Transcripts For CNBC Squawk On The Street 20240712

Table . Speaker pelosi says theres a chance she and the treasury secretary can still reach a deal later, pause for tiktok why a judge sided with bytedance and blocked the Trump Administration ban. Futures do imply a big open to start this monday morning of course, coming off the first fourweek decline of the year. Mike, you did some writing over the weekend. Largely about the degree to which september is doing the job its supposed to do. That being the sort of pause that refreshes the argument here is that if we came into september with the markets at record highs and everything looking very stretched to the upside and sentiment and the technical position of stocks and maybe even hopes for an immediate stimulus and this fourweek decline has largely reset a lot of those factors right. You have sentiment very muchal coo acooled off and huge short position develop in nasdaq futures and pretty much 180 degrees on that front. I would say back in the neutral zone, not necessarily super bearish and then, you know, you have 10 to 20 coming off the top of a lot of the leading nasdaq stocks and just resetting, i think, expectations in a large way and then maybe the final piece of that and i talk about this for a couple weeks we have front loaded so much anxiety about the election and whether well have an outcome or whether we wont and a ton of hedging and i think build up of cash and worry in advance of that which at least argues that people arent going in blindly thinking this is going to be smooth and all of a sudden the Fourth Quarter rally is starting you dont ring a bell at the top or the bottom of a correction. I wouldnt say that somehow its got to happen this way last week was somehow the low of this pull back seems cute to get to 10 and take off, again. Not surprising to say the risk reward is better than it was four weeks ago, kelly. Wouldnt you say the biggest divide on the street right now is if we resume, is it the old stuff that resumes or the new stuff . Right . Do we go back to big tech is working because it had a little correction and a little pull back here and the people who say this stuff is going to be the trend for, you know, years to come those are the places you have to be versus everyone who has been arguing for value over growth. Not to overgeneralize, but if the macro is in tact and still getting better, then it is the materials or the financials which have had a good day here and there. To me it feels like so much comes down to which leadership segment you think is going to resume wouldnt it frankly be a good sign if its some of the value stuff, although i think we would take it either way i agree that is absolutely the debate and i do think what i would characterize as a broadening of the rally or more of a cyclical tone to the rally. I dont know if you want to get caught up in definitional stuff but value will take you to financials and energy and chain retail and a lot of busted Business Models. Value as it is defined hasnt worked that well but cyclical to your point, industries doing dpin all the internal stuff, if you look at how september has behaved has not really told you that the market is registering fresh anxiety about, you know, the economy going into some kind of a double dip. Much more about field position and getting some of the froth off the market so, i do agree with you there. I dont know if its one type or the other. I think everyone would be happy if we do not have five big tech stocks, you know, pitching a shutout against the rest of the market, which is the way it felt back in august carl, i think thats the way that maybe we could come out of this and not have it be one way or the other right, right. Thats why its so important, guys, to keep our eyes on whats happening in europe in regards to covid and, of course, here in the states were averaging about 43,000 new cases a day thats up 24 in a couple weeks, kelly. Maybe, i mean, maybe the sort of bearish data points that mike points to with the Short Interest positioning, some of the highyield spreads, perhaps and outflows are there for a reason because we are, again, trying to discount whether or not the phenomenon that is happening in europe as we go into the fall is going to be something that we see here in the states, even as states like florida lift virtually all of their covid restrictions on things like restaurants. Bingo, carl heres the question. So, you start to see the case count here pick up again and were going to have a little bit of a laboratory. If a state like florida says people will take the precautions they have to take but unless our Health Care System is overwhelmed or something, we are not shutting this thing down my guess is a little impact from people choosing to stay in but were going to maybe see a very different economy through the Second Time Around and look at what happened over the summer. We had covid spreading in june and july in this country and the rebound was happening because the shut downs were over and stuff was starting to reopen, again. So, it reminds me of when i we were talking to tilmon last week and see said, look, i can operate my restaurants if you just tell me what the number is. 50 , 25 , 75 . Give me something. What every business wants to know, am i going to get shut down again or not . If not, ill figure out a way through this of course, new york city starts Indoor Dining on wednesday and well watch that closely. You know, mike, as far as vaccine news go. Nothing linear we have some great news out of j and j, not surprising news but positive data points and today i put on hold because the fda has additional questions including about its delivery device. A series of steps forward and step backward. No doubt about it i do think that both the risks of fall and winter case counts going up, as well as a little bit of a bumpy ride in terms of vaccine approval theyre going to be the push pull of this market even as were in the time window i have been saying this for a while. In the time window when there is the premise that were going to have some kind of vaccine hitting the market even if its not about broad distribution, it just seems like there is this sense in here there that there is upside risk to the market because were not sitting here wondering if theres solutionspen so i dont think one days moves pinned on vaccine disappointments or hopes but people are assuming were moving in the right direction if the market looks six months ahead, its kind of figuring that somewhere in that sixmonth zone well have better, not worse opportunities to fight back against the virus carl yeah, yeah. Maybe with some, maybe with stimulus in the meantime, guys as we watch commentary from the speaker about potential compromises between her and the treasury secretary eamon is with us with the partisanship shifting to the judicial, the stimulus plan well, a lot of logic in washington maybe that takes some of the focus away and allow dealmakers to make a deal here. So, there is some political sense to that but nancy pelosi was on television yesterday on cnn and she was talking about that 2. 4 trillion proposal that democrats have she says theyre going to move forward with it this week and they may put it on the floor but she was couching it all as if this bill that theyre talking about is really a lever to get the negotiations up and running again in full steam. Shes talking about reaching some kind of accommodation with Steven Mnuchin as soon as this week and she said there is a chance for that, even though the political dynamices have not played out that way at all so far this year. So, pelosi sort of raising the idea of a deal, but theres so much hanging over this negotiation, carl, as you point out. The Supreme Court nomination is just one of those things we have the president ial debate tomorrow night and one of the questions will be, do we see a gamechanging performance from either of the two candidates there. That can shift the political dynamic and the calculations on both sides of the aisle. The Government Shutdown bill, there is a deal in place weve been told to make sure that that moves this week before the end of the fiscal year well see if that deal holds and they are able to keep a clean Government Shutdown bill moving forward. And keep the government open and then, of course, the Supreme Court battle just so much emotion around that, carl democrats particularly frustrated that the president is moving forward on the eve of a president ial election here when republicans had suggested thats not at all the way to handle this under barack obama now saying under donald trump, yep, were going to move forward. Theres emotion and intensity around that and you have a lot of democrats who are saying we need to shut down the entire process in washington in order to raise our objections and make it felt that were against this, even though the democrats dont have the votes it seems at this point to stop the president s pick here. So, any one of those things could change the dynamic and well watch all of it this week, carl you know, eamon, for several weeks majority leader mcconnell would come on and say i have 20 senators in my caucus who feel they added enough to the federal debt is there a sense that number has dwindled as Companies Like American Airlines have talked about