter. No surprise. Whats the state of the business right now . What your seeing and how either optimistic or concerned are you about where things are with passenger levels well, one of the strengths of united going through this has been to be neither optimistic, concerned, pessimistic, to be focused on being realistic thats important in a crisis and served us well so far as weve gone through this. The pandemic has developed really since late march. Very close to what our expectations were going to be and it continues to develop in a way that we think is consistent with what weve been planning for. Because of that we were able to match our capacity down 88 , the revenue down 87 but also by being realistic we found opportunity because the revenue super36 so that realistic approach has allowed us to really do the best thats possible. We expect demand has taken a step back wards here in july from where it was in the middle of june but it seems to have bottomed and we expect to be back where we were in late may and demand will start to gradually recover once again as we get through the rest of the year were down 72 to 74 as an industry relative to the same time last year do you expect us to be in that range lets say for the rest of the sumner to fall do you expect to it come back to 50 . Whats your internal projection . We want to be flexible and adaptable to what the data is telling us youre looking at the psa numbers which is the number of passengers i want includes the number of employees, airport employees, airline employees to go through. Weve focused a lot more on the revenue because thats the best measure of demand and unfortunately its down even more than your 72 its down more at the moment more like 83 . We think there will be a gradual recovery we dont expect to get anywhere close to normal until theres a vaccine thats widely distributed to a large portion of the population. Its a guess nobody knows for sure. Our guess is that revenue will get to about 50 of what it was in 2019 and in prevaccine world. Once we get past the vaccine and widely distributed well quickly get back towards 100 . Well plateau at 50 before we get to a vaccine lets use that as a baseline. You got roughly 16 billion in liquidity right now. You plan to have more than 18 billion by the end of the third quarter. Is that enough to get you through not only third and Fourth Quarter but the First Quarter which is notoriously the slowest part of the year for the Airline Industry or do you think hey the airlines will need more direct help from washington. I am highly confident we can get through the pandemic given the 16 billion we raised. Well end 18 billion of liquidity. Unfortunately its going to require difficult, you know, we sent out 36,000 notices to our employees. Thats as a last resort. Something we would absolutely have wanted to avoid weve taken every step we possibly could to avoid those. If the crisis will last as long as we think its possible. We have to reduce the size of the airline. Until there is a widely available vaccine and because of that well have to reduce employment so i am confident that we make it through the crisis without any more funding but its also going to have an impact on employment scott, im wondering because the longer the pandemic goes on the deeper behaviors that we learned during the pandemic set in, things like remote working, zoom meetings, et cetera do you really expect postpandemic, postvaccine levels will return to 100 are there certain structural changes that will carry forward. A lot of us have spent a lifetime thinking about. At united were staying focused on not being too prescriptive of what will happen were social creatures united is about connecting people and the world we went. Through this 20 years ago when Video Conferencing first started and people thought it would decimate Business Travel did it the exact opposite. If anything it helped grow Business Travel. We need to be there in person. My guess is that it will take time wont happen immediately but the first time, you know, business loses a corporate account to a sales team, took a team to dinner instead of a zoom call they will be back out on the road there was a great commercial from united you look up on youtube. It ends im going see that friend and i think that commercial from 20, 30 years ago was true then and true in the future and a year or two after the pandemic is over, we will be back to travel as normal we wont count on that well have flect built and see what happens scott, you know the expense side of things is one way to try to deal, obviously, through lower staffing, but on the revenue side i just have a suggestion and it reminds me of the old days too everybody right now is saying im going see a friend ill drive its 13 hours. Im bringing the kids, they are 4 and 6 and were looking forward to it. Okay they havent done that in a while. After they do that they are going say im never doing this again and im willing to pay more to go on a united flight. Dont you think you need to raise prices as an industry given the new realities. I know its hard in a slow period to raise prices but it just seems like its worth more than what youre charge. Same as it was 20, 30 years ago to go to a lot of places isnt that just coming prices are going up well, look, thanks for the question ill take a slightly different tack on it which is