Of the s p 500 that is one of many questions. Power lunch has the answers, right now. Yes, we do, tyler thanks ceos are starting to sounds the alarm about the economic recovery and the path forward. Lets get to bob pisani for the details on that. Bob . Kelly, we were hopeful we would get more Earnings Guidance 40 said no guidance, were sort of hearing for the Second Quarter and into the third quarter, so ibm yesterday a good example of that. He said maybe we were a bit optimistic uncertainly makes us unwilling to provide guidance. Theres other issues, too, the ceo of capital one has made the stimulus has made it different i dont think we have a rigorous measure of how many current borrowers are unemployed i think its reflective of america and there are different degrees of unemployment right now. Thats tough ive seen some positive comments as well. Nasdaq had very big stock volume, ameritrade did as well theres been a lot of ipo activity recently. We have he Anita Friedman on, the chairperson of nasdaq, and she had we have a healthy pipeline, with many intending to execute ahead of the u. S. President ial election. Finally, guys, really good economy conductor results. Texas instruments had great results. They actually provided guidance above expectations you dont see that very often. Paradigm also good numbers it was a historic high yesterday. Thank you very much, bob. The road to recovery, an unmarked path right now. Congress trying to hammer out phase four of the stimulus package, but when will it be time to cut the court and let some of the failing businesses just go . Is Steve Liesman has the story. Some economists are concerned, well, it may be too soon, especially given the surge in the coronavirus glen hubbard under president bush and Columbia Business School professor told me the Federal Reserve needs to provide that cheap financing for viable longstanding mid size businesses that cant, austan goolsbee, under president obama, said those calling for cutting the cord should be careful what think wish for they are being, quote, terribly naive about how the process will be when millions of businesses are going out at the same time he warned of mass layoffs and fire sale liquidation prices if aid is withdrawn too soon, but one said it may be time to start recognizing a new reality. Its easy to identify some sectors where well need restructuring. Airlines wont look the same, restaurants won look the same. That means you dont keep workers attached to those same firms. If aid is going to be cut off to companies, economists said the government must be prepared to provide massive support to workers with unemployment insurance. They generally agree that its good to avoid what would be zombie companies, but wrenching to figure out which ones should live and die and when to start worry about it. I know youll stick around for our next conversation, but i want to bear down a bit. A lot of people are saying one of the things thats kept the economy as robust at this lower functioning level as it is, is that we have given support to Small Businesses and we have put money in the pockets of on unemployed consumers that is definitely true i think one of the nuances being debated its not a nuance, because its in the billions and trillions of dollars how do you provide that support to the economy . Several people i talked to, including adam posen, told me you dont really care care about companies per se, but the workers. Its probably a better thing, more official over time to support workers in a transition to industries where theyre needed rather than keeping Alive Companies that may not be viable i look at my town in suburban new jersey, which i know you know, and i look at strips of businesses that are probably not making much money to begin with. Whether they will survive or not, i dont know. Whether they deserve to survive or not, i dont know i do know if they dont survive, the landlord who owns most of those properties, those strips of storefronts will have a real hard time making whatever commitments he has to his banks, then that ripples through the Banking System lets talk more with chris rupke. Welcome. Youve heard the conversation weve been having. Well get to the question of the 600 emergency unemployment benefit, but the hard question here is we dont want to support zombie businesses, businesses that will go out anyway, but how can you ever tell which is which . I mean, you cant, but thats why government isnt supposed to be choosing these sorts of things, but you know, its way too early for all of this, this is the quickest recession weve in his story the 2001 recession was seven months, the last Great Recession was 18 months. Its way too early to stop supporting, quote unquote the economy when you have the Unemployment Rate higher now than it was the entire last recession. So all these arguments are all to the good. I think its just premature, thus be a few months i take the point if we have too many hotels, to which airline capacity, ultimately the market will determine what happens there, but right now, with 25 Million People unemployed, or thereabouts, i dont floe the final numbers, it would seem a hard time to add to those unemployment rolls steve, any thoughts there . Yeah, i think chris slightly misconstrues the