the cliff that comes with layoffs really beginning this thursday or the first . Yeah, look, i think one of the things that will really dwindle that number is if you see those layoffs come to fruition as long as theyre theoretical and the devastation of families and economic livelihoods that come along with it thats all sort of political theory once that happens that is very real and senators would feel it. You would think that would be something that would change the calculation. But the president has not really been out there twisting republican arms. He has not been making the case to Senate Republicans that this is something that he absolutely wants. He has also been skeptical too much spending among these democratic proposals he said this is just money going to democratic states and democratic cities for their mismanagement for years ago and this isnt something i want to get involved in. Does the debate and does the timing of the election and does any of that change his calculation as he moves forward . Does he want to start twisting arms to get a deal done . We havent seen it so far. The odds of doing something piece meal instead of one big bill i think he called it kids and jobs he said they would move forward on ppp and aid for schools i mean, does it feel to you like that is a possible way forward here to do smaller, specific bills instead of one larger one . No, i dont think so. And the reason why is that if democrats agree to that, theyd be giving up their leverage. Democrats know that they are very popular political things in here and their leverage is to use those things and tap some of those other things on to it in one large package. Nancy pelosi had said as much explicitly if democrats would move smaller bills they would give up the other things they want tactically it doesnt seem it is where theyre going to go. Eamon, thanks a huge story for the markets as a potential for a compromise remains on investors minds. For that well turn to eunice tiktok and bytedance where please would the injunction mainly because americans can continue to use and download the app in the United States but the decision does not cover the broader band that is is set to go into effect on november 12th because of that tonight state media have been lashing out, once again, at the deal. Saying even though the injunction is welcome that beijing would undoubtedly prepare a countermeasure for what it says could become piracy and looting by the United States now, the structure of the deal is unclear and beijing has made it quite clear that its concerned that beijing and bytedance can lose control just a couple hours ago, the china daily posted that any deal would have to muster with beijing since they restrict exports of technology. Quoting exports over the last couple days saying that beijing has 30 worksin ing days from whn bytedance applied to get approval from the company. A lot of questions about whether or not beijing would want to stall the decision and see if it would be a more favorable outcome past the election because those 30 working days, carl, takes us right up to november 3rd eunice, just based on what the messaging is that youve detailed right there, i mean, the chinese authorities seemingly willing to allow the shut down to happen if thats really what it comes down to both sides trying to play a harder line. Yeah, thats right. I mean, it really is a game of chicken because on the one hand, if you do see tiktok shutting down that would just be a terrible outcome for china, which has for so long really hoped to see its Chinese Companies become global players. And tiktok and bytedance is really one of the few Chinese Companies that has made headway in this regard on the other hand, it is worried about losing control to the americans. And, of course, you could argue that thats a bit ironic given that a tiktok wouldnt even exist in china because the Chinese Government would never allow it eunice, thanks for that well watch it closely kelly, what do you make of the argument that tiktoks lawyer made to the judge and were waiting for the opinion. Why would you ban something when negotiations are under way to make that whole thing unnecessary . Although, carl, what is it t the judge . Its interesting to me i know we spoke with senator cruz this morning on squawk box about this and its just, again, im not a lawyer and im not a judicial expert but questions of the americas negotiating stance as it relates to china would seem beside the point, right yeah, were going to wait and might be more in the opinion which i think is going to be issued today as we said, guys, futures indicating a nice jump here at the open on this monday morning with the dow, s p and nasdaq all coming off their best day in a couple of weeks. Dow may jump by 350 and were going to watch really the 100day moving average today as quk t see ibatability sawonhetrts ck in a minute. A lot of working theories on why futures are strong today is it about europe and asia catching up to the u. S. On friday is it about China Industrial profits up for four straight months or upgrades for fedex, u. P. S. , spotify and well lkta about all of that with the opening bell in just about 12 minutes. When i was laid off. It was absolutely terrifying. I felt like i was just fighting an uphill battle in my career. As a little kid i knew that i wanted to work with computers. So when i heard about the applied Digital Skills courses, that definitely appealed to me. Youre learning how to create spreadsheets, documents, forms and surveys. Im thinking i can become more marketable. I got to about the third course and im like, you know, i probably could do this for a living. You dont need to be a computer expert to be great at this. These are skills lots and lots of people can learn. I feel hopeful about the future now. Its empowering to have that knowledge that nobody can take away from you. Its fake news. Totally fake news. Made up, fake. We went through the same stories you could have asked me the same questions four years ago i had to litigate this and talk about it totally fake news. No, actually i paid tax. And youll see that as soon as my tax returns its under order theyve been under order for a long time. That was the president yesterday in response to the New York Times story on his taxes. Robert frank has more on what that report showed robert kelly, well it shows large income offset by Large Business losses thats the picture emergic from the New York Times report studying the 20 years of tax returns now. Now he earned over 600 million in income since 2005 the vast majority of that over 420 million came from the apprentice and related marketing and 176 million from the two Office Buildings one in new york and the other in San Francisco and about 20 million a year from the office and retail space of trump tower now, he took all of that cash and earnings and went on a buying binge in the mid 2000s buying golf courses and the Washington Hotel, which have all lost hundreds of millions of dollars when it comes to the tax returns. Now, his club losing 1 162 million through 2018 and the Washington Hotel losing 56 million. Maralago is the one stand out appearing to benefit from the president s election initiation fees soaring to 6 million from only 660,000 in 2016 the president taking out 26 million in income from that club before 2018. That is three times the earlier amounts that he had taken out. Now, he also has a lot of debt hes defaulted or not paid back over 200 million in debt and has another 421 million that he has personally guaranteed with the vast majority of that coming due in the next four years and, unfortunately, he wont get any work from Financial Investments or these markets he actually sold all of his stocks over 200 million worth between 2014 and 2016. Carl, a bit ironic for a man who has paid so much attention to the stock market that hes now been invested. Back to you. Robert, well watch to see what the response is with the debate tomorrow night and come wonder if that is a gamechanging event. Robert, thanks take a break here as we watch the futures and awaiting the opening bell in a few moments. Keep your eye on the dollar. Obviously an important story today as we watch some of the chcalelsasell. Back in a minute 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. Fair number of upgrades to talk about on this monday morning as we get ready for the opening bell include, kelly, upgrade fedex out of deutsche. They go to 318 a series of these upgrades of u. P. S. From analysts who are basically arguing its not too late right, carl so, we were talking at the top of the hour about whats going on with the rotation in the market or what the market is kind of telling us about the macro. The fedex called pretty encouraging. Predicated on profit Margin Expansion and we all know they pass through the surcharges and the analyst there saying they will kind of smooth out demand through the Holiday Season and they wont be faced with so much of this peak rush all at once and just overwhelms the system so, a lot of this is Profit Margins across a number of different businesses interestingly enough, they also talk about how the vaccine itself could have some upside and our reporters have been talking about this, but fedex and maybe u. P. S. Have been investing in the freezer technologies that will literally