And maybe some headlines on stimulus before then hit a bit of a dip here dow down 150 or so. The nfl confirms covid cases among players and nonplayers with the Tennessee Titans. And governor comeau saying theyre now up 3 . We might start to talk about schools closing. Meanwhile valuations is where we will begin this morning as investors try to interpret data. The price to earnings ratio of a nasdaq 100 of the last ten years, the pe ratio, it is doubled and it is at that alltime high. As you see up there above 30 it was at around 15 to 18. 40 of that index is made up of just the five biggest tech stocks so here is the question. Are stock prices in big tech stretched to a point where the value wakes no longer makes sen. We have the editor and chief of the verge joining us we have not seen valuations among the biggest stretched to this point in a long time. I kaech hearing this whole peer group value thing, but what if theyre all out of whack yeah, i think that is a big question why would they do that at a time theyre trying to recalibrate where they are but they seem like the safest money going. They just keep issuing returns theyre doing better than ever whether or not theyre embarrassed to say that. And importantly it is hard to see threats to the core businesses of the companies. It is really hard to see what dislodged the iphone and amazon. I think the enterprise action, that is really interesting and it seems long lasting. The consumer behavior, who knows what happens so i think that uncertainty leads a lot of people to invest in very safe money. I know im preaching to the choir in a way, but when these were riskier the numbers were lower. Does that make sense yes, i totally agree, i dont see the threats to the companies. The problem is the world has changed dramatically in a sense these companies are benefitting. That is why i think stocks have such high pes. In a period of uncertainty you go to where it is the most untern it is almost inconceivable that there will not be an antitrust intervention next year and i think, you know the states are very revved up the department of justice is revving up, and you know congress is doing the same thing. So i look at higher taxes, all of these things to me suggest that there is market risk here rather than industry risk in these stocks and the question that Everyone Needs to be asking is how confident are you that you should be looking past covid the first wave is not necessarily the end. And therefore we may have more time to spend with this very difficult economic environment which will be relatively better for these guys, but i think terrible for the economy as a whole and i think ultimately will be a challenge for investors. Sounds like you took the other side of that argument. You said it is hard to decide what can dislodge apple. But as roger says there is impending regulation do you think that is not going to get through the results, there is also chinau. S. Trade tensions, and what do you think about those kinds of risks i, yeah, i think i find it very hard to imagine a future beyond early november. I find it hard to remember the future past the pandemic it is almost impossible to know. I will say that regulators and courts are very slow if it will be antitrust regulation, that is years out and everyone will see it coming. Do you think it was perhaps rushed maybe it doesnt have the teeth that it was perhaps originally envisioned i agree that the onset of the regulator is coming im saying the end result, the d. O. J. Breaking up google, the court rules, it is years out it will be appealed, and well have a very clear sense of what shape it will take as it reaches its conclusion. You know the house antitrust Sub Committee is going to hold more hearings this week. Theyre going to issue a report. We have not seen that report yet. I think in terms of the market valuations right now, what we see is regulators. Theyre years away from taking a formal action that actually disrupts them. You gave our viewers a big heads up, i wonder what you make of technicians that say september was a reasonable mix of taking froth off but still respecting the structural changes within tech. A lot of that is due to the pandemic has this been the pause that refreshes for you. For me in is a pause that gave me great anxiety. I think were getting it done. What is really important is the markets are about discounting the future how far out it goes depends on a lot of factors what i believe is that tech has been an industry with nothing but tail winds for the past decade the tail winds are visible and theyre starting to impact the companies. The epic case for apple is one of the things that are changing and with the problems they are having with them i think there will be more friction the tech is not going to be able to avoid the issues with china being disproportionately challenging for tech i think on top of that the election is looking past and the markets moving forward is largely able to manage to come after, and it is significantly higher taxes for investors and thats going to change the way we have stock prices does apple need a reason to drop another 20 from where it was in june. There was a big reason for it to go up from where it has . Lets move on, lets go to facebook, the Biden Campaign blasting Mark Zuckerberg for what they call regressive action calling for the removal of some posts by President Trump in a letter to facebook ceo this fits in with