Transcripts For CNBC Squawk Box 20240712

Good morning, welcome back to squawk box right here on cnbc this morning. Im Andrew Ross Sorkin along with joe kernen and kelly evans. Becky is off today lets show you where futures stand at this hour maybe 12, 15 hours after President Trump returning to the white house. The dow looks like it would open down marginally about 63 points off, nasdaq off about 83 s p 500 off about 15 points. Lets also show you treasury yields as we speak, well show you the ten year yield right now, you are looking at 0. 763. Meanwhile ill pass it over to kelly. Thanks for joining us this morning. And youve got the news on President Trump. And before we get to that, joe, we were just joking about, you know, you and me we could banter and we were in studio and andrew wasnt and now, you know, were all no, you are in studio still im still here. Ive been here since april and i like it here there is no delay. Is that are you wearing orange or that red i think that were in sync sort of yeah, it was an orangey red this morning it was just bright enough that i could see it in the closet anyway, great to be here with you guys lets get to the news this morning. Andrew mentioned that President Trump returned to the white house last night from waller it reed and and abe mondim mondaye standing by. Reporter yes, walking under his own power, dressed in a suit and tie and walking to marine one and taking off to the short flight to the white house. And once he arrived to the white house, we saw this dramatic moment where the president walked up the steps to the white house balcony and stood and posed for pictures at the top of the balance donny, allowing americans to see that he is standing on his own two feet, he pai appears to be fine, but you doctors say that he is not out of the woods just yet, he will have another dose of remdesivir today and he will be monitored by white house physicians. All that will be happening over the next five days or so they say it wont be until monday that they will be able to breathe that final sigh of relief as they call it so something to watch there. The president recording a short video saying that americans shouldnt of trade of the coronavirus and he has seen it and he doesnt want to dominate americans lives. And we put a poll in the field on friday night, this was right after the president was admitted to walter reed, we started polling americans this battleground states, this is between october 2 and october 4, to get a sense of how this is all impacting them and here is the headline number. Support for the two candidates in the battleground states, 50 biden, 45 President Trump so a substantial lead for joe biden. Smaller than his lead nationally which is about ten points. Five points in the battle grounds states serious concerns about covid are jumping higher, into 72 now and you see the spike up since september 3, that is an interesting bit of movement there because it is not what the president necessarily would want he ahead of the election. And who is taking more appropriate personal precautions, this is overwhelmingly joe biden, 75 biden, 39 trump so as you look at this, what you are seeing is a race where joe biden is consolidating a lead in the wake of the president s hospitalization and the wake of that debate last week. Well see whether there are other events in the next month here that in the final stretch can change the cal cause husband, the president will hope that he can do that by it is playi displaying strength and recovery from the virus and so still time here for the president , but the trend line is not where the president s people would like to be weve been focused a lot on the president s personal health for obvious reasons, but there are so many people in his inner orbit that have come down with the coronavirus. What does that mean in the final weeks of this campaign when people like hope hicks, when the press secretary, when im sure other trusted confidants arent around the stark reality is that the president returned last night to a white house that is a hot zone for the coronavirus. The first lady has been in isolation inside the white house residence with the coronavirus, the president infected, rushed to the white house yesterday, first thing he did was take off his mask and pose for pictures at the top of the balance one a conn balcony. And the west wing is also an area where the coronavirus is active we saw a number of press aides testing positive over the last 24 hours or so a number of staffers were told inside the white house staff in terms of valets and housekeepers and those sorts of employees have also tested positive. It will be an enormous challenge to get the virus out of white house. That is something that the president will have to focus on. It is a big daunting challenge because the white house is not a place that you can just evacuate and quarantine but that is the reality of the situation right now, it will mean the president will have depleted manpower as he moves forward here towards the tail end of this campaign can you speak to what his advisers are telling him about messaging, about how he articulates both the message of strength and also he made a comment last night to say dont let covid dominate your life, a lot of people looked at that statement and said it dominated 210,000 peoples lives who died. And how he will speak about the disease Going Forward . Look, the jarring thing here is that the president received World Class Health care, right he had a team of physicians. You can see the battalion of physicians in white coats treating him he had his own suite of rooms at walter reed. He had access to experimental medicine that most americans could never get. This president is not the average case here in terms of the coronavirus. That is he had, what he is telling americans is dont worry about this thing, it shouldnt be something to dominate your life, there is a risk yes, but it will be fine. Well see how that plays on the campaign trail what the polling shows is that the election is moving away from the president , not toward him. One of the things that is into the not clear is who his advisers will be we dont know who he will be able to talk to. Physically, it will being limited. Only a very few aides will be able to have facetoface conversations with the president and those will have to be under strict ppe, mask wearing scenarios. On the phone, how much energy will he have to reach out and talk to various people who can advise him on all of this, that is not clear although the president is saying that he is back and feeling good and he feels as good as hes felt in 20 years so hopefully he can reach out to a wider array of advisers. But there is that sense thathe is in a bubble as any president is normally and now that bubble is a lot smaller than it would otherwise be in and the remdesivir and dexamethasone are standard care, so he did get that im hoping the regeneron drug is as great as obviously that is the one their pewic that he got th therapeutic that he got that others maybe couldnt get. And one of the reasons why the mortality rate weve gotten a much better handle in the last three, five months on the mortality rate that has gone down as far as the age old question from people on one side that worry about the damage to the economy and what that does to peoples lives, and the other side that point to the horrific number of 210,000, but 20 to 49 years, 99. 98 survival. 50 to 69, 99. 5 and when you go over 70, you get to 94. 6, a lot of comorbiditie there, a lot of things that play into that. So in terms of all the businesses that are going to be permanently gone, all the jobs permanently lost, all the lives permanently affected, it will be an argument that we have not an argument, but it will be two sides of how we approach this that will go on and on and on and no one will get beyond that 200,000 number i mean, there have been calamities in the past obviously that are in the 40,000 and 50,000 1969, a horrific flu and we had woodstock at the time. And no one is ever going to minimize the 200,000, but the people that are on the other side of that argument about dont fear it are the ones that are worried about really lasting economic damage for where we didnt isolate the older people that were vulnerable and that the 99. 