transport the vaccine. So, they see kind of a double upside there from the surge in ecommerce and also a b to b aspect that is good or at least has lower costs and on the other side some upside to the vaccine. Interesting note on u. P. S. , as well when we talked to arthur blank, the founder of home depot a couple weeks ago carol used to be the ceo and now at u. P. S. And how important to make everyone work in the stores so even while she was cfo, she would have the apron on and working the aisles she helped one woman get a wheel barrel all the way to her house because she couldnt do it on her own. When i look at that u. P. S. Call, i cant help to think about that anecdote, as well. Amazing what shes done over there at this short time mike, to kellys point better margins and better b to b mix and flattening costs and, of course, we know about the surcharges you and i are paying this Holiday Season. The other thing about the context when it comes to fedex, its not as high as it traded in early 2018 this really nasty twoyear downturn i think expectations and earnings forecasts got beaten down seemed like a value trap for quarters on end. They kept serially disappointing and then you have this internal restructuring going on just at the time that a lot of the tail winds kick in in terms of, obviously, online delivery and some of the stuff. Now its something that is just baked in so, seems like that is the dynamic in terms of people getting more excited about the group. As we said, deutsche on fedex and then does take u. P. S. To overweight at 190. Theres the opening bell at the nasdaq this morning. Mike, we began the hour with what september has brought us and i remember last week asking 32. 30 was an effective working low and so many magical elements and support from earlier in the year, the june high 10 . Sounds like you think that number is important. Weve got traction there a few times. I dont think you can declare it finished but, yes, it seems like the market was very focused in that area and needed incremental new reasons to go down and some of the macro stuff and some people concerned last week including dollar rallying a little bit and down this morning and kelly is all over the real yield story. You had this dynamic where yields going below the rate of inflation deeply and they actually bounced in the last ten days and theyre backing off today. So, some of the macromo message, okay, maybe nothing bigger that the market was registering credit markets and you saw widening of spreads and almost more in response to the stock market weakness than something that bond markets were sniffing out, kelly mike, i got to pull up the tenyear tips now as were talking about this but youre absolutely right. So, theres this whole paradigm thought for over the past couple months that, listen, if real yields stay at minus 1 or whatever, if the dollar really starts dropping and goes through 90 because we have this huge fiscal deficit that we havent seen since the Tea Party Movement going back to previous era, does that kind of lower plateau for a weaker dollar than open up all kind of interesting rallies and all sorts of u. S. Assets, right . So, yeah, stocks but also gold and all these other things im curious, mike, of what youre hearing because that dollar weakness that we started to see a couple months ago has really stalled out were now just kind of hovering in this range. If you were counting on that to be kind of an underpinning for higher stocks and higher gold and higher everything, its certainly not panning out as quickly as you might have thought. The budget deficit is going to be like 18 of gdp this year thats where all the stuff about d. C. And the budget that were largely ignoring, the market is largely ignoring but that is where it will matter if it shows up in the dollar weakness. For sure. Showed that it is not a oneway trade. Story lines that are developing around the dollar dynamics and people just got too aggressively negative on it and very crowded trade and maybe this is just a little bit of a let up and a counter trend move here just to have a little balance in the dollar and also a story that is also percolating about how the feds somehow was net hawkish in its messaging in the last couple weeks. In other words saying it is all we can do here and not getting very specific about future qe and not really trying to gun it to overachieve on the inflation side maybe the market saying we dont think we can do it, even if they want to. I think that is a little bit of people applying to what was happening in the markets anyway. But it seems like, carl, that is the stuff that we were consumed with last week and maybe youre getting a little bit of a break from this morning. Yeah, s p back to 33. 45 trying to get back to the 50day for the First Time Since about september 18th kelly, i wonder what youre making of two things one is cash balances at S P Companies up 35 so far this year b barclays which they expect not to be used for capx and dividends and buy backs and lockheed adding to and with an 8 hike on friday. So, i wonder if that, you know, goldman warned us about buy backs early in the year and dont expect much from 2020 and i wonder if that pendulum has started to swing no, i think, so, this is definitely the area to watch the entire rally that we saw for the last decade was buy back driven that made it fairly reliable and it meant every time you had a sharp selloff you had a sharp correction because those buy back programs were such a force. This time around, yes,an anecd e anecdotally they might be starting again and anywhere near what we saw last time. In fact, the biggest force in the market in some ways has been the Retail Investor. I think that makes it a very, very different kind of rally that were potentially going to see over the next couple years than what we saw before. And, mike, curious for your thoughts on this but a Retail Investor who has more hot money than i think a steady corporate buy back program could lend to bigger upsides and bigger downsides and maybe less upside overall. I mean, thats certainly one line of thought i talked to Brian Reynolds about even though were seeing companies dip their toe back in, i think reynolds is right. Debt buy backs not stock buy backs that are driving us for years to come. That acts as a little bit of an overhang on the macro. I think thats very fair especially when you consider that, yes, youre seeing a little bit of folks returning to the buy back side of things. But its very selective and not be that everybody is in the buy back game because thats what you do with cash flow. Massive amounts of corporate debt and cash balances are up and debt is up a little bit more and i think all that tells you is that companies are going into the last part of this year saying, okay, yes, we have the cushion. What do we do with it . The retail flow, i do think it is an interesting dynamic and creates a little more of an Emotional Energy in the market i dont think its like smart money dumb money, just a different type of buying interest which is a buy what you love move and arguing with each other over fair value. Yes, it creates a different flow and maybe, you know, the august overshoot had a lot to do with that to the upside im not sure that we necessarily have seen any kind of an overshoot to the down side but maybe that could be out there, as well mike, got to watch energy this morning best performing sector chevron is leading the dow and gets upgraded and they go to buy although they bring their price target to 96 basically arguing that a 7 yield more of the discounts any kind of recovery in the down stream but also some m a 12 billion enterprise deal. So, i wonder whether or not energy is one structurally to watch over the coming days its obviously some of the lagger groups getting a little bit of a lift today and energy certainly one of them. Energy stocks have just badly underperformed the actual cum d commodi commodity. Its been part of we think this is a secular decline industry and we cant really touch it but, yes, if youve done the work on chevron and the dividend is comfortable at 7 and we know what is going on with exxon and 10 dividend yield and markets essentially saying we dont buy it but, no doubt about it that the makings are there for this group to make a little bit of a recovery move but i dont think anybody believes it is going to be a leader rationalizing these industries with overcapacity like energy and steel today, too. Buying the u. S. Business you know, thats going to get applause in the market if the numbers work then chips, as well micron tomorrow night and citi adds to the negative catalyst list because they expect disappointment and watching new restrictions as lowgrade fever pertains to china relations continues not just in social media but on chips, as well. Yeah, you hate to be on a negative catalyst list, right. No one wants to be on that the msic thing is interesting because as important as tiktok is obviously because of its user base and its ubiquitty in terms of social media landscape. The u. S. Has taken a really hard line with a lot of these Chinese Companies the last couple years even if you go back to zte and i know we talked to eunice about this a moment ago but not much of a response. The semi conductors and i think matt was pointing it out last week