Transcripts For CNBC Squawk On The Street 20240712

Is its been a broadening out. Now, the question is is there enough money to go around to buy 3m today and also buy lets just use lets just pick nvidia, okay and the answer is thats to be determined there is a lot of newer money coming into the market, we will be talking about splits later today and the nature of the alchemy of it all but the thing that im most excited about, david, is there are industrials doing better than expected we have to stay focused on that because when we think about 3m making a come back, think about where they were and that is the you know, that is the and theyre having some good numbers this morning, thats what stood out to me and it makes me think nat industrial leg must be included in any portfolio. Its only up 2 are you kidding me youre referencing yeah, thats the stock youre referencing 3m. We should just tell people theyre giving us Monthly Sales numbers, july was up i think 6 year over year, 2. 8 billion, organic local currency sales up 3 because dont forget that weak dollar helps them, net of divestitures and you like it obviously. 29 in health care, no at surprise there, but other businesses as well 9 consumer, 6 in safety and industrial, electronics were down 7 , jim. Big in ppe. The tell on this was that when they ended their last Conference Call steve tusa from jpmorgan said some good things and he had not said good things before. Thats when you need you know, you caught ten if you just went with him with his slight change david, does it matter what mr. Roman who runs the company is an exceedingly nice good guy that you root for does it matter well, sometimes nice guys finish first i dont know but he is and were always happy to have him. There are still those liability questions, jim. I know. They come up in every interview, they come up in every Conference Call that he has. I know. And one time they had it on footnote 64, but, remember, it was at least in the footnotes and while i was fond of inga due lean the previous ceo it was never talked about i started thinking that mike roman got a bad hand and he is augmenting the hand and i think that that should be applauded. He did say that july was starting to go well, putting out this release shows me the momentum is shifting and 3m is a buy, but in part, david, because the industrials are getting much more love. United rentals this morning have you seen the transports of late yep showing signs of life. That ppg number, remember, in terms pre announcement. Paint for cars, that was very strong. European cars mostly going to china, david, it did set a fire under one of your favorites, dupont i say that because ed breen has been a dealmaker, par ex lance and i know youve always followed him and i would like to think youve respected a i lot of things that he has done. Without a doubt of course, i remember ed from well trier to his taking over tyco and followed him for a long time as i know you have. Jim, coming bag to the macro we did jobless claims, they came in thankfully less than had been anticipated for better in a sense a bit, which is great, but the market seems to be shrugging off the possibility that we dont get something out of congress in terms of another another huge swath of money for relief, now, whether its a trillion or 2. 5 or 3 million3 n but you have to think that investors think something is going to happen there otherwise its hard to imagine the stock market keeps going up. I think i dont want to say its impossible to imagine because, again, the brunt of the pain is being borne on companies that dont trade so you see a 3m, 3m is a Big International company where things are turning, but when you see the local restaurants that are in federal shopping centers, david, when it gets cold its not a great time to eat outside. A lot of the restaurants in the country have been very, lets say, resourceful and theyre resourceful and when it gets cold, the Hotel Business we all love arnie sorenson, ceo of marriott, he was optimistic but off such a low base. I agree with you that it is hard to believe that this momentum can continue without another version of ppp i believe larry kudlow will talk about a Capital Gains cut that has been one of larrys arrows in his quiver. I question whether thats what this market needs, but i think he may go a step further and say, do you know what, it doesnt need anything and if the democrats wont give his team anything, do you know what, were fine because the momentum is back in the market and they do tend to think that the stock market is allied with how the economy is really doing and i think you and i know better. Yeah, and i look forward to you questioning him strongly about that. You will be in there, david every time i have spoken to larry you jumped in and didnt give me back the ball. It was 3 and 10, you got the first down and then you carried completely yeah, well, you know, the last time i talked to him was relatively contained and i did come back at him that was march, i believe, so its been a while for me and larry. Relatively contained, is that what you thought with all due respect, david i dont know if you recall i did give him an all due respect, yeah, i think i got a little i got a little uppity with him, so to speak, but he took it as he always does. He always does. The gentleman that he is. Lets move on, jim, to other stocks that were keeping an eye on, lets talk cisco because the stock will be down this morning, you had Chuck Robbins join you after earnings lets listen to what he said on part of his interview on mad money, just sort of his general take on where things stand right now. There is a lot of uncertainty around what happens from here, a lot of uncertainty about do we get this pandemic under control, i mean, some of the countries that have opened up around the world have now begun to slowly close back down a little bit because of reemergence of the virus, there is still a lot of uncertainty but we did see strength in our Service Provider business this europe and asia, we saw strength in the high end of enterprise in federal as we discussed. What do you make of it all, jim, the numbers and obviously from your interview with chuck two take a ways, the first is that while the highest end is good, the small and medium sized businesses is not that good and thats what we are talking about. They are not ordering. The second is its very rare that you have someone who is loved who is not the ceo who is powerful in a company. Kelly cramer, no relation, k. K. , cfo is loved, five years at the job, the street loved her, one of perhaps the most candid and intelligence cfo i have met in my time. I have gotten the privilege of getting to know her and her retirement stunned people. Stunned. Because shes true north, out of ge, by the way, just a loved person and you will talk to big accounts on the buy side and they will say kelly said its okay kelly said its okay and chuck is such a gem. Always very horizontal with kelly so that took people by surprise, but theres not a lot of business being done at the small and medium size and that matters. Remember, chucks business is enterprise not consumer. So you dont want to necessarily conflate the two, but it was down beat. Somewhat painful because chuck is another guy you hoot for and they just dont have the level of business that you want because of all the reasons that you and i talk about youre just theyre underfunded small and medium sized business and thats what i think is the achilles heel of this economy interesting Something Else was brought to my attention from the small by a couple of investors, jim, which was and i will read it to you, i want to get your take they were talking about software, Saas Software and said if you do the math where software in our portfolio was five years ago, what percentage was coming from subscription and saas weve certainly increase it had significantly. This is Chuck Robbins over the last four or five years without any major, major refer knew driving acquisitions so that would certainly help and we continue as i said earlier to look at alternatives in that space and you should assume we will continue to look at them, but we will also be disciplined. So some people talking about the possibility of them, you know, theyve been and acquirer through the years looking at Saas Companies perhaps not that large. Im not sure how thats being played in the market as a positive or negative but i thought it was worth mentioning. They are at 51 , about a year ahead of their goal for saas i was hoping they would buy data dog. I know i wish they didnt calling it data dog because thats like my dog that i named nvidia, they ought to they ought to like up their game, but i know thatchuck is always on the prowl. They do have a lot of cash i think the issue, david, is the saas stocks are still very, very high you would have to buy somebody private. Whats holding up better than anything and the ones that people are most concerned about in in market are the incredible multiple to Sales Companies that chuck would need to buy in order to augment that 51 . Hes way too disciplined to do that way too disciplined. Discipline is the word he used right . Right. More business. If you couple those high valuations with a disciplined buyer you dont typically endu with a lot of deals. Exactly. That comes in a lot of different shapes and sizes, speaking of bankers, for example, in health care, big pharma continues to want to look at biotech companies, with he know they will pay huge numbers for them, but they are so high right now that many are saying i cant get that done. Is this like a segue . Are we like a team we are a team Thermo Fisher is incredible. We are a team and you and i can read each others mind i think sometimes all these years of working together because its funny in the Thermo Fisher chi a jen deal which is off because chi a jen did not get what it needed, german company, dutch law, different than our own, they needed 66 of shareholders to tender, had raised their bid, it wasnt enough, they got 47 , a Big Hedge Fund was against it, a belief that other bidders would come