Transcripts For CNBC Squawk On The Street 20240712

How apples shakeup is driving the blue chips plus the online surge, best buy notching is 242 gain in ecommerce sales in the Second Quarter but can it last . Trade optimism, u. S. And china officials reaffirming their phase one commitment, the s p is poised to add to its record run. Jim, i saw you last night mentioning those changes to the dow and your general point was dont be fooled in thinking there is as much money indexed to the dow as to the s p. We said that last night, its been the theme all morning and theres been no sellers. One of the reasons theres been no sellers are the people who are now trading stocks in early hours have tremendous conviction in the face of being wrong its rather incredible because the hubris of these people they must think dow jones has a lot of money to it and it has to come out of exxon and into salesforce david, you have been at the forefront of the network in explaining the nature of the dow and you see this, too. Arent you shocked that even after we say that this is not necessarily the right thing to do that the buyers get more fesh oesh ferocious . I try to not ever talk about the dow jones because it is a statistically irrelevant index given its price weighted. You can look at a chart and see it make sense, the s p of course is market cap weighted although lately weve talked a lot about how even that index is not necessarily reflective of the Broader Market any longer given the incredible weightings of five enormous companies in it, jim. This is a snapshot of a moment in time. I think that makes it interesting, to see what the decisions are in terms of what goes into the index and out, but i kind of leave it at that to your point there is a little bit of money, maybe 5 million shares need to be bought, but so little it is not like the s p at all, there is hardly any money index against the dow jones as you say, jim i always come back to the fact while its an interesting snapshot the dow is not a statistically relevant index sorry. It is curious, of course, we have amgen which is a not particularly fast gross drug company replacing pfizer which is a not particularly Fast Growing Company but is very big. We have honey wisconsin try to reinvent itself as a software company, considered to be the gonel gaininger. The doppelganger sales force is a company most people dont know what it does it makes it so you are a better seller of things, its the way to run your company and digitize it exxon is if we look if you go back in time in 2013 the Second Quarter it was the largest company, in 2010 the largest of all four quarters it was the largest. Even in 2017 it was the sixth largest and 2016 it was the in the Fourth Quarter it was geez, it was first and second. This was a huge company. It has been crushed. I think the dividend is very much in question and they kept chevron, the gall of it. Standard oil of california, they kept the wrong one right they kept the bodies, they moved the grave stones now, jim, there is sort of this highly anecdotal reputation that its somehow a Sports Illustrated cover kind of curse to get added and somewhat of a relief to get exited do you buy any of that no, these are theyre fun. Look, i think what will happen is someone is going to say, jim, you said no and then salesforce reports and that goes down, youre washed up, the usual. I would point out this, i would point out there is no curse and as david said its been you know, its kind of a bragging point. I think i informed mark last night, mark was working en masse and i said this is great whoa its a very nice thing to tell your mom yep yep. It is. I mean, and for salesforce i think they can be proud of it because it is thats it thats what it means. Right. Its, okay, you know, look what weve been able to accomplish in terms of at least the reputation, so to speak, or our importance in the overall market, jim. I will leave it at that. Now, as for salesforces numbers i will leave that to you in terms of because this has absolutely nothing to do with the performance of the company over time which obviously has been extraordinary and you of course having been a big supporter of this stock over that period of time. Since 8, proud of it, but, david, ive every time you Say Something good you have to say im a total knuckle head and got this wrong amgen surprised me amgen was the beneficiary of a Justice Department breakup of a key drug in order to get bristolmyers to be close. The whole move has been because they won a court suit and they got this one drug from celgene i dont think that amgen this is personal pride hurt for pfizer wasnt pfizer riding high on the vaccine . What has amgen got how many divisions does amgen have its weird. Yeah. Well, who knows anyway, its a Marketing Tool for dow joneseven though they dont it is salesforce i bet you they do the greatest crm company and in the dow unlike oracle, you know, unlike google. Whatever how about all right lets get to the heart of things, carl what the hell is walgreens doing in there what is that i mean, have you seen that stock . I mean, you want the dow to go down, you put a couple walgreens in there thats one of the worst. Remember, walgreens was a partner of thernos and that was the hope we could do that all day, jim, playing the chess game of what belongs and what doesnt belong more importantly, jim, was yesterday the influence of convalescent plasma and vaccine hopes, today this phone call with lighthizer and mnuchin and the vice premiere reaffirming their commitment to phase one even though china has to pick up the face in terms of their commitment for purchases for the year how important is that . How surprising is that after the president said he didnt want to talk to them anymore its very surprising because theyve been putting out navarro, Peter Navarro has been on our network, peter is talking about some of the outrageous actions that china is taking and the president is nonstop talking about what the numbers would be like if it werent for the china virus and in the meantime here we go. Game on china. And secretary mnuchin has become the point man for what i regard as, lets say, i dont know, how about, david, how about reason do you like reason david . I will take it, sure. Youll take it . Sure. Reason sounds fine. Reason. Sounds fine, yeah. All right look, we want do we want a china deal some of us are hard line on china, but what this does is i know apple is about to split, but apple is being sold off because its had such a run but they are the big winner if they think theres going to be trade conciliation. Do we really this i that, jim . This formalizes ag purchases to some extent, the chinese by the way need does this really change the tenor between the two countries which has done nothing but get worse . I think its nothing. I know you do and i know you are a hawk on this. Yes. And have been for some time, but, you know, its not like its but why did they do that . Going to help huawei in some fashion or tiktoks owner bytedance or tencent theres so many different roads that have only gotten much more difficult in terms of the relation between the two countries. You can go buy deere, deer has been on fire there was a friend that came out with a sale right before t im calling it illadvised before they reported. Carl, the one thing i would emphasize is that the administration could change its mind tomorrow. So if you are buying these stocks, maybe have a little more time frame than just 24 hours because we have seen vitriol against china, i still think the oracle deal did you see the scoop, david, by the way the journal had a story about how General Atlantic was involved i could what an exclusive. I heard yeah, i heard that somewhere. Im trying to remember david, it wasnt on you broke the story about the celtics getting a pretty good guy. Carl, it is painful. It is painful to be the tv station of record. As long as theyre watching thats whats important. Thats whats important. As long as theyre watching. Dont get caught up in the scoops i played that game for too long. All right im a news guy. Yeah. Dont worry about it. Youre a news guy, thats great and you have to be on t you have to be on it and i love it and you did have the details on this i still wonder about the complexity of that actual offer and the ability of bytedances owners in the form of to be able to monetize their move in to a u. S. Tiktok ownership stake with oracle which, again, does not seem to be as much of the driving force as perhaps microsoft. I continue to believe when youre looking at it from a complexity standpoint microsoft presents the easier deal possibly but lets not forget bytedances owners want there to be another bidder because thats the only way to get near fair value for the asset. Whats so difficult is safra catz is a sphinx you are not going to get anything out of safra catz shes not going to talk, Larry Ellison is not going to talk theyre not leaking like seives. It makes me feel like its going to happen sooner than later because of the stuff with mnuchin. Theres cross currents, theres obviously the tiktok dance, you have the fades one talks. A lot of back and forth between the chinese and the europeans this morning, jim, talking about being strong Economic Partners dave, imd sure youre going to cover this filing for an oip which would give it a valuation bigger than some of our biggest banks. We should spend a decent amount of time talking about this and we will a bit later in the show perhaps, carl, but to your point ann financial will not be listed here and i think thats an important point, one that perhaps mr. Cramer says is a good thing. Yes. I would argue otherwise, it will be listed in shang phi, hong kong, will be the largest Public Offering of all time at least according to the people i speak with, 15 billion of stock sold in the domestic market in china and another 15 billion sold globally so u. S. Investors will be able to own t you just wont be able to trade it here in the united