Transcripts For CNBC Squawk Box 20240712

This is what they came up with me and you, buddy. Just us. Just us most days, we cover the whole gamut. It is not like they are going to miss out in terms of anything the yankees going to be good in houston, now a yankee you had max. I am learning how to bet baseball just taking the underdog does not work they know how to do this if you put up 30. You could win your 30 plus more than 30 if you bet on the underdog without a spread. The underdog always loses. I found a new way to lose. Well talk more about this a great game dodgers just kicked ass. It was weird did you watch any of it . It was a little weird all i saw was the clip of fauci with the opening pitch missing by too much. Who else did that i think it was 50 cent, as i recall it went straight left. I did that, i remember it is verydaunting everything going on in the world, the New York Post everything going on in the world. Got to embarrass the poor guy. Hes a doctor, not a baseball player glad we stalled a little. Already come back 50 here is a move a look at the percent move lower. A look at the nasdaq, much lower than where the dow is. 2. 5 lost as where the s p and the dow were down 1 treasuryyields we dont have to make a claim. If that rises then we are thinking lets get to the china story overnight beijing is revoking the license for the u. S. Consulate in china after ordering the houston consulate to close today stocks falling there i wonder how that speech is taken to you there eunice joins us with the latest. He did stop short talking about china in his blistering speech, he described it as frankenstein created by the policies of the free world he was essentially calling on all the parties in the free world saying if the free world allows china to continue that could change the free world. It was a speech they did not like they said it was full of bias and unattached to reality. But it did take some measures at the consulate in chengdu that consulate will be shut down within 72 hours. So by monday the Morning Ministry accused american staff thereof interfering in chinese internal affairs. On state media, the running of why china chose chengdu is this. It is essentially one of the sma smaller consulates it is seen as not having a huge impact on American Business but at the same time wouldhurt the reason why it has been explained. They want to show it has been tough. They want to leave the door open it seems really difficult at this stage we could take it to 6 30 our time talking about all the ramifications. Trade, we have all these problems in the back of our minds global trade is something we can count on if we are talking phase two talks or even phase one. That is another thing in the market in a slow see con my. That doesnt help. Did the houston consulate, it reminds me of casablanca there is spying and gambling going on did it get worse or is this a reprizal from the United States because of what is going on in south china or with the uighurs. Is it a sum total so we decided to do this or did it get worse in houston i dont know. Thats a question better asked for the folks in d. C from the chinese perspective, they continue to deny any spying going on the general gave an interview to politico saying they are not going to leave until further notice that could become a huge conflict point it is a very difficult situation at this stage. Thank you, eunice, weve got other stuff to check on with you. Andrew, we have an election coming up. Good we are tough on china and youve got an election coming up, that will be the narrative i think youll have both candidates try toout do each other. Youve got china with the whole hedge fund i think this is going to be a political football do you think it is a coincidence . Are you suggesting that the administration is trying to jim this up ahead of the election . Either side you could argue the chinese side is doing it you could argue but it is interesting. People are very worried whether our election will be hacked by russia, china, iran or whoever which is the candidate that they would want that is not so clear i was saying it would be a win Goldman Sachs reaching a Settlement Agreement with malaysia involving the state Investment Fund 1 mdb. Goldman had been accused of misleading investors over bond sales that raised 6 do. 5 billin for e fund lookser look looking at what they reserved. Ill try to get to that legal reserve number in a moment a lot expecting that tech hearing that was supposed to take place at capitol hill is likely postponed leaders of amazon, facebook and dulg were expected to testify in mondays hearing we talked about this yesterday ond what he was expecting to hear with a lot of talk it is not clear yet when that will be held postponed because of a service being held for the late john lewis on monday. Also worth noting i believe at least part of that hearing would be taking place virtually that makes it easy for socalled travel plans and in washington, both sides hate tech so much. They both have their reasons they might agree they dont Like Technology both sides are emboldened to try something. Intel shares are falling beating estimates and Third Quarter guidance fell short. Intel fell short of fullyear guidance the share of the prepandemic guidance at 5 shares of amd rose after intel announced because of the delay of the 7 nanometer chips how you can do it with 8 nanometers delaying that to 2022. We want smaller, right you want bigger gigs but smaller nanometers yep you want your settlement to be lower than your legal reserve. This is the opposite they said that cost could exceed that clearly it has somebody wrote a story about that they did. The billion dollar whale you can buy a few 737s or whatever that boeing business jet is the cdc with new guidelines on reopening schools well get reaction from dr. Gottlieb and last night, baseball with the organ playing. They piped in some fan sounds. I got induced to take the nationals and lost taking a look at the first pitch. Really me. That was me. I just wanted to give it to the catcher. Dr. Fauci probably wishes. Well keep showing you this dr. Faucis big flub yesterday squawk box will be right back. Some see a Grilled Cheese sandwich and ask, why . I see a new kitchen with a grill and ask, why not . I really need to start adding less to cart and more to savings. Sitting on this couch so long made me want to make some changes. Starting with this couch. Yeah, i need a house with a different view. And this is the bank that will help you do it all. Because at u. S. Bank, our people are dedicated to turning your new inspiration into your next pursuit. To turning your new inspiration music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Welcome back this morning on the impact of Senate Republicans announcing the delay to release of covid relief. Missing the deadline to renew. The Trump Administration requested additional time to review details at the end of the month, states will stop paying that 600 a week that congress had authorized in march. The cdc released the longawaited guidelines for reopening with a heavy emphasis on getting students back in the classroom that is crucial for a lot who dont have child care alternatives and nutrition many reasons including good hygiene, spacing out students and keeping students in pods where the same groups Stay Together throughout the day and encourage the school to have a plan when a student gets kick saying it is not necessary to shut down the entire school if someone tests positive lets bring in dr. Gottlieb. Thank you for joining us did you have any in foput into these decisions . Do you agree with what we are talking about do we need more. Working with some of the states there are things that werent addressed like going to the hybrid model we all want to see schools open especially in ways the virus has been brought down to lower levels some situations where they need to close down temporarily or go to a hibryd model other countries did. There was destructive lessons from israel. I think theyll need to look beyond the guidelines at this point sometime things to consider if they staggering, they are looking at the proposals for us. Monday to or friday, that doesnt let parents get back to work if it is all we can do, that doesnt solve the problem we are faced with the first consideration is the safety of children and teachers in evan viernmentes where there is a lot of spread, you are worried. Connecticut is looking to go to five days a week in class and provide an athome option for parents who dont feel comfortable. I think we should make an attempt to get kids back i think thats important there might be ways you can go to and in class option where it is easier to create social distancing and force cohorting, the pod model. And maybe go to hybrid model for High School Students where they can learn online more easily. Districts need the discretion to make those decisions you are seeing a lot of variety of how districts are approaching this i wanted to ask you about texas. It is a school question i was talking to the supervis in dent of a school district. In washington, d. C. Theyve chosen to go virtual for the fall a lot of the major cities, new york and boston, the issue for teachers apparently. With he talk about parents and what people will did inside the physical school. Maybe i hadnt given enough credence is really how teachers are going to get to the school in major cities, they usually take Public Transportation and the like that is concerning more than even being in a classroom with children. As youve said, under 10 years old are unlikely to spread it in the same way not just for teachers. Getting workers to the work place to try to take staggered start times so they can do it off peek hours a lot of businesses have the ability to do that in schools, you dont have the ability to do that you might be able to work that out but it is a lot harder there is a concern you dont want to put kids on a crowded bus if the goal is to keep smaller cohorts more difficult in city schools, crowded schools. These are things cities are considering. We have greg abbott coming on we all try to grasp at positive news so the number of cases down a little bit in dallas and houston, i guess, scott. But deaths up. Hospitalizations down. So this is like the converse or whatever it was where we were talking about earlier where cases are going up but you werent seeing deaths. Havent we seen this play out before on the east coast is it positive news coming out of texas yet definitely an indication texas, florida, arizona are starting to peak a little less clear in california they still seem to be building cases. Other places are approaching a plateau around here. Unfortunately, youll see deaths lag. The time to death is about four weeks from first exposure to death from this virus on average. There is an indication the epidemic is continuing to close when you look at google mobility data they start to pull back. That said, i think it is an extended plateau there are some positive signs taking place in these states right now. Okay. That seems to be a little more positive i dont know that id eat inside a restaurant. Id eat outside. Would you take a plane right now if you had to . Ive gone out to eat several times outside. I wouldnt eat inside. We have that luxury in the northeast where you can have a restaurant outside harder to do in phoenix or texas. I would travel on a plane. I would wear an n 95 mask with proper pe and precautions, id feel comfortable traveling thank you well hopefully see you next week maybe monday good to see you. Thanks intel is down. The dow would be up if it wasnt for intel and that crappy forecast thats a big loss in that stock indicated to open 53 and change. That in large part is why. Negative almost turned positive by the way, im continuing to dig in to the malaysia goldman settlement analysts looked like they were around 3 million. They said it would exceed 1. 9. Analysts had it about three. Who brought ta deal to goldman. That is not easy to cost 4 million on a movie. Is it . The stock is now up on that news even though analysts had reserved around 3 million. Where is the whale now . Where is that guy . I dont know if anybody knows. Hes in quarantine somewhere. He could be on an i lasland. And baseball debuts last night. Gge t now, take a look at th biest premarket decliners in the nasdaq well be right back. Jim, could you uh kick the tires . Oh yes. Can you change the color inside the car . Oh sure. How about blue . Thats more cyan but. Jump in the back seat, jim. Act like my kids. How much longer . Exactly how they sound. Its got massaging seats too, right . Oh yeahhhhh. Oh yeahhhhh. Visit the mercedesbenz summer event or shop online at participating dealers. Get 0 apr financing up to 36 months on select new and certified preowned models. Some Companies Still have hr stuck between employeesentering data. A. 