Transcripts For CNBC Squawk Box 20240712

It was the big gainer. It closed at an alltime high. Tech has been leading the way. Sales force, facebook, taketwo and qualcomm at record highs you have to watch one stock in particular apple. After more than 10 gain on friday and thursday night, it closed up 2. 5 to an alltime high percentages away from hitting the 2 trillion market cap that 4 to 1 stock split is hit that price has to sit 477 not far off. Weve been talking about the pressure that has been put on yields in the treasury market. Right now, the 10year note at 0. 45 . Scott . Becky, im listening to you talk about tech and these companies. We have to get ready to talk nasdaq 11,000. As crazy as that would sound, we are on the doorstep. In spitting distance, basically. Unbelievable. Largy carri largely carried by these big five apple, amazon, facebook and alpha bes alphabet and microsoft looking back in march, would you have thought we would be talking nasdaq 11,000 by summer . No way. There is reason for it if you look at some of these results, theyve got the proof theyve got the results and the reasons to be running higher there are a lot of people worried and saying okay. What are you paying for these things what they are paying makes it look insane . They live up to the hype. The earnings pretty much delivered. Theyve met a high bar they got way over what was the high jump at that point. They managed to get over it and seemed unabated like they are just going to continue to march higher look, im as amazed as all of us the question to me and i think there are real earnings behind it some of this is a multiple expansion story. That is what happened here since this crisis happened for reasons we can talk about, investors decided to rerate these stocks. The question is will we rerate them in a different way . Looking for a place to put their money the fed has made it hard for the return on the money. They are looking for what is benefitting from what is happening with working from home and other things there is a little bit of play there too not knowing where to put your money you are not going to put it in a bank account now and you are not going to make much in terms of bonds either right as you said with the multiple. Except for amazon. Now the conversation comes, are stocks too expensive where else are you going to get growth you are talking about the Interest Rates where you are in the 57 basis points. Right not to say that things cant change in a heartbeat. Right now, this is how the market is valuing these things and trying to sort things out. There are so many things happening right now. Well talk about what washington is doing with the stalled stimulus talks things could change in a moment. Yes the changing the mind thing. This seems like one stubborn market these tech stocks dont want to change their mind and investors dont want to change their mind. Well see. I want to hear you say this next part, scott isaias. Making land fall very well you did a better job than i did. I tried without success. Go for it. You were unlucky. You had to go first. I was listening to see how you were going to do it. Not well. Thats okay isaias, it did pack sustained winds up to 51 miles an hour being traing norcking north expt move inland. Winds there, andrew, 50 to 75 miles an hour up this way and a few inches of rain so it is going to be nasty a little later on up this way. Meantime, we should tell you about this covid19 outbreak in the u. S. This is good news. We dont usually say that in the same sentence. Appearing to show signs of slowing. Fewer than 50,000 cases for the second day running and fewer than 1,000 fatalities reported on monday, california reported fewer than 6,000 new cases for the First Time Since july. And florida reported fewer than 5,000 for the First Time Since june new jerseys governor stated seeing a marginal up tick is retightening the restriction on indoor dama indoor gatherings down to 25 people but we still need a few more days of downward movement to teal better about this in new jersey looking at the transmission rate they watch that very close cannily. A number over one indicates that covid19 is spreading. Under one, sounds like you have it a little more under control democrats and Trump Officials left a meeting claiming progress on the relie bill but say they still have issues to resolve. President trump is exploring an executive action to explore a more tore yum on evictions this has been a one step forward, two step back theyve made some progress the rhetoric did shift last night to sound like maybe they were making more progress and maybe there is some Common Ground weve also got some other news with tiktok and what is happening in washington. It is not just microsoft but two other firms in talks with buying parts of tiktok. Saying he was ready to approve the u. S. Purchase but then said hes only willing to do it if the government receives a lot of money in exchange. Whether microsoft or someone else, what the prize is, the United States should get a large percentage of that price because we are making it possible. Without us i use the expression it is like the land lord and the tenant without the lease, the tenant doesnt have the value we are sort of the lease we make it possible for the success. A big portion of it is in this country. From the sale of it from the sale whatever the number is, it would come to the sale on wall street, they call that tipping the waiter. I dont think weve ever tipped a government on a transaction. I told the microsoft ceo a substantial portion of the price would have to come into the treasury United States because, quote, we are making it possible for this deal to happen i was on the phone with the people involved in this action who heard that yesterday couldnt even make heads or tails of what the president was saying how exactly would you pay the government what would that look like . Could there be a formulation you come to a transactional agreement where you are making an infrastructure or create some kind of jobs literally, this is happening inside the room among these companies. If we created some amount of companies, would that do it . What i heard it reported, i thought he means this off the cuff then i saw, wow, he really does mean it. I dont know how working on this deal, you could come up with anything that makes sense. As the top share holder in microsoft,he would love to see this deal get done at the right price. I dont know how you figure out the right price where you have to then give something to the u. S. Treasury. Because this is a bit of a valuation game i hate to say well be using trump valuation that will effectively create a higher valuation for the overall business and then create something that says we are giving you something and that bytedance is giving it the key is that the money has to come out of china, not the u. S. Company, so you have to make it appear that china is not getting a part of that because Peter Navarro dont want u. S. Money, 10, 20, 30, 40 billion ending up in the hands of china. China has weighed in on this today saying that the u. S. Is basically stealing this and trying to take off with this and it is a rouge nation now the idea that you are going to come up with something that satisfies the Trump Administration and satisfies the communist government in china. Good luck with that. They are going to get caught between the two of this because even though china may not necessarily be looking for some of the same angels, it is not going to say, okay, its okay to do this. And dont worry about the ceo of tiktok or bytedance, well worry about it it all overshadows the lead of the story, right . That is there are possibly other suitors. We talked yesterday about maybe Media Companies would be interested in this property now. The wording here we use or that eunice was reporting was other Tech Companies that makes it more interesting of who they may be and are they based in the u. S. Or elsewhere . I would imagine it would be very hard for a google, amazon or apple to try to buy this Company Given the antitrust pressures on them. My understanding is that the white house preferred or liked the microsoft choice from a regulatory perspective it is all very interesting the other piece of this. If you are apple today we are talking about the 2 trillion market cap. Given the china risk look, foxconn is employing hundreds of thousands but i think there would be risk, what kind of backlash is china to some other company there and not built in to any stocks right now . No different than the same conversations we were having during the depths of the trade war . We had the same conversations if we pushed too hard or tariffs are too punitive if Companies Like apple will face push back or retaliation in some way and maybe they are protected in some way. I dont know if tim cook is sitting there worried about retaliation at this point. Their business is holding on fairly well through thick and thin in 18 months of this entire process. Andrew . I was saying, i think thats an employment issue. I think the fact that apple and starbucks makes it so much harder for them to retain their people about eunices story. She didnt say where those Tech Companies were based i wonder what the u. S. Would do with that if it was being pursued by another Technology Company not based in china but not in the United States either. How would cfius feel about that and how would they feel about turning off the app in the United States if it is not a u. S. Company it is an interesting one. I dont know where this is all headed something was going to happen here and then the president got involved and some say it muddied the whole process of how it would play out once the white house got involved it is hard to figure out the end game if you do have these other suitors coming in after the president and satya nadala have had conversations on the phone in a certain frame of time another deadline approaching, that is going back to school when we return, well talk about the debate over reopening schools. A crucial issue for working parents and the clock is ticking. That story after a big break a price of gold after a new high trading up another for as little as 5, at 2,000 an ounce at 1,993 well be right back. 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. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. And tailored recommendations. Simon pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. He scores stanley cup champions touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. At our current phase, we must continue to focus those at higher risk allowing younger and healthier americans to resume work and school with precautions. Ideally, we want to hope those schools. We want to open them that was President Trump yesterday at a press briefing. The debate whether to reopen schools has played out over the country and economy. Just weeks to go and parents are concerned about child care and Remote Learning. Joining us to talk about this is julie from the Century Foundation this is a situation i donten vee a envy any making a decision on this. Parents, students and teachers, administrators where do you come down on this thats exactly right. Without stopping the spread of the virus, we have left everyone with impossible choices. What is going to happen is equity is going to be what is impacted the most. For gender equity. Women are going to bear the burden theyll be the ones stepping back from their jobs, reducing hours, taking care of kids racial inequality. There already was not enough equality it will be worse if schools close. Parents were already running a marathon while holding their kids on their back and now theyll be juggling fire it is just impossible. Most of us looking at this, if we could just get through the summer, everything will be fine. Fall will bring us to the more normal life. A lot of schools are choosing to open in person and offering Online Learning for people who dont feel comfortable to go back it is a really tough choice we need significant federal investment this should be a number one priority parents will be struggling with how to facilitate Remote Learning while working we should be investing everything needed and letting local communities do what is needed and figure out Solutions Best for them. Scott julie, hi. The wall street journal is out with an opinion piece this morning, i wanted your own opinion on when it comes to how teachers should be handling this saying, quote, teachers unions are using covid19 a political weapon and a push for extortion. How should teachers handle this . If you think about political extortion and what congress has passed so far, so much money billions has gone to bail out industry teachers are getting the least they are not paid enough they already spend enough of their own dollars for School Supplies are we going to ask them to buy masks and ppe too . Thats not fair. They are also parents. They are struggling with how do i go to work and care for my kids they are also caring for their loved ones that are aging too. I think we need to be centering teachers and figuring out how to make this a more equity future. Do you see a risk of mass teacher strikes once schools open i think if we are, it is because teachers and schools and the needs of families have not been put first we thought about what do we do about opening bars before we thought about solving for schools and child care i think