Transcripts For CNBC Squawk On The Street 20240712

Plus tiktok continues to tick in the u. S President Trump gives his blessing to oracle and walmart buying a 20 stake and shares of electric truck maker nikola tumbling after a firm accused the company of making, quote, an ocean of lies. Jim, theres going to be a lot to process, not just today but all week long. We have 14 fed speakers during the course of the week and powell three times well, look, powell is on the side of those who believe you should be a buyer. Its pretty clear that powell does not want things to collapse a stimulus dealdeal that seems like a thing of the past were down off of something no one understands. Maybe uk lockdown. Thats not us. Maybe madrid lockdown not us this banking story so emamorfs in other words, what im saying is weve been down for three straight weeks, carl the big faang stocks are down double digit this is when you start thinking maybe there is something to buy. Its been so bad for so long and everyone is watching and these things are really going down no, thats when you think about what to look at. You know i love a down opening i know you do at the same time, 30 states up 10 in the past week in terms of case load. You have utah, montana, north dakota setting records on cases. Positivity up in 25 states i mean, its not like temperatures arent going to do here what theyre doing in europe, jim. No, thats true i do think that when we see these numbers spike, we also have some other things i know its anecdotal. Why did the big ten go back . They found it was not that bad for younger people big 12 no problem. We had every single sport. Baseball, nba, the dome worked is that the country . I think the places where youre having a spike are places where social distancing and masks are just unfashionable for somehow the thing i find most incredible here is that in new york theyre not coming back. Theyre not coming back because of things like four people in an elevator and waiting for an hour for an elevator to be open david, we are in an extraordinary time where its just not working in new york to go back to work and everything has always been happening here and then spreading the rest of the country. So, i know the that things are spiking, david im not giving up the idea that the worst could be over for now if we get that antibody. If we get something. I have lilly on tonight, i think theyre close, david you think theyre close in their antibody i have lily on tonight. I think its important to stay focused on this. Without a doubt it is and we have remained focused on it. We take a look at who you have on on mad money. Good group there mr. Quincy and then the small molecule antivirals and the move to a vaccine and to your point, at least cities like new york, of course, suffered so badly in the spring have kept it extraordinarily low for quite some time, jim doesnt mean there isnt concern about spread obviously overseas again and in the states that are seeing a rise and were headed into colder weather. More people going to be indoors, at least in many places that we know and live that creates more questions and concerns look, carl, i would say my view has to do with a slow rise back but aggressive action by American Drug companies to come up with something that makes it so that youre not in the hospital that long i am a believer that a lilly and a merck and regenron are working on if you had enough people in the trials you would be really impressed. By the way, now if these hot spots are out there then youve got the possibility of moderna, pfizer, j j having people in the hot spots and see if they get it im betting on science, not the country. The country is just not there. The president did say pfizer is in the poll position this morning on fox in addition to making comments about tiktok, of course, over the weekend. Lets get to eamon javers. The president was on television on another network describing this tiktok, byte dance, walwalmart, oracle deal a came together over the weekend entirely in different terms than it was described by some of the parties as they laid out the terms over the weekend heres what the president said about this deal on fox just a short time ago they are going to buy it. They could have total control of it they are going to own the controlling interest everything is going to be moved in into the cloud and entirely controlled by oracle and then i guess theyre going public and buying out the rest of it and buying out a lot if we find that they dont have total control, then were not going to approve the deal. So, the president there, carl, suggesting that oracle and walmart will have total control over this deal the chinese wont have a role in it and he says if he finds that is not the terms of the deal, he will not go through with the deal the president describing this in a very different way than the parties described it over the weekend which was a 20 acquisition by oracle and walmart and then byte dance remaining with 80 of the equity in the new entity. That was the deal described over the weekend. Now the president suggesting that oracle will somehow and walmart will somehow have total control simultaneous to that or nearly simultaneous to that. We have a new statement from oracles coms department which maybe adds some clarity or doesnt add clarity into exactly what is going on here. Heres what theyre saying now upon creation of Tiktok Global oracle walmart will make their investment and the t oirxiktok s to their owners and byte dance will have no ownership in Tiktok Global will bytedance having any ownership . Oracle saying bytedance will have no ownership in Tiktok Global well have to get some clarity on what that means a question over the weekend if bytedance itself has american investors, and 40 of bytedance is owned by americans then that 40 of the 80 stake along with the 20 acquisition by walmart and oracle would amount to overall american majority control of the new entity. This new statement saying bytehabyt bytedance has no ownership in global is different from the way the deal was described over the weekend. The president describing it in different terms. All of that moving the ball. We have to find out where this deal stands and what is on the term sheet back to you. Dont go anywhere i want to turn to david on this because im looking bytedance limited with tiktok limited. The deal was described in the press release we got we told you last week 20 that was the case eamon notes it was not a totally controlled u. S. Entity in any way, shape or form given 80 . But what eamon offered from oracle is different than what we got in the initial release here in terms of talking about the 20 stake. You do have large u. S. Based investors that own a big deal of bytedance. That is true eamon, can you read to me again the language and i dont havei in front of me the language oracle shared with you about the own eer structure can you. Can you read it. I want to try to understand it a little bit more. Youre absolutely right to focus on it. Upon creation of Tiktok Global oracle walmart will make their investment and the Tiktok Global shares distributed to their owners and bytedance will have no ownership in Tiktok Global. Right they must be somehow and, you know, General Atlantic and the others sequoia must be rolling in something we discussed they will have to value their bytedance holdings to roll into what the valuation is here i heard 50 billion. I cant guarantee thats the number i know we heard as high as 60. Some have reported but i heard that the value being placed on Tiktok Global is roughly 50 billion, which would mean 10 billion investment from oracle larger from oracle and then walmart 10 billion from the two of them combined and then valuing somehow the bytedance ownership of those owners i just mentioned who then roll in. The whole thing is very complicated still, i think and not clear. Not to mention the president s comments totally unclear i mean, the story was right this morning. Did something change between the journal story and now . Maybe bytedance is offering stock in an ipo that will come in the next 12 months. I dont know where this came from well, you know, jim, it came from the president what the president said is that oracle and walmart will have a controlling interest and total control over the new entity. Thats not at all the way this deal was described over the weekend. The president describing it that way on television this morning i asked the white house immediately after he said that on National Television i asked the white house what is going on here and white house officials referring me now to the oracle statement saying oracle just put out this statement, look at that. So, you know, thats what weve got as of right now. Are they talking about the board . The board is going to be american the board will be american but this is, i dont know. I think, frankly, not a lot of clarity here to say the least we need a lot more detail by the way, we dont know what Tiktok Global is. Right it said it comprised most of tiktok and i assume it doesnt mean china but i dont know what Tiktok Global is we thought what they were talking about the u. S. , new zealand, uk and canada and all the English Speaking places. But well try to continue to make sense of it and we still dont have a number in terms of where they valued it but, david, isnt it possible, david, that nothings happened and the president is describing a level of control that we would normally on wall street not think is in control without a doubt yeah, yeah he may be conflating some of the control levers that have nothing to do with economics but with the other issues right hes not talking about the 25,000 jobs and the austin location and the fund that theyre going to put together. Hes really attacking something that i think all of us until this morning felt is not true. Yeah. Meanwhile, just to step back for a second, guys bytedance has to be really happy. I know that sounds strange with this deal. Valuing the asset as much as 50 billion which i hear is the case, thats a win for them. Dont forget when we originally believed that the entire asset would have to be sold to a u. S. Buyer, ala the microsoft deal, there was no one i spoke to that microsoft would come above 30 billion for all of usa and the other countries i mentioned. The fact as high as 50 and monitorize their stake into the future and a win for sequoia and sig and General Atlantic its a win for all of them, jim. Where it ended up and where it looked it might have gone. Those are the winners unless we hear otherwise, i have to believe that it is going to be a u. S. Company. I mean, where is mr. Mayor he could come back and do it but bytedance has a substantial stake and 40 of bytedance is the General Atlantics and the sequoias they do quite well i was thinking the United States, the president was going to trump at the jobs and austin and how the control would be, not total control, but control would be here. But at the same time, theyre still there. Youre right, david. You could argue it is a win win. But that you have to argue that there is a w for china okay w for china, not just the United States its not, remember, this is not owned from the people, its not huawei this is a win for the founder. 