98 crowd, 20 to 49, they are locked in their house, they are unable to earn a living. You know, they havei insecurity and alcoholism and depression and not getting elective surgeries so you can see the point youre right. It is a horrific and cruel tradeoff to start to think about at what level of death are you willing to accept to have Economic Activity in the country, what level of death is worth rescuing the American Theater or Airlines Industry and not just the industries, but the people that work in the industries and that depend on that for livelihood. Not to mention being shut in and 46 that is a moral and ethical and economic be and political decision and so many components to it but youre right, that is the tradeoff that the country faces and there are no clearances here and we dont have a really clear decision from leadership about where this is going to go. We are getting a lot of mixed messaging on how this country should proceed and i think that this election will be about two different approaches, the president who is infected with coronavirus and who in his first big image at the top of the balcony takes off his mask versus the Vice President who yesterday in the nbc town hall touted mask wearing as patriotic but there was no one around him. There was no one up there with him. Joe, but then he immediately what i was going to say, make two points, he immediately then walked inside without his mask on as well. But the issue about the tradeoff is this could be done but can be done responsibly and the question is, i think as eamon said is about mess anlgting if you are telling the country not to let it dominate your life, effectively to say not to worry, weve got this and well take care of you, that is a difficult message if you are not going to respect this virus. Because ultimately if you get into a situation where new york city takes their masks off, which is what he would have entertained probably up to a week ago, and would have suggested, you would have had a lot more people back in the hospital and if you had too many people back in the hospital, you wouldnt be able to get that treatment. Yes, today, it is spectacular where we are in this country in terms of being able to get remdesivir, but that is only because we dont have tens of thousands of people who are walking into the hospital. And he was also able to get tested immediately and get into the hospital very, very early. Irrespective of the fact that some of these drugs are available to others but of course not regeneron the issue is that he do get there. Most americans didnt. So i think that there is a question about what that messaging looks like you know my view i think that we can get back to business, but do it in a responsible way and that means a lot 6 testing aof testing and wg masks. That is not what the president has had vow indicated. He may not be the biggest mask advocate, but he is not saying dont wear masks. I dont know what happens in the west wing either i hope everyone recovers,er hope all 9 senators recovthe senatorr weve seen certain hot spots because weve opened up with some professional sports and things like that and outcomes so far have been relatively positive. Major universities, major league baseball, wherever youve seen it, they take off for a couple weeks, they are back the crisis passes in a lot of these. And it is obviously much more the moreare mortality rate is higher than a horrible flu, no doubt, but when were talking about him with secret service g acts and ppe, it is not ebola that were talking about, this is not bubonic plague. No one wants to transmit to anybody else but i understand what hes saying it is not manageable 200,000 is not manageable, but i dont know whether you want to impact peoples lives that are young peoples lives forever based on not just protecting the more vulnerable if i do just add a thought here one is, i mean, first of all, youre right, but i dont think that we should minimize the shear terror for the young people who have gotten it in terms of the heart implications, permanent lung scarring. We dont really know what the long term effects are no those who survive a rough case of this and materialin terms of the wes, sports arenas have dealt with it by largely as clearing out everybody and cleaning all the surfaces and what not. It is not really something that you can do in the west wing or the white house residence. First of all, they are very cramped quarters there the hallways are narrow, offices are tiny, a lot of people crowded in to a tight space. Right now they are having a lot of people work from home, but there are certain things in termses of c of classified acti they cant just fume gafumigaten bring everybody back in. They have to still manage it and because of the physical space and degree complete and classified work in a happens there, that will be a real challenge. Complete and classified work in a happens there, that will be a real challenge. My point is that i hope everyone recovers. Between now and recovery, i dont know how they get any work done or how they campaign. But that is secondary as well. But the issue the whole issue is about modeling. It is about modeling the white house up until yesterday wasnt doing contact tracing. So when you talk about these other places, these other sports leagues are so many other institutions around america are doing so much more than the white house ever did lets try not to make this political. Well talk later we got a lot more coming up, a closer look at what is working in the markets right now, well talk u. S. Quitity equity future about 36, and later you dont want to miss this, well have a wide ranging interview at 8 00 a. M. With chamath. Everyone wakes up every morning to a world that must keep turning. The world cant stop, so neither can we. Because the things we make, help make the world go round. They make it cleaner, healthier, and more connected. Its what we build that keeps things moving forward. So with every turn, well keep building a world that works. Sfw ten year treasury yield hitting its highest level since jund an joinijune and joining us j joe, and we could talk about which way equities are headed. Where do you want to start, joe . Good morning. I think that the conversation surrounding yields is the most interesting one for investors and traders. As you rightly identified, trerkry yield trer treasury yields approached lins that we havent seen since june. There has been a cokocorrelatioo growth and technology. What is the rising scenario for those growth and Technology Stocks i would offer there is a new dynamic that is introduced and last week we saw the single biggest weekly inflow into the bond act fund since 2002 that is the inception of the bond abo bond so 1. 