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. Welcome back to squawk box. Baseball is also back. Dr. Fauci throwing out the first pitch at the opener. It is almost mean to show. We all want to sympathize with him. The ball missed the mark fans said the doctor didnt want anyone to catch anything thats the joke of it all. Others said, im glad hes not practicing he should be focused on other things from behind, it looked even worse. Im telling you, you think it is easy you are imagining the worst Case Scenario i think i could have gone through the wine up and it would have worked. I dont know there were people. Other people were saying he flattened the curve. I think 50 cent had one that was worse. There. Oh, boy. As for the game, it was the first inning a 96mileanhour fastball the yankees took an early lead i was watching because i had the nationals. At the end of the first inning, they stretched the lead and it stayed there in the sixth, the skies opened up the rain delay was called due to weather. In a later game, he was out. Coming up, much more i think the yankees and the dangers are good you cant hope for the worst team in the world. I dont know what the worst team is you cant win and make all this money. Should i start betting on all this stuff 20 on a game you know what. It was about 6 00 last night it was nice. If it only cost 20, im looking noerd forward to these guys in an empty stadium. Much more on the challenges. Ill help you. Ha. Ill help you lose. More on the challenges of professional sports. Well talk about the leagues restart in a few minutes the pull back in big tech after that incredible runup. Well talk about strategy, next. 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. 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. Welcome back to squawk box this morning take a look at equity futures. Weve been modulating. Nasdaq looks like it opened and we had a pull back this morning in the nasdaq. That pull back in big tech stocks looking to continue this morning. We want to talk about that right now after the run up since march. Look at the moves for apple and microsoft. With us now, our guests. Want to go to you for a moment we heard news late yesterday that this hearing that was coming up this monday about some of big tech and the idea of breaking up big tech has maybe been pushed off for some period of time. Is there any implication or . A drama well see. I think the latter. Its like zuckerberg and bezos delay studying for a big test. We are hearing week of august 3 when this happens. It will be the same just delayed because of the Memorial Service for john lewis dan, does it matters to the stock market when you look at what happened here the sentiment changed in the past 24 hours. What do you attribute the dow draft on some of these now a bit of risk off trade microsoft reacted post quarter even though the massive results, the selloff. You look at tesla. Those are two key baro meters. The stocks have had massive runs still view the speed bump. Still now 20 to 30 higher despite some of the White Knuckles we are seeing two things here. Well get to dan primak. Do you think this was risk off because of the two hearings or Something Else i think risk off ahead of earnings next week hats off to microsoft and tesla. You go to amazon, apple, facebook are risk up i believe those are going to be strong numbers and i do see those stocks higher. In terms of the post hearing, it just kicks the can down the road it continues to be a risk between beltway and big tech battle Going Forward i want to get to that battle and the risk in a moment one thing i heard you just say is you think big tech, the faang stocks are up an additional 30 from where they are today 12 months from new . Our view is there is a lack of secular growth. Strong are getting stronger. The fundamental stores continue. It is a rerating of tech that is what continues to happen just to be clear, how much of this is a multiple expansion story and what is the upper limit on that . Versus a fundamental story thats a great question i think a lot of it have been a rerating and the covid19 environment. A lot of these growth stories have been pulled forward you are seeing a lot of the stocks reacting. Investors are chasing them i still believe there is room ahead given what we are seeing if you listen to the other dan, these companies are going to be bigger than ever 12 months from now creating even more political pressure to break them up do you think this is still just a lot of talking i still think its a lot of talking. Give it 12 months. To get an antitrust case together, usually takes two or three years. We wont be at that point. It is talk and what the doj might be doing is different. They will argue that theyve got competition from one another of the companies and they are all very different we group them all together all the time if you wither to make a legal antitrust case, they would be for very different regions what do you think is at greatest risk i would think it is google. I think antitrust cases against each of them has been complicated. One mitigating factor here all of them are going to make the argument explicitly or implicitly, if you break them up, china is going to get a leg up in the global tech internet wars and that will have some res nens in Congress Great to see you. It is a debated discussion well continue to have with both of you for a long time. Thanks coming up, stocks to watch we are talking sneakers and American Sports are back baseball kicked off last night kicked off doesnt sound right for baseball well talk to the wnba commissioner you can watch or listen any time on the cnbc app any time please do. Its easy to get lost in the economic uncertainty. The volatility. The ambiguity. This moment calls for more. 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. Pampers cruisers 360 fit can too with a stretchy waistband and adaptive 360 fit so they can move the way they were born to [music] born to be wild pampers cruisers 360 fit stocks to watch this morning, mattel shares are on the rise even though they reported a Second Quarter loss to 20 cents a share. Net toy sales declined 26 leading by a drop of the vehicle category and dropped in infant, toddler and preschool sales but barbie sales up. Shares of sketchers sharply higher the loss of 44 cents a share wasnt as bad as 66 shares estimated. E commerce sales rose 24 in the quarter. Andrew okay coming up. Slowly but surely, sports return baseball opened last night and wnba tipping off on saturday the commissioner will be our guest joining us to discuss how the bubble is working and what the return of sports means for the country. Announcer dont forget to subscribe to our podcast youll get interviews, original content and behind the scenes access look for us on Apple Podcast or your foravite app and subscribe to squawk pod today. When we started carvana, they told us that selling cars 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. First pitch. Tomorrow Anthony Engelberg joining us, my golf buddy and i use the term loosely your new job you went from an accountant at deloitte, ceo, to a commissioner of a Major Sports League you pinch yourself every morning . How do you do that how did that happen . How lucky are you . So im yup i was looking, joe its great to see you. For some different with the womens leadership platform. Something i had a passion for. My father had played big time college ball it was a passion thing obviously i had no idea wed be coming into a global paandemic. I was kidding its not really a job tell us about the bubble 22 games and then the playoffs 50 are going to be televised, kathy. Im not saying that its good that this happened, but this could actually continue the great momentum that you had with the wnba could bring it to a new level. Yeah, thats exactly right. Part of this was to get more exposure for the great women athlete and to move the numerator up the coverage is less than 5 of sports gets covered. Were doubling the amount of national tv windows and i think there is so much momentum, joe, as you said. But by the way, our top priority remains health and safety of our players, teams, all of the staff that are here. The players are affectionately calling here at img academy the wubble for the wnba bubble fun thing the players came up with that weve adopted unofficially the protocols were developed over the last few months since we came off our First Virtual draft in april and a lot of scenario planning. A lot of my business experience coming in handy and we decided we were going to play a 36 game per game season. 22 game per team season. We were going to take a month off for the olympic break. That allows us to get 22 games in in this same footprint ending in october. I think its exciting well talk about the serious things first not a single case of covid while people have been in the bubble at this point. So far so good. Thats right. Weve been fortunate its complicated we started with individual quarantining as players came into florida we then went to just Team Activities four days later and now were obviously starting some scrimmages this weekend and tipping the season off tomorrow at noon on espn. Very excited to get tothis point tomorrow its been a herculean effort big sacrifice by the players, coaches, everyone to come to one single neutral site and follow the protocols and so far so good but i dont want to jinks it. Youre pretty serious about it, too. If someone breaks the bubble, i mean, theres a problem and youre watching that closely i think andrew has a question, cathy. Hey, cathy. The question i was going to ask is how much does it cost to create the bubble, maintain the testing and to the extent there are lessons for other Business Leaders out there who may not be able to create a bubble the way you have, but if theres some kind of i dont know, can you create a quasi bubble or hybrid version . Are there lessons from what youve experienced here that you think are applicable to the rest of us . Yeah. I think im on the partnership for new york city and have been listening to what Business Leaders are doing in reopening their businesses i do think there are lessons here learned theyre not different from the Public Service announcements youve been hearing around wearing masks, washing hands, not touching your face, temperature checks, symptom checks those are important, too, testing is important the temperature checks and symptom checks, making sure everybody is following the protocols. One thing ive learned in the three weeks here is that if you follow the science, it works. But how did you get how much does the testing cost do you think that could actually take place at a company, at a warehouse, at an office building, regular test that go youre doing yes obviously the entire setting up of the wubble is expensive. You take the science because theyll be playing on the court with one another take the science and take someone out if they test positive the testing is often, but it does get expensive were fortunate because we have a smaller scale league with 140 players or so and obviously staff but, you know, no doubt its expensive but i think its working and it could be a model and there could be hybrid models because i dont think we needily have to create a full bubble but i think you have to create an environment youre constantly cleaning clorox has been a great partner with clorox wipes and electrostatic sprayers i never thought i would know so much about electrostat tiic cleaners lets get to the playoffs quickly. You dont need 60 lets do 22 almost like a tournament let the cream rise to the top. Get to the playoffs and see what happens. I think its going to be great it will be good, cathy. Thank you these Women Deserve a season it was pretty existential for us to have a season we have great tv windows and well be off and running tomorrow. Could turn out to be good for the wnba thanks appreciate it. See you again soon andrew when we come back, two big hours ahead. Former House Majority leader eric cantor will join us to discuss deal making and the next round of stimulus. Take a look at shares of honeywell. 1. 