38. 36 years old or so. Hes 38 they create a lot of billionaires in china. They do they do. Communism is incredible and create billionaires. Carl, they create more billionaires than we do in the valley pretty interesting you know, snowflake versus beijing. I just find this, we have to get more facts on this thing and we have to get them before the open oracle is up big we dont really know what oracle is saying. So, i dont know, david. They have a web hosting deal, jim. Sd yeah. Theyve got zoom and that and walmart. Walmarts got a good deal and mcmillan is very excited about it i dont know i just think the president is really excited about it. Before we wrap up our opening block here, jim. Lets go back to the markets themselves i mean, we talked as well about the banks. Are you concerned at all about these latest issues . Do you seem at the open to not be as concerned perhaps, at least for u. S. Banks boich Deutsche Bank is a mes. Well, that was Deutsche Bank to link jpmorgan with Deutsche Bank without jpmorgan coming out and saying something alo look at that list if i were jpmorgan, i would come out this morning and say, listen the allegations were going to prove otherwise. But im not getting that and, you know, carl, i know that you get a lock down in europe and you get a problem with some banks and that causes us to go down big, carl i dont know doesnt seem right to me all right well keep an eye on it, jim september is living up to its name as futures are weak were coming off the third week down and as we said at the open, s p looks to open at an eightweek low well take a break here and back in a menomt. Stay restless with the icon that does the same. The rx, crafted by lexus. Lease the 2020 rx 350 for 409 a month for 36 months. Experience amazing at your lexus dealer. To deliver your packages. And the peace of mind of knowing that important things like your prescriptions, and ballots, are on their way. Every day, all across america, well keep delivering for you. Every day, all across america, 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. Its a remarkable monday of news the reopening concerns that we continue to see in europe and in the United States to some degree the tiktok deal and nikola in a moment here well get a moment of silence from the new york Stock Exchange, guys, and the nasdaq in honor of Justice Ginsburg of course, so much has been written over the past 48 hours to the degree to which she was a champion to equality not just in her own career and such a groundbreaker on that front and then the voice of descent one of the fiercest voices ever to serve on the Supreme Court and a champion for gender rights, civil rights, equality and having passed away at 87 having passed away at 87 heres that moment of silence. We love our new home. Theres so much space. We have a guestroom now. But, we have aunts. Youre slouching again, ted. Expired, expired. Expired. Thanks, aunt bonnie. Its a lot of house. I hope you can keep it clean. At least geico makes bundling our home and Car Insurance easy. Which helps us save a lot of money oh, teddy. Did you get my friend request . Uh, ill have to check. doorbell ringing aunt jonis here for bundling made easy, go to geico. Com. Hello . We are expecting a tough day today. Watch microsoft. Xbox tweets today is a special day athey buy the games of bethesda and well talk to phil spencer later on this morning about that story as microsoft is changing the face of gaming. Were ckn miteba ia nu pampers, the 1 pediatrician recommended brand, helps keep babys skin dry and healthy. So every touch is as comforting as the first. Pampers. The 1 pediatrician recommended brand. 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. Makes it beautiful. Stateoftheart Technology Makes it brilliant. The visionary lexus nx. Lease the 2020 nx 300 for 339 a month for 36 months. Experience amazing at your lexus dealer. At morgan stanley, a global collective of thought leaders offers investors a broader view. We see companies protecting the bottom line by putting people first. We see a bright future, still hungry for the ingenuity of those ready for the next challenge. Today, we are translating decades of experience into strategies for the road ahead. We are morgan stanley. Four minutes before we get start trading for the week lets squeeze in a mad dash. Apple still the Largest Market Cap Company out there, jim everyone, i think, is watching apple thinking when is it going to stop going down. Looks like 135, 104. Jim is not waiting he is actually right now raising his price target hes going from 112 to 125 and talking about wearables and the comfort and most people have not been able to really get their arms around. Those of us who watch football saw an apple plus movie that looked fantastic by the guys who did, but what is happening here is he is taking the other side of the trade, the selloff and it seems brave, but i like it. I think hes got some good points and i think its nice to see someone willing to go against the wave of selling. As you point out, jim, well off its highs, of course but the stock is still up 45 year to date right we are now moving into that focus 5g cycle what are you pinning sort of a positive tone on here . I just think there is, i know there is tremendous multiple contraction going on but fed will dispute it and powell will speak three times this eek the estimates are not coming down so you start thinking, is the stock actually inexpensive i mean 23 times, 22 earnings i mean, ill pay that. Now, there will be other people against it that say look at the chart, jim are you a fool im just looking for a stock that has some valuation underpinnings and, oddly enough, apple has come down enough that you can say it does have some valuation and i think hes got some points here i know you might think it is a generic piece that the apple watch cant but a number of things that came out they werent so negative. I am just saying you want to hang your hat onsomething the company came out with something last week that is noticeable against what i regard being a wall of red that is rather monumental after weve been down for three weeks. Wow yeah. Im not not buying it im keeping an eye on a lot of things tesla now up 428 for the year, again. And, jim, thats been, well, when it comes to multiples, you cant really have a discussion about it but that does seem to be defying some of the moves weve seen battery day is drawing closer, jim. Tomorrow is battery day what a day what a day thats going to be. Already doting that as a holiday. I tell you what is inest theter but this nikola. And hindenburg which is an illusion to a tremendously unsuccessful is say while founder Trevor Miltons departure may give the appearance we believe this is only the beginning of nikolas unraveling we think the companys key asset was its founders ability to raise money through hype and i know im going to caveat this saying outright lies i think that is, i have to be careful. General motors he said should be carefully evaluate the policy longterm damage to its 112year brand by continuing to tie itself to nikola david, this is one of those, its down a lot, but its not over all right well, were going to discuss it a lot more, carl but lets get the opening bell guys, there is the opening bell well watch some of the early movers jim and david mentioned nikola and we did get a statement out of gm saying they will work to close that transaction ci t youve played your hand. You heard jim read the statement from Hindenburg Research the shorts look at this and they look at shares of nikola and premarket they were down, what, 20, 22 . They were down trading, there you go, down 28 and now trading under 25 a share. You are going back to the levels that we saw in may and, remember, it was right before the reverse merger with inveco and they took off and a lot of that was fueled the oxygen, if you will, for nikola this is what were doing with the electric truck and were going to have Hydrogen Fuel semis and revolutionize tra transportation and was the face of this company. Even though he was not the ceo of this company, he spoke as if im running this company mark russell is still the ceo of nikola but remember after they had their Quarterly Results and they came out and they said, this is whats happening and during the Conference Call mark russell answered a number of questions. Well, the street