forward to the point you were getting at there seemed to be Unrealistic Expectations of what thermo would pay which is you would argue what were seeing writ large in the stock market. Youre so right i go back and forth with mark casper, a big supplier and a good supplier of the kind of reasons that you need to measure covid. Hes saying, look, that theyve been playing a leading role in supporting the covid19 response for governments, customers, biotech but most importantly they are a disciplined dee employer of capital in order to create the significant value for shareholders david, you cant be a disciplined buyer if you get these hard to negotiate deals that are so expensive. I thought Thermo Fisher when it started this was paid too much and mark casper completely verified look at that stock if we have a chart qiagen its incredible Thermo Fisher is always worth looking at qiagen is up emerson is not buying them. They do have a business, some of their business at qiagen suffered as a result of covid look at that. You can never pick that because theres singlestock risk and our viewers are too dumb to isolate the company thats the number one medical Equipment Company in the country. Yep you know, back to qiagen for a second they do sell a component thats used in covid test so theyve benefited in that part of their business surprising to see that stock not breaking down this morning. I know. I will look into that a bit more finally, jim, before we hit a quick break here i did want to go to you on tesla which had an incredible day yesterday on the news of expected five for one split. There are other stocks that you mentioned yesterday that you think should similarly undertake such splits. I certainly think they might if they can get the kind of market cap accretion that tesla got remember, again, you are not actually creating any new value to splitting a shot you are just creating more shares. Its alchemy, i said at the top of my show last night that i am in favor of alchemy because there are a large number of new investors, 13 million strong at robin hood brought in by no commissions and they look exactly those stocks that are there, but they say i cant buy i cant buy that, its too high now, obviously, david, tesla the dollar price is too high but we remember the days when pepsico would report and they would boost the dividend and give you a three for one because its at 134 and people would cheer and splits used to be rewards, cheaper rewards than boosting the dividend or doing a buy back the big institutions took over, they have to buy more shares, they have to pay more commish and, david, the individual left. The individual is so back that i believe and you know i have to get his name in because of the Penn National gaming recommendation from goldman sachs. Here we go. Yes. Yes. The portnoy factor. David, i have no complaints with portnoy. Im aware all right. Thats twice i know you mentioned him in squawk box as well. Do you know what thats in difference to, right do you get paid on the mention . Im kidding. I get paid by the phillip roth estate. Portnoy complained do you know that one thats actually not that far. Up for sale by the way in warren, connecticut. Yes, i looked at it my wife and i looked at it we said we buy phillip ross place and we want to flip it american pastoral 2. Best book ever they call me the swede you are the best. Lev all right. We will get more on the speculative nature of the stock market and reminisce about the late 90s again when we talk about tesla. Do want to talk about apple on the other side of this and dont ing aitat b kudlow wille joinus b ler in the show 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, everybodys 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. Just have to make more corners in this building. Chad. Your wireless. Your rules. Only with Xfinity Mobile. Now thats simple, easy, awesome. Switch and save up to 400 a year on your wireless bill. Plus, get 400 off when you preorder the new Samsung Galaxy note20 ultra 5g. Apple said to be writing a series of bundles that will let customers subscribe to several of its Digital Services at a lower monthly price. Theres a look at the stock. Sources telling bloomberg who is reporting this that the bundles dubbed apple 1 are planned to launch as early as october along with the next line of the iphone bundles will include video, news, music, fitness jim, not a surprise if, in fact, true cant tell you we havent confirmed, but not a surprise. When you think about it even amazon prime i think sometimes people forget it comes along with music and entertainment. Right i cant tell you how many times i told tim cook have you looked at making an acquisition in this particular space tim has always said that they will be studied, find out whats best for the customer, what the customer wants and then they will expand. Wo do you know what, david, if everyone had that strategy, i think stocks would be a lot higher because there are ceos who have confidence in themselves and their people. Tim cook has a tremendous level of confidence but still runs scared he started this, he is going to end up being a titan in this industry with some very good people someone to watch look at spotify, by the way, just in terms of what you can create that can beckon, apple can do that there are very good people on podcast for apple. Look, david, they are just really good at what they do and i think no one is really jealous of tim because he doesnt carry himself that way, but you have to be impressed with this, too. Yeah. You know, when it comes to the entertainment offering, jim, early on of course we were saying how, you know, it was not robust at all, the library was barely anything, but they had been spending real money on securing movie rights, tv rights, they have been spending. It will be a slow ramp but that seems to be fine from apples perspective. Yeah, theyve got plenty of time, but remember their true north is the customer and they want to be sure of what the consumer wants they are as focused on this as they are on what will happen in china and wechat they have the ability to be able to do a lot of things at once, multitask at once but this is something to watch and we will be talking about this as a force next year at this time. Meanwhile, though, you do mention china which you always have to consider particularly given the state of affairs between our country and that country and that possibility as remote as it might seem certainly not as remote as it once did during the heat even of the trade war, jim, that china does take some action against u. S. Corporations that do a lot of business in that country. I think that the president is keeping the heat on. I expect more negatives about china coming out next week you do . Yes, i do. Okay. Yes, i do. By the way, thats something we will talk to larry kudlow about who will join us in about 15 or so minutes from now. Hang with us on squawk on the street. We have an opening bell and a mad dash coming up we love our new home. Theres so much space. We have a guestroom now. But, we have aunts. Youre slouching again, ted. Expired, expired. Expired. Thanks, aunt bonnie. Its a lot of house. I hope you can keep it clean. At least geico makes bundling our home and Car Insurance easy. Which helps us save a lot of money oh, teddy. Did you get my friend request . Uh, ill have to check. doorbell ringing aunt jonis here for bundling made easy, go to geico. Com. Hello . All right. Here is a look at how were going to open. You can see it, six minutes from now. Nasdaq will open higher it appears and the s p lower. Announcer the opening bell is brought to you by nuveen. A leader in income, alternatives and responsible investing. All right. Lets get to a mad dash as we count you down to the opening bell three minutes from now. The company im told youre going to focus on, one you really have just loved, jim, i mean, really, youve thrown so much love their way for so long, i really dont know how you could do even more. Im changing my tune. No really . Ive hated this company ive hated this company and the company is occidental. When oil was at 37, wow, but there is a very i mean, minus 37, sorry. David, there is a very compelling piece by jpmorgan where they go from sell to hold and they say its now in no mans land i think thats true. Theyve been able to do a refinancing that takes the pressure off i dont think that this is the level to buy it, but i do point out that its not they are no longer going to have the oxygen turned off if oil stays at this level they have some maneuverability, they have one rig going, its been a complete disaster since they bought anna dark co, chevron stocked has thrived since they passed on it at these prices its been poorly run, but, david, each a dog has its day and today is this days this dogs day. Oxy. Really . Will that just be 24 hours or will it extend beyond natural day . No, tomorrow we dont trade, but, yeah, i just think ng the the risk of bankruptcy has been largely dip initial ll. No dividend to speak of dividend if oil goes up its still very sensitive to oil. David, how many times did i come out on this show and beg holland not to do that deal . Beg. You did. Not to do the anna dark co deal i was willing to forego the Investment Banking fee it was incredible. Do you think greg lemm could you my buddy at goldman would forego it the way that i wanted to. The best bankers are say no but they are few and far in number they are about the longterminate tour of the relationship it cant help when you tell a ceo not to do something it doesnt happen very often. I mentioned greg because greg is one of the guys who would say no in my view. He is a good man. Really . Thats high praise from a curmudgeon like you. It is it is indeed youre right they should not have done the anna dark co deal, certainly not at the price that they did, as you pointed out so many times mike worth who had the deal in hand at chevron walked away, holland came over the top and increased. Warren buffett is still getting paid, though, isnt he he did well he did well on that as he tends to do. Yep yep. As he tends to