this is the area to watch going back to what is this market going to look like if it gets it feet underit outperformance and negative catalyst not withstanding and getting its mojo back and bank of america upgrade at chevron that kind of cap tures, mike, what you were saying they upgrade the stock but price target to 96 they say this thing has a 7 yield. A lot priced in. 7 at chevron and 10 yield at exxon. Either those dividends are going back or the dividend opportunities of a lifetime, right . Pretty much you know, you can go back to early 2016 you had a little bit of a similar game going on there in terms of some of the majors had yields well north of 6 , 8 and pretty much you won the bet on that if you said they were sustainable. Im not saying it is the case this time. I know that if you look at exxon in terms of the leverage and what they spend on producing assets over the last couple years. A lot of concern there the big question is, does the market already discount it and, you know, what is also interesting is they kind of lost the tether to having leverage to an economic rebound to some degree it seems. If you kind of believe crude is broadly range bound. So, nobody thinks that, you know, how much to cut into the unused supply, carl . Yeah. Speaking of miles driven, kelly. How about ubergetting the blessing of london remember when that was such a big story and the worries about whether losing the uk was going to be to the company but a fit and proper operator to what he called historical failings this is a warning shot to california, as well. I mean, to me it says and i know uber is on the ballot in california this fall, but uber is popular enough given all of the issues that its had that is reinstated in london and tell me it is not going to bereinstatedn california and were talking aboutthe dynamics it is allowed to operate under but very, very popular with users and i think the politicians are finding that their efforts to crack down on this, if they mean well, there are other ways to help out with benefits with that side of thing. Benefits, portability, carl. When it comes to undermining the Business Models of these two uber and lyft and their viability with the public. I think they found out you have to be very, very careful and i can see the stock up today 4 and to me it totally says they might win the long game here because they provide a service that people really want. Yeah, although its remarkable to see it really trade between 30 and 40 since the, what, beginning of may. Well see if that range gets busted any time soon lets get to bob pisani and see whats moving. Good morning, carl. Happy monday, everybody. Great open 101 advancing the declining stocks this is largely about the reopening story. Reopening stimulus is moving the stock market not so good last week and better florida, of course reopening and comments in spain and madrid rejecting calls to lock down the city there. So, you see here the reopening stories. Banks, energy, industrials doing better, tech doing better and lagging all defensive stuff and health care, Consumer Staples and reits, utilities about the reopening, still mega capped after a modest rally mega caps had a very good week last week and again today you see everything is up 1 to 2 thats sort of the story of last week and i called it a cynical rally last week because the cynical play last week after a modest correction was to buy those big mega caps because they would be beneficiaries of a potential increase in cases. Last week much more concerns about the lockdown or excuse me about the reopening not going as well if you take a look at last week how these mega caps did. They all rallied in the face of bleeding that they would be beneficiaries in the event that the situation worsened on the reopening story and this rally is continuing in today we saw also outside of the mega caps all the work from home stuff working, as well, last week and the belief they would be beneficiaries in case it faltered zoom and peleton and docusign and all those did really well. Theyre all up modestly today because we have a broad rally going on but today more about that broader reopening story and if you look at the reopening names and the travel names, your deltas and hyatts and live nation and theyre all rallying modestly but a very different story last week. None of the reopening names were doing well at all. So, we saw the same names last week had a terrible time of it so, this tells you the market is very dependent on the reopening story and when the reopening goes bad, everybody flees to mega cap and work from home names under the theory that they would do better here so, you can see this sort of push and pull over reopening and to a lesser extent over the stimulus story so, where are we right now well, i mean, look, four down weeks, folks no getting away from it here we are down almost 6 for the s p for the month of September Mega caps are down 5 . Small caps and there is your sort of recovery play. A lot of small caps in the recovery sector down 7 . So, first down month if this continues since march and most of the risk assets around the world. Theyre also down. So, the question is, how much of the reopening story really is going to matter into october thats the big question. The depth and duration of the reopening story. As for this week, big stories this week. The ipos just keep marching on here well have a very busy week. Almost a dozen coming including two direct listings. Havent seen this for a long time here. But we have two of them we talked about it. Big data analysts and asana a Work Management platform getting a lot of attention and that is expected to do fairly well and some china ipos. Yes, theyre still coming here in the United States and Chindata Group holding very Interesting Company giving all the issues around china u. S. Trade. Theyre going to raise 500 billion. They may be 4 billion, 5 billion market cap here in the United States and we have conventional companies Academy Sports and outdoors a big Sporting Good company. Theyre going to try to raise 250, 300 million and maybe 2. 5 billion market cap but im leaving out a lot of companies. Almost a dozen this week bottom line, still looking like a great time to float an ipo or a direct listing in the case of asana or palantir. Another big one, bob. Thank you. Before we go to break. Lets take a look at the treasuries and how theyre fairing. Yield on the 30 also higher at 1. 41 recovered later in the day as the strength and equities around the world really dampened the safe haven appeal. Finally, look at the dollar reter retreating from that twomonth high were about 15 minutes into the open this monday stocks up for a second straight day. Best twoday stretch for the s p since june question is, can september manage to make up for some lost time were back in a moment conference of the year is only two days away and theres still time to get in. You dont want to miss a lot more go to deliveringalpha. Com to learn how to register and stay with us. Its smarter Trading Technology for smarter trading decisions. Fidelity. That selling carsarvana, 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. Shares of snap and spotify are moving higher after its upgraded raising spot from a rare sell to a neutral the analyst behind the calls joins us now, Michael Morris michael, its great to have you here the rationale is interesting i have to say it reads a little bit about valuations are high so these companies should be high too. Explain to us whats going on here yeah. Absolutely i mean, i think in simple terms, youre not wrong the market has been strong secular winners, particularly in technology have been the strongest, but were still bullish overall on the potential for lock longterm Value Creation were looking for opportunities where i think the market is going to come to a new realization. And in this particular case we see many of the internet names as underappreciated. When you compare them to the software counterparts which we think sets the stage for pretty strong relative strength, relative growth over the next year, and so happy to go into more detail on it, but basically we think winners are going to keep winning and we think Internet Companies are unique and even after their moves, have areas where theyre underappreciated lets talk about spotify for a moment of the pair, youre more cautious on that until this upgrade, you had a sell rating on it. Heres something i was wondering about, people raised as you build out these apple plus bundles apple Just Announced as you build out what might be a google plus bundle as big tech bundles everything, is spotify the smallest player with the least leverage standing alone . Its a fair question and something i think investors struggle with pretty consistently we have a number of just Huge Companies in the country i think people say why wont Large Company x just sort of kill relatively Smaller Company y . And what we find and see pretty consistently is despite the narrative, businesses that with excellent products, excellent talent, excellent Business Models are able to compete specifically in a single field and really if that dominates, at least carve out attractive positions for themselves spotify definitely represents this its a company thats been pretty singularly focussed on being excellent and delivering