26 per share. It did say it expects continued sales to be challenged in some segments, inudcling aerospace and oil and gas. Well be right back after this ad and adaptive 360 fit so they can move the way they were born to [music] born to be wild pampers cruisers 360 fit 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. Find a stock basedtech. On your interests weve just been finding a way to keep on pushing. Or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. Stocks snapping this weeks winning streak as big tech tumbles pulling the overall markets lower. Well find out whats moving markets. Tensions growing between the u. S. And china american consulate to close and secretary of state mike pompeo blasting beijing were going to get the latest and reaction from former House Majority leader eric cantor. And then the secret life of jag zeitlin. Well discuss his abrupt departure as the second hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc on friday im joe kernen along with Andrew Ross Sorkin. Becky is off today u. S. Equity futures are indicated down about 60 points or so. Intel, a big drag on both the dow and the nasdaq had a tough session yesterday and yields, we are seeing some historically low yields in a lot of parts of the yield curve. The claims number yesterday rekindling some fears that maybe the recovery will be uneven. U. S. china tensions escalating over the past 24 hours beijing is revoking the license for u. S. Consulate in china after the u. S. Ordered chinas houston consulate to close yesterday. Secretary of state mike pompeo targeting china in a fiery speech amid the growing dispute between the two countries saying the u. S. Will no longer tolerate beijings playbook chinese citizens only to see the Chinese Communist party to exploit our free and open society. China sent propagandists into our news centers, high schools, colleges, even into our pta meetings the truth is our policies and those of other free nations resurrected chinas failing economy only to see beijing bite the International Hands that were feeding it. Pompeos speech made only a small mention of the consulate closure in houston instead it focused on the broader tensions of the u. S. And china. Feel bad for our viewers in china. I feel like this is a strobe light today. We go in and we go out we say the word pompeo, i think we go off. Wish we could do that over here once in a while. When you dont see something you dont like, we could just turn it off actually, people do do that, i think, occasionally. Hopefully not too much the good news is here you can do it on your own volition exactly right weve got some news this morning on Goldman Sachs Goldman Sachs has reached a 3. 9 billion Settlement Agreement with malaysia. This involves that case involving state Investment Funds 1ndb a settlement with goldman. They had been accused misleading investors over bond sales that raised 6. 5 billion for the funds. Of course, this involved leonardo decap did i kicapri. The settlement, we should describe it, a little bit more than what we had expected. Analysts expecting 3 billion. This is 3. 9 billion this has been a cloud over the company. Youre watching that stock rise this morning a little over 1 now 1. 25 . We should also note the way the structure of the settlement, theres a guarantee. Its about i can give you exact numbers but its not 3. 9 unto itself. Some of the assets are being returned to malaysia goldman is guaranteeing some of it its a little more complicated than a straight transaction. Joe . We had seen the dow coming back i think American Express didnt help the cause just up with some Quarterly Earnings recorded a profit 29 cents a share. Analysts had expected a loss of 11 cents a share revenue was below estimates. The stock immediately pulled off about 2 and that playing in a little bit into whats happening in the dow down about 46. The company says spending volumes set a low point in april but gradually improved in may and june Senate Republicans are going to unveil their Coronavirus Relief plans early this week. Treasury secretary mnuchin outlined what will be in the next round of stimulus and what wont be in on squawk box yesterday. We are where we are because congress, the senate and the house reacted quickly and clearly state major parts of our economy that would have been devastated otherwise weve got 3 trillion. Weve only put 1. 6 trillion in so we have a lot of money left to go. Were focused on putting another trillion in quickly. That will be c. A. R. E. S. 4. 0. If we have to come back for c. A. R. E. S. 5. 0, the president will consider that at the time. Lets welcome in eric cantor. Thanks for joining us. Youre in the private sector now. Debt is something that the private sector has to Pay Attention to it for every company. When it gets too high, you can just feel it and what it does to the operations eventually we need to think about it republicans are coming under a lot of criticism for not being able to agree with each other about how to do this, but there are some that genuinely are worried about how much the tab already is and how much more we add to it. Thats part of the equation, right . You know, joe, one of the frustrating things that i have as a republican is just always seems at a time where we just have the opportunity to coalesce behind a strategy we, instead, turn into a circular firing squad. I worry right now because theres a 3 trillion plan on the table that nancy pelosi has put out there, its been out there for two months so the democrats have coalesced around her plan but unfortunately my side, we as republicans, have not sort of coalesced around what we want i think what we should want is we should want the economy to start growing again and, you know, we should lay out in some very in no Uncertain Terms first and foremost, weve got to go and get these schools back open again safely, period. And its not about forcing them to open, its about leading and saying, hey, we have x, y, z, 7point plan to open these schools because i know in my conversations with Business Leaders around the country, thats the most pressing issue right now is how we can get our work force back into place but i agree with you you know, again, if were not if were not certain about the way we want to see a package put together, all its going to do is go rack up more spending. Thats sort of the lowest common denominator default that will happen. You kind of gave me both answers there. So you think the republicans do look bad and open up themselves to some criticism from the democrats but then again you admit there are some republicans that just arent comfortable with, you know, the t number being thrown around, trillion here, trillion there constantly . No question im not comfortable with hearing that either, somehow though weve got to be more consistent in our discipline when it comes to the message about being a fiscal conservative. I mean, thats what the issue here right now is and its a real problem you know, i worry about, you know, the political pressures that come about when youre three or four months out from an election its very tempting, especially the senators who are in cycle that are in a bubble, its easy to say, hey, were going to want to go throw money so they can go and show their constituents that they care about them at the end of the day, what the voters will do when they go into the ballot box, theyre going to look to see whos leading. Whos got a vision for how were going to see this country get back on track, how we can convince the public that things are safe, that weve got a plan to make it safe for them, their families to get back into the kind of routine as close as we can while were still battling the virus. So how do you see it playing out . Whos going to take the lead next week . Mcconnell . Mnuchin . I mean, the president wanted the payroll tax. Thats not going to be in anymore so and then will it be a deal that the democrats are comfortable with if theres Liability Protection and if its way below 3 trillion theres sort of three, i think three real issues that are going to make sure that there is a bill that comes out one is what Mitch Mcconnell has been saying from day one, its concerns that i hear in the private sector every day its about Liability Protection. That was afforded to the ppe manufacturers early on in this crisis to make sure that we didnt have all of these lawsuits flying so that it would inhibit the manufacturing of ppe to protect our health care workers. Same thing for businesses. Weve got to make sure, so i think that will happen and i think the state aid that nancy pelosi has prioritized, if thats going to happen because its connected to the schools. And as i said before, that should be priority one how do we safely reopen our schools should be priority and then lastly, i think the real action forcing event, especially fwoor the democrats,s this Unemployment Insurance benefit. The Unemployment Insurance benefit as we know is a federal bonus on top of what states already provide and in many instances around the country, people who are unemployed are getting more than they would if they went back to work so i think thats a legitimate opposition in terms of the republican cry right now is how in the world can we provide incentives for people to stay home when they really need to get back to work so we can all sort of resume some type of normal existence so those three things i think are going to make sure that a bill passes. It probably wont be by the august 7th deadline. I think most likely it will flip over into the following week and finally there will be 10some consensus and some agreement without all the republicans, we will see a lot of republican no votes. Youre also going to see democrat no votes. I think people like aoc, Bernie Sanders, people like that, theyre going to say, hey, this is not enough money. Theyre going to want some money thrown in for the election thats their big issue as we round the corner in the fall. What are you doing on a daily basis now at moelis . Whats it look like . Whats your job duties look like is anything happening . Are there going to be permanent changes at moelis six months from now will you be able to see things are different . I am in our d. C. Office weve opened some of our offices obviously in compliance with local jurisdictions, rules and regulations. Ive never seen so many signs to socially distance, arrows which way to walk, things like that. Filling out surveys every morning before you go into the office but, dwyes, i think on a daily basis things are certainly different. In terms of the market and where our clients are, i think what we saw during the outbreak of the epidemic, i think people in leadership positions, management and the boards of directors were saying, hey, weve got to take care of our employees. Weve got to make sure theyre safe how do we operate virtually from home then we have to concern ourselves with the liquidity of our business i think that phase has sort of been playing out and what were seeing now is really a probably within the last month a lot more willingness to sort of resume the talks of m aupd a were focused and our bankers are focused on Quality Assets, bringing those to the markets. Theres a lot of pent up demand. If you can hang on to or acquire a Quality Asset through this tough time, youre going to come out in good shape when things resume to normal did you ever throw out a first pitch . Clearly, no, but i saw your pitch, joe, in cincinnati. Looked not bad compared to what happened here in washington last night with dr. Fauci. Im going to prove that it wasnt bad in the next half hour because weve got a compilation of a couple along with faucis that we found that make me feel pretty good about myself so you never did well, actually, youre a republican and down in, what, virginia, d. C. Youre not too popular, i dont think. No, not now a days unfortunately. No. No ill tell you one thing, joe, i miss seeing you and andrews doing a duo this morning missing becky. I know shes been off all week is that a backhanded complement we miss becky, too we couldnt get anyone else in here i thought we were doing pretty well, andrew and i. I think youre doing awesome. Were weve scared everybody off, thats the problem. It is a weird existence. 