didnt react with any great reaction there. Theyre like, you know, whats the future for those guys. Who was on air and who was on social media within 24, 48 hours, it was Trevor Milton. So, he had been the oxygen that had kept this stock anywhere between 35 and 55 a share and now he is gone out of this company. Hes a consultant until the end of the year, but hes not the executive chairman any more. Hes not on the board of directors and if he even wants to tweet which has long been his platform or instagram. If he even wants to say anything about nikola it has to be cleared by nikolas legal counsel. Phil, let me just ask you there still is gm is making things for them i know that gm, you can say they got tied in with someone bad but gm is doing something that is good for gm. Right . Doing something. I think gm, i think gms perspective on this is, look, 11 stake in this company that will be paying us to build their electric pickup truck the badger electric pickup truck and that is going to be built, they havent announced this yet but most likely at the plant in detroit which adds size and scale, which is what they want for their ev platform for the battery platform they want size and scale they just dont want to have gm vehicles theyre working with a number of automakers and the hydrotech element of this making hiydroge fuel cells that theyre developing in europe thats what gm is supplying, as well gm looks at this and theyre committed to staying in this relationship with nikola they look at this as theres upside here. What downside is there if nikola were to fall apart completely, what is the downside to General Motors . It is embarrassing maybe this was not a deal that went through but otherwise theres not a whole lot of down side here. Yeah, thats my thinking. I think its important, as well, guys, to remember that its not as though nikola and, remember, we had them on and i remember the first time anybody had really heard of them is when we brought them on in early march right before things sort of shut down joined Trevor Milton on set at the Stock Exchange when they announced their plan to go public gurski will take trevors role they dont mention the fact that he was a southside analyst covering autos for all those years. But they never, phil and jim, they never said that they were going to be at tesla they never said they were going to create their own proprietary engineering and things of that nature the plan had always been to take from here and take from here and sort of create this vision and execute on this vision that trevor has had and that others had bought in to and so, the question becomes can you continue to have the vision without the visionary . I dont know the answer to that. I do know david, i can tell you yeah. I can tell you this much. Having conversations with people familiar with this the badger electric truck, thats the least interesting element of nikola when they were putting together this deal for the speck ipo. The Hydrogen Fuel cell semi and the hiydrogen and fuel Trucking Company one stop shopping. You guys will take care of everything fuel, everything all i have to do is basically supply the driver so to speak, that was the interesting part of the business plan. Not the badger electric truck. I know that got everybody on twitter wanted to talk about the badger its the 700 stations that theyre talking about. Its the vertical integration that they were talking about from day one if they can pull it off. Hind hinderburg raised a lot of questions about their past actions and did hit his credibility hard i will tell you a week right after the hindenburg report came out and started to get a lot of attention, trevor then went to the board and said ill resign and they said, no, we dont want you to now, apparently he came back and offered again and this time they said yes i dont believe he was forced out because i know he had offered to resign already and they had refused that offering jim, you remember when we had them on. Well look at what the data is i assume it is on the tape we tried to hold him to all the different promises he had. Heres the give and take that jim and i had with trevor back some time ago. We got a tough thing on our plate. I wont lie. This year, i can tell you this the next four months are the greatest months in nikolas history, hands down. This is what is exciting about nikola im keeping that tape and ill play it back to you next time if you dont deliver. So, just so you know and if i dont, im okay with that i will. I will just beat you silly okay listen, say this for the guy. Great promoter, incredible personality and great guest and i guess, i dont know if we get a chance to beat him silly because now hes not a part of the company. I wonder if theres more to it so far hindenburg has been spot on phil, one thing is clear i had lindi on which is the largest provider of hydrogen in the world and the chinese are ahead of us with hydrogen. I dont blame gm one bit for trying to be in the Hydrogen Race hydrogen is a great fuel and you need hydrogen more than you need electric if youre talking five, six because its a green fuel that doesnt even require a plant. So, phil, you have to admit that in the end they want in the Hydrogen Game and they have to have it. Everybody does when they announced this deal and Trevor Milton was on and what did she talk about . The badger electric truck . She mentioned they would work with them. It was the hydrotech element of this providing Hydrogen Fuel cells for nikola thats what gm views as the future in propulsion but they also understand that hydrogen is going to be there and the Hydrogen Fuel ceelements what they were excited about with this deal still excited about this deal. Thanks, phil. Phil, thanks for that phil lebeau. I am looking at the 10q highly dependent on the services of mr. Milton. If he would discontinue his service to us, we would be significantly disadvantaged. Well find out if thats true. What im confused about is some of these charges are so extreme but so far hindenburg one and Trevor Milton, none. They keep seeming to avoid the whole time, the whole time these people at nikola has yet to deal with hindenburg is saying in any substantive way. Dav david, so far their work is pretty good. Yes now, listen, supporters of nikola will tell you they took a lot of Different Things from the past and that it was not about the companys Current Operations and that it was unfair in that way. That said, plenty of people can look back at past behavior and decide that those kind of things dont change and, therefore, its reflective of what you can expect its a story that weve been following closely and well continue to because, listen, if it was successful, a real positive in a lot of different ways, not just for shareholders but for the planet, as well. Dont forget that sort of is where a lot of this comes from define Trevor Milton and will you use that particular set of skills that is a nightmare for Trevor Milton . I know where trevor is. Id assume he is not hitting the airwaves any time soon never trust a man with two first names. You just dont do that bow tie, two first names. Dont trust somebody who doesnt drink. Theres a long list. The market is the s p is down 2 , guys, overall. Weakness where we would expect it sort of big cap tech and banks as we saw earlier are getting hit. Theyre getting hit. Tesla and netflix are up and oracle is also higher on the tiktok deal and the hopes there, i guess. They get the big web hosting contract. The gaming stocks are off because microsoft story. And im watching apple react positively i still think this was a great deal for walmart i think walmart is such a winner here because they get access to 100 Million People in tiktok and they need that Younger Group Doug Mcmillon on the board, carl, not going to get on a board that is phony. Hes just not going to do that no, i think the bigger discussion, jim, is probably oracles lack of consumer touch, right . And how that will play out in a business that is highly consumer se centric. Zoom is business to the consumer and i think no one feels zoom is unhappy with oracle that is a pretty Good Relationship i know what is hardest is Larry Ellison is talking to the government but they dont talk to us. So its very difficult for them to be able to convey the story when theyre not trying to convey it. Right, right. Thats why you end up with opeop opeds which im sure you read today. The idea that a countrys leader decides which deals get done and which dont and contingent on how friendly the company is with the leader is how it works in putins russia wow well, okay theres joes view i do know what you have is you have majorityowned company and however the president put it, i come back to its majority owned. Im not sure putin did place a major role in some of those companies. It is somewhat odd that President Trump is not trumpeting the jobs being created but something that bytedance isnt giving him why hes reaching to be able to say that this deal is different from what the deal is and i understand, it seems very problematic right now. Yeah. The actual ownership structure, again, is something were struggling to fully understand here in terms of how it is going to work and theyre claiming that existing bytedance holders are either rolling in or valuing their shares in bytedance and going to own Tiktok Global which is what theyre calling this business well see about the 25,000 jobs. That will be interesting to watch. Well keep an eye on that throughout the years boston. Boston. I know, its funny, a number and its former incarnation early on i remember when they were looking for a ceo at tiktok and talk of moving it to a major u. S. City, including new york at one point. Guys, before we get to bob, there was another large deal we tend to sort of not consider it technology, but it is technology yes, im going ilumina which is down getting hit not as much as it was at the open but down about 5 . Multicancer Early Detection would seem to be a pretty important thing. Liquid biopsies are the holy grail and they have a lot of false positives in china but when you have 500,000 people per hospital, you need a liquid biopsy grail was once part of illumna and spun it off to kind of let it get its own momentum and that was only four years ago. The economics of 12. 