to say, whats not clearly understood. People to understand better that you need a safe environment that an aircraft is it is inside but unlike anything that youre experiencing in the world. Not like being in a restaurant or Office Building or even a hospital for that matter and its because more of anything of the airflow and air infiltration where the air comes out of the ceiling, designed to go the floor, into the ventilation system where its recycled through filters and mixed with fresh air from outside every two to three minutes air in an airplane is refreshed. Its a unique environment unlike you see anywhere else. Its one of the safest environments you can be in, indoors. Thats the message we need to get out more to help with confidence pricing will follow whatever demand will be but getting skoofrms and the public at large to understand that incredible things that happen on board airplanes, and the cleaning regiments we have aircraft are uniquely safe environment. Lets talk about that a little bit you have an enhanced mask policy you Just Announced twin last hour essentially saying you dont wear it you wont fly and thats not just being on the plane, thats any united area, the concourse, frequent flyer lounge, whatever it might be are you seeing much resistance in terms of people to the current mask policy . Is that the reason you put out the new one . Were seeing very little resistance vast majority of our customers and employees agree with the maverick policies, applaud the maverick policies. United, im proud were a leader we were amongst the First Companies in the world to require a mask and that was back when it was still controversial to ban customers that dont wear a mask we do still see places in airports in particular where customers wear a mask on board tarp because its clear that its required they are not always wear a mask in the airports were just extending that policy really trying to close all the travel gaps, all the gaps in the travel process i talk earlier how safe it is on board an airplane. But weve taken steps to keep it working on the ground and this mask policy in the airport so our customers can feel confident from time they get out of their car to the airport they will have a safe experience scott, youve been around this for a while this snouis not your first rode. Youve seen how the industry operates youve held the line on fares. Can you do that Going Forward given the fact there are nor flights, seats and competitors are slashing their fares this is unlike any of us have experienced. My guess is price is going to go lower for a short term all of the normal metrics we use, in this pandemic are a little bit irrelevant. The most important metric is cash burn. Im proud that united is doing the best on that front i talked earlier about the realistic things that helped us to get to that level our focus really is on cash flow and cash generation as we go through this crisis. Weve taken aggressive steps to match our capacity for demand and be looking out 60 days. At the beginning of july and june as the pandemic expanded and weve taken steps and youll see more steps to adjust being quick to adjust is the biggest thing we can do. Taking quick steps to ad just is whats in our control. Scott kirby, thank you for joining us exclusively on squawk box guys there you heard it from scott himself. They do not expect to get above 50 revenue until vaccine is here and once that vaccine is here then they expect the full return or at least closer to a full return for the entire Airline Industry guys, back to you. Phil, planning a long im telling you. Ill be so ready ill take my chances, i think after 14 hours in a car or whatever ill be like put me back on plane. Give me a mask no middle seat ill take my chance. Thank you. Coming up first cnbc interview with bill ackman well spatalk about his new spa and that prediction he made on this network back in march that hell is coming futures indicated, some of the best levels weve scene. The dnasdaq iups youre watching squawk box on cnbc in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. Lookentertainmentour experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Welcome back to squawk box futures right now, the dow is down 40 points some improvement after the vaccine news todays vaccine news i like to double things up seems like just about every day. Isnt that to be expected when you got basically were trying to do a moonshot operation warp speed, whatever. So there are 26 in Development Going to be some frequent news come out about these maybe too much, andrew, i dont know when you get results you want to get them out so we hope it works. I expect to it keep on going on the vaccine front. Meantime, bill ackmans Pershing Square holdings poised to become the largest special Purpose Acquisition Company to date investors putting money into spacs without knowing when or how the capital will be deployed with the goal of acquiring a private company and making it public his company is listing on the New York Stock Exchange today under the ticker psth. Joining us bill ackman bill, great to have you on the program. Want to talk about the spac, also want to talk about your investments and the markets and your comments since this is the first time weve had a chance to talk to you since march back then and even some of the critique of that lets start with this