question, if i might. The question is how in the most efficient way to support the economy. I dont want to argue for this point. I,endly agree with chris, but i do want to frame the debate correctly. The debate is at what point do you make a pivot and decide that the eight of the government is no longer useful, keeping alive those businesses that need to be pared down and where resources reallocated to other parts of the economy, help the workers, but not necessarily the companies. I want to say, tyler, from a personal point of view, i know im talking generically about businesses, theres the sweat and the toil of individual Small Businesses in those franchises they created, but it may just be there are too many hotels, too many restaurants, given what people are going to do in this postpandemic era. I dont know the answerings but my thoughts are how do you require people to put up mower equity, take more personal risk in a given government loan that may show, hey, youve got skin in the game, therefore the government is willing to help you in that regard not to pick on applebee, but home applebee s does america need how many marmarriotts . I think its just way too earlier. Were forgetting about the idea for Government Support where theres no private investment, no private spending on consume respect and businesses, and the government has to step in. One of the things were seeing, to move off a little of what companies are doing, how many retailers, bars and restaurants we need. One thing that is being forgotten is state and local governments. I believe in the first round they only got about 150 billion. The democrats and their plan a couple months ago had, like, 1 trillion earmarked for state and local governments. Thats going to be a real problem that needs to be addressed, you know, pretty much right now. I take it youre saying that were still early in this game, its too early to pull back and take put our foot on the brake a bit, that you would support in some form continuing the emergency 600 a week in Unemployment Benefits. Maybe not at that level, maybe for a specified number of months am i reading you correctly, chris . Yeah. You dont want to drop from 600 a week from the extra federal government Unemployment Benefits you dont want to go from 600 to zero i think fed chair powell said that i mean 600 a week sounds like a lot. It is in addition to what the states are given, but it is 15 an hour. So i dont think theres that many people who are being dissuaded about not working now. There are certainly examples i know people who are more than happy to take the 600 and not go back to work, but realistically theres no work for a lot of these people to go. If this was a normal recession, like the 80s are the 90s, even the Great Recession a decade ago, it would be different this is very different in terms of its almost a humanitarian crisis, if you will, you know, where theres a pandemic out there. People are losing their lives, and this is a very special type of recession that deserves support from the federal government, and the federal government needs to enable the state and local governments for support the economy as well. Well, chris, among the many things you said, you got one thing at least right, and many others, and that this is not normal this is an abnormal type chris rupkey, thank you. Both stocks are rallies on the news meg tirrell has more for us. Meg . Hi, kelly. This deal is for 1 million doses if this vaccine is successful in getting approval there is an additional option in this deal to acquire 500 million doses more of this vaccine, that the initial almost 2 billion will secure 100 million which would be enough for 50 Million People this dose does require two vaccines the government and pfizer says americans would get this dose for free they say if all goes well, they could get data on the initial evocation and safety in just a few months and be in a position to apply for approval by october. Then they say they can manufacture 100 million doses globally by the end of this year, and up to 1. 3 billion. They are not of course the only company to get Government Support, but this is a different deal this is only contingent on approval whereas other approvals is to support the development and manufacturing of their vaccines. This is the largest and kind of different purchasing order, guys back over to you. Are you surprise shares of moderna arent lower today on this announcement . Its a good question. One way to see it is that the government will likely also strike a purchasing deal for other vaccines, which could include modernas, so folks might be waiting for that news and to see, you know, where that deal shakes out, and if the pricing is similar to, sort of what has been struck with pfi r pfizer, which is about 20 a dose they did get funding earlier spoke support the development. This funding is contingent on approval its basically an order to buy doses. 1. 95 billion buys 1. 