Transcripts For CNBC Squawk On The Street 20240712

This second half rally continue . Then a stimulus stalemate the latest from washington as both pelosi and mnuchin talk covid relief. And later its been one of the biggest winners of the pandemic, why peloton is getting a new street high price target over at jpmorgan its actually not a bad place to start right there, guys, because for the second day in a row, david, we have had some analysts raising targets even on names that they maintain at neutral, today its b of a which yesterday kept apple at a neutral, they upped their target acknowledging moment tim today they do the same thing with tesla, this Equity Funding will fulfill growth and their price objective goes to 500 plus yeah. Listen, every day brings more things that for me are reminiscent of the late 90s its hard to avoid it. I made some comparisons yesterday, many High Quality Companies of course are getting the fuel this time as opposed to what was a broader spectrum of companies perhaps at much higher multiples, many of which did not have great business models, but its hard not to when you see analysts twisting and turning and raising price targets. By the way, theyve been right, just the same way that henry blogett was right on his 400 target in 1996 or 8 on amazon, just the same way that many of the analysts were right in that period as well didnt make it any crazier. Mike, what are the latest numbers on tesla i think its trading at 1200 times earnings and 72 times sales. I think those are the numbers. Tesla is pretty go ahead. I was going to say tess will is a pretty much its own species in that respect at least in the current environment. A lot of people have made the comparison tesla to qualcomm back then which is the one stock to seize on that represents and embodies the momentum of this massive new market back then would be cell phones and the stock markets look similar although qualcomm crazier ultimately at the highs even though market cap level it was not. It went into the s p at 25, 30 billion dollar market cap. This market is tacking on massive chunks of market value across the board and, carl, you mentioned about the price target action look, analysts sit there and say, okay, if this is what the market is willing to pay for, you know, future users for Revenue Growth, for whatever, its not my place he is necessarily to say the overall market is priced wrong i look at what the Comparable Companies are valued at so im going to follow them higher. Obviously that chase represents something i guess of an overshoot phase that we are probably entering or have entered at this point. Even the overall market, the nasdaq 100 was contained at or below 20 times forward earnings for five years coming into this phase, its jumped in a hurry to 30 the s p 500 was contained at a ceiling of 18 times forward earnings its now at 23. The market is basically saying you have this early cycle economic recovery dynamic at the same time that you have kind of late cycle risk appetites and public excitement for stocks, its all feeding into higher valuations also at a time when at least right now people are willing to bet you are not going to get the policy missteps you got after 2009 with slow responses and sovereign debt crisis and debt ceiling showdown and taper tantrum. If you put all of that together i think you have people saying, fine, i will take t i will pay what the market is quoted for right now and thats the makings of some kind of an overshoot ultimately. Yeah, although its hard to get a taper tantrum when a quarter of the s p is five names and they are all benefitting from the same tech trends weve been talking about for months. David, at the same time we are seeing some very wellknown bulls, tom lee is a good example today who remains constructive on what he calls epicenter stocks, travel, leisure, industrials, but today acknowledges the number of new highs is declining even as the s p goes up, the vix back to 25 is something that is reminiscent, a clue at least of what we saw back in 2,000. He is not changing his view but this morning he does say its something to keep an eye on. Yeah, he think a lot of people are keeping an eye on it, at the same time if you are a Portfolio Manager who didnt own apple or amazon or netflix or tesla or peloton or zoom or i mean, we can keep going for a while here, guys, or paypal or teladoc, you know, you are trailing and trailing big and always the question becomes by the way, tom lee does a lot of good stats on this stuff, you know, what do you need to buy to try to catch up or are you comfortable telling your investor base, hey, listen, i wasnt willing to pay those kinds of multiples and, therefore, my performance has lagged its a difficult position to be in but the risk certainly, mike, would seem to be seem to be getting greater given these higher multiples at the same time the simple trade was just to follow the liquidity trade, follow the fed and get into these keends of assets clearly over these last four or five months. Right there is no doubt about t there is no doubt about it that when prices go up risk goes up and forward returns go down. We can explain why the market is willing to pay these valuations for the greatest companies in the world that lead the nasdaq right now based on where Corporate Bonds are trading, based on their stability of cash flows and all these other things, but that doesnt mean that it translates into over the next 10 and 20 years they are going to be the outstanding performers or their value for great superior returns over that time so thats the trade off you obviously got. Im looking ata lot of the shorter term stuff im sure that also tom lee and other folks who have gotten this right are looking at which is this rush to buy further shortterm upside bets in the biggest and fastest moving stocks in the Options Market so just in very simple terms, if you want to buy upside exposure for a 5 gain in a stock youre probably paying 3 to 4 times what you would pay for protection against a 5 decline. That should not be that kind of mismatch and shows you that the public is stampeding in the apples and teslas of the world in this direction. It cant last forever. You want to call it an overheat, the makings of a blow off, whatever it is, it can go on a long time because its not connected to anything like the adp number that came out today thats going to derail that process in itself. Yep, adp did disappoint up 428,000, we were looking for 1. 2 million, david, although the chatter this morning obviously is that adp has basically stopped becoming a good tell on what the jobs number may say on the following friday because of subsequent misses in var i didnt say directions. To Michael Point about risk protection, a lot of chatter not specifically about the vix but the way the vix relates to the election and overall election risk, which bloomberg today says is the most expensive risk event in history as were beginning to see various scenarios spun out, david, where, for example, the president wins the night of november 3rd on votes that are counted at the ballot, but then biden comes along a few days later theoretically and wins if you count mailin baltimore slowly those are the kinds of things that investors will be asked to process in the coming nine weeks. Yeah, frank luntz on squawk box this morning the pollster making that point as well that that scenario is possible given that it is believed that more democratic voters will use vote by mail than Republican Voters and to your point, carl, that would be a very difficult situation for the country one would imagine. And there are a lot of scenarios you can imagine at this point that would be somewhat difficult. Mike, i have no idea how the stock market will react to an election that is sort of that hangs in the balance we know the last one was extraordinarily close, it could come down to a couple of states and frankly a few thousand sand votes, its always possible, given it was 71,000 votes and three states last time that swung the election to President Trump in terms of the Electoral College despite 3 million or so votes more for his opponent in the overall vote totals. Yeah. I dont know. I will defer to you for history as a guide in any way if its possible perhaps the 2000 election, although unfortunately it would seem the vitriol even though 20 years later is far higher than it was then. Yeah, although at that point you were working with unprecedented levels to that data vitriol, i would argue, and polarization yes. And if you look back on that period its actually sort of interesting. You were already in the opening months of a bad bear market for stocks once we had that hung election for a while and as we look back on that phase i dont think anybody points to the disputed election as a result as decisive in how the market behaved or even how the economy did after that phase one point, though, carl, on this kind of bulge in demand for protection against volatility around the election, weve been pointing out this for a while, the actual market has been very calm, its been in this steady uptrend, you would not expect to see that much of a premium to be placed on volatility protection in october its obviously around the election but it also leads you to ask is the market now basically prehedged against that the fact that everyone is flinching against this possibility is probably all else being equal better than going into this blind and thinking everything is going to be fine i dont think its as easy as saying the market is pricing in turmoil, therefore, well get turmoil. Right thats an excellent point. Maybe were building a lot of that in early as you said. Meanwhile, as it pertains to stimulus we heard from the treasury secretary yesterday saying hes ready to go back and resume negotiations with the speaker over aid for related to covid. Eamon javers has more on that this morning. The treasury secretary was on capitol hill yesterday, he was asked about this idea that a lot of people in our area have been discussing, this a vshaped