if people are rising up, i understand why we are not prioritizing people we should be prioritizing. We are sending everyone out on their own saying it is every family for themselves, every school for themselves, every teacher for themselves we should all be coming together to come up with collective solutions that we all need i have to admit, i dont know what the solution is i hear what you are saying about teachers who have kids at home or maybe elders too. But how do we get to the point so we have care solution for their kids so they can go back when teachers dont want to go back ishlg it is this chicken and egg position ive gone round and round in my head im not sure how to fix it im with you. I dont know what we are going to do with our first grader in the fall either. Part of the problem is that covid really drove a tank over a crumbling infrastructure we never built the bridge or the system we never figured out how do you work and care for kids we are just reaping what we sowed and going wow, this is really impossible. We are looking at what are the Building Blocks and putting dollars behind child care and schools. Behind teachers and child care providers and Something Like paid leave for all and so parents dont feel like it is on them to care for themselves . It is on them to decide it for themselves, every School District feels like it is on them well be figuring out our through this as we get deeper into the fall and kids real will i go back to school in mass. Thank you for your time today. We appreciate your thoughts. Thank you very much becky, i think you are exactly right. I dont think people know what the right answer is. So many parents are in the boat you are in that im feeling and im sure, andrew is as well. What the right answer is when you open schools, what the threshold is going to be if there are cases within the school building. What do you do how do you handle that that is my question i know how bad it was for our four kids to not be in school the last three months of the last school year it is incredibly difficult for them i want them to be able to go back but i want to know that it is safe and i want to know if there are cases out there, that i find out about it. It is a failure of testing and tracing. Thats what it is. We got our plan last night. In the plan, they say, youll find out theyll close the classroom if someone comes back with a positive test that doesnt tell me if there is someone else in that classroom who is a sibling in my classroom. It is complicated. Im not sure there is a enough transparency to make me feel great. All good points coming up, the Pandemic Impact on retirement saving and the challenges of retiring we have new survey on that after the break. Take a look at the biggest premarket gainers in the s p 500. Taketwo interactive surging well ve mhaore details on that later this hour. 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. Wever somethings goneg a mogotten into the office. M, i hear you. Feels like theres no barriers between departments now. Do you think everyone appreciates it . I do. Huh. Forgot my glasses. Serivcenow. The smarter way to workflow. In this pandemic, saving enough for retirement is still a worry for many how much do you think you have to save . The answer is your age and how you are saving now Senior Personal finance reporter joins me with the latest findings from a survey released just moments ago hi, scott you need 2 million to retire today. Thats what the latest findings show they look at average amount 401 k savers think they need to have to have a nest negative to retire with. Th thats 1. 9 million. Millennials thought 2. 1 and boomers thought theyd be good with 1. 6 million. Still a great deal of uncertainty whether or not theyll be able to reach these targets. Only 37 believe they are likely to reach their retirement goal 21 said they are likely to retire later than planned. 14 say they are not likely to reach their retirement goal at all. Here is another idea maybe there is so much focus on retirement goals in planning a partner and member of the Advisors Council says yes planning is important but putting all effort on deferred financial gratification takes away from what they are needing today. I wonder what moves people are making in their 401 k in this crisis. Can you see a bunch of people making moves in the depths of march that are maybe not the right places to be now exactly what is interesting. You look over the course of the pandemic, the Charles Schwab survey found 59 , most people have not taken any action. That may be a good thing in some type of program gears towards their goals. You have to consider a fact that a quarter of those people working with a financial professional did make changes. They made some changes like increasing the contribution rate or rebalancing their account that might be a good thing to do if they were not properly allocated. Do you think a lot of people are stopping contributions all together or having to dip into their 401 ks . There is a lot more flexibility to do that right now. Finding only 5 of 401 k participants stopped their contributions. There have been other reports talking about how Little People dipped into their 401 k and took a distribution with the cares act. There is a expanded ability to do that. From april to june, they had about 700,000 take money out buts that only about 3 of participants thank you, sharon cnbc has partnered with acorn, the savings and investment app part of an initiative, invest in you. R ready, set, growth the race to the 2 trillion market cap is on well talk about apples big runup next a look at yesterdays s p 500 big winners and losers 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. Good morning take a look at u. S. Equity few you ares we are in the red. Nasdaq looking to open about 32 points off s p off about eight points being held up by some stocks that one of which scott is about to talk about. Apple becoming the First Company to reach 2 trillion watch for 467. 77. It has been quite a journey. The stock hitting a Market Company of 100 trillion in 2007 500 billion in 2012, 1 trillion in 2018 and 1. 5 trillion earlier this year. The founder of Big Technology and a cnbc contributor good to see both of you. It is remarkable 1. 5 trillion in june and now we are talking about 2 trillion. How has the Company Managed to do this in the face of the pandemic i think it is pretty straight forward. Investors are buying 33 trillion worth of stock, they are really making a play for the next few years and ive studied apple the last 15 years. This period will be unique it is represented by what i believe to be accelerating growth rates we saw 11 growth last quarter accelerating in the substance of what is happening that gets investors excited about this being ultimately like a 600 stock, not just 2 trillion but much higher. Getting them to an investment mode is sustainability on the next two years first 5g and 50 of their cost gets upgraded. Wearables, autonomous systems. Ive predicted apple past and been wrong ive been reluctant to talk about a car but that is something they are working around and then Vector Services too. It is stronger than an anchor of garlic the car prediction was so long ago, ive almost forgotten about it. Alex, it sounds like you are raining on the parade here you say the market cap is out of reality and horde to see what theyve done differently than when we they are at 1 trillion. Whats the problem when you look at the market cap in march, it was below 1 trillion is apple a different market now . I see where investors are going here they see the 4 billion more in iphone sales than they were expecting. Over time, that will lead to more Services Revenue and bigger growth that will be a good place to park your money. Where else are you going to put your money in hilton or a place you know you are going to see growth. You have people installing devices and revenue down the line coming from the perspective. I think apple might have actually accelerated a lot of upgrades youll see down the line now those upgrades and people spending the stimulus money. Working on the apple car project, it is chaos and really waiting for them to develop out of the core and the wearables associated with it when you hear that, i dont know if i want to call it criticism. Maybe some of the points people think are valid. How do you smorespond to all of those concerns apple went into the pandemic as a Strong Company and had all of these key factors in place. It is a very Different Company today than it was at 1 tr trillion what weve seen is first the importance of cash, close to 200 billion in cash and second, the world is clearly different. People are more prepared today toward educating and working from home. Health and wellness undoubtedly has moved forward. What has happened around services is people medicate around the pandemic with content. That is different today. When you put all of this together and think about pieces we havent even talked about augmented reality. Something tim cook said well look back and marvel at. Looking down at the phone and then looking up at the world apple will have ar glasses in the next three years ive been wrong on other things but i feel strong about this when i hear nothing has changed, im in a different place i think that this company is in a much better place and investors can simply sleep well knowing that they own potentially one of the worlds greatest companies 30 or so dollars away from 2 trillion market cap thank you. Well talk to you both soon. Thank you still to come this morning, we have more on the markets after the nasdaq closed at another record high yesterday. Dont miss our interview with former starbucks Ceo Howard Schultz coming up. Well be right back. As business moves forward, were all changing the way things get done. Like how we redefine collaboration. How we come up with new ways to serve our customers. And deliver our products. But no matter how things change, one thing never will. You can rely on the people and the network of at t. To help keep your business connected. Welcome back a couple of storied stock movers to tell you about. Shares of Virgin Galactic are falling. Reporting a loss it has not yet started commercial Space Tourism the Company Expects to fly Richard Branson into space in the First Quarter next year. What got me more excited i dont know if we have pictures of it. They are working on a plane that can get you from new york to london in 90 minutes so think concord but even faster they are going to try to get to the moon but also use that technology to get people around the world faster this is what elon musk wants to do too you know who is excited about that wolfe. Hes tweeting about it could be cool. Not valued in the stock for obvious reasons. Also watching shares of nikola after volatile session yesterday. After Deutsche Bank issued the catalyst call ahead of the first public Earnings Release which will happen today. Woo el s well see how much of their business stands up another storied stock. When we come back, more on squawk box. The latest read on Small Business from paychex ceo and news on the statement that facebook is willing to release all of the space in the Farley Building in the city some people leaving the city, facebook looking at expanding. Welcome back to squawk box this morning Small Businesses facing unprecedented challenges Small Business job growth slowed joining us right now with the numbers and to break down whats happening, marty with paychex. Great to see you lets talk about these numbers because some of them are not so great. As some of these as we now hit this month and a big debate over whether theres going to be more stimulus or not and whats going to happen, how thats going to impact things, want to understand where we really are help us. Break down some of the numbers. Andrew, as you said, expected with some of the shutdowns, we saw the july jobs index drop puts us back to about april where we saw the big drop from march to april were kind of flat over the last three months now some of the good news is hours worked were up on an annualized basis were up 9 those employees that are there were working more hours. That shows the demand. Youre seeing both the south and the west dropped the most, as youd expect with some of these closures the south still number 1 though in job growth and florida still number one in job growth and youre seeing construction really is the one thats pulling forward along and because when you think of new home sales, theyre up 14 new single home sales up 14 over last july around the same time the unemployment stimulus checks that American Families have been getting and what happens when they go away. I think that helps in june and in july. I think thats been part of whether or not spending as much. The biggest is uncertainty they need more loans in the flexibility of how they use the loan funds you cant get a lot of the materials because the fact tris had shut down. They need to get the supplies to fuel their business. Do you have any visibility into the checks that are going out, whether those checks are coming off of ppp loans and whether those companies anticipate or are expecting them to be forgiven or need them to be forgiven to stay effectively in business . Well, we do we helped actually put out over 28 billion in loans with the support weve given our clients and through fintech loan providers and the banks. We do see that a lot of it is important that it is forgiven because they still dont have the demand. Weve had a small amount of our businesses, clients have gone suspended. 