Transcripts For CNBC Squawk On The Street 20240712

Ahead . A delayed launch, Rocket Companies sinking after reporting its first results as a Public Company, the ceo will join us in just a few minutes to discuss. And later Tyler Goodspeed as jobless claims come in under consensus and post a new low since the start of the pandemic. A lot to work with today, david and melissa, as we watch that intraday period yesterday where we saw tesla down 10 , for example, worst day for a moment there since early may, david, and then the buyers came in and we will see once again if that happens with some of those names like tesla down about 6 before the bell. Yeah, well, listen, im glad we have melissa with us today for so many reasons but one is because theres nobody who knows more about this company or certainly has talked about it as much as you guys have on fast, melissa, for obvious reasons as it has soared over the last few years and last few months have been truly extraordinary we keep making comparisons to the late 90s which we all know well and remember that period well and mike santoli was just doing it also. Tesla is the name that so many people come back to as a sign of speculation in the market just given the incredible markets, there its 1200 times earnings or 73 times revenues, its a bit lower than that now giving yesterdays pull back and 63,000 vehicles delivered over the last year, but here we are. Here we are it certainly is a symbol of that notion of buying into future growth especially when Interest Rates are so low thats critical. When you make that comparison to the 90s Interest Rates were nowhere near where they are today. With the ten year sub point 7 at this point that enables the markets to levitate higher and have higher pes. That said specifically for tesla obviously its in a sector that has had a lot of speculative enthusiasm, shall we say, when you take a look at how neo has done, how nikola has done, plug power, workhorse, all of these names which by the way are also favorites among the robin hood investors. They have all seen this sort of lift to all boats on the back of the enthusiasm for tesla when you hear Baillie Gifford the largest tesla shareholder aside from elon musk saying its going to cut its stake and even if its simply to rebalance its portfolio because of teslas magnificent run and its a huge percentage of their portfolio now, they had to trim it back, that sort of underscores this notion that, hey, this run is all the way up here, maybe its time for some prudent Portfolio Management at this point carl . Yeah, indeed. And we are looking for signs of rotation, melissa. Interesting to see some of the large growth etfs, the vanguard, the vug, the i shares, core s p group seeing their biggest outflows on record for the month and were starting to monitor whether flows mean anything at this point for overall value to melissas point about robin hood traders and have in evs, im sure at some point today we will talk about quantum scape, this bill gates backed battery spac which would be the latest spac deal in autos since nikola back in june. We will phil lebeau earlier i was listening close to his reporting on that. As melissa says, these have become a socalled favorite of what is this growing cohort or one that has certainly grown shubs shael over the last few months of individual investors back in this market and reminiscent again of the late 90s that way given the significant participation of so many people who worth otherwise had not only that much about the stock market and may not have known that much about the stock market when investing in, robin hood or etrade have seen enormous growth. As you point out, carl, that area in particular, ev and melissa went through a lot of the names have seen have seen that you know, melissa, you cant blame you talked about the large shareholder there obviously, you cant blame them for their Asset Allocation decisions there. No. My god, what a great investment thats been for them. Id point out musk whose net worth was almost 115 billion a couple days ago as a result of an 87 billion increase just this year and Larry Ellison dont orget, the rich get richer here, dont they . Larry ellison made an incredible investment not that many years ago in tesla as well, if you recall, and he has benefited greatly from that also just kind of trying to go through the various people and investors who benefitted from this incredible run. Cathy wood over at arc invest some of these investors have come under scrutiny because theyve trimmed their investments, its Portfolio Management they cant allow one single position this their portfolio to exceed a certain percent and so by mandate theyve got to do that the request he here is as we start to see undercurrents of a rotation, we saw that yesterday and weve this in fits and starts over time t hasnt really taken hold, per se, as a lasting trend because weve always seen investors come back and bid up tech shares higher, but in yesterdays session as we hit those record highs it wasnt tech leading the charge and, carl, you had mentioned tesla pairing its losses yesterday, paired its losses but still finished the day down pretty sharply. It was a russell 1,000 value index up 1. 4 in yesterdays session. We saw utilities and financials do really well so the question here as we sit here premarket and see these big cap tech stocks like an apple, a microsoft trade lower that all the chip stocks are under pressure this morning because of the reports that china is going to do more to foster domestic chip industry. We have to wonder whether or not we will continue to see that rotation especially as we head into the election. Thats true and whether or not that rotation means that banks and yields do better we will talk about the deutsche upgrade of jpmorgan and bank of america. Facebook for the first time limiting new political ads beginning the week before the election Mark Zuckerberg saying the company is starting to plan for the possibility of a president ial contender either declaring victory or declaring the election count somehow rigged he was on cbs this morning talking about just to whom those restrictions might apply take a listen. I certainly think that anyone who is saying that the election is going to be fraudulent, i know thats problematic and i think additional context needs to be added to that. Its not just anyone, its not just a regular joe, its the president of the United States. This will definitely apply to the president once this policy goes into place and will apply to everyone equally. So an interesting evolution you could argue, david, in zuckerberg and facebooks thinking about the legitimacy of advertising, especially leading up to the hours where people actually go to the polls doesnt mean you cant run an ad at all, you just cant institute a new ad one week prior to the vote it is going to be it would seem a very crucial period we all know at this point the importance that the facebook platform plays in terms of dissemination of information and conceivably helping people make decisions around things like which candidate they support we all can look back at the 2016 election for evidence of that. You know, its been an evolution on the part of mr. Zuckerberg to a certain extent, he gets criticized from the right for not allowing enough conservative voices, he gets criticized by the left for empowering the right. He is in a difficult position but its interesting to note they have made this decision twitter has been much more aggressive it would seem about policing things like inaccurate tweets even from the president clearly from that interview and interchange it seems they will be willing to not allow the president to make false claims on the platform at least during that period of time when they say they cant be rebutted effectively by the other side. I think if youre being criticized on both sides youre doing something right. We feel that all the time on our end, right, david, when you talk i mean, literally minutes, seconds after we had that tesla conversation i got a tweet saying ive been on the wrong side of this trade for a long time and ive been totally against it and on the other hand i got another hand saying ive always been pushing it when youre getting criticism from both sides that means youre not favoring either and thats something good for facebook, especially facebook had been slow to the game in terms of responding, twitter had been sort of at the forefront of being the arbiter of truth, so to speak, facebook didnt want to be the arbiter of truth for it to step in here and make this announcement i think has really shown you how far the company has come in thinking in terms of how to deal with these with these issues, especially an issue that had completely roiled them the last election they have to be proactive this time around. Yeah, we had dick costel of twitter and he argued for platforms including twitter and facebook that the degree to which they remove, for example, deep fakes or doctored vehicles, these companies are going to have to become in his words overzealous about removing them and that may mean some accounts are removed that dont deserve to be, but as dick said, david, people are going to have to get over that because the underreaction is simply not working right now. Yeah, and weve talked over some time about how many people facebook has added in terms of to their ranks to try to at least do something to police the site there are still as melissa points out plenty of critics who say it is far from enough on the part of