recovery, what kind of a letter would you suggest . The president yesterday suggested this is a super v recovery, steep drop down an sharp rebound. Treasury secretary mnuchin, though, wouldnt go all the way to super v here is what he said the president , the entire administration thinks there is more work to be done lets not get lost on different letters of the alphabet. Lets move forward on a bipartisan basis on areas that we can agree upon because there are clearly parts of the economy that need more work. So the treasury secretary there saying that the economy needs more stimulus, urging congress to get behind the president s effort to at least do something the administration has been pushing this sort of skinnier proposal rather than the broader effort that nancy pelosi and the democrats want after that hearing mnuchin and pelosi did have a phone call last night nancy pelosi putting out a release saying the call was 36 minutes long but expressing real skepticism about the administrations approach from her perspective. She raised the question of whether the administration is taking this seriously enough in effect and whether they are willing to invest the kind of money that she thinks is needed here to break the log jam and to get this economy moving again. So some real differences remain but they did have that 36minute call last night were told so that is some indication that talks are continuing, guys back over to you all right eamon, i imagine we will talk about relatively soon. Eamon javers in washington we will take a quick break a lot of news to get to on this wednesday before the labor day weekend. We will get to macys earnings there is an upgrade this morning of zillow group, price target ene ntuen montvidia and peloton. Wh wcoin ia me when the world gets complicated, a lot goes through your mind. How long will this last . Am i prepared for this . Are we prepared for this . With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations, with access to taxsmart Investment Strategies designed to help you keep more of what youve earned so youll know youre doing what you can for your family and your future. Thats the clarity you get with fidelity wealth management. For your family and your future. I cant wiat to share at ts big 5g news. shouting through the glass at t has nationwide 5g . Yup and thats faster . Faster, yea but is it reliable . Ah huh and secure you should consider making a big deal about it bigger . I said bigger oh, bigbigger deal bigger than what im doing . Its not complicated. A 5g Network Needs a 5g device. Now everyone including existing customers can get a free Samsung Galaxy note20 after tradein. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. Welcome back i did want to update our viewers not too often we see an unsolicited or socalled hostile offer. We do have one this morning involving a company that i know fairly well, altese u. S. A. Announcing its presented an offer to cogico. Its a fairly large operator of Cable Systems in canada but also has a presence in the United States as well this morning altice in partnership with Rodgers Communications one of the larger canadian cable and Telecommunications Companies has made an allcash offer to acquire this company for a price of 106 canadian and 53 cents. Here is a look at altice we want to keep an eye on this Canadian Company for what would be not owned already by rodgers one set of their shares and 134. 22 per share for each subordinate share. All of this means a 30 or so premium for the company. Its an Interesting Company in that it has a control shareholder that only owns 10 of the economics but has the controlling votes because of super voting shares. In this case altice u. S. A. Is paying a premium for those shows that including 800 million canadian, 612 million to the audette family for their ownership interests and that would include 100 of the multiple owning shares a huge premium over 500 for the control stake, 30 for all public shareholders is what altice in combination with rodgers is offering here then theyre going to split the company if they were to actually be successful in actually getting it altice would take 1. 1 million u. S. Subs for something called Atlantic Broadband which is a subsidiary of cogeco and rodgers would take the remainder even with some tax consequences apparently they feel it would be a very good deal over all about 7. 8 billion u. S. Is what this unsolicited bid is currently worth. About 3. 6 billion us of that would be altices responsibility, the remainder would be rogers we will keep an eye on all of these shares i dont know if weve seen cogeco and how theyre trading this morning not often we see unsolicited you have a controlled shareholder with not that large an economic stake but the voting shares, apparently part of a family some of which are involved in the business, others of which are not involved in the business and so its almost reminiscent in a way of way back when one of my favorite breaking stories when Rupert Murdoch made the offer for dow jones given the huge possibility of enormous profits that he was offering them for that. Theres a look at all the stocks we will see how cogeco trades. The price of 106. 53, carl and mike, for the public shareholders there, much larger for the familycontrolled voting shares over to you. Thats fascinating. I was on the desk with you that day that you broke the dow jones news, that brings back some memories yeah. More on that later, david we will take a quick break and get to macys and some of their e com numbers. Stock up 7 premarket. Guess reinstated the dividend, stocks up almost 18 back in a minute who is usaa made for . Its made for this guy a veteran who honorably served and its made for her shes serving now we made it for all branches and all ranks whether they served one tour or made a career of it. We also made usaa for military spouses and their kids usaa is easy to work with and can save you money on auto, home and renters insurance. Become a member today. Get an insurance quote at usaa. Com quote usaa. What youre made of were made for at morgan stanley, a global collective of thought leaders offers investors a broader view. We see companies protecting the bottom line by putting people first. We see a bright future, still hungry for the ingenuity of those ready for the next challenge. Today, we are translating decades of experience into strategies for the road ahead. We are morgan stanley. Last week it was Goldman Sachs upped its target on peloton to 96, today jpmorgan does it better at 105 talking about some delivery wait times for bikes that you have to see to believe we will get more on that in a moment stock is up 9 announcer the opening bell is brought to you by nuveen. A leader in income, alternatives and responsible investing. Getting some clarity and more specifics on those job cuts at ford. Lets get to phil lebeau this morning. Take a look at shares of ford, the company has just sent this letter to employees basically saying that it will be offering early retirement to those employees who qualify and were talking about white collar salary workers here in the United States. The goal, eliminating 1,400 jobs and in this letter they basically say, look, if we can get to 1,400 jobs through voluntary layoffs or early retirement offers we should say, great, if not, then they will look at involuntary layoffs. That would be 1,400 jobs as a point of reference they make it clear that the goal here is to get to 10 ebit margins in north america and they are not there yet despite the fact they announced a restructuring, 11 billion restructuring last year, a couple years ago, that still hasnt paid off. They are still in the process of trying to get there despite cutting 7,000 salary jobs, but now they are going to eliminate another 1,400 here in the u. S. Guys, back to you. All right, phil its hard to turn every conversation about autos, phil, in tesla, but i did notice this morning that teslas market cap is now equal to all 18 of their developed market competitors. That doesnt surprise me. I know that it was more than the top five auto makers in the world combined and just as a statistic to drive home how wacky this is, those top five auto makers we are talking about toyota, vw, nissan, renault, mitsubishi along with gm and hyundai, you add up all of their sales last year, they cold over 33 million vehicles. How many did tesla sell last ye year 360,000. Certainly the price action is no longer related to unit sales but it was night to see us get to 15 million run rate for the year yesterday phil lebeau on ford, we will talk to you a little bit later on. Mike, we havent touched on macys, but narrower than expected loss, e com up 53, gross margin 23. 