5 they are now going to buy it back its an 8 billion overall deal. So, its not a small deal by any means. Were talking about what will be 4 billion as much as 4 billion or more in stock. The remainder in cash, as well and, jim, you know, theyre saying that its going to, obviously, move illumna into an area they want to be in and they believe is so important and more and more important and get full reimbursement conceivably from the insurance companies. A lot of people try to do this and if they have it, well, it is the grail the holy grail because you can imagine you can just take a drop of blood and figure out whether someone has cancer remember, they are doing it in china, but a lot of times it says you have cancer and you dont. In the meantime, carl, can i just say that apple is almost up after that disastrous opening and apple is the key to this market i see nasdaq coming back remember, everyone gave up on the nasdaq because they discovered there was a selloff that is often a time to buy. Just pointing it out were watching the nasdaq 100, jim barely dipped below fridays low. So, were watching that closely. Lets get to bob pisani and see what else is moving. 3255. Sevenweek low i think we lost pisani there for a moment well come back to him when we can. Jim, i want to point out one thing and that is even though the tape is ugly Getting Better as you suggest we did get upgrades of boeing and ups and dunkin and oracle today. Theyre working wasnt taking the glass half empty point. Running u. P. S. And underperformed fedex and shes fantastic. Remember the ceo of home depot i thought that call was a very bold and good call the goldman piece really does say and commercial aircraft, its a very positive piece about what could happen with commercial aircraft. In the meantime some names that were just shredded like the fastlies and theyre coming back and those are the backbone of the kind of whacko nasdaq that everyone says is too expensive these have just been pummeled. So, were getting the pummeled stocks making a comeback zoom which has been dezoomed is being rezoomed i like that. Resume as the dow is trying to hold 27k, guys. Before we go to break how treasuries are fairing get a look at the treasury board and yield zone deals are down in a flight to safety amid what we know are rising cases of covid there and talk to the house of commons on tuesday and the yield on the tenyear hitting a tenyear low squawk on the street is back in a moment. We lost bob for a second were going to get him back. Good morning. Technical issues important thing about the markets. Still sevenweek low apple briefly went positive. Tech is rallying its a problem with tech and banks down look at the sectors here another weak day for the banks issues going on in europe. Materials, industrials, also weak this is partly the reopening story. Tech is doing a little bit better apple went positive. Banks, the issues over in europe with that suspicion trading activity its not clear if any it impacts. Jpmorgan not clear how much this should impact any of the u. S. Banks but again, you see them to the downside travel and leisure rolling over for a week essentially. Thats happening again today because the reopening story is getting a little murkier and if you look at whats moving the markets, we used to talk about the five or six buckets that moves the markets a couple months ago havent put it up recently the only thing still positive is is treatment of vaccine. There are advances on the stimulus issue not so clear. The fiscal negotiation the fed really didnt appease the doves that much on quantitative easing. Reopening, the european lockdown fears are real ugly day in europe and china rising trade tensions weve seen on the markets, the two big issues are valuation and earnings generally tech overvalued for the moment earns are improving. Third kwaequarter numbers are g up thats a positive for the market mixed messages more negatives than positives in the election making things more complicated. Technical matters to the extent the market is dominated by momentum the s p and nasdaq are below the 50day moving average. That happened friday and the week after the september quadruple which is among the weakest of the year. Normally down 1. 5 . Thats happening again the technical issues are also weighing on the market i think the big problem is how do you get the market to rally with technology and banks this week heres two of the biggest sectors out there. The s p down 7 . Tech is down 11 banks are down 6 . Health care 5 you cant rally the market on industrials and materials. Im sorry. Theyre just not big enough. We need tech to do better. We need banks to do a little bit better at least youre getting apple trying to stay positive for the day. Thats at least one positive were seeing right now carl, back to you. Yeah. Bob, well see you in a little bit. Take a look at the opening on this monday dow trying to hold 27 k. Down about 2 . S p 3265 nasdaq just under 10700. Dont go away. Turn on my tv and boom, its got all my favorite shows right there. I wish my Trading Platform worked like that. Well have you tried thinkorswim . This is totally customizable, so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. Take a look at the dow down 620 here. All sectors red led by energy down 3 vix at 30 and the stayathome stri trade getting a second wind as the pay pals, the walmarts enjoying green arrows today. Were back in a minute there she is [baby crying] mama from the first loving touch, everything that touches your baby should be this comforting thats why pampers, the 1 pediatrician recommended brand, helps to keep your babys skin dry and healthy so every touch is as comforting as the first pampers. The 1 pediatrician recommended brand jim, an update on tiktok the chinese are going to have to accelerate the distribution at the time of the oracle walmart investment which is something the president wants. The chinese have not wanted it, but theyre going to have to give in. The president wants a huge win hell get it if they accelerate and there will be no chinese stake when the walmart oracle deal closes. Walmart the winner i would buy walmart on this. Its incredible the chinese have to give it up at the time of closing. How are they going to do that i dont think they want to, but they may have to okay. But for a Public Offering . Yes what does that mean yes at the time. The idea was they were going to wait a little while, but now its accelerated they would close the transaction in terms of the purchase by oracle and walmart of the 20 at the same time that bytedance would sell out in a Public Offering of its ownership . Thats what i understand. Thats very accelerated. You know that whole 12month thing is going to be off the table if they get their way. The win tore me is walmart the president wants a competitor we know to facebook. Hell get it i dont know i mean, the chinese somehow i dont think were done with this were not will the chinese agree to that thats a huge win for the u. S. The global times headline is china wont approve current tiktok agreement youre right were not done whats on mad tonight . Eli lilly this is my focus is therapeutic. Quincy is bringing out new drinks and ricks. What a show. I got more work to do. More rest for the weary, or the eagles for that matter at least we had a good weekend of football. Great games yesterday. Well see you at 6 00. Welcome to squawk on the street. Worst level for the dow since august 4th the reopening worries, senate in the uk meet worries about the death of Justice Ginsburg and the degree to where it complicates efforts of more stimulus yeah. Its yet Something Else thrown in its more of and more of a focus in the coming weeks, the election and concern, of course, about the election not just the outcome but the actual election itself may start to be reflected more in equity prices to some extent and the concerns about whats going to happen there, melissa we have things to think of the death of Ruth Bader Ginsberg is thrown into that mix as well. Take the virus which is surging unfortunately in the uk. We still are obviously dealing with 40,000 cases a day in the u. S. And its making for a potent mix on the downside for a change if you go down all the way down the rabbit hole with the Supreme Court, david and carl, you could get a scenario where if you have a bush gore scenario where the Supreme Court must decide and you dont have the ninth justice, you could come into a situation where you have a dead loclock and the outcome d be uncertain thats a rabbit hole, but thats out there. Cramer made a good point with apple. You see the struggle to go positive we have some steep declines in facebook, amazon, google as well as microsoft you got the other of the heavy weights in technology weighing apple down and so offsetting the impact we see steep losses on the back of Technical Levels that seem to be breached at this point along with the huge spike in the vix indeed. Morgan stanley saying the s p vulnerable to the retest of the 200day, down about 10 mike is with us with more. Well see obviously you can take your pick in terms of what is now weighing on the markets i view it as a broadening out of the correction process we had a selective surgical pullback up to this point where it was the overheated tech stocks taking the brunt. Theyre