Transcripts For CNBC Squawk Box 20240712

Becky is off today. Looking in the green nasdaq to open about 78 points higher and looking to open higher as well also 22 points higher. Also treasury yields youll look at the 10year note at. 681. We have a lot going on today on the data front, details come at 8 30 eastern. Breaking news overnight. The House Transportation Committee issuing the final report on the 737 max list the failures that led boeing to design and the faa to approve the software that contributed to two crashes. Around the Safety System called mcas accusing boeing of concealing the information. Including concealing the existence of mcas from its pilots boeing says it learned many hard lessons as a company from the accidents and from the mistakes we have made as this report recognizes, we have made many changes to our company. They expect to get 737 max back in the air in the Fourth Quarter. Congress is expecting legislation to review the safety reviews of new plane models. Reporting that there was no singular mistake that led to the crashes. It was a series of events. Weve heard it before that pilots were like, what is this hearing they didnt know about mcas, that is shocking youve got this huge piece of machinery underneath you and there is this new system, which was wellintentioned how do they explain that . We needed help im glad you appreciate becky even more so now. Was there a get melissa emergency. Was there begging, pleas i saw the signal in the night sky and i came in. Thats cool i love that. Thats my favorite part of batman well move on here facebook i dont have anything to freeze in terms of instagram. I heard celebrities were doing this i thought should i be doing this but i dont have an instagram account. The ftc is gearing up the agency has spent more than a year investigating concerns that it uses its market position to stifle competition the company has argued its acquisitions and not final decision has been made the commission doesnt always bring cases. Well talk more about this you are going to go into it right now. Youll mention People Like Us but go ahead well talk about the ftc case and what that may or may not look like. As joe was mentioning in other Facebook News given celebrity status, surprising you dont have a account some are freezing their facebook and instagram accounts for one day to protest the spread of hate speech and misinformation among the people today, Kim Kardashian west, Orlando Bloom, Ashton Kutcher i will say, a oneday protest, dare a say, is not a protest im not sure that this is somehow going to change. Maybe not to you. You have an instagram. You may be the only one of three. If you are Kim Kardashian and this is your primary way of communicating with your followers. One day is significant to these people we are not those people so maybe we dont understand that it is only significant if it is significant to facebook if the idea is that you are going to change facebook ways. A week or two could become meaningful you have to injury yourself at the same time but thats what a protest is im suggesting this is more symbolic than that well we are talking about it. I agree we have more coming up. We have to talk about apple. The big news yesterday apple unveiling its new subscription bundle it means for the stocks details on the company, snowflake. All straight ahead after this. Clean is a feeling. Its the simple joy of washing your hands, without ever touching a faucet. Its the Little Things that matter. Thats why we create moments to feel kohler clean, every day. Fedex reported strong earnings thanks to a boost in shipping ground jumped 31 . Revenue per package rose the company helped by a 35 drop in fuel costs. Fedex declined to provide an earnings forecast for 2021 citing continued uncertainty and shares of rival ups were higher following that fedex report. Cloud Storage Company snowflake will debut price above range at 120 per share valued at 33 billion. Revealing that Berkshire Hathaway and salesforce agreed to buy stock berkshire will buy 4 million shares it will trade under the Ticker Symbol snow. Apple unveiling a new subscription growth. The bundle includes different tiers for products and music including a fitness service, new watch and new ipad the stock coming off a big run year to date tech columnist and contributor and managing director at raymond james. Ill start with you, are you impressed. I buy most apple things that i have to admit that i am unsure i plan to buy the full bundle. Im spotify on music weve got peloton going. Im trying to avoid the arcade stuff for my kids. Where do you stand who doesnt love a bundle actually, no one zs that means you probably are paying more than what you actually need. In apple case, if you are a major apple user, which you are but you use services from other companies. This might make sense to you but if you start using one service and you see that is just 10 more and i get all these other services thats 10 you would pay for me, i pay for apple storage and apple tv plus. In that case, the family or individual bundle makes a ton of sense. Does it make sense or are they going to start losing money on you i dont care if they lose money on me. I know but Share Holders do they might. Thats my question, if you add a lot of apple subscribers for me, i could pay 20 less. But is the game bigger for people like you who havent been paying for some of these services chris, take it from the investment side. What do you think . The whole thing out of the apple thesis is getting a few more dollars out of the base adding things to potentially be in the bundle is incentive to trade up when you put it in a bundling type situation, fitness is a good exam elf that when people arent doing their gym memberships, it is a good incentive. Those are things that are not large to invest in the costs are not higher relative to the charge to that what is the bigger picture. There are six services that make up the bundles and 5 million to these services the revenue to these is pretty small as a perfect of its total revenue. What is the largest picture apple is aiming for . Is it to create a hard wear plus services bundle. What do you think the big game plan is . My view is that the game plan is to sell hardware first and foremost when the services was in vogue a few years ago, we didnt agree with it because we think Services Makes sense and that is starting to grow again it was just the appetizer for the main event which will come shortly. Services becomes icing on the cake for those services, you need the apple watch for this that is incentive to get the apple watch. Here on the apple watch, the incentive to upgrade every two to three years where they are coming in to say youll also pay us 10 a month for this great workout service. Seeing this, im thinking, i dont need to upgrade. You are probably not thinking about buying a watch how concerned do you think apple should be that they are tempting regulators by pursuing a bundle of this sort. Talking about fais and spotify and these bundles are competitive. I can make that argument t apple. These are harder to make a tiein case, if you will you have to be tying to a dominant product it is unclear any of those are dominant unto themselves just by pursuing this strategy, how worried do you think they would be to pay even more attention. The way you brought it up, perhaps on i cloud, apple music, spotify is a great competitor there. Apple tv plus there is the underdog what this does do is build the wall higher around apple users saying these walls, the control of the hardware, software, really stifles competition from developers yesterdays case there is a lot of case made that apple is building its walls even higher chris, would it be a good idea from a business perspective, bad idea from regulatory perspective how do you see it . They are not dominant in any particular individual piece of that bundle. This he were trying to incentive the deal there personally, i dont think it will wind up being an issue for them we appreciate your time and well see what happens next. Thank you. An update on Hurricane Sally. Sally has strengthened and made land fall about 5 45 a. M. Eastern as a category 2 storm. The eye is near gulf shores, alabama. Could bring storm surges and down pours coming up, the kickoff of an auction of a trex more from adobe going higher stay tuned when it comes to parenting, youre a pro. You know your kid doesnt step around puddles. And you know cheap leaky diapers are an amateur move. You need luvs prolevel protection. Luvs. Parent like a pro. Good job, michael does. Ok, lindsey now tell the class what your mommy does. My mom has super powers. Its like she can see the future. What . its like she time travels in a rocket ship. Thats cool and then she comes back saying try this or try that. She helps everyone. She helps them feel less worried. Wow mommy, so what is it that you do . Im a financial advisor. She is aig proudly supports all the professionals taking care of our financial futures. Kristis is preparing for an auction like no other. It involves trex. This is a trex. We havent actually created one. Maybe it is possible using the agar and the cloning i dont know not yet this is a real fossil. A 67 millionyearold trex fossil unfailed at Rockefeller Center it can be yours for a mere 6 to 8 million hes one of the largest and most complete skeletons ever found. Discovered in 1987 in south dakota displayed at the black hills center for research. Which is now selling it. He will be on view in the windows of christies. We believe in this challenging time, its important to start the new season with something positive the last trex was auctioned off in 1987 for 4 million mcdonalds bought it at the time and donated. Stan will be auctioned with a 20 to 30 million pick asso quite a picasso there cracks me up did you see that there it is. Is that one person, robert help me out . I believe it is a portrait of marie perez, his longtime partner, mist res. I believe it was meant to be flattering what did you say to me about as old fossil. You felt the same thing going whoa, thats not very nice but im no artist we are going to go to break. We want to offer our condolences to the gates family. Bill gates senior died monday at the age of 94 years old. He was crucial in starting the bill and me Linda Gates Foundation he called his father the real bill gates and said, he was, quote, everything i try to be. And i will miss him every day. Well be right back after this with an update on the pandemic from dr. Scott gottlieb. 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. Our Retirement Plan with voya gives us confidence. They help us with achievable steps along the way. So we can spend a bit today, knowing were prepared for tomorrow. Wow dad, do you think you overdid it maybe . I dont think so. What do you think, peanut . Nope honey, do you think we overdid it . Overdid what . See . We dont think so, son. Technically, grandparents cant overdo it. Its impossible. Well planned, well invested, well protected. Voya. Be confident to and through retirement. Good morning welcome back to squawk box here in the green with the dow looking to open about 125 points hire, the nasdaq about 70 points and s p about 20 points higher shares of nikola under inquiry the firm accusing nikola of misleading investors about those trucks stocks were down about 8 after word the sec was looking into the same claims. Nikola, the connection with gm, people now start to look at gm we had mary barra on they own a piece of nikola true. The fda can use its emergency use commission to shrink the lag time of approval according to fda commissioners dr. Scott gottlieb joining us now is dr. Scott gottlieb hes also a cnbc contributor serves on the boards of pfizer and illumina you now have a tougher case to make, doctor, after comments youve seen that are well intentioned, helpful, whatever you heard bill gates almost questioning the legit massy of the fda under the Trump Administration now youve come out with this oped. You are proposing an expedited process after weve just said we need to be really weary of what these companies will do. What the agency will do is use the fdas emergency use authorization which was cot tied by bio shield in response to the anthrax attacks and have a recall act in 2013 and teaked a little to respond to the h 1 n 1 pandemic it gives a lot of latitude to make a market entry. The fda will put out guidance for approval or authorization of a vaccine. Im pretty sure that theyll set a bar where clinical standards and an eua would be the same the difference is under the emergency use authorization, they would make a staged influence to approve or authorize for a very narrow group of people to make the original data sets mature. It allows the agency to bypass additional things. For the vaccine to give it a by logics application to make sure it can sit on its shelf for six months when they sit on the supply chain, they may sit for a while. You dont need initially the six months of stability testing. Allowing the fda to authorize that as you mention on the board of pfizer under development for covid. The fine point you made about expediting the process or the safety issues you are expediting are on the shelf. That will be muddled in this charged environment we find ourselves in right now maybe there is something to it and you look at hydroxychloroquine and the way that was very controversial, the way that was handled you look at the pressure on the cdc in terms of testing. People are naturally going to question in terms of important agencies like the fda and cdc and elsewhere are put under undue political pressure not just to save lives but in time for an election. How do you walk that line . It is difficult where those positions are miss held or miss communicated this is a really important decision i have trust in the process and in the point of view the external advisors and the committee, which is going to review this application and data, i believe and before the fda makes the decision you have multiple layers of review you have the companies and monitoring looking this over so you have a lot