8 billion went in in a very defensive mannerism last week 1 billion of it alone on friday when we received the news about President Trumps covid dyi dias so does that get unwound and does to allow for both growth and technology to continue to advance. And also to see some of the value like financials advance as we well so what is the answer if you are going to position yourself based on what you are talking about, are you buying financials and tech . I think a proper blend of both is the right strategy i would not be moving away from growth, i would not move away from the faang names on concerns that yields could rise further were one week from today, you will be talking about jpmorgan and citigroup earnings as they are released next tuesday morning. And having exposure to select financials might be the right strategy looking forward so i like a blend of both growth and value. I dont want to move away from the growth as it relates to financials themselves and the upcoming earnings season keep in mind as weve discussed in prior months, the Capital Market activity remains incredibly robust. And that will offset the negative impact that continues to hold back financials with deteriorating rating margins so names like morgan stanley, names like goldman sachs, they will once again benefit this quarter from an environment of trading that is certainly unique to the experiences of trading revenue over the last several years. And this is kelly here. The scenario you are describing is kind of the goldie lgoldiloc. But interesting to talk about even yields rising from here because just to get to 75 basis points feels like it has been a huge achievement so the first part, are the gains already priced in, and the second part, a lot of people who think that yields are rising paint it as a very dire scenario, like the end of the bond kind of bull run and all of that so are you basically saying that we stay range bound, the range just moves up a little bit well, i think what it does, kelly, it acts in a positive mannerism to unlock some of the fund flows that have been so overwhelming and aggressive towards bonds in prior years and also think about how investors have sought the safety of bond proxies in the last prior years. So having yields rise to 1 or even 1. 25 , first of all, i think that is what the februaise wants. And for investor, it benefits Equity Investors as it flows out of bond funds. And do we really want to be dealing with an environment which obviously in be hach havi saw last week where investors are saying flock towards bonds because we could have a contested election and that will continue to suppress yields. We all know the economic climate that most challenges all of us is deflation so i think that this is a favorable thing for risk assets. Joe terranova, great to see you. Appreciate it. The other joe, back to you and then there is the other joe, joe is im happy with my name right now a lot of joes. Joe, joe, joe. Coming up, the nfl looking to tighten its coronavirus protocols after two games had to be moved last weekend adding strict penalties and right now, here is a look at some of the biggest premarket decliners, in this case in the s p 500. Hey, dad hey, son no dad, its a video call. You got to move the phone in front of you like. Like its a mirror, dad. You know . Alright, okay. Hows that . Is that how you hold a mirror . 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Roger goodell said violating protocols would result in penalties including the potential forfeit of a game or loss of a draft pick especially for violations that led to viral spread or games being rescheduled. Two games had to be rescheduled this week after an outbreak. And yesterday we had i dont know about i love science nobel prize. Yesterday it was for hepatitis c, today for physics, and it has to do with broke being holack hs it was awarded to a trio of scientists fordiscovery about i want to just quickly tell you who it was. And one british scientist, a better m german scientist but at berkeley, and andrea i dont know how to say her last name. Ghez at the university of california ucla. And black hole, although they are the stuff of, you know, so much Science Fiction and legend. And the sink xgularity and nothg escapes. Even though foe tophotona, and t rays, gravity somehow even escapes light from escaping. So figure that out. Sa, and light rays, gravity somehow even escapes light from escaping. So figure that out. , and light rays, gravity somehow even escapes light from escaping. So figure that out light is both a wave and a particle you like that stuff . I like the helpp c one. I thought that was awesome with all the awful stuffing for on, what gilead has done with that treatment and Everything Else there was a time i know im old, but we used to talk about non about nona, nonb hepatitis because they didnt know what it was. And they named it hepc and cured it so that is why you get a nobel prize. I love it coming up, stimulus talks are continuing today after yesterdays negotiations failed to plowroduce a compromise. Have the markets already priced in no deal well have that next and take a quick look at yesterdays s p 500 wichb he wi losers 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. I cantwhat . Ve it. 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. Good morning welcome back take a look at u. S. Equity futures, were off about 31 points on the dow. S p 500 looking to open down about 12. 5 the dow about 70 and nancy pelosi and secretary mnuchin spoke about an hour yesterday as stimulus talks continue but they fail to reach a deal ylan mui is joining us with more the new x factor now is with the president back at work at the white house, does the political dynamic of this deal change once more lawmakers will be trying to gauge whether the president believes that closing the deal could give them a boost heading into the election, or whether he believes that blaming democrats for blocking compromise could be more advantageous. What we know is that the treasury secretary and speaker of the house are supposed to get back on the phone today for another round of spoke about anr yesterday and they are now getting into the details both sides could claim a legislative victory, but democr republicans could claim a judicial win with the nomination of Amy Coney Barrett despite an outbreak of virus in the senate, Mitch Mcconnell says it is full steam add for the committee holding the hearings and for its chairman lijun Lindsey Graham chairman graham has all the options he needs to supervise a fair, thorough and hopefully dignified confirmation hearing next week and that is just is what is going to happen. I look forward to seeing judge barrets brilliance and qualifications on full display starting one week from today graham said that he has spoken to President Trump and that trump is excited about getting Amy Coney Barrett confirmed. And when we spoke yesterday, we were talking about october 19th as a key date for the senate as well, that is when they need everybody back in person thats right. That is when mcconnell has said that the senate will reconvene and bring everybody back and the key thing there is will there be enough healthy senators to come back and be able to confirm Amy Coney Barrett on the floor of the senate or even within the committee. We heard yesterday from senator ron johnson who says that he will put on a bubble suit if that means being able to get back to the capitol for these important votes. So it seems like republicans at least are on board with making sure that they can be back in person democrats however saying this is a health and safety issue, and that they are very concerned about the level of testing, tracing and monitoring going on at the capitol thank you for now and joining us now to discuss the lack of the stimulus deal and the election, lets bring in the Founding Partner of u. S. Policy you say that trump was always behind, the tightening of the polls is now reversing and likely to be defeated decisively what makes you so confident given what we saw in 2016 . Well, i think that number of things number one, bidens lead is much larger than clintons lead was then biden is polling around 50, 51, whether Hillary Clinton was polling a lot less than that democrats were in the white house at the time and Hillary Clinton was much better known, so she was essentially the incumbent. And undecided vote typically does not break towards the incumbent, it breaks away from the inconsukuconsume bechbtnt the majority of the country dislikes donald trump. So i think that when you look at and you can look at the stability of the race. How about the fact that the republicans are in suv senate races in South Carolina and montana, places like that that they should be winning comfortably, the president behind in ohio which he won by almost ten points in 2016. So i think that the list just goes on and on that shows that the president has had a very stable unstable Approval Rating and has been that way since he