40 on air people and its totally empty except for me and andrew thank you, eric cantor becky and i did a solo thing last week, i think, andrew occasionally. It can be done. It can be done im happy. Were using our resources efficiently. Thats the way to think about it. Exactly margins. Okay. Coming up on the other side of this break, the future of health care. Humana ceo is going to be joining us to discuss what the election could mean for the industry the state of business during the pandemic and so much more. Before we head to a break, lets get a check on the markets the dow is up about 55 points. Nasdaq off 85 points s p down 8 points. Squawk box returns right after this anything your wild child does pampers cruisers 360 fit can too with a stretchy waistband and adaptive 360 fit so they can move the way they were born to [music] born to be wild pampers cruisers 360 fit iredefined the wordng thschool this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. Presumptive democratic joe biden. The Prescription Drug affordability. In the next hour first we want to talk about the election want to talk about the way youre getting done. Thats great being here thanks for having us very oriented to the medicare population we see what a public option and a private option is. If you think about medicare, it has medicare service, which is traditional, and you have Medicare Advantage what weve seen over the last decade is growing as a percentage of total Medicare Beneficiaries from the low of 10 or so to today getting close to 40 and then growth in the private sector Medicare Advantage itself youre seeing Great Innovation youre seeing focus on making it simpler for the customer youre seeing improved Health Outcomes that allows to be reinvested into the affordability. As we think about the biden plan we see bipartisan support for Medicare Advantage type of structure. But we do believe in the Biden Campaign and the Current Administration that that kind of structure is really what everyone is thinking i know youre trying to be bipartisan and politics to some degree, but lets just be very clear. Is one candidate better or worse for your industry in your mind i would say i would say both are supportive. I understand the point youre making there, andrew, bipartisan i would say both are going to be supportive of the industry because i think both of them look at a private Public Partnership is so important in being able to make strides in health care. If youre right though, why is it that we hear from Health Insurance investors, Health Insurance analysts who say that the biden plan is going to make it tougher for you i think when you look at the biden plan from a point of view of uncertainty, i would say thats probably a bigger area of orientation. I would not say that all companies are oriented to that biden is going to hurt the industry i think theres an orientation that we will continue to show that private enterprise can add them and the ability to create innovation when the proper motivation is there. So i would just say that i think both parties are supportive of structures like ma and if you are an organization like ours that is oriented to ma, i think youll see some very strong support for programs that have a private enterprise orientation. Bruce, separate Health Insurance question, and its a little bit of news you can use kind of question about the pandemic, which is to say that one of the things weve seen in some of the earnings reports is that there is a sense that clearly there were savings for a lot of Insurance Companies during this pandemic so far. People, elective surgeries, other items where people were not going to see the doctor so the cost wasnt there, but theres an expectation that those same elective surgeries will happen in the future, that some of these, if you will, the savings will pull forward. Is that right . Is that wrong . How much of these things do you think is pulled forward . How many of these surgeries or other events were elective or not . How are you thinking about that . And potentially even more medical issues down the road from people who didnt go to the doctor or hospital in between . A few things there. We did see from the beginning of march to middle of may elective surgery being delayed and obviously the covid crisis was a lot of the health care capacity. What we have seen is the Health Care System is really getting back to normal and were seeing much more orientation to being able to overcome some of those elective procedures that were delayed and we will continue to see that Going Forward we believe that over the next few quarters well see this normalization back and be able to really treat the members and patients that were needed to be treated during that period of time and so we are not as concerned because the industry also responded very proactively during that period of time and trying to help the Health Care System in areas such as offering telehealth, in home being able to help with prescriptions, sending food to individuals homes so there was a very, very proactive outreach by the industry during that period of time we do see the utilization in a short period of time you mentioned telehealth and i wanted to ask you one final question about that, which is clearly that appears to be the future this is the first time its become almost a mainstream proposition for folks and families who are now participating in telehealth, but the big question is is it really going to reduce the cost insofar as, yes, its going to reduce the cost of me driving to the doctor and taking Public Transportation to go see the doctor the question is should the doctor get paid less money for a quicker telehealth visit than an inperson visit . I would say today we pay them equally. I think we can look at costs in two ways one is what we pay today and that might change over a period of time. Secondarily, the ability to get care to people that are in need of it. And what we find that telehealth is a very convenient way to provide care that a lot of times people wouldnt get that care. What that does is it saves costs down the road and the ability for people to receive that care. Yeah, but, bruce, what i worry about not that i worry, well all hopefully get better care, but i worry about volume look, its great for us but it also means that there will be more costs because, whereas, i might have said, you know what, lets wait 24 hours, see how everybody is feeling tomorrow, whatever the issue is, in a telehealth world you might say, sure, ill popyou up on face time right here, talk to the doctor, and then by the way youre going to bill me. Yeah, but i would tell you what we do see is a valuebased payment models, thats irrelevant what we see is whether theres quality in costs, in our business, 60 some percent of our members are in valuebased payment models it doesnt matter the channel they go. The most effective delivery is oriented and thats how the doctor is paid, around the outcomes as opposed to the value. The more we can bring that to the payment model, the more the channel and how it gets paid becomes less relevant. Okay. Bruce, its great to see you we appreciate you taking the time this morning. A reminder for everybody thank you. Reminder for everybody that bruce will be hosting the quarrel terrelly just call coming up at 8 15 a. M. Eastern time you can manage for it on just capital. Com right now. Futures down this morning following yesterdays pull back. Big tech names pushing the averages lower well find out whats driving that move and then the bizarre fall of the ceo who ran one of the most popular Luxury Brand Companies in the world v vanity fair talking about the fall of zeitlan of tapestry. Which country launched its first interplanetary Space Mission earlier this week . The answer when cnbcssqwk xonnues ua ed bill not covered by my Health Insurance. And this is the aflac duck who helped me cover it. 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 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. That selling carsarvana, 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. Now the answer to todays aflac trivia question. Which country launched its first interplanetary Space Mission earlier this week . The answer, the United Arab Emirates the hope spacecraft is expected to reach mars in february 2021. Check out the shares of boston beer surging this morning after the brewer of sam adams said that it more than doubled consensus estimates with the latest earnings. Results were boosted by a jump in demand for beer consumed at home despite the closure of bars and restaurants. Every day something, andrew. National something day this is an important one today, especially on a friday i happened to see it trending on twitter. National tequila day, dude. Yeah. Did you know that i didnt but are you coming over for margaritas tonight or what we could have margaritas, shots finally polomas i tried, andrew either my waze didnt work or did you find it remember those phone numbers we got in high school. It would be like someone would give it to you at a bar. It was like, did i write it down wrong . Did i write your address down wrong when i tried to find you did i . There was nothing there. It was a pasture when i got the i dont know. No, im not trying that again. National tequila day thats all i need. We should get on the tequila right now. I think that might be in order. All i need is a reason to drink tequila. Anyway still to come on squawk box, maybe well start drinking some tequila u. S. China tensions. Maybe that will help big tech pushing markets lower well get an outlook and find out where you should be putting money to work then then jide zeitlin resigning abruptly it is the craziest story youve ever heard before his company was leading a hidden life. Will yes, maam cohn of vanity fair will join us to discuss his article following jide ziet l zeitlins downfall it is something to behold. Apps are used everywhere. Except work. 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 welcome back verizon earnings coming out. Beating earnings by 3 cents with an adjusted profit of 1. 18 per share. Revenue coming in above estimates. Well continue to dig into those numbers and talk about more value today. Joe . Futures reporting to a lower open after china ordered the closure of a u. S. Consulate in retaliation for a similar action by the u. S. Earlier this week. S p 500 and nasdaq coming off the biggest one day losses in a month. Mike santelli joins us with more on this National Tequila day good morning. Yeah, s p 500 this morning indicated below the highs. A lot of talk about the nasdaq with the shakeout. A lot of people waiting for a rotation year to date does that look like a major regime shift to you . Not yet. So youve flattened out here with megacap growth curled lower in the last week or so and then just a little bit of a steadier up trend in the average stock in and value stocks. Ive said before, it doesnt have to be a zero sum game even if the big nasdaq stocks have to cool off more. It doesnt mean all that money is going into the value sector it doesnt mean if value is going better, you get some traction, that large cap growth all of a sudden is game over and it falls apart a lot of movement within the index as we go sideways for almost two months here one thing i would point out is kind of restraining arguably this move into more cyclical value trades treasury yields. Still very compressed on the macro outlook, guys. Mike, stay with us. Joining us to talk more about the arket, the b of as security and equity, savit Savita Subramanian you kind of eventually come down, savita, on the notion that stocks are probably a better place to be than a lot of alternatives because of where rates are and because of all of the liquidity. Are you kind of just a reluctant owner of equities right now, savita no. I mean, you know, i dont want to say reluctant good morning, joe. Its more about the idea of where are you going to get income and from that perspective its a no brainer. You look at stocks and their offering 3. 5 times the yield of a 10year treasury the dividend yields look relatively safe. I think that Value Proposition is unassailable. Where it gets a little bit more mercy is a lot of this rally that weve seen off of the marleaus has been driven by is liquidity being pumped into the system from either the fed or fiscal stimulus, just looking for a home basically finding it in either, you know, defensive dividend yield or in faang stocks my worry is if this liquidity machine slows down, turns off, if we see any friction in terms of how much stimulus were going to get from the government or the fed, i think thats when its really hard to continue to buy this theme so i think, you know, one of the things we pointed out in the note the other day is if you look at the fed Balance Sheet versus the weight of faang stocks in the s p 500, its basically the same chart so my sense is when you sort of disaggregate all of the stuff and you look at whats been driving the market higher, we all know its tech the reason techs been moving higher is because its essentially investors looking for something to buy and what theyre settling in on is, you know, high growth Tech Companies. So that, i think, is the biggest trick. I like what mike said about the value rotation i think hes right were in the early days. This could be another head fake like what weve seen time and time again for the last ten years. Weve seen these little rumblings of cyclicals recovering and theyve been smashed down by Tech Leadership over and over again. I think why this time might be different is when you look at positioning and valuations of Growth Stocks, namely tech stocks versus value stocks like financial financials, industrials, energy, the value surge is massive and tech is, as you know, more expensive than it was back in 2000 by many measures. I think thats where we get to a point where things really look extreme right now. Would you throw in the political concerns with washington and even states looking at tech, savita . That could match up with what youre talking about technically . Absolutely. One of the big risks for tech is antimonopolies stick regulation. The companies are getting so big. You have data privacy issues youve got all sorts of issues facing tech from a regulatory perspective. This isnt a new story though. Weve been talking about this for, you know, a bunch of years now. Really what we want to see is the campaign line items