6, we were looking for something more like 20 so the battle continues to pivot and adapt to a model that obviously is a much different one than the classic Department Store model we are used to. For sure. No surprise really to see that kind of year on year gain in ecommerce, almost every chain has been reporting that. We dont have the absolute numbers. Whats interesting is how the market treats macys, you know, its trading at 7 and change, bottomed below 5 in the spring, it still was at 17 before this whole crisis, theres 2 point something billion dollar market cap, trades at 10 of trailing sale its being priced by the market as this, you know, kind of zombietype business you have 7 billion in debt on top of it, but its making it through and now it seems as if its basically got a little bit of a cushion to operate and try to pull whatever leverage they can and obviously in shrink mode, trying to narrow the focus merchandisingwise it is interesting and, you know, i think a lot of the retailers will want to hear about what august was like after they close the books on the quarter because that seems to be the big the big debate point is whether things did soften up in that mont month. Im here. Yeah yep. Reinstating the dividend, revenue down 42 on store closures an reduced demand interesting to see a dividend come back from a troubled retailer and stocks up double digit premarket. So much of this does seem dependent on their ability to generate online sales, the digital channel. We noted it as well last week with tiffany which were better than anticipated numbers, but online looks amazing because as a percentage of overall sales it is far larger than its ever been but the overall sales number was come down to a level that it hasnt seen in a long time as you take a look at shares of guess which are going to be up quite nicely when we get started with the open a couple minutes from now. Mike, i dont know, the number of the market cap of these all these retailers added up doesnt come anywhere near well, i mean, we do the tesla comparisons. Throw amazon into the mix or even a pure play like a home depot or costco which have benefited during this period of time. Target or any of those. The kind of winners absolutely dominate the market value. That being said if you look at Consumer Discretionary as a sector and equal weight the whole thing it has been improving, theres no doubt that the market is saying, look, things are going to come back to a certain, you know, higher percentage of 2019 levels than we thought before and it seems like, you know, there is a little bit of room for people to get more confidence about, you know, the nearterm strength in the consumer whats interesting is all of these things were priced for some kind of secular decline beforehand and so, you know, the same dynamic thats taking all the digital winners up to these unprecedented valuations is also adding extra punishment for these guys its an interesting part of the market where it wasnt as if things were great and then we got this shock things were already on a slow slide, accelerated, put them in crisis mode, made them in many cases take on more debt and now its what comes next, carl yeah, its fascinating. Weve been waiting to see the knockon effects of the expiration of those Employment Benefits in the month of august, but visa said u. S. Payment volume growth was pretty steady in august, up 7 versus up 8 in july we will see if that changes. We have seen some down ticks in consumer confidence, gallup says a third of americans are worried about losing their jobs, but so far the hard data has not necessarily disappointed there is the opening bell and a look at brett this morning as nvidia will lead us at the open up 6 , another price target increase, i think its a street high over at b of a 650 largely on gaming but ng the call is a little more broad than that, mike certainly they did have some gaming announcements yesterday in terms of chips and we are really starting to see what the battle is going to look like regarding nvidia, amd and intel, which has become quite obviously the laggard in that space. Right this call is a lot like we were talking about before is essentially, well, i guess i have to ratchet up the valuation assumptions here b of a basically saying were willing to put a price target of 46 times forward earnings thats calendar year 22 by the way, 46 times 2022 earnings at the high end of the recent historical range the recent historical range was not achieved when this company had a 350 billion market cap. Its basically saying this market cant get enough of the winners, the acknowledged winners, and were willing to ride it up there and assume that the market is going to stay in that mode for a while. You know, 46 times forward earnings x cash is, you know, stretching to get you to a price target, but the market is not flinching ahead of that. So, you know, its not to say its wrong, its just shows you how the psychology kind of feeds on itself as the market just, you know, scales these heights you know, mike, i see names like this with the currency obviously at their disposal that is so rich at this point and as we enter sort of this fall period prior to the election, end of year, you know, i do wonder about m a obviously when i talk to the practitioners many people say things are getting busier, but we will see if that actually does result in announcements, but, man, if you are a company like that, you know, i go back to the period, again, in the late 90s, you remember. Yeah. J. D. S uniphase using its stock price to do an enormous deal, global crossing, quest and then of course the greatest of all, aol time warner but there are opportunities here to use these pieces of paper so highly valued by the market to get things done. Pieces of paper plus inexpensive debt a lot of companies also have piled up a bunch of cash there is no doubt about it its another one of those things where you say, well, it seems like maybe things are getting a little overaggressive but its also just a bull market doing bull market things thats the kind of lifecycle that you see here, confidence spreads, valuations go up, tesla can do a 5 billion equity raise and not even feel it in the market cap really and that in itself creates a Stronger Company and greater flexibility for them so it goes to what doesnt, but i absolutely believe youre right that m a has been a little bit of a lagging piece of all this and you think all the ingredients are in place for something, you know, getting bigger on that front. Yeah, as we watch yet again many of the names that weve watched every day go up. Apple backing off its initial move higher but it is above 2. 3 trillion in market value now, facebook again up, amazon is also, you know, 92 gain for this year is what were talking about with amazon. Its truly stunning and of course we talked a lot about mr. Bezos net worth, not to mention his exwife. Guys, on the subject of deals worth mentioning, tiktok the latest reports yesterday saying that that things have stalled a bit. Not a surprise as i indicated the other day, though, my sourcing on this, unfortunately, is not to share too much but has gone a little cold, but, you know, having watched my share of m a when you are dealing with a level of complexity, first of all, that they were to begin with in terms of just the Software Code, the 15 million lines of Software Code that powers tiktok, the ai behind it, the fact that it takes not just strong signals but weak signals to help deliver things to people that they want and keep them engaged and youve got to take a snapshot of that code and then transfer it over within a year, you get the updates, but then you add on, of course, this latest move offer the weekend from the Chinese Government that throws into sort of certain questions about the ability to even have those updates available to you or even take the code at all, thats a key question here and its no wonder i think i indicated to carl the other day when we were talking about this you do have to wonder as a potential buyer of this asset how you view all of this. The u. S. Government which seems to be sticking with the september 15th deadline in terms of potentially saying no more, although that remains somewhat unclear and then the Chinese Government here we are, we will see whether they can figure their way through this and im talking about microsoft in partnership with walmart and oracle in partnership with a number of Financial Partners as well, but complexity and lack of certainty are certainly the enemies of getting a deal done. There is plenty of that after hearing that a deal was imminent from various reporting over the past couple of days and maybe one still is, but youve added a lot in terms of understanding, our understanding of just how complex the deal is going to have to be to complete it guys, weve got record highs on the s p as we got initially 3541 nasdaq 12 k, another record high there. Zillow group, mike, a record high as we get an upgrade today from deutsche bank, 106 target inn employees 26 upside, we did get Mortgage Apps down week to week but up 28 on the year deutsches thesis is we will see morseler interest from zillow groups the mobility argument, the polling data that basically confirms there is a lot of mobility in the country right now, largely from urban to rural, which is something that Spencer Raskoff who no longer runs zillow but still knows the company very well a few months ago said it wasnt clear in that was actually happening i think it is becoming clear that it is yeah, and whats certainly clear is that its become a higher intensity, higher turnover, more competitive Housing Market which means whatever the macro inputs are in terms of mortgage rates, in terms of, you know, Weekly Mortgage applications or whatever, it means that people are much more focused on it and if zillow being a content company it creates that much more engagement and, you know, with everything its all about, well, has the market already paid for that scenario or not. Its not really clearment the call today is that its getting a little bit of traction up 4 or 5 right now. Im not sure that six months ago when everybody was sketching out what are going to be the shutdown winners they would have necessarily said zillow because im not sure we thought it was going to last long enough for people to basically make life decisions to go and bid up houses in huge numbers like they are, carl. Yeah, thats right. And of course, you know, all of that so many dynamics, david, right now are contingent on a vaccine. We did have fauci yesterday say, look, if there does appear to be a winner in phase three and the fda sees reason to put an emergency use authorization early, there is a moral imperative to give those people who are in the trial on the placebo side access to that drug deutsche has a nice chart today looking at the overall odds when a drug is in phase three the percentage approval is actually pretty high. The fact that we have three solid candidates is probably one reason why fauci on the today show today reiterated he does see a vaccine available and approved by the end of the year. Which would be great news and as we know also manufacturing has been moving ahead as well with the idea being that if and when it does get approved it will be available almost immediately and you can start to inoculate Front Line