do. All right. You hear the applause building of course, jim, we can take a look at our realtime exchange back where you are at our headquarters you hear the opening bells this morning. At the ncse celebrating its ipo today ke holdings, its a chinese on line property platform we will have the cfo when that stock openings. Isnt that great. And you can see as well. Just so great you and kudlow can share your disdain larry is not your desire to not allow Chinese Companies to have access to our Capital Markets i know plenty of bankers who are not going to mention that not to mention our friends at the nyse. Or my friend Peter Navarro who shares with me, lets say, a desire to make it so that the chinese cant come over here, offer really horrendous deals, take our money and run its steve miller meets the communist party. Take our money . I mean, money moves all over the planet money is global. The fact that ann financial will probably be the biggest ipo of all time. I know. Theyre going to be getting money from here they are just not listing here. Thats true remember, the msci they will be included in the index and everybody will own it if you own international stocks, so much money is indexed i dont know look, you know how i feel about these companies, david lock in. Lock in. Remember that . Yeah. The chinese starbucks of course yes. Do you like that one . Yes. How about dufoi. That did not work out very well for those long in stock do you know how press used i was by bankers to say good things about luck in on our show i told them to talk to the hand but it wasnt this person because of the pandemic. And, no, youre right, it is listen, there is a lack of transparency in some of these, a difficulty in ascertaining whats going on on the ground. There is no doubt, but at the same time alibaba will report earnings next week do you have a problem with them . Their business is largely in china but they trade here. You are talking about a 690 billion market cap company, jim. And they do offer anyone who has shopped on there for commercial purposes the bargains are incredible and, david, you introduced me to that company, i have Great Respect for it, the financials are very much american i did not have the respect for it until you told me sit down with these guys and understand them and i felt very compelled to say this is a winner. But that was you yeah, and it has been its up about 20 this year of course as the Chinese Consumer has come back to play. Lets not forget they do own 33 of the aforementioned ann financial which was just kind of taken away from the company if you were from shareholders i mean, shareholders are still very angry about that from years ago with they just sort of the word they used was stole it. But, hey david, dont you find it there is a controlling holder although im not quite sure what his actual economics are. We will see the prospective probably not that long on ann financial. We have to watch that david, would mall or joe, how would they feel about singles day . They were kind of communists, singles day, which is the day that you buy alibaba to bet on is not something that joe i dont think he was a great leader. Yes come on. Yes. Ping, maybe he was a shopper. He turned things around. Malls wife, capital schroder remember we used to talk about those, that was really in college when i took those seven course on marxism of which by the way i did really well. Do we have larry on . Bring him on. David, true treat, joining us now National Economic Council Director and former partner of mine of kudlow and claim, larry kudlow larry, it is always great to see you. First of all, how are you feeling . Things good because of this pandemic i know you are not a big guy, certainly not the kind of thing that suits you. Well, youre right about that, jim yes, its good to be back with you and david and the others jimmy, those marxist classes did not wear off on you. They did not you know, you are a wealth guy, you are an American Patriot guy, when we worked together and you still are. Look, on the big picture today i just want to note at the top very good unemployment claims numbers, initial claims numbers and, you know, weve been struggling through that because of the hot spots and they have been Holding Around a million. The continuing claims have dropped a lot but i wanted to see the initial claims so they dropped a lot, about, what is it, 228. So we are down a million i think for the last two weeks thats a good sign theres no question that the breakout of the hot spots in the south and the west probably slowed the recovery at least in those states no question about it and i might also add even with these better unemployment numbers theres still a lot of hardship out there i get that we have much, much more work to do, but i will say things seem to be trending in the right direction and, you know, lots and lots of we could talk about this, different sectors are showing significant recoveries even despite the hot spot breakouts again, we lost some ground, things like restaurants and Small Business, but not too bad. So im relatively optimistic on this story weve done all we can, you know, to persuade people, we sent cdc people in the field, deborah birx to these states and said, look, you have just got to proclaim or mandate or just lead towards masking and distancing and testing where applicable and of course, you know, washing your hands and hygiene thats the way to do it. I completely agree. I do want to know given the drop in the jobless claims and some of the momentum im seeing in companies, and im going to Say Something that i do not believe in so viewers will know that, but is there any chance that you think that we dont need additional stimulus or is that we could wait or that we should worry about the limits of the countrys borrowing party . I dont think the limits of the borrowing power, jim, has were not near that yet. Okay look, were sensitive to the fact that were doing so much heavy borrowing, but, again, with ultra low interest rates, whatever, 60 basis points on the ten year, you have to borrow this is the time to borrow its an emergency situation and we have to reinvest that money into the american economy. Everybody, you know, workers, jobless people, working folks, you know, the president s payroll tax cut, i have advocated for that, im delighted that we went through with this executive order, i think its a big help, its going to give 140 Million People an 1,100 wage hike for the last four months of the year and we were able to use the executive order to help the unemployed so theres with the states and the federal government either 700 or 800, we will put in 300, the states have already put in 400, if they want to put in another 100 thats terrific. So we are able to deal with that the eviction moratorium, we are working on that to make sure that we dont have any big issues with mortgage bonds and things of that sort or evicted people going to homeless shelters where theres Community Spread and waiving the Student Loans, interest and principal zero rate. I mean, if people have spare cash they ought to pay down the loan at a zero rate. But i dont think we are worried about bonding power. Whether or not in terms of your first question, i dont think i really want to say much on that. Weve acted President Trump has acted forcefully because we couldnt reach a deal with the democrats. They are asking too much money, 3. 5 trillion, we have already spent over 3 trillion so much of the democratic asks are really liberal left wish lists because, you know, Voting Rights and aid to aliens and so forth. Thats not our game and the president cant accept that kind of deal. Well wait and see on the negotiations treasury secretary mnuchin is working on that, but so far its a stalemate. No question. Lets take that for a second. Treasury secretary mnuchin is like you an optimist i know he, like you, favors Small Business is there a possibility for a small deal, in other words, something that would carry over the people that you have taught me mean the most toward the strength of the economy, which is that Small Businessperson do you think that theres a way that a deal could be crafted that would just help those people in the interim . Well, i wouldnt mind so far its not there, jim i wouldnt mind. I mean, you talk about Small Business and youre right, thats the engine of growth. We would love to extend the Payroll Protection Program we would be happy to do that if you could craft a separate bill for that. We have had technical, you know, changes in for our bill so that could be something. Theres no question that that would be helpful as a backstop the other thing, jimmy, is weve got 105 billion here marked in our asks for School Openings related to covid improvements that are necessary to get the schools open, get the kids back to school. They have a very, very low case race as you know we would love to get that through. We actually had a higher ask than the democrats initially thats another one, the Small Business piece and the only school piece. Those are two areas that wed like to see. I think you mentioned it, stalemate so i want to move on from this and get to something where you might be able to give us a little more clarity which is last weeks executive order from the president involving wechat and tiktok. Specific to wechat the journal reporting this morning about a call with a lot of corporations asking for clarity because the order basically barred any transaction related to wechat. My guess is you were on that call although i dont know, perhaps you can tell us and can you provide any clarity on what that language actually means unfortunately i cant provide much clarity and to be honest with you, david, i was not on that call. In fact, i was not aware of that call in fact, im not sure there was a call now, its possible that, you know, one of my colleagues uscr, Commerce Department might have had such a call. If so it was not the whole trade Principles Group or any other senior group so i cannot confirm that the decisions all right the journal is saying apple, ford, walmart, walt disney all on the call but youre