5 doses s its a different agreement. No approval, no order, right . Correct this vaccine neither to get approved in order for the order to go through, yeah. Effectively an option to buy. Coming up, a big week for earnings, as microsoft and tesla get ready to report after the bell we will tell you what investors will watch the hot housing trade continuing to surge. An analyst will tell us how long the odgo times can roll. More after this break. Some Companies Still have hr stuck between employees and their data. Entering data. Changing data. More and more sensitive, personal data. And it doesnt just drag hr down. It drags the entire business down with inefficiency, errors and waste. Its ridiculous. So ridiculous. With paycom, employees enter and manage their own data in a single, easy to use software. Visit paycom. Com, and schedule your demo today. Another survey found 48 of boomers have reduced spending by as much as 500. 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, everybody. Microsoft is back, the stock is up 60 from the march lows and has helped lead the sector as comeback josh lipton has more on what investors should watch hi, josh check out that stock. Its up more than 30 already this year. Easily outpacing the broad mork. The ceo has strong tailwinds at his back, offering products and services that should benefit as more of us work, learn and play at home. The street thinking azure will continue to perform strong her theyll also focus on office 365, and teams competents with rival services slack just accused microsoft of andycompetitive behavior in a new eu complaint, but microsoft firing right back, telling cnbc with covid19 the market has embraced teams, it says, in record numbers, while slack suffered from the absence of and then theres gaming, which represented about 9 of the companys revenue. It should also outperform as people now search for inhome entertainment due to the pandemic there are potential challenges, though, too. After this kind of stock surge, and analysts say there could be noise around certain business segments, too, impacted, guys, back to you. So the megacap Tech Companies they definitely is the market too reliant on these big tech stocks or do you just keep buying the high flyers . Lets talk to kevin and maureen. Lorene, youre saying, no, you would rotate away from tech into other parts of the market s. We are being buyers earlier in the year, in march when we saw the loans. So what were seeing is for conservative investors, who have had perhaps an overweight in technology, now is the time to be looking at maybe going into more of your classic recession plays, like Consumer Staples and health care, moving and taking some of those gains. We still Like Technology we still like microsoft for our moderate and more aggressive investors. Kevin, where you do you fall whether it comes to investing in or avoiding big tech we like big tech. Essential if you look at what youre buying there, youre paying about a 30 or 40 premium when you exactor in net debt, compared to revenue, versus the s p 500 the question is, is it worth paying 30 or 40 more to own technology we think it is for a few reasons. First of all, if you look at the debt that the companies have in aggregate, its less than 10 of the market value if you look at the profitability, its double that of the s p that gives the whole industry a tremendous amount of flexibility when you go through a downturn in an environment like were in now, where we have a lot of question marks still out there, we want to own the most flexible companies we can, and technology is at the top of the lith list are you paying a premium sure we think its worth paying you cant avoid it if youre in any tech index funds, basically in the s p 500 its just a big portion. So its not just about whether you do or dont pick those names, right there also has to be a strategy for how do you avoid overexposure through Everything Else you own. Just to your on point, the s p 500, the top five names represent about a quarter, so were saying its a stock pickers market, look at individual holdings versus going s p 500. Now were looking at potential tesla being part of the s p 500 as well. So like you said, people looking at other areas, just look at the disparity, which is largecap growth and largecap value at some point were going to see a rotation we will eventually see the same rotation into value. What im saying to investors is look at some of those value names, look at some of the small and mid cap names. What happens when eventually this run stops but for the whole market yeah you could get a rotation into value it largely ignores debt. Were 20 years into a large easy credit cycle even though the valuations look good based on book value so in an environment like this when you have the s p earnings down,s tech is down ten, down ten is almost like being up as far as were concerned its important to focus on. Dont be just guided into value just because Something Like cheap you probably are buying rfk that is being probablily priced into the market you have to be careful of that is that a good zoom background or really in an office with another person no, no, these are actual live people its sparsely populated at the moment, but were back in the office. Refreshingly normal to see, almost startinglily so we appreciate it. Still ahead, the rally in chinese stocks taking a breather today. Trader will tell us the names that are still safe to guy. Plus tesla gearing up for earnings the stock has had an incredible run, up nearly 280 this year. Thats why one of their factories was shut down. More power lunch is next [narrator] at Southern New Hampshire university, were committed to making college more affordable. Thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Woi felt completely helpless. Hed online. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Welcome to power lunch. Tensions between the United States and china escalating after the u. S. State department ordered is the consulate in houston, texas, to close on intellectual property and privacy grounds. The ministry shouting back for thousand this further decoupling between the United States and could impact investors, let ace about, and jc ohara which names do youing this are at risk . Yeah, i think these tensions, theyll be here for a while. Well see flareups for the next decade the two stocks that im concerned about here, which is wildly held stocks are apple and nike. I think what people need to be thinking about is by potentially trimming heres why its absolutely no correct that apple seems to be priced for perfection, up 32 this year, forward pes about double the five her year average. It is within striking distance, and in addition to guess a huge portion of revenues, china also make 23 of their shoes. So thats a problem as it relates to tariffs theyre Good Companies a lot of people own them i think its important to really focused on leadership here in china, so much of the u. S. Technology is current leave. We node that the charges are still in a clear, welldefined up trend its important, and i will even say its vital for the bulls to see this chart hold above those at 65 s. Thank you all for more, follow under the circumstances on twitter thank you so much still ahead, tesla reports after the bell can elon musk deliver . Plus the right of the retail invest offers, brokers reporting unprecedented trading will be, and why the Housing Market is surging. All of this when power lunch returns. 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. Here is your cnbc news update President Trump is expected to expand a program sending federal agents to American Cities to help fight crime operation legend is also expected in a few cities albuquerques police chief says he hopes any such effort is not, quote, a cheap political stunt, end quote. A Canadian Court has reuters reports that over the last four years, more than 50,000 people illegally crossed the u. S. canada border to seek asylum canada says the pact violates the human rights charter. Wearing a mask in Public Places will soon become mandatory in the nations capital. You are up to date thats the news update this hour ty, back to you. S. Its really whether or not tesla can report a profit. Yeah, well pros on the other ones this stock moves into results for the quarter. You see this quarter after quarter, so ive had people email or ask me, hey, what is going on with this run justify runup three things well be watching for, a, do they post a profit, and also, what will they say about the location of a second plant, a socalled gigafactory for the cybertruck in the midwest. Will they say its going to be in austin . Is tulsa nothing at all they exceeded delivery guidance when it came to the estimate out of the street on Second Quarter deliveries that was at a time when they also had to deal with that planned being shut down for about four, five was ex. Soo what is the fullyear geeance . Previouslily they had they expect to deliver at least half a million vehicles j. D. Power out with its analyze appeals study i. This they talk with owners and say why do you like this vehicle . They can say this brand is highest. Came in number one, tyler. A lot of the answers had to do with elon musk i love that, phil people love it because of elon musk. Name one other brand that exactly what is the new name of fiat and peugeot . Interstellar thats for the holding company. Phil, stale right there 4re9s take more about tesla an run. Tim higgins what was the significant of the including so what would the significant be for the stock if it joans the s p 500 . For the stock and investors, its now that you have a number of funds and Fund Managers who have to have holdings in their particular fund. They will include teslanow that theoretically will give the stock a bump and further support. Also, for elon musk, i think its important to know for the longer time, he has sought out validation from the Broader Market but clod is true validation. Which in a lot of people said. Phil, the tesla brand has had ups and downs. Some years ago, i believe Consumer Reports called it the nearly perfect call, but more recently there have been problems with did. So why do so many people still go out and buy the car youre schooling any on jeep, but yet it the interesting thing about this survey, this appeal survey, it is the exact same people who answered the survey, who also rated the initial quality of tesla as the worst in the industry ive talked with tesla owners, friends who have a tesla theyll say things like, yeah, something is not working exactly as it should, or when it was delivered, this wasnt working but you know what . Its so cool to drive. Ive people say, you know tesla owners think its cool not that they use it all the time, but the guy put a fart sound in there lets bring in tim higgins from wall street journal. Tim, i was going