the company in terms of its role here. It obviously says, hey, free speech, you know, we are not going to sit here and police everything, people have a right to express their thoughts and feelings so its still a gray area to some extent. I would assume theyre bulking up even more for this period were entering now a couple months before the election, the prospect perhaps as you pointed out, carl, and many others have as well of mailin voting, delaying the results to the extent we will not know who the winner is. Its going to be quite a period here that were entering into i think its fair to say, carl of course, we have talked about the impact as well on the stock market which we will talk a lot about more 61 days of course until the vote and early voting really Getting Started in the next few days so much news to get to, guys we will talk about rocket and their First Quarter as a Public Company, the upgrade of jpmorgan and bank of america out of deutsche upgrade of fedex, theres pvh, crowd strike and a lot more. Dont go away. Upgrade of fedex, theres pvh, 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. If i could, baby id how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. Shares of the quicken loans parent Rocket Companies are down sharply, you can see over 10 this morning this after reporting its first results as a Public Company. Rocket companys Ceo Jay Farner joins us now jay, i have to say in my experience seeing a newly Public Company print 3. 5 billion in net income is rare to say the least. Nonetheless, at least at this point, investors dont seem particularly taken with it any idea on your part as to why the stock is looking down 10 . Thanks for having me this morning. Our focus has really been where the stock price has gone since the ipo here just a few short weeks ago. We are up pretty substantially and q2 was a great quarter and q3 we think will be even better. You can probably help me understand the day to day trading of the stock better than i can help you, but the long term is where we will continue to stay focused on. I know you are, and to your point the stock did perform extremely well right after the ipo and sort of those days and weeks following and it may simply be the weakness is based on how much strength theres been to date again, because you point out your volumes were enormous, theyre going to stay there. I mean, how long can we expect, jay, to have a Mortgage Market like the one were in right now which we report on every day in terms of housing being so hot . Great question. As we talked about the Third Quarter our expectations that we will see continued growth, you know, were hearing that were going to see Interest Rates low for quite some time. When we think about demand right now, the demand for refinancing and purchase Third Quarter will probably be one of the best quarters we have had remains strong so really our mission right now is to continue to grow capacity. Were up to over 100,000 clients closed in a month and our goal is to get to 40 billion a month closed by the end of the year. The future looks very price and for us its about a platform, about growing out that technology and continuing to take care of our clients with world class service. Youre certainly optimistic, jay, but in terms of your commentary suggesting that volumes may follow more seasonal pattern that tli florida may be some seasonality which is typically weaker in fiscal fourth quarter, how much of that is being conservative considering the high volumes we have had and maybe the expectation that there is some pull forward of housing plus the seasonality factor actually, i think that the purchase is going to be remaining stronger through the end of this year weve seen that so far and were looking for inventory to increase a bit i think our comments were more reflective of the Natural Cycles we see year in and year out especially between christmas and new year but as you know with Interest Rates the way they are today and the 30 year fixed and the threes people will be refinancing their homes regardless of the time of the year and thats going to mean for a great Third Quarter and a strong finish to the year. Speaking of which, jay, i wonder, there is a view on the street among some who are watching the banks that the bulk of loss reserves for the year is either close to being over or may already be over if you are convinced that macro strength is returning. Do you have any color on that . No, i dont have a lot of color on how the banks are performing from a loss perspective or reserves. From our we watch forbearance and were seeing our forbearance rate continue to drop which is great news i saw you reporting jobless claims as well so i think overall real positive feeling that Banks Companies are positioned well and theres a lot of bright side or upside that were going to experience as we get into the second half of this year. How have your lending standards been, jay, compared to, say, six months or a year ago . Im wondering if there is any sort of opacity in the amount of data that you have what struck me was that there was a comment from the Capital One Financial ceo saying they dont have a really rigorous handle on the level of unemployment amongst their borrowers, that its just unclear, that many people are at certain certain levels of unemployment you mentioned forbearances forbearances dont get reflected in Credit Scores im wondering how you adjust for these things that may not have existed before. Yeah, great position. The lending standards are the same as theyve been, in fact, in a few areas a bit tighter than they were six months ago and so we feel great about the credit quality that were seeing, the income quality and the loan to value mortgages as weve seen Property Values continue to increase as i mentioned from a forbearance perspective i think this reflects the servicing approach that we take proactively reaching out to our clients, ensuring that theres somebody there to pick up the telephone, take their call or their email and in talking with our clients, our book looks in very good shape. I think with the credit criteria thats being used today, you know, the mortgage interest is in a nice spot right now you also, jay, have put out a longerterm target, 25 market share by 2030. Why share Something Like that with investors you know, i think its important to talk about where were headed long term because in this business the day or the week or even the quarter can be hard to predict. So when we think about our strategic focus, we think about what were going to be working on for the next year, next three years, next five years, next ten years. That sets our strategy the tech that were going to build, the marketing were going to be doing, the Client Experience we are going to be generating, how we grow our real estate business, auto business, all of those things are long term strategic plans and so giving that target of 25 i think helps investors think about what they can expect from the company over the long haul which is a better way at least for us in the last 35 years weve been in business a better way to focus on it than looking at it day to day or week to week. And finally, jay, back to the current environment. I noted than ott call you said 98 of your team is working from home still yeah. When do you expect people to get back to the office well, weve told our team members that they can expect to work from home through the remainder of this year, i think giving them certainty, especially with folks having Children Entering School and those types of things is really important. Were hopeful we will be bringing back a significant portion of our team members as we start 2021 and i think the really exciting thing and thing that helped us as you look at our q2 numbers is the ability to get that 98 from the office to the home in less than a few days allowed us to have a record march, which then we followed up of course with an april and may and have continued to do so. So that platform we have built allowing our team members to work anywhere remotely has benefited us through this process. The great news is even as hopefully we see the pandemic, you know, solved for in the coming months, that work from home option now will give us flexibility we didnt have before right not necessarily good news for even a detroit which of course you and your founder as well have been so focused on helping to build up. I mean, these urban areas. When i hear a company like yours say we can keep having people working remotely for a long period of time because we are not losing productivity is that a bad signal for detroit or new york or these other places for detroit i dont believe so here is why, people want to come to the city. Our demand for the team members who say i want to be back in the office, back in the city experiencing the city is strong. The office will look different, we will probably have more collaborative space, but people are itching to get back here to the city, experience the city. It will be different, i believe we can make it better and so we will have the best of both worlds, giving people more flexibility from a work perspective but also enjoying the city and that will be helping propel the longterm growth of detroit and other places across the country. All right amen jay farner, thanks for joining us appreciate it. You bet thanks for having me take a break here. Get to all of the vaccine therapeutics and testing news we have gotten this week including some new headlines this morning from pfizer. We will dig into jobless claims, a bit better than expected what does that mean for the jobs number tomorrow . Futures are weak back in a minute 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. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. Take a look at shares of carnival on the move premarket after they announced their italy based cruises will resume operations this weekend followed by one of its german based brands in early november they have have adjusted itineraries. That stock it up 6 ahead of the open nclh, rcl the other cruise lines are up sharply premarket dont go anywhere. Squawk on the street will be right back announcer the opening bell is brought to you by nuveen. A leader in income, alternatives and responsible investing. Futures are weak on this thursday morning, but some of the names that are going to be up at the open have a thread of retail running through them. Costco is a good example as august comps come in right around 13 , we were looking for something just north of 10, thats a bit of an impressive move out of costco pvh, sales were hindered by store closers, did manage to turn out a better than expected bottom line, that will open slightly in the green about 1 melissa, fedex as all the these kids are going back to school, watching for the consumers ability to continue to spend into the fall. Baron berg says were going to start to see a split between the upss and fedexs of the world they take fedex to buy the fall will come with shipping surcharges that the bulls could argue could bolster the shipping companys bottom lines. We saw that when they announced the pricing increases akin to holiday price increases but earl earlier in the year bag back to costco i thought this was an interesting quarter because the growth for costco was really international, it was uk, it was korea, it was in those markets outside the United States it was the ticket size so each basket was bigger for costco, but what was key was that the biggest category for costco which is food, that seemed to be moderating and that sort of suggests that perhaps comps will be tougher Going Forward and we already know what food prices have done in the past few weeks. Eggs, lunch meat, you name it. So we look at inflation, food and energy, but anybody who goes to the Grocery Store knows what the deal s theres the opening bell and a good look at breadth this morning as we Pay Attention to overall levels. 3559 i see that savida at b of a raising her target but a wide range of outcomes between the bull case and the bear case. Over ten years, though, as she looks at valuation trends 5,200 s p in ten years out of b of a today, pretty interesting note. In ten years we can come on and have savida on and see if she was right. Hold her feet to the fire. In ten years. I love when analysts do some of these longterm projections because even a year seems like an impossibility to actually forecast, especially in the year like this, david. Yeah, i dont know how any of them do it a lot of them unfortunately are having to do back flips in terms of their price targets, im sure you saw the peloton price target that was raised by i dont even remember who numbers that you could never even have imagined to your point, melissa, as little as a few weeks ago let alone a year ago as we watch peloton shares down a bit this morning. Starting to see a little bit of rotation out of these huge momentum names that weve seen of course, led by apple right now, at least on a market cap basis which opened the morning lets call it down a little over 2 after being lower yesterday and is now only up a mere 74. 7 for the year but its market value has fallen below 2. 2 trillion two days ago it was above 2. 3 trillion not sure where its cycling to these moves have been so short lived in terms of what appears to be at least some rotation in the market that then never really fully rotates in any way. Yeah, there are so many calls for, oh, the start of the value rotation, right, and then just as quickly as you can get the words out of our mouths or investors can get the words out of their mouths its over. We see investors come back in and go to the old playbook of growth stocks, Technology Stocks, bidding april over 2 trillion in market cap but it is worth noting today that we are seeingstrength in the financials so this is follow through from yesterday. We do have we do have the Deutsche Bank upgrading jpmorgan as well as bank of america to a buy rating seeing a little bit of a steep thing of the yield curve and this motion, guys, jpmorgan put this out earlier this week, we had Mark Kolanovic the strategist at jpmorgan outlining where he thinks there could be a value rotation under way especially as the election comes and if donald trump wins es in not meant to be a political conversation but simply just a strategy conversation that there will be this very strong rotation into value and that investors could get caught flatfooted unless they start rotating ahead of that so this is worth watching to see if this actually holds yesterday as we mentioned utilities and financials were the Leadership Groups in the markets. We will see if that works again today. Yeah, i saw the president mention the kolanovic note on the tarmac the other day although he said it was Morgan Stanley which i dont know if marco minds but definitely was jpmorgan with that call about the trends tightening for a trump win and investors potentially being out of position guys, the leaders this morning, we mentioned pvh and melissa mentioned carnival, but a lot of travel, a lot of leisure delta, the airlines are doing fairly well. I wonder, david, if this is sort of putting the cap on the week weve had when were getting news about a very quick abbott test and the roach test and glaxo trial and novavax last night and the fda telling cities and states to start planning for distribution to Health Care Workers in late october or early november which of course was the big news last night. Yeah, that emergency usage has gotten a lot of peoples attention potentially and at least some medical professionals certainly voicing their concerns from what ive been able to read about the idea that any vaccine would be approved in that way as opposed to going through the full phase three trials and receiving the rigger of the fda and then being out there in the market which could conceivably according to dr. Fauci still be as soon as perhaps by the end of this year. So not that many months. But, you know, emergency usage would potentially be pointing to an earlier use and, again, lets not forget particularly the mrna candidates, we are we are talking about moderna, a few others, melissa, these results that weve seen quite positive are on an extraordinarily low population when you move into vaccinating tens of millions of people the last thing of course that you want to do is get anyone sick who wasnt sick to begin with. So, you know, you do have to wonder where this comes out and whether or not they will be allowed to just fully move through phase three and, therefore, perhaps gain more confidence in the population at large that whatever vaccine we get or hopefully a few of them are safe and effective. But the calendar, the calendar really works in the favor of this motion that there will be some sort of emergency use vaccine soon the fda has a very important virus vaccine schedule for october 22nd, moderna this morning announced its virtual r d day will take place on september 17th there is a great expectation that there will be interim results at least from moderna and the pfizer and bio en tech candidates sometime in the next month and a half or so if you read the New York Times article, they had that article about the cdc advising local governments to get ready, they are saying that if you take a look at the specifications that the cdc had mentioned that it does sort of if you connect the dots it draws a line to moderna as well as pfizer and bio en tech as being the vaccine a and vaccine b that were mentioned in the memos given to states we are seeing moderna shares trade higher than more than 3 , 3. 6 pfizer not getting too much of a bid but we did see the big run on pfizer prior to the news of its vaccine so maybe not entirely a surprise there. Yeah, well watch that. Obviously theres lots of things that you could potentially see reopen if a vaccine were approved and as david says widely accepted by the public. Amc is going to be opening as we know 70 of theaters this weekend, a couple actually in new jersey getting announced today, but, david, i guess its the secondary thats weighing on the shares down about 2 but theres that to watch and then theres also, you know, we have tenant already playing and a trailer for no time to die the latest james bond and the Hollywood Reporter does a nice piece about what they call the studio marketing machine roaring back to life in their words which would be welcome news to a lot of those in the media business. It certainly would, yeah, to your point of course about amc we are talking about 30 million shares of common stock that the company did issue at this point. Adam aaron sounding positive about the future potentially for that company carl, when it comes to production, of course, lets not fore bet about tv, interesting journal story today in terms of advertisers looking for the ability to cancel a larger percentage of what theyve committed to if, for example, the nfl doesnt succeed in pulling off a season or more College Football falls by the wayside. Not to mention what melissa is going to be a very slim offering of new shows in the