of data, even filing let alone before you advertise it the vaccine will be available to a sub set of population. We shouldnt see this licensed to broad use what is likely to happen in late fall, winter, the fda will issue an emergency demonstration that demonstrates it is safe and effective and authorize it for a narrow sub set maybe Front Line Health Care workers and maybe those that are older with a higher risk of contracting covid and a loutill the initial data set to mature and get more longterm safety data in that guidance which they say theyll put out. Theyll articulate how many patients need the longterm follow up data with 5,000 patients with six weeks to eight weeks theyll set down the bar not just on efficacy but safety in that guidance document, which is forth coming so doctor, you over the years have seen there is a whole lot of conjecture about the vaccine and autism and it is antiscience, a lot of it but very controversial here we are in the middle of it. Do you think it is helpful we are already hearing a lot of americans say they are not going to get the vaccine herd immunity will be hard to come by. Do you think it is helpful when bill gates questions the efficacy is that okay look. This entire crisis has been plagued by crisis that is imprecise. People have to be careful how they communicate about these things they are very complex. When you put out a sound bite, it can erode confidence. I think there is better ways to air those concerns in the constructive fashion than the way these are picking up across the political spectrum to your point, there have been miss steps by the agencies and officials that breeds further confusion. Dr. Gottlieb, to that point, politico over the weekend headlined Trump Officials interfered with cdc reports on covid19, the spokesperson and his team demanded and received the right to review scientific reports to health care professionals. What does that do to the credibility of these organizations . It erodes them. That is unnecessary. Those reports were held in a very high regard people didnt get it weigh in on those. There are reports related to fda issues i would see those reports as they kr going out. They were carefully guarded in the way the fda carefully guards their review positions those cannot be interfered with. When you see that, thats the kind of stuff that erodes confidence to let these things happen on the margins that are important you end up ee rodding these things sometimes you distinguish. Because they are not there they dont know. I believe the vaccine review process, how do people trust that when they see things like you are saying why are they confident a vaccine process will be different and walled off from the treatment weve seen with emergency use which then later on were found to not have the efficacy originally thought. You have President Trump basically saying to abc, three to four weeks to a vaccine president says dr. Fauci says it might be the end of the year then President Trump says well many disagree. A neurologist, i dont want to knock them the president is still saying three or four weeks, deferring to the judgement of a neuroraidologist hes really close with how can you be confident this process wont be politicized and that front line workers will be doctors and say, you know what, we are going to trust this process and we will accept this vaccine and take it. It is going to undergo multiple layers of the vaccine the people who are external will allow this all of us will know it youll see something very public i know the folks who will be engaged in this. They jealously guard that process. Something will happen here youll know it if they feel they hadnt been leaned on and the ability to make the decisions here, youll know that too. Im pretty confident well have transparency and how the decision gets made the mere fact will discourage anyone from trying to lean in on this we are about out of time doctor you heard the news of the Monoclonal Antibody that shaves a day off when used with remdesivir is that another single in a baseball analogy in trying to deal with this it is an early data set this could turn out to be a more robust drug. This will represent another they are pew tick gain going into the winter and gains on Life Expectancy with this disease open optimistic that more drugs will provide more treatment opportunities over time. Thank you we missed you yesterday. I was thinking had we talked to you. I guess you have a life or something. Wed appreciate seeing you ever day. Andrew okay coming up, we have todays biggest stock movers including adobe. Later, the nba bubble gets a little smaller after the nuggets knock off the clippers well talk pro sports and the Washington Wizards coming up with a reminder you can watch or lteisn any time on the cnbc app welcome back to squawk box this morning we have some green arrows this morning. Nasdaq looking to open about 80 points higher, the s p about 21 points higher. We have some news, some coronavirus news not just coronavirus but it looks like from lily that we were just talking about. I dont know if this is a different one or additional News Coronavirus drug trials from eli lily meg joins us now is this the same we were talking about on monday . This is a different drug lilly has developed specifically the drug we were talking about on monday is a different drug that is a jack inhibiter this is interim results on the drug in people with mild to moderate recently diagnosed covid19 in outpatient setting about 450 people in the trial. Eli lilly showing reports that this may work. The prime ory goal is to look at three different doses of the antibody against placebo and to see if it reduced the viral load it found the middle dose reduced the load, the others didnt. Part of that might be that time point. Think did find most patients did clear the virus by day 11. It does show in mild to moderate patients, people are Getting Better people on the drug cleared the virus earlier. It reduced those on higher viral load they say fewer patients on the drug went to hospitals or the er in smaller numbers 7 on the drug versus 6 people that had to go to the hospital had underlying risks like age or bmi. They saw rapid improvements on those restrictions oven safety, they say it is well tolerated. Lillys chief scientific officer say the drug has a direct antiviral affect and may reduce covid hospitalizations reinforcing our conviction that reducing antibodies will help. They are taking next steps and running more studies that does include the potential to file for emergency use authorization. This is incredibly fast moving others are in this fight we are expecting data from them as well. The monday news that is a different drug it has to do with the immune responses already in development in the pipeline. We sequence covid and look at this Novel Coronavirus thats when they started doing this. It was pretty resencent what are they basing that on the spike protein or the virus as a whole yes, an antibody targeting the spike protein. It was isolated from one of the first people in north america that recovered from covid19 this has been under workerly and advanced quickly in a way to discover new drugs these are moving fast. All right excellent. You could have told us this before gottlieb. I know it is breaking news well ask him next time hes on. We asked him about the old but this sounds like more good news than we saw on monday. Do you agree it is significant. We saw early top of remdesivir b one day. You know, we dont have the full data on this this is a press release of top line results so when we see the full data on reducing the viral load, well see what this means in terms of keeping out of the hospital that was on people already in the hospital exactly all right. Thanks, meg. Melissa. Coming up, todays biggest stock movers and some potential picks for your portfolio. First, japan has elected its first new Prime Ministerin nearly eight years he was a longtime ally of former Prime Minister shinzo abe. He has signalled he will maintain abes core policies, including generous Government Spending and a Strong Alliance with the u. S well be right back. 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. Shares of adobe are on the move this morning. Shares jumped more than 4 and are now up about 3 premarket. Adobe is one of the stocks were focusing on in our squawk pick segment. Joining us is ellen hanam. A lot of investors would be grateful for 15 , 14 Revenue Growth which is what adobe posted but yet that number is decelerating what should you pay for a Company Whose revenue is decelerating given that its trading at a premium next to its peers. Thanks, melissa adobe had a fabulous quarter and theres no question that the Digital Transformation of so Many Companies has been very much accelerated by the pandemic so you see small, medium businesses, individual, entrepreneurs, as well as Large Companies increasingly moving to online and so you did see adobe have even faster growth a couple of quarters ago its decelerated from over 20 down to 15 but some of that was pulled forward so im not sure how much we should consider the deceleration for 15 Revenue Growth, particularly if its projected for the next several years, which this is, and importantly with a company who generates Free Cash Flow far above earnings, it makes sense to pay at least one and a half times the market multiple. Adobe is trading at about 35 times two years out earnings but if you look at a Free Cash Flow basis, which is so much better than an earnings basis, its about 25 times, which is very fair for a company able to grow revenue double digits. I want to get to your two other picks which benefited during the pandemic. Home depot is one, ellen im wondering how much pull forward there is in home depot in that if youre at home and looking around and you do Home Improvement and you regrout your shower or redo the kitchen floor, youre not going to do that again for quite some time so how do you how do you see that business and the pace of business for the rest of the year home depot had an unbelievably good quarter. That was the july quarter, of course, for retailers that are on the july quarter calendar comps were 23 , which is unheard of in the home space and yes, there have been people increasingly turning to nesting and improving their home, but what was interesting about home depot is you saw the strength across the board it was in outdoor, it was in indoor, it was in kitchen, it was in everything. And so theres reason to believe that it may sustain. One of the concerns about home depot is whether or not we are going to see demand fall off a little bit with the stopping of the extra unemployment insurance, so thats something that were watching on home depot. But on the positive side, you have so many other drivers you saw phenomenal numbers out of lennar yesterday. The Home Builders are doing very well so we have seen this little bump from people staying home and improving their homes, we think that that can last quite a bit longer when you see the strength in the rest of the Home Builders. Ellen, thank you for your time, appreciate it. Ellen hazen. Joe. Coming up thanks, melissa. Coming up, a lot, including the owner of the Washington Wizards. But hes so much more. Aol, remember . Rev nugs hes more than just that blackrocks rick reeder, bill ruden all coming up. Squawk box coming right back good morning, mr. Sun. Good morning, blair. [ chuckles ] whoo. Im gonna grow big and strong. Yes, you are. Im gonna get this place all clean. Ill give you a hand. And im gonna put lisa on crutches wait, what . Said shes gonna need crutches. She fell pretty hard. You might want to clean that up, girl. Excuse us. When owning a Small Business gets real, progressive helps protect what you built with customizable coverage. And im gonna eh, eh, eh. Donny, no. Oh. And im gonna eh, eh, eh. 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. Stocks sets to rise ahead of todays fed policy announcement and forecast update. Well get you ready for the trading day ahead. Breaking news on boeing. A House Committee report condemns the company and the faa for flaws that led to two fatal crashes of the 737 max. Plus Cnbcs Shepard Smith sits down with bob woodward to discuss his new book shep will join us with highlights of that interview, as the second hour of squawk box begins right now good morning, and welcome back to squawk box. Im Andrew Ross Sorkin along with joe kernen and melissa lee is in for becky this morning boy, joe, did we we needed help we always need help, but melissa is here to help us through the next couple hours. I cant offer you that kind of help, but i can help you with the show. We appreciate it. Lets show the audience where u. S. Equity futures lie at the hour it looks like the dow would open up about 175 points higher right about now, the nasdaq 90 points higher and the s p 500 looking to open up 25 points higher. We did friday, monday and tuesday, andrew, and i think finally the call came in it was just like, hey, guys, you know, are you watch have you dvred and watched this . I enjoyed it, sorkin we talked about it we get to hog all the interviews. We covered a lot. You know what, and we cover a pretty wide range of opinion as people who have seen the show know. Yes anyway, lets get a check on some Early Morning movers. Dom, i didnt get to mention this to you the other day. It was really weird. I was wondering whether you did it you did Dominos Pizza and chuy backtoback. Nobody picked up on that. I did did you do that on purpose can i tell you that the hardworking folks in our control room and production staff came out and basically said that was one for the ages we had to take screen shots in the control room of the fact that you were standing next to these augmented reality tombstones that showed dominos and chuy at the same time. And chuy yeah. This is what i do. I want to sneak some of those subtle things in there to see if people picked up i will say you picked up and a lot of folks on social media did so i got a lot of screen shots of that. Weve been doing this too long we do find ways to amuse thats okay, i think its fun. I think its good. Go ahead and im watching here because melissa is maybe 60 feet from me so were both here to help you guys out lets talk about those morning movers well start with shares of boeing because melissa just alluded to that. Theyre down fractionally. This is the aerospace and defense giant lower after a House Committee put out a report that put a lot of the blame for the deadly 737 max jet crashes on it and federal regulators that report said that the crashes were a result of, quote, the horrific culmination of failed government oversight and boeing inaction so were watching those shares off about half a percent next, shares of tapestry up over 3 , roughly 15,000 shares of premarket volume helped along by positive analyst commentary out of Deutsche Bank where analysts have upgraded it to a buy. It was a hold. The target goes up to 21, it was 18 they like among other things a refocus on key brands. They trim their Product Offerings and a better omni channel selling strategy so those shares up 3. 