saying you are know sure a call took place or you dont know. I cant confirm it. I dont know i was not aware of it. The president has said clearly hes going to give microsoft and any other private suitors 45 days so call it midseptember that is still open for discussion and open for resolution larry, you know, on the tiktok question microsoft and i have reported still working on a potential transaction. Im aware of other potential bidders who have decided not to pursue it and the reason why is because they dont know where they fall in terms of the president s like or dislike and there is a concern that if he doesnt like you as a can be you are not going to be able to get this the larry kudlow i know would never want Something Like that where corporations and their Decision Making was based on what the president wanted or didnt want in terms of dictating a potential buyer. What dus to people who have that criticism . Well, i dont think thats, you know, a really fair representation of President Trump and youre right about my view look, i think, david, on this and maybe related matters, there are certain principles that must be adhered to. Thats really the issue. Not so much whether you like this company or you dont like that company, there are certain principles among them, among the most important is the issue of personal information and the degree to which the Chinese Government, the communist party, has access to that information millions and millions of lists of people. There are other security issues. I mean, there have been a lot of meetings that ive been in, there will be additional meetings we have to be secure so if tiktok moves out or either is purchased by microsoft or somebody else or if they just go it alone and ive seen structures and term sheets on both, they have to show us how they can change, repair and renovate their software plans so that it will be completely secure from the Chinese Government thats the key absolutely the key issue to my i dont believe the president will play a favorite or a nonfavorite i think thats the key security issue with respect to china. You know, theyre a tough crowd. They hack into you, they run through espionage, they break a lot of promises, particularly in this area, the corporate area, so i would just suggest to you that its a matter of adhering to the principles of security and trustworthy and thats kind of a software or cloud ware problem that we will be exploring in any proposed deal. Larry, the only way that you can assure that we can get out of the clutches of the chinese and their trojan horse is to have someone like microsoft who understands code i want to talk about something you and i used to endlessly debate, we wanted lower Capital Gains and we wanted lower dividend you always thought that because of the drum beat that we had we accomplished that. I completely understand your desire to lower Capital Gains. Is there any way that if you did that you could tie it in with investment to help workers because it wont do good if we just go by muni bonds with our Capital Gains, larry. Youre right about that last point. Look, actually, you and i had a lot to do with the 2003 Capital Gains tax cut as i recall. Thank you. A heck of a lot if you go back the president has been raising the Capital Gains issue again, he has also raised income tax, middle class income tax reform, too, in addition to the payroll tax. In the campaign, jimmy, back in 2015 mnuchin and i and others around the table we came up with a plan that included a return to the 15 Capital Gains tax rate other parts of the plan had a big reform of the income tax we had only three brackets, 15, 25, 35 as i recall now, i think if you do Capital Gains tax rate you will have to hold it for a period of time it will it absolutely will contribute to big increases in investment, Capital Investment, and thereby the k over l ratio, the capital to ratio will go up and enhance productivity and real wages the advantages of cap gains are very much like the Corporate Tax cut that we had and you recall before the pandemic contraction the Corporate Tax cut led over a threeyear period to a very large increase in the wages of the middle income folks, the blue collar folks, and also the lower below that, the biggest winners from the Corporate Tax cut actually were the bottom quinti quintiles, jimmy it was never tax cuts for the rich this is something Kevin Hassett and i have always believed in. How i would make the same case with Capital Gains look back at them and i think the history shows, the data show that the outcomes you want are actually the outcomes that have happened in the past when the Capital Gains tax rate has been reduced. And it usually produces a big flood of revenues over a period of time with faster growth im not so big on designating uses but im saying your generic points will be met under a lower Capital Gains. Its very unfortunate, look, very unfortunate the biden team wants to raise the Capital Gains tax, which operates, as you know, through the Corporate Tax plus the obamacare addon, would be about 50 50 . And i think thats absolutely wrong and would be damaging to the economy and the workforce and middle class people. President trump wants to move it down to 15 . So there is a very clear contrast between the two all right well, larry, we are going to have to leave it please maintain your optimism. Thank you. It is pure joy. I wish you the best of luck and lets home we get some sort of agreement. Great to see you, sir. Yes. Larry kudlow, an old friend of cnbc. Thank you. David, do you have some thoughts all right yeah interesting, jim i mean, im not sure we got a lot of clarity on much there to be perfectly blunt always good to hear from larry i dont know what your take a ways were. I mean, i know you guys were talking about the Capital Gains tax, thats obviously not something thats going to happen anytime soon. Look, just once again, it brought to you fore, david, that you may want someone else in there to buy tiktok, but only microsoft is sophisticated enough to be able to break the stranglehold of the chinese. David, you said this from day one, this is a coding issue and the people who understand coding who are left are microsoft theyre going to get it, david thats what i heard. Listen, if they want it, it would appear to be they are the ones if youre bytedance, youre selling this asset,you have on the one hand selling it or having it close down and getting virtually no value, obviously you want to try to create some sense that there are other buyers out there, but as i indicated in my question to larry, i think, many are just shying away because its so uncertain. Right. And you really dont know which way the administration will go even if you are in a position thats unlikely for any number of reasons. We have to go, david. We have to go we have to go. Its not fun. We will have stop trading from you, we have a lot more to cover on squawk on the street. Stay with us our Retirement Plan with voya gives us confidence. Yeah, they help us with achievable steps along the way. So we can spend a bit now, knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Oooh, well. Im good at my condo. Oh. I love her condo. Nana throws the best parties. Well planned, well invested, well protected. Voya. Be confident to and through retirement. One thing we didnt get to in terms of earnings was lyft uber ceo indicated the possibility of shutting down the service in california given the judges ruling what was your take top and bottom were considered to be better than expected david, i cant look at it like that i think this is a pandemic in a pandemic, you dont want to go into somebody elses car. You cant do a thing about that. I think lyft is very well run. Within the context of going in someone elses car, i dont think it works by the way, remember the excitement was supposed to be with these companies Driverless Cars thats where the profit margin was. You dont even hear about Driverless Cars these days no one is talking about it youre so right i feel like we would talk about it every day thats years ago when you had people saying i mean, i remember talking to the founder of uber saying theyll be on the roads. We were in new york. This is now almost it was so many years ago nothing. Nothing. When he introduced himself to me and said he was richer than i am, which is an interesting way to start a conversation, i wanted to get Driverless Cars. He had to tell my wife he was richer than i am and it went off the rails. He told you he was richer than you are youve had some interesting interactions im jimmy chill they dont know you the way i do, jim. What can i tell you. Well take a quick break well come back right after this this selenite grey is so pretty isnt it . Wow. Jim could you pop the hood for us . There she is. Turbocharged, right . Yes it is. Jim, could you uh kick the tires . Oh yes. Can you change the color inside the car . Oh sure. How about blue . Thats more cyan but. Jump in the back seat, jim. Act like my kids. How much longer . Exactly how they sound. Its got massaging seats too, right . Oh yeahhhhh. Oh yeahhhhh. Visit the mercedesbenz summer event or shop online at participating dealers. Get 0 apr financing up to 36 months on select new and certified preowned models. Lets look at the laggards jim talked about it earlier. Concern about small and medium sized business for the company octhly taking it out of that stk is morning over 10 were back after thi. Whats on tonight . Deutsche bank decided to take the steam out of with this downgrade from hold to buy that can move all them down. I have paypal which has been the star of the rally other than square theres a company that is a leader in terms of Contact Centers and then people dont know azek. Jesse worked at 3m composite material i have everything in the front of my house done with azek because it lasts forever it can survive nuclear war its wood replacement that is really ideal people who know this also know it and lets see what they have to say its great to see you. Yes you know, its funny, looking at paypal here quick, jim, its up again. Technology has a