outperforming. Everything else is catching up its a broadening out of the pullback one thing thats relevant is all weve done is unschooled augusts rally we can talk about levels pushing 10 on the s p but that doesnt even get you back to lets say where we were july 1st thats a significant thing to keep in mind in terms of how much youre cutting into muscle. Seasonals, technicals, looking wobbly you dont see a ton of stress in the credit indicators. The longerterm trends are roughly intact its more about risk appetites in the leadup to the election when youve lost a little bit of traction in the cyclical recovery expectations just because of people clenching up ahead of a potential increase in covid cases and maybe some lockdown measures. I think its mostly about rationalizing all those things together in a pretty week seasonal moment for the market as we i think people feel too good about the pullback. It seemed like the stuff that went crazy in august was all that was down. Maybe you have to generate more concern for this to run its course the muscle memory for september and october trading not a positive one in general. Mike stick around. Well talk about the markets bob, great to have you with us i guess a pullback is in the eye of the beholder. What do you make of the pullback were seeing four Straight Days of down days i think youve all just covered it very well what i would add is remember into the high, just a couple weeks ago, the market went up 60 in six months. I dont know about you when i run that hard, i need a rest i think thats what the market is doing its pausing its correcting. The fact mike just talked about it, that high yield spreads treasuries, copper prices are not doing a whole lot tells me this is more internal technical as opposed to oh my goodness the world is great and now its awful. How long does this pullback last in that should we expect it through the end of the year . I know longterm youre a holder, an investor, but shorterterm, whats your outlook given the elections coming up, given the spike in potential lockdown because of a rise in covid cases i think well see a lot of choppiness in both directions. That we got as high as we did surprised me i dont know that this is a whole lot more left to down, but we may have seen the high for the year and we may just chop around here moving up and down several hundred dow points on and off for the rest of the year as we digest the virus the now mixed economic data. The slowing of the advance, can i say it that way, of the election not just the outcome but the uncertainty. Will people accept it . And now you lay on top ofthat the Supreme Court, the banking stuff coming out of europe its enough for the market to say im going to go to the sidelines for a while. It doesnt sound like theres a lot of reasons to be long at least in the shortterm. Im wondering if you can it sounds like the risk is definitivety to the downside is there a price level where you say that skews in terms of the risk to the up side . So ive had for a while a 2350 target for the end of the year thats kind of where we are. So a couple weeks ago i had a talk if that was the right target well have a down next few months were there quickly. Well go probably south of that target for a while, but im sticking with that which one more time implies the sidewise chop bob, id like to you know, weve seen as you point out, the equal weighted s p 500 is on pace for a good month versus what is, of course, the market cap weighted s p which has been weighed down recently. Its a broadening in a sense do you think its going to continue i think the broadening will continue use all pointed out, what got hit first is usually what went up the most. The nasdaq 100 now today is outcoming as things catch up i think we need more internal health we need more participation as you know, at the high the market was up nicely for the year, but the average stock was still down so we need some catchup, a broadening of the economy will cause that we cant lose the cyclical improvement weve seen to continue to have that breadth improvement. Mike, on friday it was goldman who was pretty constructive on the prospects before the stimulus. Argue that further stimulus this year was now unlikely and that was before the death of Ruth Bader Ginsberg was announced how much does the market care if the odds of the compromise goes back to zero you can argue some of that is at play today in terms of weakness in some of the consumerrelated type areas. Its obviously something that gets exacerbated the longer you go were still feeding a little bit in the aggregate off the fact that there was a prop to incomes to real incomes and, in fact, there was a spike in savings rate it runs off as we go into things i think were probably going to be fixated on the pacing of whatever recovery out from here, thinking that it basically is going to be a little bit tougher. Theres a little more friction in the story without the stimulus for sure. Youre going to fall back at some point nothing much changed on the side in terms of what the fed is doing. Corporate profits are being forecast to be on the recovery even in this quarter versus what we looked at in june all that stuff is at some point potentially going to give you some support, and the credit markets as well. But in terms of the strength and recovery, the biggest bullish point is were front loading concern. Everybody sees very little reason to take on morerisk and when you get to that point, ultimately you kind of front loaded a lot of the pain is the hedge enough to back away august gains . No. I dont know that it is. Im talking specifically about how much people are paying to hedge away volatility risk around the election in both the stock and the bond markets you kind of got this little bit of a welling up of concern thats already in the books. I just dont know how far that gets us. Mike, bob, thank you both all right. Meanwhile another story were following closely. President trump has signed off on tiktoks oracle walmart transaction, but theres a lot of questions here over who owns what and what will remain and lets get to julia who can give us the latest which is quickly changing julia . Quickly changing. And also very complicated, david. Now, the plan was for tiktok to continue operating because President Trump has signed off on oracle and walmart taking stakes in Tiktok Global. It will be broken off with by bytedance. The president saying it will be controlled by oracle and walmart. According to the companies involved, heres how it breaks down the deal includes oracle taking a 12. 5 stake of Tiktok Global in becoming the cloud provider with walmart taking a 7. 5 stake and the ceo joining the board. Now, that 20 sale of Tiktok Global to walmart and oracle technically brings the new company to majority u. S. Ownership. Because bytedances investors, getting shares of Tiktok Global are 40 u. S. Based. Now, ultimately Tiktok Global will be 53 owned by u. S. Investors and approximately 36 owned by chinese investors but not technically by bytedance itself oracle saying in a statement, upon creation of Tiktok Global, oracle walmart will make their investment in the Tiktok Global shares will be distributed to the owners americans will be the majority in bitedance tiktok is committed to filing for ipo within a year. Two creating 25,000 jobs in the u. S. And sources say Tiktok Global will have a license to all the source code including the algorithm so it can build a u. S. Version of the app and guarantee security sources say its not finalized but 50 billion, 60 billion, that range is the number discussed. I think this is getting more complicated. The global times tweeted that chinese officials wont sign off on this deal saying it would endanger chinas National Security this is far from over. Yeah. Far from over. 50 billion is the number im hearing. Thats roughly 10 billion for walmart and oracle for dollars think about it in terms of how the bytedance investors would roll into tiktok and whether they need to value their bitedance investment to determine what theyre getting of Tiktok Global its complex but to your point, if the chinese say no, its not clear where we end up here remember the ban on exporting artificial intelligence. Thats the key to the tiktok platform yes i started off my segment saying this is the plan that the president has approved the president signed off on this he said its majority u. S. Ownership. I explained why, its because of the u. S. Ownership of bytedance through the u. S. Investors with the algorithm and the restriction of the export of chinese technology, my understanding is because the u. S. Companies would be licensing that technology, its not technically being transferred. Its being licensed. So oracle would be able to access the source code to effectively rebuild a u. S. Version of the app to make sure every single piece is secure, and oracle would be responsible for that but from oracles position, from the way this whole new business has been structured, they wouldnt actually be transferring anything. They would just be licensing it it seems to me as not an expert in source code and algorithms. It seems like a distinct without a difference that could be central to the Chinese Government concerns in signing off on the deal. Yeah. Were learning a lot about control of the algorithms and the Organization Charts on this deal which is nowhere close to be done. S p session low 3245 and the dow session low down 696. Were not far away from that were back after a break given my unique lifestyle, thatd be perfect let me grab a pen and some paper. Know what . Im gonna switch now. Just need my desk. My chair. And my phone. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Dow down 717 session lows its important to watch the tape at large, but probably easier to understand whats happening if you look at s p leaders. It is a campbells soup kind of morning. Campbells is the number two gainer and delta is the number three loser as the opening concerns become more acute and to jims point, rightfully so or not. Were not sure what the uk and spain are facing may not be what the u. S. Will face but it is a bunker sort of mentality. Campbells soup, netflix, etsy all these stocks are gainers today. And we do have a broad base selloff. In this light it looks like the markets are bracing for yet another wave to hit in the United States. Potentially more lockdowns potentially factoring in a worse Case Scenario were seeing play out starting to play out in europe we have to watch this. This is a lot of the market mentality, especially after the big run in august, and hunkering down here ahead of the elections. Indeed. And obviously a lot of the health care desks around research desks are trying to make sense of when exactly this all clears up. When a vaccine timeline becomes reliable for that we learn to meg this morning with a special guest hi, meg. Hey, carl thank you. That special guest is the chief adviser to the administrations operation warp speed of course, the effort to bring a covid19 vaccine to america and the world. Doctor, thank you for being with us this morning. Help us understand this timeline from where you sit which is a better perch than anyone else in terms of visibility. How close are we to a vaccine for covid19 good morning, meg thanks for having me we are pretty close. This is really an Unprecedented Program between january 23rd when the sequence of this virus was identified to today about nine months later. We have three vaccines in phase three and our fourth one is starting imminently, and two of the vaccines in the u. S. Have their phase three trials almost fully recruited to the original plan and the readout of the phase three trial is 50 of the answers to the question when we read out efficacy. That is going to happen somewhere between october and december, january. The longer we wait, the more likely the reason we dont know and we cant predict is because it depends on the number of cases the other 50 of whats really important to define with the vaccine is manufacturing enough available vaccine doses. Thats progressing well. Were investing in a large number, up to 25 different manufacturing facilities in the u. S. To help manufacture the six vaccines were supporting. And we already are stockpiling small amounts of vaccine doses will become readily available in november and december and if approval is granted around that time, or authorization, we may be able, for instance, to immunize the most susceptible populations in the u. S. By december of 2020 most of the elderly and first line workers in january of 2021 and the rest of the population in february, march, and april. I see thats a really helpful clarity on the timeline. I want to ask you also about getting this data from the phase three trials weve seen the protocols be posted publicly from the three leading vaccine candidates something that Drug Companies typically dont share. But theyre citing increased need for transparency during the pandemic what they show is there is the possibility of for early looks at the data based on a few dozen events 32 infections in pfizers phase three trial. If the balance is good enough for the vaccine being protective, they could potentially file for emergency use authorization based on just seeing 32 infections in the trial. Are you comfortable with that kind of early look at the data, or would you rather they look until the final cut at 150 or 160 infections it really depends on the numbers. Theyre defined by statistics. It depends on the real efficacy of the trial we assume the vaccine may have a certain efficacy but the reality is whatever its going to be, and if the vaccine efficacy is somewhat im going to call it moderate, 60 or Something Like that, we may need to have a reasonably large number of cases, because under those circumstances, for instance, you have 100 cases in the la Placebo Group and 40 cases if you had one case in the Vaccine Group and 30 in the Placebo Group with one smaller number of cases youll achieve a stronger sta ktistical outcome d certainty on the efficacy. The other important number is the 15,000 subjects immunized with the vaccine in generating information about the safety of these vaccines, particularly over the first two months of the immunization schedule. The large database showed thats one most of the significant side effects if they happen, actually happen of course by definition, because of the pandemic, if these vaccines are highly effective, they would be introduced with a shorter observation time on safety than usual. But we are working very hard with the cdc and the fda to ensure that surveillance after the vaccine is introduced in any population is as active as possible, almost as close as that in a Clinical Trial to ensure we are appropriately documenting the vaccine safety on the question of safety, weve seen an event in the astrazeneca trial in the uk that halted the trial they restarted it around the world. We havent restarted it in the United States. What can you tell us about your understanding of the safety event a prior event in the trial deemed unrelated turned out to be multiple sclerosis, but some linked similar pathologies whats your expectation for the safety of the vaccine and the spire technology, the Technology Based on the viral vector . Yes first, there is a data safety monitoring board in the uk and one in the u. S. Overseeing the u. S. Trial and there is the fda in the u. S. They are looking at the safety at the events, and understand whether they are closely related to the vaccine itself or chronologically related to the vaccination has happens in a number of cases and making the difference between causal and chronological relationship is very difficult i will not try to substitute myself to those independent bodies whose role is to assess safety what i would like to underline is the responsibility of the company and of the dsmb of halting the trials as soon as the cases appeared and ensuring theyre appropriately assessed the fda i understand is has a number of questions and a number of information that theyhave asked, probably similar to the one that the mhra looked at and is analyzing it and will make its decision and will obey by the decision the fda makes im glad you walked through sort of the path toward approval and the bar in order to get a vaccine across the finish line, so to speak. Im wondering, though, there is a degree of skepticism among the general public about taking a vaccine, because it is perceived this process is being politicized in terms of emergency use authorization granted by the fda would you consider requiring the members of operation warp speed, the top cdc commissioners and the fda commissioners all take the first vaccine given emergency use authorization to prove to the public that it is safe certainly i as a person and with my values and ethics, would i ever agree knowingly that something is unsafe and say no, its safe i can guarantee that would never happen and, therefore, i take it. The one thing i would want to agree to is what is the recommendation that is given to that particular vaccine whichever one it is. As you know, we are developing a portfolio of vaccines. One of the advantages of going after a portfolio is one of the vaccines will have different performances some may be bestsuited for very old people some bestsuited for mature adults and yes, i mean, i feel completely comfortable that we would not recommend a vaccine for approval unless it is safe and it is effective and we are transparent about the day. And they will look into the data and make recommendation to the fda as to the approval, and let me also say one thing. Why do we have accelerated incredibly development we didnt cut any corner that was inappropriate to cut what we have done is to go very fast we went after platform technologies described in the last ten years that we knew and understood and would project their performance. We took Financial Risks and Operational Risk we organized the phases of the trials before we were in the clinic so when we had the right information to progress, we did it immediately we went from manufacturing and invested in billions in manufacturing sites treating them, organizing them, hiring people and start to manufacture before we know wherever the vaccines are effective there is one thing we did more than usual were running a larger phase three trial than usual with 30,000 subjects in it. Many vaccines are approved on trials with 8,000 or 10,000 subjects thats going to allow us not only to achieve the efficacy events faster. Thats why we have 30,000 in part, but more importantly, it will allow us to have pretty good assessment of the safety on 15 and some trials, 20,000 subjects vaccinated with the vaccine. And the vigilance, if the vaccine is introduced and authorized will allow us to further document the longterm safety i feel very comfortable. Yeah. To your earlier point, doctor, earlier in the month you said i would immediately resign if there is undue interference in this process and Science Magazine said if you see an eu push you dont agree with youre out . Your response was youre out how would you define any undue influence . Any ask made to the operation thats not based on data and facts and science would be undue influence, and honestly, i havent had any. And thats why im here. A lot of people, of course, know that you spent 30 years at a company, but also questions about the holdings you still have in that drug company, and many people reaching out to me personally to say please ask about the holdings and any sort of appearance of conflict of interest paubecause