5 then well cap things off with shares of overstock. Com which are up over 3 as well roughly 15,000 shares of volume there. The retailer gets initiated with an outperform rating and 91 target price by analysts at credit suisse. They cite things like relative value of the shares and so watch those stocks one down, two up, melissa. I will send things over to you to help these guys out. Thanks, dom it is great to see you in person here in the studio. Investors are waiting for comments from the Federal Reserve later today. Officials have indicated no Interest Rate moves are likely for several years. Overnight at the singapore summit, jamie dimon suggested that that has succeeded in averting a financial crisis in the wake of the pandemic what they didnt want was a Global Financial crisis in addition to a great recession. Thats where markets close down and people cant get money and so they kept the markets open, which benefited everybody. You know, they dont need right now theyre so wide open that they dont need to be pumping it up anymore. Let nature take its way. Joining us now is Noah Blackstein from dynamic funds. Noah, great to see you. Nice to see you. Is it enough for the markets for the fed to just say lower practically forever or does the fed need to move toward outcomebased guidance, average inflation targeting, et cetera, for the markets to be satisfied and continue this rally . Well, theres the old saying that once something becomes a target, its no longer sort of a good measure, something to focus on so weve had a problem targeting inflation for a long period of time and i think weve kind of run to the end of Monetary Policy so i think the fiscal supports were really important during this time from governments around the world, whether that was on income support or other things like that i do think that as long as large swaths of the economy are still shut down, its important at least to extend some of those supports until the economy can come back. And so i think thats why, you know, theres such a push to extend some of these programs, at least hopefully until year end. I know the house is debating things but those are important. Monetary policy is probably can remain supportive of conditions, but to get through this great contraction induced by the pandemic, we probably still need fiscal supports for a little while longer. And so i think the market is nervous certainly into this month about the expiring of some of these things for sure. How much further can the feds tremendous liquidity in the markets get us in terms of this market rally, or have we already seen i know that youve been invested in the cloud area for more than a decade at this point, but certainly that is an area thats really gone up in part because its perceived as work from home but also because theres tremendous liquidity out there in the system. Weve seen cloud stocks, for instance, the bbp nasdaq cloud index up 55 this year its just been tremendous runs here so how much of that is just there is no alternative, plus the feds liquidity . Well, i think to some extent obviously, this entire contraction was government induced. We shut the entire economy down. I think there was a couple of papers that were written likening it to a katrina type of event where you have a complete shutdown of the economy and you sort of see the v rebound. Markets are always forwardlooking so markets will anticipate that recovery so i think that this was not something that was an economy that sort of rolled over because of natural causes, whether that was too much supply or a central bank raising rates too far, this was something different. So weve seen what it required to get over the hump was the monetary and fiscal stimulus but i think youre beginning to see the early signs of a rebound. I think obviously technology has done well, but work from home and Digital Transformation are not the same thing this isnt vpns and Video Conferencing what were talking about are cloudhosted applications, whether its subscription or volumebased type of models. A lot of that Digital Transformation was occurring before this pandemic and is likely to continue after this pandemic whether thats because its better and easier and more efficient to run just from a Business Continuity standpoint or whether now youre at the third stage of the cloud where applications are being developed in the cloud that you could never develop on premise, so its been a longterm trend that i think is continuing. I think the Business Model has really been played out, that its not try and sell as much software as you can by the end of the quarter this subscriptionbased model really held up well during this pandemic i think that sort of proved its mettle but as you expand across this market, we saw an unbelievable quarter last night from fedex where they nearly doubled the expectations despite higher covid costs. So you hear a lot from the bears about this bubble and that bubble we had a 10 correction in january to february of 18 we had a nearly 20 correction in the Fourth Quarter of 2018. We had a 35 correction in march of this year, which was pandemic induced. So im not sure if theyre waiting to tell you to buy the next correction, which will be 50 , but i think to sustain the move you have to have the earnings where you see quarters where fedex despite covid costs nearly double expectations, its probably going to be eled from here rather than p. E. Expansion but there is a lot of operating leverage in the system thats going to require the economy reopening and people willing to reengage. Fedex up 10 premarket. The highlight there was the operating margin, which came in at 8. 5 , which compared to estimates of 5 just blew it out of the water do you think fedex, though, it seems like now its a workfromhome stock im not sure its a leading indicator of the economy per se. It sort of lives in this unique place because it is delivering packages primarily through home. The volumes were increased internationally but also the residential and thats because we are ordering things instead of going to stores perhaps but also i think if you look at the transportation group, you know, youll see similar type of moves off the lows in places like rails and other things. I think youve seen i mean obviously im a growth manager and spend a lot of time in health care and technology and other areas like that, but you cant ignore the move were seeing in the transports or the move that weve seen in Home Builders or Home Improvement stocks even some of the gaming casino companies. Names like penn gaming were 4. 76 in march an now are tenbaggers since then so were seeing broad signs that its beyond technology, its a wider economic recovery. The pandemic certainly paused what was going on, but it probably accelerated a lot of future trends. And a lot of people had to adapt during this pandemic for sure. My parents and other peoples grandparents probably wouldnt have used zoom in their lifetime but were forced to use it once they have used it, were also creatures of habit so well adapt and then have a hacketbit. So the question becomes how much do we go back to our old ways. Were certainly not going 100 back to our old ways now that weve done it, this has become habit good to speak with you, thank you. Thanks. Thanks, melissa coming up on the other side of this break, dozens of celebrities freezing their social media accounts to protest against the spread of hate and misinformation on platforms such as instagram and facebook. Well speak to the ceo of the Antidefamation League about the movement and if one day is enough isnsig aerx retur rhtft th everyone wak every g to a world that must keep turning. The world cant stop, so neither can we. Because the things we make, help make the world go round. They make it cleaner, healthier, and more connected. Its what we build that keeps things moving forward. So with every turn, well keep building a world that works. I feel like were forglet me check. Ing. Xfinity home gives you peace of mind from anywhere with professionally monitored Home Security built around you. No, i think were good. Good. So when youre away, you dont have to worry. The tent. We forgot. The tent. Except about that. Xfinity home. Simple, easy, awesome. Hey look, i found the tent and, see, its safe. Call, click, or visit a store today. As amy first jober, is to care for derek. Everything i do is for him. When i moved to this apartment after six months, we need to connect with the world. I use the internet to keep him in the language, because thats the way to connect to my familys traditions. He has to know where he comes from. We need internet essentials. Theres no excuse to not get connected. We mentioned it earlier, a celebrity boycott of instagram and facebook gaining steam yesterday public figures including lenaurd owe dicaprio, austin kucher, Kim Kardashian west members include the naacp, the Antidefamation League and the same group that organized the boycott of facebook. Joining us is the ceo and National Director of the adl i find ourselves saying this more and more, this is an episodic show. This is not a standalone interview. Weve been talking about this exact issue yeah. With you for a long time i keep thinking that youre going to come on and say that facebook is doing a better job but you never say that, do you well, joe, look, its nice to see you again. I sort of wish we werent stilling of this conversation, to be frank. But the question isnt whether theyre doing a better job, the question is whether they are doing enough unfortunately stop hate for profit launched this action because still indeed months after we first talked, after more than 1,100 of the largest brands in the world said that facebook needed to do more about dealing with hate and violence on their platform, im back here this morning because theyre simply still not doing enough. And we always have the same discussion, and its the obvious one, jonathan. And that is that one persons subjective analysis of what they consider completely objectionable might be different than somebody elses and, you know, when we talk about things, well, like in the workplace, you dont ever want to do or say anything that someones grandmother might you know, might find offensive and that raises the bar high enough to where but let me finish with you, im worried that this could lead us eventually to a place where we talk about things like microaggression or things that i see happening on College Campuses where you dont see any acceptance of any opposing viewpoint whatsoever to the exclusion of speakers, and where all of us have probably rolled our eyes at some point, i dont know, maybe you havent, about what were seeing on College Campuses in terms of what can be offensive. And thats what the stuff you always talk about has absolutely got to be gone, but how do you make sure that youre not just insulating me from things that i want to see . Look, joe, we undertook this action this week not because of a free speech issue, per se. This is about honestly life and death. Let me give you an example what really prompted this action where what we saw happen in kenosha, wisconsin, just a few weeks ago. Following the shooting of jacob blake, we had armed militia groups who organized in the streets and then that led to the shooting and death of two people when a 17yearold armed with a semiautomatic weapon showed up. Now, the question is what does facebook have to do with it . Well, facebook groups, one of the most popular products on the platform, has literally become the organizing tool for the armed Militia Movement in the united states. And im someone who deeply believes in free speech, but im sorry, the freedom of expression isnt the freedom to incite violence and when facebook groups are being used out in the open to organize people to bring armed weapons, when facebook groups are being used by those who want to promote violent insurrection, joe, i dont think thats a question of free speech. I think thats a question of what kind of society do we want. Now, look, we undertook this action to call attention to the fact that facebook still hasnt done enough to deal with white supremacy, violent militia groups and hate on the platform. What im amazed at in literally just two days, the message we put out there to the world has been picked up and amplified not just by ordinary people, not just by civil rights groups, but by some of the most prominent public figures in society. Katy perry, Kim Kardashian, sacha baron cohen. He really cat liesed this movement in many ways. When people likely naurdo dicaprio and Orlando Bloom are saying enough, why is that significant . These are people whose careers predicate on social media. Who have built businesses and brands on this amazing platform. And when they are saying today we are going to freeze our instagram accounts and when they are telling the world that they have had enough of facebooks failure to solve the problem, i think we all should sit up and take notice. Its been just over 48 hours and literally the message has been shared over a billion times. Something is going on here civil rights groups, Child