of each of the candidates as we move closer to november let me tell you one thing. So the one thing weve noticed in the market is as you approach from here to november, historically during an Election Year you tend to see a massive pickup in volatility 30 increase from the vix from today to election day based on historical trends. That i think would also make me cautious on, you know, continued outperformance of the s p versus many other benchmarks. Interesting, savita thank you. Lets let mike finish up here. Sounds like you could just buy the vix, mike. Have dividend stocks done that well savita makes a case. I wouldnt im not sure savita wants any stocks that dont give you a cushion of a yield of some sort. Dividend stocks to the extent youre talking about Consumer Staples have had a run here. The very highest yielding stocks not so much. Thats the market saying they dont have a lot of trust in those dividends. You can now find things like i was looking the other day, cocacola. The stock has backed off its at its highest relative dividend yield that its been in quite a number of yields i think theres dividend support thats come into play in some areas of the market. The market has been gravitating towards the big Growth Stocks because Corporate Bond yields are 2 and they look like they had bond like economics in their finances. Okay, mike. Appreciate it. Savita, thanks we kind of said thanks thanks, savita andrew thanks, joe. Coming up, baseball is back. Weve got details ahead right after the break. Then got to hear this story. The double life of jide zieitlan his other career as a, quote, photographer we will explain. Were going to dig into it with the man who figured it all out vanity fairs william cohen. Squawk box has a bizarre story after this break anything your wild child does pampers cruisers 360 fit can too with a stretchy waistband and adaptive 360 fit so they can move the way they were born to [music] born to be wild pampers cruisers 360 fit i saw dr. Fauci yesterday talk about how nervous he was about throwing out the first pitch ahead of the Yankees National opener in washington thats why now thats forever fauci fans on twitter saying he didnt want anyone to catch anything thats why you do get nervous about doing this in front of people because you know its replayed in front of people forever and ever and ever. We found other ones. This is Carly Rae Jepsen we played this i dont know, maybe thats excusable. That one didnt make it past the mound, i dont think darth vader, i dont know whether he can see that well but it looked like he could have done better than that. Snoop dogg, that one went a little wild. Thats a wild that would not have hit the batter on either side of the plate probably this guy is bob bowie. You know one of the best ones was 50cent. Heres 50cent. That just see, what if you do that, andrew thats whats nerve racking about being under the gun. Its going to go forever you will see it on youtube it will be maybe a million views. Can you believe that worth adding to it. Were doing it with sympathy, i think, for dr. Fauci. We are. I think thats my point, thats why im also trying to explain why i lobbed it in there so high, because i did not want to try for the you do actually you know, you do sort of grind leading up to when i just i just wanted to make sure there are a lot of people thats not so great. Anyway, he caught it as for the game, the yankees took an early lead with two runs in the first inning. By the end of the fifth inning it was 41 then the rains came. Im not a national fan they were unable to mount a comeback because it ended after it began raining it was called. Im going to try again tonight, andrew when you try to do the opposite of what youre thinking, the betting gods know youve done that then it does you know what i mean you do the opposite of what you want to do then you still lose. Like opposite day on seinfeld. Right. When we come back, i cant get over this story. Youve got to here this story. Jide zeitlins double life ceo of Parent Company coach. Its unbelievable. Were going to bring you the story from the guy who broke it right after the break. Futures right now, well show you whats going on ahead of the open a little over an hour nava way dow off 113 points nasdaqlooking to open down as well off 144 points back right after this. Its pretty inspiring the way families redefined the word school this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. Welcome back to squawk box. News breaking this morning on Goldman Sachs. Goldman reaching a 3. 9 billion Settlement Agreement with malaysia this is 1mdb issuing a news release confirming the settlement. Goldman had been accused of misleading investors over bond sales that had raised 6. 5 billion for that fund. Want to get to that story as well as this other bizarre story weve been telling you about all morning. Tapestry ceo jide zeitlin abruptly resigning in an oral from propublica the second life, if you will raises all sorts of questions. William cohen. Vanity fair, cnbc contributor. The goldman story, you wrote the book on them, bill i know youve been following this case throughout 3. 9 billion more than most analysts had anticipated. Originally they had reserved for 1. 9 billion. The analyst estimate was 3 billion. Theres a bit of juggling in terms of how those numbers are ultimately going to come down, a guarantee for goldman for part of it, cash for part of it as well is this Game Changing for them does it lift a cloud for snem h snem how should we think about it its all of those david solomon, the relatively new ceo had to get behind it that was the most important thing. He dispatched his chief lieutenant, john f. W. Rogers to malaysia to get this done. Theyre going to pay 2. 5 billion in cash and 1. 4 billion in guaranteed assets to make sure that the malaysian government gets the value that they believe they were entitled to. According to goldmans release they have done an analysis doesnt think they think they have a call on that guarantee. It is more than people thought its important to get behind them more than they reserved for. Thats the way these negotiations go. The most important thing was to get it behind them and now David Solomons done that. Okay. Lets move on to this wild story that clearly it looks like youve been working on for maybe over a year now. Jide zeitlin who was running the Parent Company of coach looked like he was having a successful career but once you pealeled it back, bill, it was quite Something Else how did you get started working on it . Maybe tell the audience what happened here. So last september, andrew, zeitlin was named the ceo of tap pest try, the Parent Company of coach. He had been on the board of tapestry coach for 14 years. He was lead director for a while. Former Goldman Sachs partner, speaking of Goldman Sachs. He had his own private equity firm after that. And i thought, wow, you know, i wrote the book on Goldman Sachs, i certified of heard of jide zeitlin over the years and its so interesting that jide is becoming ceo of a Fashion Company without really any fashion knowledge as opposed to, like, going into government or, you know, starting a hedge fund or doing what the rest of the typical former Goldman Sachs partners do. I thought ill write a feature about him, how interesting i went and i interviewed him over at hudson yards in november and then again in december and of course, you know, as part of anybodys Due Diligence for writing a piece about this, you look at the clips and there was one from 2009 by a guy named josh rogan whos now a Washington Post columnist, when he was nominated to be the number two at the u. N. , he ended up withdrawing his name from the nomination after he had been confirmed by the Senate Foreign Relations Committee for, quote, personal reasons in that brief article it said he had, quote, lured women into unwanted relationships when i asked him about that i thought, wow, thats odd then when i asked him about that he started obvious fe obsfucati said spend an extra month digging into my background, you wont find anything like this ever happening this is all a political hit job, it never happened, this isnt fair, this is the way washington works and its not right. Then you did look into it. Then i did. You found at least one woman, if not many women yes. Who he was involved with as a photographer on the side. Yes. Who lured them into relationships that they were unhappy about. Basically he used craigs list, he used a different name called james green, his middle name is james, and he posed on craigs list as a fashion photographer using a hasanblad camera of all things he met gretchen raymond, the woman who was much of the focus of the story, at the gm building he was then renting office space from Perry Capital Richard Perry was another Goldman Sachs partner. He was renting that office space. There are all these emails between them about what they were doing and how that was all going to work. Very unfortunate. Let me ask you a question about the here and now yes. Which is given what you discovered and what you say was so easily discoverable, right . What does this say about the board of tapestry that hired him, thats overseeing him today and is still on that board, all those members . Yeah. Big question, andrew big question about Corporate Governance did they do their Due Diligence on jide. I think that familiarity bred laziness here, unfortunately they knew him. He had been the chairman of the board. He had been on the board for 14 years. They needed a new ceo last september and they went with it. I dont think they did their basic Due Diligence and i think thats a flaw. And thats a flaw that investors should be concerned about . Well, obviously now theyve got i mean, thats the question the company was doing very well under his leadership precovid that is. Yes. It becomes a very complicated issue, no . Yes absolutely the board has to reconcile with this and frankly look themselves in the face and figure out what they did wrong and maybe there should be a new board at some point. Right now im sure theyre trying to get their Management Act together yes, the board did not do its Due Diligence on jide zeitlin. Believe me there were signs all over the place. Bill, final question. Hes accused you of using spying software or something on emails during the reporting process want to get your reaction to that first of all, its completely not true i had one email that i sent to the former ceo, luke frankfurt, and i put some tried to figure out whether he read it, opened it, what he did with it, thats all it was read open software, thats it. Not this tracking software that hes accusing me of. Okay. Bill cohen, great to see you thank you for your analysis of the goldman situation and of bringing us this wild story. Talk to you very soon. Thank you joe thanks, andrew tech stocks falling. Talk about what was behind the big drop next. Dont miss our interview with Stacey Cunningham to talk about the return of the trading flr,oo ipos and much more squawk box coming right back how 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. A live interview also ask him about his states raging battle against the coronavirus. As the final hour of squawk box begins right now. Good morning welcome back to squawk box right here on cnbc im Andrew Ross Sorkin along with joe kernen and its just the two of us. Beckys got the day off. Lets show u. S. Equity futures at this hour right now we are in the red. Dow off about 98 points. Nasdaq looking to open down even more, about 130 points off s p 500 looking to open off about 13 points. We should tell you markets in asia after the Chinese Government ordering the u. S. Consulate to close were going to get an update on that story a little later this hour also, lets show you treasury yields as we speak right now youre looking at a 10year note at. 582 we also have two dow components out with earnings this morning a lot going on first, we have verizon beating analyst estimates on the top and bottom verizon saying it did see a negative impact from covid19 which impacted the wireless service. Spending revenue American Express beating on the bottom line its forecast 29 cents a share expectation was for an 11 cent per share loss amex revenue, spending volumes hit a low point followed by a gradual rebound in may and june. And, joe, youve mentioned today was National Tequila day so i just went upstairs. This is a very expensive bottle, im told given to us as a gift, some tequila. I thought we could start drinking early you know, its a friday. That would be different how well look at you i just figured we should go for it. What am i supposed to do . Why not its friday. Cheers, my friend. Do it do it. I want to see what happens do it do it the problem with this, theres only two of us do it theres only two of us. If we both get trashed on tv we still have an hour to go. I want to see you get trashed. Join me no. People always say that