what we were talking about before, either way you slice it a continuation of President Trump or president bid biden. Like you said, any action with final con squisequences will ta years to play out and theyre minting money. I think the challenge is some want us to put more up and some want us to take more down. The big problem is that, you know a summers worth of zuckerbergs internal town Hall Meetings he is kaugts between a democratic Employee Base and a fairly conservative base will he try to embrace the view from nowhere and i think that is something, you cant look into their course facebook, populism is more engaging, do you agree with that sentiment or this more passing the buck this is one of the most cynical statements ever to come out of facebook. At the end of the day, what mark du zuckerberg describes as free speech it is built around outrage and obviously left wing politics know what has happened that has been a smaller part of the leftwing strategy, but they are stoking hate speech. I disagree with the notion that facebooks audience looks different than the population as a whole. The population as a swhoel in the middle, at the moment moving slightly leftward. And you know facebooks algorithms are amplifying not the people in the middle theyre doing qanon, the proud boys, promoting trumps stuff, and all of that collectively is, if you will, contaminating our politics because those things are often not based on facts democracy is about applying different value systems to the different fact sets. Facebook has played a huge role in this, the people on the right are operating with a different understanding of the facts than the people of the left and that one of them is, by definition, wrong. There is only one set of facts out there. Right, the question is whose job is it to which is which. Why is Kim Kardashian taking only 24 hours off of instagram yeah, you quit, you here is why i quit you tube we see it all of the time, right . That statement from the facebook official, and why was that person anonymous it implies that the democrats should sew division and anger. And i think this is built to reward that belove i keep coming back to the company and its product expressing values it is their own employees, making the world a better place, they are not doing that. Can you map that to one set of content moderation or to the structure and the product and the item itself. Is it broken donald trump is a president with very little democratic norms mitt romney running for president does not say that the ballots are rigged we have someone breaking every democratic norm and we seem to be asking one powerful company to fix it. I think that facebook, because it cant say that out loud, we should not be the ones to fix trump. They are in a pretty hard spot well leave it there, thanks. Two huge debuts coming tomorrow both direct listings well break down what was a value hit q 3, dont go anywhere its a thirteenhour flight, thats not a weekend trip. Fifteen minutes until we board. Oh yeah, we gotta take off. You downloaded the Td Ameritrade mobile app so you can quickly check the markets . Yeah, actually im taking one last look at my dashboard before we board. Excellent. And you have thinkorswim mobile so i can finish analyzing the risk on this position. You two are all set. Have a great flight. Thanks. Well see ya. Ah, theyre getting so smart. Choose the app that fits your investing style. music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. Stocking taking a leg lower on several headlines new york citys major saying the daily positive test rate is over 3 for the first time in months. The nfl reporting that eight members of the titans franchise have tested positive and were seeing downward movement in games stocks Contessa Brewer has that for us. Thank you, coronavirus taking its toll on the nfl there has been a cluster for the Tennessee Titans three players testing positive and five team personnel. The titan wills suspend inperson activities they will suspend inperson Club Activities it is one of the biggest worries for Sports Betting companies for them to coincide with the football season. If covid shuts down football, it certainly takes its toll. A look at the Sports Gaming stocks penn down five and a third caesars off five and a third draft kings is bucking the trend here, up more than a percent interesting that that is still positive all of the gaming stocks in the red except for draft kings right now. It certainly matters to them with regional casinos around the country. Well watch that price action all morning long in the meantime, investors are looking at some other investments. There has been such a build up and yet we know what this has been like. The overall ipo market has been on fire the return has been good or investors and the regular irapo are flying off of the shelf right now. There is interest in the ipos, and it gets the deal done about 11 price. It will be a 3 billion deal, the second largest ipo so far this year. It has a billion in revenue. It is guiding toward profitability. It is good it has shown a lot of losses and i think that is a concern. So we think our issue here is the direct listing and that it does have challenges and going to the market in that way. Right, you make the point that there have been others that did not work out so well i wonder what you think it is that is making direct listing a little more challenging in the early stages. Basically