50 have started paying again. Thats good news so we need to see more of that theyre really looking for more loans. Theyre not at a point where they can survive, many Small Businesses, without the loans. I think thats going to happen its just a matter of working it out. So heres the real question, marty. As we walk into the fall and were talking about school and everything else, given the numbers youre looking at,are you more or less optimistic about where things are going to go well, i think with more ppp support, more loan support and more flexibility on the loans, id be pretty positive you know, when you look at heres an interesting stat new business starts. Startups are up almost 10 year to date over last year thats a good sign that there are some opportunities out there that entrepreneurs are finding and theyre starting up. So im positive on the fact that i think the government will get together, theyll figure out how to get more stimulus out there, not only to individuals but to Small Businesses to help curb some of the uncertainty. I think things will get back going again. It will be a little slower than we hoped okay. Marty mucci, always great seeing you. Thank you for bringing us the numbers and the information. Scott . Andrew, thank you. Coming up, mike pooil of blackrock joins us to talk markets as big tech continues its push higher. Thats coming up next. Plus, the former yum brands david novak is with us to talk about ceos leadership during the pandem pandemic squawk box will be right back. Im pro athlete stylist Calyann Barnett and im here with nicole and miles and were out to find the top looks for day one back to school at Dicks Sporting Goods. Regardless of if youre going to school or online classes. Yeah. At the end of the day, its all about your confidence. Like if they have good shoe game, im like ooh ok, i want to know this person you know . Dicks has like 30 different colorways for each thing. Its a rainbow up in here. Whether youre in the classroom or on camera, get the brands that make a statement. Day one starts here. Im an associate here at amazon. Step onto the blue line, sir. This device is giving us an Accurate Temperature check. Youre good to go. I have to take care of my coworkers. Thats how i am. I have a son, and he said, one day im gonna be like you, im gonna help people. Youre good to go, maam. I hope so. This is my passion. If i can take of everyone who is sick out there, i would do it in a heartbeat. If i cits totally not the whsame without you. Re, were finally back and cant wait until you are too. Universal orlando resort. Buy now and get two days free at the parks. Restrictions apply. The tech sector locks in another record close and trying for more gains this morning. Well take a look at whats driving the names in your portfolio. Thats straight ahead. The stimulus battle on capitol hill the latest on what to expect from washington is coming up plus, a preview of Business Quarterly results. The second hour of squawk box begins right now good morning welcome to squawk box right here on cnbc im Andrew Ross Sorkin along with becky quick scott wapner is with us. Always fun to have the judge hanging with us. Take a look at u. S. Equity futures at this hour we are in the red but just a tiny little amount dow off 11 points. Nasdaq off 23 points s p 500 off just a little over 5 points all right, andrew. The recovery continues to face a number of hurdles, as you know even if the second half is strong, the economy may not look that healthy at year eld Steve Liesman joining us now with more on that. Good morning to you, steve reporter good morning, scott. Even if the forecasts of economists for the strong second half recovery ends up panning out, the u. S. Economy is still going to be in the equivalent of a recession by year end. Cnbc found the economists are looking for 21 rebound and thats followed by 7 in the fourth the Unemployment Rate is forecasted to climb from 11. 1 to 9. 8 in december. So you put that into context, that 9. 8 Unemployment Rate would by itself make it the third highest among recessions in the post war era. It would be eclipsed only by the surge in joblessness following the 81 and 2008 recessions. Economists forecast the Unemployment Rate to fall towards 7. 8 at the end of 2021. Thats 4 points higher than the february starting 3 1 2 percent. Speaking yesterday to reporters, charles evans, chicago fed president said our outlook is its going to take us until mid2022 until we enjoy the level of growth we had at the beginning of 2019. The outlook for a slow recovery leaving substantial slack in the economy explains why the Federal Reserve is pointing towards a long period of low rates, why its not concerned about inflation because theres lots of slack and why it continues to look for ways to stimulate the economy despite a whole lot of stimulus so far. I spoke with doug holtzeakin said ive long expected a quick rebound, but then the rest is hard work. Dealing with slack and the economy after that most of these dont factor in a second wave of infections or another widespread shutdown. Economists, its happened before, they could be wrong and they could be too pessimistic. This could turn out to be the better Economic Forecast for now, scott, it would be still a continuing recession, slack in the economy even after a strong recovery. So im trying to figure out, steve, what shape that recovery takes. Is that a square root . In that weve had a bounce until Charlie Evans says is 2022 which feels like an eternity from now or is it a w reporter im only half laughing. Because its not a v. Reporter i havent thought of the letter that it actually represents its not a v its a bounce off the bottom and then its a slope up to the right. Is it like a cursive v maybe the slope upwards. You have the bounce but the bounce doesnt get you back to where you were thats the critical aspect of it that gap in fact, i looked at the output gap it would be one of the worst output gaps. That being the production versus its potential depending on what you do youre right, scott. I actually was excited and interested to do the report, scott, and throw it back to you. What does the market have factored in here they must be seeing these numbers. They must have run the numbers the way i did to say, you know what, even after two strong quarters of growth we still have this big gap in production yeah. At some point youre the markets going to have to see results. Right now its making a leap of faith, i guess, that youre going to have some kind of recovery but its supported by stimulus and the fed its hard to know whats real and whats not steve, i want you to stay with me lets bring in another guest to the conversation, mike pyle is the chief investment strategist at blackrock good to see you. In the context of what steve was talking about and how were viewing where this economy really is, what are investors supposed to do reporte so we think the thing for investors is to really stay up in quality look to those names and those sectors that have strong Business Models, resilient Business Models in tech, pharma, other spaces, Strong Financial statements that can weather and produce across any number of scenarios moving ahead from here what i find really interesting though in your notes is that you guys have closed under weight in cyclical equity exposure, such as value. Steve paints a scenario through the data that suggests that the cyclical stocks are maybe not where you want to be and thats precisely the reason why tech stocks have done what theyve done in the market yeah. I inserted a caveat. I think one of the things that we really strongly believe during the peak of the crisis in march, april, may was being under weight value in cyclicality was an important exposure for investors to have that worked out. Looking at a global basis. We see a restart underway. We see that restart underway more robustly in europe and east asia we want to close the under weight cyclicality in places like europe even as they remain cautious on places like the United States where the restart looks a little choppier. Yeah, for sure. Steve . Reporter what i was going to throw out this idea, scott, is that based on your comments when we were talking was this idea that you can trade the economic momentum you dont necessarily have to trade the end point. The idea that were going from 80 of capacity up to 90 , theres a trade in there if the price is right so i guess i have to throw it to mike. Mike, given these end points that im talking about, which is that youre still if the economists are right, 10 , 9. 8 by year end, even 7 by year end 2021, if thats the case, is the price right in the stock market for me to take that gamble and wait or is it already fully priced in that im buying the stock that looks at the economy already at 100 . Well, i think were cautious to your point. The further you get away from those really high quality names in tech, pharma, those other favorite sectors in the u. S. , the more were cautious. The more we think the price may not be right so i think to your point, as we look ahead, we see the uneven restart in the United States as a result of all of the health chal loenks we alenges weve exd the likelihood for fiscal policy stimulus and the ongoing impulse and we see caution the closer you get to the ground level of the u. S. Economy, the further you get away from those key high performing names in places Like Technology steve, i think the other point is that the reality is, if you will, that the market hasnt traded on the economic reality for some time. If it was, theres no way that we would be having a conversation about nasdaq 11,000 and the way that the market was able to rebound. Its been trading on the fact that youve got a massive bazookas worth of stimulus by the government and from the fed. You know, at some point the real question, you raised it, steve, is whether the market catches up to all of this and begins to realize what the true economic reality is the picture Charlie Evans paints and, steve, you talked about it and the market matches more what the Economic Opportunity is. You know, i like to think of reasons why the market is right, scott, as i know you do, too in this case its possible the market is pricing in a more optimistic scenario. Look, the economists were wrong about the first two moments of employment and maybe that turns out to be the case i think when you look at alternatives, where am i going to put my money and get a return, its more its a better deal for me to put money in the stock market and bank on the full return of the economy a year or even two years from now than it is to put it into a one or twoyear note where i get almost nothing for that gamble yeah. Although mike raises the issue of maybe europe has the better bang for your buck right now given where the recoveries are reporter right. And how uneven they are. Just to follow along, steve, i think thats right thats been supporting the market combined with the secular themes around technology that have also been obviously clear winners. As we move into the fall, the risks around the Public Health challenges, the risks around stimulus those two risks come together, that could be a real challenging fall for the economy and thats something the market would sit up and take noticeof. For sure. Mike, we appreciate the time as always mike pyle joining us, blackrocks global chief forecastor and steve, we appreciate it. Thank you. Andrew thank you, scott thanks, steve. Meantime, when we come back on the other side of the break, yum brands Founder David novak his thoughts on the Food Industry amid the pandemic later, 90 days until the president ial election. Well discuss the impact it could have on your investments squawbo rur rhtft thisetnsig aer you say the customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept. 5g, everybody is talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item, corner offices for everyone. We just have to make more corners in this building. Chad . Your wireless, your rules. Only with Xfinity Mobile. Now thats simple, easy, awesome. Switch to Xfinity Mobile and save up to four hundred dollars a year on your wireless bill. Plus, get two hundred dollars off when you buy an eligible phone. He has a new weekly podcast called how leaders lead. Its available on apple, google, spotify and stitcher its great to be with you lets talk a little bit about what youve been seeing happen in the Food Industry because, you know, dealing with all kinds of problems over the years as you were when you were running the company. You look at this now, man, this is a whole different ball game what Food Industry leaders have had to deal with at this level but we have seen a lot of innovation. Yeah. I never had to deal with anything like the leaders are dealing with today i think everybodys focused on enhanced safety protocols for sure you know, contactless delivery, curbside pickup. Its the name of the game now. I think what youre going to see is a shift to off premise consumption and digital. You know, thats going to stay thats only going to stay and get, you know, even bigger, i think, as we go into the future. I was talking to david gibbs, the ceo of yum brands whos done an excellent job during this whole ordeal and taco bell is already