spac because its the biggest one yet. I dont know if you saw the segment we did in the last hour. Spacs for a longtime had a bad name they were considered compensation vehicles for sponsors, for the managers, oftentimes at the expense of the investor what do you think is changing right now and how is this to the degree that it is different . Sure. So what weve done is weve and the what i think is a good idea, the idea of raising a cash shell to really bypass the going public process which is a risky time consuming process i think its a good idea the problem has been the terms for investors really has you described. Whats new in our structure is its the first fact where were taking no compensation no management fee, no promote, were not buying cheap stock no compensation to the sponsor the sponsor in this case is not us ersonally its the Pershing Funds. We set this up to create an Investment Opportunity for Pershing Fund and employees of pershing, we own 23 of Pershing Funds are indirectly invests and we set up an align meant that was very appealing to investors. We created the most investor friendly spac in the world went we had an enormous reception that gave us the ability to do very large scale we have 5 billion equity check, if you will, that will be trading in an hour or so on the New York Stock Exchange as the ability to issue securities. We can our goal is to buy a minority interest in a business and what i mean by that well merge with someone, take them public, our shareholders will own 20 , from 5 to 30 of the company. We believe we can make an advantage deal for our shareholders, really creating a great opportunity for a doe accelerate its growth, deleverage Balance Sheet and provide capital for investors seeking it ate great structure and a wonderful reception. Bill, if im a company out there, and by the ways, Big Companies have been speculated about everything from Michael Bloombergs company to airbnb as a potential target for your spac if i was one of those companies, why would i prefer to go public via this route as opposed to going public through the ipo route . Sure. Imagine you are airbnb and you got however many employees waiting for that one day youre going to go public one day employees learn this is been a filing of an ipo prosp t prospectus next day everyone gets a phone call from Financial Adviser giving them advice how to exercise their Stock Options early. You should buy the home. Much starts focusing on things that have nothing to do with running the core business. Airbnb is going through a challenging time because of the crisis six weeks later and by the way the press you guys start calling around to current employees and former employees to gate story then about six weeks later if they are lucky they file a revised prospectus having received something from sec. Then you receive all kind of commentary look what happened to wework it ultimately destroyed the company. Its a very challenging time for a business to be under that kind of a microscope and not allowed to respond to the media because under the sec rules you cant. Then, a few weeks later they file another prospectus and then start at that road show. They go on a road show and fly around the world meeting with investors. Its not until the last day of the road show they know how much capital they will raise, at what price they will raise it and whether or not even if the deal gets done. If the u. S. Government decides to break ranks with china and the market is down whatever or trump tweets something or biden is ahead or behind in the polls, whatever tissues are, we think the next six to nine months are very treacherous times and the ceo and board has to make a decision do we go public. Looks like we can only raise a billion. Do we go forward with a bad ipo. Do you pull the deal you create this period of uncertainty for your employees compare that with us we sit down with the ceo of airbnb we come to an agreement on the value of the company we buy only a minority interest in the business so they are not afraid to leave a little money on the table we do deep Due Diligence we announce a transaction with the company. We committed a billion, billion and a half of capital and give every investor an instantaneous ipo with some of the most important investors in the world. One of the things we did bill, let me sure. Let me ask you a question you talked about the need of transparency when you shorted companies historically you talked about how healthy it is for there to be more transparency isnt the ipo process unto itself, we take out the structure you built into your spac but other spacs are not built this way wouldnt the ipo structure is healthy and actually creates that transparency and when a wework doesnt go public investors could look into the books and raise questions that are much harder to raise in the context of a spac . Investors dont get to look into the books they get a prospectus, thats the only document they have. In our case they get the same thing. The difference is they get a lead investor like us who are committing a billion, billion and a half of our own capital. Well have the benefit of inside information. Well put together what is called a merger proxy. With similar and actually can have more extensionive information about the business that we provide to investors every investor in a u. S. Spac has a full right