it is the bargain between the buyer and the seller here in the case of the direct listing, the company is the seller and the idea to raise as much capital as possible with no restrictions on insider selling, but for the buyer theyre not looking at wanting the highest price. The buyer has to make money on the other side of this it is hard to predict exactly what will happen, i think it is instructive to look at the direct listings that happened for spotify and slack both companies after the first day of trading, a year after their ipos, they produce negative returns for investors i know things happen in the companys business that might be some events that could have affected that trading, but still the trading in those tells us that there is no reason to rush into a direct listing. So were going to see palantir there will be a lot of interest, the pricing may not be as compelling as it would be for an ipo that is generally a discount for the early days of trading. So i think that investors having learned from the other two might not necessarily chase this and wait it is interesting to note that palantir has a third of share thats will be outstanding and freely tradeable not just the registered shares, but other options and shares that will be free to be sold so even though there is a lock up, there are many shares able to be freely traded. It could be a bit challenging. Seems like some of the things that youre scridescribing with direct listings are actually kind of great for the companies themselves though, right well, possibly. I think the issue is that the company and its employees, they want to say theyre receiving options, they get compensation over the years they want to see the shares rise i believe that these two that have been done receive premium valuations in the market and it has taken time for the fundamentals of the company to catch up with the early days of trading in both slack and spotify. So when we look at palantir we think yes, maybe they maximize the price, but what kind of its not, you want to have a stock that trades well after the first day. You want it to go up and make investors happy. Then you can issue more shares employees can see they made money on their options it has a i think especially when youre only selling a portion of your shares into the market thats not the time to be looking at maximizing your price. If you sold the whole company, no doubt but i think these avenues for going public have not worked that well for investors. If that is the case investors wont come in and be interested in these there is another distinction, not just a direct listing, but one of the most aggressive Corporate Governance structures that i think we have ever seen yet wall street journal report says it could fetch a valuation of more than 22 billion do you think investors are looking at such an advantage even if they sell their stakes they can essentially retain control. Thats right, clearly in the long run that really matters but i think in the short run investors really care about making money and i think if palantir is a moneymaker they might watch out for this governance but theyre not a moneymaker. Theyre losing money im saying for investors. So say palantir coming out at 22 billion fully die luted impi diluted implied aluation so i think that if investors do not make money, or do not see this as an attractive investment, theyre going to add to that the in fact some clear the trading. But we found investors will say can i make money with this that happened with snap, the snap governance was terrible and every ignored it, but when the Company Started to produce results that were disappointing, they were really disappointed about the governance for the snap ipo we have watched tolerance tomorrow will be a big day, thanks for the help, see you later. Thank you here are shares for microsoft. Microsoft has tweeted the majority of the issues related to that outage have been resolved stay with us, squawk alley will be back with more keeping your oysters growing while keeping your business growing has you swamped. you need to hire i need indeed indeed you do. The moment you sponsor a job on indeed you get a shortlist of quality candidates from a resume data base so you can start hiring right away. Claim your seventyfivedollar credit when you post your first job at indeed. Com promo welcome back, everybody. New york citys mayor saying people who refuse to wear a mask will now be fined. This is after a covid19 positive test rate doors to more than 3 . Britain and canada have improosd sanctions. Six other senior government officials as well. A 91yearold leader of kuwait, sheeshikh sabah, has di. In the apple 6,000 sheet have been trapped since early snowfall took shepherds by surprise so far they look okay, though. Well keep you posted, thats the news update at this hour ill send it back to you it is not march yet, but is it time to get out of the sweet 16 the top 16 names in tech are overbought and warns the continued inflows could be a pinprick that pops a bubble. Where investors should be looking instead. Good morning and thank you for being with us. Im looking at anytimes like apple, tesla, nvidia, others that have run up this year why is now different why is now the time to get out of them . I think the real difference peer is that there is an all terntive to these stocks first if you look at the last three months industrials are really hanging tough with the tech space. I