to ask you about the significant, both for the stock and for the company it would be a recognition of the vision and dream for the past 15, 17 years to the industry, and to essential rise to the ranks that he would be part of, you know, the benchmark indis. For the investor they get so the benefit might be shortlived then the equities trail behind the s p 500. Do you think there would be reluctance because its been so sharp . Did it go below 200 briefly last year would that be reason for pause to say lets make sure this is for real theyre concerned about the fundamentals of the business, and you. Phil, final question for the report, you mentioned about half a million for the forecast do you think its should we expect they will put owl fullyear guidance elon musk believes, a couple things they have going in their favor. They have half a year to make up for any potential shortfall, and, two, china continues to expand in terms of production and in terms of deliveries so thats momentum on their side that gigafactory in shanghai and the deliveries over there. Phil, thank you we appreciate it tyler . Still ahead, retail and Airlines Face the music. A broker trading boom, and why the Housing Market seems to be defying gravity. When we come back. 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 we have news on nvidia josh lipton has that this is an interesting headline. Its said to attract nvidia interest we reached out to both companies. They are declines comment at this time. Its a cpu franchise, the primary brain, and would get them back into the mobile business but no comment at this time, guys. Josh, thank you time for todays power movers, starting with spotify. Le deal secures the label joins massive catalog for screaming. , macys and kohls are tanks after ubs downgraded United Airlines knee the lows of the session after reporting a 1. 6 billion loss for the Second Quarter. Going forward it will require all passengers to ware face masks or risk receives, kelly, a flying ban. Now to the bond market, where Rick Santelli is tracking the action two day of tens all those maturities today, when theyre at their lowers interday yeels would be below the yam tike one of the reasons is big stimulus package on the budget. And you can see its close to 1 as those yields move down. Kelly, back to you. Meanwhile, Retail Investors are helping to send trading volumes to new records, all from the comfort of their sofas well have fresh details on that story, next. For my mother 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, top brokerage firm, with people starting to get back to work with growing volatility, can stimulus checte running out, can it last kate rooney has the story. Interacti Interactive Brokers are seeing frenetic activity and they say that can hold up. These firms have set the bar high look at some of the triple digit growth at charles schwab, trades up 126 since last year t. D. Ameritrade, a more than 400 increase in trading compared to last year and a 62 higher jump than the prior quarter. Interactive brokers have seen trades jump 111 year over year. Nasdaq this morning also reporting record inflows in Exchange Volumes across the board firms say this was driven by individual retail traders. Analysts are factoring in more muted growth for the second half of this year headwinds include sports coming back, stimulus checks eventually running out and economies reopening meaningless time at home for things like day trading. Low Interest Rates putting some pressure on net interest margins. One factor is sticking around. Zero commissions analysts say that even if trading fizzles, growth should stay above where it was way back when you had to pay for trades back to you. Way back when you had to pay for trade. Couple months ago yeah. Thanks new data out today shows the Housing Market may be stronger than ever. Well discuss why next dont forget, you can always watch or listen to us live on the go on the cnbc app we will be right back. Look at that newsroom. Experience the adventure of a bigger world in a highly capable lexus suv at the golden opportunity sales event. Lease the 2020 nx 300 for 339 a month for 36 months. Experience amazing at your lexus dealer. Ehow does the world reopen for business . To return to the workplace, safely, companies will need the right tools. Thats why salesforce created work. Com its an allnew suite of apps, expertise, and services. To manage this crisis today, and thrive tomorrow. Everything Companies Need to return to the workplace. Lets reopen. Safely. Despite all this economic uncertainty, the Housing Market is holding strong. Existing home sales hit a new record diana olick has all the details. Diana . Thats right. Home sales took the biggest monthly jump in the history of the realtor survey, thats going back to 1968 not surprising given how far they fell in april and may, but closed sales in june jumped nearly 21 month to month. Still not back to prepandemic levels and still over 11 lower than june of last year but its a start. Realtors say sales would be higher if there was more for sale inventory dropped 18 from a year ago to a fourmonth supply of homes for sale. As a comparison there were 350,000 more homes on the market last june. Tight supply and record low Mortgage Rates are keeping prices in the positive the median existing home price hit another record high of 295,300 thats up 3. 