to redeem if you dont like the deal you get your money back with interest so if idea of a lead investor, you know, looking throughout the world the find the highest quality best business in best terms nexting a transaction, committing capital and only then do investors get presented with detailed information they need to make a decision and have a full optout typical process ipos are announced several days its a scramble. Investors are competing for allocations. They dont have the time to do Due Diligence in a spac process. Theres 45 days between the mailing of that document and all investors before they have to make a decision. Its a much Better Process much better for the issuer and much better for the shareholder because they get to make a thoughtful decision thats not rushed all right bill, you know, the last time i want to pivot. The last time you were on this network was back on march 18th you had a dire warning where the coronavirus was taking this country and business specifically in this country i just want to play that segment for a second hell is coming. Okay and i felt, you know, i never had this experience before in my life the closest was the financial crisis things are coming, bad stuff is coming. But this was a feeling like ive never had, like theres a tsunami coming right . The tsunami is coming and you feel it in the air bill, you have been both right and wrong with that call but i wanted to get your thoughts on the markets today but i also given the critique then about the fact that you were short, i know you had been public that you were short prior to coming on the air then, i also just want to understand your own positions today because when people say bill will be talking his book, i think we should all that have that transparency to know where youre coming from today sure. Let me just go back, to again, that was a 28 minute segment and that was about 15 second piece of it and i want to remind people the message and i encourage you to go watch it were at a fork in the road. At that point we hadnt shut one state in the country right . March 18th, you see the compounding of the growth of the virus. Look one path is we do nothing and if we do nothing hell is coming but im bullish. Im buying stocks. Why . Because i believe the president , the government will shutdown the country. The answer is we did stoiomethig in the middle. What we recommended was a 30 day hard shutdown of the country statewide, every state in the country and then a careful reopen to go back and watch what i said. Had we done that, okay, we would not we would be in a much better position unfortunately than we are now. Were somewhere in the middle. The day after my remarks california shut down the state next day new york shut down their state. We had a state by state what i would call sloppy shutdown and had a state by state sloppy opening. Multiple people died skmi in a worst place. Had we taken the pain and ripped the band aid off cnbc played that 15 second segment. Number one at the time of the broadcast i been bullish weve been very public on this on march 12th we decided to completely unwind our hedges and took that capital and invested over 2 billion more in the market by the time i had done that segment and we completed bill, just to clarify you had not closed out your shorts at that point though completely er with were unwinding first of all, massively long in the market we were 85 invested in stocks prior to what a hedge on okay pap march 12th we took the hedge off. We had, you know, liquidated a billion three of the hedge and invested 2 billion in the stock market in the six days before that interview we were at 3. 3 billion more long than on march 12th which took us to a lot more than 100 invested we were absolutely bullish in fact, again, made it very clear were buying hilton, restaurant brands, every stock that we are able to buy other than stocks on the board and by the way it was the low that day if you go back and look. Low for hilton low forrest rant brands. Low for starbucks. We were making a very bullish call at the time where we are today bill go ahead. Just to clarify that position because i think that people will listen to that and think oh, well he had unwound the shorts he went on the air said hell is coming then plowed that money back into markets after he made that comment that hell is coming but to be clear you had actually unwound those shorts and put that money directly in prior to going on the air with the dire forecast thats absolutely correct my comments were not dire. What i said if we do nothing things are going to be dire, hell is coming but i dont believe we wont do nothing. I dont think we have an alternative. I think the president will shutdown the country my recommendation was for a hoard shutdown in america thats where our federal system and, you know, states were allowed to make their own decisions. That toledo a slow extended shutdown what i call a sloppy shutdown and the result is we had a middle case. My bullish call on markets was correct. We were dollars 3. 