developing, you know, smaller footprints theyre looking at double drive throughs everything they can do to reduce the size of investment and focus on the off premise segment this is happening around the globe. I think Going Forward, you know, safety is going to continue to be a huge concern. Every restaurant is going to have better lighting for sanitation sanitation spots for consumers i think people will be looking for ways to take labor out of the restaurant because thats the safest way of all. But in the end, becky, theres no doubt in my mind that the big brands will survive and the little guys are in trouble theres no doubt in my mind the Real Estate Market is going to commercial real estate is going to really take a big hit theres no question about that youre going to see youre seeing lots of closures, you know, lots of closures in malls and places like that and its a really tough time but big brands with trusted reputations i think are going to really do well. David, that puts a fine point on the discussions that are taking place in washington right now with the ppp being extended, perhaps, for Small Businesses. As you point out, its the big brands that are doing well theyre making sure their spaces are safe theyre able to cap the Capital Markets if they need to too. Small businesses, small restaurants dont really have anywhere to turn or anything they can do in response. What would you say to washingtons leaders who are discussing this right now . Yeah. Well, i think we need to do everything we can to help these Small Business owners. You know, its very challenging. I dont know where it really stops though you can keep pouring more money a after it if you dont have customers, its a problem we have to get this vaccine which i hear from my sources, were much closer to this than people could ever imagine. We need to be able to get our country confident again. You know, becky, the worst thing that can happen with any brand, business, to be caught in the middle thats exactly where the United States of america is right now were caught in the middle were not really going back to work were kind of at home, not at home were caught in the middle youre caught in the middle. Its going to be tough going for a while. I think thats what were dealing with with my podcast that ive been doing with these great ceos, we Just Launched a worldwide pleer of how leaders lead with david novak last week, what were seeing, two big trends that consumers are or that ceos are having to deal with. One is covid19. I think everybody is looking at this as a time to take care of their people and reinvent their business its amazing, you know, the big buzz word in business is pivot look what you did in cnbc, pivot so you could continue their broadcast. Panera bread, they offered 14 days curbside service. I talked to Kendrick Scott theyre doing virtual try ones of their jewelry i talked to brian cornell. Their goal is to be the safest place to shop and he said digital has accelerated three to five years from where it was you know, nobody looks at the longterm plan right now your longterm plan is four weeks. Its not three to five years it is like people are scrambling then you have this social justice issue which i think every ceo ive talked to is trying to do what they can in their piece of the world to attack racism, the inequality thats out there you know, i talked to evan spiegel, he wrote a really thoughtful document to his employees. He talked about the need to invest in the future to improve the future, like 7 of Government Spending is only on investment right now so, you know, its you know, everybody is trying to do what they can with that issue as well david i can hear you trying to interrupt me i was on such a flow you had to stop me. Its scott wapner good to see you again. It has been a while. Good to see you. Your podcast is so perfectly timed. I mean, this is the leadership issue of our time, right i mean, its easy to lead when the skies are blue when there are storm clouds app then hurricanes and tornadoes and all of this other stuff, thats where you define what it is do you think that in the same terms, these leaders will be forever defined by how they react not only to the virus but the movement you just set for racial jus snis. Yes i think absolutely the case. But i think theres a bigger case here. When you look at companies and you look at managers, 58 of them basically say they arent getting any Leadership Development. Think about that i mean, thats amazing, okay and, you know, i think what we have to do is develop leaders at every level and improve the leadership in our companies and in our country when i was ceo i did best practices, i met with different ceos, i really tried to tap into what they were working on, how they were going about their business, jamie dimon, warren buffet, you name it. What im doing now with my podcast is im trying to bring these great leaders to the managers who arent getting any Leadership Development you know, i think that, you know, its what we need to do. Right now i think the american ceos are stepping up big time. Im so impressed with how all of the companies are pivoting and really addressing, you know, covid and addressing Racial Injustice in every industry. I talked to Larry Fitzgerald whos won the Walter Peyton award in the nfl, Great Community leader, he just went on the Dicks Sporting Goods board. He wrote a great editorial in the New York Times about how, you know, minneapolis isnt the same place he grew up in, that people needed to listen before they could move on i talked to a. J. Banga, hes trying to drive financial inclusion. Hes doing an outstanding job. He says, dont forget hes a person of color, hes indian for every one person that discriminates against me, theres 999 cheering me on so we need some balance to this whole situation. Then i talked to tim ryan at pwc, Price Waterhouse cooper and hes leading a ceo coalition to really go after Racial Injustice. Hes been a leader on this for years. He had a day earlier to talk about leadership i think youre seeing a lot of people sharing best practices, trying to do the right thing when people look back on how our companies responded during this time, i think youre going to be blown away by how quickly everybody accelerated their plans. You know, what used to take six months, scott, takes two weeks now because people are just knocking out the bureaucracy, okay theyre getting thing done the other thing that, you know, im learning, you know, i talked to frank blake whos the chairman of delta airlines, larry merlot at cdx health, everybodys talking and using webinars and theyre having weekly conversations with their employees. Theyre going straight to their team members, okay i think this is really showing ceos how important it is for you to communicate i think this is something thats been sort of like a light bulb has gone off with everybody. Geez, i dont need to have all of these layers of communication between me and the people that really make it happen. I can go directly to them. They can hear it from me sam walton used to do that years ago. He was the first to create the internet with his satellite tv system where he could talk to his store managers well, every ceo today is basically getting that learning, and i think its going to make a big difference dave, i want to thank you for being with us this morning like i said, its been too long so come back soon. We want to remind everybody go ahead no, go ahead. I always love being on the show, becky. I love you guys. You do a great job and i encourage everybody i want to thank all the people who subscribe to how leaders lead. Weve already climbed up in the top ten of all business podcasts wow. That was in a span of hours theres a lot of podcasts out there. We want to help the world. I think the business world, the leadership world needs to learn from each other and by bringing these great leaders to the public and managers all around the world, i think were going to make a big difference i cant wait today im interviewing Kevin Johnson of starbucks ive got jamie dimon later in the week, tom brady for football season coming up youre going to hear from a lot of great leaders and i know theres so much to be learned. I know you have the head of pga. Yeah. Eclectic group. Bobby brown, having dinner with her to get ready for the podcast. I cant wait well, david, we look forward to it. We look forward to listening to the podcast, too well talk to you again soon. I have to do one with you, becky. Youre a leader. I dont know about that but id love to talk to you any time, david. Okay. Great. Take care. Well see you soon. The election and your money. A look at what the implications are for markets this morning later, tiktok in the crosshairs. The social media firm under fire from washington and a possible acquisition by microsoft well discuss what it means for the tech giant, the nation and much more. Squawk box will be right back. [ engines revving ] its amazing to see them in the wild like th shhh. For those who were born to ride, theres progressive. But what if you could stdo better than that . K. Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. A lot goes through your mind. How long will this last . Am i prepared for this . Are we prepared for this . With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations, with access to taxsmart Investment Strategies designed to help you keep more of what youve earned so youll know youre doing what you can for your family and your future. Thats the clarity you get with fidelity wealth management. Howard schultz, well talk all about it when squawk box comes back you should be mad they gave this guy a promotion. 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. Welcome back to squawk box this morning 90 days remain until the 2020 president ial election. Bringing with it massive implications in the markets and your investments joining me is jim picket, a fellow with the American Enterprise institute and cnbc contributor. Joining us is danny krypton at stra teej guess Research Partners dan, i want to start with you. This is the part i cant figure out. I know theres a view that the markets not really looking at the election or wont look at the election until post labor day, but what i cant understand is between the possibility of a delay in the votes, which i think is a real risk, not necessarily that they will be fraudulent but a delay between when we get them and frankly the polls suggesting that biden would win, theres conventional wisdom that that would be bad for the market, why do you think that is . Thats a great point. I do see investors buying volatility protection. Theres also a belief that biden could win and not raise taxes and if thats the case, then much of the risk wont be there. And there is also a possibility that biden could win and the republicans keep the senate. That scenario. You get all of the better trade policy without the tax increases as well. Thats a pretty bullish scenario i think we need more time to sort that out as investors those senate races break in late september and thats why you see them not respond until post labor day. Really in october the equity market is going to turn. Yeah. Thats what i was going to ask jim. Jim, if you think the markets going to turn, you would think it would want to turn in advance of it. You would think the market would be more efficient about it. Right i thought the theory here was the markets were these massive calculating engines taking every bit of information and incorporating in the stock prices i would think that would be happening. Maybe the reason markets arent freaking out is because theyre just not that scared listen, biden raised Corporate Taxes, whats he talking about taking it to 28 thats not what the Obama Administration was talking about, tim geithner. I think thats 28 Percentage Points too high, but i just dont think thats a terrifying situation for markets. He apparently does not want to do all of these millionaire surtax surtaxes listen, would i prefer lower taxation to not higher taxation . Sure maybe the biden agenda isnt as terrifying as it was a year ago. Let me make a point on this. Yeah. Its not about the overall stock market level at this point, its about individual Stocks Companies that are facing greater regulation, theyre already pricing in because biden can make those changes without any type of congressional change those are for profit prisons, student lenders, the low hanging fruit of this. As you get deeper into the election then it begins to impact tax reform, defense spending on tax reform, were talking about 11 decline to eps it is pretty significant despite what jim is saying and the market will have to discount it. The market is not convinced thats going to happen if the market changes its mind on that, then you will start to see downgrades to companies. Listen, if youre worried about biden pulverizing some sector, it doesnt look like tech stocks think they are going to regulate them to death as they continue to rise. Correct jim, let me ask you this. Put all of the policies aside, one of the things thats terrifying no matter who wins, it may take several days, maybe even weeks to find out the results given all thats happened and clearly you have in the president somebody whos raising questions about the voracity of what the results are going to be. How terrifying is that for the markets and the economy . I think the consensus is that this