5 annually. Thats thanks to bidding wars and a much faster market the average time in june was just 24 days to sell a home. Down from 27 a year ago. So the big question is can the gains continue into the fall not if we go into another big lockdown according to the chief economist. Just 7 of buyers did only virtual touring in june. So if home tours were to close up again, sales would most likely take a hit. Back to you. Thank you very much lets dive deeper into the strong Real Estate Market and whether it with keep up its hot streak joining us now on the state of housing is jonathan walishin from ubs Global Wealth management welcome. Nice of you to join us today do these numbers surprise you at all or are they basically reflecting sort of pent up demand people who werent able to go look at houses in march and april and those months thanks for having me. I think theres some surprise in them in that given the fact that were staring down the barrel north of 12 unemployment, you know, logic would have dictated that probably sales should have been lower on some level theyre not surprising for a couple reasons. If you dissect the data and you look where the sales occurred, a lot of them occurred in the Southern States and in the sunbelt markets, which have been the beneficiary of a lot of population and job growth. Number two, Interest Rates are incredibly favorable for the highest quality borrowers we broke below 3 for the first time in 50 years also the dearth of available supply has helped that the last thing that helped is a lot of states have begun to remove the lockdown and inperson viewings when we lay around to that, what we heard from some public Home Builders in terms of activity there, theres not complete surprise there you mentioned the idea that people are maybe migrating to the south, thats where population growth has been thats where job growth has opinion. Are you sensing a move from the urban cores to the suburbs as people may not feel as comfortable being in crowded vertical living environments its an interesting question. We tried to break down what we think is structural versus kind of cyclical. One thing that we think is an actual structural move is the move from what people would call blue states to red states. And if you look at the data over the last ten years, you have seen a move out of the five highest taxed states into lower taxed states, whether thats an east or the west thats clearly a structural trend that we think will continue what is more cyclical in our view and time will tell what kind of legs this what is the move from the dense urban environment to suburban. I live in west chester county. We have seen some of that. But i think its always a little one has to be careful in making the judgments during the middle of a crisis go back to 2000, after 9 11, what did we hear no one would fly in a plane or live in a high rise or work in new york city. The key is once we have the vaccine, its very possible we could see a reversal of that trend. Median prices are high. Lets talk a little bit about what may be happening at the lower price levels of the market while there are lots of buyers out there, there are also a lot of people who are now without jobs or have seen their hours cut. There are a lot of people who may be in danger of foreclosure. Are you concerned about that wave hitting shore any time soon there have been foreclosure moratoriums under the federal borrowing programs what do you see there . How do you factor that in to your outlook yeah. Look, the entry level or more affordable price point has been the strongest part of the market and, you know, one of the reasons that we entitled our report defying gravity is because if you look at the vast majority of the layoffs that have occurred, they occurred more in Service Sector jobs which tend to be on the lower wage scale so if we are to get an increase in unemployment in higher wage jobs, that could be a risk for the more entry level market. As far as foreclosures go, about 75 of the mortgages out there are ultimately either backed by fannie mae, freddie mac or the fha. Their moratorium programs have said once forbearance ends you wont have to make a bullet payment or balloon payment, thats good news but that does leave 25 of 11 trillion market in the hands of either Balance Sheet lenders or private label Mortgage Backed securities from that perspective there is no consistency in how the period will end certainly there are risks going forward. Jonathan, we have to leave it there. Thank you very much for your insight. Appreciate it. My pleasure thank you. Well, the big news over the next couple of hours will be microsoft and tesla. And i think chipotle, too a lot to watch well turn it over to closing bell for that im sara eisen along with wilfred frost. Stocks are higher as the rally rolls on but the nasdaq dipped back into the red. Lets look at whats driving the action right now optimist around a virus vaccine candidate pfizer and home stocks are higher today after a record increase in home sales and a ninth straight weekly climb in mortgage applications. News on the stimulus front
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