Audio Content to the consumers i would argue it has the best in class interface. At the end of the day while the bundles why be compelling to a certain cohort, the challenge to having spotify even if you are a user more broadly of apple or google or amazon products, is a pretty low hurdle to continue to have that product on your phone. And so i think that spotify is decently positioned to continue to be a best in class player despite intensifying competition. A similar question about snap one of the reasons some of the big Software Companies get the valuation is there are massive platforms. Their addressable markets are huge and growing snap j is it also just a little sibling type player here, in a market by the way where tiktok could go from 0 to 100 million in a few years its a fair question. Generally speaking software is a tremendous industry. Right . They have most deep motes around their businesses. They have unique ideas and talented teams, high degrees of recurring revenue. We understand what the enthusiasm is. And when you look at these Internet Companies, i think you asked about snap, particularly, but i think across the space, theyre competing with Software Companies for equally talented team members they have significant R D Investments and functions like Machine Learning and augmented reality and commerce and snap in particular is one of the businesses right . Theyve developed an app that is effectively communications and Entertainment Software for consumers instead of enterprises but the Network Effect makes it a sticky product and now their r d is going into things like augmented reality, sophisticated tech stacks allowing them to really connect commerce, right shopping and direct response ads, shopable ads considered valuable and growing in value that tech investment is building out the functionality effectively digging a mote now, they have to keep people on the platform its more challenging than enterprise in that regard maintaining the Network Effect i think the unique power of their technology is as strong as it is for software that will be appreciated by the market yeah. And snap is up 7 over the past week its up 3. 5 this morning. Thank you for your time today. We appreciate it thank you all right stocks getting off to a good start on this monday morning energy, the banks, selected retail helping to the mix as all sectors are in the green were back in a minute good monday morning. Welcome to another hour of squawk on the street. Im Carl Quintanilla pretty good Risk Appetite all around the world this morning as we see the dollar come in. Eyes on potential for more stimulus as they compromise between mnuchin and pelosi gets chatter. Well talk about that as the hour goes on our road map begins with markets looking for a second day of gains after friday saw the best day for stocks in two weeks. Next, hopes for a stimulus deal continue to grow after positive comments from nancy pelosi over the weekend. Coronavirus cases surging across the midwest leaving many retailers and landlords in a second wave of bankruptcies we start with the markets. The dow, s p and nasdaq looking to recover from the last four weeks. Friday seeing the best gains for the averages in two weeks. Lets talk to a professor of finance. Professor, good to see you this morning. How are you thinking about what we saw so far in september obviously its it meets all the textbook definitions of a correction is it what you expect . I think things got wild in august with some of the tech names, i think its a healthy correction. And not surprisingly, i think the two big things weighing on the markets is they want another stimulus package you guys talked about it everyone talked about it, and the election coming up its hard for me to see without a stimulus package and with an election uncertainty theres a lot of progress between now and the first week of november. You know, i think that uncertainty is sort of going to continue to weigh on to the markets. We havent, however, seen a lot of that nervousness about the economic implications show up in areas like the bond market well, i guess you can kind of take it two ways bond yields never lifted along with the stock market. They were never saying were off to the races in the economy. They also have not really compressed that much over the last four weeks. Do you get any signal out of treasuries at this point theyve been so remarkably stable were almost talking about tenths of basis points ive never seen it in such a narrow range you almost think the fed is controlling it, but they claim not. I do think, by the way, one thing thats coming, certainly the debates tomorrow as we all know, but friday theres an employment report. And one of the things that can get a stimulus package going is if theres a disappointment in that report. I mean, expecting Unemployment Rate to inch down from 8. 4 to 8. 2. What happens if it goes up i think there could be some political pressure get something started because we really do, we need more stimulus ppp that is targeted toward so many businesses that are still shut down. I think its really important. So maybe well have to wait until friday to see actually some movement in the political sphere, and maybe also on the bond market, too you mentioned the debate, professor. First president ial debate for tomorrow six topics discussed including the economy. From an investor standpoint, what will you look for from President Trump and democratic challenger joe biden well, i think this debate is going to be really important a lot of people say everyone has made up their minds, but this could be a close election. Those few that havent are going to be looking. I mean, is there you know, we everyone is going to look is biden on his game is trump going to wander away on something and stay on message . I think a lot of it is going to be perception more than what they say, but perception of how are they fit for the presidency . And i think that could really be important for tomorrow yeah jeremy, mike has been making the pretty good point that the markets front loading in discounting of risk. And i wonder as it relates to this tiktok ruling from the judge last night, or restrictions on various industries between the u. S. And china, if youre getting the sense as well that on both sides it really is ending up to be a little more bark than bite, not to say theres no bite whatsoever, but that the worst outcomes that we talked about during the summer, lets say, just dont seem to be in the cards, at least not before the election you know, theres a lot of posturing. And youre exactly right before the election. I mean, the chinese shouldnt be waiting for who is going to be president . Who are they going to be dealing with and lets keep the pot boiling and uncertainty boiling. And of course, theres a great contingency in the u. S. Among the teenagers and the people with tiktok. Hey, i want to keep my app running. So this struggle is going to be i think more bark than bite. But china policy is clearly something coming up on the election, and its something in the markets, and something the markets will be paying attention to Going Forward i mean, some people think that there will be a more predictable china response with biden. Of course, at the same time they like that. But they dont like the biden tax plan so theres pros and cons on both personally, i think we get through this election and its not a landslide. I mean, even if the democrats take the senate evenly, biden wi wins, and we get through it with a transition power thats not disruptive, i think november could be a nice rally in the market just that unstecertainty out ofe way could be a favorable factor Going Forward. Yeah. Usually theres some kind of tension release almost no matter what the result. I wonder if you widen out the angle a little bit jeremy, ive heard you Pay Attention to stocks over the long run is this the start back to march of a new actual bull market . Theres a lot of folks who say a lot of the dynamics match up with the kind of liftoff from 2009 from 1982 it was only five weeks down. We didnt get a big reset of valuations that you sometimes get in the bear market how are you thinking about this in terms of categories ive been on cnbc often and saying i look at the tremendous burst of liquidity money supply liquidity 40 increase in the mi increase. This is unprecedented in 75 years since world war ii i mean, its already twice as big as the whole year that followed the lehman bankruptcy which was less than 20 increase weve gotten 40 so far. I think theres a lot of repressed liquidity in the market that once the vaccine and the pandemic fears fade in 2021, were going to see a big boost in activity, and we all know and weve talked about we could see a tremendous boost in productivity Second Quarter productivity, 10 was the biggest in 50 years but firms have shed down the unneeded individuals on productive individuals, cut expenses profits in i think the market is a forwardlooking its looking forward to a really good 2021 no matter who is president. So i think the chances are the bull market could continue in the next year just on those factors . So all that suggests to you that the valuation levels riergt now are not going to be a head wind in terms of returns down the road no. Ive been saying the new normal is 20 pe thats where we are. 20 times 2021 price earnings ratio. And with all that liquidity thats being pushed and will be forceful on to the economy and the markets next year, i could see it going higher. Then again, as you mentioned for the long run a 20 pe implies 5 return after inflation which is about 1. 