3 billion more long on march 18th than march 12th we made a decision to go long. I meant to deliver a very bullish message. If you look at my contemporaries instead of talking about the hell is coming part of my interview, i understand why people are confused look at the bullish statement i made im buying stocksnow it was the low point for all the stocks in our portfolio that day. Some people listened to what i said and bought hilton and lowes and restaurant and starbucks and bought, you know companies that we talked about on air and if you had listened to what i said people have done very well we absolutely turned bullish and we were very long going into the segment. I can talk where we are today. Depending where you stand people bring up sweden and its controversial. Wasnt quite as much of a lock down there obviously when i hear hell is coming and amudslide it was only a 15 second snippet we had. And the market did, obviously, it speck down 38 but came back very quickly so im not convinced that was the right forecast for what here well get into again 150,000 deaths is hell and for the families affected and for people that, you know, have lost loved ones, young and old, it is hell. But just in terms of the way the market has bounced back, it almost looks like that was an aberration and too much pessimism about what was going to happen in the be markets at that point youre saying now you were both. Were you surprised at how quickly the market had rebounded to where were at new highs in the nasdaq and i know the stimulus and Everything Else, but it doesnt look like hell to me hell never came in terms of the markets. I would say yeah, the markets are a representation of the most successful, the largest, the best capitalized, most dominant companies in the world unfortunately the markets dont there isnt a market for the private family owned business right . And that market is down 80 , 90 , in some cases 100 . Think about closed restaurants think about gyms the bars if you live life using the s p 500 as your Reference Point for how everyone is doing youre leaving out of a meaningful percentage of the country and there are a lot of people suffering. Suffering economically and they are unfortunately people who are suffering, dying and more died 150,000, unfortunately, is not, you know, is not the maximum well lose more. By the way, the sooner again the approach was a rip the band aid approach shutdown the entire couldnt for 30 days. Stay home. I call an extended spring break. If we do that economy can recover very quickly and be back to somewhat normal life for a period of time until theres a vaccine. But instead we did a gradual rolling shutdown where each state got make their own decision and each state made their own decision about reopening some states reopened too quickly. We never would have gotten to zero in term much case as end tried to flatten the curve it was always going to at some point have burns and places around the country where still going be present obviously until theres a vaccine. Youre saying that the way that it was played by the media the 15 second clip is unfair because you were bullish you can see how i mean three days later that was, i think, that was a wednesday we bottomed on a monday. A lot of people that werent fortunate enough to be short going into that essentially sold they could have sold based on those horrific forecasts, and probably bottomed out the market and havent been able to recho 40 of whatever it is the market come back. Youre saying that wasnt your intention and not your fault, its by playing that 15 second clip i would say i really blame cnbc took 15 seconds of my interview and ran around scaring people because it was Good Television i hate to be in your face for this but thats what happened. I gave a very bullish message. I said i was buying stocks which i was doing. You guys kept playing the hell is coming. I said were at a fork in the road if we shutdown the country, okay, we can be like hong kong which actually is going back to a normal existence that was administrative recommendation to the government okay that was my recommendation you know, why the market bottomed because california shutdown the day after my interview. Because new york state shunned two days after my interview and people said okay now theres going to be an to end this the market bottomed because states started taking actions that would lead to the end of the virus. The reason the stock market was down 6. 5 before i went on tv because the government wasnt taking the virus seriously enough and states took it into their hands to shutdown the states investors understood a shutdown would kill off the virus and return to a more are normal existence. So bill, given where we are today, now covid cases, what seems like a record surge are you bullish today . Are you bearish today . Let me also ask you specifically about your positions, not just your thoughts but your positions so we dont get into a thing where viewers or others or saying that youre saying one thing and doing Something Else let me be super clear were long term bullish on america. Long long term bullish on stocks. Im cautious on market which hatve a short position on market highly levered businesses will struggle because it will take time for the economy to reopen. Were about 80 about 20 cash in our publicly traded entity and were approximately 98 long so the entity itself the leveraged. The cash offsets the debts, effectively 100 long and shorter opposition in the high yield credit index which is a composite. Do you foresee a wave of bankruptcies yes i dont think the fed is going to bail out companies that have too much debt, and its not clear to me i view it