Advocacy organizations, and now the biggest influencers in the world are all saying enough. All right i understand what youre saying, jonathan and youre saying that it would go both ways, antifa, anything advocating violence would be something that you wouldnt want but i did kinda smile a little bit. Im not sure i want celebrities controlling all aspects of my life with some of the stuff i hear them say. Anyway, andrew has a question. Jonathan, i think the real question i was going to ask you is some people look at the celebrities that are engaged in this campaign with you as taking themselves off the platform for 24 hours and say how much of a protest really is that, and how much of that is going to really influence facebook if the kardashians decide to leave instagram for two or three or four weeks, that might move the needle in a very meaningful way. The question is whether you think this 24hour protest ultimately when you have a protest youre trying to, i dont want to say hurt the other side, but youre trying to impact the other side. The question is whether 24 hours unto itself will do that. Look, i think weve kindled the public conversation here, andrew, the likes of which follows up what we did earlier this summer. The goal is not to bankrupt facebook the goal is to create a conversation about the fact that they need to stop the flow of disinformation heading into this election they need to not allow violence on the platform. And indeed its just one day, but i told you over the summer, andrew, that that was the warning shot this is yet another salvo and there will be more to come until facebook takes the action. All right jonathan, thank you. And we will well have another episode im predicting and well let everyone know because its episodic tv those are my favorite series anyway, hence the series thanks, jonathan, well see you again soon. Coming up, breaking news in the housing front and then a very special guest the host of cnbcs new program the news with Shepard Smith will join us shep sat down with bob woodward to talk about his newly released book rage. Well bring you part of that interview. Take a check on futures. We are looking at a higher open across the board with the nasdaq looking to open up by 50 points. S p looking to add 20 at the open stay tuned, youre watching squawk. Time now for todays aflac trivia question. Until 1946, the statue of liberty was featured on what coin cn uaswer when bcsqwk box continues by my health ins and this is the aflac duck who helped me cover it. Aflac. These are all the cab rides to my physical therapy. And aflac paid me directly to help. Aflac. What he said. And this unexpected bill is from. The twothousanddollar specialist. Thanks. Aflac. When youre sick or injured, aflac is there. We can help with Expenses Health insurance doesnt cover. Get to know us at aflac dot com. 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. Now the answer to todays aflac trivia question. Until 1946, the statue of liberty was featured on what coin the answer, the dime welcome back to squawk box. Mortgage rates stalled last week rates are hovering near a record low. So many borrowers have refinanced that demand fell 4 for the week refi application volume was 30 higher than the same week one year ago but that annual comparison has been shrinking for several months this as the average year on the 30year fixed for conforming loans sat unchanged at 3. 07 current borrowers may be waiting for another sizeable drop before they make a move applications for a home to purchase a home fell 1 for the week they were still 6 higher compared to the same week one year ago thats the smallest annual gain since the housing recovery began in may that comparison has been in the 20 range recently and there has been more demand for bigger loans that pushed the average loan size to a new survey high of 370,200. Back to you, andrew. Okay, diane, thank you so very much. We will be back in just a moment when we return, cnbcs shep smith is going to join us with some highlights of his interview with bob woodward. Squawk box returns in just a memont a new way to shop thats completely tailored to you, with hundreds of your favorite fashion brands. Tell us what you love and what you dont. The more you yes and no, the more we get you. We will build a shoppable feed thats so you. No two feeds are alike. This is shopping made genius. Download the app and shop in a whole new way. Good morning and welcome back to squawk box. Among the stories front and center, eli lilly reporting positive reports on its covid antibody treatment a reduced rate of hospitalization for patients using the treatment. A new congressional report is slamming boeing and the faa for 737 max failures that led to what the house panel calls the preventible deaths of 346 people in two jetliner crashes. The 238page report follows 18 months of research and comes as regulators get closer to recertifying the planes. Cloud storage and Software Company snowflake will make its debut on the New York Stock Exchange today the company priced its ipo at 120 a share valuing the company at around 33 billion. It will trade under the Ticker Symbol snow. We are looking at a positive open across the board with the dow looking at 128, the s p up 18, the nasdaq looking to be higher by 41 points at the open this morning andrew thanks, melissa. In just two weeks the news with Shepard Smith begins right here on cnbc ahead of that premiere, shep sat down with one of the legends of journalism, bob woodward, to talk about his newly released book rage and how his career covering eight previous president s shaped his views on the current occupy of the oval office shep, it is a privilege to welcome you to squawk box, to welcome you to the network were very excited for you to be with us and be part of the team. Were going to talk a lot this morning about the big show in just a second but we want to talk about this interview that you had with bob woodward and this book that continues to make so many headlines. Andrew, thanks so much. Its fantastic to be here. Im so excited and ready to get going. On this book, as many of your viewers go, woodward got extraordinary access to the president , he really did 18 interviews. In this book woodward covers dozens of subjects from across the presidency among other things we talked about his reporting on general jim mattis, who resigned when the u. S. Pulled troops out of syria. He admitted a lack of plan in that conflict. Woodward reports that mattis said in a conversation with the director of national intelligence, dan coates, that President Trump has no moral compass and coates responded, to President Trump, a lie is not a lie, its just what he thinks. He doesnt know the difference between a truth and a lie. Which takes us to covid, about which woodward reports the president told him early on its a killer, its spread by breath. But he wasnt saying that to the public, at least not in the early going. Woodward reporting on a lack of national strategy, and how previous president s handled their crises and the importance of telling the truth if you tell the public the truth, that they will rally around, they will get behind the leadership this happened in 9 11 after the Terrorists Attack in new york and the pentagon president george w. Bush actually gave speeches and said, you know, were going to respond at an hour of our choosing and the public got behind this, the congress got behind it it was bad news. People wont flee from bad news. People in this country are problem solvers, i believe but you described on the part of president bush a plan no one can forget him standing on the pile and saying theyll all hear from us soon. Those are the things around which we would rally. Yes. Did this administration have a plan they had known for months then did they have a plan around which we could have rallied . They didnt and one of my findings in the book is that President Trump is a oneman band he decides things, he has his impulses there are not the kind of serious, regular meetings of the National Security council or the National Economic council. Being a oneman band, he acts on the impulse of the moment. Impulses instead of the science, often rejecting science. Instead, following the oney, a we do around here. And as woodward reports, and evidence suggests, the president has throughout his life. The stock market is one indicator of whats going on in the American Economy for the tens of millions of people who dont have jobs, who dont have enough food, who have no steady income, this is a crisis like the Great Depression in terms of people who live here and work here for tens of millions of people. Hes a new York Real Estate developer, hes a businessman, his muscle memory is clearly about markets. Were you surprised that in this pandemic his focus or at least part of it appears to be on the markets . Well, its fair to raise, but and i said to him, i said, you know, do you realize what is going on and he will acknowledge it but hes not acting on it. Its a good term, shep muscle memory. We all have muscle memories. We all have history and the past we need to use it, but we cant be prisoners of the past. In other words, Pay Attention to the moment, woodward reports. And listen to scientists who work for him, obviously. They insist we must distance, we must wear masks, so that the economy and the markets can thrive in the long term as they did before covid you cant have economic stability and greater employment if we dont tamp down the virus with masks and distancing, thats his reporting the president , woodward says, is not setting that example and his campaign is not living that truth. Two nights ago, a rally with thousands of people, most without masks and with no social distancing set up by the campaign, a potential superspreader event, the kind that scientists, including our own dr. Scott gottlieb, say can and does kill. Woodward covers it all, most of which honestly has already been reported by the Washington Post. It seems like they got all of the good parts in the front. The president calls of course the book fake news and says woodward always writes, as he puts it, bad books it is, though, a good read from one of the prominent journalists of modern times, andrew. Hey, shep, i have so many questions for you. I think the biggest, though, for the Business Community, for those who are focused on our economy, for investors out there who are trying to handicap this election and what it ultimately means for our economy and potentially the direction with which we take, the question is whether a book like this and the revelations to the degree that theyre described as revelations, because there are some people out there who say we knew this of the president do you think it changes the equation over the next several months does it change the hearts and minds of voters . Im not really a predictor, but i can look at history and say the president has had his base, it has been solid and loyal and it has stuck with him through thick and thin we can go through a hundred examples the president has his detractors who have said no more trump, we have to change course. And theres a sliver in the middle who will likely decide this race, likely in florida and pennsylvania and wisconsin, just like before. And whether this piling on of information and continuing reporting will change the minds of those of some who will make the difference is reporting for another day. Maybe thats for reporting a month into the news with Shepard Smith when it begins on cnbc at 7 00 p. M. Two weeks from today shep, ive got one more for you. Oh, yeah, yeah, ive got all morning. As one of the great reporters and journalists of our time, let me ask you this, which is because theres a bit of a controversy around this book, which some have argued that bob woodward should have reported these some of these revelations contemporaneously as they were coming, as he was learning about them in february and march and in april, potentially in the Washington Post at that very time. Others have said that it wasnt necessary or that this is part of a book plan, or that some of that already had emerged prior where do you land . I asked him about that. He said that in his early reporting, he didnt really know what the truth was and in the early going in fact, when he thought he was talking about the threat from china outside of the virus before he even realized that the virus was going to be an issue, when you move forward to the time period which you mentioned, march and april, he said i was still fact finding g i wasnt deegbeing a day of journalist i was trying to bring forward the facts for the book many of these things did come out during the time. I remember the reporting of a conference of governors where there was discussion by scientists, redfield at the time, saying, look, this is very bad, its going to spread very rapidly. You need to get ready immediately. These were the kinds of things that were being told to governors. Scientists were telling them to experts. It was making its way throughout the government the president was standing strong and in many cases in the reporting of woodward that the people within the government were following the president as mike pence is quoted as saying repeatedly to people directly under President Trump who could have spoken up and said something, stay the course. He reports that mike pence said repeatedly stay the course, stay with the president and thats what they did shep, i want to thank you for joining us well call this your squawk premiere. First day of school. We dont want the audience to forget, mark your calendars, put it on alexis, siri, whatever you do the news with Shepard Smith debuts on cnbc on september 30th it happens at 7 00 p. M. Eastern time and youre going to want to tune in. Thanks so much, shep. Thanks, andrew. Joe, over to you. Coming up, a damning house report slamming boeing over failures in the development of the 737 max and its handling of two fatal crashes. Phil lebeau joins us aer tfthe break. Squawk box will be right back. Flexshares may look like other etfs. But inside. Theres advanced research, modeling and refinement. Constructing funds that dont simply follow an index. But explore new terrain. Helping you fill portfolio gaps. Connect to client goals. And strengthen confidence in you. Flexshares. Powered by over a century of investment expertise. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Some breaking news this morning on boeing. The House Transportation Committee issuing its final report on the 737 max. I want to get over to phil lebeau who joins us now with more on that report and what it means. Phil andrew, this is a damaging report and really not a surprise, given the fact that this was an 18month investigation scores of people interviewed, people within boeing, people in the industry, people who used to be with the federal Aviation Administration and who are still with the faa were not going to go into all of the conclusions that come out of this report but a couple of things stand out first of all, they cite numerous failures that were made by both boeing as well as the faa. They cite issues among those issues that are cited, production pressure at boeing to get the plane, get the 737 max built and out into service as quickly as possible faulty design and performance assumptions. There were a number of examples within the report as i read through it where you sat there and you said, wow, did they really think this at the time as youre looking at the statements that were coming from former boeing engineers, and also a culture of concealment at boeing now, boeing has issued a statement. This was expected. They knew this report was coming in the statement they say as this report recognizes, we have made fundamental changes to our company as a result and continue to look for ways to improve. Change is always hard and requires daily commitment, but we as a company are dedicated to doing the work that work continues, by the way, on the 737 max it has been grounded for 19 months youve got to go back to march of 2019, march 13th, thats when it was grounded. Now, it is expected that it will be recertified by the faa and other regulators around the world by the end of this year. Thats when we may see deliveries begin again as you take a look at shares of boeing, this is a stock that is well off of where it was back in march of 2019. And they have lost either through cancellations or adjusting the order book more than 1,000 orders for the 737 max. Thats the bottom line impact. Theyre still not out of the woods, guys. Remember, the doj has had a grand jury investigating this matter for some time i would not be surprised that at some point there is some kind of an agreement, a plea bargain similar to what we saw with General Motors and with toyota when they had their issues, whether it was with unintended acceleration or the ignition switch failure dont be surprised if we see that at some point down the road as the doj continues to look into boeing. Phil, one of the more shocking revelations out of this report is the concealment of the mcas system from pilots, which just seems to be correct. Awful. Im wondering if you think that this report could arm investors, could arm other airlines out there with evidence in a lawsuit against boeing sure. And investors should think about whether or not boeing should set aside more for legal reserves sure. And they already have set aside billions of dollars. I dont have the exact number, melissa, but several billion dollars have already been set aside in special charges some of that has already been paid out they believe that they have as much as possible calculated what the legal impact will be in terms of dollars and cents but what you say, melissa, is true you read this report, you come away going what were they thinking what were a lot of these people thinking some examples, some of the testimony, when you talk with representative defazio and representative larson as we did yesterday before they released this report, there is a tone in this report that really leaves you with a very unsettled feeling. So that comes out. Now, well have to see whether or not well see even greater reserves needing to be set aside in the future, but they have already set a large amount of money aside anticipating that. Phil, thank you phil lebeau. Boeing shares down 1. 5 premarket. Coming up, sports are back but ratings are down well hear from the Washington Capitals owner about the reopening of sports, the gambling craze and the impact of no fans in the stands. Taking a look at futures, the s p looking to be up by 20 points on this fed day squawk box will be right back. Good job, michael does. Ok, lindsey now tell the class what your mommy does. My mom has super powers. Its like she can see the future. What . its like she time travels in a rocket ship. Thats cool and then she comes back saying try this or try that. She helps everyone. She helps them feel less worried. Wow mommy, so what is it that you do . Im a financial advisor. She is aig proudly supports all the professionals taking care of our financial futures. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. And tailored recommendations. 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. Sports hungry fans are welcoming back live events, but ratings are down from a year ago, according to neilsen. The first round of the nba playoffs were off 27 . Thursday to sunday nfl ratings were 4 lower. Monday night football was down 26 . Joining us now to talk sports, big tech and a lot more is deadte ted leonis, entertainment and cofounder partner with revolution growth. Hey, ted i was kind of laughing because we called you the owner of the wizards. Do you think theres a lot of young people that never heard of aol . Maybe they have seen the Tom Hanks Meg Ryan movie, youve got mail. Anyway, welcome. How are you . Very well just watching the show and seeing how business and government are coming together and reflecting what weve just been through with sports i think sports really is a great metaphor for managing through crisis strong commissioners we have governors. Thats what were called we have 30, 31 governors in each of the leagues weve all really come together for a common good. Weve kept our players and employees safe weve allowed them to selfexpress around social justice and weve been able to keep the business going, mostly serving our immediate partners and our sponsors so ive been very, very proud to see how the groups have worked together very, very well teams win. This this is much bigger than basketball or hockey and to see how weve worked through this is a case history on good governance. Im not a very good proxy for this because ive been watching more sports than ever. Nba i was so i feel guilty sometimes because i heard maybe some of the other Football College football leagues are now reconsidering not playing it and i feel guilty because im at home safe, watching, and i should worry maybe more about the downside of starting too early. But as you say, im gratified and heartened that it has been we had the bubble for the nba. Weve got a lot of testing for the college players, and maybe they go out even less. Maybe theyre not out if theyre not playing football, maybe in that setting, they can be protected so i dont want to feel guilty, but i really want sports and Major League Baseball i think has done a great job theres enough to feel guilty about. I think that the bubblesreally really worked. We lost last night in the playoffs for the wnba and so now were all at home. But we have three teams in the bubble and the bubble really, really worked. Its a good metaphor for using technology, using process and protocol to keep people safe and still be able to deliver the products obviously our businesses are dramatically affected locally. We cant bring fans into the arena. Our goal for next season would be how can we find ways through rapid testing, hopefully as the vaccines start to roll out that we can start to get fans back into the buildings that represents usually about half of our revenues in terms of ratings, we are carrying every one of the important demographics on a nightly basis across the board there is this great equinox, weve never seen this before, of having both baseball, football, basketball and hockey and other sports all coming at the same time certainly august is not a traditional time to be having nba or nhl playoffs. You know, hopefully we can do better on the scheduling but when you think about it, we were the harbinger of shutting down businesses and doing it in the right way back in march. We planned really, really well and collaboratively to go into the bubbles. Weve been delivering the programming. Theres certainly a lot of programming. And just about every single night last night i was watching a wnba game, an nhl playoff game that went into overtime, two nba games. Its really almost overwhelming with the amount of programming, but were providing it its very, very competitive. I think were being very creative in the way were presenting the game with different camera angles, more interactivity, allowing fans to zoom in. We are pumping in kind of the sounds and the voices. And its going well for how we go forward because we strengthened our studio and our technology capability, social media streaming and the like we also have deep relationships with at t and comcast nbc and disney and espn. They have been very happy with us and were finding new ways to generate new revenues. We talked about earlier the draftkings phenomenon, william hill is one of our partners. Trying to gamify all of the data that we generate and really get higher levels of engagement for fans theres a lot of money that is being bet on games right now all through mobile apps. Yes. In our case theyre coming into our building. I lost both last night. I was close on the celtics because i had the under and they were ahead for a lot and then they lost in overtime so it didnt matter and then i lost i dont know, the nuggets really came on. So, ted, there is some conjecture you said that youve let the social justice come into a lot of the venues that weve seen. There is some conjecture that there are certain viewers that are turned off by that and actually the approval of sports took a little bit of hit as well do you think that that is transient . People that swear off sports dont swear off for very long, i dont think, ted so how do you see that playing out and do you think it has had an impact . Well, people do want to be entertained and but this is a moment, the black lives Matter Movement is very, very important to our players, very, very important to our organizations most of our teams are in big metropolitan areas we want to be very, very socially responsible this was the time to do it we saw a commitment to our players in the bubble, especially in the wnba and the nba. Were being very, very proactive until terms of creating funds and charities to make sure and were opening our arenas into voting centers. Im hoping as time moves on that we get more balance back into it this is a wis thatbusiness that entertaining and we can get through the pandemic and bring fans back. Okay, ted im sorry to ierptntru we have a hard break hitting thank you, ted and i apologize, but thank you everyone wakes up every morning to a world that must keep turning. The world cant stop, so neither can we. Because the things we make, help make the world go round. They make it cleaner, healthier, and more connected. Its what we build that keeps things moving forward. So with every turn, well keep building a world that works. Good morning stock futures in the green thats been a theme all week the dow and s p 500 currently riding a threeday winning streak but will the feds latest message on the economy keep investors happy . Thats the question. Theyre going to be listening closely to chairman Jerome Powell this afternoon for comments on everything from inflation to the need for more fiscal stimulus from congress. Rick rieder will join us and then new comments on the fed from jpmorgans jamie dimon. And faultily technical assumptions and grossly insufficient oversight House Committee blasting boein and the faa over certification of the 737 max well bring you the details of that exhaustive investigation that just came out overnight the final hour of squawk box begins right now good morning and welcome to squawk box here on cnbc. Im joe kernen along with Andrew Ross Sorkin and melissa lee. Melissa is still here thank you, melissa, youre hanging out with us. This is the third hour and we were hoping that we wouldnt do anything im counting the minutes, though. What am i saying. 59. U. S. Equities take that back take that back thats not nice. Anyway, u. S. Equities futures at this hour, as andrew said, the green has beenthe color. The color of money, tom cruise movie, paul newman anyway, were up about 157 points s p indicated up about 21. 5. Nasdaq indicated up 53 and treasury yields at this point are not necessarily the most interesting thing to talk about, but were at about. 