states. What price does the party want it to be. Alibaba does own 33 . Say again, jim. What price is the Party Setting it at . The Chinese Communist party, have they picked the price. Come on. What do you mean come on. Youve literally become Peter Navarro. You might as well be chaim. Whats my handle the student has become the master. Yeah. Ive tried to get navarro to be a little tougher. I think hes worried about biden getting in just kidding no, come on, david, its the chinese do you understand yes, you do. This is an enormous Financial Services company in china created alley paid, they pulled that business out of alibaba, a lot of their shareholders were not happy about it years ago they own 33 , they changed it from getting the dividend to owning 33 , its helped move up shares of alibaba but we will keep a close eye on ann financial. Jack ma still controls that. And who is his hero speaking of speaking of Capital Markets activity and ipos, i want to talk pal anterior after the break, the listing from this Silicon Valley giant is coming up is coming up welcome back, guys i want to talk a bit about palantir, a name at the beginning of this year many would not have expected will be coming public will be hitting the markets fairly soon. It would appear. In fact, were waiting moment by moment for an official s 1 they did file confidentially a while back but it is going to be made publicly the s 1 any moment im told many expected we would have seen that yesterday of course, this is a company the government and Defense Department are a large user of its services but it is commercialized those services in part under what it is its foundry works part of its business as well that part has very large Gross Margins as theyve tried to move towards profitability. Remember peter thiel is a long time investor there, the chairman alex carp the companys ceo has never embraced fully the idea of becoming a public company, but thats where theyre going to go it is going to be a direct listing. Much of this is already known and been reported on by others at this point. We are expecting im told it could be as soon as september 24th that this listing takes place. You will need a road show prior to that, lets call that midseptember before this hits the market a direct listing, similar to spotify and slack, both of which hit a bit of turbulence early on, there was some concern amongst both of those about selling shareholders what may distinguish this as this desire on the part of palantir, jim, to have a lockup on a certain and potentially large portion of the shares that are sold, that would be a new thing for a direct listing i was going to say that until i heard that i was going to say once again weve seen tremendous undervaluations with these, whether it be google back before 2000 or spotify which was completely hacked, hacked meaning cut to pieces by the direct listing youve got something there, david. Youve got something there lock it up might be so that palantir gets a good valuation, i have not seen the financials, by reputation everybody says the same thing which is its sterling. I think their margins are high, still losing money, there were some tech shots s 1 sent gross roughly 50 million, from what i hear, though, they at least are talking a big game at this point about their opportunities amongst corporations not just the government which has been a large user of their services and the prospect of a very strong Fourth Quarter. We will see. This has been a darling of Silicon Valley for quite some time, the valuation has changed. Theyve been able to raise plenty of money in the private markets as so Many Companies have, but there seems to be a hope that unlike Many Companies that were able to do so and therefore push off their Public Offering to the point where they werent growing anywhere near as fast, there seems to be a hope that in this case their larger Growth Prospects are still ahead of them. We had a discussion about this yesterday, sort of related to how covid flipped the switch on a lot of issues, jim, would a precovid airbnb ipo have been as compelling as it appears to be in the offing now no, not at all. Snowflake today im sorry. Its turned a bunch of things upside down. Their business fell off about 80 , they didnt see anything come, they did layoffs, then the tables were turned people decided hotels were more dangerous, lobes, elevators, difficult to clean versus homes. A pool at a home versus a pool thats a Community Pool at a hotel. So now business is off the charts and a lot of the hotels obviously are on the ropes and thats why i think airbnb has gone from a deal we were questioning to being a deal that you have to get in you have to get in now thats terrific. Yeah. Still funny, jim, i still wonder exactly why theyre choosing now to go public. Certainly help in terms of the Broader Knowledge of a company, the marketing in some way that it helps you do, but theyre not raising the money. They are not out there raising the money and obviously they have selling shareholders who have been able to monetize because of all the money theyve raised previously. Look, i think no one thought it was going to be good, even management wasnt sure and now i know that theres people that say i dont want to stay in somebodys house it is the hotels, the amount that are in arrears, versus if you go the value of airbnb, its working and i think it is a great time for them. Which is why i want a piece of it, well, if i could trade. I was talking palantir when i just made those comments, but understood. Okay. Carl . Guys, so many names to get to some of the upgrades in price target hikes for names like starbucks, deere, amd, facebook, chipotle, a new street high on apple. 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The smarter way to workflow. Announcer the opening bell is brought to you by nuveen. A leader in income, alternatives and responsible investing. All right. Time for a mad dash as we count down to the opening bell about three minutes until we get there. Palo alto is the name this morning, jim. Yes, an old name for you, david, softbank, he took this over, bought a lot of stock at 200, has, i think, made a magnificent turn, he has bought a series of companies and made this into maybe the Gold Standard for on premise and for work at home cybersecurity david, reports of a blowout quarter. We have ten price target boosts, weve got two other analysts who didnt boost but said this is the one to own this is a new pattern for this period of stocks that have run we saw it for nvidia, nvidia stock was down 8 after 19 price target boosts. Weve got palo alto down almost 10 and i predict that palo alto if you buy it with all those price target boosts will work. I think they are doing a great job. I had him on last night, very confident. Really doing well with stay at home, work at home, which, of course, is i dont know anybody who works at home, but it must be something oh, hey, carl, do you love it . My wife said lisa we were at mark and keek keys house on saturday, she said, jim what, the hell are you doing why do you go to that office i said because im lonely, i live out here, you live it must be great. I dont know, david i dont know about david, but im looking at jpmorgan this morning, we have a piece on dotcom that jpm is going to start implementing a model daniel pinto says that he thinks will be more or less permanent which is a rotational model, you work one week a month from home, maybe two days a week. Thats the way this is evolving. That means theres going to be lots of zoom meetings like there are now which means, wow, you can hide. It also means that, yeah, it also means you can reduce your footprint. Im not sure that thats what jpmorgan is thinking particularly given the enormous renovations that they are undertaking at their headquarters at 270. Your actual foot print of employees, your real estate footprint is what im talking about lets break the story every company offline says its a lot cheaper to have people at home and they work much harder and you can calling them at any hour thats the new world, you work harder from home, its cheaper never use the word exploitation because i know this is not 1917 in russia, but it is incredible what a bargain it is to have people to work at home and not to have any travel and entertainment, carl, these companies are going to have huge watch what salesforce does tonight i bet you they do well theyve been people at home look, buy a home from lennar that has two offices in it im going to try working from home next, just the buttons, mad money, its hard theres definitely upside i mean, im sure david agrees, there is a nice lining to it i mean, i do miss i miss being on a desk what you guys, you miss the chatter quotient of working with your colleagues. Yes. Even when you are not on the air. Its mixed its definitely mixed. Yes. The fact is that its working out very well for the companies and people are surprised how well its working out. Thats the theme for this quarter. Theres the opening bell, we will watch breadth fill in best buy comps up 5. 