of the holdings how do you address that . Why not just divest those shares you still own . Meg, as i said, this is this has been quite a tough learning for me. Of course on flikt of interest have to be addressed and should be investigated the tough learning for me has been that rather than people asking me the question, the people have assumed that im here to make myself richer or my former company richer or my former colleagues richer as if i was some kind of a gangster or i dont know what. For people who know me, people who know that money has never been and will never be the objective in my life its human health and impact thats what im doing. Now, my holdings in gsk are my retirement what i proposed and the hhs lawyers specificize in ethics, et cetera, have told me thats absolutely appropriate is to say any, any increase in value in the shares or in anything that i own that happens during my tenure in this role, things that i own that are related, of course, to the pharmaceutical field, i will divest and i will give that money to research in the nih. And as far as moderna, we had decided with the moderna board that i would actually retire from the board, that i would sell my shares into moderna prior to the announcement of my role in the operation but we couldnt say it. Moderna is a public company. After the announcement happened, we effected board meetings over the weekend, and then divested, and again the increase in value between the announcement, i committed to donate to cancer research, and i already gave half the earnings to research, and i will give the other half at the end of year we appreciate you taking this time with us this morning, and we look forward to staying updated on the progress toward a vaccine. Thank you. Thank you so much a check on the markets s p 500, session lows. Sitting at 3226 is the level now. Down 2. 5 i felt like. I was just fighting an uphill battle in my career. So when i heard about the applied Digital Skills courses, im thinking i can become more marketable. You dont need to be a computer expert to be great at this. These are skills lots of people can learn. I feel hopeful about the future now. Everything we have, weve earned. The unmistakable lexus is. Get zero percent financing on the 2020 is 300. Experience amazing at your lexus dealer. Experience amazing 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. Dow is down 823 poirnnts ths morning. S p down almost 84 were looking at some of the things that have turned, jim cramer gold below 1900. Is this source of funds . I tried to start the rally too early, i think people are still panicked i think people feel the market is going to break down a lot of the drug stocks are breaking down. I think the drug stocks from the ones to watch. Theyve been sluggish. Theyre pretty good in a recession. I want to comment on the deal. My understanding on the tiktok deal, walmart and oracle have four out of five board seats this is one of the situations where it will be americancontrolled. Thats one of the things the president is insisting there will be a couple steps walmart and oracle first buying in and six to 12 months later an ipo. Very little chinese ownership at the end when you add the others to the walmart stake and the oracle stake i think the deal is going to get done thats why the stocks are up i think walmart will end up big at the end of the day. The president got what they wanted unless the Chinese Government jim, unless the Chinese Government has something to say about it. Well see. Right and theyre doing so, a valuation higher than under a microsoft deal under which that was contemplated they would sell the entirety of tiktok us or Tiktok Global. It feels like theres a lot of Different Things to come into play here. We cant say this is any sort of a done deal. Would you agree . I think chinese have agreed to the four out of five board members. Which we thought that would be the case, and obviously all the servers are here yes data is here. The company is head quartered here well, thats how you say its an american company. After the ipo, the chinese will be distributed it will be just another global company. So the president s wish so far looks like bytedances command im surprised its amazing bytedance caved here maybe they get a good price and theyre happy . They got a better price they were faced with a potential shutdown of their service. For a while it looked like one potential buyer. No option at all so what microsoft wanted to pay was the number you accept if youre bytedance then they came up with oracle as a potential bidder that came to the finish line and oracles founder is close to the administration what role thats had if any. Its interesting to see the least. If youre bytedance, you have to feel better about this than the prospect of a forced sale at a severe discount. Not to mention the others have to be happier with the prospect. Sure. Paving the way for what might be an interesting offering of the service. We havent talked about that i know. The prospect it was going to get shutdown amazon makes a fortune as you said over and over again, on amazon ads i mean, this is walmart ads on tiktok which reaches 100 Million People 50 minutes a day for some of these people david, its a great way for walmart to assert itself versus amazon maybe thats the way to look at this yeah. Jim, were going to get cap l caplan on today. I think that the market, lets watch and see if theres a lot of margin selling between one and two. I wish they hadnt started the rally so early, but i think its getting overdone people are just discovering theres a selloff . The selloff has been going on for ages im more constructive than ive been jim, weve been talking about multiples and talking about correlations to some extent in terms of some of the stocks. Weve been talking about it for weeks as we watch the s p now creep back to basically being flat on the year the nasdaq comp still very much a success if youre along. 17. 5 . Today as we mentioned in the first hour, were seeing play in the stay at home names netflix up pelaton. Usual names. Look at the stocks that have been trashed look at campbells soup. Be careful General Mills about to report. I do think this is the beginning of the end of the selloff. Im willing to put it out there like that. How about that ill remind you when youre wrong. Well, you did that to Milton Trevor you beat him up. Im flipping it in your honor. You said you beat him up is he a big guy . Yeah. I know i feel like hes well see. I know i dont think its the last of him. Nikola shares down 20 off the lows i dont know i dont know i dont know maybe hell probably stay quiet for a little while jim, thank you i will thank you well see you tomorrow morning. As jim was mentioning, of course, perhaps getting toward at least his opinion of sort of a moment of spaces banks, though, not the case. Down across the board. Lets get to willford frost. Theres controversy wrapped up in terms of the move down from the banks. Indeed. Good morning bank stocks are sharply lower today. Both in europe and the u. S Deutsche Bank down hsbc hit a 25 year low. U. S. Banks around 4 lower today. This is in part due to an investigation by the International Consortium of journalists that highlighted suspicion activity, Money Laundering following reports filed by the u. S. Financial crimes Financial Network hsbc statement said in part all the information provided by the icij is historical and predates the conclusion of our deferred prosecution agreement in 2017. At the end the Justice Department determined that hsbc met all the obligations. Hsbc is a much safer institution than it was in 2012. A Deutsche Bank statement said this is not new information to us or our regulators clearly its not good information, though, either way. The important factor is it relates to share price as it relates to share price moves today, the reports have not uncovered Fresh Information that the regulators need to deliver fresh punishments for. Todays selloff much more likely down to broad cyclical selloff linked to covid in europe lockdowns picking up again. Travel stocks are down sharply as well. In the u. S. The Supreme Court news over the weekend makes a stimulus bill less likely and thats something banks dispor disproportionately react to. I agree the down drop with the banks could this potentially frame future investigations with more cautious view, and a much more exacting sort of punishment for future violations . In general, yes clearly if this is getting lots of news coverage, its not going to be something that helps ease pressure on regulators as to whether go tough or soft on people and the election is a big swing that affects the banks more than other sectors. A democratic sweep could undue some of the favorable. On the topic of Money Laundering, antiMoney Laundering, aml procedures, theres a push on this front and you could argue that some of these releases that we dont know exactly may have come out of the investigations to lead to stricter aml rules that have already started and already come into play. Again, on the nuanced factors, this is past information on the big picture factors, news stories that this helped the banks and lead to less regulations in the future . It does not. Thank you for that. A big story today that somehow is getting lost in the mess of other news well talk to you later. Keep your eye on faang today tesla and apple dipped into the red. Netflix barely hanging onto 470. Joining us is managing director allen patrikoff. Good to see you. Nice to see you i want to read you what barkleys wrote last week. Measures of equity valuations are at 2000bubble levels and appear to price an ideal scenario they say were reluctant to chase it would you push back on that . No. I disagree with what was just discussed a few minutes ago. I think we are