669 on the 10year. According to jay powell, well only be there for the rest of the century. So not necessarily that long not for the century, but well hear some comments on that today, melissa at least a couple of years i think is what were thinking so at least. The fed obviously a big story but heres some of the other top stories were following for you this morning forecasters are warning of dangerous flooding as Hurricane Sally makes landfall on the u. S. Gulf coast sally came ashore near gulf shores, alabama, moving at just 3 Miles Per Hour a specialist with the National Hurricane center tells the Associated Press there it will be catastrophic and lifethreatening rainfall over portions of the gulf coast, Florida Panhandle and southeastern alabama and will continue well after landfall an extensive report from u. S. Lawmakers blasting faa and boeing over the companys still grounded 737 max the 250page review from democrats on the House Transportation Infrastructure Committee found the two crashes back in 2018 and 2019 were, quote, the horrific culmination of a series of faulty technical assumptions by boeings engineers, a lack of transparency on the part of boeings management and grossly insufficient oversight by the faa. Boeing says it has learned hard lessons from the accidents and continues to look for ways to improve itself the faa says it will work with lawmakers to make improvements the report highlights. Eli lilly reporting positive results on its antibody treatment. It shows a reduced rate of hospitalization for coronavirus patients using the treatment the experimental drug helped people diagnosed with mild to moderate covid symptoms get rid of the virus sooner. The Clinical Trial is ongoing and it has enrolled 800 patients that stock is up 2 premarket. Joe. Thanks, melissa. Snowflake, snowflake, could be the hottest ipo of the year the Cloud Data Management Company begins trading today and investors are paying up to get in leslie picker joins us now with more for years all it meant was, you know, the things that youd see starting in november and december but now when i read it, i cant help i just think its almost its used as a pejorative, isnt it, sometimes . Yeah, i think the company was founded before that came about i dont know, maybe that will help them to a certain extent with some of the robinhood trader, well see. But that deal coming in at a whopping 36 times forward revenue, likely the highest multiple ever for an ipo of this size and scale snowflake is garnering a 33 billion market cap with shares 40 above the range it had initially sought throughout this process. Just to give you an idea of how the market is revaluing software in a pandemic world, snowflakes current market cap is nearly three times the valuation it received in a private round just seven months ago in february i spoke with some investors about this deal and heres where they see the opportunity snowflake provides cloud based Data Warehousing software for large enterprises. The popularity of this model allowed snowflake to see revenue jump 133 in the First Six Months of the year to 242 million. Rarely, guys, do you see this kind of growth at scale, even though the company is still unprofitable and heres the kicker. Snowflake landed an unprecedented anchor investor, Berkshire Hathaway, handing over 735 million concurrent with the ipo. While it was todd combs who signed the s. E. C. Paperwork related to this investment, it would be the firms first ipo going back half a century to fords 1956 offering well hear from snowflakes ceo in just a few hours on squawk alley. Guys so if its so highly valued, what does that mean for the deal today, the debut no, its a good question. So we took a look at some of the other recent Software Ipos that have come in at loft evaluations. The second and third highest, data dog, zoom info, both over the last year or so, they came in at 19 and 18 times respectively on their first day of trading data dog was up 39 , zoom info was up 62 if history is our guide that bodes well for snowflake that said, snowflake is coming in at 36 times, so thats many, many turns away from these other Software Companies that in their day just a few months ago were seen as pretty high values so it will be interesting to see how the market receives this one, but it certainly has the wind at its back, the momentum to at least it has a lot of people on the street talking all right very good. Thanks, leslie well be watching it all play out today. Andrew thanks, joe meantime the fed wrapping up its latest twoday meeting ahead of the Central Banks Interest Rate decision jamie dimon making headlines by saying effectively the fed has done enough at this point to support the markets. Heres what he had to say at cnbcs 2020 singapore Virtual Summit i think theyre doing the right thing now, which is to let us get through this. There are going to be serious issues about government deficits, fiscal and monetary stimulation. Thats kind of a secondary problem right now. This is the problem. We can get through this and hopefully cooler heads will prevail how we can unwind some of the stuff wisely. Joining us right now to talk more about this is rick rieder, chief Investment Officer and head of the global team at blackrock. I want to talk about jamies comments but really wanted to mention leslie, just prior to the segment we were talk about snowflake. You look at thevaluations youre seeing in the marketplace around some of these new Tech Companies and the like theres so many questions about whether the fed is sexual abuina bubble im wondering if you think they are. Its a great question i think ultimately the governor on whether the fed has to move, i dont think its going to be inflation. I think keeping financial conditions as easy as they are will ultimately create valuations that are too high i think thats whats going to push them off the dime do i think were in a bubble today . I dont. I also think that some of these new businesses, the ability to scale and how commerce has changed. Many years ago we talked about tesla, et cetera you think about how many your ability to create scale, your ability to change commerce, i think were going through a revolution in technology i think listen, some of the big tech got a bit full and deserved to recalibrate. But i dont think were in a bubble yet i do think if you keep rates at zero through 23, if not longer, what thats going to do, think about what it does to financial conditions when you put the discount rate on assets at zero, all of a sudden those assets, particularly if youre a growing company and particularly if you have Free Cash Flow growth, they become pretty attractive the 10year note is not very interesting but you have to find other ways to generate return. But what would be the Tipping Point at which then you think that powell puts his foot on the brake . You know, andrew, markets are you think about what drives Business Today or drives the financial systems, everybody has a return target. That return target doesnt really change. You think about what your liability stream is, what your irr target is. So ive got to hit a return target how am i going to get there . What are the tools that i have to get there you think about what happened years ago, the financial crisis and otherwise. When you keep rates low for too long, it will create leverage building up in a system, it will create stress in terms of overpurchasing of assets at the wrong price. Listen, i think the equity market is where a lot of the income is today. The fixed income market, there are parts of emerging markets, but the equity markets is where all the income is today. We look at some of the dividends being paid out to Free Cash Flow yield generation, but then its going to get overdone. But just to put a fine point on it in terms of the valuations, you think even tech valuations today are very much within the realm of reality, meaning you dont think that they are being artificially inflated but it sounds like you dont think theyre being artificially inflated yet. Thats correct. Listen, i think what happened in august and the beginning of september, some of the valuations and some of the big tech names got extreme the call option activity was unbelievable ive never seen anything like it and now its pushing some valuations of six or seven companies to levels that i think were too high. I think that was a very healthy recalibration. But i look at a lot of business. I think whats the most fun today is a lot of these new businesses, these new companies coming to market, cloud, ai, data simulation, these are really exciting businesses their ability to get scale quickly. You talked earlier about draftkings think about how you can create scale globally its different than anything weve ever seen before, and i think youll see commerce change pretty quickly and were witnessing that play out today how do you feel about the unloved cyclicals that i think theres still a waitandsee attitude given the pandemic about whether theyre going to come back and when ostensibly you want to get in before that moment happens i imagine its a bit of a binary event around the vaccine maybe its not binary, because it could take quite some time. Weve heard from officials on a vaccine level basis for the whole world it might actually take several years to actually vaccinate the world. Weve done a bunch of that. Per the discussion about big tech being too high, weve rotated an awful lot into the cyclicals. I do think the economy is in good shape i think well continue to get retail sales you could get a monthly aberration, but the consumer is in good shape. The economy is in better shape weve talked on your show for months now the economy is in better shape than people give credit too. Im not a big believer to buy what is, quote unquote, value, companies that are old businesses where commerce is changing the efficacy of their Business Model but i do think cyclicals, whether its in trucking or rail or chemicals, i do think theres some interesting cyclicals to play in todays environment. Weve done some of that rotation i still think its there to do and then finally, we started this interview showing you that clip of jamie dimon and i want to get your thoughts on that particular comment that he made. Specifically about how much were really supposed to worry about the debt long term so listen, first of all, i think his point about i think the fed has done an a plus job i think what theyre doing today is paving the runway for more fiscal stimulus. I think liquidity is a big deal. I think moving Interest Rates, were done on Interest Rates im not sure you have to be at zero liquidity makes a difference fiscal stimulus is a really big deal because its targeted, you get an income redistribution, an infrastructure spend, you get a health care spend. I think the fetd d is doing tha and paving the way i think the economy can absorb higher levels of debt because of the aging demographic. I think we can absorb a bit more debt the key goal is to put more people to work and you can do that through fiscal. So the Economy Today can absorb it weve got to grow nominal gdp to diffuse the amount of debt thats glowirowing, but you cane some more today. Rick, always great to see you getting your perspective and insight. Hopefully we can do this in person soon. That could be good. Weve been doing this through the screen for too long. Id like that. Rick, thanks so much, appreciate it. Thanks, andrew. Melissa, over to you. Whats it going to take to get new york city humming along and fully back to work bill rudin will join us next. Check out shares of fedex. Earnings crushed estimates in the companys latest quarter volume surged 31 , operating margins a real bright spot the stock is up 9 stu stay tuned, youre watching squawk box on cnbc i feel like were forgetting something. Let me check. Xfinity home gives you peace of mind from anywhere with professionally monitored Home Security built around you. No, i think were good. Good. So when youre away, you dont have to worry. The tent. We forgot. The tent. Except about that. Xfinity home. Simple, easy, awesome. Hey look, i found the tent and, see, its safe. Call, click, or visit a store today. Welcome back to squawk box. General motors announcing mans to manufacture its open family of electric vehicle drive systems and motors gm has ev partnerships, including one with nikola. Nikola shares are under pressure under reports that it is under investigation. Tesla shares are down by 1. 3 , but of course the relationship, the partnership with nikola is really highlighting some concerns about gm and whether or not it actually did the Due Diligence necessary to enter such a deal, joe. Jpmorgan is reportedly sending some traders home after one employee tested positive for covid19 this comes just days after the bank told traders they were expected to return to inperson work by september 21st the reported setback underscores the challenges of reopening offices in the covid world lets bring in Real Estate Developer bill rudin, the ceo and cochairman of rudin management and the chairman of the real estate board of new york we are still kind of right in the middle of all of this, bill, and learning as we go. Bring us up to date just on the state of things in your view in new york city and elsewhere. Well, the state of things i think are Getting Better literally by the day our occupancy levels in our Office Buildings were at 15 yesterday. My guess is next week when Public Schools reopen well be over 20 i think youre seeing that across the city. You mentioned about jpmorgan but obviously this virus, as we all know, has not gone away. We have to remain vigilant, wear our masks. Ive got my big apple mask here, we wear it around the office and in the streets were going to have little setbacks and so well have to remain vigilant, continue to test, continue to social distance and im pretty sure that the requirement that jamie talked about in terms of getting his people back will continue. Just have to continue to work hard and do all the right protocols, social distance, wash your hands, and i think well get through this i think also as i mentioned before, people are coming back to work. Youre seeing the marketplace in new york continue to positive things happen. We Just Announced a major deal the other day with wework moving about 500 of its head quarter employees to our building in brooklyn, on top of amazon making an announcement that were moving into 40,000 feet of space and williamsburg moving from Hells Kitchen into brooklyn, and were seeing really positive signs and activity continue to grow. Were building we own a building right behind you at 3 times square were in the midst of that starting a major buildingwide renovation. Were seeing very strong activity we have some announcements well make in the next couple of weeks about some renewals and other deals. So there are positive things going on, but we have to remain vigilant, theres no question about it hey, bill, covid is one thing. Lets say that there is a therapeutic or a vaccine are you convinced that some of these other issues in new york city and big cities around and for lack of term ill call them quality of life issues, and im referencing that letter that the ceo sent to mayor de blasio, is that going to be an issue after we are through this pandemic in your view . I think were already seeing quality of life issues get better in the city the mayor and the governor over a month ago allowed restaurants to have Outdoor Dining if you walk around the city today, many, many restaurants are open for lunch, breakfast, lunch and dinner were seeing a tremendous amount of activity at the end of this month. Limited indoor dining, 25 through the month of october will happen and then it goes to 50 if everything goes well. But i think your previous guest was talking about the Federal Reserve. Chairman powell has continually talked about the need for the federal government to get aid to cities and states all over the country. And i think theres a frustration level literally every place around the country where we need to get that aid. And that will help our cities get through sort of a bridge loan in essence, because we lost significant revenue, theres been some cut backs in services. But if we start getting federal help, that will help us get through and deal with education, safety, homelessness, you know, all the basic services that the city needs i think there were other letters and other conversations going on and i think the city is responding yes, andrew, how are you . Hey, its great to see you. I have two quick questions for you. One is that you were one of the signers of that letter and immediately the mayor used that letter to effectively say to the Business Community, if you believe that, come support me and our effort to effectively take out more loans. Not just get money from the federal government, which is something i know you are backing, but to go get additional loans, something the new York City Partnership i believe is adamantly against where do you stand personally on that well, as representing the real estate board, we have been very clear weve followed the lead of another Organization Called the Citizens Budget Commission that has been very clear that no borrowing should happen without a comprehensive and feasible plan that leads to fiscal stability like all of our companies and businesses, weve had to go look at our expenses, how we operate, and the city needs to do the same they need to have a concrete plan that shows through attrition, not through layoffs, through restructuring of contracts with unions, working with the private sector. Part of the Partnership Letter talked about Public Private partnerships, something that my father created back in the 70s when he started the association for a better new york, when the city was near bankruptcy, and the realization that Business Leaders have that government cannot solve the problem themselves they need to bring in private sector then let me ask you this. Why has the why has the Business Community in new york city not pushed harder, and also spent money, to create a massive Testing Program . When people talk about how you create confidence in the system, ultimately even when you get a vaccine, testing is going to be a key component of this. As much credit as you can give to cuomo after some of the problems some of the problems is maybe an understatement that we had in march and april, but in terms of actually having real surveillance testing for Public Schools, for businesses, so that you can actually get traders into a jpmorgan without having the problems that were starting to already see, and we can actually have the confidence come november and december when it becomes colder outside and becomesharder to do some of these other things, that you can actually continue some of them well, i think there is significant amount of private sector testing going on. Were working on a couple of initiatives for our company and for our buildings. I know other Major Companies have instituted testing, and im sure thats part of the reason why they were able at jpmorgan to catch those couple of traders early in the process so there is there is significant planning and use of testing. But there again, the federal government needs to ramp up through their authorities to get the producers of the test kits out there in a much more rapid way. Youre seeing spit tests coming into play at schools and at companies. So i think as the production of these testing ramp up, you will start seeing more and more of that deployed. That definitely is a key to getting people back into work and feeling more confident our company, were at 50 occupancy. Im in my office were encouraging our employees to come back to work were starting to see that and i think there is a confidence level thats building up but again, as i said at the beginning, cautiously bill, what kind of Testing Program do you have at your company . Bill, if you have 50 of the people coming back to the office, whats the testing protocol we have our employees tested every month through a pcr test we may every month every month once a month . Every month we may move it up to every two weeks as we start moving up into more people coming to the office so we have a doctor who we consult with and gives us guidance weve had that doctor with us from the beginning of march or actually february helping us and guiding us through a lot of these questions about how to deal with the virus. So you seem surprised a month. Not enough or too much too little. I would be thinking youd want to do it twice a week. You have to balance you have to balance all these issues out. Maybe we get there, im not sure but so far through our testing, none of our employees in our main office have since march have had any covid i hear the music again, bill. Thank you, bill rudin. Appreciate it. Were going to get through this i promise you. All right well get through it together as they say bill, than. Mi up, breaking retail sales data stay tuned, youre watching squawk box on cnbc when i was in high school, this was the theater i came to quite often. The support weve had over the last few months has been amazing. Its not just a work environment. Everyone here is family. If you are ready to open your heart and your home, check us out. We thought for sure that we were done. And this town said not today. 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. Welcome back to squawk box. Rick santelli standing by with breaking retail sales data rick, the numbers. Yes were waiting for our august retail sales number. China had theirs and they finally turned positive. They had their first positive reading of the year. We went positive much earlier than that. Our may reading was positive here we go, up 0. 6 of 1 on the advanced retail sales for august that is not as high as the expectations we were looking for a 1 number. If you strip out autos, up 0. 7, we were also expecting up 1 there. Take out autos and gasoline station, sales up 0. 7, we were expecting up around 1 and finally the control group number that gets fed into other data points actually minus 0. 1 of 1 . Were expecting up 0. 3 these numbers are a bit on the soft side. They arent out of the realm of positive, though, and thats a good thing other than the control number but it is an advanced read and they put in advanced for a reason because this will get tweaked in the final august numbers that will replace these. Ultimately, the effect on the market, at least the markets that are open, we see 0. 66 on a 10year note, which has been hovering right there, right in the midpoint between the high at 90 basis points from june and the low, alltime low of 0. 50, half of one percent in august. The median is 0. 7 and thats where weve been gravitating to. Revisions are coming out subtle revisions all taking something away so the number last time of course was up 1. 2. Thats now up 0. 9. Strip out oos, that moved from 1. 9 to 1. 3 strip out autos and gas, up w 1 1. 1. And the control number moved to 0. 9 so both what we received and whats in the Rearview Mirror both a little less than we were expecting. Back to you. Rick, appreciate it stay where you are, i want to bring in Steve Liesman to join us with more on these numbers. Steve, are you concerned concerned, but not necessarily surprised, andrew. This is a hit to the economy thats recovering faster than we thought. Im going to throw out what i think is perhaps the culprit here, which is that 600 benefit from the federal government wore off or expired in the month of august i think what happened is we took a hit to the growth rate of retail sales as a result im looking at things like discretionary spending, sporting goods, hobby, Musical Instruments and bookstores down 57 nonstore retailers which tries to capture the internet, up zero after being very, very strong. Rick is correct to point out the control group. Thats going to feed into gdp. I think its also worth pointing out here that what were looking at here, Consumer Spending is twothirds of the economy. The good spending within that is onethird of Consumer Spending the other side of this, the e s service sector, is the part thats probably been hit the hardest. So what im saying, the good sector has to hold up very strongly in order for Consumer Spending to do well. Look, the economy is recovering. We have estimates of a 30 rebound in the Third Quarter its been up from 20 and ive seen estimates as high as 35 . This could perhaps knock it down i do think, though, that it may be a bit of the writing on the wall if we dont do more to get funds out to people who are unemployed or at least some additional benefit from the federal government out there that 300 benefit from the executive order from President Trump does seem to slowly be making its way out but didnt necessarily make up for it rick is right, these numbers could be revised but the june revision was downward. Sorry, the july revision was downward, the august numbers are a bit of a disappointment, though they are still growth okay. All right, steve. Thank you so much all right, steve, thank you we appreciate that and rick, you said high. I really was thinking with the revisions you were going to say higher but it didnt come. Coming up, more reaction of this breaking data with our allstar retail sales pal. Ne stay tuned, squawk box is coming right back. [ thunder rumbles ] [ engine rumbling ] [ beeping ] [ engine revs ] uh, you know theres a 30minute limit, right . Tell that to the rain. [ beeping ] for those who were born to ride, theres progressive. Ms. Williams weve been working hard. Ms. Robinson . To make learning fun again. Ms. Duncan and making sure our students can succeed. Ms. Zamora were with you every step of the way. Ms. Robinson i know its a challenging time. Ms. Zamora no one wants to be back in the classroom more than teachers. Ms. Williams we have missed you so much. Mr. Hardesty but we all have to be safe. Ms. Robinson because were all in this together. Narrator making our School Buildings safer. Ms. Robinson working together, we can make it a great year. Narrator because the California Teachers Association knows quality Public Schools make a better california for all of us. Welcome back to squawk box. A gain in retail sales last month coming in below expectations, both on the headline number and exautos joining us is matthew shea, jerome martis and justin norman. Matt, ill start off with you. What do you make of this, because its not just the below consensus estimates that came in for the month but also the revisions lower for previous months how do you think about a reduced benefit Going Forward, and if theres a compounding effect consumers know that its going to be reduced, consumers think that it may not be coming and so that they pull back even more . Yeah, melissa first of all, good morning i think you are view on this, the numbers are a little bit mixed, but as both ricks, Rick Santelli and earlier rick rieder, said, consumers are actually in pretty good shape. If you think about the way consumers have been behaving over the past few months, they certainly responded well to the relief measures that the federal government, the fiscal stimulus that was put in place that supported the recovery, the 600 a month 600 a week bonus unemployment payments as well as other dimensions of the relief program. So that did taper off. That ended in july so not a surprise we see a little lag in august i think looking ahead, the question is going to be how do consumers behave as we go into the Holiday Season, which we know is going to be beginning earlier. Everyone is behaving differently. Youve already seen public announcements from retailers about how theyre thinking differently about the Holiday Season were about to go live with a campaign helping to education consumers about how to behave safely, responsibly, respond to the Holiday Season so i wouldnt get too worried about the august numbers but weve seen the relief recede id be looking more how we go into the Holiday Season and the rest of the year. Jeroan, what data are are you looking at to see if consumers open up their wallets come christmas, come hannukah, whatever holiday you celebrate the one indicator is the unemployment number. The Consumer Confidence report is telling us unemployment is beginning to shrink and consumers are feeling slightly better about their economic situation. Still, with the money that they had in the second quarter, they definitely went out and splurged now were seeing a slowdown going into the Third Quarter the data tells us for the second half of the Year Spending is expected to be slower than the second quarter, especially in the Third Quarter as consumers take a break right before the Holiday Season then the Holiday Season were expecting to see earnings drop about 22 for the retailers and then its not until the First Quarter of 2021 that well start seeing positive growth again justin, what are you seeing on the closure fronts . Restaurants and retailers were the hardest hit. Are you seeing closures tail off, start to taper . And does that jive with the Economic Data that were seeing . So it jives pretty well, but unfortunately we are still seeing closures in all categories but in particular for restaurants and retail, which continue to be the hardest hit early on in the pandemic we saw a lot of Retail Businesses be able to shift their operating models, offering things like curbside pickup, online ordering unfortunately those measures arent always enough to sustain the business over the long term so we ended up seeing at the ending of august about 30,000 total business closures in the Retail Sector and shopping categories at 17,500 thats the majority of which are permanent. So were definitely going to see a different landscape for consumers both in how they access the shopping activities and then also the specific businesses theyre able to go to based on the closure data. Matt, that would seem to be very concerning to see this level of closures because youre talking about as justin mentioned the ability to Access Services and goods but also each business implies people. They have Business Owners and all of a sudden theyre out of jobs, which seems to indicate that the pain is still to come, as closures continue, and that sales might be even slower well, certainly its sad and unfortunate to see these business closures. Thats one of the reasons that weve been encouraging the administration and congressional leaders to put additional relief into the economy from fiscal stimulus, because we really do believe those Small Businesses need that help i think if you look at closures in the context of the total number of businesses, and again those are only statistics and so it belies the real pain that people are feeling, but were talking about an environment in which there are almost 1. 