has been in office. So from where you sit, you think investors will focus on the wrong thing, which is not the kind of odds between trump and biden, you think it is more about the odds of the sweep, you noe, of biden winning and the democrats taking the senate. How likely do you think that outcome is and what would it mean for markets i think a sweep is looking like a jump ball right now if biden does in fact win by Something Like 6 to 8 points which is where the polls have been the last two months or so, i think that that implies a sweep. We do have the seat in North Carolina getting a lot more interesting with some controversy from the democrat there. So that could bes t marginal set and that is an important development. But right now, republicans are behind in four seat, they will pick up alabama, that puts you at 50 50 and then youve got a number of other republicans who are tied or a little bit tied and almost no vulnerability on the democrat side in terms of seats in play and so i think it looks like id say a jump ball or even better for the democrat for right now and youre saying that the democratic sweep would reduce the after tax return of owning stocks which would put downward pressure on stock prices and people have talked about how much that might reduce Earnings Growth and could the Supreme Court nomination made a republican victory no likely in the senate . We saw the kavanaugh effect, that is why the republicans control the senate now is it possible that if that confirmation moves aheaded they could do better than you expect . Well, i think what happened can kavanaugh is Republican Voters felt that kavanaugh was treated very infatherl linfai. And if we see democrats launch attacks that mobilize the Republican Base and beyond that, i think that the base is very mobilized, if we are talking about maybe swing voters, suburban, republican women who are not sure that they can vote for trump, but if the democrats attack Amy Coney Barrett unfairuattack unfairly, i think that this could move it. I doubt it, but it could move votes at the margin. All right very good. Andy, thank you, sir, for your time appreciate it. Coming up, Movie Theaters among the hardest hit during the pandemic with huge movies facing big delays well talk about what it means for the industry, next and later, Southwest Airlines xi gary kelly will join us on the odds of a stimulus deal and his new plan to avoid layoffs. This was an unexpected bill not covered by my Health Insurance. And this is the aflac duck who helped me cover it. Aflac. These are all the cab rides to my physical therapy. And aflac paid me directly to help. Aflac. What he said. And this unexpected bill is from. The twothousanddollar specialist. Thanks. Aflac. When youre sick or injured, aflac is there. We can help with Expenses Health insurance doesnt cover. Get to know us at aflac dot com. But when i started seeing things, i didnt know what was happening. So i kept it in. He started believing things that werent true. I knew something was wrong. But i didnt say a word. During the course of their disease around 50 of people with parkinsons may experience hallucinations or delusions. But now, doctors are prescribing nuplazid. The only fda approved medicine. Proven to significantly reduce hallucinations and delusions related to parkinsons. Dont take nuplazid if you are allergic to its ingredients. Nuplazid can increase the risk of death in elderly people with dementiarelated psychosis and is not for treating symptoms unrelated to parkinsons disease. Nuplazid can cause changes in heart rhythm and should not be taken if you have certain abnormal heart rhythms or take other drugs that are known to cause changes in heart rhythm. Tell your doctor about any changes in medicines youre taking. The most common side effects are swelling of the arms and legs and confusion. We spoke up and it made all the difference. Ask your parkinsons specialist about nuplazid. Ask your parkinsons specialist our Retirement Plan with voya gives us confidence. So we can spend a bit today, knowing were prepared for tomorrow. Wow, do you think you overdid it maybe . Overdid what . Well planned, well invested, well protected. Voya. Be confident to and through retirement. Coming up, with ann warners brosh. [ brothers pushing back the release date of batman and regel cinemas preparing to shut down their theaters, raising questions about the big budget theaters. Shutting down because they got for movies, so i dont think if they will make movies becae eyrehuindownus reentering data that employees could enter themselves . Thats why i get up in the morning i have a secret method for remembering all my hr passwords. My boss doesnt remember approving my time off. Lets just. Find that email. The old way of doing business slows everyone down. With paycom, employees enter and manage their own hr data in one easytouse software. Visit paycom. Com for a free demo. Monitoring the president s recovery, negotiating a stimulus deal covid19 second wave were going to get to rich greenfield, hes got a great backdrop kelly, i want to just mention this one more time andrea, youre excited about this, only the fourth woman to win the noble prize in physics and you said the first one was madame curry only the fourth, thats unbelievable the black hole, this is cool if you look into it. After einstein postulated the theory of relativity, it mandated holes but he didnt believe in them. Ten years later, roger pendross wrote the definitive paper on it 1965 thats what hes getting this for, work done way back then. You still have to be alive, right, so thank god. I think you do, i think youre right it always seems a little unfair to me shouldnt you be able to get it for Something Like black holes. We have to get rich on camera, shaking his head you want to talk about movies, doesnt that make you feel kind of, anyway, hey, rich, youre on now. Good morning. Has prompted Movie Theater closures and extensive delays for hollywood productions. Its like a black hole in movie production, isnt it its almost more like a dear in headlights, there are plenty of movies shot and done and ready to be released the theaters say they are, you know, i saw mookie on cnbc, the ceo of cineworld, talking about theaters are quote unquote safe. The consumer has spoken. The consumer isnt comfortable going back and sitting in indoor Movie Theaters the numbers on tenant, with no competition around the world, you know, forget about new york being closed the number of people that went to see this movie, relative to what needs to see a movie to make it profitable, the theater goers are not there yet. Like the consumer is just not comfortable with indoor Movie Theaters yet, and its just going to take time why hollywoog down they dont have an outlet. They cant put it out directly Nbc Universal did an amazing job with trolls, going direct to consumer in the height of the pandemic making it available for 20. That worked well for a relatively small movie billion dollar type movies, that is not a solution, and so you cant do, you know, the premium video on demand, 20 to 30 mulan didnt work. What you have sort of run into is unless youre willing to embrace the netflix model, which nobody seems to, youre basically in a waiting game. So its not that movie sets are dangerous, and theyre not making them, its no reason to make it because no one is going to see itment it its got to be a combination of all of those things. Movies are starting again, tom cruise, and the crazy part is movie production is restarting its slow and cumbersome and more expensive and time consumes, but its like a pilot. On the highway, you got a 13 car pile up, like the pile up is building right now because you cant release these films. Theres no outlet for them in theaters and its this oddity. Hollywood is making more movies but doesnt have an outlet to distribute them right now, and thats going to be a really interesting event for, you know, as you move into 21 i dont think many movies are coming out until the summer of 