decent bid to it all with the overall market today weaker than it was yesterday when we had broad based participation. Dont blame them for this decline. You sound sour whats the deal . You got a whole show coming up thats going to be dynamite. I dont like saying goodbye to you it makes me sad. Ill see you soon. I cant say goodbye to you all right no complaint. I have read them all. Its one of the best all right. Lets get started with the next hour of squawk on the street. That is the 10 00 hour eastern time im david faber. Hello, everybody nice to see you all. John, just give me your quick take here. Were seeing sort of a pullback broadly speaking as i just said to jim one name that keeps powering higher is one i know you know well, tesla, off the strength of that split thats coming up. 300 billion market value was eclipsed earlier this morning. Oh my you say goodbye i say hello. Hello to you yes tesla powers higher. There are a number of names that are also doing that. Workday up almost 3 they just had acquisition news its interesting, julia, were near these alltime highs on the s p. Who knows if well get there were right about at the flat line right now its hard to read a story line through daytoday yeah. Absolutely just looking at some of the individual stocks, i know we see apple sort of moving along with the market im very curious to hear your thoughts, john, on some of these reports that apple is working on a bundle and looking at how theyll use their services to drive the market higher. Apple shares up 1. 2 thats in line with many of the other stocks that i follow closely such as facebook you know, weve seen a lot of conversation about what the implications are going to be about some of these tik tok conversations, looking at facebook, twitter, so, david, a lot of different topics to discuss today. Yeah. Lets get started with a few of them well bring in Northern Trust management president nice to have you with us this morning. I want to talk about esg which i know is a focus of yours at Northern Trust lets start with the broader markets and what your view is with an s p right at record highs. With respect to the market, you know, weve been of the contention for some time that a lot of what you have seen in terms of the fiscal stimulus and other efforts was certainly providing support for key areas of the economy that can persist there are longer term considerations as weve seen this rally now in terms of what happens with main street and then the implication for, say, consumer related companies but we feel comfortable. Our overall portfolios were still invested though slightly underweight risk in this environment. So, again, we think the markets can continue, but we are concerned as we look longer in terms of some of the longterm economic implications. So give me a sense as to your underweighting at least a little bit when you mention risk. Is that a recent move on your part well, the underweight that we have is actually something that weve moved to really in the last two months. If you think about when the market traded off heavily, we felt compelled to stay in risk assets and were slightly overeigove overweight we look at our Asset Allocation so in previous months when we looked in may and in june, those became opportunities for us to move from what was a slightly overweight position to a slightly underweight position and to be clear, where weve taken some of that weight off the table would be in areas, for example, like emerging markets and where weve balanced our portfolio a little bit are in areas like a little bit more of a commitment to say Investment Grade bonds. Good to see you good morning so i want to talk about isg. Environment, social and governance i know thats an area you focus in on. Were used to thinking about longterm benefits when we talk about esg. With the s p near these alltime highs, i wonder how investors looking at esgs should look at the downside is there protection within esg for the downside and if so, what areas . Or are there spots that are likely to suffer if we turn down a bit from here . Yeah. So the interesting thing about sustainability is im going to make an argument there is investment merit clearly for the longterm and for the shortterm when were looking at environment, social and governance criteria. One of the things i would offer is when you look at criteria taken together, the evidence shows us that you often get better risk adjusted performance with the companies who in a sense rate higher or score better in those areas. Where we would see that, you look at Something Like everyone sci, esg global index. Weve seen through the first half of the year a 1. 1 outperformance against the equivalent of a nonesg Global Market index so thats to give you an example you can expect if we look over an extended period of time what that would mean to an investment portfolio. You see the same thing for morningstar when they say about 44 of esg funds actually were in the top performance in the First Quarter and we see that persist also as we get the results and dig through the Second Quarter what i worry about with esg kind of thinking from an investor perspective is whats really all being included there and do you end up with tesla included and then some other stock thats doing something thats entirely different where you end up with a bundle of things that dont necessarily make sense all together and something pulls you in a direction in one of these funds that you didnt expect how should investors think about the total makeup of one of these funds and really understanding what theyre getting into . Well, first of all, they are different types of funds what i would tell you is esg, evolution over time is that its much more imperical. Companies tend to outperform when i want to be clear on is this is not something that when you look at it, you can measure it as companies disclose and report this information in a variety of categories, so i think your point is right. I would say all esg funds or Investment Solutions are not created equal. The level of transparency that we have now and the kind of work that a number of enterprises and thirdparty analysis going on in the marketplace is providing for people to assess those is greatly improved and will only continue to improve. Julia boorstin here ubs said this week their flows to esg funds increased dramatically in the Second Quarter and morningstar found 56 of sustainable funds outperformed their peers in the Second Quarter looking at your Second Quarter performance, looking at investor demand for esg, what do you think covid is going to do to the way people think about esg investing . Well, one of the things we said for businesses as a whole is the current pandemic has accelerated a number of trends if you think about the trends underlying the focus on sustainability in esg, you see demographic trends you see younger investors wanting to have impact with their investment we talked before about the shift of wealth in the u. S more women control more wealth than men and that percentage is shifting globally. So youve already had some things from a demographic standpoint that are causing some shifts i think as weve seen some of these gross inequities come more to the forefront, people want impact with their investment dollar i tied to that the last comment which is we with better measure and see the impact of those portfolios that tells me this is a lasting trend. You mentioned when you hit a certain number of women onboard and diversity in management the performance improves do you think investors are thinking about esg as a competitive advantage rather than just having an impact with their investing dollars . I think its on two levels. For us, this is nothing new. Weve been doing Sustainable Investment strategies for three decades. So we know that if were looking at the right criteria that we can improve investment returns particularly on a risk adjusted basis. So thats part of our fiduciary responsibility the other part that you speak of, investors are people with beliefs and values we often forget its their money. We have a responsibility not only to invest well providing highrisk adjusted return, but also factor in investment intent as we manage those portfolios. Just to wrap it up, you have 95 billion or so under management right now that we would call Sustainable Strategies how much is a percentage overall do you see that moving towards so if we look at the roughly trillion in management that we have across, you know, all of our direct investments today and call that roughly 10 , it would not be inconceivable for me as we look over the next five years to see that double, if not triple, because, again, i think the marginal consideration that many investors will have will be the impact of their investment dollar and so i see this taking up a more substantial portion of our overall Investment Strategies as well as certainly the industry so interesting. Something we spent a lot of time talking about prior to the pandemic thank you for joining us appreciate it. Thank you the ceo of chilis joins us on the other side of this break on earnings and covid severe impact on the restaurant inst duryngo anywhere. Were back in two. Hike 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. Breaker international is a Parent Company to restaurant chains like chilis out with earnings that saw the effects of the Pandemic Impact its bottom line joining us now to talk about what the company is doing to navigate its business through covid19, we have the ceo. Welcome. Thanks. Good to be here. Stocks up 4. 5 to my eye also this morning we have news on brands looking to buy johnny rocket so m a happening in your space as well. Give us a big picture. What does it mean . You had some encouraging things to say on the call we see some Companies Making investments. Whats going on . Well, you know, obviously the pandemic had a huge impact on casual dining restaurants where we had to close our dining rooms so the quarter started off pretty rough but as the pandemic kind of got under control and we were able to get back into our dining rooms, even at 50 capacity, with the investments weve made over the years in technology and embracing convenience with delivery and takeout, were able to grow the business nicely through the quarter, which ended in june. We found june down about 10 , 11 . Into july we got Even Stronger and theres some real bright spots with regard to the chilis brand especially where we see in the 84 of our restaurants that have dining rooms open, were only down 3. 