being short high yield credit as a good hedge i dont know whether it pays off or not i think the defaults cover the cost of carry unless bad things happen and if theres a vaccine soon which we hope there si think things could snap back pretty quickly but a levered Energy Company whats happened in the energy markets, you see multiple bankruptcies, companies reequityize and become more competitive and leads to more brauankruptcies. A bankrupt company doesnt have to go fire all the people particularly a large cap, Large Enterprise Company the equity holders lose their investment credit tors can convert their into equity. It can continue to operate and hire people. Thats actually a Pretty Healthy process. Lending money to highly levered companies only ends in tears bill, right now we have more cases per day than when you said that hell was coming i think theres much less likelihood that texas or a lot of these hot spots are probably not going to do anywhere close to what you thought needed to to be done last time so why wasnt hell coming this time considering the virus probably is as prevery lent as it was back then or is it because you think a vane is near term . Because a lot of states like new york took drastic action texas, california are not going shutdown and more cases coming now than when you said hell is coming last time why is hell not coming this time i said if we do nothing, okay if we do nothing, okay, we have 18 months of the virus running roughshod across the country hell is coming if we take aggressive action we can end this quickly right now were somewhere in the middle my expectation is things dont get meaningful better until the second half of 2021. If the vaccines work were in a much better place. Sooner everybody in america wear as maverick in a public place, the more quickly the economy will recover, more quickly people can go back to normal and its not a big deal to wear a maverick it isnt its not a political statement its about protecting other people its everyone in houston, you know, or dallas or other parts of texas wear a mask a lot more people will be safe. Economy will recover markets will go higher longer people say hey, liberty, america, you know i dont want to cover my mouth the more well be in a mess and so i dont know what will happen over the next six or 12 months were having as i say a sloppy reopening of the country. Once miami is completely overwhelmed south florida will have to be shutdown or the tens of thousands of people are going to die governors, mayors are going to take their own actions and if we had a coordinated federal action at the very beginning we could avoid a lot of this. Thats what i was saying a question about the markets. You know youre investing in starbucks, chipotle which will be reporting after the bell today. I want to get your thoughts on that and so many others but we havent talked about the high fly terrifies Big Tech Companies and i want to get your thoughts there have new vested in any of the Big Tech Companies that have been leading the amazons of the world and facebooks and googles and others or a tesla . What do you think about that look, what a crisis does is advantage some businesses and harms others amazon, i think i even mentioned in my interview on the 18th i think is an enormous beneficiary and we scramble to do the work on amazon and our bad for missing. We dont own any of the great high flying Tech Companies whether or not they justify their value acceleration valuea complicated. Everyone who sitting at home and ordered amazon for the first time becomes a long the Term Customer and this is an enormous, they are an enormous beneficiary. I bought a tesla a great car. I have some issues with it but theres a reason why you compare a tesla to a traditional gasoline car its the future. Thats why people believe they are going to take a huge market share. The current valuation you have to believe a lot of very good things to justify it and we like to own things where we dont have to be so visionary about future cash floss to justify buying a business. Youre not shorting tech business were bullish on america. We own restaurant companies, hotel companies, real estate companies. Im very bullish on america and well go through a very uncertain time in the next six to nine months we have a high l contested president ial election whether its a second term of President Trump or first biden term it will create uncertainty in the world. The fact we wont have a vaccine until the First Quarter, getting back to what i want to talk about today, thats why having a cash shell where someone can instantaneously raise 5 billion and be in an offense position in accelerating the growth of their business or deleveraging their company is a good opportunity. Its that uncertainty that creates that opportunity looking forward to watching a trade in the market and partner with our shareholders and accomplishing that all right okay bill ackman, thank you so very much for joining us this morning. It was a pleasure to talk to you and talk to you about so many different issues thanks again we look forward talking to you and following the progress of all of it. Thanks bill. Appreciate it the u. S. Government will spend 2 billion on 100 million doses of the Coronavirus Vaccine being developed by pfizer and Germanys Biontech reporter this is a deal that will be paid only if