election cannot be delayed, will not be delayed. I think thats by far the scarier mark at some point we look like a total Banana Republic and not a democracy anymore. Not knowing the result, i think it helps that weve been through this we went through this in 2000 it was not an enjoyable time for most americans because we didnt know what was happening and the whole process looked terrible. We had no fairly recent idea of what that might look like, it might be a lot scarier. In 2000 we didnt know who the winner was for six weeks it triggered the u. S. Economy into a recession now were talking about not knowing congressional primary results in new york for weeks after they happen. Whats going to happen on the general election michigan, pennsylvania, wisconsin, they wont even start counting their mailin ballots until after the election is cast when you have those delays it can start to bring legal challenges from either side or a side that didnt win and it could create pretty big chaos in our system im not a doom sayer we were featured an uncertainty that is not comparable to 2000 i think thats a pretty big ris zblk dan, real quick big tech, which has held up this stock market throughout this pandemic, big tech get broken up in a biden world in a trump world and i also want to get your thoughts about trumps tiktok i dont know if i want to call it tip the waiter 1078 people call it quid pro quo, other people call it bribe bribery. The wall street journal has said the Trump Administration is thinking of filing antitrust charges on google. I dont think any legislation could be reached it feels like if theres personnel moves made in the Biden Administration, there could be regulatory risks than they do biden. Thats why the stocks can move later. Y07bd this year i see regulatory risks i think were going to be splitting up amazon. I dont think those kind of breakups are likely any time soon, but will at some point a doj, fcc find something on these companies that cause them to change their business practice in some way . I think theres tremendous pressure on these agencies to do something. Thats not an apocalyptic existential risk but it could be something. Dan, who does biden pick for the vp i think hes going to pick susan rice i think susan rice will be the pick dang it, dan. I was going to pick susan rice she looks like someone who could be president on day one, Foreign Policy i think hes ultimately going to want someone who can step into that role immediately. Does Elizabeth Warren get a role in a Biden Administration what is it not immediately, andrew, because we have to see what the Senate Results are going to be you dont want to remove her from the senate if its 50 50 because they can appoint a replacement temporarily. She already has her influence. She is a key member on the Transition Team and i believe Elizabeth Warren can be very influential that will effectuate policy that will be consistent with her progressive ideals. Thats why i think theyre going to be left of center than the market is anticipating. We will continue the conversation, as you know. Jim and dan, thank you for the conversation appreciate it. Scott yeah. Good conversation at that, andrew enjoyed it. Coming up, a preview of disney results, the media and theme park expected to post the first loss since 1984. Well have what to watch coming up next. We remain on apple watch after more than an this is just a bit away from hitting 2 trillion in market cap 467. 77. Wel rhtaclbeig bk. Welcome back to squawk box, everybody. Weve been watching the equity market futures this morning, and so far there are some red arrows dow futures down by 75 points. S p futures off and nasdaq off by 40. Yesterday the dow was up by. 9 of a percent the s p was up. 7 to its highest level since all the way back to february 21st and then the nasdaq up 1. 5 to a new alltime high scott . Becky, thank you. The latest now on the situation involving tiktok President Trump saying yesterday he was ready to approve a purchase of the u. S. Operations of tiktok but only if the government receives a lot of money in exchange. Whether its microsoft or somebody else or it was the chinese, what the price is, the United States could get should get a very large percentage of that price because were making it possible without us, you know, i use the expression, its like the landlord and the tenent and without the lease, the tenant doesnt have the value were sort of in a certain way the lease. We make it possible to have this great success. Tiktok is a tremendous success, but a big portion is in this country. From the sale directly . From the sale whatever the number is, it would come from the sale President Trump said he told microsofts ceo that a very substantial portion of the price is going to have to come into the treasury of the United States because, quote, were making it possible for this deal to happen. And i think, andrew, were all trying to figure out how that would work if, in fact, it would work at all. This is the first time for everything and weve had a lot of firsts. I guess so. A lot of firsts. I guess so. I dont know how you do it. The banker i dont know. It casts a huge concern for any Foreign Company doing business here wondering if that avenue to doing business here eventually gets shut off when i first heard this report and i didnt see what he said. I heard it reported and i thought, come on, its crazy you watch his comments and hes really putting it forth. This is not as a joke. Oh, he seems serious. You need to take it very seriously. Yeah look yeah. I said it the last hour. I talked to a lot of people around the deal teams on this. Theyre taking it very seriously. Theyre trying to figure out what does it mean . How are they going to come up with money or some other form. What does this look like to the point in our last segment, at some point if theres a Banana Republic elements i dont know who stands up to the president and says, no, were not paying anything. It will be interesting we have a lot more. We have a preview, we should tell you, of disneys results. Talk about that on the other side of the break. The pandemic hurting the theme parks and cruise businesses. At the top of the hour you dont want to miss this. Chairman Howard Schultz here to discuss Small Business relief and the pandemic hes behind the big letter that 100 ceos signed yet that was signed by a lot of them. Pampers the 1 pediatrician recommended brand, helps keep baby skin dry healthy so every touch is as comforting as the first pampers. The 1 pediatrician recommended brand what happens when puts its customers in charge . Well, the good news gets shared. And it gets rated 1 for customer satisfaction. But dont just take our word for it. Take theirs. Its your wireless. Your rules. Only with Xfinity Mobile. Call, click or visit a store today. Welcome back, everybody. Disney is expected to post first its First Quarterly loss since 1984 when it reports results after the close today. The focus obviously will be on the Pandemic Impact and what the company says about the gradual reopening of its theme parks, the return of sports, disney subscribers, cash flow and the state of studiobusiness. The stock has felt the pressure falling about 19 this year. Joining us now is tom rogers, the former ceteva and a cnbc contributor. Tom, thanks for being with us today. Thanks for having me, becky you know, the way the street is looking at disney right now is a very different take than just seven or eight months ago when they were looking at this as a company that was really firing on all cylinders and was managing to move into the streaming world with a big splash what do you expect the news you were just covering about tiktok and microsoft, and you have to ask the question, if thats where all the kids are, if thats whats engaging them in the video world and the tech world is about to take over that, the fact that disneys not even mentioned to me is a real indication of where the traditional Media Business is or maybe more precisely where it isnt. I think thats a backdrop to todays earnings we know its going to be a terrible quarter obviously theyve been hit as hard as anybody because of covid, but i think its very clear now that the markets been soebered up about this its no longer a disney versus netflix story. Since the launch of disney , disneys down about 20 , netflix is up about 70 . Its the old disney versus the new disney is the decline of traditional Media Businesses going to outpace the growth of streaming media . Thats where i think the questions will be. Thats an excellent point, tom. I guess ive always thought of disney as being more for younger kids and maybe tiktok and others being more for teens i guess disney did have a lot of those eye balls and watching those shows. Do you think thats an area where theyve lost ground . Well, i think disney still makes very, very compelling movies that certainly grab mass audience, kids and family, but you see whats going on during covid, more kids than ever the Television Ratings of the childrens services, the Disney Services included with kids home in ways they never have been ratings are down 25 just year over year and that is not an indication that they are holding on to that kid and young teen audience in a way that disney used to. Hey, tom, in terms of these streaming services, disneys obviously been a great success, but given the production issues that so many basically all tv production is fallen apart and if this persists for any length of time, now the expectation is it very well may, comedies, come early 2021, if theres not new content on the services, with the exception cartoons and things kids will want, do you think users say, im going to turn it off for now . Ill restart netflix, disney ill be honest, you know, even in the sorkin household, were starting to run out of stuff to find were now really looking around to find stuff we havent watched before. I think what youre pointing to is constant new original. Netflix with a budget that is so much bigger than disney and everybody elses has been able to continually push out more and more its not just about how many subs you get at first. Disney did a wonderful job of getting that 50 million sub mark i think what the next metric is that everybodys going to be looking at on this Earnings Call in particular is what was churned . What was engagement . How many hours were people watching thats what really gives you pricing power, that combination of very low churn and very high engagement and its very unclear obviously even though they have a Wonderful Library of product that without new production coming out amazingly netflix had incredibly low churn in the eu. The expectation was churn was going to spike as people went back to their normal lives if the eu is any indication of whats going on here netflix has constant new products. Hey, tom. Its scott nice to see you again. I want to go back to something you touched on at the very top and whether you think a Media Company should take a look at tiktok in trying to make it big or get involved in talks to try and get it in its own rightofway for microsoft well, with something that big i dont think any of the Media Companies really have the Balance Sheet to do what microsoft can do i dont think they can be competitors in the game for that kind of acquisition. I think they all seem to be more comfortable with traditional acquisitions in their own space. One of the questions in the earnings is how is the box acquisition going . That was right in their wheel house. So far the fox studio has been very disappointing they reasoned that the point of that whole transaction was to fuel streaming and global streaming ambitions. They particularly pointed to fx as kind of a gold mine of adult programming during the pandemic, were not talking about sports now, were talking about an Entertainment Channel at the heart of that transaction. And the key demo while everybodys home, fx ratings were down 17 . So they havent proved even within their own wheel house theyre a great acquirer i think tiktok is beyond their Financial Capability right now hey, tom. Always good to see you all right guys, Howard Schultz joins us to talk about his call to action for more Small Business aid. Take a look at the biggest gainers in the s p 500 this morning. Were going to have much more on the markets ahead of the opening bell theres your group right there squawk box will be right back. The dire situation the u. S. Economy the former starbucks Ceo Howard Schultz. Theyre calling on congress to pass more Small Business relief. Speak to a Bipartisan Group of senators huge implications for the economy, the markets and your money and you cant afford to miss it. The final hour of squawk box begins right now. Good morning, everybody. Welcome back to squawk box here on cnbc im becky quick along with Andrew Ross Sorkin and scott wapn wapner joe is out today weve been watching the u. S. Equity futures were seeing pressure and the s p is down by about 97 points thats about the weakest level weve seen sorry, dow futures. S p down 15. Nasdaq off by about 50 points. This does come after an update yesterday for the markets where the s p got back to its highest level since february and where the nasdaq actually set another new alltime high. Lets take a look at the treasury yields. That market continues to see yields under pressure. Andrew thank you, becky. The Biggest Issue right now for the economy and for