Health Care workers, for example, people who are more vulnerable in terms of those populations and that will be very important. You know, getting people enrolled in these trials is not an easy thing, youre dealing with large populations, its not like these phase two where its fairly small, and that goes as well for the antibodies, the antivirals that weve been following and how quickly they can fill out those phase three trials carl, thats great news. We can only hope that one or more of them prove effective in phase three, but then the question i think still wil become how many people refuse to take it. You read and hear a lot about these sort of antivaxxers or perhaps others who will feel like this was rushed and that will have to be something of a concern because once you get a vaccine you certainly want to get as many people vaccinated as possible to try to create some sort of broader immunity we will be looking for sorry, go ahead, mike. I was just going to say in terms of the market, i think its a premise of what the market is looking at that, in fact, we are within the window where theres going to be multiple solutions, vaccines getting closer, treatments and all the rest of it, not that, you know, that there is a Silver Bullet assumed, but to me its the way that weve been kind of substantiating a lot of this rally, it probably would change the mix of stocks doing well and leading if, in fact, we did get very much an imminent clear vaccine solution that was going to be distributed pretty widely, but i dont think its necessarily one of these kind of binary upside surprise moments if, in fact, you get the approval because weve been handicapping every incremental step of this thing along the way and i dont think theres a lot of doubters out there anymore left that are kind of moving the incremental price in the market that say were not going to get Something Like that. Yeah, thats a food point certainly it would have large implications, though, for things like movie theaters, david, amc is up 20 as theyre going to open have 70 of their theaters opened by this weekend. New jersey going to indoor dining, i think, by friday and then i saw maryland yesterday, governor hogan, going to a different phase of reopening in which Live Performances will be open, i think, at 25 starting either this friday or next so incremental movement on the reopening front although i think goldman did have a report yesterday, they argued that to a large degree the reopenings weve seen appear to be flattening out and the question at the top of the report was is this it . So well see whether or not we can truly loosen up the spigot for states that have already done some. Yeah, and we will also wait and see how many people actually are willing to dine indoors when given the opportunity without a vaccine, obviously, being out there at this point or the antivirals. How many people are willing to go to a Live Performance or even a movie theater. Some will, obviously, and others will choose not to paced perhaps on their level of vulnerability, but we dont want to forget the virus is still out there thankfully the cases nationally have been trending down recently, but were still talking, what, 40,000 the other day, over 1,000 deaths they are still pretty large numbers, certainly very large when looked at globally in terms of our percentage overall, even today, carl. So, you know, theyre not going to open pools, unfortunately, in new york thats the one thing that ive been focused on. Theyre going to open gyms but not pools. Im trying to figure that one out. Who knows. Yes i saw equinox in brooklyn welcoming consumers back but you are still doing your open water swimming. I will be in the wet suit again soon, man. Yeah, i will be in the wet suit again, man you have to keep going yes adp did disappoint, ten year below 68 bases points lets get to Rick Santelli this morning. Ray, rick. Hi, carl. And indeed adp did disappoint but there wasnt a huge amount of Movement Based on that disappointment which really is the story. If you are looking to adp for the answer to fridays number, youre probably not going to get what you want and i think that the market paid little attention. As a matter of fact, here we sit on change. The reason thats important, lets go to a chart that goes to last week when we had our High Water Mark on friday for tenyear note yields you could see that we have drifted. Today we are starting to hold, maybe we will break that threeday trend of lower yields and if you look at the vix against ten year since march 1st because we have all been talking about the vix the cost of protection is going up but is it really going up because of Market Forces or is it going up because of election and Political Forces in either case i really like the fact that it seems to pay quite a bit of attention to the nervousness associated when you get a blip higher in rates so we want to Pay Attention to that chart in particular when it comes to china we all know that phase one there has been various deals and shipments of grains, im not sure that thats important to everybody, but i will tell you it certainly seems to be important to Foreign Exchange markets the relationship between we see that the dollar currently is at 16 months lows against the on shore chinese yuan going back to may of 2019. If you overlay that same time period with the Euro Currency you can see the differentiation there, that the dollar isnt as popular, isnt as strong and the Euro Currency really does remain the one currency that has some surprising strength on its own offer the last ten months. Finally when we consider the fact that were going to have some important data at the top of the hour the yield curve is something we want to pay very close attention to many guests have continued to point out that it is indeed steeper even though its given up some ground just a few sessions ago it was near 60 basis points now its hovering around 54, 55, but the point here is that theres going to be some ebbs and flows but all things being equal whether you are in a bull market where rates are going down or a bear market where rates are going up it certainly seems as though the steepness is holding somewhat constant carl, back to you. All right rick, thank you very much. Rick santelli. I got most of the dow components in the green today, lets get to bob pisani as well hey, bob. Hello, carl happy wednesday, everybody very familiar scenario, an up day, an up open and its been this way for several weeks now and the same components are leading, its the same Semiconductor Stocks are having a good day, a lot of new highs in the semiconductor list, Consumer Discretionary as well industrials a little bit better, but, again, look at that, banks and energy just have been doing nothing, nothing for weeks on end. They are not participating in this rally in the slightest extent and thats a little bit discouraging new high list its the same familiar names every day we put up nike and amazon and walmart and alphabet and amazon and apple, they are all there every single day what i dont see is the big expansion, over 100 new highs on the nyse today, theres 2,50 stocks on the nyse you want to see 300, 400, Something Like that. We are not seeing it right now the semis, yes, again, every day what the other part of the new high list is always the semiconductor names, you can see some of the big names like nvidia, broadcom, qualcomm, advanced micro, but where is the rest of the market its not there in terms of the internal advances that you want to see and that includes the advanced decline line which has been very sloppy the last few weeks. We are frothy, we keep grasping for superlatives to describe how frothy things is one of the ways you look at the market internals, this is a twoweek indicator, 14 days that when you are over 70 that means you are over buefver bought, whu are over 80 youre really overbought when you get over 80 it means you have to be up every single da i for weeks on end essentially to be in those kinds of levels and the market doesnt do that. Historically you start topping out at some point and usually these are associated with at least shortterm market tops the s p 500 itself is at 80 which is a very, very rare occurrence you dont see that very often. The last time that happened was january 2018 remember we had this huge rally at the end of 2017, we were up 10 and when it hit 80 that was a shortterm market top. Thats why you watch these kinds of market internals for signs of overbought, oversold indicators at extremes they are usually useful, in the middle perhaps not so much. Weve been talking about the u. S. Markets, they are at new highs, but i want to remind everybody that the majority of the rest of the world is also in a notable uptrend, maybe not as steep as the United States, but we have had some amazing moves here we are right near 52week highs on the other major world economies, germany, im talking about the stock market, germany, japan, south korea, the shanghai stocks exchange, these are all 2 , 3 from their 52week highs as well. Thats close enough for anybody to say we are essentially at new highs. The reason that is important is these four countries and you throw in the United States which is half of the world market capitalization, this is about with the u. S. These four countries thats about 80 of the market capitalization of the world stock market so the global stock market is doing well, but not everybody. If you go into a little bit below the top market leaders here, you know, Southern Europe is doing nothing i mean, they rallied and topped out a couple months ago and spain, italy, france, theyve been moving sideways to slightly down, so is brazil, so is mexico not doing much so is thailand, so has malaysia. So, yes, these are smaller market capitalizations in terms of how much money is involved in them, but not the whole world is moving in one lockstep some countries are having some real problems. Guys, back to you. Okay. Bob, thank you, bob pisani with a look overall at the market earlier this morning we told you about a hostile bid from u. S. Based altice u. S. A. Along with Rodgers Communications this for a Canadian Company called cogeco there it is up 32 why . Its 106. 