fall here for all of the Major Television networks and Cable Networks at this point given the inability to really produce over the course of the last six months and theyre just getting back to it now so, yeah, maybe we will get a couple of movies but we dont expect sort of any sort of outpouring here of video content anytime soon. And thats a problem not just for the networks obviously in terms of the ad dollars but also all the streaming services that have benefitted from the pandemic sitting a the home and have gone through netflixs library and think whats going to come next . We dont know whats going to come next. There has been a production halt in hollywood that the slate of new shows that were expected may not actually come and you have to wonder whether or not thats going to hit the numbers for all these subscriptions. Yeah, well, we could all use some fresh stuff to watch. Guys, tesla down 5 and as bespoke says today its only been down 4 on back to back to back days three times in its history. We will watch that in the meantime lets get to some of the other movers with our bob pisani today hey, bo bo be. Hello, guys happy thursday finally a breather this is a welcome respite, believe me, a lot of frothiness, frothy stocks, down today. Moving into some other sectors lets take a look at whats moving here. Youve got banks up today, you have a lot of the regional banks moving modestly on the upside, industrials are holding in there, health care is flattish, energy flattish as well and of course semiconductors notably weak, a lot of concerns melissa was mentioning on issues on china, maybe theyre helping to develop their own internal semiconductor industry, thats a legitimate concern and legitimate fear. I like that were seeing a lot of the frothy stocks, i mentioned yesterday stocks that were rsis were over 80, names like apple or nvidia or zoom video or sales force or tesla or crowd strike here, these stocks were ridiculously frothy and today they are all down 2, 3, 4 even 5 percent thats a good sign that naturally should happen when you get in this kind of overbought territory you cant go up every single day for weeks on end, it just doesnt happen and today youre seeing a bit of a correction upside movers, the travel and leisure is doing better obviously, the vaccine and the treatment story is helping pvh was good numbers, leisure wear sales are up, no surprise there, and you see some of the regional banks like zions on the upside a lot of talk about the increase in options activity and futures activity there has been an increase in call buying but this is natural and understandable equity futures cme up 64 year to date compared to last year. Equity options up almost 50 why . More retail buying out there, but, remember, we have had a rally going on, thats pretty notable for a while now and there is a cause and effect here the cause of the rally has been negative real rates, the fed liquidity and an improving economy, slowly improving economy. That has an interesting effect the market is going up and there are people at the upper end who are engaging in more call option activity, a lot of call buying, particularly deep out of the money call buying. So that remember the cause and effect here. The cause is the market going up, the effect is some people out there engaging in more option activity. And some of that option activity may be contributing to some of that froth kbreeness but just dont confuse the cause and effect another thing im getting a lot of calls on the last couple days, ipo traders, boy, they are expecting a mountain of stuff coming and they are excited about it and they should be. You wouldnt have believed this blee months ago but the ipo business is doing great, year to date 111 companies, 37 billion has been raised. 2014 it was the alibaba year they raised 85 billion back there. We have a shot getting close to the best year since 2014 and that was alibaba was a good part of all of that remarkable come back for the ipo business the reason of course thats happening, you have the big three things going on here, first you have a market rally going on from the bottom, the s p is up 60 from the march 23rd bottom but the ipo market has been on fire from the bottom the ipo market is up 135 . The ipo etf is up 60 this year, so its outperformed the overall market those are your two factors then you have the whole work from Home Business this has been a boone for the Enterprise Software companies guess who is coming public most are Enterprise Software companies to take advantage of the fact that Everybody Needs to upgrade their systems. The retail companies, the banks, the doctors offices, Everybody Needs to do that if you look at the recent ipo price of some of these companies, vroom and Rocket Companies and lee auto even, electric vehicles, jamp an apple platform manager have been great all tied to the tech ipos. Whats coming in the next couple weeks, snowflake, unity software, good rx, j Frog Holdings a Software Update platform, sumo logic folks, its all software, Enterprise Software is leading the world and you will see a lot more about these companies in the next couple weeks. Guys, back to you. Bob, we will talk to you in a little while our bob pisani we will take a break here. Is a rotation in place we will find out the banks are up almost 1. 5 , yields not necessarily ratifying that move. This is the biggest drop at the moment for the s p and nasdaq since august 11th. Back in a minute at massmutual, we know that traditions matter more if theyre celebrated with the ones you love. 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And ism services, the pmi coming out in about 15 minutes and that of course a more seasoned read, that goes back to 97, markets go back to, well, they celebrated their threeyear birthday in august carl, back to you. All right rick, thank you. We will see you in a little bit. Rick santelli. Jobless claims earlier this morning did come in under consensus, 881,000 versus an expected 950,000 thats a new low since the start of the pandemic the ajting chair of the president s council of economic adviser Tyler Goodspeed is with us this morning. Good morning to you. Good morning. Definitely trending in the right direction although theres a lot of concerns about the methodology with claims, the degree to which census might color the jobs number tomorrow whats the expectation at the white house . Well, we were definitely very encouraged by the Unemployment Insurance claims that were coming out today and the continuing claims we saw 764,000 fewer americans in insured unemployment for the week ending august 22nd. That was a tremendous number it certainly bodes well for the august Employment Situation report coming out tomorrow you know, we track a lot of High Frequency data, credit card spending, various color that we get from the likes of visa, and in general the view has been that august has not been as weak as some had feared given the expiration of the those enhanced unemployment benefits. Does the white house have an explanation as to why that might be true . Well, for one thing, as we just saw in the Unemployment Insurance claims numbers the labor market has been stronger than expected, this was the fifth consecutive week of sixdigit declines in continuing claims right now the expectations on the street are for private Payroll Employment growth of 1. 3 million in the month of august, thats certainly going to support Consumer Spending and as you said we saw in retail sales data from the credit cards that actually retail sales are now above their february 2020 levels and then also an additional level of support for Consumer Spending was the continuation of enhanced unemployment assistance by the federal government thanks to executive action by president trump. So the take away for some because of those better than expected numbers is that perhaps theres less urgency to put a compromise together for further aid on the hill. Whats the view on that . Well, the president absolutely wants a Bipartisan Legislation that he can then sign into law. It was in the absence of that movement on the hill that he proceeded with executive action. I would just like to note that of all the people in this town who could have acted to provide a continuation of enhanced Unemployment Insurance benefits, who could have acted to provide protection and relief for student borrowers and american renters, who could have acted to boost takehome pay for americans who continued to go into work in the face of present challenge and risks, of all thev taken action on each of those fronts, only one person in this town did that. Tyler, finally on trade the trade deficit in july is almost 64 billion, the highest level in 12 years. Imports up by a record the view among some is the trade war the president said was easy to win is not paying off why is that . I see we have a different interpretation of the trade numbers. It shows a recovery in global trade. Exports grew the u. S. Is a Services Oriented economy. Services have not been rebounding as quickly as goods were going to expect the goods deficit to widen as things recover. When we look at the national and income product accounts data then what we actually see is that net exports as a share of gdp in the United States have improved in 2017, 201, 2019 and 2020 relative to the proceeding 8 and 16 years as a share of gdp, net exports have improved to negative 2. 8 during the 3 1 2 years of the Trump Administration this is an average of negative 3. 