8, double the estimate on computers and appliances and tablets they declare a dividend, we talked about online comps up 242, but no guidance and a warning that maybe q3 cant be sustained at 20 . And thats the cfo gave you this line says were not i would note that we are planning for Third Quarter to be higher compared to last year, so far so good, but likely not continue quarter to date level of approximately 20 growth so why dont you just stick a fork in yourself maybe they needed to feel like they could revise things down, but they are on fire and its large appliances and home theater. Who would have thought home theaters are back. David, do you have a home theater . No, i dont think i do. I dont think it qualifies ive got a sound bar, but thats not a home theater, you know, but its nice. It works its enough. People want it. I bought it at best buy a few years ago. Did you yeah. I bought mine i bought a huge screen, carl, from amazon and now id like to have seats because its how im going to watch the games because my season tickets dont mean anything, even though i paid for them already and they sent me a note which says we are delighted to let you know that you get to keep your box in 2021. And im fine with it im fine with it. Where would you put a home theater, jim which house would you choose i dont know, the 12th one. Wait, we jumped ahead, i thought we were ten. New one and another one one coming, lisa is going nuts. New wave cinema in italy, jim. Italy you cant get to italy. I know. I know we should talk about cowan going to 530 on apple on the heels of katie hubertys 520 yesterday. Are we going to do this every day, the 10 incremental move . This piece was one of the most boring pieces please lets come up with something new. Sum of the parts, are they going to break it up earnings no let this thing come down i am surprised that these analysts dont realize the stock is for sale as people take a little profit and come out after. Its not look, im a huge advocate of splits but we also know they dont do anything. Let it come in i dont know why people feel like they have to do this call right now, carl, other than this usual, well, we have to take the price target up. We saw some pieces today, with he got a piece today thats completely factuous about apple going up, google we got a facebook piece, their social media is doing well we got a netflix piece saying netflix is doing well. Give me something about hormel for heavens sake, give me something about smucker. I feel like ubs, facebook i dont know if it was evidence lab. Medtronic had a good quarter, mdt. Ubs took facebook to 330, they were at 242 theyre talking about shops being a 10 billion opportunity, jim. It will be. Thats a new street high on facebook as well. I think shops is brilliant, its the ambassadors now of the company, notice the heat has died down. There was a nonstory about actually that zuckerberg has been saying, listen, as long as Microsoft Microsoft can get tiktok as long as its separate. There were no revelations there but they had to make it a revelation you have mark smucker . You guys have mark smucker yeah. Why dont you cut my heart out. Indiana jones and the temple of doom he was my guest. You know how he reaches it and just goes like this, thats what you just did to me. You dont get every single one of them, jim. The great sara eisen im not going to mess with the eisenhower you should feel better about it, im on that hour today with sara, those two hours. Its cafe bustelo, its dunkin. Thats in the 11 00 im trying to give you the brands so you know the story. Got it. Carl, im sorry im competitive. You know we love it. Its corporate darwinism at work, jim. On smucker youre talking basically a threemonth high im curious, its another example, deere was the other one last week, jim, where we had down grades going into the print. Yes. Smuckers case it was Morgan Stanley they went to 107 said they would be a lesser beneficiary of food demand, the print proved the exact opposite. This is 50 organic sales up 11 , 70 cent beat, pet up three. A lot of people felt that their pet offering is not that competitive. Cafe dunkin bustelo one of my favorites. People have coffee at home and buy the wellnamed brands. I was a uvan guy at one point, that was when i didnt sleep on tuesdays david . All right no sleep tuesdays. No sleep tuesdays. I remember those. Taco thursday, no sleep tuesdays guys, quick faber report. Wading back into the drama that is tiffany and lvmh, remember that deal, of the course, signed last november, 135 bucks a share all cash, remember they moved up at the end, something that bernard arano the richest man in europe regrets they had to extend the merger agreement as you would expect because this is taking longer than might have been anticipated in terms of getting approvals, the key one being from the eu. Tiffany did it union naturally which we dont often see and then there was language that tiffany shared with us from lvmh in which they said first of all, august 24th they delivered to lvmh confirmatory notice, extended to november 24th. Fine we see this often in deals remember how often sprint and tmobile had to extend their deals. Lvmh has notified the registrant it reserves the right to challenge the validity of the outside data on their merger agreement. That is why the stock is down 4 it is raising concerns as i have reported previously, this was months ago at this point that bernard arneau would like to get a price cut. No the walk away from the deal but get a price cut. That is not something unknown to the tiffany side what remains unclear is whether or not he will be able to figure out a way to get it. The latest foray is around this idea of an extension, perhaps you would call it a mac result of at least at the time that he tried to extend and therefore say you have the right to terminate. Very much unclear and you delaware law that that would be something that they could do and, in fact, tiffany has made it very clear at least in speaking to people close to that company that they will go to court, that they are not interested in extending any sort of price cut as you would expect them to say to mr. Arnault even if his advisers are telling him you dont have this great a shot at getting this he wants to continue to put the pressure on. The two companies talk all the time and im told early next week you will get a filing of a formal notification to the eu beginning what would be a 25day review process for the deal. Meaning a close could not be that far away, if mr. Arnault is looking for that opportunity to say price cut or auk walk it may be in the not too distant future again, guys, this is another covidimpacted deal, not unlike taught man and simon properties, declaring a mac even if we have no right to do so. A key here, jim, will be tiffanys, were getting them thursday, china has been very strong, weve seen, from a number of other companies that have reported results in the luxury area. It may make it even more difficult in some way for lvmh to say we deserve a price cut and, again, they may be sng for that opportunity to get one, but it remains very much unclear how they actually will go about doing it it doesnt mean hes not going to keep trying as i r ive said many times. The retail have and have nots have been the ones that have great ecommerce versus the ones that dont, tjxs position was a terrible number. Why . They dont have any ecommerce i dont know how much ecommerce tiffany really has, but i dont think its known as one of those and i think that look, its a great gem that has been led fallow i thought the last two years was pretty good. Carl, the name was never destroyed. The name was never destroyed but i do think that the world changed with covid and the answer is if you have e com like facebook shops you are in great shape and if you dont have e com youre questionable. People dont like to go to stores anymore. Dont you think, jim, i mean, im looking at this citi upgrade of gap today, gaap is the number one s p gainer up 6. 5 that come are searching for optionality stories as well. L brands the same you look at these its not interesting stock i think portnoy just bought 2 million shares of gail pacific i like gap as a break up play initially. I like l brands as a break up play initially these are trades the i mean, honestly, these are companies that are trades. Its just that the l brand trade worked out a little longer than i thought because bath and body works was good i think in the end these are transitional names and, yes, maybe all the different divisions are worth more, but then what . I mean, youre still stuck with these companies that are mallbased, that are the numbers are horrendous and i just think that this whole l brands someone came out and said its not too late to buy l brands what are you kidding it was at 19 its not too late. Rocket mortgage. There is there is a time when it is too late if the company is not a great company. Its too late. And dont forget, i mean, talking about deals that fell by the wayside, of course, l brands deal to sell Victoria Secret to sycamore is another casualty of the pandemic. Yeah. Both sides just walked away so, again, it gets back to your point and their concern. That november 24th deal on tiffany just to make it clear thats when they have extended the deadline it doesnt mean they wont close long before that, but now they at least have the time to do that so you dont seem to think tiffanys longterm prospects whether a part of lvmh or not, jim, are that great . No, i dont i think the world changed and tiffanys is a mallbased shop with high prices there are people who will be trading substantially lower if they walked away substantially. I dont know this is not the right kind of company in this environment. Its all about ecommerce and, carl, i think that we are never going to be the same in terms of the way we shop. We shop on amazon for th silliest things, hence, why walgreens is where it is, and i dont know about luxury, but i dont want to try things on. I mean, i think thats one of the problems i mean, do you know that cash is down double digit. We dont want certain interactions i dont want to try on i dont want my wife to try on a ring that she that might have been tried on before i know that they polish things up and whatever, but and i know they probably hate that, but i just dont like mall i dont like mall. Yeah. No, you and i know some people who work in beauty and the lipstick counter has changed forever. I can tell you that. Yes,est alloweder back only because of moisturizer because look skin care do you ever do you ever see the ring of fire that you get i know thats a great reference, but ring of fire. I like johnny cash live at fulsome has his back. Lets get to bob pisani this morning. Hey, bob. Good morning, everybody happy tuesday. Respectable open, split, 2 to 1 advancing declining stocks but second day in a lower getting a little bit of a