because we mess around sometimes they say, well you dont get up at 3 30 if you have an alcohol problem, you just dont. Gambling might be different. Anyway, lets move on, andrew. By the way, what i was going to say, yeah, we talk about the two dow components reported today. What about the one that reported after the bell yesterday thats what we probably should mention that intel, and thats one of the reasons that were leading into a tech interview intel is down after a weak forecast just so you know that. In addition to verizon and amex, we should have that on your radar screen the Technology Giants power markets higher throughout a lot of this, even through the pandemic, seeing a volatile week of trading yesterday the nasdaq had the worst session since late june. This morning the big names are down again in the premarket. Lets bring in some tech watchers to tell us whats going on joining us now, bradley tusk, gene munster, managing partner and founder of louet ventures. Theyre both dead cold sober this morning, i think. So far. Once were done on the air ill start drinking. Its early. I want to talk to you about the political backdrop and the actual fundamental concerns we might have for tech. First i just want to go to gene and say, gene, should we make anything of this move yesterday after the move weve seen over the past six months . Does it do we necessarily have to find fundamentals to explain it or is just a pull back to the expected given the big moves that weve seen . I think the latter, joe lets put some quick perspective. The faang plus microsoft is now 25 of the s p 500 on top of that, since the pandemic the dow is down 6, 7 nasdaq up the same amount. Faang and microsoft up almost 20 . I think this is as simple as these have been outperforming and as investors get a little bit skiddish, i would refer to this as a finger prick yesterday. As they get skiddish, they pull back more. I will emphasize the fault line, the fracturing of the market between the haves and have nots, its been clear for the last few months i think that line is going to become more clear in the months and years ahead. I do not think there is anything fundamentally wrong with most of these companies. I think some of them have real issues and most of them are Great Companies to own for the long term. Bradley, if you were a journalist and your editor told you, write a reason why the tech stocks are down yesterday, i mean, we could come up with something based on what congress is contemplating, could we not for sure. What you would write is congress is summoning the ceos of four Biggest Tech Companies to explain themselves and their potentially competitive behavior they are looking at antitrust investigations into the Big Companies which could lead to them being broken up, at the very least lead to years of litigation the tech giants have managed to upset people on both sides of the aisle. Both parties are convinced the tech parties are out to get them i think politically theyre in for a few rough years ahead. I think as a critical topic ultimately around what washington is going to do, i think it is fundamental to a lot of these companies i dont know if that was the catalyst yesterday just given weve known about this hearing for some time and this antitrust wranglings have been around for the better part of the past year yeah. Thats sort of how i led into it with you i agree with you, but i also agree with bradley that you could definitely write and its probably as good as a lot of times what youve seen written by people explaining things we never know exactly, right you could definitely write it. Bradley, the bipartisan nature of it is disturbing when youve got two parties that dont agree on anything agreeing that maybe they dont like tech for different reasons. Yeah. Yeah i mean, look, its disturbing for a few reasons. Number one, its almost impossible to unite washington and yet amazon, google, apple and the others have managed to do it. Number two, no matter who wins in november, each side has an incentive to really pursue this aggressively if the lead that biden has does hold, while he may not wake up every day thinking about antitrust reform and competitive practices, he needs to throw more than a few bones to the left and i think he would have no hesitation in saying to elizabeth warren, Bernie Sanders and others, yeah, have at it go after microsoft, go after google, amazon, knock yourselves out. I dont really know who in Congress Stands up to them so, bradley, has it gotten to the point where our great Tech Companies i mean, i think that theyre crown jewels of u. S. Capitalism obviously, has it gotten to the point where theyve gone beyond just being really great and innovative and, you know, worldwide great at what they do to where theyre using their power to sort of block out competitors . Is that the way to look at it now . Have they gone past the point of doing things legally where we need for innovation to break them up . I just i dont like the idea of that just by definition because i think it goes against everything weve tried to do here when you do something well, you should be rewarded for it, shouldnt you . Yeah. I think theres a fine line between being rewarded for it and making sure that we dont have a culture that of innovation that becomes stagnant because Early Stage Companies cant compete in any way i invest in series a companies and one of the main questions we ask ourselves in every investment meeting, why couldnt amazon do this why couldnt google do this . Why couldnt microsoft do this if the answer is they could do it and do it more easily than buy the company that were thinking about investing in, then we usually dont invest you at least want there to be a steady stream of competition because thats what makes all of the companies better, thats what keeps the economy going long term. At the same time, yeah, most of these companies have worked hard if there are places where practices have violated the law themselves, they should be held accountable for that these are companies that are not pushovers. Just like when microsoft thought the department of justice in the 1990s and while doj prevailed, it was a really, really deep battle in court. I dont expect facebook or anyone else to roll over for doj now either. I guess we have to go, gene assume you theres both sides of everything, but you think theyll ever be broken up honestly, gene no. All right we lost some audio there anyway all right, gentlemen thank you. Were going to need to talk to both of you again because i think its going to happen sorkin, someone said thats a really expensive bottle. Did you waste the shot. I havent i still have it here the conundrum is after the show i have to drive. Were i take my son to the dentist so i think its probably best and i havent eaten much tonight ill if you someone is saying we should merge this tequila discussion with tech discussion. Has musk said he wants to make teslaguila. Someone says you should he has said i dont know, maybe not. Maybe theyreyapging my chain. Im pretty gullible. You know what, hes got a lot of hes got a lot of fans out there. I think its a good brand extension. Line extension when we come back, got a lot more big interviews right here on squawk box this morning. First, were going to speak with the New York Stock Exchange president Stacey Cunningham. Also the rise of spacs Blank Check Companies. Bill ackman going public Texas Governor greg abbott will be joining us to talk about tesla choosing texas as the next manufacturing site surge of covid19 cases in texas. Stay tuned, osthe big interviews right here on squawk box. Anything your wild child does pampers cruisers 360 fit can too with a stretchy waistband and adaptive 360 fit so they can move the way they were born to [music] born to be wild pampers cruisers 360 fit iredefined the wordng thschool this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. Pull back yesterday in tech which weve been talking about meanwhile, shares of moderna are falling after losing nearly 10 yesterday. That comes after moderna lost a bid to vinvalidate a patent by buddis this could force it eventually to pay a royalty and, you know, you thought i was kidding. We have written articles on elon musk, cnbc has, andrew he has filed with the u. S. Patent or tesla has for the patent trademark for tesla. I saw it. Did you look that up . It would be pure agave. I love the word port montu teslaguila is another one. Michael jordan, cinguoro small batch tequila. Why are we not doing squawkuila are we allowed . Cant invest in i think its a brand extension for us i think its a brand opportunity. Breakfast, cereal and tequila. Yeah. Good idea. Wow. This one bottle is 2400 heres yours is that is that yours i dont know. It was given to us as a gift im told you can ring the bell a lot of tequila i dont know how do you it. It looks like a salt shaker, sort of. You can ring it as a bell, i guess. I dont know we were given it as a gift were not the biggest tequila drinkers people use it as a flower vase when they finish drinking. Im told by our wonderful viewers on twitter they seem to know this bottle. I dont know you know, dont throw that shot out wait for until you get back from the drive and have it then, right . Yeah. National at ttequila day. It is. Well talk a little bit more about the markets. Well see whether we need tequila at the end be of the day based on where we end. One big market trend has been return of the Retail Investors Td Ameritrade all reporting a sharp rise in the Second Quarter as well as record retailing volumes. Yesterday social capital Chamath Palihapitiya said investors are seeing what the pros do in the markets. Retail investors now have access to so much information that its almost on parity with people that work in traditional investment organizations and what weve seen as thats happened is that the quality of that analysis and the ability to see around the corner is as good and in many cases better than traditional investment firms. Joining us right now to talk about the rise of the Retail Investor and so much more, want to talk about Blank Check Companies and spacs, Stacey Cunningham is here with us wheres the Retail Investor . Now the Retail Investor is here. You know, the comment that chamath was making was i think some degree reference to tesla theres been lots of questions about just the valuation of that company, but his argument right now is that Retail Investors have as much access. One of the things we try to do at cnbc is make the markets as transparent as possible. One of the things i often think is as transparent as we do try to make it and as technology has hopefully helped along the way, it may still not be enough, meaning that the pros still have more access to information than everybody else is that right or wrong nice to be with you both this morning. Im excited to talk about retail and other trends in the market first, i have to say and joe might be interested in this. I was invited to throw out the first pitch and i was too nervous to take that opportunity because i knew it was going to live in a reel and show up forever and ever so not only do i think dr. Fauci for his leadership during this period of time, i also give him credit for being a lot braver than i was in taking that opportunity. But, yes, the Retail Investor has been a big part of the market over the past several months for a variety of reasons. One, they can trade for free with 0 Commission Platform two, theyre home so they have an opportunity to do so and theyre engaging a lot in this tremendous rebound in the market that weve seen. Our markets are all about balance. Balance of information, balance of providing equal access and opportunity, so i am excited to see the Retail Investor engaging in the market but im also concerned if theyre not doing it with information and also not making you know, understanding the risks associated with it because you certainly dont want to see Retail Investors get hurt because they didnt understand markets can go in both directions and be they can go pretty quickly theres a lot more information. It is available to Retail Investors. When you talk about the disparity between professional investors and Retail Investors, thats a time thing. Thats what i was going to ask you, do you think the Retail Investor makes the market quote unquote more efficient or less i think hopefully they are expressing longer term opinions, right . I think if Retail Investors are trying to day trade without experience doing so, its just a you know, you want to make sure theyre educated and making informed decisions so they are coming into the market i think its important for the whats really made this country so great is that access to opportunity and to be able to invest in companies as they grow, which is why we prioritized the Public Markets over private markets i dont know if you follow them do you know about dave port k w knownoy . Yes so does my 14yearold