this vaccine is successful through phase three trials and gets approved pfizer does expect to start that phase trial in the u. S. This month. If all goes women potentially seek Regulatory Approval by october. Theres also an option to acquire an additional 500 million doses under this deal. They say americans would get the vaccine for free this, of course, follows deals that the government has struck under operation warp speed with astrazeneca. It includes 300 million dose these deals are different because those support Manufacturing Development and whereas the pfizer deal is just if this gets through the regulatory process and gets on the market back to you. Great, meg. For more on the governments vaccine deal lets bring in health and Human Services secretary alex azar. Secretary azar, this deal, i guess has been in the works for some time with fierz is that an indication the government thinks pfizer has the lead theres an oxford team theres moderna. 26 teams why pfizer first its important to recognize we now have five Major Investments in vaccine portfolios and were going keep looking for additional one physician need be. The pfizer one as historic as meg described it is a contract, advance purchase contract where we can acquire 100 million dose of this vaccine as early as december of 2020 and have the option to buy an additional 500 million doses and we just saw Clinical Trial data from the phase one of the Pfizer Vaccine this week that shows it produces what we look foirn an early stage of vaccine which is neutralizing antibodies at levels better or equal to Covid Patients in their convalescent plasma it comes on top of four other Major Investments that weve already made in astrazeneca, moderna, and Johnson Johnson what would the timeline be . Nothing would be made, not a single dose would be made until the phase three trial . No. Public . It would start before then this is whats really unprecedented with President Trumps operation warp speed were literally making the commercial scale vaccine now as were going through the Clinical Trials so were doing that at risk using the full power of the u. S. Government and our Financial Resources to do that how is the supply chain in terms of what we need . Is it domestic are there concerns there would be a shortage thats coming from china on this particular vaccine . No. Were not concerned about supply chain and its domestic manufacturing across the portfolio that were investing in weve even gone already to ensure full finish capacity, syringes, needles, et cetera this is where having the partnership with the Defense Department in this is so critical they bring just incredible logistics and procurement capabilities to the table. Melissa secretary azar, who pays for this individuals who receive the vaccine have to pay anything including a copay do insurers bill for this. For any vaccine we bought, the Pfizer Vaccine, those 100 millionvaccine, those 100 million doses would be acquired by the u. S. Government and given for free to americans. Thats the same with the astrazeneca or the novavax vaccine. We continue to be engaged in discussions about others, but we will ensure that any vaccine that we are involved in sponsoring is either free to the American People or is affordable secretary, as youre speaking ive been getting some questions about readers. Not just about this, but related to this, and one of them is why hasnt the defense production act been utilized to get ppe in the same way that the government is being very aggressive on the vaccine front, why havent they been more aggressive on the ppe front especially considering that retail customers still cant get n95 masks. Its an absolutely false premise. Weve been using the defense production act since the beginning around ppe and thats why we have been able to build up supplies. We have created a supply control tower that has never existed before so through fema and the Defense Department what we do is we now can survey the95 of ppe that is actually out there in the commercial Distribution Channel and we can direct it through the med surg distributors to make sure it goes where it is needed and build up a strategic stockpile here to supplement that right now were going through hot spots, you were just discussing that, we really are not seeing requests from our Health Care Providers coming in for personal protective equipment because of the tremendous success over the last three months of hospitals, nursing homes, Community Health centers and states being up 30, 60, 90 day reserve ppe capacity. Were building that up at the National Level to be able to back them up and support them. We are not getting many requests right now. So do you also have the sufficient inventory, secretary, of needles and syringes once these vaccines hit the market and are ready to be distributed to the American Public. Thats right. Thats what i mentioned. With he right at the beginning of operation warped speed locked down fill finish capacity, as well as syringes and needles and glassware. We will be able to ensure we will be able to vaccinate the American People once we get vaccines demonstrated safe and effective to the fdas Gold Standard of approval or authorization. The testing that were seeing, we still hear anecdotal examples of long waits and not only to get the test but also to get the results, mr. Secretary i mean, obviously this