value tilt, one of these mini rallies that happens every once in while, bank stocks move up, industrials, health care doing all right, tech has been the lagging although it moved into positive territory overall not a lot of new highs, though, still dont see it on the s p, im waiting for that to happen i will tell you what is pretty hot is the ipo market. Did you see overnight, my heavens, four big Silicon Valley tech ipos announced, believe it or not, these are the first Silicon Valley ipos of the year. Weve had tech ipos, rocket came, but theyre based in detroit, so finally were getting some Silicon Valley companies. The one im interested in is is ant group, this could be the biggest one ever and it isnt even going to be here, its going to be over in china and shanghai, important thing about this is we dont know the numbers yet but it could be 30 billion thats the speculation, we keep showing that would be a record, folks. If you take a look at the biggest ipos ever, saudi aramco was the largest one in terms of a flow, 25 billion there, followed by alibaba, softbank, ntt and American International assurance. This could be it its a great time to go public for ant financial. I mean, they are a Payment Processing company essentially and these companies are on fire this year, not only are they tech but theyre doing well because of the whole covid situation. If you look at some of these Payment Processing stocks and i consider paypal is a potential competitor for ant, paypal, tencent, square, aiden is in the netherlands they trade over in europe, look at these stocks, this is just this year, good time to go public, good time to to go public as a Payment Processing company its going to be hard to own ant financial if you are in the u. S. But one way to own it renaissance capitals international ipo, ipo s is historic high, they will o en that within days of ant going public as for the dow companies, the dow changes that weve been seeing by the way, losers on this, nyse and nasdaq, do you think theyre not unhappy about missing out about the biggest ipo of all time potentially, theyre listing in shanghai and in the hong kong so not here in the united states. Obviously theyre not going to be happy about that. As for the dow shake up, this makes sense, theyre conservative here. Salesforce replacing exxon, salesforce big software company, apple split reduced the weighting of technology and you dont need two energy stops when the s p is 3 energy having chevron would be enough amgen replacing pfizer, pfizer the lowest priced stock, amgen more representative of biotech, that makes sense honeywell replacing raytheon is like for like by raytheon overlapped with boeing and honeywell a little broader all these changes are conservative but not baffling here index investing, carl, where the money s we talked about this, david talked about this, 31 billion linked to the dow thats not a typo, 11 trillion linked to the s p 500, the s p is getting bigger and bigger, 28 trillion market cap and five companies are 23. 9 , carl, of the s p 500 and we know what five those are back to you. All right bob, thanks for that financials leading along with the health care today, lets get to Rick Santelli hey, rick. Maybe the financials are looking at the yield curve which has steep end about 3 basis points with ten year note yields up 4, 30 year bold rates up about a handful. The 30 year bond auction on august 13th. It was a thursday. Why do i go back on the charts on that session, thats when we started to have this notion there might be a life with Interest Rates going higher that arent challenged by the Federal Reserve and raising the quantity of buying they do, but yet we tapered off but were coming back we briefly traded over 70 basis points in tens, we briefly traded over 140 bases points in 30s and do remember we have a twoyear auction today 50 billion another record size auction, seems like every one seems to be bigger lets look at ten yeear minus bunds. 112 basis points were starting to outpace bund yields just a yet. Yields growing a little taller and faster with respect to the chinese trade talks that happened this morning via telephone, it seemed like theyre playing nice, its fascinating to look at the euro versus the chinese on shore yuan lets look at year to date the euro is definitely doing better the dollar against that currency is at the lowest level since the third week of january. Finally lets isolate that strong currency, here is a month to date of the euro versus the dollar what you can see is that it is losing a little bit of ground here, but nothing huge and we want to Pay Attention to recent highs in the past. Carl, jim, david, back to you. All right rick, thank you very much. So s p 3435, interestingly on the dow at least the biggest laggards include those that are bound together kicked out, raytheon, exxon and pfizer apple is thrown in there, too. Were back in just a moment. Some Companies Still have hr stuck between employees and their data. Entering data. Changing data. More and more sensitive, personal data. And it doesnt just drag hr down. It drags the entire business down with inefficiency, errors and waste. Its ridiculous. So ridiculous. With paycom, employees enter and manage their own data in a single, easy to use software. Visit paycom. Com, and schedule your demo today. As far as the u. S. Is concerned, when you look at this, the head count on the infections because of the cruise ship people come off, we have contained this, we have contained this, i wont say air tight but close to air tight weve done a good job in the united states, hats off to our Public Health people thats kudlow, six months ago today with our kelly evans larrys addressed that statement several times since, jim, and said it wasnt a forecast. The hope is what he said back then might actually be true now, as the number of deaths and new cases every day continues to drop yesterday, the big 12 is going to play football and the doctors advise and mayo clinic differ on this, they were saying hey, listen, who knew . Its easy to nail larry but when you have mayo clinic that didnt know, you have ohio state doctors saying they shouldnt play, there is such division still. We had an fda director take back what he said sunday. Is this a fiasco or just hard . Look, i feel for larry that was obviously very illadvised statement, but is there anybody who has really been completely right on the initial lancet article in Public School of health you have a split like big ten not playing, big 12 playing is because nobody knows anything and i know its easy to secondguess larry well, the answer then, jim, is to not step out over your skis, right . To not make promises that youre not sure about yes to just say we dont know. That would have been the smartest thing to say. I didnt like the idea that it was kicked back to the states because in world war ii, honestly, i said yesterday you dont want iowa out there in the german theater in europe and we got florida fighting in the midway you needed a united effort, we didnt get that because the president wanted to make it a states right issue but the fact is we know that masks works, yet people dont believe in masks. Certainly stocks are higher than they were six months ago today. Take a quick break here and talk more about what the market day has for us in store, ia mentn [ 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. Take a look at the s p Citi Upgrades gap and a 4 target as well as some of the names added to the dow like honeywell and am gen more squawk on the street back in a moment. Or face to face, were here to help utilizing our resources as one of the nations largest banks and a local approach with a focus on customized insights. So youre ready for today. Time for jim and stop trading. The idb has been horrible, down, down amgen is the Largest Holding number four, youve got a very good one, you have regeneron in there. Regeneron is the next one the president starts talking about, the cocktail that they have with roche that needs to be tested right now. They dont have enough people, the trial starts in september. It is for people sick already, the magic bolt david talks about. I know hed like it to be a pill amgen is going to break the spell. Buy regeneron. Interesting take, jim right, biotech index kept everything down. Good point. Whats on mad tonight . Mark benioff, salesforce replaced exxon well, you know, standard oil, easy come, easy go and jim snee from hormel just because he didnt blow off the numbers like smuckers does, can be an interesting get and i understand theres measure behind the scenes and i dont let this happen again. Im taking whoever you have. Anyway, good show. Im jimmy chill. Jim, well see you tonight. Mad money 6 00 p. M. As always. Good tuesday morning, everybody. Welcome to squawk on the street. Im Carl Quintanilla with david faber. Sara eisen is with us for the hour we get new homes and Consumer Confidence rick is up first reporter yes, confidence is a disappointment for august. Were expecting to read over 90, maybe 93 we end up with 84. 8. 84. 8, basically a sixyear low, going back to april of this year, when we had 85. 7, right in the same area, and if we go through the present situation, down about ten points, down exactly ten points, 84. 2, and on expectations whats ahead, 85. 2 versus 91. 5. These are weak Richmond Fed Manufacturing index was strong, came in at 18 versus ten, an august read and new home sales up almost 14 , wow 901,000 seasonally adjusted annualized units, more than were expecting. Last month gets upgraded to 791,000. You have to go back a dozen years to see this type of horsepower on new home sales, and nobody does new home sales like diana olick diana, pretty impressive number in housing once again. Reporter once again, rick. This is a blockbuster number, up 36 year over year now the street was just expecting a small gain, but everything weve heard from the builders especially with Builder Sentiment hitting a record high in august showed that this was going to outperform. Whats interesting here, prices up 7. 