think thatted fundamentals start to broaden out and you say why am i paying nine times revenue for these really good companies, absolutely, but when you look at 2021 they trading less than two times and they will clever better Earnings Growth than our sweet 16 list. So that gives you a rotation to add a little bit to the portfolio. Does that ignore one of the central arguments that the tech stocks are moving higher and higher theyre uniquely positioned that may not be going anywhere any time soon. The valuation gab is ridiculously large we have not seen this since 2000 and at some point you have to say what is too high, and then nine times revenue and ten times revenue, it is high pricing, too. It is a huge detriment to these stocks it is the trend for industrials, materials, and consumer diskresh nation it will be better, the growth is going to broaden out so you start to say why do i pay this multiple for these stocks if there is an alternative i think there is an alternative. Many of the companies in toies that people dont care about their stock. It could be a catalyst, as well, as you get into 20 21. Interesting i wonder, stephen, you know it has been awhile, but the play become where so much ware outperforms hardware issues has been written for awhile now. How valid do you think that is if you stay within tech. Software is a huge business there is a huge demand for it, but at some point you want more torque some of that will be more tied to Economic Growth and that you start looking at semis and auto space so with that these stocks have been not as enamored as others so you get a little of that rotation and it doesnt take a lot to change the dynamic of the performance given the gap in the valuations etfs and index funds. Are they especially dangerous, do you think, given your valuation argument yes, it was very funny before i got on i took a look at the fun flows. Tech is seeing outflows that excluded the qqq so trying to change the psychology of the individual investors is challenging so inflows into qqq creates a nice backdrop for the stocks there is a little more for the tech and the qqq we need to see it flow into other parts of the market. And were seeing industrials and markets showing more interest. And it doesnt take a whole lot given how small and how the dynamic is dramatically different between tech and the rest of the market a different market this year. A lot of individual retail investors, but maybe well save that for another time. Appreciate the time, thank you very much. The investing event of the year is just one day away. Do not miss tomorrows delivering alpha conference now in its tenth season featuring the likes of steven mnuchin. Aro o delivering alpha. Com t len more well be back in just a moment. [narrator] at Southern New Hampshire university, were committed to making college more affordable. Thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. When you do your first 100 races on peloton theycall it your century race and they got to 100 hitting a low at 24. 75 that day back in september of last year in the meantime getting some commentary from Speaker Pelosi on stimulus talks. Lets get to ylan mui. They are keeping hope alive for another round of covid relief the two of them spoke over the phone this morning for about 50 minutes about the democrats new 2. 2 trillion proposal they agreed to speak again tomorrow and the treasury secretary has already briefed the white house chief of staff mark meadows and the white house staff. So far theyre feeling optimistic about the potential for progress larry kudlow says the white house has been very clear about its priorities. We have made concrete specific well targeted and smart policy proposals to aide well targeted sectors such as will your honoring to school and helping Small Businesses and we want to help the harls and we can have more assistance for unemployment to continue were not the ones stopping this most of the provisions he outlined are in the democrats new proposal there is 182 billion for education. There is an extension of ppe for the hardest hit businesses and there is 25 billion in aide to the airlines but that last point that he mentioned, unemployment assistance that has been a roadblock along with the level of state and local funding and whether or not state and local republicans will saccept it afte direct checks, will they continue to talk about it or will it fizzle once more we know were going to hear from him tomorrow, becky quick has secretary mnuchin tomorrow speaking of conferences, conferences are fully under way with vm ware were going to talk to path gelsinger about the keynote and other news stay with us what . That our new house is haunted by casper the friendly ghost . Hey jill hey kurt movies . Ill get snacks no, i cant believe how easy it was to save hundreds of dollars on our Car Insurance with geico. I got snacks ohhh, i got popcorn, i got caramel corn, i got kettle corn. Am i chewing too loud . Believe it geico could save you fifteen percent or more on Car Insurance. The annual vm ware conference will be coming up Pat Gelsinger is joining us now ahead of that. Good to see you, good morning. Good morning, jon great to be on the show again and spend time with you and before we have a stunning Virtual Event of 150,000 or so that have that im told you can break some news with us a little earlier. That is a partnership with vm ware. Yeah, it is nvidia and vm ware coming