1 and almost negative 4 during the preceding 16 years. Our number one read in the trade numbers is this is a sign of a rebounding u. S. And global economy. Well watch that. Obviously, tyler, a lot of numbers to get to, and the big one tomorrow we appreciate it very much good to see you. Thank you very much lets look at the nasdaq here of the major three. This is really taking the hit. Taking a leg lower one by 1. 75 the lowest level since july 23rd. A 3 decline in apple. 2 plus inicso mroft and Semi Conductors stay tuned well be back in a moment. Ght ls 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. Into strategies for the road ahead. Tmobiles new offer on iphone 11 pro is even better on our most powerful signal. Switch and get two new lines of unlimited for only 90 and 2 iphone 11 pros on us. Only at tmobile. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. Got to watch tesla today found some Quick Support again right around 405 after the open. But both for tesla and apple thats three days of declines at the moment one reason the nasdaq is having the worst day since july 23rd even as the dow closes the gap from the february high to about 1. 2 . Back in a moment before money, people 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. Tmobiles new offer on iphone 11 pro is even better on our most powerful signal. Switch and get two new lines of unlimited for only 90 and 2 iphone 11 pros on us. Only at tmobile. Got to mention robin hood. Facing an esc probe. Could cost the upstart Brokerage Firm a fine exceeding 10 million. Between this and outages over the summer its been a tough couple months for robin hood what theyre accused of doing is illegal, payment of order flow, but its the notion of not disclosing it clearly prior to 2018 when it made up a big chunk of the revenues. If they settle and they dont have to admit or deny anything that could be a clean way to get past this. In the meantime, were continuing to watch the nasdaq closely. We mentioned this at the top this rotation we saw starting in yesterdays session away from tech nothing into the value cyclical issues. Regional banks up strongly energy up strongly energy by the way, stocks up despite crude oil being lower today on fears of demand softness we have the likes of exxon mobile up by 2 and the reopening trade is on fire of urging states and local governments to get ready to deploy a potential vaccine to front line workers, nursing homes, et cetera, by the end of october, early november time frame. That lit a fire in yesterdays session late in the day, and were seeing that carry over into todays session something we would have talked about before the pandemic the algorithms that power them seems to be in play more today than does the new phenomenon that we talked about so often, the power of the Retail Investor on platforms such as robin hood. Well see how long it lasts but perhaps the machines have a little more control today. Yeah, and one last thing before we get to ism is the jewel announcement weve seen talking about exxon, companies trying to retrench, maybe pull out of certain countries as the question is asked again today whether the investment in jewel was one of the worst since aol or time warner before. Luckily for them, it wasnt anywhere near the size dont get me wrong if my memory serves it was over 12 bill it was a big number. But it is not a good deal for them in any way, shape, or form. I think we can safely say that the safety concerns that jewel faced fairly early on after the investment, they never got the approval, remember, from the doj to take voting control the whole thing was a nightmare scenario for that company. Yeah. Yeah although the shares now reflecting the news at the moment good morning welcome to squawk on the street. Im Carl Quintanilla with david faber and melissa lee. Now to santelli. August read looking for a number around 57 a little bit light, carl 56. 9 56. 9 that follows 58. 1, at least up to this point, thats unrevised. We continue to see most of the numbers improving. Market improved more so this was a little light, but for all practical purposes from a sequential stand point, its a step back. Rick, thank you a road map today starts with tesla. Dropping once again today. Can you believe it tesla dropping again the stock seeing a correction with threeday losses near 17 the companys largest outside shareholder reducing the stake tech overall under pressure. Nasdaq seeing the worst drop since july 31st today. And tri vago pushing back against the call to work from home in terms of employment news for the week, adp, the jobs number tomorrow and today it was claims for color on that, lets get to steve good morning, steve. Good morning, carl. Thanks the number went down 8 81,000. Its a good move in the right direction. Theres a lot going on behind the scenes ending up with the latest data, 29 million americans receiving some form of benefit 881,000 compared to 1. 01 million theres a change in the seasonal adjustment factor that may be responsible. Continuing claims did fall thats a good number go back two more weeks to see how the pandemic unemployment assistance is going. Thats up. 13. 6 million. Thats the middle of august. Really big game right there. Leading to the total 29 million americans as of the week of 8 15 receiving some form of benefit thats up more than 2 million. Steven s Steven Stanley writing the bottom line here is 881,000 figures probably more right than last weeks 1. 01 million reading because of seasonal judgment is a better way to do it. Week to week basis results in the change in adjustment it should not be used as a sign of an improving labor market the number is lower. The seasonal adjustment is probably a better way to do it, the way the department of labor is doing it. We dont know until next week the trend and we have to catch up with the separate system, a separate program leading to the total, the 29 million americans are receiving jobless benefit now. Important point of the data point. The markets this morning, nasdaq and s p 500 hitting record highs the worst day since july 23rd. For more on todays market, we have guests with us. Barry, what do you make of this start to a rotation. It looks like a rotation when you have financials, energy, utilities, leading the way at the expense of technology. To an extent it does feel like too much money chasing too few ideas. Its hard to make the rotation from disinflation to reflation without there being some interruptions in the markets so i think its a lot of money, a lot of liquidity, a lot of algorithms that are saying these didnt go up lets buy them the other ones, they went up a lot. Lets sell them. Its almost like a computer driven rebalancing. Is that what you agree with in terms of the fundamentals the computers are doing it but what should you do well, the first 1,000 points on the s p 500 off the march lows we caught we missed the last 400 points here to the high 3500s this market feels frothy to us at 24 times our estimate for 2021 earnings which is 10 below the consensus. We have concerns going into the autumn in terms of virus news, vaccine news, political news, Even Economic news as far as the Consumer Service economy muscle memory for many investors is the fall is a treacherous time for investors a lot of people are pointing to the rise that weve seen and the volatility of the vix along the s p 500 making new highs are you concerned about that ann saunders had an interesting chart saying of 20 past occurrences, 17 of the oh kurngss where the s p 500 hit an alltime have happened in the late 90s its an unusual configuration for markets. We have to be cautious predicting what it means based on what weve seen previously. Weve only seen this once in the late 90s there are some things in terms of positioning, particularly in tech and how narrow the rally has been that echoes the tllate 90s. The fed is supportive for equity markets and very different to the late 90s barry, im trying to think back to some of your earlier calls in the summer. It seems to me that as i remember, part of your working thesis was to await the arrival of fresh either monetary or fiscal stimulus. Do i have that right, and is that intact . Has the log jam between the speaker and the leader in recent days done anything to change that when you think about it the first 1,000 points i referred to auz a combination of fiscal and monetary policy. We played that rally there were good reasons. Investment grade spreads came in dramatically now we have concerns we know that price level targeting are allowing inflation overshoot by the fed is here thats been coming for two and a half years since it was done in a power point, explaining the price level targeting concept to a presentation so i think a lot of the good news is embedded in the market now theres angst about the autumn we would schieffhare the concer going into the fall. How would you recommend investors position for a trick you autosnum. One of the concepts is the early signs of some rotation to value. Thats something we think investors are looking for money to work in the equity market they should think about the extent of how narrow the rally has been its been driven by the faang names. If we see a more constructive environment whether its driven by traditional Economic Data thats solid or news for around the vaccine, then potentially we could see the value outperform thats the potential for more fiscal policy that could see some sectors that lagged due to industrials catching a tail wind barry, gregg, thank you to you both thank you meantime, drug makers ramping up their Clinical Trials