2 year over year and supply down to a 4. 1 month supply from a 4. 7 month supply thats going to keep pressure under prices we saw that in the existing home market we have existing home supply down to a record low threemonth supply, that is benefiting the builders whats really interesting here, though, is that youre seeing the price category shift youre seeing a much bigger gain in sales for higher priced homes, that is shifting that median higher but also we know that the builders are increasing prices why . Because they can they know theres a low supply on existing, and therefore, they know people are also really wanting new, they want high tech homes, homes in the suburbs. You have the urban flight playing into these gains and youre really seeing the gains across the board, when you look from region to region, the strongest sales gains were in the midwest, up 58 month to month. 81 year over year sales were lower month to month in the northeast, very strong again in the west. Down slightly again, northeast not seeing the best gains but still thats a blockbuster number youll see the builders pop on this one Toll Brothers reporting later today, the high end of the market and you can see the high end is selling sara another very strong read on housing, diana, thank you. Our road map for the hour though is going to start with the blue chip shakeup. Exxon, raytheon and pfizer ousted how apple stocks split is reshaping the makeup of the Dow Jones Industrial average best buys Growth Outlook after a 242 online gain in sales in the Second Quarter. What the ceo is telling cnbc about the path forward and a postpandemic bounceback Jerry Seinfeld amongst those pushing back against the claim that new york is dead. What does the data say big changes coming to the Dow Jones Industrial average three new companies will join the 30stock benchmark before the market opens next monday salesforce, amgen and honeywell replacing exxonmobil, pfizer and Raytheon Technologies respect e respectively, a sign of the times more than anything a lot of people are familiar with the dow, they know it the indexing numbers are much smaller, a fraction of say the s p 500, so that gives you a sense of how professional investors look at it, but still, quite a badge of honor david, i think i know you always say its statistically irrelevant index but it certainly is a big deal for the company, like salesforce, mark benioff started this company after leaving oracle and quite a milestone to end up in the dow replacing exxonmobil yes you cant argue with that and as jim said earlier benioff can call his mom and say look what we just accomplished and that is true, but it is also true that it is a price weighted index as weve said many times so for example apple, which has had a Significant Impact on the index, being a lets call it what is it today 496 stock soon will not have that impact given the fourforone split you know, so that is what were dealing with sara talking about the dow. We are seeing those stocks, carl, move higher this morning, despite the fact as bob pisani indicated theres only 31 billion worth of stock that is actually tied to the performance of the dow, versus some 11 trillion of index funds that are tied to the s p 500 index money, money that is indexed to the s p 500. Right it does have the advantage of bigger history i guess, right, more duration of history, probably better known, although sara, i would argue that weve talked about the s p levels in absolute terms probably more than weve talked about the dow this year, right i mean, 27k comes and goes but 3400 gets everybodys attention. Right and a new record close yesterday. All the bears are capitulating citigroup the latest that a lot of people are talking about. Capitulating and raising its s 500 target for the second time this year against the powerful force that is monetary easing, fiscal stimulus, which the market is still expecting and then a lot of Technical Levels being breached, leaving a lot of the bears behind, and now i think the question is, just as how bullish is everyone . The enthusiasm seems to be growing for the day, as people do capitulate not just analysts on their individual stock prices but Hedge Fund Shorts go to lowest levels weve seen on the market in years. For a closer look at what to do next, with this market, which continues its rally, s p flat holding its gains, we bring in Morgan Stanley Wealth Management lisa shallotte and northwesterns brent schute. Welcome to both of you lisa, you sound a little cautious about chasing this rally. Why . Absolutely, and i think that the reason is that increasingly the index itself is not representative of the economy and the data that were seeing we are very enthusiastic about the economic recovery and the v shape that we are seeing in manufacturing, in housing, as we saw in some of the supply chain related parts of the economy that are doing well and are reflected in improving pmi numbers, but thats not what the market is. Today, this index is all about this work from home, technology, everything is digitized, everything is internet, and we believe that that disconnect is just getting too big so while we love the bull market narrative of an economy with a vshaped recovery and massive stimulus both from the fed and the federal government, we think the way to play that is through individual stocks who are actually going to benefit from the change in the data its not entirely clear to me that blowout home sales are going to excel new iphones everyone who wants an iphone or ipad got one back in march, and so we do think that there is lisa rotation that needs to happen which types of stocks, youre talking about value, are you getting into value stocks . Were talking about cyclical sectors. Were talking about small and mid caps were talking about valueoriented sectors, so were buying financials. Were buying industrials were buying transports, were buying parts of the Health Care Value chain. Were buying various parts of Consumer Discretionary that have been left behind, all of which we think are linked to housing, so weve got lots of things to buy. Theyre just not those, you know, largest cap mega tech work from home names. Lisa, sara mentioned citis new target one of their lines is that despite the euphoric sentiment, equities continue to advance we see shades of 99, tobias writes, but the feds started tightening then rein theres no hint of a repeat now would you go that far . Yes so i agree with tobias spirit of what hes saying certainly, but exuberance is exuberance nonetheless. We know what it looks like and know it doesnt end well anyone who is going to jump in here needs to have a strategy for what is it thats going to get them out of the market, because we know that at some point, these things catalyze and break when youre this disconnected so while i cant talk about, you know, specific stocks, lets just say, you know, its hard to fathom the idea that one of the Worlds Largest electronic carmakers can increase their market cap 50 16 trading days and that not be labeled irrational, and so i just think liquidity goes a long way until it doesnt stimulus goes a long way until it doesnt, and i think that folks who are just chasing here really need to look at that consumer data that you guys, that just reported the expectations, we got to remember the u. S. Economy is 60 to 70 a consumption oriented economy, and if Consumer Confidence is flagging as much as those numbers suggest, its going to be very hard for this market to run simply on fumes, and sentiment. And so i think that folks who are chasing need to have a strategy for what is the catalyst to get you out . The policymakers arent going to tell you when. Brent, i want to bring you into this conversation we are often now making at least connections to 1999 in some fashion. You point out significant differences including of course the yield on the tenyear treasury, flinor instance. Explain who you mean sure, estimated valuation as an absolute metric is more of a relative metric. In 1999 it was 6 and aaa bonds, aa bonds didnt exist back then, yielded 7 or so so if i can compare and contrast that to today the tenyear treasury 65 basis points and twoyears whatever it is today, 0. 2 and the fed is suggesting they are completely shifting, which well hear about more on thursday i do think from a relative valuation perspective there still is support for equities. I think as lisa is mentioning that this does remind me of 1999 in a different way than i just mentioned. Thats the compare and contrast. I think the market concentration right now ten stocks representing somewhere around 30 of the s p 500, which is similar to what it was in the 1990s, i do think that poses a risk, and so the stayathome stock as she is mentioning have driven the market higher on a narrative theyre changing the way we live forever, which is similar to 1999. I guess what we thought over the next few years that narrative worked economically but the stocks had already discounted that, so i think as you look forward, i do think you need to focus on some of the areas lisa mentioned, so value stocks, small cap stocks, mid cap stocks i do think there are opportunities there, and as the virus continues to lessen its impact on the u. S. Economy, which is t has gradually over the past three or four months and we expect it to continue, i think as the earnings and economic recovery broadens past just housing and manufacturing, i do think thats one of the biggest potential gains are in the coming years, not in the names that have driven the market higher over the past few months interesting, because weve heard that so many times and yet Growth Continues to outperform value and these big cap stocks continue to outperform their smaller brethren as well, brent, you make that point of course when it comes to valuation in terms of extraordinarily low yields right now, you could also make an argument there is simply nowhere to get a