21. Is it over or like sports if theres a vaccine or if this finally lifts, is there going to be a lot of pent up demand to get back in there or all of the theaters, half are closed and the employees are never coming back. Look, the longer this goes, two things, one, i dont think most Theater Companies are prepared for this financially, and i think most likely scenario is that most of them file for bankruptcy protection. Remember, we have seen the theaters, the theaters have gone bankrupt before. They were, you know, they expanded too fast once before. What probably needs to happen, you probably need the theaters to go bankrupt shrink the footprints. We dont need 40,000 Movie Theaters in the u. S. We need it to be more of an event. I know you have had rich on from i max, the experience of going to a movie needs to feel more i max like, more event like to get you out of the home. The longer the pandemic lasts, the longer theaters are valentines day kanl vacant, the month of october alone, theres 20 plus movies on netflix. Netflix is gunning direct to consumer movies. Thats going to alter behavior the number 5 title on netflix is a movie called outpost, a war movie. Theres a lot of movies coming out, just not in theaters. Were going to do a rich greenfield sequel, fast and furious two or something because were out of time. I nominate you for a nobel for Media Coverage we got to go thank you, and do a sequel for us soon. I dont know if you want to release it incomparable design makes it beautiful. State of the Art Technology makes it brilliant. The visionary lexus nx. Lease the 2021 nx 300 for 359 a month for 36 months. Experience amazing. At your lexus dealer. Pandemic well see yousoon. Thanks, joe h dont want toy pr we have a interview, and layoffs. Squawk box will be right backy stocks coming off a big monday to start the week the possibility of a stimulus deal fueling yesterdays gains what you need to watch in todays trading session is straight ahead. President trump is back at the white house where he will continue to be treated for coronavirus. The latest on his health and his message to america is coming up. And theres a food fight brewing amid the pandemic. Will mom and Pop Restaurants get some form of Financial Aid while chains like chipotle and starbuc starbucks thrives. That and much more as squawk box begins right now. Good morning, welcome to squawk box right here on cnbc. Im Andrew Ross Sorkin, along with joe kernen and kelly evans, in for becky today take a look at u. S. Futures at this hour. Were going to show you where things stand right now, we are still in the red, kind of a little bit better dow off about 25 points, nasdaq off 67 points. S p 500 off about 12 points. We have news just crossing, and we have this very guest on our program a little bit chart, palihapitiya, ipo merging with clover for a total enterprise value of 3. 7 billion. Social capital founder and ceo is going to be joining us at 8 00 a. M. Eastern time to discuss this news and so much more that stock up close to 10 this morning. Clover health of course a Health Care Company that spent a lot of time trying to go at the Big Health Care insurers, and well talk about what it means and this frenzy around spacs in the next hour. Get into this sorkin, everybody is doing it. We need money, is that the problem . Is that our stumbling block . I have said repeatedly, joe, that we should start the stock spac the problem is not finding the investors early on well talk with chamath. It the harder part is finding the target, convincing them and persuading them to participate, and finding investors who want to participate in that its sort of a double whammy andrew, real quickly, do you like the spac . This whole kind of model in general, i mean, would you be on the side generally speaking of saying, listen, theres a role for this, and its almost like a shark tank thing and they get advisory help or do you think its really expensive and a trend thats going to backfire. I think its going to be an asset class for a long time. A number are going to backfire simply because theres so metropolitmany of them. This may feel like the late 90s. The internet didnt go away. There was a period with which nobody wanted to touch this stuff. So i think, you know, some relatively large percentage, unfortunately, of these may not work, but as a vehicle, i think its going to change the game to some degree. I think the fee compression, there may be real fee compression on this that may make it less attractive everybody and their brother wants to participate in this and become a sponsor, it may be the fees look like a big askman Fee Structure which was much more performance based which it could turn out that people like gary cohen, and everybody else trying to do these things theres really not enough, the incentive isnt there to do it i think it also speaks to the problems of Capital Formation in america right now. And whats wrong with the ipo process. But i also think theres some elements that need to be tweaked and fixed around the spac process as well. Theres been no major innovations in doughnuts lately. I mean, what would be your interest, to take public i would do online, some type of online gambling. Im not sure what. I think thats going to be huge. Doughnuts, digital doughnuts im not sure where would be your area of expertise . You love journalism, right youre a really good journalist. I would roll up some media companies, joe is that what you do theres a media roll up to be had. So you have been thinking about this all were missing is money and brains anyway, President Trump returning to the white house as the coronavirus, as he continues coronavirus treatment. Amo eamon javers. Have you got any money no, im out. Its going to be a skak or a spak anyway. I cant help you on that one. I know you cant. I got nothing for you was he gasping for air, where did that come from did you notice i noticed when i go up steps, since i havent worked out in eight months, but did you notice yeah. Look, its hard to say what was going on there the president , you know, some striking scenes as the president left walter reed, you know, walking under his own power to marine one that was an encouraging sign for a president who had spent three days in the hospital behind closed doors for the most part we saw him then getting off of marine one, saluting the marine there, and walking over to the white house and then posing for pictures after he walked up the steps on the white house balcony. All of this designed to show that the president is standing on his own 2 feet and is back. Removing his mask which is something that has attracted a lot of criticism from people who say the president ought to be messaging mask wearing better. The president clearly uncomfortable with it, decided to ditch it, and film some videos inside the white house for social media so that, a dramatic moment, setting up the end game of this president ial campaign now, even as weve got some new polling for you, joe, on just how that hospitalization may have changed the dynamics in this race. We had a poll in the field starting on friday night chl that was the night the president went to walter reed. Polling over the next couple of days on our cnbc research. States of play poll, and heres the headline number from that. Its biden 50, trump 45. In the battleground states, these are the toughest battleground states that are going to be most hard fought in these battleground states where these Electoral College votes are going to be decided, biden is ahead by 5 as of right now, and take a look at this number, joe, this is the serious concern about covid. That number is increasing as well since september now up to 72 of the people we talked to have serious concerns now. You can see that spike at the end of the graph going up toward levels where it hasnt been since say april, may time frame. All of that trending in the opposite direction that the president s campaign wants it to be, so clearly theres some real impetus for the president to