millions of americans is the fate of the next federal stimulus package. Congress has been unable to strike a deal even as emergency measures continued starbucks, merck, walmart, alphabet made a call to action signing a letter asking for urgent aid not for their own businesses but for Small Businesses the ceos say there could be catastrophic results if those businesses are allowed to fail in just a few minutes well speak to a bipartisan pair of senators trying to get an aid package passed were joined by the man who organized that letter. Starbucks chairman and Ceo Howard Schultz thank you for joining us this morning. Want to talk about this letter, what it took to put together and in particular how much money at this point do you think were talking about . First off, i think we need to frame the problem. Since february over 3 million Small Businesses have closed and if we continue down this path with no significant stimulus that basically is every Small Business we estimate that 35 and 40 of the 30 million Small Businesses in america will begin to currently close by labor day. Now this situation will have such a significant catastrophic effect on the economy and none more so than the fact that so many of these businesses are owned and operated by minorities and africanamericans. And so it is no longer a crisis. This is a five alarm emergency in which i believe, and i think the 100 ceos who signed this letter in support of the restart act is that all roads should lead to Small Business relief in any stimulus package that Congress Approves. So what are we talking about here in this letter you write federally guaranteed loans is what you want at favorable terms that will enable Small Businesses to transform, sustain themselves through 2020 and well into 2021. Support must last longer than just the next two or three months thats really a signal, i imagine, in terms of the timing that people now think we may or may not have a vaccine this is going to be longer than a lot of us want in terms of dollar terms, what do you think that looks like then well, let me just be clear because what you read is very important to make sure people understand this is not a bottomless handout. This is low interest money federally backed by the government that will be paid back over time, however, i do believe that the businesses facing the most dire consequences in terms of their inability to survive should be given forgiveness at certain points we are probably talking about the kind of money that is close to 1 trillion now as large as that sounds, the economic short fall of not doing this is much, much greater and if you just do the math, not only are we talking about Small Business across the country closing, but were talking about massive levels of unemployment in addition to that, and this is really critical, the municipalities across the country, every city in every state is facing insolvency in terms of their budget. If these businesses close the tax effect is so significant the Ripple Effect is not just the businesses themselves its the social fabric of every community. These are mom and pop, restaurants, beauty salons these are the life blood of every community. America will never look the same and businesses will permanently close and never reopen and so this is not the time for politics this is really a defining moment of how bipartisanship and american capitalism can benefit the american worker, Small Businesses and the American People at large. This is so vitally important let me restate this. Its not crisis anymore. We are on the clock and thats hundreds of people, many, many more, it wasnt just ceos. When you are looking at the fact that Small Businesses represent approximately 44 of private Sector Workers representing 44 of the gdp, this is a such a theres been nothing like this in American History that we can be looking at to wipe out every Small Business in the country over the next couple of years. I can explain very easily. They dont have the cash to retrain their people they dont have the cash to buy rent its very its not month to month, they are desperate right now. A week is like a year to them. Small businesses that i talk to are in such dire conditions. Hey, howard, i think a big part of the question, no argument that this is an emergency for Small Businesses everywhere, but i think part of the question for lawmakers has to be how do you define Small Businesses and how do you go about giving these loans we had a restauranteur who owns 60 restaurants across the country yesterday who said he needs more money in ppp and his business has gone from being 75 normal to being 50 . He cant survive by the way, he doesnt just want loans. He says hell never be able to dig out from that. He wants loans forgiven if he keeps people employed. What do you say to somebody like that what i say is that these businesses are operating at approximately 50 of revenue since theyve reopened they cant survive the question youre asking is the right country, the leaders in congress cant let the businesses default on their own. We are not asking for free money. This is money that will be paid back over time if this gentlemans business is one of those businesses facing a dire situation, then perhaps those businesses and those loans should be forgiven but when you look at what ppp was designed to do and it was wellintended, it did not fit the bill it was a shortterm solution, a band aid we need a longterm bridge to the vaccine that saves the Economic Security of every Small Business in america. Its not just a business, its the social fabric of every community. The fact is you have a republican from indiana, a democrat from california you have the centrist vision that i had when i was running for president but this is so vitally important right now to remove the politics and get this done howard, its scott. Good morning to you. If you were a Small Business today, if you were, say, in the early days of the starbucks years and you were facing the kind of issues that youre dealing with today and other Small Businesses are dealing with, what would you do . How would you handle the current the crisis when it pertains to your employees how do you think about that as a Small Business owner yourself at one point . Im glad you asked that question because in 1987 starbucks had 11 stores and 100 employees. We were a very similar star businesses its important to consider that. These Small Businesses are like a family they love and respect their people they dont view them as employees. Theyre trying to protect them of course, in trying to answer that question were trying to do everything you can to preserve the health and welfare and the security of every employee and their family but at certain points you cant do it i was asked could starbucks have survived this situation in 1987 . The answer is probably not unless there was some mechanism for the federal government to step in and save these businesses so many businesses and entrepreneurs are the future opportunity of Large Businesses for the future of the country. Howard, let me ask you this though to the degree there are Small Businesses that today, at least potentially for the next several months, if not longer, depending on your optimism around the vaccine, that theyre quote, unquote, uneconomic businesses, they cant be in business right now given the circumstances, the question is what should they be doing . Should they be taking loans and using those loans to pay their people should those people go on unemployment should they be taking loans to pay the rent so when and if there is a vaccine they can come back i think theres some real questions about how loans should be used, whether they effectively should be used as an employment device, if you will, even if there is no business behind it at the moment. So ive been hosting webinars for Small Businesses, Small Business owners just to try to walk in their shoes and understand with great specificity what it is theyre dealing with these Small Businesses,many of whom were able to take ppp can no longer afford any debt. Them taking on a loan to pay their people, pay their rent thats why youre seeing so many of these permanently closed. Were encouraging them to take the unemployment but thats going to run out the situation is so, so dire and every day that goes by in which Speaker Pelosi and leader mcconnell and members of congress are not acting and not walking in the shoes of these Business People who deserve an opportunity, a life line is just a terrible situation for them and the country. One of the other questions i wanted to ask you about is whether you think ultimately were not going to need just money to get to the other side but were going to need a restart fund, meaning when and if they get to the place where not only are they going to have enough money to get to still be in business but when they get there they 345i have to make additional investments and how we should think about that andrew, i havent thought about a restart fund but i certainly can envision if this if covid and the way in which the virus is spreading and kind of the boomerang of cities across the country, if that continues into next year at this rate without any hope of a vaccine or a remedy, then certainly were going to see our situation is going to be expanded by the countrys inability to do more the importance of that question, i understand but at this point in time we must take care of Small Businesses and i just think the responsibility of members of congress especially since 47 senators have signed this, led by senator bennett and senator young, this is a moment in which every aspect of stimulus must lead to Small Businesses let me ask you one other question that reeltsz to thlate. How should we be paying for this theres an argument, we are socializing this and when it gets better privatizing the gains. Well, i think, andrew, you and i had a conversation at deal book, i think it was three years ago, which i was at that time the term what was certainly being suggested, the Corporate Tax rate going to 21 . Were going to have to look for ways for american businesses and Large Businesses to do their share in ways that are different than today certainly the country is going to have a massive burden to deal with the 26 trillion of debt that is on the Balance Sheet of america and future generations are going to have to pay for that weve got a lot to sort out. Very complex problems but we must stay optimistic about the future of the country, which is so significantly intertwined which represent the engine of the economy and the heart felt aspect of entrepreneurs. Hey, howard, before we let you go, two quick questions. One relates to starbucks, the company that i know you know and love so very much. It has been hard hit by the virus by the coronavirus around the country the company is trying to make a lot of progress to try to stay open in so many different places the markets seen past it. What do you think about all of that well, i think store buck starbucks have to adjust and pivot. I think theyve done an extraordinary job. Im no longer operationally involved but i listen very carefully. The company is really coming back very strongly and i think in terms of the stock price that the markets have for the company, for my view its dramatically under valued. Starbucks given its national footprint, how well the company has come back in dhien na, these are still the early days and longterm Share Developers will be part of starbucks Growth Opportunity has been in china. Obviously that was a key part of your philosophy on where to grow starbucks internationally. Im just wondering, were talking about the ratcheted up tensions between our two countries and now were dealing with the tick tobktok talks betn that company and the country if youre a ceo trying to grow your business in china, how do you navigate what appears to be a much more difficult landscape . I appreciate the question having spent so much time in china over the last 20 years and starbucks has a footprint there of 5,000 stores and opening a store every day. Im very close to that business, the people who run it, and very proud of what weve done im going to Say Something that i know will be controversial but i think when people take a step back and listen to it, maybe theyll understand certainly this administration has ratcheted up the situation between u. S. And china relati s relations, and i certainly understand there are political issues to deal with that are very significant and very complex. I always viewed russia as an enemy of america, but i always viewed china as a competitor, not an enemy and i think the country and the United States government and certainly Business Leaders would be so well served if we were able to bridge the gap and recognize that china and the u. S. Are going to have to create a coauthorship of how do we live together recognizing that we are fierce competitors, that we have differences in the way we govern, we have differences in politics but the world would be much better, much safer and the economy globally would be much better served if america and china could create an opportunity for us to Work Together and i think that over the last three years unfortunately that has not been the case. I do understand that there are significant issues dont misunderstand that but creating this kind of situation i dont think is in the best interests of anyone in america, certainly Business People certainly