1 million Small Businesses in retail and restaurants and weve got substantial closures, certainly more than we want to see, but im not sure than other than signaling dramatic transformation in the near term, i think over time youll see recovery there similarly, the bankruptcy issue i think in the same context, there have been about 40 announced this year. If we go back to the recession of 20082009, there were 400 each year. So were still dramatically lower than that. I think we need to get back into keeping the economy open, reopening business, and i think thats what were seeing is the intersection of relief tapering off as businesses are trying to reopen thats why we have this little august lag. Were going to leave it there. Thank you all. Thanks, melissa coming up, mega asset manager blackstone saying investors face a potential lost decade ahead heres what the firms executive chairman said on squawk box asia this morning i think this could be a lost decade in terms of equity appreciation, both because at some point well have Interest Rates normalizing somewhat or at best stopping further decline on the one hand and 10 therethen ts plenty of headwinds for corporate earnings. And well get reaction from the leader of one of the Worlds Largest Pension Fund Managers and ask where shes ndg fiin value right now. Stay tuned, youre watching squawk box on cnbc welcome back to squawk box. Take a look at futures right now. We are in the green across the board. The dow has come off a little bit, about 116 points if we opened up this second. The nasdaq would be up 48 points, s p 500 would open up about 17 points. Melissa. Coming up, marcie frost on where she is looking for value in these markets and jim cramers first take on the day ahead. Check out the premarket gainers on the s p 500 in the meantime youre watching squawk bo oxn cnbc fedex leading the charge there lets get to cnbc headquarters, jim cramer joins us now jim, i know how you watch these things, and theres just no way that youre not looking at fedex. I mean its going to be a twoyear high in the stock i tell you what i thought, and i want you to tell me help me with this. So online we get it. Online my wife was just here saying its online im telling you, its online theyre here every day is that all, or is it also just a Strong Economy is it a little bit of both or just the pandemic play first, hi to penelope i think whats happening is its much stronger than expected. Its so strong, for instance, that they can raise price, that they can take surcharges, they can take another surcharge theyre talking about theyre going to have the mother of all i mean four times, joe, four times they talked about a peak like none other that is coming up, four times. So whats happening is they expect a strong Holiday Season theyre seeing numbers they thought would happen in 2026 and 2023 and theyre a beneficiary of the fact theres so few actual commercial planes, theyre cant they are out of it, that things are better, and i think its one of those calls where the numbers just back them up its quite a Conference Call i urge people to listen to it because its a very optimistic hopeful call jim, i may show my ignorance here there is a lot of amazon trucks around so im figuring, you know, that thats got to be its not all fedex, but in the whole logistics chain is fedex involved somewhere in just about everything that Online Shopping . Well, i had Union Pacific on last night and Union Pacific is experiencing basically a boom in ecommerce, thats their word, not mine, and a lot of it is just everybody every truck in the country, every train line in the country is stressed by amazon and its colleagues. Because its also walmart. There is no doubt in my mind walmart is a partner of fedex that we just dont have enough infra, infrastructure to handle all the ecommerce and the jump that it was supposed to be that it went from its 26 its just right now it went from 15, 15 last year, to 21 and they are seeing that a lot of it is up, you know, up in 26, 28 i mean, europe by the way very good for them at last. Its hard to believe, joe, that things are as bad as people think when you look at those numbers. All right last question, jim so, you know, its a big component of the transportation average which a lot of times is a harbinger of good things to come for the other averages and for the economy. Do we say, oh, but thats just fedex, which is up because of online, or do we say it doesnt matter why its like that, it just is . I dont know. United parcel ask doing kprat, xpo is doing great every Trucking Company is doing great. Theres tremendous business back from china and forth from china. So i dont know. I mean, look, your panel before about Small Business, the yelp analyst, none of this stuff uses this one of the things thats so great is they literally talk about how we transferred from a true Service Economy to an economy that is about things and delivery levels and, you know, its a change entirely in the country and they are the biggest beneficiary and the analysts are just now realizing about the pent up demand extraordinary. Okay, jim. Thank you. I know that i know this is going to be on your mind at 9 00 and we will be watching on squawk on the street. Its a very important call. Very important yeah. Okay thanks, joe. Meantime, mega asset manager blackstone warning of some potentially tough years ahead for Equity Investors here is the companys executive vicechairman on squawk box asia earlier today. I think this could be a lost decade in terms of equity appreciation, both because at some point we will have Interest Rates normalizing somewhat or at best stopping the further decline. On the one hand. And then theres plenty of headwinds for corporate corporate earnings joining us right now for her take on investing in the days, months and years ahead marcie frost from calpers, the largest defined Public Pension Fund in the country. Good morning to you. You heard that comment and if its right its going to make your job that much harder. Do you agree with it yeah, i think we do agree with it, but we always have to remember that were longterm investors, we think in terms of decades not quarters, certainly our credit teams can be quite active looking at opportunities including in the private credit or private debt space which were able to fund a number of those deals during the market volatility due to covid19 so the teams are active, but for the most part we would agree with that sentiment. And if thats the case, what is your target, whats your benchmark in terms of the target that you think is reasonable in this day and age what does that do to your budget and how do you invest against it right so our target is 7 over the long term and currently those Capital Market assumptions for the ten year and the actuarial assumptions at the so and 30 years mark have come under 10 we are concerned about the current positioning of the portfolio, we will be leading our board over the next 12 months through our Asset Allocation and Liability Management cycle where we will be looking at how to deploy this capital across the various Asset Classes. Meaning diversification continues to be extremely important to us, we are primarily passive on our equity side, our public equity side of the house, but we have to take a stronger look at private equities if we can increase our target allocations both in private equity and private credit and then the other part of our Investment Strategy would be to look at putting leverage, some amount of leverage, a prudent amount, on the portfolio itself but, again, long term investors and we have to be really thoughtful about shortterm disruptions but the long term macro trends or micro trends will be much more important to us marcie, let me ask you about that and a you just mentioned private credit and private equity your former cio departed last month and we can talk about that in just a moment but he had been a great champion of moving more of the money into private equity and private credit has that strategy not changed at all and do you imagine it may depending on what the mix of your team ultimately looks like . The strategy really is not going to change. It really is a calpers strategy, certainly was being led by our former chief Investment Officers, but calpers has had a pretty significant allocation to private equity for a couple of decades, went into asset class i would say in the early to mid 80s similar to washington and oregons systems we understand the importance of private equity to the portfolio, its one of the Asset Classes that is expected to earn greater than the 7 so we need to up the policy target to that asset class, the policy target today is around 8 and so really the challenge for calpers is to continue to work with our general partners in the private equity space to find those deals and find those opportunities to partner together, to improve the pacing, we have had a little bit of inconsistent pacing during fundraising that has really i think harmed the returns we had at one point stopped our coinvestment program, we want to get that restarted and have gotten that restarted immediately. That helps with some of the fee drag and then also the diversification of the way that we invest in private equity. We really have not done much in the growth space, weve done more in distressed, for example. So i think its less of a byproduct of the departure of our chief Investment Officer, more of the fact that calpers has to have exposure to that asset class in order to hit its return target. Marcie, i know you are a longterm investor but there are a number of investors putting a lot of money into the private equity space now thinking that theres going to be a moment of distress and that that would make this current vintage thats currently being raised right now and in the market a success. Do you agree with that i think fundamentally we would agree with that. We are certainly working our deal teams are certainly working with a number of our high quality managers on some fundraising. We had funded some deals, we have some deals certainly in the pipeline, but, again t goes back to the consistency in your pacing if you have concentration risk and in particular vintage then that can be problematic to your longterm return we are taking a serious look at everything being brought to us. Marcie, i have to ask you about the departure of ben meng. He departed over concerns about a conflict of interest having personal holdings. Can you speak to it and what it means Going Forward for calpers . Right unfortunately mr. Corbat meng did decide to resign from the fund, you know, and i cant really speak, you know, in too much detail about the reasons why, you know, this is a very public job, we have a 415 billion portfolio and it does cause quite a bit of public attention. Some chief Investment Officers would certainly prefer to focus on the portfolio and focus on the team, but, you know, the next chief Investment Officer has to understand that its both understanding how to manage the portfolio, build a very strong and competent team, but also understand the public nature of the job. So one of the things that we are looking at, our board is meeting this week, is whether the new chief Investment Officer would need to put any Financial Assets into a blind trust, that way it would avoid any perception of conflicts and truly avoid any actual conflicts as well okay. Marcie, appreciate it very, very much thank you. Thank you again for joining us this morning. Yeah. Fascinating to hear about all of it and i hope to talk to you very soon. A quick thank you to melissa for keeping us all honest this morning. Always great to see you. Always a pleasure, guys. Joe, we will do this again tomorrow looks like weve got a big week ahead. We do what did you say . Friday its back to the bromance with the two of us, i think. And ilk back at the nasdaq tomorrow, and drew, so maybe less of a lag, which would be good, less of a delay. A lot to look forward to. Meantime, i want to thank everybody, make sure you join us tomorrow when joe is at the nasdaq and squawk on the street begins right now good wednesday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer and david faber. Futures are solid for a Third Straight morning as we await a fed at the same time and presser this afternoon big ipo day, snowflake pricing strong, retail sales were a miss and oil is responding to Hurricane Sally which did make landfall as a cat 2. Our roadmap begins with fed watch, News Conference later on this afternoon, stocks are set for gains at the open. Quote, a lost decade for stocks, blackstones warning for investors about expected economic and corporate headwinds. And big tech measures, the ftc eyeing an antitrust suit against facebook and spotify