of their Covid Vaccine candidates fresh news today meg has that for us. Good orning, meg good morning, carl. Quite a lot of fresh news. Lets start with two of the largest flu vaccine makers they partnered up to work on covid19 saying today they have started human Clinical Trials of their vaccine for covid19 theyre enrolling 440 Healthy People they expect the first results in early december and will start the phase three that month if all goes well and the vaccine looks safe and effective enough for approval, theyll seek that Regulatory Approval in the first half of next year. Meanwhile they are saying theyre scaling up manufacturing with a goal to be able to supply a billion doses in 2021 and remember, this is the vaccine that received more than 2 billion in funding from operation warp speed now just starting human Clinical Trials just getting news out of a pharma briefing from a European Pharma Group from the pfizer ceo. They are in the lead along with moderna in terms of phase three Clinical Trials. The ceo saying their Clinical Trial has enrolled 23,000 of the 30,000 participants and they expect to know if the vaccine works by the end of october. Meanwhile they are simultaneously ramping up and preparing the application for fda approval theyll be able to file as soon as they have the data. The cdc is telling governors to be prepared to distribute a vaccine by november 1st. Heres the timeline when when the phase three trials have begun. Astrazeneca just beginning the trial in late august were expecting a phase three trial this month from johnson johnson. Going full speed ahead toward getting the data potentially before november 1st. Guys meg, lets start with the pfizer news. Emergency usage. If they were to successfully end the trial at the end of october and submit to the fda, what would the typical timeline be or what is the expected timeline for the fda to say safe and effective and this can go on the market well, the typical timeline and expected are completely separate in this pandemic scenario right now the fda has scheduled an Advisory Committee meeting for october 22nd to look at covid19 vaccines. Right now we dont know if thats going to be focussed on any one vaccine or just to talk about vaccines in general. But a lot of people in the industry are paying attention to that date. Because if the Pfizer Vaccine data are ready or if modernas are ready, they havent been aggressive with thymelines and they could discuss the data at the october 22nd meeting an advisory makes a recommendation to the fda. You would expect the fda to move quickly once they have the data and theyre probably working with the drug makers to evaluate everything as it comes in on a rolling basis. Theyll be prepared to act quickly. Normally these things take months, if not almost up to a year to review but we are certainly not obviously in a normal scenario i need to ask about another date, september 17th moderna announced a virtual r d day. Are we expecting interim information . That would be interesting if they would be ready to give data at september 17th. I havent heard speculation they set that date for that purpose moderna is working on multiple vaccines and they want to give attention to them as well. I expect that if they had enough information to give an interim update on any kind of efficacy data, they would give it immediately rather than waiting for that date. All eyes will be on the meeting. Anything they say in terms of progress in that trial will be very important and meg, finally on this idea of emergency usage, prior to the fda giving approval but potentially when weve seen some data, what are you hearing in the people that you speak to in terms of the likelihood of that and whether or not it would be accepted generally speaking by the public at that point such an important question. It is expected that the first clearance for a vaccine would not be a full approval necessarily but probably an emergency use authorization. The same kinds of clearances weve seen for all the diagnostics for covid19 this is a way to get things out quickly before you have to go through a much more onerous and larger and longer lasting approval process and whats expected is that an eua, an emergency use authorization could be given for a small sliver of the population, people at high risk. And theres not enough supply potentially by when the authorization is made for the vaccine to be approved more broadly, to be used more broadly. Thats likely what well see this fall if the vaccines proved to be safe and protective in the trials. And theres a lot of concern about the communications around this clearance, because people already are his about the about vaccines some folks in the country. And also people are worried about how fast this is going and, of course, the proximity to the election and all the political pressure were hearing about around this as well. So many concerns there yes and high driving while intoxicated chloroquine was emergency use and then revoked after by the fda thank you for your great reporting. Thank you coming up, Michael Jordan joining draft kings as an advis adviser. He joins us next wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. And tailored recommendations. If i could, baby id how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. Draft kings joining forces with the chicago cubs for their First Official and exclusive Sports Betting and daily fantasy partnership. Of course, a day after announcing Michael Jordan will be a special adviser to the board. President of the north america operations joins us this morning in a first on cnbc interview matt, good morning what a week youre having. Good morning. Thanks for having me its been quite a week leading up to the start of the nfl season for sure. Yes and as someone from chicago, this is pretty exciting. You say youre looking forward to making our presence felt in and around wrigleyville. What does that mean . Draft kings is now through this partnership with the chicago cubs the official Sports Betting partner of the cubs. What that means is were going to collaborate together on building hopefully one of the best sports books in the country within a five block perimeter of wrigleyville were working hand a hand with the illinois regulators, the city and state to develop that plan and dwaygain approval. We look forward to bringing it to market. The cubs are a storied franchised thats beloved throughout the country and especially in illinois which is one of the biggest most important Sports Betting markets in the country the partnership is essential to our success in that state. Can you be more specific in a timeline about chicago and the degree to which it expands to other franchises as well well, i think the most important aspect is we want to build great relationships with the regulators, the city, state, and build an additive world class experience in the heart of wr wrigleyville we want to build good relationships in the city and we want to be embraced with welcome arms in the city i couldnt help but notice the move up in the stock yesterday on the news of Michael Jordan you say hell provide input on inclusion, equity, belonging, Marketing Activities give me an example of what you see mr. Jordan adding value on or how specifically he may do that yeah. Who wouldnt wouldnt want Michael Jordan around the table talking with the board, helping with initiatives throughout our company . Hes obviously the top of probably everybodys list of marketing geniuses, branding geniuses, who youd want the collaborate with as the person who is running our marketing brand operations, et cetera, who is a better person that you could sit and bounce ideas off of were incredibly excited to have him around the table were just Getting Started but i think its going to be a tremendous additive piece to the overall success of draft kings over the next several years. Is he going to be in ads for draft kings . In yesterdays session the stock added about 800 million in market cap on the back of use that mj was going to be a special adviser. Im wondering what youre getting aside from that 800 million bump in market cap i think were going to work hand in hand with michael on strategic or business decisions. Hes a team owner in the nba that has obligations that being said, every way we can work with michael in every aspect, were going to be doing that what can you tell us about whats going on currently . We have basketball up and running. The prospect of the nfl coming soon some sports. Baseball are you seeing a lot more activity on the platform and do you expect it to continue and or ramp up toward the end of the year yeah, absolutely. This is an unprecedented year. Theres sports like nba that are in season right now that last year they wouldnt have been in season in august were seeing tremendous activity around baseball, nba playoffs and right now were ramping into what is always the peak of every year week one of nfl is the biggest activation of the year for draft kings. Were excited about what were offering starting with the 100 million Golden Ticket give away. Every american can create an account and get a prize of 5 to 25. Thats a top of the interest for draft kings and we can stand behind our product Sports Betting in the markets that were live were really excited about what we have to offer throughout the nfl season starting with week one coming up in a week from now. Thats huge when daily fantasy started catching fire a few years ago, people were telling Cautionary Tales about how policy changes can happen very quickly