5 less than the historical means so you dont get anything free a little bit higher mean p e ration does mean slightly better forward looking returns but compared to bonds, minus 1 after inflation is what bonds are giving right now at best. You could say tina, but stocks have it all over bonds all right jeremy, well see if the math still works. Professor, thank you for your time thanks for having me. As we head to the break, stocks leading the dow now boeing, dow and chevron. Up next a New York Times out with an explosive report over trumps tax returns over the last two decades well get you the details next 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. Nice bounce at the open. Its held around 3340. Dow not far from the highest levels of the open and the banks starting to add to the fire w 2 noup . Were back in a minute hmms and ahhs heard incall. The New York Times detailing years of prurchs tax returns. Revealing a long list of struggling properties, write offs and hundreds of millions in debt coming due. We are joined by robert frank to break this down. Good morning. You can divide trumps Business Empire into two categories, the apprentice and Everything Else before the apprentice, trump was reporting slow and steady income offset we nearly 1 billion dollar tax loss in 1995. When the apprentice debuted, the cash starting pouring in over 400 million over ten years. He had 176 million from two Office Buildings in 2005 and 2006 he paid tens of millions of taxes for the first time in years but he used the cash along with borrowing to go on a big spending spree buying nearly a dozen golf courses and that hotel in washington d. C most of those investments lost money on a tax basis one club in miami losing 162 million through 2018 and the Washington Hotel losing 56 million. Since 2000 his golf courses alone have reported tax losses of 315 million. Now, the one bright spot is maralago initiation fees increased nearly tenfold in 2016 his income nearly tripling meanwhile he has over 300 million in personally guaranteed debt coming due in the next four years and hes failed to pay or had forgiven 280 million in loans since 2010 he sold out of his stocks in 2014 and 2015 and we know that retail vacancies and the pandemic have hurt his commercial space and golf clubs. So its likely those losses if, in fact, they were net losses, have continued guys, back to you. All right robert, thank you for that its a good summation. Robert trafrank. Its where he pick up with jim stewa stewart. Good morning, carl. Theres so much to process here theres whats in the report were going to hear about how the times got the documents, the timing of the report and the notion overall that the rich and savvy in this country work the tax code legally, especially in real estate. I wonder what your take aways were from this story yeah. Well, this is something ive been working on for years. I wrote many columns about and i think one of the big revelations here is we didnt know what happened after the 95, 96 Carry Forward now we know the same tactics he kept using even after he started to have income from the apprentice i think the Biggest Surprise to me was in his first year of the presidency, he basically spade nothing. He paid 750, a token amount in federal tax. Why is that . A lot of it is presumably legal and its because real estate kw Developers Like him have the most favored tax status in the company. Many Real Estate Developers pay low tax. And when trump had an opportunity to correct some of the unfair provisions in 2017, he not only did not. He enhanced them in the tax code Going Forward. I think thats a key issue that was a rallying cry for you when you would come on our air and talk about potential changes to tax codes a couple years ago. I mean, what do you think the times did hint there would be additional reporting surrounding the documentation they had gotten i know you cant give anything away, but what do you expect the areas they will continue to mine well, there are certainly some very curious aspects of the returns that we dont know that much about for example, the very large consulting fees that he paid on some of this income. Like, who were the recipients of the very large consultant fees many of them in Foreign Countries and at least one of them appears to have been his own daughter and so i think thats an area for exploration. Certainly the circumstances. If you have a giant tax refund of almost 80 million, that remains under audit. That may be why hes been arguing hes been audited and cant disclose it. He always could disclose it. But what is the issue what are details of the audit what is reclaiming there and why was he arguing he should get an 8 0 million refund . Could it be losses from the casinos . But supposedly he didnt have an ownership stake there. Thats confusing and i think has the article points out, taxes only show you so much. Again, i think another key thing they revealed is he always said depreciation is what smart people use to offset their taxes, but they pointed out even if you take the depreciation out of there, his latest ventures have been losing a lot of money, and whether they are really viable and what their value might be is still a very open question there is a ton of stuff out there for reporters to go after. A laundry list of questions from the revealing report. With that said, jim, how much time do you expect joe biden to spend on the compliance with the tax law during tomorrows debate when President Trump already has come out to say calling this report fake news and insisting he pays a lot in taxes well, i think if he wants to show hes paid a lot in taxes, hes going to have to produce documents to prove that. I havent heard him actually dispute any of the numbers in the reporting. They are very precise. Theyre down to the penny in some places. They didnt make up the numbers. If he wants to refute the numbers, step up and release the tax records. Whats the point anymore he says he paid a lot in state tax. Okay reveal your state taxes and lets see how much you paid. I think he is going to be under pressure i mean, biden should certainly hit him on the notion that he cant release these because theyre under audit. That is not the case he absolutely can release his taxes as every other president has if he wants to beyond that, i dont expect there to be a lot of focus on this i mean, it only verifies trump will say im a Smart Business person and thats you elected me because i know the tax code and im only following the rules. If there are loopholes, then im taking advantage of them, but this is an extraordinary situation where he basically wrote the tax code his administration wrote it. He could have closed the loopholes. I think biden should probably take him to task for some of the glaring injustices in the tax code which remain. Well see where this leads. I have to ask to your reaction to the preliminary injunction of tiktoks ban last night. I wasnt all that surprised i think the administration is going to run into the reality that tiktok is not like any other business its a form of communication and speech people who use tiktok is expressing themselves. There is a long and deep tradition in this country, the protecting freedom of speech, and particularly, its very difficult to prevent speech before it happens. And i think this is something that the a reality is administration is running into i dont see any easy way for them to get around that. If theyre going to argue that spree speech has to be curtailed in the interest of national security, they have to step forward with a much more detailed and convincing case about why this is such a threat to u. S. Security i think its a very tough argument given the first amendment. Jim, working against that, isnt there just very, very powers in terms of figuring out whats okay in terms of Foreign Investment do we have rules that block Foreign Ownership of tv stations and things like that i mean, where does that come into play . Well, its one thing to oppose Foreign Ownership its another thing to try to block the users. It would be like saying well, you cant turn on your tv. Tv is different because you receive it but everybody in the internet has the ability to express themselves on it so to try to stop the users is whats going to be hard. They have a lot of room to negotiate the Ownership Structure as long as it does not impede the ability of tiktok users to express themselves on the platform so that is the needle theyre having to thread theyve gone too broad by trying enjoin the operation and stop the users. This fight should be from the owner and the government, not the customers of tiktok. You know, jim, examining chinas actions in different parts of the world, whether its the disputed border with india, building a military presence in and around the south china sea, that suggests china is being aggressive is it Wishful Thinking to expect chinas officials to approve the deal with walmart and oracle and allow them to manage the source code that manages u. S. Customer data thats going to end up being a