return so people will keep piling in to those growth names regardless of the multiple yes, so small have worked in periods of time where we werent having a trade war 2018 we were introduced to a trade war. It did decrease Global Growth and put back on the defensive s p and the brightening of the Economic Outlook toward the end of last year, small cap and value did start to work because historically they are more leveraged to economic upside and then we got introduced to covid. I think that that provides a framework to think about what the future looks like, if we do have covid lessening its impact on the u. S. Economy which i think we are pushing more towards each and every day brent and lisa, thank you both for weighing in today thank you thank you as the s p trades a little bit lower, carl, it would be the first down day in the last four if we close lower on the major averages yes, watching those confidence numbers did not help a few moments ago. When we come back, we mentioned apple earlier, ahead of that fourforone split one analyst has raised its target to a street high 530, hell join our discussion when squawk on the street comes right back hey, kids welcome to camp tonsafun on xfinity its summer camp, but in your living room. Learn how to draw with a minions expert. How to build an indoor Obstacle Course plus. Whatever shes doing. And me, jade cattapreta. The host of es the soup camp tonsafun. Its like summer camp, but minus the poison ivy. Unless you own poison ivy. In which case, why . Just say summer camp into your xfinity voice remote to join. Apples been off a tear coming off four straight highs it is down this morning. Joining us the analyst behind the call coens krish sancar and tom remains bullish on the stock. Gentlemen, thanks to are both. Krish, let me start with you and the 530 price target you say valuation may appear skrechd on absolute basis but not relative to peers. Explain what you mean. Sure, david, thanks for having me. A few things i want to highlight pen first and foremost the multiple expansion for apple started almost a year and a half ago. A large part of it was driven by services and what you saw postpandemic was the fact that because of getting more important theres lots more value in countries that show the technology staple and also the fact when you roll it all together the way we looked at it, you compare the Services Recurring Revenue type business compare it to Companies Like cadences and snap sis which have recurring revenue, apple trades at a discount to that given the fact that apple is a higher Revenue Growth rate than them but lower recurring revenue base, and compared to mega cap tech like the amazon, googles of the world and compare it to them and if you put it all together, you compare the Free Cash Flow and Revenue Growth rate, in the ball park and the last bucket is the consumer staple for clorox and look at it, i would probably say given the growth rate and the Free Cash Flow yield in a relative discount to a consumer staple and if you add all of it together apple as a single entity looks stretched on value valuation basis up b to its history but on a relative basis its not right, yeah, people make the cloer red sox comparison sometimes including our jim cramer compounded Revenue Growth 5 or 6 over the last five years, krish. A 38 multiple is a lot of years of earnings to pay for that kind of growth on the top line. Fair yourself and i think that the biggest thing is that the Revenue Growth rate, the trailing fiveyear Revenue Growth rate hasnt been sumer impressive but the biggest thing was the mix has shifted more towards services so the mix has shifted towards a more higher multiple business, even though the growth rate has not been that good. Second thing i would probably say, if you look at where the stock is today, most of the buy side is probably expecting around 17 in earnings, and sell is around 16. Apple is trading at 30 times buy side estimates so not a 35 or 38 times it looks on a trailing order consensus basis. Tom, not to knock the analysts like you guys which do very good work on valuation, but some people are just scratching their heads every single day, a new, krish is raising his target, you raised your target recently and under review to raise it higher. Are the fundamentals changing that quickly as the price targets continue to run or are you chasing the price action sure, so feel free to knock the analyst. Its important to question analysts i appreciate the questions when i think about apple, i think its a confluence of thre factors that drive the stock forward from here. Short term logitech pointed out the billions of consumers working remotely and learning remotely you have on the verge longterm of a multiyear upgrade cycle to 5g and because of the billion learning and billion working, you have a short term lift to their hardware sales outside of smartphones, tablets, laptops and lastly a multiyear effort by the company to increase their nonhardware revenue, their services revenue, which is garnering a higher multiple. So i think a confluence of this three short term factors is what is driving the stock and will continue to drive it from here why doesnt anyone on the street seem particularly worried about antitrust concerns, regulatory risks around the app store as the Company Passes 2 trillion and more Companies Including microsoft now join the epic fight, spotify, a lot of wellknown companies are seemingly going up against apple here on these App Store Policies i think the concern that apple may have to charge a lowered rate staggered rate for subscriptions, 30 for year one, 50 or year two and thereafter, so perhaps they have to do that all across the board, or come one a graduated rate to the extent that the app developer generates more revenue, the Commission Rate declines over time, but i dont think anyones worried it will go from 30 to zero krish, what strikes me is that some of the concerns that someanalysts have pointed out, that is china risk, obviously app store risk, margin compression, volume risk if they try to make up the margins with higher asps, sort of get dismissed out of hand by other analysts like yourselves how do you process some of of those concerns do you have them at all . No, i think we have the concerns for sure, obviously you cant ignore them but two things id say, some of the concerns, you know, the china risk, the app store issues have been there for a while. These are not things that popped up in the last week. What youre seeing is things getting exacerbated now, which is what it was prior the app store, epic games, called the pepper case going on for a couple of years, i think what youre seeing is more like, you know, magnification of some of the issues. The second thing id also say is that you cannot just ignore those risks but the fact is that these things have been around. One of the things they did last week was the math on trying to figure out the App Store Impact and the bottom line is, you know, probably 6 of total revenues for apple and 10 to 15 of eps say App Store Goes to zero that impact is on the numbers but the bottom line is i think apple as a stock has not moved for a specific reason. Its moved for a multitude of reasons and for those same cases, i dont think there is one huge overhanging issue thats going to bring it down as part of a confluence of things like you point out they are given to valuation, app store risk, china overhang, et cetera, et cetera. Yes, and a rare down day at least thus far, a lot more trading to done today. Gentlemen, thanks to you both, tom and krish, thank you thank you now time for our etf spotlight. Today a look at wisdom tree mid cap dividend, etf ticker d. O. N. Down 20 for the year and currently trading off a third of 1 different story for one of its big holdings, j. M. Smucker, todays bigger gainer on the s p 500, up sharply upping guidance and better than expected Quarterly Results helped by Strong Demand for coffee, consumer foods, pet foods. It was a blowout for smucker up 8. 3 weve got a first on cnbc interview with the ceo, mark smucker, coming up next on quack alley in the next hour well take a quick break on squawk on the street. Oil is trading higher. The dow is down68 points the s p just goes positive but trading along the flat line trying to digest which were poor Consumer Confidence numbers in leg usg of very stronhoin sas. Well be right back. Tools, cattle, grain, traded goods. Even shells represented value. Then currency came along. They made it out of copper, gold, silver, wampum. Soon people decided to put all that value into a piece of paper, then proceeded to wave goodbye to value, printing unlimited amounts of money as they passed the buck to the future. Thats why its time for Digital Currency and your investment in the grayscale funds. Go digital. Go grayscale. Welcome back shares of best buy moving lower after reporting earnings this morning. Our friend has the latest Frank Holland. Despite beats on the top and bottom line weak q3 guidance i just got off a media call with corey barry, the ceo explained stimulus is unknown variable in q3 she said in part the stimulus provides a level of confidence and backdrop against which customers feel like they have purchasing and spending power and lack of that stimulus, may only underscore the heightened levels of unemployment and some of the kind of lack of confidence and its hard to say how long the kind of overhang of the last stimulus hangsing on adding learn from home is expected to be a driver for q3 some students will likely start learning in person and may end up learning at home which means this could be a sustained longer period of need around the technology that you have to have in order to make that work in your home. And so we definitely believe were seeing high demand and its not just learning from home, its likely a combination of many people both working and learning from home simultaneously best buy will pilot a store as a hub model focused on big cities with the high