demonstrate his strength, to have a go ahead run plolitically and change the dynamics of the race, not going where the president wants it to go theres still weeks left, and as we know, over the past week, the news cycle can change dramatically theres time left for the president , but its not going in the direction his campaign might want it to, joe. Yeah, definitely not. We had andy, you know, kelly, someone sent me a cnn poll from four years ago, and it was 50 38, hillary, so she got to 50 at one point wow do you remember it was after the second debate or something, i think, eamon s. Is that a National Poll the number i showed you is a battleground state poll. This is talking about a previous interview we had where the point was made that it never, the margins that we saw in 2016 nationally were never this high. And it was pretty close. Although he had other reasons, he said, you know, everybody that hillary was more unpopular, and that there was a democrat in the white house at the time. Its hard to argue with all of those polls, and theres no comey this year, and revisiting emails, i guess, but i dont know but there is covid, and you know, there is a Supreme Court fight. You know, there are a lot of dynamics here that we have never seen before in american politics, so i think we do have to have some humility around the polls, right, because of what happened in 2016 i dont think you can look at the polls and say thats a slam dunk, its a biden win you have to look at the polls, we can get interesting trend lines, movement around some of these events, but i think the only poll that matters is the one that happens on election day, and thats absolutely right, especially this year. Yeah, the betting sites are strange. One of them is who will win the election the other one is who will be the next president , and people were pointing to on friday. Two different things, maybe, thats concerning. Well, you know, if you get covid, and you know, you have thats different than winning the election thats like, you know, whos going to be the next president when you get covid obviously that would cause the betting cycle to move in the direction. People are going to be paying attention to the Vice President debate on wednesday, as we see harris, pence squaring off in utah the former Vice President s age, both of those candidates are going to be scrutinized more intensely than we have seen. Exactly all right, so you showed no interest in our spak, but thats fine thats fine. Im interested. I just dont have any money. I cant invest. Youve got the brains youve got the ceo look, if we do it, and the hair and stuff. I dont know. Youre in the mix. You might be in the mix. Im here to help. Thanks for including me. Kelly yeah, i think eamon, we need to clarify, we want to invest in eamon. A 450 point gain on the dow after investors grew optimistic about the president s health and the possibility of stimulus relief mike santoli is here to help digest market moves and go back to the leadership here and which sectors, curious for your thoughts. It was interesting. The market did relax we have been clinched up against perceived risks and we did relax to a point if you look at the s p 500 on a yeartodate basis and that point was right here around 3,400. We did surmount it we got a little bit above in level that has seemed to contain this rally since, you know, back even into late august. Also, by the way, its virtually the high from before the covid crash in february. A lot of friction and a lot of traffic around this area, i would say. 34 25 is an area people are looking at that was the high in mid september. I do think that you had an eclectic group of sectors working yesterday, almost hard to draw a story out of it because you did have the large Growth Stocks as well as the beaten down value stocks rallying with the rising yield i wanted to show the nasdaq 100. The mega cap growth sector, as well as the s p bank sector. The reason is, this was a big rally, and look at from what level. Whats interesting is this nasdaq 100 has had a very short peak from the up 40 year to date level, and this has bounced a couple of times from the down 40 yeartodate level banks and big tech i think that one thing to keep in mind is even if you start to see a little bit of relative outperformance by banks and the other value group, theres just a long way to go before its anything but a bounce. Theres a lot of room for them to recover some territory without it necessarily being a big change of story. Look how excited, kelly, we got, or andrew, about the yield move. Look at it on a longterm chart. It was almost nothing, and it seemed like we were somehow breaking out we have to keep this in context in terms of the magnitude of these. We were talking with joe about that, mike sorry, andrew, go ahead. No, no, go ahead, go ahead. I was just going to say, mike, we were talking to joe about this last hour and betting on the financials ahead of earnings season, nice numbers on the trading side, so how would you say, yeah, they can show some vigor r, but, you know, are we saying theyre dead money or we dont know yet. Strictly by reversion and the fact that theyre cheap and you have a little bit of room from treasury yields, who knows, they can actually be a beneficiary of one of these rotations that doesnt necessarily change the overall story of whats going on during this entire bull market, which is huge cap growth leadership, winner take most economy and market we have to be careful about deciding, this is the inflection point. Okay. Mike santoli, are you buying spak this morning . Im going to sit it out im going to wait for the busted spak trade to come out, next several months. You could be part of our spak, too. Well talk about that during the commercial break hes not interested. Okay, fine. Were not begging. You either want to be part of this or not, right, andrew, we dont need anybody else. We just need money right . Were good. Well talk to chamath about money, he has the big announcement that just crossed the tape literally about 14 minutes ago. When we come back on the other side of the break, fast food and casual dining restaurants are tweaking their approach to customer interaction in the face of the pandemic. A look at the changing landscape of eateries, thats takes place next, and later, Southwest Airlines asking its employees to agree to pay cuts in return for not furloughing or laying off employees through 2021 nonunion salaries will be cut by 10 until the beginning of 2022, and were going to talk to and were going to talk to southwest chairman, andyy prtg its time you make the rules. So join the two Million People whove switched to Xfinity Mobile. You can choose from the latest phones or bring your own devic, and choose the amount of data thats right for you to save even more. And youll get 5g at no extra cost all on the most reliable network. So choose a data option thats right for you. Get 5g included. And save up to 400 yr on the network rated 1 in customer satisfaction. Its your wireless. Your rules. Only with Xfinity Mobile. Pandemic forcing restaurants and fast food chains to change the way they do business kate rogers joins us now with more how so, kate hey, joe, good morning, we have seen delivery and pizza players like papa johns and dominos take off during this time, but other restaurants are leaning into carry out and drive through concepts as Consumer Preferences continue to shift. Starbucks is opening both smaller to go stores and more stores with drive throughs in suburban areas over the next 12 to 18 months chipotle has had its lanes for two years for digital order pickups, and 2021, 70 of new locations will have a lane burger king revealed Smaller Stores that have drive in options, curbside, and pickup delivery taco bell has a smaller mobile store with parking spots with contactless Curbside Pickup and a lean to prioritize those who order by the app, and shake shack is working on shack drive through lanes and carryout windows. So many of these concepts focused