the American People would be better served to try to figure out how we can get along with chinas as a significant competitor and they are a very different story. Hey, howard, i can understand your perspective on it you may think they are less of an ebb my because you dont have intellectual products and intercompanies going back and forth be it huawei, tiktok and do you think there is any truth in that. Yes, i do. As to whether theyre a competitor or an enemy no, i certainly do agree with everything you just said and that is why from my perspective we would be better served to agre address those issues and solve those problems if we approach it in a different way i certainly agree with you dont put me in a box and think that because i run a coffee company, i dont understand the issues of piracy and ibt l intellectual properties. I certainly do i dont think the way we are going about it is going to address it. Thats a fair point and i dont want to put you in a box if i could ask one more question because i dont want to leave this with you feeling like youve been put in the box i guess my question is with the things youve seen russia do versus china, how do we differentiate between the two . Its a complex world and there are so many things that were trying to get our heads around you know, ive come on this call to speak specifically and with great passion about the issue of Small Businesses in america. Im happy to come back and talk about china and russia relations, but im really here to talk about the issue at happened and that is for members of congress and the administration to do everything they can to support the restart act. Howard, we appreciate you joining us very, very much we appreciate the work that youre doing on this we do hope to talk to you again very soon and we should tell you, were going to continue this very conversation which you have helped spearhead now in just a moment because were going to be talking to those two members in washington who are on both sides of this n. Addition to that we are doing a playbook Virtual Summit coming together soon as well that you can go check out online and you can see that at cnbcevents. Com thank you again, Howard Schultz, for joining us again this morning. Scott . Andrew, thank you coming up, well be joined by u. S. Senators who have some legislation Going Forward to help make spaul businesses a reali reality. That company saw sales double. Take two also raised the full year stock forecast. Thats better than 3 1 3 percent. Youre watching squawk box on cnbc you say the customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept. 5g, everybody is talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item, corner offices for everyone. We just have to make more corners in this building. Chad . Your wireless, your rules. Only with Xfinity Mobile. Now thats simple, easy, awesome. Switch to Xfinity Mobile and save up to four hundred dollars a year on your wireless bill. Plus, get two hundred dollars off when you buy an eligible phone. Welcome back, everybody. A blockbuster report that comes out on the Housing Market is there right now. Lets get to diana olick good morning. Reporter good morning, becky. Yeah, the first read on june home prices is a big one they jumped a full percentage point nationally which is the largest monthly gain for june in seven years. Annually jumped 4. 9 record low mortgage rates, tight supply and Strong Demand much of that demand pushed by the pandemic the expectation is that prices will moderate over the next year, at least according to core logic. All real estate is local philadelphia saw prices up 8. 4 annually thats thanks to fleeing new yorkers. Prices were slightly down in San Francisco as tech workers can now work from wherever they want forecasts are also split las vegas, which depends entirely on tourism for the economy, could see home prices fall more than 11 in the next year but in san diego prices are expected to gain over 4 because of that tight supply supply is the key word looking forward. Youre seeing huge demand from the Home Builders because theres so little existing home supply if the builders push construction then prices could take a breather. New construction has been, well, not so much lately because the builders are ham strung by lack of land, labor and materials back to you guys okay. Coming up when we return, were going to talk a lot more about the tech surge and other major factors driving markets higher take a look at the futures well show you where things stand. Right now dow up 65 points nasdaq off 35 points s p 500 off 1200 points. Posting 29th record close of the year just yesterday. The s p 500 rallying to its latest there at the highest level since february if you can believe tt. Ha so much more coming up on squawk after the break welcome back to squawk box. Take a look at the futures dow off 50 points. Nasdaq off 60 points and scott, you have the story of the morning . An update, andrew, on a story weve been following for the past 24 hours. President trump suggesting the u. S. Government should get a cut of any deal microsoft is making with tiktok. Whether its microsoft or somebody else or it was the chinese, what the price is, the United States should get a very large percentage of that price because were making it possible without us you know, i use the expression, its like the lapped lord and the tenant without the lease, the tenant doesnt have the value well, we are sort of in a certain way the lease. We make it possible to have this great success. Tiktok is a great success. But a big portion of it is in this country. Sale directly it would come from the sale whatever the number is, it would come from the sale interesting concept meanwhile, late last night the outspoken editor in chief of chinas state backed global times blasted the idea of a sale of tiktok and the u. S. Taking a cut calling it, quote, theft and saying china could retaliate if a deal is made becky, its going to have a lot of people talking today for certain as we try and figure out whats going to happen with the deal if one gets made and this comment from President Trump about the United States getting some form of payment and it would be something to watch to see how microsoft would fit it in, how would they manage the entire deal . So deals of this size and of this complex nature are difficult enough without getting two different administrations involved calling the shots on either side. It complicates it pretty extremely. Yeah. The president is now the head of Investment Banking for the United States of america, inc. What did you call it earlier, andrew, getting a tip . Whats the fee. A tip. Jimmy lee. Jimmy lee, the one of the great legendary bankers used to say, tip the waiter. This is close to that, though i think people have a worse view of this version of tipping the waiter than that how they do it i think is still the open question. Boy, people are getting involved in this trying to figure out how they would do it. Well see it raises all kinds of questions for any Foreign Company operating in the United States when we come back, a warning from former starbucks leader Howard Schultz if congress cant get a program up and running soon, the results for the country could be devastating. Next, well be talking with a bipartisan pair of u. S. Senators trying to get just such a program into the next stimulus bill. Indianas todd young and michael ben knit will join us with what they are calling the restart act. In the meantime, as we head to a break, check out the price of gold this morning. Still sitting near a record high it hit an alltime high near 2,000 yesterday in trading. This morning its just about 5. 5 away from that. 1994 stayun ted, youre watching squawk box right here on cnbc. 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. It is no longer a crisis this is a five alarm emergency in which i believe, and i think the 100 ceos who signed this letter in support of the restart act believes that all roads should lead to Small Business relief in any stimulus package that Congress Approves that was former starbucks Ceo Howard Schultz he joined us a little earlier this hour and he spoke about a letter to congress that he spearheaded. It had lots of ceos of Big Companies that signed off on this calling for robust new aid packages for Small Businesses. Joining us right now are two u. S. Senators from opposite sides of the aisle pushing for exactly that in the next stimulus bill. Lets welcome senator todd young, a republican from indiana. Also, senator Michael Bennett who is a democrat from colorado. Welcome to both of you, senators i have to say, Howard Schultz made a really compelling argument for this. Its a huge issue for the country when you consider how many jobs are tied up in Small Businesses and it is an urgent and dire situation right now first of all, i love seeing both sides Work Together. I hope to see more of this but i think the real question comes down to how this works so, senator young, maybe you can describe what the process would be sure. My hope is that we can come together and recognize that when this pandemic hit, we were all hoping that this could somehow be addressed or navigated within a short period of time so we were able to pass the paycheck protection program. That helped out tens of millions of americans stay attached to their employer helped a lot of businesses stay solvent at this time but theyre going to require additional assistance so what michael and i propose in a bipartisan fashion, with the support of spores of allies here in the u. S. Senate, is a longterm working capital loan for our hardest hit businesses based on the amount of revenue loss that theyve experienced from the beginning of the pandemic to the end. We compare the revenue they earned last year to the revenue theyve been able to generate this year, we think that this is going to require, you know, an additional six months of assistance and the terms of the loan, of course, will be favorable so that our main street businesses will survive this pandemic and remain engines of our economy on the back end senator bennett, how small does the company have to be in order to qualify the idea of loans being paid back, that is something weve heard from some of the Small Businesses weve talked to that they dont think they can pay back loans eventually. Is there a chance that any of these loans will be forgiven two really important points the way weve drafted the bill is that it goes up to companies that have employees up to 5,000. We could see, you know, maybe that number needs to be 2 or 3,000, but the reality is there arent a ton of companies between 500 and 5,000 employees. There are a ton of workers there and there are millions and millions of workers that are going to lose their jobs if these Small Businesses go away, which is what the purpose of the loan restart act is meant to stop your point on forgiveness is an enormously important one i think one of the features of this bill thats different than other proposals is that the loans are forgivable to the extent of the losses that firms take and to the extent that they use the money to pay salary and benefits to pay rent, utilities, working Capital Requirements of businesses no Small Business in america caused this pandemic and i think its critical to have loan forgiveness so that companies arent submerged under a bunch of new debt. That wont do anybody any good thats one of the big differences between this program and the paycheck protection program, which came before another huge difference, as senator young said, is this in order to be eligible for these loans you have to be able to show that your revenue has declined as a result of the pandemic there are businesses whose revenues havent declined and they were eligible for the paycheck protection act. We dont think thats right. We think we should be focused on the hardest hit businesses in america and doing everything we can to get them back on their feet part of that is having loan forgiveness as an essential infwrei ingredie ingredient. Whats the price tag, senator bennett . We think for 300 billion worth of equity we can lever 1 trillion worth of loans. Thats similar to the number Howard Schultz talked about on your show and i think it reflects the order of magnitude response we need to deal with. Look, nobody wants to be in the situation were in i think what todd and i are trying to do is everything we can do to make sure that when the lights start to go on again, americas Small Businesses are still here and that we havent seen the kind of carnage that otherwise were going to see hundreds of thousands in Small Business, millions of employees losing their jobs, and those businesses never to return you saw the numbers in new york just yesterday those numbers are happening all over, you know, my state of colorado and the state of indiana. This is a blood letting like we have never seen before in the Small Business sector of our country. They didnt cause this problem we can stand together to help save them and help save the American Economy as a result just a quick point on that. Go ahead. I think its worth noting, its a point i made before, we cant be penny wise and pound foolish here this is expensive, but the most fiscally irresponsible, the most expensive thing we could do is fail to help out these businesses, to make them permanently insolvent, to permanently go out of business and for employees to go on public