53 is what theyre offering by the way, that is nothing compared to what theyre offering the audette family for their ownership interest given they own super voting shares theyre offering them 612 million for a stake that was worth about, i dont know, 150 less than 150 million us we have more on this deal and a lot more on squawk on the street straight ahead we know business keeps moving. And however we connect, whether its over the phone, online, or in your office, were here to listen and provide solutions that help you run your business better. Because the decisions you make have far reaching implications. And a relationship with a Corporate Bank like pnc can provide just what you need. As one of the nations largest banks, pnc brings customized insights and a local approach. To make informed choices now and in the future. I keep working my way back to you, babe with a burning love inside yeah im working my way back to you, babe and the happiness that died i let it get away servicenow. The smarter way to workflow. Im a verizon engineer, and im part of the Team Building the most powerful 5g experience for america. Its 5g ultra wideband, and its already available in parts of select cities. Like los angeles and in new york city. And its rolling out in cities around the country. With massive capacity, its like an eight lane highway compared to a two lane dirt road. 25x faster than todays 4g networks. In fact, its the fastest 5g in the world. From the network more people rely on. This is 5g built right. Only on verizon. China ease competitor to we work is planning a back door listing on the nasdaq later this year we have more on ucommune. Yes the company is called ucommune. Its the arch nemesis of we work here in china and the companys founder told me the company is looking to raise funds in order to expand overseas as well as here at home this shared office is fully rented out a businessman says his company ucommune has recovered to 70 occupancy after 40 at the height of the crisis more and more people realize coworking allows them during an after the pandemic, a lot of companies reduced size and want to save size this is chinas answer to wework they Lease Office Space and rent it to Small Businesses looking for a Flexible Work space, but they believe this model is different from weworks. Its a Management Company reporter ucommune has offices like this. About a fifth of the revenues are from professional photography and other services. In beijing it costs 145 a month. For a day 4 that includes facial recognition for security and tips on how to navigate the registration process for new companies. The ownercurrently has yet to make a profit and the company had hoped to be able to list on the nysc it ended up pulling the ipo and is now pursuing this back door listing for the nasdaq later this year. David, but i think it really shows just how challenging the situation is for the whole coworking industry, even though the founder himself is quite upbeat about coworking in china. Carl fascinating stuff, thank you for that later on today on squawk alley, do not miss the nfl commissioner Roger Goodell, 11 30 a. M. Eastern on cnbc exclusively. A lot of questions about the upcoming nfl season, covid safety and a lot more. Dont go anywhere. Were back in a minute you should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Shares of altic e usa are up altice wants the 1. 1 million u. S. Subs in the u. S thats what it gets if its successful well talk to the ceo about the strategy to try to get this hostile deal to the finish line in the next hour of sawon e re. Quk from the firstloving touch. Everything that touches your baby should be this comforting. Thats why pampers, the 1 pediatrician recommended brand, wraps your baby in breathable softness to help keep their skin dry healthy. So every touch is as comforting as the first. Pampers. The 1 pediatrician recommended brand. Good wednesday morning welcome to squawk on the street. Im Carl Quintanilla with sara eisen and david faber. We got nasdaq 12 k and a record on the s p currently nasdaq settled back and apple and tesla are down lets get to factory orders with rick these are july numbers. Final numbers. Expecting 6. 1 we end up with 6. 4 on factory orders and 6. 4 is the best number since may when it was 7 7. 7. If we look at extransportation, it loses some but holds up okay, up 2. 1 durable goods, july final. The difference is we take the advanced mid july read and pull it out that was 11. 2. We replace it with 11. 4. We improve there and with regard to 11. 4, thats the best read. Also since may when it was 15. 0. And just to remind you, 15. 0 is the second best read in this entire series. The best goes back to 2014 when it was up 23 capital goods orders, nondefense exaircraft, that number is up 1. 9. Thats as expected shipments up 2. 4 both those replace the same numbers from the mid month read. The only one i left out was durable goods, extransportation. A couple tenths better than extransportation expectations 2. 4. These are pretty good numbers on the mid month of factory orders we replace them with better numbers. Most of the data points outside adp were better than expected. The disconnect between the market and the economy continues. Bill is with us. Good to have you with us good morning. Thanks for having me you know, coming off the factory order number and durables and ism, i wonder if youre seeing pockets of some value and what we call the industrial economy right now yeah. I would say theres a lot of value in the market today. Even though the s p is up, say, 50 over the past four years, its largely been concentrated in Technology Companies and the p. E. Spread has gotten enormous between the highest price stocks and the lowest price reminiscent of where things were in 1999. We think both in industrials and consumer nondurables, that there are cheap stocks along with banks and some other special situations a lot of those stocks are at lower pes today than they were four years ago im seeing in your notes, mgm is something that piqued your interest can you explain what thats based on, what needs to happen to have that thesis fulfilled . A lot of times value guys come on and the impression of all we can talk about is financials at six times earnings a company like mgm, iec became the larger shareholder purchasing 12 in the open market their shares in two public companies, Mgm Properties and mgm china almost get you the entire market valuation of parent mgm, and that leaves you with a company that has about a third of the rooms on the Las Vegas Strip for free additionally, theyve got half of the ownership of bet mgm Online Gaming. And if you look at a company like draft kings, selling at 30 billion, and bet mgmses a separation to be like draft kings, and you compare that to mgms current market cap of 10 billion, some success in Online Gaming will go a long way toward making mgm a really good stock today. Yeah. Bill, its david i share your interest. The iec investment was fascinating. Id love to get your take on the Broader Market and follow up on your comment about the differential in p e rations and the reminiscence of 2000 what happened to the value stocks did everything get crushed was there a coming together of pe numbers no. Not everything got crushed traditional stocks at 1919 we99 at single digit p e rations. Those stocks along with the internet stocks came down sharply but the food stocks, bank stocks, industrial stocks performed really well. We were able in 2000 and 2001 to have absolute returns while the s p went down. That followed an awful 98 and 99 where we lost probably 80 of our investors because they thought we didnt know how to invest anymore do you think the same thing is something more happening . Yeah. Im sorry i missed that. Sara and i asked the same question im sorry, sara, for jumping on you. Do you see the same thing happening now . Well, its funny. People say what happened in 2000 to cause the high flying stocks to finally go down and even living through it and managing money at that time, we couldnt point to something specific that happened its just that the valuations got so extended that they had to return to something more like normal for 70 years high Growth Stocks have tended to trade at 2 to 3 times the multiple of the cheapest stocks. Today that multiple is about ten times. And its just not sustainable. You see a company like tesla which i dont for a minute pretend i understand teslas valuation. But theyre trying to sell stock here it makes sense that the companies that are really expensive would do things to try to capitalize on their very high stock prices and i think yes, i think the logical outcome is that low pe stocks perform well over the next couple years and the companies that are selling at 100 times earnings have a difficult few years ahead of them and some of the best performers in the oak mark select fund are facebook and alphabet how does that stock up with your view its funny. People think of facebook and alphabet as if theyre high flying Growth Stocks alphabet if you subtract out the cash and some nominal values for their other bets segment and add back the earnings, alphabet is less than a market multiple now. So we think those companies are mistakenly thrown into the group of high priced stocks. Its actually the best of both worlds you get the rapid Growth Without paying a high pe all our viewers know you so well youre not in and out of names the way some, say, i would guess you would say more modern age of investors. But is there any strategy that you are taking out of the box to trade around or prepare for election risk . No. All we do at oak mark is try to look at how a company will likely be fundamentally five to seven years down the road and then invest at prices today that are very cheap relative to that. One more example is something we own thats kand of an unusual stock, dxc, the