on dine in options as well as carryout in august when more restaurants were reopened, drive through visits represented 37 of all restaurant visits, and off premise remains popular as concerns and restrictions regarding on premise remain. Back over to you, joe. Favorite in my house, kate, dominos, and they reinvented a lot of stuff pizza, its good a lot of stuff is that why the stock is up . Its up over the past six months what will we expect to hear tomorrow they do, joe, and so they had really strong same store sales last quarter of 16 growth were expecting that to likely continue they also have new menu items. I dont know if youve tried them out yet they introduced revamped wings, well see how those do, and the ceo rich allison said consumers were spending more when they visited perhaps for leftovers. Thats a trend well be keeping an eye on. They got an ultimate pepperoni, and i realized there cant be too much pepperoni, its weird if its thin enough, you know what i mean, and it gets nice and crispy, there cant be, maybe they could. I actually agree with you i think thats a great point thank you its hard to believe people would agree with me. I appreciate that because i was serious but most of the time people just roll their eyes. Thank you. Youre welcome. Kelly, you dont always roll your eyes. I disagree. I take the pepperonis off i pick them off. I cant, yep, the husband gets to eat them. Its a winwin exactly hes like bring it on. Pass it over i can see that lets stay on track with the Restaurant Industry here they are set to lose 240 billion this year because of covid for a closer look at the push for federal aid for the industry, lets welcome in our next guest, chef and restaurateur marcus samuelson, theyre lobbying congress for virus relief its great to have you here with us this morning. And i mean, youve got some really scary numbers about how many restaurants could close and would you want another round of ppe is that kind of main way to support the Restaurant Industry . What are your expectations at this point well, first of all, when you think about it, right, you talked about fast food, and places like that, when you think about the word restaurant, you have to think about independent restaurant are about 11 to 16 Million People, this country works in independent restaurants, and our worlds look vastly different than big Box Restaurant they really do, right, so it is interesting to listen to the conversation that were in the toughest time in the restaurant history has ever been in this country, and one side of the business is thriving and the other side of the business, and also i think that when you think about neighborhoods, when you think about the heart and soul of not only new york city and san francisco, places like that, but american cities, restaurants, independent restaurant is what makes it sort of the heart and soul of those neighborhoods, because when restaurants are gone, so does retail marcus, i dont think any of us need convincing its obvious when you look around any town, and you talk to people who are struggling to stay in it, so youre kind of drawing this contrast between the way that some chains like dominos or chipotle are thriving while the mom and pops are struggling with all sorts of crazy rules. Not crazy, but just difficult to apply a broad standard to and figure out, you know, how to plan for the months ahead, and restrictions on Indoor Dining and not a lot of capital to come up with the solution you cant just launch an app you want the restaurant act to pass right, its in the heroes act. I dont know i guess we have to wait and see whats in the bill that might come from pelosi and mnuchin, right . Its the most important thing that can happen for us as 16 million restaurant workers, it has to pass, you know, this is a difference whether present 16 Million People are going to go on unemployment versus being able to hire back 60, 70 are hiring back, so definitely, not just for the survival of the employees, but also the owners and the institutions are really at stake here. If we dont get this bill passed, i dont know whats going to happen to independent restaurants and our neighbors and our communities will look very very different, and its going to take even with this, its going to take an incredible task to build the Restaurant Industry back, right, were not out of the woods just because were going to get this bill passed and its not so much about getting this bill pass instead terms of we want another loan, we just want to go back to work. Thats all we want to do you know, its a known fact that restaurateur put 90 to 95 of all revenue that comes into the Restaurant Goes back into the restaurant right, so its actually very good investment for the government because its going to go back to reemploy people restaurant owners, there is no exit plan. There is no umbrella that we staying in it, and we just want to go back to work. Marcus, the question i would ask in terms of is how to make the money the most productive it can possibly be and the most targeted it can possibly be. Which is to ask a terrible question i desperately want the Restaurant Industry to not only survive but thrive, but i worry that, you know, this could be a 12 to 18 month project from here on in before things could possibly get better, depending we could hope maybe on the more optimistic side, you could say six months in things could get materially better potentially if certain cities were to allow more Indoor Dining and the like. But the question then becomes by default, were going to be employing people who are ultimately not working in the moment, and so the question is there a different way to target them in terms of those employees to provide them with funds but doesnt necessarily need to come through the restaurant because theyre not going to be working and how would you work that . Well, i mean, that battle has already been dealt with, right you know, if you go back and look at how other countries dealt with it, they actually dealt with it through the government, right . But since we decided a long time ago that Small Businesses would deal with this, we cant actually retract that right now, do you know what i mean . We would have said, you know, eight, nine months ago that the government will actually take care of this, and were not going to go through the Small Businesses then thats a path we could have taken. Thats a path that other countries have taken, france, sweden, et cetera, right, but our path has always been were going to manage this through spa Small Businesses and restaurants. Its actually not a path that we can exit out of because that would be even more catastrophic. So that conversation, you know, we could argue that back in march or april when this was dealt with, which, you know, america has picked this path of that were going to have as small government as possible, its about having the right side government as possible, and this is really the livelihood of about eleven to 15 Million People that, you know, makes up neighborhoods or, you know, huge fabric of our communities. So once we decided that were going to pay it through the small restaurants, independent restaurants, we have to stick to that path. All right marcus, thank you so much for your time this morning, and well all await the fate of that bill and the whole industry, marcus samuelson, andrew thank you so much i want to go up to harlem to have the Fried Chicken that he makes so very well its some of our favorites, red rooster. Coming up, when we return, chances of a stimulus deal driving yesterdays trading session. The nasdaq and s p having their best day since september 9th were going to talk markets where it put money to work in just a few minutes check out shares of dollar tree right now, Company Plans to hire 2500olay,0 hid season workers. Many of those jobs will be at they keeping your oysters growing this. Y gp still to come on squawk box, Vice President joe biden has drawn the dividing line between the rich and everyone else at 412,000, a