and burn a lot of people. Online poker was the example most gave. I wonder if you think the industry has escaped velocity where the rapid reversal in policy is untenable for regulators at this point its regulated in 20 or so states right now theres laws on the books around daily Fantasy Sports regulation and most states have various skill gaming law that regulate or cover what were offering no, were not expecting any sort of change on that front. Its a beloved product in the United States. Tens of millions of americans are playing Fantasy Sports every single year. And i dont see that ever changing its an extremely popular way of getting closer to the sports and games that americans love. Youll bring jordan on next time i hope so i will hang out with Michael Jordan any time he wants yeah. Okay david and i might come into the office for that one if you can work that out. Yep matt, thanks. Congratulations. Talk to you soon thank you very much have a good one. Now, lets get to our etf spotlight. Consumer staples, xlp. One of the holdings, campbells soup beating on Unprecedented Demand amidst the pandemic they also expect demand to decline in the current half of second half of the fiscal year its trading down by 2 . Closing bell will have an exclusive with theeo tay cod squawk on the street will be right back take a look at the chip stocks qualcomm and broadcom among the few of many stocks feeling the brunt of the tech meltdown all down about 3 or more. This on news that china is going to do much more to foster their own domestic Semi Conductor industry, and that could be at the expense of u. S. Economies. Sky lark down by about 6 . Well keep an eye on this and the broader tech selloff on squawk on the street. Stay with us 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. Welcome back heres your news update. President trump telling people to mail in their ballots and then try to vote again in person to test the election system and make sure their vote is counted. However, casting multiple ballots to illegal in los angeles the city council declared a fiscal emergency and is furloughing workers. The mayor is expected to approve the plan its meant to reduce expenditures in massachusetts this happened in june more than 100 patients had to be evacuated and as of today that hospital has yet to reopen and tom severe died. Known as tom terrific he led the mets to win the 1969 world series he suffered from dementia and more recently covid19 he was 75 years old. You are up to date thats the news update this hour melissa, back to you thank you, sue. Tesla shares are seeing a correction this following teslas largest shareholder announcement citing portfolio restrictions also the announcement earlier of a major secondary share sale for more on this were joined by guests collin, how do you assess the two pieces of news putting pressure on the news on top of December Tesla being on the wrong part of market that seems to be cycle away from growth well, weve seen the shares rally 70 after the announcement of the shares. Weve seen salvation it doesnt surprise us it seems healthy for the stock these are a couple of small catalysts that i think were not unexpected for the stock certainly trimming around mandates for investors isnt unusual. Also the companys supporting a balance sheet. Also a little bit of a change for them from the strategy its taking advantage of dynamics and well see how they wrap it up and what price they wrap it up i think theres plenty of good news for the capital as they go forward. Joe, how do you think about the company, what it seems like a change in position elon musk said in the past the company did not need to raise capital. That didnt mean it wouldnt out of an abundance of caution, conservatism when it comes to the balance sheet. To be honest, i agree with him. Im going to suggest the following. I dont think tesla should raise 5 billion i think they should raise 25 billion. Theyve been handed this enormous market capitalization theyre a Growth Company if have to build a lot of factories over the next several years. Im glad to see them raising 5 billion. If they really wanted to put themselves in the drivers seat for the next five, six years, they ought to raise a lot more i think ceos including mr. Musk spend too much time demonstrating they dont need to sell stock, to be honest joe, how do you value the company right now . Lets call it a 395 million market value, but in terms of what youre looking at to base your future projections on, what are the keys for you well, what ive tried to do, and ive written about this, is to anchor to an outcome a couple years out. Yes the multiple on current year earnings is high ive said i think this can be a company doing 2. 5 million unites in 2025. And then i said about valuing that, i said hey, what if the companys valued on the same multiple as apple at that point . That got me to 1500 pre split and then i went to a market perform. I ran out of runway at some point, but thats how ive been coming out of it collin, the next calendar date is september 22nd, battery day. Theres an expectation of announcing the Energy Density of battery. What do you want to see out of that day we want to see more information around their cap and materials. About year and a half ago, there was a company. Were looking at geometry changes. In terms of the product, but also understanding the process technology thats supporting the changes. Obviously theres a lot of folks chasing this market now. Capital raised but clearly tesla has a long history of performance around the materials, and i think the expertise is highly defensive. Were looking for that information. Beyond that, were looking at how to leverage the expertise through the power train to really translate that Chemical Energy into propulsion well hear about that, and that may be a surprise for investors. Joe, would you say the pullback is worth buying tesla has had a history of offering shares to the public, and while you see initial softness, they rally after yeah. And look, were in a market performing now, well continue to reassess. I want to follow on the comments just made here the value comes from investing in future technology, and boy, this company is a long way ahead of everybody else in drive Train Technology and potentially making a big move in batteries so if they raise 5 billion, we hear theyre going to do something thats going to improve the Energy Density and their battery packs, then thats positive theres been way too much focus on the nearterm implications of the Capital Raising and not enough on i think the productive ways they can invest the money it sounds like you should be at a buy rating, the way youre talki talking. I downgraded it 1500. I felt smart for a bit were always reassessing well see. Thank you guys. Collin and joe thank you thank you nasdaq close to session lows as we look at almost a 3 decline. Lets get to dominic and look at what is moving this morning. Were watching right now a look at some of the at least bigger sized movers to the downside powering the decline to 3 looks at shares of docusign and zoom and tesla a sharp move to the up side. Theyre pulling back do do docusign down. Also take a look at the ones that really move the markets these are the nasdaq 100 large megacap stocks in that index apple shares down 4 right now. Microsoft down 3. 5 and amazon down 3 . All these stocks have been ones making near record highs in the last few weeks or so well keep a close eye on those. One other place seeing relative strength over the course of the last several months and again hit record highs the past week, the Semi Conductor industry. Look at nvidia and advanced micro devices. That chip complex has been at record highs now pulling back sharply those are the parts of the market that are driving this downside move. Well continue to watch that and see if it plays out in the afternoon session. Back over to you all right keep us honest on that thenext hour, pager duty share are down almost 30 after. Levels are going to take you back to june or so the ceo will join us on squawk alley in just a bit. Stay with us with just two months to go until the u. S. President ial election, a chief strategist breaks down the winners and losers in either outcome of the vote find out more on trading nation. More squawk on the street coming up. When the world gets complicated, a lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. Auto makers adjusting Interest Rates during the pandemic phil has what thats going to mean for buyers. Phil david, a lot of people took advantage of it when the pandemic hit in march and april. You see the zero percent finance offers going across the board in the industry, especially over longer terms 72 months in some cases for certain vehicles and as a result, new data from expeeron, they found there was Significant Growth when it comes to new auto loans. People rotating from leasing to buying new and financing it with a loan the average new auto loan jumped almost 4,000 to 3672. Theyre stretching them out longer it should be 5 years and 11 months six to sevenyear loans made up 35 of all loans and now were seeing growth in 7 to 8 year loans. Almost 5 of those borrowing are saying stretch it out to 85 months this is good news for the auto dealers. People are coming in whether its auto nation, penske, those stocks are close to auto highs and those auto dealers with a strong used vehicle spoent, were talking about car max, lit ya, sonic, theyre seeing their stocks responding well the bottom line is this. Youre seeing people