8 in july we have about 36 of our restaurants that were running positive comps so thats a combination of leveraging the strategies that we put in place multiple years ago to address the consumer need and that are working Even Stronger during the pandemic as well as putting new innovation in and that was really with the rollout of our First Virtual brand. Its just wings rolling out a brand during this period of time seems gutsy. Whats virtual about it . Why is it a virtual brand and whats it going to do for you . Yeah, well i think first off just on the strategy of being aggressive during these times, i think that was our approach to begin with was we didnt want to just hunker down our objective was to get as many keep as many ofour tea members employed as possible and use this as an opportunity to continue to take share and position the business Even Stronger in the pandemic and obviously on the back end of the pandemic what weve done is we were looking at a lot of different opportunities for quite a while now the industry has been pegged with being overbuilt we kind of came to the conclusion that maybe its not overbuilt, its just underutilized so we were focused on Getting Better utilization. You can only get it through door dash we rolled it out to over 1,000 restaurants in one night its doing phenomenal. It offers a great product for those that want wings and great curly fries and for those looking for indulgence, fried oreo dessert its really little to no Capital Investment Julia Boorstin, the fried oreo sounds intense. A question though about how much that new brand is really about the rise of delivery, takeout orders, and the fact that restaurants as you have them now are not designed for that takeout business just to be sort of stand alone doing more takeout unless in restaurant how much do you see takeout being a trend that continues over the rest of this year and even postpandemic well, i dont think well ever go back to the mix that we ran prior. Too many people have been exposed. You have seen the numbers on, kind of, how far ahead of th projections the Delivery Companies are and we got so many more people that never tried delivery that now have experienced it and liked it. We think it will continue to be stronger than it was pre right now were at 5050 thats probably a little influenced by just not having full dining room capacity open we think it will probably drop back down a little bit but it will never go back to 80 20 it was prior. Were fine with that we embraced delivery and convenience before the pandemic hit. Weve got the technology to make it seamless for our guests and very operationally friendly for our restaurants. Thats a key to be able to from a cooking perspective, our guests dont know if the order is coming from a door dash website, our website, or from the dining room. It shows up in the kitchen and they make the food and then we just either put it on a plate or put it in packaging and it goes out. Whats the better margin . Did you hear me . What is the better margin . Which business has higher margins . I dont know if we lost you i think we might have lost you, yeah . Yeah. I lost you for a second there. Youre back david faber was asking about which is the better margin in that business that you were talking about. I think he meant between the virtual brand and what youve got going already. Yeah. David, the beauty of the virtual brand is theres no Incremental Capital and its highly incremental sales because those guests werent coming to chil chilis. They were using this wings occasion for a different purpose and so the incrementalty on that is high because we leverage our fixed costs so it flows through very nicely. Thats the benefit of utilizing these restaurants that weve got. That is fascinating its an answer to ghost kitchens within an existing facility. We put 1,000 of them out there overnight. Powerful folks. Thanks for being with us thanks for having me. Overnight ghost kitchens. For our etf spotlight looking at the Telecom Sector ticker iyz down this morning following deeper for the year. The group not getting help from cisco. Down 11. 5 guidance disappointing the street and overshadowing better than expected quarterly results. Well take a quick commercial break. Stay with us [narrator] at Southern New Hampshire university, were committed to making college more affordable. Thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. I opened a sofi money account and it was the first time that i realized i could be earning interest back on my money. I just discovered sofi, and im an investor with a diversified portfolio. Who am i . i refinanced my Student Loans with sofi because of their low interest rates. Thanks sofi for helping us get our money right. Welcome back heres your cnbc news update at this hour. Amc is saying it will reopen 100 theaters next thursday and that will be just in time for the release of tenant. 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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. By now you have seen mcdonalds is suing its former ceo for fraud. So where was the board in all of this we have the special correspondent for vanity yfair joining us now to discuss. What happened with the board its obviously still early days to know what exactly happened at the board level. This is not the right behavior for boards to engage in. You know, i think that theres potential problem with ceos who come up through the system and seem to be well known to Board Members or well known around the country. There isnt the kind of level of d Due Diligence and investigation that needs to happen before someone like that becomes the ceo of the company in other words, boards sometimes get too lax in their behavior and too comfortable around the people who have been schmoozing with them or been vying for those roles and then when it comes time to the appointment, they dont actually do the Due Diligence and investigation that is often warranted and obviously rarely do you see a situation like this. It just goes to the fact that boards need to be far more diligent than they have been in the past diligent and truly independent. You wrote a story about what happened at tapestry when that ceo was fired. Do you think theres a comparison to be made here in terms of what happened with that board and where mcdonalds board fell short im glad you brought that up because i do think theres a comparison to be made. They were foo familiar with the chairman of the board. He had been on the board for 15 years or so. He obviously was somebody they felt very comfortable with in many ways its a different situation because what he was doing was in his personal life which wasnt great he hadnt disclosed that to the board, which was a violation, i believe, of his contract with Steve Easterbrook he engaged in this behavior with subordinates in the workplace which is clearly a violation, clearly theres no place for that in Corporate America or anywhere, and so both boards did the right thing after the fact, which, of course, whats so interesting about the mcdonalds situation is they are now suing him for back pay and back compensation, which is a rare occurrence but very much warranted in this case if you ask me bill, its david. You know, whats interesting is you seem to be questioning the boards hiring of him in the first place. I guess indicating, perhaps, they should have undertaken a more thorough check of him then. I dont know his behavior prior to taking over the ceo position. Youre arguing that not just that the board may have failed in its initial investigation given what they found at the time when they dismissed him well, i think, again, if you look at what happened at tapestry, i mean, all of what i discovered was potentially known to the board of directors at the time that they hired him as ceo last september it wouldnt have taken very much investigation or research to discover some of the things that i discovered now, with mr. Easterbrook, if youre right, none of this behavior was going on prior to him becoming ceo, which, you know, in terms of human nature seems hard to believe. I dont know the facts i think in general theres a danger of people who are cozying up to Board Members as part of the jockeying process to become the ceo of a company and Board Members and those candidates become too familiar with one another and when it actually comes time to appoint that person, the ceo kind of Background Investigation might be done on an outsider is lax and needs to be ramped up. These two cases in the last two months are really indicative of something that needs to be changed at the board level boards need to do more investigation and more background checking of the people that theyre putting in these positions. No doubt. And to your point, when they know somebody well, they perhaps dont undertake the necessary investigation that they should are you surprised that mcdonalds decided to move forward with trying to claw back his compensation at all and perhaps didnt go the route of just saying, well, this is over and done with. If we can avoid it coming out at all, we might be better off . Of course im surprised, david. You and i have both been around long enough to know the usual way this goes down is they try to brush things under the rug. Its kind of refreshing. Its the right thing to do and i hope that they succeed in clawing back some of his 40 million. Bill, i have a slightly different take and question. Was it really in the mcdonalds boards interest to find the truth sooner than this they took his word for it that it was the only relationship and it was only after an anonymous tip in july that they found three more employees that had he inappropriate relations with it seems