assistance. That would be highly expensive and also the innovation costs to our economy would be enormous. You have gotten 48 of your colleagues including yourselves, you have 48 who have signed on to this. Whats the reception that youve gotten from leadership in terms of whether this would be included and whats the reaction youve gotten from the administration with treasury secretary mnuchin . Senator young . Ive had some very constructive conversations with leadership blessedly they incorporated the concept of longterm working capital loan into the heels act which is the bill that was introduced in the u. S. Senate. Both michael and i believe we need to go bigger if were going to help out the hardest hit, small and midsized businesses theyre warm to it theyre moving in our direction, but i think its important that during this critical time this week we make a fullcourt press to ensure that these businesses are helped out senator bennett, what do you need to see happen next in order for this to Progress First of all, i think, you know, weve got 47 or 48 cosponsors, almost exactly split between republicans and democrats. In the ten years that ive been in the senate, i cannot remember that sort of bipartisan coming together on an issue thats hard you see it on easy issues, but on an issue thats hard. The outside business support that weve got, the support from the nonprofit sectors across the country that weve gotten. Ive heard very positive things from leadership as well. I had a chance to talk to secretary mnuchin before our last break so im very optimistic that as part of the package to continue to recover this American Economy we will have something in there that addresses Small Business. The question is going to be is it half the loaf that doesnt get the job done or is it something that really will give certainty to these mom and pop businesses across the country . You know, weve got many concert venues, for example, in colorado theyre not going to open for a long time. That could be a year from now. It could be longer from now. And weve got to figure out a way to try to do what we can to keep them afloat as we reopen our economy. And i think thats the bill that todd and i have written. I have been very gratified not just to get the support inside the capitol but all of the support outside of the capitol as well. Senator bennett, whats your idea of a half a loaf in this situation . What are some of the ideas you have heard tossed around i would worry if we were talking about ppp as valuable as it was, another extension of that is not going to deal with the working Capital Needs that our Small Businesses need. I would worry a lot for the reasons we already talked about if it didnt include forgiveness because the last thing Small Business needs is to take out a bunch of loans and then sink beneath the waves of those loans. Id worry if the term wasnt long enough for businesses to be able to get back on their feet and do the work that they need our job here is not to make peoples lives more miserable. Its not to make peoples lives more miserable it is to be constructive and to do it in a bipartisan and effective way and thats what wed propose senator young, senator bennett, want to thank you for your time and your focus on this program. We hope you keep us updated on the progress. Thank you for your interest. Will do thank you. Thank you andrew thanks, becky. Coming up when we return, jim cramers first take on the markets ahead of the opening bell take a look at the futures still in the red 58 points off in the dow, nasdaq 40, s p off 13 points. You are watching squawk box. Stay tuned for mr. Cramer after the break. Dont forget to subscribe to our podcast. Youll get interviews, original content and behind the scenes access look for us on Apple Podcast or on your favorite pcaodst app and subscribe to squawk pod today. When we return, well tell you what you need to know about the market day ahead before the opening bell rings critical sectors and stocks to watch are coming up next stay tuned you are here on cnbc pampers the 1 pediatrician recommended brand, helps keep baby skin dry healthy so every touch is as comforting as the first pampers. The 1 pediatrician recommended brand welcome back to squawk want to get over to cnbc headquarters jim cramer, i just want to know what you think of this comment from trump about paying off him because hes the landlord to buy tiktok how does it even work . Could be illadvised. I think that hes cutting a deal, okay, and he knows how to the art of it, but its not i mean, maybe he should do the Farley Building with facebook because it used to be the post office, you know. I dont know this one is hard for me to get my arms around because it is a steal for microsoft so maybe the president feels, hey, listen, satya, give me some money here i dont know its very different. Its not something that im used to or youre used to or the 327 Million People in the country are used to, but, hey, its novel. Its novel like the virus is novel. But, jim, what do you think it means, though, to other u. S. Companies doing business in china . Dont you think at some point that somebody in china is going to say, hey, tim cook, hey, you know, hey, starbucks, over here, either pay us off, you know, a little under the table, whatever, or over the table, since this is out in the open or you cant do business here. Right well, this used to be the foreign corrupt practices act except for now weve made it so its the foreign noncorrupt practices act. Its kind of like what it is i dont know ive been struggling with it because i feel like that im i dont know, im not really schooled in the world of constitution, the republic maybe its because i went to law school i dont know its hard its a quandary, andrew its a quandary. No make it investable, though. Would you buy microsoft z as a result of it or no yes, because they will pay the president whatever i dont know the money eventually goes to treasury i presume, right, it kind of goes to treasury and microsoft is stealing it because there is no other company that has enough money to buy it and even the people the shareholders know this, so, yeah, i mean, why shouldnt the president get a cut . Why not . I mean, what would goldman get you know right . What would solomon be asking for . He had that big party and it wasnt his, i know, but you do have greg who runs m a, he would get a cut. Whats the difference . Okay i mean, first of all, we have Peter Navarro doing the spac buying the kodak thing, thats a spac, so we have the president doing a deal here. Its like another spac hes got a lot of spacs. Yeah. Right wall street meets washington. Yeah. Jim, a question for you, you said this yesterday and said it again today that this is a steal. Microsoft is basically stealing it because no other company would be able to pay it off and do t thats the same thing that the Chinese State media is saying, too. Is there any chance that they get involved and put the kibosh on any deal . They know this deadline wipes everything out i think that their bark is worse than their bite. Theyre absolutely right microsoft is going to kill it. Raise the pe, a whole new division, probably good for everybody because i think that i think that microsoft would have certain strictures, wouldnt be allowed to get content from bytedance i dont know, becky, how often you look at it when i look at tiktok my iq goes down immediately and thats acceptable its incredible drain this is the great equalizer. I dont get it. You are immediately everybody who watches this thing is brought to a lower level. I dont know tiktok is just i dont know again, great deal for the president , gets the lemm cow cut, the goldman cut and not one and none of it is believable frankly trying to i mean, its probably going to happen, but, i dont know where is joe what would jose say . I dont know what joe would say. You had Howard Schultz are you on tiktok, jim . Do i like tiktok. Are you on tiktok. I am. Of course. Of course im on tiktok. Do you do dances . Lip sysyncin lipsyncing. Im on tiktok as a way for them to get my email and tap all of this in here. Isnt that why you are on tiktok its a brain drain. Whats your user name what is my i dont know, whatever my daughter told me it is you guys are not on tiktok okay. No. Our kids are. Did you go to college to get stupid im like a lurker i havent done a dance or a lip sync yet. The amazon guy and the ups guy delivering the package, you didnt watch the post office guy delivering you didnt watch that video i saw that on twitter. Thats a derivative you have to go to the i know. Didnt you learn in college that you have to do the first materials. You dont go to the derivative. Yep. Tiktok. Yes. Im posting today i have a post im working on for my mass contest. Okay. Im trying to make it as stupid as possible to get as many people involved any dancing i will dance for you, jim. Thank you, guys this was fun. Jim, thank you. I like this triple box i wanted the triple box since we started the segment. I remember when steve liked this segment, i would have loved the triple box. We will see you back here today and in a few minutes. Let me see if i cant get that commission down the president wants. Let me get that right now. Good idea. I will get it. Joining us as we count down to the opening bell on wall street is david bianco chief Investment Officer at dws americas i know that you think this is an incredibly difficult environment for invevestorinvestors. What do you tell people to do as a result im not on tik tok. Thanks for having me its still a challenging environment because its an uncertain environment. We look at these tech stocks at wish that our entire portfolio were these tech stocks we are overweight tech, that has helped us but weve been underweight equities, particularly the value stocks. Frankly i think the economy as well as the Earnings Results we got during Second Quarter earnings suggest you should stick with the growth stocks, wait longer probably past the elections before buying value, financials, energy, i think many Industrial Capital goods will be challenged through the year. So dont fight tech, own it. At the same time keep cushion in your portfolio we see opportunities in Corporate Credit, particularly the spreads, Municipal Bonds and selectively in real estate but i know that everybody wants their portfolio to do as well as these Tech Companies have been doing and in many cases its justified, however, be aware of the risks, keep cushion in the portfolio. David, when you say youre underweight stocks, youre making up with it with real estate or Corporate Bonds or do you have a large portion of cash that youre keeping on the sidelines . I would say were not keeping up with it we have not been overweight cash, weve been overweight Corporate Credit Corporate Credit has done well, particularly versus value stocks particularly on a risk reward basis but its these tech stocks that we all wish we had more of and we are overweight them and as they get bigger we wrestle with how large of an overweight can we justify but the Earnings Results from last week and the continued challenges to this economy make us feel compelled to stick with it the valuations are demanding but these companies seem to deserve it david, ive got an email from art cashin and he points out that when it comes to apple they could be benefiting from a bit of a short squeeze on shares that are on loan to short sellers because people want to get ahead of this before the stock split. Does that make sense to you . There are skeptics out there about the technology companies, particularly their valuations, however, we find that this tends to be more of a loved sector with less shorting activity than you would find at other sectors like airlines. So i dont think its a short squeeze. Frankly, i think its just fundamentals, strong Earnings Growth that has taken these stocks to where they are, these mega cap, tech titans that they are, and and we acknowledge the valuations are demanding but were not going to fight it and we think theres an element of defensiveness, if you will, that these Companies Offer when the pandemic remains a real threat going into this winter okay. David, we want to thank you very much its been great seeing you today and we will talk to you again very soon. Thank you okay. Folks, that does it for us today. Weve been watching the averages and they have been under a little bit of pressure all morning, off the worst levels, dow still down by 61 points, s p off by 13, the nasdaq down by about 39 andrew, i will see you back here tomorrow, hopefully scott will be back with us at that point. See you tomorrow. See you tomorrow. Folks, right now its time for squawk on the street. Good tuesday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber futures are just south of flat as stimulus talks on the hill show few signs of progress getting some breaking news right now on ford and for that we will head to phil lebeau. There is a shakeup at the top of ford motor company, jim hackett who has been ceo and president of the Company Since may of 2017 is retiring october 1st taking over on october 1st will be jim farley who is the coo of the company this is a move that had been widely expected. The timing is a business of a surprise, nobody was quite sure when this would happen, but its not a surprise that jim farley is taking over for jim hackett this is a company that under hackett has not been able to