taking out larger loans, stretching them out over a longer period of time and this means its going to take people longer before they have at least paid off enough of the capital debt there that they are not upside down on their auto loans there will be more people in the future going in, trading in their vehicle for another vehicle and they will be upside down on their loans. Interesting trend, phil another trend, of course, one i reported on is the proliferation of special purpose acquisition corporations one of their key targets being the ev sector. Quantum scape. It sounds like a sci fi series, but tell us about the latest entrant. They are focusing on ev battery production in particular, lithium metal solid state batteries. Thats a long way of saying longer range ev batteries. The potential here in terms of the Science Behind the batteries is enormous. You would have batteries that could go much further at a lower cost potentially but theres still hurdles that need to become overcome before we see this on a wide scale. Theres bill gates as a backer, saic, and volkswagen which plans to put some of the batteries in volkswagen electric vehicles starting in 2025 a lot of potential, but no revenue. Thats what we see with a lot of these. A lot of potential, no revenue yet. Yep trying to be early, phil thank you. As we go to break, phil, can talk about the airlines as well if he wanted Holding Onto Gains this morning. Potentially getting a boost in sympathy with the cruise airport or thes after carnival announced the resumption of cost to kruz lin cruise lines in the weekend. Lets take a check on the markets right now. The s p 500 a hand full of points away from the lows. Feeling the pain from the tech pullback and the prior relative strength in financials has been dissipating as well as we see a reach for bonds. We have the yield and the tenyear going to the low. 6s. Keep on your radar that. 54 we reached is our most recent low the dow down by 247 points right now. S p 500 down by 1. 8 . The nasdaq, the hardest hit, down by 3. 4 . Names like apple, amazon, the big cap tech names moving onto hotels, facing serious financial trouble amid the pandemic seema is looking at the numbers. Hilton is the latest in new york city to shut the doors and cut 200 jobs the hotel is franchised by hilton the owner of the property is sun stone, a Real Estate Investment trust. Its one of the properties that we have highlighted in recent weeks that has missed a series of debt payments and it also follows news of the Embassy Suites in midtown handing over the keys to the lender according to data there are 14 hotels in new york city that are 60 days or more behind payment properties at risk include the mark on the upper east side. The standard in the meat packing district holiday in in the financial district among others in total, 34 of new York City Hotels are delinquent thats not the nations highest. Houston with exposure to oil and gas at 64 chicago at 42 followed by los angeles. And with a little travel that is happen right now during the summer expected to dry up once the fall starts, foreclosures are expected to rise thats why the Hotel Industry is calling on congress to pass Bipartisan Legislation for a preferred loan fund capital that can be used to Service Existing loans, but data is unclear whether that will pass seema, thank you. Companies such as as facebook, twitter, slak and a number of others have announced employees dont have to return to the office in 2021 or maybe ever our next guest agrees saying work regular mote has too many limitations. He disagrees i want to talk to you about that i have to get your reaction to what seema was discussing. When you see the delinquent numbers from hotels that are going to have to give it up, what are your thoughts what duos through your mind terms of right now and the future of travel and hospitality . I actually say its not a big surprise, because what weve seen is that the two segments that are hit worst have now seen very little recovery is Business Travel and any kind of intercontinental travel. When youre looking at cities like new york or london, paris, i mean, you have a significant share of intercontinental tourists and a lot of Business Activity and that capacity is not there currently. On the other hand weve seen in summer more traditional family destinations, like vacation destinations have done much better and that demand has come back first i dont think it would get better very soon Business Travel will recover, but very slowly, and its related to the topic well talk about later. When youre okay with working more from home, you accept the fact that you dont need personal interaction as often. It has consequence on Business Travel and intercontinental travel is uncertain. It will take some time to rebuild their connections, and the supply and demand to gradually reach old levels, it l certainly take quite some time yeah, im husure, and busines travel is the focus there. It would seem that supply will start to shrink as some of the hotels are forced to close absolutely. And how quickly that that supply will shrink is very difficult to predict. It depends on the financing of the individual property owners, and what will happen with the properties afterwards. I do agree, supply will shrink i think it will be very difficult to predict lets quickly move to the topic at hand that we brought you on about, which is this decision to at least offer the opportunity to many of your employees to come back and perhaps encourage them to do so to the office. Why . We have learned quite a bit in since we moved complete he will remote and we moved in march fully remote something that we have never had. I do agree with what is said quite often these days that it does work and work as much works remotely what we have also seen and we got that feed back quite si consistently from our employees and there, one thing that is missing is clearly it is more difficult to give feedback and you dont sense emotions as easily the second thing that is more business related is anything that has to do with creativity with a Rapid Exchange it doesnt work as well. There is a tiny time lag and we it is more difficult for people to manage a Work Life Balance because there is no end to the working day we started an additional week of paid have indications a couple weeks ago to make sure that everyone is getting rest and resets and we started two weeks ago to reopen the office. And it will do focus weeks where we want to bring everybody back, whoever is comfortable obviously with regulations in place to spend time for the things that we think is safe to do, and everybody can structure it the way he or she feels most comfortable. Given what is going on in the market were going to cut it a little short last night. Lets take a check right now. Off of the session lows that we hit just a moment ago. The dow down by 1 nasdaq off by 3. 4 were seeing pressure on technology shares, but we have strength in regional banks and reopening trades potentially off of the cdc advising local governments prepared to do that. The broader markets are feeling ayith essure st wus, were watching that sell you have for you, stay with us. 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. The nasdaq down 3. 5 looking for a bounce here as a bottoms out around 11,600 and were talking about the trade, usually before Labor Day Weekend there is a upside bias yeah, it does, but not in anything that any of the last month. The damage is not as broad as it looks. There are three stocks declinin for every two advancing. The reason it looks worse is the dominant Technology Stocks have a bigoter weig bigger weighting it makes Everything Else look work bank stocks are off of their highs from earlier in the day. Industrials and health care on the flatter side, and really the Semi Conductors are down for momentum reasons and also for reports out of china that they may be guerding to help their semiconductors part of this is momentum nvidia was 400 a month ago. This is 530 its look, 83 with a sell off you see how much they have advanced here. You have momentum and a little china news on top of that. Megacaps are down but when theyre down it moves the market more here. Apple is 95 split adjusted a month ago. 124 now and look at these numbers, they just huge, still, even with the sell off today here. There is a whole bunch of what i call the frothy names. Really high up in the 80s. The zooms and the sale forces and the tesla and the workdays zoom video is 230 a month ago. Even with the sell off, 375 ago. And you see here, what do we have here . 263 somewhere around there these are extremely frothy stocks get a little news and momentum going against hire in the meantime, treatment, vaccine news continues to domina dominate were seeing carnival talking about restarting some of their cruise lines in italy. Delta, pvh, leisure wear doing very well for them get a little news on semis combined with extremely over bought convictions and youll get a day like this. Guys back to you thats a good context, bob, i imagine well talk again very soon in the meantime, everybody, good thursday morning. 8 00 am at facebook headquarters swa squawk alley is live turn up the radio, the stereo loud dont hate on us, be envious good thursday morning, welcome to squawk alley. We dont want to call it a full reversal, but it is the way a reversal would play out in this is some of the reasons. It is strength and Energy Utilities and resorts like were seeing today i want to slice tech a little more finely, also. Lets brin