like maybe they were forced into this position. If somebody was anonymously tipping them off, they could tip off the press and then the board looks terrible like they let, you know, all this money out of door without doing a thorough job was it really in their interest to drag this out in the first place and do this thorough investigation and let mcdonalds get dragged through the mud or was it in their interest to sweep it aside as quickly as possible, get a new ceo in and pretend that everything is fine from here . Well, the word sweep it under the rug is never in the interest of a board of directors. A board of directors is a fiduciary to all stakeholders in a corporation and getting to the truth of a situation is always in best interest of a board of directors. Sweeping something under the rug is never in the best interest. Now, does that make it easy or something that they want to take on, no, of course no board of directors especially at mcdonalds which had a problem in recent years with churning through ceos of the company, but it is the job of the board of directors and, in fact, its probably the most important job of the board of directors of a company is choosing a ceo and making sure that that ceo is squeaky clean and obviously a number of high powered law firms around the country have made a Good Business out of doing these investigations and they get to the bottom of these things and often usually do the right thing. Its not hard to do it they just need to do it. They cant let their cozy relationship that they have with ceos who have been around the company for a while to inoculate them from doing the right thing here an Investment Group is pushing for an overhaul of mcdonalds board how inevitable is that or necessary is that at this point and how should Companies Like mcdonalds think about rebuilding their boards or formulating their boards as they go forward to avoid this kind of thing . Well, its very hard unfortunately to reformulate a board. You know, that has to either happen through a ceo wanting to really be aggressive about changing out a board or big shareholders pushing for that kind of revamping of a board again, if its found that the board of directors were derelict in their duty here, they should voluntarily resign which would be the right thing to do or be replaced over time through various shareholder initiatives or board of directors meetings or shareholder proxy actions so its not an easy thing to do. Its obviously much easier to fire the ceo, get a new kraecce tell the world youre cleaning house. Board of directors are much more difficult to replace unless you get an activist pushing for a clean slate and that can be very effective. There are ways to do it. Its just not as easy as replacing the ceo saying were doing what were doing here and cleaning house or were beginning an investigation into mr. Easterbrook. Well try to claw back his 40 million and that will sort of purge our corporate boardrooms of any scandal this will be an interesting story to continue to follow as we see what happens with this lawsuit and the rest of the board drama. Bill cohen, thank you so much for joining us today thank you later this hour, nyu Infectious Disease expert on the vaccine shes developing for covid19 dont go anywhere. Were back in two minutes. [ thunder rumbles ] [ engine rumbling ] [ beeping ] [ engine revs ] uh, you know theres a 30minute limit, right . Tell that to the rain. [ beeping ] for those who were born to ride, theres progressive. From a depression era crisis to the boom, find out more on cnbc. Com more squawk on the street coming up. Ecost more. Shares 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. Experience the adventure of a bigger world in a highly capable lexus suv at the golden opportunity sales event. Lease the 2020 rx 350 for 419 a month for 36 months. Experience amazing. At your lexus dealer. Huge numbers out of amazon frank has the july report card on amazon. Amazon selfdelivery, packages dropped off by blue vans that grew 75 year over year in july as part of a growing trend. Last july delivered half of its own packages thats improved to nearly twothirds while volume also increased by 46 year over year this july. Amazon delivered more than a third of all packages dropped off at homes in july topped only by the u. S. Post office. Despite the delivery growth, u. P. S. And fedex see elevated shipping with an average that exceeded the year in the first four months of the pandemic and u. P. S. Said amazon has upped 12 its business well look at how online buying changes are changing during the pandemic online sales growth of 75 or more and forecast to see growth of 50 or more full year certainly a trend to watch julia, back over to you. Thanks, frank my family is definitely driving those numbers higher guys, dont forget about tesla that stock shares up about 6 after a huge surge yesterday following that five to one stock split. Well keep an eye on shares of that stay with us were back in just a moment. 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. Weve just been finding a way to keep on pushing. music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. Puts its customers a wiin charge . Rier 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. With more schools turning to online classes only, many working parents struggling to adjust to that both with their own career and with those kids staying home we get the latest on that subject. Many parents are bracing for a virtual start to the school year and with the kids at home, they are facing tough tradeoffs between child care and career. We surveyed likely voters across six battleground states with change research and what we found is that nearly a quarter, 24 , said they are making longterm plans to deal with the school closures. We then drilled down to look at households with schoolage children in particular and 36 said if schools go online it will be harder for them to do their jobs 17 said they would have to hire additional child care and the same number said they would have to reduce their hours. Meanwhile, 8 said they would have to quit their jobs and leave the labor force all together now, that could help explain why parents are more likely than other respondents to say its okay to send the kids back to school 41 of parents believe that school is safe compared to 34 of nonparents on day cares, the percentage for parents is 41 who say its safe only 30 of nonparents agree. Now, to be clear, david, more people, parents or nonparents, do believe that its not yet time to put kids back in the classroom, but what our survey really highlighted is how and why parents are so conflicted about this choice. Back over to you yeah. Okay thank you. I want to leave it there for now and bring in our next guest who is steven cramer, ceo of Bright Horizons they had earnings as well and certainly this is a subject that you are very familiar with, steven i mean, in many ways you needed to reimagine to a certain erxten the way your business works given that centers onsite have not been well populated if not even closed. How have you done that and how do you see this evolving in the weeks and months to come sure. So it absolutely has been something that has forced incredible change in our industry and certainly for Bright Horizons. At the beginning of this pandemic, we went ahead and closed 80 of our centers and the 20 that we had open throughout this pandemic we were instituting very significant covid19 protocols at this point in the cycle, we have reopened a number of our centers and at this point up to 65 of our centers we opened and then as we look to the fall well have 85 of our centers. Again, the key to ensuring safety of both the children and our teachers has been the implementation of very strong covid19 protocols we should mention by the way that nbc is a customer of Bright Horizon services we heard about the willingness of parents to send their children back to school. What is the willingness of parents in your point of view right now and what youre seeing in terms of the data of their willingness to send their kids to child care . So i think their willingness to send their children back to a Bright Horizon center has been quite high we spent a lot of time through this pandemic educating the families that had been previously enrolled in centers that we temporarily closed about the protocols that weve instituted and our experience in operating through this pandemic and the success that we have enjoyed in keeping the children and teachers safe and healthy has given them a lot of confidence in having their children come back to our centers. Stephen, a week ago you guys denounced the acquisition of sitter city business which is the takeout version of what you guys do. Instead of on location, baby sitters actually go to the home. I wonder is this work from home trend, theres a lot of talk about people are going to be in offices as much as before, just blowing a hole in your old model and pushing you to do more of a hybrid, more of this sending care workers into peoples homes and using technology that way. Are you going to be investing a lot more in that ill answer that in two ways. First is that we absolutely think that Center Based Child Care is critical to working families and to employers, has been, is, and will be critically important going into the future. As we look at our employer clients, because Bright Horizons mainly operates Child Care Centers in partnership with employers, typically on or near their work sites what we have found is regardless of whether or not an employer is reopening their office, they recognize that employees cannot be both productive employees as well as fulltime caregivers and teachers and so they are reopening their Child Care Centers that are at or near their work site irrespective of whether or not theyre opening up their offices so the children are coming back whether or not the parent is working at home or working at the office, they still need that critical support in terms of the step we took to acquire sitter city, that really is just about expanding our ability to serve as opposed