it outsourcer. It was formed from the combination of Computer Sciences and Hp Enterprises about three years ago. Stock was north of 90 then. Its at 20 today. They have a new ceo that came from the company theyre about to close this month of a sale of a division that will produce cash thats equal to their current intersurprise value im sorry, their current equity value, and the stocks sells at about six times earnings whel ak senture is at 30 we dont care who wins the president ial election. When you look at five years down the road, this company is going to look a lot more like accenture no matter who wins the president ial election. Bill, always good to get your take very grounding well talk to you next time. Thanks thanks for having me. We havent gotten to it yet shares of draft kings surging this morning the Company Announced Michael Jordan will be joining the as a special adviser to the board of directors, jordan will also have an equity interest in draft kings as part of that deal, and you saw its sending the shares up far higher. Interesting to note it comes in the same day that remember, draft kings was a special purpose acquisition that acquired it. Or draft kings used it to go public flying acquisition corp. A is another one from the team. They announced the deal as well today. We can take a look at that feac for skills. Ceo of which is going to join us later in this hour as well and that also is up quite a lot. Of course. Everybody has got a spak these days, a spak and a dream these guys are making it happen. The draft kings jordan thing i dont know if its worth that much its interesting particularly given his ownership in an nba franchise as well. Absolutely. I mean, youve got to imagine not just jordans history, knowledge of all kinds of different markets. His roladex. The premarket on this was interesting. Yeah. Especially because truth came out with draft kings on the a hold on the stock. It keeps getting whipped around. Headline sensitive around sports when mlb had to postpone games, the stock lost 13 a lot of it comes down to the nfl season which i know youre talking to Roger Goodell about macys reporting a loss in the Second Quarter but a big boost from online sales. Lauren thomas got off a call yes i just got off the phone with jeff, finishing macys Earnings Call after the wrap this morning. Last i checked shares were down slightly they had jumped significantly up about 6 earlier in the morning. I think there was a lot of excitement around these better than expected online results and macys particularly called out strength and luxury which was a little interesting considering the impact because of the pandemic that weve seen on tourism and International Tourism has come to a halt when i asked about that on the call, he said look at the competitive landscape. You have neemen marcus, lauren taylor, a number of high end Department Stores Closing Stores and macys is trying to capitalize that, particularly with blooming dales. He says thats exceeded their expectations and contributed to the better than expected results during this latest quarter and so they are looking forward. They hope to capitalize that, on that through the Holiday Season as well. Looking at its real estate, i know that was top of mind for a lot of analysts heading into this call. Macys is still planning to close about 125 stores over the next three years its not changing those plans which it set before the pandemic however, it is looking to test a number of locations away from malls. As you and i have discussed before, weve seen a lot of weakness at the mall in recent years, and that continues to kind of intensify and jeff, when i asked him this morning during our call, he said if that does well, if this experiment does well and customers react well to the stores, macys would be looking to grow that part of its business i cant believe lauren, this is a 2 billion market cap stock. What has happened to macys . How do they have any visibility into the longterm, and when they can pick back up given theyre running on fumes here and liquidity theyve managed to raise in the market. No Holiday Season. No back to School Season whats next . Whats the picture sure. Well, i think i mean, as jeff said this morning during our call, i mean, he sees about 10 billion up for grabs with the bankruptcies and the turmoil flooding through the Retail Industry kohls is throwing that number as well. Part of it is betting they can take a bit of that theyre certainly up against the targets and walmarts of the world. It wont be easy the Holiday Season, i mean, its going to be a turning point for a lot of companies, i think, and really important to watch. I guess its how much they can capture online for holidays so far lauren, thank you. Macys shares up a tad after the earnings next up, the ipo that nearly doubled on the day of the day bay selling off today after the first Earnings Report as a Public Company which stock is it . See if you can guess the ceo will join us on the other side of the break. Gine ru] [ 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. Welcome back if you guessed the mystery chart, jamf, mixed results since going public the company saw revenues up 29 year over year joining us to dive into the results is the ceo of jamf dean, welcome to the show. The stock is down 7. 25 . I cant tell if this is a case of just lofty expectations because your ipo was so hot, or whether there was some underlying weakness that wall street is teeing off of. How do you read it i still think its early. People are consuming the information. Once they get a chance, theyll see what we saw. 36 arr growth 42 Revenue Growth net operating nongap Net Operating Income more than double a year ago. And 33 unlevered precash flow margins. We feel fantastic about this quarter, especially in the middle of an economic recession. Talk us through color behind the numbers you gave apples stock chart has been a moon shot. Theres excitement about the new products from your perspective on the enterprise side, what does it look like in terms of business during the last few months yeah. Well, first, historically our business has grown the way it has because of the consumerization of it. People say they want their work computer and Work Technology to work as well as they do at home. That has been fantastic for apple going into the enterprise. Its been fantastic for jamf we have consumerlike experiences for employees. In the last few months we have the greatest movement of people from offices to working out of their home weve ever seen in history. That is more than likely in our view and has already fuelled the consumerization of i. T. , and that is something we can help organizations do are you seeing reluctance youre everybody works from home, but what about the layoffs across Corporate America right now . Have you seen pullback in spending . Yeah. The way weve qualified for people, weve seen both head winds and tail winds theyve offset each other. The head winds in some organizations have reduced their staff. Therefore, they have fewer devices they need to secure, but on the flip side, weve got some microtrends like the work at Home Initiative where Many Companies needed to send emergency computers out to homes to empower them as quickly as possible Distance Learning which is something that were extraordinary at, helping teachers still have control of their classroom despite being miles away and telehealth initiatives that allow physicians to meet with their patients whether in the hospital or in their home in a safe way so those microtrends have offset some of the economic struggles weve seen over time we believe the microtrends are here to stay no doubt. Thats where the spending is dean, i want to ask you about the consumer side of apple right now. And the story, tons of excitement around this new phone launch for 5g and the demand thats going to be there and the new products and super cycle are you preparing for that or does that not have anything to do with you . A great question. We, of course, everything we do in terms of enabling apple at schools and the enterprise, we have to innovate at the pace of apple. Any time apple comes out with a new technology, we support it so an enterprise with can deploy the voices every fall apple comes out with new technology and every summer theres beta versions and making sure were ready not only with compatibility but with all the new features dean, thank you for joining us for a snap chat of the business thank you good to see you time for a etf spotlight. Today a look atticer iye down more than 40 this year as coronavirus restrictions continue to drive down oil demand Energy Stocks are the worst performing in the market this year one name making headlines, exxon mobile it is currently trading a bit higher just a little bit. Their spokesman saying the company is assessing possible worldwide job cuts just the latest Major Company to do so. Well take a quick commercial break. Exxon booted from the dow this week in favor of sales force s p up. 6 . Could be looking at otr anhe record close if we close higher for the s p and the nasdaq when we started carvana, they told us that selling cars 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. Good morning, everybody. Im sue herera heres your news upzat in paris the trial has begun for 14 people charged with assisting a terror attack in 2015. 