nephew. What do you make of the phenomena that he is i think its about balance. Its great to get Retail Investors engaged and opportunities the market provides you need to balance that with the clear understanding of the risk profile so we dont end up having them get hurt when professionals are okay let me ask you another question about another phenomena were seeing in the market, which is spacs and these Blank Check Companies that are going public really as either you call it a run around or a new version of the ipo. Earlier this week on squawk box ahead of his spac beginning to trade, we talked to bill ackman and he had some pretty interesting words about the model and what it may mean were committing a billion, billion and a half, possibly more of our own capital. Every investor in u. S. Spac has a full right to redeem it. If you dont like the deal, you get your money back with interest so, you know, the idea of a lead investor looking throughout the world to find the highest quality business on the best terms, negotiating a transaction, committing capital and only then do investors get presented with the detailed information they have to make a decision and they have a full opt out. The process is several days, its a scramble. Stacey, some people who are fans of the spac say effectively its an indictment of the ipo process. What do you think of that . I think that investors and Companies Looking to become public are looking for choices earlyinvestors are looking for the alternative. Its not going to replace the ipo process. When we talk about ipos on your show and in other places and you see it up 60, 80, 100 , that often gets described as a good thing, but its not a good thing if youre the one that sold it the night before what were seeing is Companies Want to be public but i want an alternative to do it spotify did it with a direct listing. We recently filed to innovate with that and add capital. Spacs have been such an important part of the Capital Formation process throughout the first half of the year we raised over 19 billion in spacs and that was prior to bill ackman, so well over 20 billion in spac proceeds in the first half of 2020 over 85 of the proceeds raised was raised on the New York Stock Exchange because were seeing a different caliber of business lieder looking to take advantage of this mechanism now. Theyre coming to us i get calls weekly from different Business Executives saying, hey, im launching a spac, can you help me out . I see it coming. I was going to say though, historically spacs had a bad name there was a view i said it yesterday, sort of a compensation model for the sponsor and manager that was mass cure raiding, if you will, as an investment strategy. The sponsor took so much of the deal so the question is in terms of the cost of doing these things some of these models are adjusting a little bit as this matures a bit, but are you worried or concerned about that . No. Fla frankly they didnt list the spacs. The way they and we have evolved is to allow Large Companies to become publicly. We talked about what bill is doing. Youre going to see innovation on the process, but it provides another path to public, which is a good thing the Retail Investors arent denied the opportunities to invest in the most exciting and dynamic companies. Well see more of it i dont think it will replace the ipo market just like i dont think direct listings will replace it the first day pops are interesting. Spacs give a little bit more control. You can negotiate a deal and become public and youre public like every other company. Stacey, always great to spend time with you. We enjoy spending time with you. We hope to continue the conversation. Great to talk to you. Joe thanks, andrew much more on the developing news out of china the country ordering them to close a consulate. The coronavirus slamming the breaks on deal making. With a zoom meeting just a click away for many of us, shouldnt we be seeing more action were going to talk about atwhs Holding Things back. Stay tuned youre watching squawk box on cnbc 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. Coming up when we return austin has the next manufacturing hub. How did the loan star state clinch that deal well talk to the governor about what texas is doing to get the serious coronavirus outbreak under control. Hospital stations have hit a high there over just the past two days stayun ted much more on squawk ahead right after this you should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Original crown molding, walk in closets. We do have a ratt problem. Round and round with love well find a way, just give it time. At least geico makes bundling our home and Car Insurance easy. It does help us save. Round and round with love well find a way, just give it time. Round and round what comes around, goes around. For bundling made easy, go to geico. Com welcome back to squawk box this morning tesla will build a 1 billion plant in texas making it one of the Largest Economic Development projects in the citys history phil lebeau joins us with more. This is a big deal and a big win for austin, texas. This is a contest for where the next tesla gig ga factory would be located that went on for several months it came down to austin versus tulsa, oklahoma. Ultimately for a number of reasons they chose austin, texas, including the fact that its a great place to attract talent they think theyll do very well there. This is what the giga factory comes down to down there near austin, not in the city and the video youre looking at comes from our affiliate, kxan theyre doing work down near that location. The second final u. S. Assembly plant for tesla in the u. S it will build the cyber truck as well as the tesla semi, model 3 and model y for the eastern United States. Heres elon musk talking about the giga factory. The location is five minutes from Austin International airport and 15 minutes from downtown austin. About 2,000 acres and were going to make it i think a factory that is going to be stunning right on the Colorado River so were actually going to have a boardwalk where there will be hiking biking trail. It will be an eke logical paradise. By the way, as you take a look at shares of tesla. Going all the way back to november of 2014 why are we showing you that, joe . Since then thats the date they said they were going to build a giga factory in nevada that was the first of five theyve built, earmarked, acquired they acquired one in buffalo five in addition to the final Assembly Plant in fremont, california back to you, joe that chart, crazy, phil anyway, thanks lets get to the governor for a look at how this will impact the tesla economy. Lets welcome Texas Governor greg abbott. Thank you for joining us its great to see you. You, too, joe. I saw the tax break is that a mistake. It doesnt seem like a huge inducement, the tax break, so there must be other things about austin and the texas work force that attracted elon musk to your state. Well, joe, youre spot on listen, i had the opportunity to have multiple visits with elon about this entire project and about his vision for what he wants to do with both tesla and what he wants to do in texas i will tell you, in my personal conversations with him, the tax benefits were helpful but they were not really the incentive. The incentive was the opportunity of what he could achieve in texas in part its what phil mentioned, the access to a lot of talent around the austin area but also its the freedom. You hear elon talk about this. He wanted to get away from california he wanted to get into a state where he had more freedom to expand the way he wanted to expand he has a remarkable vision that goes far beyond this one announcement he is a visionary. He is a transformative thinker and hes thinking about that and processing that as hes developing this parcel of land and what he wants to achieve in the future and he knows he has a better ability to do that in texas with the freedoms that we offer him with the low cost that we offer him than he does in other places like california. I was thinking about how to talk to you about coronavirus today, governor, and i think id like to talk more about the factory and getting more details about employment levels and how much commerce and all of that. You mentioned the freedom that texas is known for dont mess with texas, deregulation in the oil industry and tort reform and all of those things i just wonder whether that sort of milieu in texas adds into what happened with coronavirus i mean, i dont know whether people want to stay home as much i dont know whether they want to wear masks. Is that part of the problem in texas is the independence of people that live there and its coming back to haunt you to some extent in whats happening in some of the big cities sure. Let me answer that but let me dovetail it into this fact also, and that is that before the coronavirus texas was number one in the most new corporate relocations but ill tell you this, after the coronavirus hit my phone has been ringing off the hook even more so from california, from new york, from so many other states around the country. There will be far more announcements coming here in the coming weeks and coming months about businesses growing and expanding in the state of texas. But you do mention something very interesting with regard to the coronavirus and that is the freedom that texans embrace and, hence, one of the first challenges we have as we begin to open up, people thought the coronavirus was something we had completely defeated, that didnt exist anymore, that we were not going to get hit the way new york was hit and so the first really challenge i had to do was to help my fellow texans understand the coronavirus is real, it is here, its not going away. We need to step up and understand the way we need to fully respond to it. That said, i have imposed a mask requirement in the state of texas and it pulls overwhelmingly 85 of texans agree that facemasks is a way we can go about keeping businesses open without having to shut down. I made very clear we do not want to shut down again the only way we can go about that is for people to embrace not wearing a facemask theyre doing it and were seeing positive results. The number of people testing positive in dallas, houston, other places is going down its because people are beginning to wear facemasks. I guess critics, its become politicized. Theres critics on all side. Its unfortunate is it too little too late . It got a hold in the big cities in texas because these mandates werent put into place sooner . You know, its unfortunate it has become politicized when were tellidealing with a medicl based issue. The spread has been reduced in dallas, in houston, in other places because people have begun to adopt this practice it is turning a ship in the ocean right now as opposed to a quick turn we are turning the situation in the state of texas, its just going to take a little while were going to be fine we will continue through this process to make sure that texas remains a premiere environment globally for the location of businesses and you will see on cnbc many more positive business announcements coming. Do you feel like youre on the downward side of the pandemic at this point, governor or some positive there go ahead. Joe, that would be premature. I feel like we have reached a plateau where we have contained the exponential growth of covid at this particular time, but we have a lot more work to do in the coming weeks i have to emphasize this, too. All the texans watching this right now, and that is we dont have covid conquered right now we have to learn to deal with this until medicines do become available to treat it. Until that time everyone must embrace this practice of wearing a facemask if we do that, we will ensure we dont have to shut down the texas economy again. How many jobs how much total do you think it brings into the state, the tesla announcement joe, in the short run its thousands. Ive seen 5,000, it could be far more than that talking to elon, his vision always is far larger than what people really know only blossoms in the future. So i think this is a stepping stone to what could be a really massive expansion of tesla in texas. Understand this also, this is not elons first foray into texas because he already has spacex operations in the state so he notion the state he loves the state in fact, he told me he changed his license from a california license to a texas license already. So he is a bona fide texan now. Listening to some of his questions about what happened in california and hes known as a maverick he seems to fit in well. I will say, that might be an easy transition for him to become a texlan. Thanks, governor great to see you thanks for being with us this morning. Thanks, joe take care. You, too. Andrew a lot more on squawk ahead well talk the markets take a look at the futures we are in the red right now about 120 points off the