on the holidays where online orders are shipped directly from one of the companys 1,000 stores with employees making residential delivers here she said a fifth of our stores that are in those more dense areas that could help us deliver with speed, but also with a bit more efficiency as you can imagine, whenever youre shipping out of the back of your store, youre doing the best you can to pick the products quickly, get them put together and get them with the right carrier. You have a much better shot of doing that efficiently so again, best buy really leaning in to their online sales. Miss barry added about 60 of their online sales either picked up at stores or shipped from their stores back over to you down day today, frank, but this Stock Performance of best buy has been stunning, over the last year up 70 , over the last three months up 40 . How is best buy positioned relative to some of the other retailers that justify those kind of gains, even if today is looked at as maybe a reason to take some profits especially around that stimulus uncertainty. Sara, great question. Their online sales jumped up about 240 , so you compare that to other retailers like a home depot and lowes that saw strong online sales it looks like best buy is positioned to take advantage of the fact that consumers arent as eager to go into stores and want to shop online more and trying to focus on using their stores very similarly to what targets done as a place where they can ship things and get things more quickly to try to optimize sameday shipping. What a quarter. A lot in there, frank, Frank Holland on best buy, one of the major retail stories of the morning. Lets get an update with sue here herera a Tropical Storm no more. Laura is now a hurricane with sustained winds of up to 75 Miles Per Hour texas and Louisiana Residents continue preparations for the storms landfall which is now expected early thursday morning. You can go to cnbc. Com any time for updates onthe storms progress the the father of the black man shot by police in kenosha, wisconsin, says his son is paralyzed from the waist down, according to the chicago sun times. Jacob blakes father also says his son was shot eight times, and the doctors do not know whether the paralysis will be permanent. Protests over the shooting intensified overnight. Several vehicles and businesses were set on fire protesters clashed with riot police who then fired tear gas to try and disperse the crowd. Still developing story well follow for you today, that is the news update this hour. Ill see you back here in one hour carl, back to you. All right, sue, thank you very much. So were watching the indices try to hang on to some gains here had a nice open earlier this morning, but then Consumer Confidence hit and well below the 92. 5, at 84. 8 and with that the dow is down 117. Jerry seinfeld writing a new oped, saying new york city will bounce back in a big way after covid19 our Steve Liesman investigates whether the research actually backs up his claims. I hope it does, steve. New york is not dead yes, sara, theres a good bit of Research Backing up seinfelds contention in his oped that new york city and other metro areas will bounce back from the pandemic people flee cities from epidemics for as long as there have been cities for millennia here is an article in the jstor journal observing in the 1798 yellow fever epidemic of majority of citizens of philadelphia rented at outrageous prices, rooms and homes in nearby villages sound familiar if people flee, do they come back plague outbreaks in amsterdam 17th century and cholera in 19th century paris, marc france and matthius korevaary heavily affected areas recover in prices and rip price growth return to their initial growth paths within a few years after an epidemic on average they found housing prices in cities hit by pandemics fall 5. 5 in the first year and another 4 the year after but both housing and rental prices after a few years rebound to prior levels. They say we attribute the absence of any longterm effect on house prices and rents to the resilience of cities to major shocks new migrants often underpin the rebound as do infrastructure upgrades technology and work from home present a bigger challenge this time around but these technologies have been around for a while as seinfeld pointed out. The attraction of cities is social, cultural and economic as well sara, what the Research Shows is that the real city killer is violence that could lead to a serious lasting exodus from metro areas, but not too bad for the comedian his economics, sara. No, thats reassuring actually, the point you just ended on was what i was going to ask about, is this time different, because of this resurgence of violence on the streets of new york that the number of shootings, is it turning people away in any sort of permanent way is that in thedata yet i think thats an issue i think if you could pair t the studies i read about inner cities in the 60s, there was a sustained period of four or five years of riots i guess that began with the riots in los angeles and lasted for a long thyme we have this terrible upsurge in some inner city violence but its not i think on that scale at this point. Its hard to know how people will be affected the idea is once things clear, people have tended to come back and its kind of like almost like its obvious, right, paris underwent so many different epidemics, as did london, by the way, and fleeing london was just sort of a normal part of being wealthy in london. Theyd flee to their manors out in the countryside, and thats whats happening now, but the data show they will eventually come back, sara, and prices will rebound. Steve, its david count me of course in that camp as a life time new yorker, lifelong new yorker. Yes that knows it will come back, knows. It will be though some time, and to the larger question that still remains, of course, as Congress Seems unable to negotiate a new aid deal, steve, is the one of aid to states and cities i mean, 1 of new yorkers pay 42 of the income tax, those are the higher income people some are leaving sales tax, tourism is nowhere, that is going to be down sharply, property taxes are going to be town there is going to be an enormous budget shortfall, not to mention the state, which is suffering greatly, and contributes to the citys budget, not to mention separately the nta these are not insignificant challenges that new york along with many other municipalities face in the short term here, certainly without aid from the federal government i agree look, the studies do not suggest that people magically come back. They come back as a result of actions that are taken, new people move in also this is not an issue now, but what you found in these epidemics in the 17th and 18th and 19th centuries is they made major changes to the sanitary conditions inside of cities, and where they didnt, those neighborhoods didnt recover and that is akin to the challenge thats faced now if the cities cut back on services, then maybe people dont move back as quickly until its realized that they have to get the aid that youre talking about, david i think youre 100 right that if they dont get the assistance they need, theyll just lengthen the recovery and by the way, minority businesses among the hardest hit in this downturn, and where are they theyre in the city. So we can decide to call it democrat or republican cities or whatever, but at this point, these are american cities, and theyre being hurt right now, and theyre going to need help to get back. The history shows they do and can come back, david yes well said, steve the seinfeld piece was emotional but nice to put data behind that we continue to watch smucker leading the s p. A beat on the tom and bottom line stock at the highest level since april as they guide above as well well talk to the ceo in a moment traded goods. Tools, cattle, grain, even shells represented value. Then currency came along. They made it out of copper, gold, silver, wampum. Soon people decided to put all that value into a piece of paper, then proceeded to wave goodbye to value, printing unlimited amounts of money as they passed the buck to the future. Thats why its time for Digital Currency and your investment in the grayscale funds. Go digital. Go grayscale. The s p 500 at another record high but invescos top strategist sees one trap that could foil the rlyal fine out more on tradingnation. Cnbc. Com more squawk on the street coming up. Now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. 