in a dangerous zone i mean, when you have Companies Going public and tripling from their offering price, when you have a series of these companies, weve had ipos all throughout this year that are just jumped to enormous premiums and any event can have an impact on those kind of increases it seems the public has an enormous appetite right now to buy stocks and i wish i knew how many were wellinformed or if theyre just trying to go along with the trends but i think were in a precarious territory i think were certainly vulnerable to further decline. You know, when you see Companies Like zoom up 500 , selling at 500 times earnings i mean, i think people forget that 500 times, 500 means it will take in effect 500 years to get back what you paid obviously its betting on a very high growth rate used to be a ratio that related to growth rate you were growing at 50 a year, you could sell at 50 times earnings now in the stratosphere on so many of these companies and the backlog of ipos doesnt decline, and tech is hot. And you could say you cant find a trend. On the other hand, at some point someone has to pay the piper ive been through so many of these cycles, and just when everybody is so excited and it can only go up, and thats the general conversation, something happens. And with our president ial elections coming up, and with the president we have today, every day is a new unexpected event. So i would say this is a good time to be cautious. Now, allen, obviously the classic retorts are there. Where else do you go valuations are naturally elevated in the beginning innings of another either bull market or at least a structural bull story like we have in technology and software. I dont think youre saying structurally the fundamentals the stocks began to trade on at least are no longer valid. No, but i think that were living right now in a moment in time where everyone is very excited about anything you use in the home, and theres kind of an extrapolation, i think i heard it said earlier today with covid coming back in europe and presumably going to get stronger again during the winter months here well, zoom should go up because people will continue to stay home at some point people i believe are going to go back to the office, and companies are going to do more in person meetings and less video meetings like weve all been able to do. They will do less exercise at home and more back in the gym. I think weve had an enormous shift. Online learning. Online entertainment watching more videos having business meetings online. When we shift back, and the aftermath, we dont know, we dont know what thats going to be i mean, i drove down a major thoroughfare i know you have a national audience, but i drove down queens boulevard thats like the broadway of queens, and i was overwhelmed by the number of store after store after store that is closed up or has gates on it that will probably never open again. We dont know what the longmaterial longter impact of those closings are going to be, and its going to effect our whole society i think this is a good time to be cautious. Its a great desire to buy stocks while i dont follow stocks, as you know, i deal in the private market in young, new aspiring companies, growth companies, early stages, you know, i kind of stick to more traditional basic portfolio. Just sleep better at night until we get through this election period i mean, whats going to happen between now and november and then whats going to happen between november and january 20th is a lot of surprises. Hey, allen, its david faber. Someone who grew up on queens boulevard. I get it, i had a question that is specific to new york it has been quite vibrant prior to the pandemic. What are you seeing there in terms of back to work for these employees. How are things looking i think it looks good im dealing with Young Company thats can grow 100 a year going from one million to two million in revenues. There is different bases for growth the Venture Business is strong the ability to raise money for funds. The transactions going on. Were having a meeting today, three companies up for consideration in investment, and its all being done without seeing the people in person and kicking the tires. It involves more intensive Due Diligence and it is happening. I know i started in this new fund, prime time partners, and were just overwhelmed with the opportunities in the elderly market of products and services. And there has been a lot of interest in the fund itself for investors. We just, they are no one seems to be concerned by what is happening outside in the environment. Business is moving forward and people are hiring people were about to hire someone later today. Which is encouraging, maybe even two, and prepare for a future that brings us all back together again. Alan, that is nice to end on an encouraging note. We love checking in with you and we will talk to you again toon, i hope. All right, allen patricof there. Nicola came out in a prominent stage as a result of going public he is now going to be the companys chairman he said he had a wonderful experience building nicola and seeing all of you hired. What started out in my basement became a headquarters with over 400 diverse families it ends with his eternal grat tuesday to them all. They have come under a great deal of skrooutny as of late they raised a lot of questions about some of the past promises that mr. Milton has made and not fulfilled calling into question a number of things including one of their trucks that was going down a hill. They never said it was, but a lot of other questions raised there. I understood that as little as eight to ten days ago when the kofrs started to swirl, he said i will step aside if you want me to people familiar with the situation said no, we want you to stay in place as the visionary delivering on that socalled vision he came back and this time they did accept his resignation the question is what is of nicola overall will they deliver on the promises that he made. A deal that was announced with gm just a week or so ago we talked to Trevor Milton about his many promises. Here is the back and forth we have a beat on our plate but the next four months will be the greatest in nicolas history, hands down. Im keeping that tape, and im going to play it back to you next time if you dont deliver, just so you know if i dont, im okay with that, and if i dont beat the held out of ly just beat you silly okay. Melissa, i think we will stay away from bodily harm at this point given what he is dealing with but you have seen the stock. You have watched it closely. A lot of speculation a lot of robinhood traders embraced it early on they are embracing a carbon free future that so many people would like to see. And for the semi truck it is going to an outside supplier, and that calls in questions earlier changes they made for this battery for this product. So many questions about the companys promises and whether or not the technology was there which is one of the allegations in that report, but part of this cohort that had seen a magnificent rise so we will continue to mo monomonitor this stock seema has more on that sector. The cruise lines are down 9 or 10 per day this morning the healthy sale panel submitted a 65 page report on recommendations that they feel wont happy against now these recommendations that include testing, face coverings, daily temperature checks have been submitted as Health Officials consult whether or not to lift their nosale order. The protocols while extensive still lack detail around who conducts the testing it is raising fresh concerns about whether or not they can bring more ships to italy and germany in the coming weeks. They say anothership will depart today but shares of carnival down as much as 10 on the day carl, back to you. The weakness travel names not limited to cruise lines. Airlines are down as well. Theyre all down 5 to 8 . A rough morning. Were looking at the major carriers theyre all under pressure and a few things are weighing on them right now. First there was expectation that was building into next week that perhaps there was a cares act 2 that might be lent to the Airlines Give given what is going on in washington the prospects of that is slimmer you also have increased lock downs in europe. And remember passenger levels are plateauing september and october, theyre typically relatively slow months for the Airline Industry so youre going to to see the levels that were down 65 to 75 . You look at the Airline Stocks over the last month, they were moving higher. One other note is bowing, shares of bowing. American airlines telling pilots they will start training for the 737 max, they will have to go through new training, two hours worth before they can fly the max. They will start that training hopefully in november. That memo sent to pilots today in is a key fourth quarter, carl, because theyre hoping to get the max ungrounded and potentially get deliveries in december again. Right phil, i wonder how youre judging the drop off in traffic. Is that an expected seasonal thing . We know that Corporate Travel is still depressed. There is nothing there, carl, and you heard this goingall of the way back into july they were hoping you would see continued growth they saw it was not happening. There is nothing there to boost travel in september and october. There is some sales out there, and there are some markets that are adding flights and routes, but overall this is a slow time of year. That mark is depressed in addition to everything else. So this is not expected. All right, phil, thank you very much. Appreciate that watching the Airline Trade today. We have to ask the control room if we have an open, if notly welcome everyone back. The dow is down almost 840 points were joined this morning by people whoa can help us figure it out