to a substitute so what were really seeing through that sitter city acquisition is the opportunity to extend what we do for employers and their employees to allow for not only onsite and near site child care through center based care but to supplement that with additional supports such as nannies as well as baby sitters that actually go into the home. Certainly one of the other things that were trying to accomplish through sitter city is learning pods allowing families to meet other families in their community as well as match with a teacher or caregiver to make sure that theyre able to do that to the extent that that is the best solution for that family stephen, Julia Boorstin here. I have used sitter city long before you acquired it precovid and it seems like potential for sitter city is massive especially when it comes to the potential for having people to help with teaching or tutoring im just wonder its a very different platform its more of an open platform. Not like sitters that you match families be are necessarily employees. How are you going to handle the safety issues around testing and guaranteeing that youre not going to be sending a sick person into someones home i think thats a really important point. So certainly the caregivers and the teachers that we employ are going through very strict and strict protocols and ultimately allowing for us to make sure that what happens within our centers or even caregivers that we send to the home through our backup care service that 850 employers invest in are absolutely both high quality as well as background screened, et cetera with sitter city, they have a long history and history, and ty sitter city made such sense to us as an acquisition target is they have a long history in trust and safety its something that they take very seriously and is a really differentiator for them among other players in that Online Matching Service and so, we have great confidence that they will continue, under our ownership, to continue to persist that and we are looking for ways to enhance even the trust and safety that they had had in place for the entirety of their existence. Stephen, we appreciate your taking some time with us and for the update thank you. Yeah, thank you very much as we head to break, were keeping an eye on Online Retail etf ticker outperforming the market today up about 2 some of its leaders today are stitch fix, up over 5 , stamps. Com and chegg one notable laggard is lyft after a big demand hit and the potential shutdown in california about drivers eloenmpymt status squawk on the street is back in two gimme one minute. And ill tell you some important things to know about medicare. First, it doesnt pay for everything. Say this pizza is your part b medical expenses. This much about 80 medicare will pay for. Whats left is on you. Thats where an aarp Medicare Supplement insurance plan, insured by Unitedhealthcare Insurance Company comes in. This type of plan helps pay some of what medicare doesnt. These are the only plans to carry the aarp endorsement for meeting their high standards of quality and service. So call Unitedhealthcare Insurance Company today and ask for your free decision guide. With this type of plan, youll have the freedom to choose any doctor who accepts medicare patients. And when you travel, your plan will go with you anywhere in the country. Whew call unitedhealthcare today and ask for your free decision guide. Our next guest is actively developing a vaccine for covid19 at nyu as well as running Clinical Trials for vaccines being developed by pfizer and astrazeneca weve been talking a lot about the challenges and problems with testing. Please tell us that the Vaccine Development process is going much better. You know, this is a unprecedented time, as everyone always says, because were developing a vaccine at a much faster speed than ever before so were trying to develop something in months which normally takes years that being said, however, we are still following all of the phases, all the appropriate safety checks. So, so far, phase 1 and 2 have shown very promising data from multiple companies and now, multiple companies in the u. S. Are moving to phase 3, which is kind of that last step before they can apply for fda approval yeah, Vladimir Putin in russia seemed to think that phase 3, maybe not so important. Explain, if you will, why phase 3 is important and how important is it in the time like this to share the data from these trials to increase the likelihood that people actually take the vaccine. Right phase 3 is extremely important because this is the step where we test it very widely, 30,000 people are tested, all the highrisk groups are tested, elderly, healthcare workers, those with health disparities. Those are the populations we want to make sure that it definitely works in, and then sharing data, of course, is paramount, right, because we want to know that it works we want to know its effective we want to know that its safe, which is key, so this is actually the most important phase because when you have largescale testing, usually phase 1 and 2 is usually less than a hundred people, if that with 30,000 people, we can get real, strong data on how safe this is, how effective this is, and if theres any hiccups, its going to cause a lot of vaccine suspicion, which we dont need, because that would be another roadblock in us achieving herd immunity, if people are reluctant to take the vaccine. Yes, speaking of that, doctor, so often we hear the phrase during the course of talking to your friends, relatives or anyone else, when theres a vaccine, ill go back to the office, when theres a vaccine, ill start going out to restaurants and bars inside. But when theres a vaccine and when its available to me and when its available to a lot of people and when we get to what you were just talking about in terms of herd immunity are two different things, arent they . So whats the actual expectation for when its available and people can take it and we can really get back to normal . With the most optimistic thinking, were hoping vaccines are approved by the end of the year now, that being said, it might not be available for people to readily get like the flu shot until even summer or spring of 2021 or even later. You know, this is the first time, probably, in a long time where the entire world is clamoring for the same supply of a vaccine, and that being said, i dont know if people understand vaccine immunology, but if i get a shot today, its not going to be protective tomorrow it takes a couple weeks, at least, for your own immune system to react to it and build those antibodies, build those tcell responses so, people still, i think, will have to be realistic about their expectations doctor, a couple of questions here one is, you know, you mentioned that its going to take a couple weeks before the vaccine is actually working in peoples bodies but also, do you have a sense of how frequently people are going to need to get vaccines for that to remain effective . Is this going to be a one time a year thing similar to the flu shot and also, i know youre testing different types of vaccines. Is each vaccine going to have a very different protocol or do you think there will be a similarity, which will make it easier for consumers to understand those are all excellent questions. The length of vaccine immunity is actually the Million Dollar question, if you will, because we have great data from moderna, pfizer, as well as Oxford Astrazeneca that the vaccines are working. Theres good antibody responses. Oxfords vaccine is even showing good antibody and tcell responses but the question is how long will this last . And the short answer is, we dont know were in the process of learning about it just as the rest of the world is so, that will be very interesting to know how frequently the vaccine is needed, because that will affect the supply around the world. A vaccine needed once a year versus every five years is very, very different the other thing people dont realize that a lot of these vaccines are multiple doses, so most of the ones that are currently being tested, moderna, pfizer, theyre two doses. Astrazeneca oxford, the protocol is still being worked out but likely that one will also be two doses so again, its not like a one shot and done deal so even just for the initial immunity, most of these vaccines, you need at least two doses. And then, just on the question, though, of a booster shot, so to speak, or once a year, when will we know . When will we have a sense as to actually what is needed to recur over some period of time right, so, you know, all of the patients that have already been enrolled in phase one and two, theyre going to be followed for a minimum of two years or more just to see how long their immunity is lasting and that includes even the people enrolled in phase 3 and then phase 4, even after fda approves it, all of these people are continued to be followed so we get an idea of how long that immunity lasts for from the vaccine and if there is a need for a booster shot or repeated shots. The other thing, too, is we want to see if coronavirus behaves like the flu virus, right, is there a seasonality to it where it can change year to year right now, it does not appear so, that it shifts as quickly as the flu virus does, but again, theres many unknowns. This is one of those things or were learning about it and treating people at the same time all right, doctor, thank you very much. We very much look forward to getting all of that worked out best of luck to you in all that important work that youre doing. Thank you and good thursday morning, welcome to squawk alley. Julie and mike santoli with me for the hour we look at the major indexes this morning the dow and s p, pretty much treading water nasdaq doing a little bit better but mike, cant keep my eyes off apple, getting closer and closer to that 2 trillion mark its up about almost 2 so far this morning yep continuation really of yesterdays trend where there was a return to those, you know, very familiar winners that have kind of seem overworked but they still continue to go higher, apple up