dow 127 points on the nasdaq which took a turn yesterday as well. Well talk all about it. Live update on chinas directive to the u. S. To close one of its consulates to retaliation for the u. S. Order earlier this week china shut down the consulate in houston, texas its going to raise tensions across the board well explain the implications shares of intel, the implied guidance for the rest of 2020 below estimates. Intel signaling further delays in the next generation of chips. That stock down big isth morning. Well talk that as well when squawk returns 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. The faa is saying you have to affect the air flow. If they have not flown in 7 consecutive days they have been parked and have not flown, there is the possibility of corrosion around the air valves that could result in dual engine failure. There are no cases that are prompting this they have found some checks that have indicated there may be problems with the valves guys, this gets back to what weve talked about planes are meant to be flown theyre not meant to be parked this is an issue with all of the planes that have been parked this was just issued by the faa impacting boeing 737 ng model. Not 737 max. Okay. So we need to make that clear. Phil, thanks for bringing that to us. Andrew thanks, joe. Meantime, deal making is dormant. The pandemic has cut activity in half leaving a lot of cash with no place to go leslie picker joins us with that story. Leslie. Reporter hey, andrew its an interesting problem to have deal making had been picking up but now with the resurgence of coronavirus across much of the United States, many wouldbe sellers are going back into hibernation mode u. S. Deal volumes so far this year have plummeted more than 60 from 2019 levels and several deals signed last year fell apart before they were even completed. Now the recent spike in virus cases is causing a backdrop of high uncertainty creating headwinds to do buyouts in more Traditional Industries john gray is the president of blackstone which has an industry record of 156 billion in dry powder to invest weve shown a willingness to deploy capital even into the most impacted areas, but there tends to be a little more resistance to that as people want to sell into a healthier market reporter in addition, its harder for them to do this without physically being in the right place. Without a strong sense of future cash flows, finding an agreeable price is nearly impossible guys leslie, heres the conundrum, and i talked to a lot of i think maybe some of the similar people you do in the private equity space and elsewhere part of them think that come the farther we get down this year, things are going to get better, will be healthier, people will be more inclined to sell to them theres a flip side which isyo look at some of the big banks, jpmorgan and others putting out big reserves with an expectation that the third, fourth quarter, early in 2021 is going to be harder, in which case you would think that would be harder for private quity, harder to make deal right. Whos going to win . Thats the thing. Thats a good question i mean, there is certainly an opportunity, especially for a lot of people to be looking at buying companies as they go through chapter 11 proceedings thats one thing that of course wont help the volumes for m a. Theyre usually dealing with bankrupt companies that is the big issue right now. If youre a big private equity firm sitting on capital. This has fee holidays right after its raised. For blackstone, this is the case the fee holidays are over. They have a bunch of investors paying the Management Fees and theyre going to start to feel moore pressure to put that capital to work. It can be difficult in an environment like this. Leslie picker, thank you for bringing us that story appreciate it very, very much. Morgan stanleys michael zezus on what a democratic sweep in novembers election would mean for the markets andrew, do you have that tequila handy . I could use it just reading that, i could use ive got it right here. A lot of people i can ring the bell i have to hit it hard. Can you hear it . Nick dunn, says thats amazing. I didnt know i fapd out we got it as a gift i have to figure out who gave it to us. Correction by the way i said Michael Jordan, four other nba owners because Michael Jordan is an owner jeannie bus, wick, thats tequila. Thats fancy stuff you have there. Joe, i should say, youre not the only one who busts my chops. You know when i went to not drink the tequila, my wife sent me a text, what did it say wuss so yeah, wuss. People hear it. I get it on air, i get it at home would you be worse driving after tequila or after eight donuts either way you might be whoa. So you probably shouldnt drive ywter that either. Anay, youre watching squawk box hopefully still on cnbc now is the time to support the places you love. Spend 10 dollars or more at a participating Small Business and get 5 dollars back, up to 10 times with American Express. Enroll now at shopsmall. Com. Lets get to a developing story that weve been talking about out of china authorities ordering the u. S. Consulate in the city of chengdu to close since washington had the chinese consulate in houston shut down. Eunice yoon joins us again hello again, eunice. Hi, joe i think that i need some of the tequila you and andrew are talking about because the war of words between the u. S. And china just keeps escalating. Within the past hour the Chinese Foreign minister commented on it saying that the difficulties in u. S. china ties are entirely caused by the United States. He said that china seeks to achieve a nonconfrontational Mutual Respect in the relationship and that no country with a conscience will side with the u. S. On china. He was speaking with his german counterpart on a video presentation at the time this, of course, follows secretary of state mike pompeos blistering speech on china where he fell just shy of calling for a regime change as part of the titfortat retaliation today china said it would order the u. S. Consulate in chengdu to shut down. State media say they have until monday, 72 hours, to get out in fact state tv actually set up a live cam where at last check there were 38 Million People watching to see if theres any activity there wasnt but a lot of people asking rhetorically whether or not the fire brigade had arrived in a way to reference the widely distributed video of the consulate in houston that purportedly showed chinese officials who were burning documents in open bins so the situation very, very tough right now. The Chinese State media has been explaining why chengdu was chosen, saying that that particular consulate is smaller than the others, doesnt take as much business from the u. S. Business community but at the same time is very important. According to the state media, that consulate is gathers information on tibet, a very sensitive topic over here, and also strategic weapons in the region guys. Okay. Eunice, thanks let us know which embassy if they really mean business which one it would be because this one doesnt seem to be the worstCase Scenario, i guess. It doesnt. But it would be pretty much any of the others except for wuhan wuhan is in the epicenter of the outbreak but at this stage nobody is really there we understand that there are diplomats in the city but that the operation is closed. But if you if we hear that shanghai, or of course the embassy here in beijing are shut down, then that is going to be a significant escalation in tensions okay, great thanks, eunice thanks, eunice. Meantime were now just four months out from the 2020 president ial election and there are already postelection trades being discussed. Here to break down the different outcomes and how they could play out in the market is michael zezas. Michael, good to see you you have some pretty interesting trade ideas around the election and the question, of course, is how to make the bet in advance but lets just walk through your top three ideas here sure. Yeah, so i think this really boils down to what type of outcome could really be a meaningful change from the status quo and when we break down the different election scenarios, the most obvious and meaningful and likely break from the status quo is one where the democrats take the white house and control the senate and this is also the place where theres the most investor confusion so in the surveys weve run with investors this is the place theyre most concerned because theyre concerned about higher taxes and higher regulations but we think its also a place where the sort of reality of policymaking could be quite different than that. So taxes are probably going to go up but theyre probably going to go up less than people think and are probably going to be accommodated by a major expansion in spending, probably on the health care side. So there are actually sectors we think can do quite well here which probably seems somewhat counterintuitive for example, managed Care Organizations we think would do pretty well because the democrats are probably going to be able to execute on a trillion dollar plus Health Care Expansion plan but not medicare for all so that means pumping more money through the existing apparatus of managed Care Organizations which do better on a margin basis we also think financials can do pretty well here as well because youre creating a demand side stimulus in their key customer cohorts so we dont think theres going to be the promise of regulatory rollback doesnt change much because the deliverance from the republicans on regulatory rollbacks so far has been pretty far short of what would have actually benefited the sector michael, whats your take on what it means for big tech, since big tech has effectively not just led the market but to some degree held it up during this period . Yeah. So i think if you get if the polls that we see right now continue up until the fall, its hard to push back on the notion that you weigh on Investor Sentiment of tech. But i think the postelection reality of the democratic suite is far mercuurkymurkier. So the ability for either party to legislate some serious tech regulation is pretty minimal not just because, one, there are other priorities that voters want each party to deal with, but, two, i dont think either party has really laid out its own sort of policy technology for dealing with the tech problem. They know what the problems are at a high level, privacy and size they dont have a plan to deal with it. So i think these fears are worse than the reality in that sector. What about the world of energy, both traditional and what you might describe as new energy or electrification in solar and wind and stuff like that yeah, this is probably something where you get in a democratic suite positive sentiment leading into the event but the followthrough on that is probably going to be tied to whether or not the democrats choose to prioritize Infrastructure Spending as opposed to health care spending. This is a tough call because there are political benefits of both were arguing that we think theyll skew towards health care, but if they decide to skew towards infrastructure, which makes sense, well still have a somewhat weak economy. Theres higher multipliers dealing with that. Getting infrastructure done and putting it through a progressive caucus probably requires kid of a green veneer so a lot more money going towards clean energy, solar, et cetera those are the types of things that would follow through. So modest Favorite Health care goes first but infrastructure is in the mix. Michael, is it too early to make a bet one way or another . We talked to a lot of investors who say youve got to wait until at least post labor day to begin to try to gamble on what the election looks like and you could go back in time and look at who was winning in the polls, if you will, at this time and then later and things switch around so frequently so when do you think that moment should happen one way or the other if youre going to make that bet so i think theres two subquestions here. Theres when do investors start paying attention and how likely are they to make a mistake so when do they Pay Attention . Weve got to go in 20 seconds. So just give me a quick timeline, very quick. You could start making investments now but i would focus on the 2021 and 2022 policy impacts, not on whos going to win or whos going to lose so that means health care, those types of things. We appreciate it very, very much thank you. We want to wish everybody a fabulous weekend happy tequila day, joe im going to get on this a little bit later have a great weekend, everybody. Squawk on the street begins right now. Good friday morning, welcome to squawk on the street. Im Carl Quintanilla with mike facebooker and david san tolly futures are weak following the worst day in a month intels results dont help china telling the u. S. To close its consulate in chengdu gop stimulus will have t