17 people and all three gunmen died in the attacks. The pope holding his first public audience since the pandemic began he is calling for solidarity in fighting the coronavirus senator ed markey prevailed in one of the most watched primary cases of the year. Markey had support from progressives and younger voters. It was the first time a kennedy has ever lost a race for congress in massachusetts. In North Carolina a body has been recovered now of a woman who was swept away in the flood waters this morning the search is back on for two this afternoon who are still missing due to the storms you are up to date thats the news update this hour squawk on the street is back in a minute. Now you can trade stocks and etfs for any amount you choose instead of buying by the share. All with no commissions. Stocks by the slice from fidelity. Get your slice today. Its been a busy week of news for the chips obviously nvidia yesterday the battle with intel continues. And the ceo is going to join us in the next hour, bob swan join us for that back in a couple minutes could worries about a vol tire september be overblown . More on the biggest misconceptions one strategist is seeing more squawk on the street coming up. As business moves forward, were all changing the way things get done. Like how we redefine collaboration. How we come up with new ways to serve our customers. And deliver our products. But no matter how things change, one thing never will. You can rely on the people and the network of at t. To help keep your business connected. S p 3551 this morning. Lets get to rick in a special edition of the Santelli Exchange hey, rick. Carl, yes thank you. Id like to welcome my special guest today. He happens to be the chief executive officer, the chief operating officer, and director of Stanley Black and decker, james laurie jim, welcome hi, rick. How you doing . Very well it seems as though Stanley Black and decker is doing better than many might have expected listening to their july 30th Earnings Call. Moving from a minus 7 to flat Third Quarter on an organic growth forecast. Upgraded to potentially up 7 to 10 . Can you tell us the details of the ak filing . Absolutely. Its theres been a real bonanza in the home centers and ecommerce in the United States. Thats a big part of it. Theres this connection reconnection with a home and garden thats occurring with the consumers. And on top of that, we have europe starting to become sequentially better by the week. And also emerging markets which were really in difficult straits right now looking like theyre up in double digits as well so its been a very dynamic year in april we were down 40 for four weeks in a row. It looked like the year was going to be incredibly challenging. As time as gone on and things have stabilized, the economies have gotten better, its looking much better. Initially you had workers sidelined and furloughed whats the update on that stat us sure. When the sales were down about 40 , we decided to take out about a billion dollars of cost and about a half a billion of that was mostly and the other half was from suppliers. That involved a furlough or shortened workweek for about 10,000 salaried employees. And recently with the better news in revenue, weve been able to bring back about 90 of them. And 1,000 were going into permanent layoff status. Its been really a positive Development Based on the Revenue Growth you know, when i think about tools, theres so much more to the new Stanley Black and decker ecommerce, were talking before the show and you said ecommerce has really been a strong area for us tell us about that most dont think of ecommerce when we think of Stanley Black and decker oh, yeah. Weve been working on it for a decade we have three to one relative share advantage with our largest competitor in ecommerce that investment is paying off like in spades its growing sometimes in the 50 to 80 range for us and last year we had a 1. 3 billion business. Its going to be much bigger this year. Now, you have plants all over the globe. You have tens of thousands of employees. I guess the obvious question is during all these chapters of covid and how various countries have dealt with it, how are you keeping your workers globally safe thats our number one priority since the start of the crisis early on we required masks, did temperature taking we did all sorts of contact tracing. We did education theres a lot of misinformation out there, and all those things have combined to create sanitizing and many other things all those have combined to create a safer environment that weve been able to operate continuously throughout this crisis with very minor supply chain interruptions. Security business is also one of the bright spots. It seems as though nowadays wherever i go, everything is touchless. Can you tell us something about your security business and some of the areas youre moving into . Sure. Sure so weve had a Health Care Segment of our security business for a long time that specializes in iot applications and protecting the elderly and in addition to that, we have an Automatic Door business and who wants to touch a door these days thats been really strong. And then we have the core Electronic Security business which principal objective is to keep people safe this business was a its a 2 billion business and something we built from scratch over the last 15 years. It looked like it might become strategically irrelevant to it covid changed everything with regard to that people dont want to touch doors. We need to protect people in health care facilities, and in institutional buildings. So contact tracing, proximity sensing. All these things are down through our iot applications and security well, my final area is we live in a time where the obvious issues of social justice and being fair to everybody is something that seems to be doing very well at your company. I know that forbes named you one of the best employers for women in 2020 but diversity kags has been integral. Why dont you bring us up to date there yes we put an intensive focus on diversity and inclusion. We ramped it up four years ago and worked hard to make sure our underrepresented cohorts in society have equal opportunity at this company and that we do everything we can to make sure the underrepresented have that opportunity. Jim thank you for joining me today. I wish you more success in the future id like you to come back when we get on the other side of covid to see how the company is doing with some of the new enterprises. Thank you for joining me today Carl Quintanilla, back to you. All right Rick Santelli, thank you coming up, an exclusive with the commissioner of the National Football league on the leaders plans for the upcoming season, the impact of covid, social mustice, virtual fans, the whole gat. Thats coming up in the next hour dont go anywhere. Shares of altice usa are up on the news for a takeover in partnership with Rogers Communications thats why were showing you that joining me now is altices ceo altice usas ceo always good to see you good morning. Youre mounting an unsolicited bid for a Canadian Company in partnership with another Canadian Company if youre successful youll give rogers the canadian assets youre going through this to get 1. 1 million broad band subs in the u. S. Why is it worth doing this well, as you know, david, thank you, good morning to start off with, and as you know weve always had an emphasis on trying to grow our footprint at altice. Were currently in 21 states across the country just about 5 million subscribers. Addi adding another 1. 1 million homes is attractive to us. Particularly the geographics is synergistic with our operations. Were in West Virginia and North Carolina as well we line up well from a geographic standpoint, and we like cable we think cable continues to be attractive it has a continued length and growth going forward, and so this is something that is right in the middle of our wheel house in terms of things we want to continue doing i want to talk cable in a minute back to the deal itself. Obviously its an unsolicited offer. You have a controlled shareholder. Youre offering them a large premium for their economic interest and a 30 premium roughly speaking to the Broader Shareholder base why is that enough, and whats next here, dexter . If they said no, what do you do . I think the merits of the financial transition speak for themselves its very attractive i think weve met or beat a precedence in terms of transactions that have been done before us. And i dont know whether its enough or whats next. Were awaiting response from the board. And we think they should evaluate this very attractive offer. And engage with us right . So i think were in more of a waiting pattern at this point in time we look forward to hearing from them i have not had time to go over canadian takeover law, dexter, at this point. I dont quite know it as well as i typically do in the u. S. But do you have other levers at your command can you try to mount a proxy fight to take board seats if ne needed what else can you do if theres a controlled shareholder and they dont take your deal, it would seem they have to say yes for the audette family thats right. We think what we presented to the board and to the family themselves is very substantive very attractive. And so we think this should have likes and traction for not only the family itself but also for the Broader Investor base that this is something they would find attractive and they would expect the board to engage on. And so but if he if the board says no, the board says no we understand that right but youre trying by doing this in an unsolicited way to say yes have you had conversations yes weve had conversations with them as has rogers historically. Rogers is a largest shareholder, economic shareholder at cogeco and my understanding is theyve had many conversations with the company in the past. But they havent led to them getting them to sell the company to them or to you. Thats right. Thats exactly right so i think this is a transaction that on the face of it is probably more than anyone would expect for us to have put forward. And hence the reason why we think its very attractive and that we should be able to elicit some type of positive response from them all right and back to the actual fundamentals of the transaction itself if youre successful at this price, youll be spending roughly 3. 6 billion u. S. For 1. 1 million u. S. Based subs why is that a number your shareholders should feel good about, and are there synergies, i would assume there are, but can you give us a sense of adding those subs if you get them absolutely. To be clear, david, its 1. 