together, and they have been building their capabilities for quite a number of years, but theyre used by 10 or 15 of enterprises. They are only available in remote cloud environments. What were announcing today is t the democratization of ai. The Industry Standard deployed vm ware data and software and bring it to every data application. So were quite excited about the application. We have known each other for several decades. You are suggesting that there is only a fraction of the effect, how big will this be for your revenue. We see an idea that we can now make ai broadly available to enterprise exciting for nvidia they are still cracking just a small piece of the application workload we think this is a major accelerant but also extending to the edge as we see 5g and edge emerge this is a major new area for both of us and the virtualization offeringings and every enterprise can start to take availability of the powerful ai capabilities we see it as a game changer. It is clearly an accelerant opportunity. Give us a picture of what is driving demand for you right now. It is multiclouz this seems to be following the t t trajectory theyre looking to hedge their bets is that what is driving a lot of the ipos that we see coming up and some of the tools youre building yes, we want to help Companies Take advantage of the most modern cicb pipelines modern capabilities, but they need to take advantage in their private centers. And for this our preferred partnership with amazon has really taken off but now with azure and google and oracle and alibaba partnerships all showing up, now they can take the interest of that across any cloud and be able to go through their private data centers through the cloud and back we now have major customers that were highlighting that are taking advantage to the cloud as well as from the cloud and this high bridge approach enables us to save maybe 30 on average for customers. And also having consistent developer environments and i think that will be the next major mov Artificial Intelligence for every enterprise sounds really great in theory. I know this is different im reminded of a few years ago when ibm made its big best on watson and tried to bring Artificial Intelligence to more corporations with mixed results. I wonder whats different about your partnership is it a different time or are there certain businesses or sectors that are more quick to bring that technology into their models as i think about ai, you have this 30year incubation cycle. My First Experience with ai is when i was architecting in the mid 80s it goes through this long incubation cycle were seeing these breakthrough capabilities and then you go through the valley of depair then you go through the plains of prosperity where the technologies are starting to be adopted. They are maturing. Thats exactly this period of time that we see ourselves in. Nvidia, a clear recognized leader in ai the m ware a recognized lead heer in computing we think its a game changer that people can say i can make part of every application. This is the specialized things that im trying to solve particular aspect but now across health care, across financial services, across security industries, across a broad set of transportation i can now use ai at scale to be able to both reason on data, this enormous flood of data. I call it the oil of the next generation but also be able to get insights, predictions from it thats the phase we see ai in n now. We taub about the tech landscape, i think you gave us some technology there. Thanks for being with us look out for stitch fix. Amazon watching we can take a look at that i think im losing my picture, guys down 2 . Take a look at stitch fix. Shares are down. Amazon down about one third as tech pulls back. Well be talk about a new form of payment amazon announced y. Da stay with us well be back after the break. Its still not too late to get in go to deliveringalpha. Com to learn more and to register squawk alley is ba ia mentckn music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. Call it amazons palm pilot. Amazon is launching a new palm scanning device that would connect a customers palm to a credit card and allow them to pay for items with just a wave of the hand. There are plans to sell that technology to third parties like retailers and stadiums but for now amazon will launch the service in two of their go stores in seattle. I want to go there i have been there let me tell you, the first time i used, not the Palm Technology but the grab and go technology p i accidentally stole a you gugut it wasnt perfect. Got the apple card, google going into checking accounts you got a free yogurt maybe that did work out perfect. That sounds like giving amazon some biometric information about me i dont mind the bar code. Whats next, the room you get your irises scanned. They can call it an eye pod. Yeah. I wouldnt put it past them we already handed over so much of our data though thats true they are one of the ones that are continuing to innovate were down 200 on the dow. Some of those covid headlines will remind us how hard it will be lets get to the judge welcome to the half. Front and center, the road ahead with your money with stocks staging the worse month since the spring the so much to consider over the next few weeks. Well debate what ushtyou shoul with our investment committee. Second to last day of the third quarter. Dow is down 200. S p is down a half percent nasdaq