had to be done on the fly. Hopefully the Vaccine Administration will have plenty of time to get everything logistically set up, but would you take a lot of confidence in the way the testing played out for the vaccine . I think they are very, very different situations with testing we had to build a National Testing system for a novel pathogen really from the ground up through a Public Private system that was never built for this so we are experiencing some delays, the commercial vendors, the lab corps, the quests are at about capacity, although as they add pooling of testing samples that will increase some of their supply capacity. But thats about half of our testing in the United States the other half is point of care and hospital and thats and Public Health labs and thats turning around either immediately or within the same day and we need to get some of the demand shifted from these commercial labs over into our Public Health labs which are at 58 capacity right now we need these states to crank it up and get double, triple shifting in there to use the equipment. We need hospitals to use their Thermo Fisher equipment thats sitting dormant even as we have 40 million test supplies available. Secretary azar, thank you. Go ahead, andrew. I thought we were done. Mr. Secretary, before you go i have to ask because it was just reported this week your number two, your deputy eric hargens wife emily registered as a lobbyist on behalf of several Health Care Companies and is now lobbying in fact your agency i gather he is going to recuse himself, but how concerned are you about the appearance of conflict this is something i have heard a lot about over the past 25 hours from people in washington. I just saw that news report, i had not been aware of that i assume that the deputy secretary is going through all the appropriate ethics procedures in terms of clearance as well as appropriate recusals. One of the core values we are here at the department of health and Human Services is ensuring ethical integrity in our work. The deputy secretary was in the Bush Administration here with me, so i am going to look into it to make sure, but i assume that everything was done according to our ethics procedures we have a very tough career Ethics Department here that i have tremendous confidence in. Mr. Secretary, thanks we appreciate it keep us updated. We appreciate it thanks andrew okay. Thanks i want to get to cnbcs headquarters, our good friend jim cramer i really just would ask you, jim, to react, if you could, to some of the comments that bill ackman made both about the markets back in march and the markets today and the way he sees it. Right well do you think you are aligned . This is i see the problem of having been on tv for many years and realize that what happens is when you say all hell breaks loose you may not realize thats going to be a sound bite but i think that thats somewhat obvious that it would be and then when you say you buy i dont think people necessarily listen to that they see the whole market come down the futures im not saying there was manipulation im just saying here is the facts. The idea that he was buying when he said that all hell is going to break loose but it wont if things go better, no one is going to pick up the but it wont. I think he is a seasoned player. I, therefore but on his defense i would say, hey, listen, i said everything i was going to do. So lets just say its i would say inartful what happened here inartful i think its a shame because i think there were a lot of people who were scared. Thats not his fault he used scary words and you could say, well, he should have just said, do you know what, i dont like the market here, instead of just saying that all hell is going to break loose. Jim, theres more cases now theres more cases now and hes not saying there is no closure coming, no full closure coming. He is raising a lot of money for spac why would you say all hell is going to break lose if you raise a lot of money. If its three days later you hit the lows and its just you know, i think it speaks for itself i think it speaks for itself. So when you get the call from his people and he says, listen, we didnt mean to say that im just going to shrug, im not going to say tell my moment. Im much more genteel now. Youre jimmy chill. My mom died years ago, you would never get her on the phone. Jim, i want to thank you. Looking forward to what you have to say about tesla and some of the other companies that will be reporting today and hotow play that we will with a much it on squawk on the street in just a couple minutes melissa. 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. Final check on the markets dow down about 33 points thats all im going to say about the nasdaq is up melissa, thanks, andrew, thanks. Did we read tolstoy . Was todays show like par and peace i laughed, i cried all of it. Three hours sounds like it was years ago. Great booking, andrew, im glad we did that with ackman. Make sure you and we will see you tomorrow, melissa and andrew make sure you join us tomorrow squawk on the street is next good wednesday morning, welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber. Got some chop to futures this morning amid new china tensions, the u. S. Telling china to close its consulate in houston got results from united, snap, microsoft, tesla tonight, pfizer news, oil is b