largely financial decision i mean, how if they cant have the u. S. Market in tiktok, if they ultimately are banned here, thats going to be thats going to severely curtail the financial prospects of tiktok china may not care about that, and the Security Issues there may loom larger or the idea that theyre not going to give into u. S. Pressure. I think thats something that you have to peer into the minds of chinese leadership to see but i do think it is a real risk that when all is said and done, china will say no, were not going to let this finally, jim, weve been asking people not just on the heels of this particular ruling but as the deal as come together to the degree it has at all, whether there is a dampening effect on cross m a, whether folks to see opportunity back off because of the heightened now risk of approval and clearances to the degree where its come down to the opinions of two leaders in the world. Well, thats certainly true if youre dealing with with anything that has to do either with national Security Issues or internet issues, and obviously the two have blurred we have a long history of difficulty with the u. S. Technology companies penetrating the chinese markets. I mean, going back to googles efforts, facebook. I mean, there have been its been very contentious area for a long time. So i think a heightened level of hostility, this ongoing very public war over tiktok will definitely have a Chilling Effect not just on m a, but on u. S. Companies trying to gain greater traction in the u. S. Market which is kind of ironic, because one of the main goals of putting the tariffs on china was getting them to open their markets up more to u. S. Companies. But now it looks like all of that, theres a cloud over all of that, because the minute you have u. S. Companies operating in china, you have the potential of China Gathering Additional Data on u. S. Citizens jim, thanks so much good to talk to you as always. Jim stewart on two very big stories today. Carl, is it time to get bullish on the cruise lines. Down more than 50 since the start of the year. But have we reached a bottom were going to debate that next. Dont go anywhere. Squawk on the street returns in two economics . Algorithms . Magic . Turns out, its you. Doing your thing. Dreaming dreams. Building new worlds. Its why we built our workspace technology. To help you do your best work and to see what you can become. Youre made for bigger things. Zbljtdsings with bags yxz ung nmtd zblnchtsz in Northern California evacuation orders the glass and zog fires have burned roughly 10,000 acres. Across california more than 1,000 firefighters are battling wildfires. Heavy fighting between troops supported over the disputed region. Dozens of deaths have been reported actual numbers are disputed. Several nations have called for the two sides to return to the negotiating table. India has now confirmed more than 6 million cases of the coronavirus. This as the worldwide death toll from the coronavirus approaches the 1 million mark and a new study shows people you should the age of 20 are 44 less likely to get covid19 than adults british researchers analyzed 32 other studies to come up with those results. Youre up to date. Thats the news update this hour seema, ill see you back here in an hour. Thank you cruise stocks have been crushed during the pandemic. The cdc putting into place a no sale order in march. And ships havent been able to sail since then. Many expect an extension to be announced this week. Is now the right time to get back into the cruise names which rallied 10 on friday . We have guests joining us to discuss. Patrick, ill start with you you really have to have a stomach for volatility in order to invest in cruise lines and part ways with traditional valuation metrics. These are some of the most highly leveraged names on the s p 500. Do you think the recent gains weve seen are justified you know, we i will tell you right now the only certainty is uncertainty with these names. Im of the view that its going to be a much longer and slower recovery than folks are expecting. Certainly we saw the names jump up significantly at the end of last week in anticipation that you might have some cruising sooner than later. Im of the view that the cdc will extend no sale order for at least one to two months, but again, we anxiously await it because were running at about 48 hours until that current one expires. Earlier last week the cruiselines submitted 74 recommendations to the cdc including testing for all crew and passenger. The use of private islands and limited excursions to ensure that passengers dont contract covid when they get off on a port do you think thats enough to win the approval of the cd zpl. You know i was going through that i was going through that same list, and it was pretty clear its going to be a very different world for cruise customers. The protocols are pretty intense, and back to the earlier question, i wouldnt call an inflection at this particular point. I think there is a whole lot of things that have to happen for the consumer out there to be comfortable getting back on the ship we know that the clock is ticking for the no sale order. If anything, just the cdc letting the so sale order expiring, i dont think that indicates were getting back to normalcy any time soon as far as the stocks themselves, we know they have become even more leveraged than they were as they continue to try to navigate the liquidity pressures. So at this point in time, were still pretty neutral on those shares, and we think this is really not a time to try to mask your positions pending all these issues patrick, how are you thinking act this industry if you project a little bit further ahead, and theres one school of thought that says theres going to be obviously pent up demand for all kinds of travel, and theres going to be a real release of that demand at some point in the future on the other hand, this industry already had maybe demographic issues, people not taking to it as quickly what do you see for the further future here . Well, to like the stocks you to value them on 2023, maybe 2024 estimates and i think during that time at least over the next six months, i think youre going to be more disappointments than encouragement, and what worries me a bit is many investors, especially robin hood investors, dont have three to fouryear time frames. If you got fouryear time frames, most of my clients probably dont, especially hedge funds, i see more risk than reward over the year tuna, when you see headlines cross from the companies that say bookings next years are above historical norms, what do you think is the phenomenon behind that . Are those passengers with reservations precovid and deferring on the hopes maybe this will work out again, or is this people putting a fresh reservation online because they think this is going to work . I would like those advanced booking numbers with a grain of salt consu a lot of people given credits for previous bookings and cashing in on the credits, theres a lot of flexibility for cancellation built in. So while the companies are saying the numbers are coming in within historical norms, you know, we know that doesnt necessarily indicate the people will get aboard the ships under the new protocols we talked about, and more importantly, i think the profitability of the companies are going to get squeezed even more, because theres a whole lot of costs that are now kind of built into the business while the companies as we speak are still burning anywhere from 160 million to even north of 200 million on a monthly basis projected cash burn. That is set to continue over the long haul, even if cruises get back to any semblance of normalcy theres liquidity issues they have to deal with, and i think we could be looking at a potential recovery that could stretch well into 2022 yes speaking of liquidity, patrick, youve seen all three cruiselines downsize their fleet and sell a lot of their ships. There was a Holland America ship worth 120 million at the beginning of this year now worth 10 million i mean, how concerned should Credit Investors be about some of the debt that theyve bought that is backed by the ships . Unlake hotel real estate, theres no underlying land value. I dont know if we should be dramatically concerned were going to get a vaccine youre going to by the end of next year get some return to normalcy what weve seen so far is the Capital Markets and investors over the last several days and the equity have been very accommodating to these cruise lines. Im not overly worried about the Companies Going bankrupt any time soon. On average they have 13 to 14 months today of liquidity in a nosale environment, but again, the Capital Markets are open granted not cheaply. The Interest Rate of 10 to 12 has to bite at some point. Thank you for joining us to share your expertise on this sector all right as we head to a break, the programming note get ready for delivering alpha on wednesday its back for a tenth year 20 years ago, i was an hourly associate cart pusher. The different positions ive had taught me how to be there for others. I started out as a cashier. I mean, the skys the limit with walmart. Its all up to you. Chris harvey says its too soon to put new money to work. Find out when hed be adrey to jump in on trading nation. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. Still no deal in congress on a coronavirus stimulus package no deal and no sense as to where were going. The speaker of the house was on cnn yesterday and said negotiations are going to continue this week and said democrats are going to continue to push forward with the 2. 4 trillion proposal, maybe in bill form for a vote on the house floor. Though she said what she would prefer to get out of this is a negotiation with Steven Mnuchin and a deal with republicans that could attract republican votes and get it through the senate and signed by the president. They hope to do that this week well see where that goes. The negotiations just have not been very encouraging for people who want to see another stimulus so far well see if they can break the log jam this week. There are a lot of potential things hanging over this debate in the negotiate this week including the president ial debate thats tomorrow night that could change the political dynamics if theres a real breakout performance for one side or the other, it could reframe the calculation. Theres the Government Shutdown looming. The expectation is theyll be able to come to a deal to have a continuing resolution to kick that can down the road if that deal were to fall apart, that might play into the overall stimulus negotiations, and then theres the fight over the Supreme Court. Republicans said theyre going to push forward with hearings on the president s nominee as early as october 12th. Theres a lot of emotion around that and there are a lot of folks on the left to say democrats should shut down everything on capitol hill in order to protest the president moving forward with a Supreme Court nomination so close to an election f. If that idea takes hold in the democratic party, that could impact whether we see a stimulus bill or not but as of now, pelosi says shes going to push forward. Well see whether negotiations can yield anything they havent to date interesting just off the highs of the day, 36 days until the election the latest on where talks are on stimulus heading into the break, look at shares of caesars and william hill the companies in talks in a takeover that gives caesars full control of William Hills Sports Betting business. Well be back in two as coronavirus cases continue to surge across the midwest, retailers and landlords alike are facing the possibility of more store closures and bankruptcies for more on what theyre seeing on the ground, ray wash jburn i with us along with troy tribble. Good morning. Ray, weve been talking about sort of fiscal cliffs for the business for several months now. Temperatures are going to change for big swalts of the country. I guess where are you seeing the mix right now in terms of what youve been able to do in open air and thats even some of the restrictions are starting to loose snn. Sure. Well, in texas were at the 75 . Its fine. We have beautiful weather in texas, but when you look at a city like new york where the mayor just said hey, were going to let you stay indefinitely outside, but if you close, its 25 seating. The average new york restaurant has 20 to 40 seats outside thats only five or ten seats outside. In texas theyre going to allow us to go to 75 . We run 100 kitchen. We have our sales up to 80 plus which gets us back above the break even line, but when the Colder Weather comes in, if were not able to go to 100 in our outdoor enclosures, thats the next foot that drops yeah. Paul do you think consumers are going to give temperatures a long leash and basically say whether or not they want to lear not they want to support the business because they want it to exist for the future are they going out in kpconditis they wouldnt have i think customers will always port the sbigss they believe in. You know, particularly for a pair of retailers within that only gets you so far customers will not be able to come back into stores like they have and buys has changed pb theyre not buying things for special Events People have started to make masks back in march. Individuals and Companies Like capital one and others, thats what this will do to bridge the cap. Not every big business is willing to make that commitment. It will be a hard time for these companies in the fall and the sprint and it is two seasons on them not coming back in stores. You have them meeting nine months in advance, so its not too little inventor, or touch, and that balloon might pop, so i think some mall businesses will survive, but i think there is over 200 businesses, and i think that will come in the fall and carry on in the spring yeah, just to get to those numbers a little bit, there has been a sense of suspended animation. Using whatever support payments are out there. Do you think there is not really a way for folks toandahalf bait their way out of it the markets seem to be willing to float a lot of them at least part of the way. I think all of the pap has been delayed at this point we thought it would be shorter than it was. I think once ppe is down and particularly on the retail side, landlords can only get so much grace. You cant do six to nine months of free rent to take on that liability. Youre saying what can i do to change and to add cash into the business, things like face masks, but those are not Long Term Solutions it will take them getting back to the stores and promises to get there to bridge a lot of Major Companies with retail footprints in the next 12 months. If there is one part of the economy that had a vshaped economy, it is retail. For that to be susz tanble how critical is it for the bill to be passed . It is and you have probably not probably not heard on the ppe money, the sba has nine days to determine if you spent the money correctly. And they need to do things right for the american taxpayer. But we want to invest in our future, and a lot of that throughout our platform of restaurants we cant really spend the money. We feel paralyzed until a ppe gets forgiven and everyone in the industry is feeling that we need some stimulus in some parts, but we need the old stuff forgiven so we can go forward and take our Capital Investments Going Forward. I want to switch quick on the retail side as well. We have a lot of retailers and the ones doing well are selling accessories, purses, shoes, things like that what is hurting is mens suits and things like that it is a true economy of the have and have notes. Womens apparent has recovered, but its the men side that stalled out. We mentioned a surge in cases. The lullish argument is that it will not result in greater hospitalizatio hospitalizations even if it does lock downs are not coming back, but others say this is a dark chapter as we go into the fall. Where do you think the consensus is on that right now in the business for us i think it depends on what the Consumers Want to do. Consumers want to eat outside and they want to go to the stores for things they need. But for people doing consumer goods like we are i dont think there is a big rush back to the Stores People are just antsier to be outside. A majority of what we sell is kashl clothi casual clothing. So retailer lgs be more on lock downs, as long as they have a robust business, a plan to get to the spring, and getting back to next year im an optimist, people will come back and it will be a matter of who will be there and i talked to a factory owner the other day and he said if we can make the to number next year there is a potential that well be kings because we might be the only ones around be smart, hustle, keep your head down, create cash where you can and get ready for next spring. Yaed, one thing that is a positive is up trending our Commodity Prices the other Commodity Prices are coming down a little bit the factories are working again. The unemployment that ended on july 31st is people going back to working and pricing that is flattening out last summer it was going haywire across all commodity places. So were yeah. Yeah, youre right, its a great reminder of go ahead, paul. No, i said i think our challenge outside that is different from the Restaurant Industry is that were buying things, six, nine, and ten months in advance. So really it is retailers like us prices might pop up and that might not affect us, but a factory closed in hitly, it is affecting deliveries now it is really the long time table that i feel like it makes maybe what is different from food and beverage is that were feeling those challenges in the fall and the spring of next year. And it is a matter of powering through and getting to the other side of it paul, ray, thank you guys that is a great touch on two important sectors. Well talk to you later. Lets get to a sector sort. Stocks are starting the week on a high note all s p sectors are in positive territory. Among the best is energy they are down 14 in the last month, but today it is up 2. 5 4. 5 now, as well as schlumberger and they are going up on the announcement of going equals dow is up 4 30 squawk alley starts in a moment upbeat music we did it crowd cheering [narrator] wherever you start, snhu is where you can finish. crowd clapping crowd cheering here we go. [narrator] and its it. [group] yay [narrator] you did it, high five Southern New Hampshire university. [man] that gets a hug. laughing look at that masters degree, i did it i did this for my children. I am very proud of myself