1 million homes past and half a million subs its anywhere between based on the Public Information anywhere between 350 and 400 million of ebita and 800 million of revenue. Wed be paying somewhere between 10 and 10. 5 times ebita for the assets as you may recall, we pay ten times for cablevision, ten times for studdenly, and we recently paid ten times for service electric, a Small Business thats the multiple that is a good private transaction, or public transaction multiple up there for these types of assets. This has been three or four years later from doing some of the larger transactions, theres been more growth in the businesses its a lot more penetrated relative to where we bought cablevision and sudden link. However, we think there continues to be a great momentum in the broad band market going forward. The overall atlantic broad band business i believe published just over 4 Revenue Growth in the last quarter that would blend very well with our business of course there are plenty of synergies that we see. Its a footprint that mirrors or sudden link footprint. And if we looked at that, we are probably somewhere in the mid 50s, ebita margins on sudden link relative to our overall ebita margins more in the mid 40s and hence, we think theres significant synergies in the atlantic broad band business who is publishing about a 45 ebita margin, and also our cap exsynergies would be significant. We think ultimately over time well be able to earn ourselves into a more attractive multiple than ten times all right and at the outset you said you like the cable business. Youre talking about broad band. We know thats the key product when you say cable, do you also mean people still subscribing, although fewer and fewer each day . We know cord cutting tonights. Do you still like that business . Is it still a viable business, particularly given the lack of sports programming and Everything Else right now . Well, i mean, you are raising something thats very particular to whats going on currently in the global pandemic. But broadly speaking, the video market continues to be a money making business for us it is a little bit of a tale of two cities as you may know our longerterm subscribers are a very stable, very big users of the video product. And the early adopters right now when they are adding onto new subscriptions are not very financially viable subscribers for about 2. 5, three years so we really are dealing with two different customer bases half of our customers have been with us on a video side for over five years the other half are less economically attractive given that theyre under five years in terms of length. And so we will continue to provide a great programming. Weve got very good relationships with our content providers and partners but we do suffer as many of our colleagues do in the field, as well as some of the other multichannel distributors like the vmvpds with rising programming costs that make new subscribers quite uneconomic for a bit of time. And so thats a dynamic that is changing today as the attachment rates with the video product have come down substantially, and a majority of our subscribers today are taking only broad band we think its going to continue. Its good for profitability that were losing unprofitable subscribers and maintaining good return rates on our older stickier customers i get it. And a lot more to discuss there. But for today, were going to stop look were going to stop look forward to talking to you in the future as well, dexter. Thank you for joining us. I appreciate it, david. Take care. The consumer staples, david, among the big leaders today trading at alltime highs boosted by this mornings best performing stock on the s p 500 which is the brownforman. Siting strength in its premium bourbon brands like woodford reserve, jack daniels also doing quite well well be back on squawk on the street in just two minutes this is decision tech. Find a stock based on your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. Mobile Company Skills announcing it will go public through spac at flying Eagle Corporation led by the same executives who did the draftkings deal earlier this year we should mention skillz is a twotime cnbc disrupter 50 company. Joining me now is the founder and ceo of skillz andrew paradise congrats on announcing this deal and nice to have you with us given youve been doing well as a company, you could have gone the ipo route. What is going the spac route better for you and your investors. We always planned to go public our vision is to build 100year company. And we were planning on being ready to go public at the end of q4 this allows us to go to market a little faster and also allows us to select the best Financial Partners through the pipe that we set up with wellington, fidelity, Franklin Templeton among others so, it was just the timing and getting that money in because its not like youre paying for the privilege harry sloan, the spac sponsors take, what, up to 20 of your company. Thats not nothing no, thats quite right. A traditional ipo is 10 to 15 of a company any way and so, when you think about kind of the different parameters of how you want to set up your company postpublic, being able to pick meaningful investors like the ones i named, being able to partner with wellington, fidelity right out of the gates is a really exciting thing for us and its something that is unique with a spac. Tell me about the company a bit. Its being portrayed as a platform with patented technology across a number of verticals. What are your barriers to entry from others that distinguishes you from other companies out there or other companies that might want to move into your area of expertise . Yeah. First to explain what skills is building the competition layer for the internet b 2 b to c for Game Developers to build better content in the future of entertainment. We enable these developers to build highly competitive mobile gaming experiences were best known as the leader of mobile e sports we provide our Player Community with fair, fun and meaningful competition and our mote is that we have an incredible amount of data science built out to protect the consumer against cheating and fraud so, that data mode is very much like the antivirus shield of a company like mcphee but focussed around competitive video games. Andrew, obviously right now its a hot time for video games and mobile games because of the pandemic people are at home, lack of sports, whatever it is the industry is seeing record numbers. I think the question is what happens when were past this, when there is a vaccine . What happens to those numbers . And how much has your business been boosted by the pandemic so, weve actually been able to generate incredible consistent growth. One of the reasons we partnered with harry sloan, we showed them three years ago about our vision to go public in 2020 and showed them the financial projections for three years forward. Weve actually hit within 1 to 5 every quarter the numbers we showed them three years ago. We very consistently performed and we were projecting to double or triple our business in revenue every year from 2017 onwards. And so, when i look at the business, we have been doing very well at growing it before the pandemic now, candidly i think all of us need more entertainment at home these days we have definitely seen a commensurate bump with growth. We had our best quarter of growth ever in q2. And some respects its like the first seven years of companys Revenue Generation that we ren j generated in a single quarter in terms of growth. It was an amazing bump for us, but the reality is our system and platform has been growing very well before covid andrew, do you need to build more Brand Awareness is that an important part of your strategy . Or given youre a platform across various games and sort of underlying things, is it not quite as crucial we are definitely investing in Brand Awareness i think one of the exciting things about going public is showing everyone the results of the business, showing everyone how this business has been created and the future of entertainment. I think the one of the Amazing Things that many people arent aware of is that the mobile Gaming Market has grown just absolutely tremendously over these past ten years. So when we started the business, it was an 8 billion market. Today its a 68 billion market. Tomorrow, in five years its projected to be 150 billion market and when you think about mobile gaming and the word gamer, we all think of this 24yearold nerd in their parents basement. The reality of it is gaming has become everyone through mobile it is very much a mass market human entertainment platform now. There are 2. 6 billion people that play mobile games every month. And when you think about these interactive devices and their proliferation across the planet, the smart phone, the tablet, mobile gaming is interactive content built for interactive devices. Thats why its the future of entertainment. And finally, what do you think . Your stock is up well, your prospective stock is up 22 . Is what that you expected . You know, i think we will only see what the market will bear, but we certainly think its a great value for everyone investing in business. Were excited about the future of this business very much its a 225 million revenue business this year 555 million in 2022. And were a team where we very much believe in the pact between us and the investor community. That pact is when we put out numbers we intend to hit them. So, yes. Were very excited about this moment but it is a milestone along the journey of 100year vision of a company. 100year vision all right. Well have you back next time to see how its going in the next iteration. Andrew, congrats on the announcement today i appreciate your taking some time with us thank you. Thank you thanks for having me meantime, guys, s p hanging on to 3550 good wednesday morning its 11 00 a. M. Its 11 00 a. M. On wall street and squawk alley is live im going to fight them off i said the nation army couldnt hold me back theyre going to rip it off taking their time right behin my back