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. Protesters clashed with riot police in wisconsin one day after a black man was shot by police in the back multiple times. The officers involved were not wearing body camera technology, one concern. The city had reportedly planned to buy more than 100 body cam a cameras from our next guest this year butdelayed that due to funding shortfalls and other concerns rick submit is enterprise ceo and founder, launching a new autonomous Drone Program that will enable departments to view livestreamed footage thanks for joining us. Good to see you. Thanks for having me on today. I know maybe its not policy to comment on pending contracts, but can you discuss kenosha at all . Theres really not much that i could talk about we dont currently have a contract with them and obviously were watching like most americans the tragedy unfolding there. I wonder what you make of the pressure from the public or certain parts of the public certainly to have Police Activity documented more thoroughly with body cameras and maybe drones versus the budget shortfalls and the pressure well see tons of cities come under in the coming years. When we went through this back in 2008, there was also tremendous budget pressure, and i think one of the ways that Law Enforcement had to respond was to use technology better, to go after some of the inefficiencies in the process, and when you think about that, a Police Officer spends about 50 of his or her day documenting, writing up reports, theres tremendous efficiencies that can be gained and were starting to see that with body cameras playing a role in not only documenting cases so that you can know what happened in Critical Incident but you can also help more rapidly create the case information for all the everyday cases and that efficiency typically will more than pay for itself. Rick, how widespread is the use of body cameras in Police Departments across this country right now . What percentage of Police Members actually use them . I would say body cameras are more prominent and more prevalent in the big cities, so probably around 80 of the larger cities have body cameras. When you get down into mid size cities, theyre a little less prevalent and i think that just tends to be the larger cities tend to have more of a focus on the issues around Police Accountability and smaller towns, but as we just saw, these sorts of things can happen anywhere, and i think were going to see continued Movement Even from the smaller cities how do you explain or describe the acceptance from the rank and file . If you are a beat policeman on the street, is this something that you want on you for protection later on or maybe to make your documentation easier or is there still a sense that youve got big brother following you around on your job no matter where you go well, theres a saying in policing that no one hates a bad cop more than a good cop because it sullys the reputation of everyone who wears a badge we find officers are concerned about wearing a body camera if theyve never done it before its a big change but after about two months of wearing one, most officers will refuse to go on patrol without one, because once they understand and actually experience hey if i do everything right, this is going to protect me and there are a lot of false claims that happen in Law Enforcement, which theres also times officers cross the line and body cameras at least can bring an impartial truth so to speak about what happened in these incidents so we find officers overwhelmingly support from them after theyve had a chance to wear them for a while. Whats your demand been like, rick, for instance in the wake of the george floyd obviously horrific video that we all saw, which raised awareness for things like Police Wearing body cameras. What have you seen in terms of orders its actually been fairly consistent Law Enforcement we have to remember our agencies of City Government they tend to have rather lengthy cycles and city processes to go through so were definitely seeing Strong Demand from the public and Strong Demand from Law Enforcement in general, but its not like these arent impulse purchases that happen immediately we do think that this is really cementing the body cameras are going to be here for the long haul and i think in the next few years they will be a standard issue as a gun and a baton finally rick on drones, any conflict weve been talking about Drone Technology for years, mostly in retail delivery, for example, but i mean how complicated is the low altitude air Traffic Control situation as municipalities get used to things that i guess at that altitude theyve never really had to think about . Yes, thats actually one reason our announcement today is exciting we partnered with a Company Called photo kite has a tethered drone that can operate autonomously because its attached to a patrol car, literally push a button and the drone flies itself, because its tethered to the vehicle, its actually not considered an aircraft its considered like an extendible ladder with a camera on it, effectively, from a legal perspective, which means youre able to get eyes over a scene in a matter of seconds. It can be operated by remote dispatcher, whereas traditional drones you have to have a dedicated pilot on scene who is flying the drone this is the technology i think will be a breakthrough that it will give Law Enforcement the ability to have eyes over the scene from anywhere without all the complications of as you talk about air Traffic Control and the faa, and all those legal issues that make it much more challenging with free flying drones fascinating well have you back to talk more about, im sure pricing is a whole other story and the degree to which that comes down over time rick, thanks so much thanks for having me on rick smith of Axon Enterprise coming up, a new street high for facebook and news from googles fitbit, all of todays tech news, Just Moments Away stay with us here on is it tsqn the street. S p is down three points and nasdaq lower by a point or two well be right back. You say that 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 buy the new Samsung Galaxy note20 ultra 5g. Welcome back to squawk on the street. Stocks lost a bit of steam, new high on the open among the most effective, energy, despite energy trade with the laggard, we find big oil gas nails, phillips 66, rfme, quil is one of the worst peorrssawk on the street will be back in a moment cmon hurry up vo audi etron. The next frontier of electric. Get an exceptional offer at your local audi dealer. Fitness and wellness apps like the one run by our next guest seeing a jump in traffic while were all stuck at home but will that trend continue post pandemic. Joining us ceo of find body Josh Mccarter josh, lets talk about how your business is impacted overall by covid19 obviously, you jumped on the digital train, but still so many people are staying away from gyms and Fitness Centers absolutely, in march, we saw nearly all of our customers close, tens of thousands on our software when they went down, we saw bookings dropping 70 to 80 . In places like new york city, theyre still down about 80 whats happened as the country has reopened have you seen people eager to get back to gyms or is it more of a permanent phenomenon that theyre going to stay away no, weve done a lot of consumer research. In fact, were doing consumer and business research. And what we see, 95 of consumers say they want to go back to their precovid workout habits so, thats something that we see as different States Reopen now, about half of those say they want to add some type of virtual component to their workout, that can be either on demand or streaming. How have you had to change your focus and your business to address what consumers want, whether its working out at home, or what they want from their gyms, in terms of safety yeah, absolutely. Well, theres a couple aspects to that. First, we have to pivot quickly to address the needs of our businesses and launch what we call our virtual wellness platform this is a system thats fully integrated with our Business Management, marketing and Payment System that allows studios to do streaming or on demand that is fully tied in with their Business Management systems. Weve now taken those videos and on demand streaming and integrated it into the mobile app. Were seeing about 1 million, 1. 5 consumers come in every week and through the app. Theres definitely a pivoting through the industry and we think thats going to last were putting in a hybrid Business Model which we think is the future, where businesses offer inperson and virtual classes to their consumers on the topic of returning to the gyms, most businesses right now, have made plans from reopening theyre looking at everything from checking temperatures, as people come in reduce class sizes and reduce occupancy gyms where you walked in and had a workout, in many cases, now, its going to require an appointment ahead of time. Hey, josh, if youre an instructor, how can you possibly be making now through digital workouts or lessons what were you before yeah, its definitely an issue. The economics of the entire Fitness Industry is changing at the capacity, most states and countries when they reopened, are only reopening with 25 to 50 of capacity, and frankly, these businesses were never meant to run on that no business is meant to run on 25 or 50 comphaefapacity. So that flows all the way down to instructors providing those services and impacts other services on our platforms like spas and salons, youre just able to employ fewer people. And thats one of the things thats a shame, the way the pandemic has been handled, with the elness industry, is that, you knoll, many of these businesses are small medium businesses that form the back bone of the u. S. Economy and frankly, were seeing thousands of them close every week and that is thats, you know, thats not good news for the future industry. Yeah. Were watching the stock video from your company about people getting facials and all of these classes. Things that cannot happen right now during a pandemic. Right yeah you were just talking about the impact on businesses across your sector, how do you expect this to look, say, in the next 6 to 12 months . How many businesses are actually going to close well, you know, we dont have a view on how many businesses will close but we certainly have seen that in markets that reopen, the bookings rebound rapidly in fact, in some markets were looking at hong kong and australia, when they reopened, the booking levels went back to higher than they were prepandemic. We think theres going to be a fundamental shift. I mentioned this hybrid model, thats what were going to see in the Fitness Industry. And separately in the spa and salon industry, were talking about a lowtouch journey where its almost like an uber experience, somebody can book on an mobile app. They can check in remotely and therapists can check them in and never have to walk in and touch anything we think those are some of the changes going to happen with the industry Going Forward josh, thanks for joining us to talk about it thank you so much appreciate your time. Find body the dow down about 130 points. Carl, back to you. Yeah, the biggest loss of august, so far for the dow good morning, everybody, its 8 00 p. M. , at facebook headquarters at menlo park in california, its 11 00 on wall street and squawk alley is live welcome to squawk alley for a