look at the number that really defines and what it means to be quote rich and at the top of the hour, Chamath Palihapitiya joins us. He just maded his latest acquisition, well talk about cloud cover. Weve often wondered what keeps the world running. Economics . Algorithms . Magic . Turns out, its you. Doing your thing. Dreaming dreams. Building new worlds. To help you do your best work and to see what you can become. Youre made for bigger things. Welcome back to squawk box, take a look at futures right now. Were showing you dollar tree right now, but were going to show you futures right now things have turned around. The dow was in the red looks like its now moved into the green, about 43 points up is how we would start the day if we did it right now nasdaq would open off about 50 points s p 500 off a little over 5 1 2 points we have renewed hopes of a stimulus deal that may be pushing markets higher, at least thats what happened yesterday gene todd, executive Vice President fiduciary trust company, along with liz young, at the ny melon Investment Management also a cnbc contributor. Gene, let me start with you in terms of positioning yourself. Are you positioning for a stimulus bill . Do you think this is really happening . Hey, andrew, good morning yeah, we do think its happening. Now, i cant tell you its going to happen before the election, though it seems like theyre getting closer they werent that far away from the beginning. You know, you had the dems at 2. 2, calling for 2. 2 trillion in stimulus, and mnuchin, and the republicans were at 1. 6, 1. 7 so as we like to say the art of the deal, we think its going to get done its not the end of the world if it does not get done before the elections. If it doesnt, it will happen shortly thereafter. How are you playing in terms of equities. Look whats happening in the bond market, the tenure, does that say anything . Is that speaking to you right now . Its absolutely speaking to me, if you just compare it to what happened in september, we saw a rough september in the equity market, but the bond market really kind of stayed staer steady what were seeing now, and what we saw yesterday, one day does not make a trend you saw a nice rally in the stock market, youre seeing a lift in yields, Risk Appetite broadly staying healthy, and i think that should continue as the recovery drags on. Now, theres a caveat that with the expectation of an opposing party win, the market is typically weak in september and in october i wouldnt be surprised to see a weak october here, but it doesnt mean the recovery is off track, and i think some of the signs like yesterday are encouraging. Liz, you think the markets pricing at a biden win right now . I think the market right now is reacting to the likelihood, the higher likelihood of getting a stimulus package september we werent expecting one at all we unfortunately needed some bad news to get the likelihood to increase a little bit. I dont think the market is pricing in entirely a democratic sweep. I think what the market is reacting to is as of the weekend and then yesterday is less Political Uncertainty given what we went through last week, and the president contracting covid and so on and so forth i think that if biden stays ahead in the polls as we move through october, were likely to see more volatility. The congressional race still continues to be a little bit of a toss up, if the likelihood of a democratic sweep increases as we move through october, were going to see more weakness as well. And gene, are you in the same place . Yeah, i mean, i know the consensus is that biden is going to win and i guess people are saying a blue sweep is a dominant probability at the moment. Sometimes the consensus is wrong. It was wrong during the last election im calling into the show from st. Louis right now. And so you know, theres a lot of people here who lets just say polls arent accurately reflecting how theyre going to vote we know the wall street journal had a recently poll that said biden was up 14 its obviously much tighter in swing states maybe 5 so a lot can happen. The elections are four weeks away thats an eternity in terms of an election. So lets see what happens with the economy. Lets see what happens with the markets. Lets see what happens with reopenings but i think its going to be a lot closer than the polls suggest. And were just going to have to wait and see jooergene and liz, i want ton you both appreciate it. Thanks, andrew. You bet joe thanks andrew. The cdc updating its coronavirus guidelines, detailsp everyone wakes up every morning to a world that must keep turning. The world cant stop, so neither can we. Because the things we make, help make the world go round. They make it cleaner, healthier, and more connected. Its what we build that keeps things moving forward. So with every turn, well keep building a world that works. Squawk box coming right back. Welcome back to squawk box this morning, the cdc updating its coronavirus guidance yesterday. Acknowledging that it can sometimes spread through airborne particles that can linger in the air for minutes to hours. A transmission that occurred in poorly ventilated and enclosed spaces that often involved activities caused heavier breathing like singing or exercise but the cdc said the common method of transmission is through large respiratory droplets when people cough, whether they sneeze, talk, which is important talking matters. Or breathing in close contact, guys joe . Thanks, meantime, Top White House officials are blocking strict new federal guidelines for the emergency release of a vaccine for coronavirus. At issue, a provision in those guidelines that would almost certainly guarantee that no vaccine could be authorized before the election. It would require vaccine test subjects to be followed for about two months after the final dose is received the fda submitted the guidelines to the omb for approval more than two weeks ago, but the New York Times is reporting that they stalled in the office of chief of staff mark meadows. Coming up, the biden tax plan and the definition of wealthy. What it could mean for your money if the ve esenicpridt wins the election at the sales are down from last quarter but we are hoping things will pick up by q3. Yeah. Uh. Boss doug . Sorry about that. Umm. What. Its. Um. Boss you alright . [sigh] [ding] never sett top with power e of the. It has powerful, easytouse tools to help you find opportunities, 24 7 support when you need answers plus some of the lowest options and futures Contract Prices around. Dont get mad. Get e trade and start trading today. Aflac now tell me, what does aflac do . Aflac pays you money directly to help with unexpected medical bills. And is aflac Health Insurance . No, but it can help with Expenses Health insurance doesnt cover thats right. Are there any questions . Coach yes . Y can i get pye of those cool blue blazers . You know i cant play favorites. Alright lets talk coverage. Its go time get help with Expenses Health insurance doesnt cover. Mmm hmm get to know us at aflac. Com i decided that i wanted to go for Electrical Engineering and you need to go to college for that. If i didnt have internet in the home i would have to give up more time with my kids. Which is the main reason i left the military. Everybody wants more for their kids, but i feel like with my kids, they measurably get more than i ever got. And i get to do that. I get to provide that for them. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save up to 400 a year on your wireless bill. With the carrier rated 1 in customer satisfaction. Call, click, or visit your local xfinity store today. Were coming right back. Y prtg welcome back to squawk box this morning, a live shot of the white house right now. For his tax plan, vice Presiden Biden has drawn the dividing line between what he calls the rich and everybody else, and hes making that line at 400,000 is it really rich, especially in high cost states or is it even too high that is a question that robert frank is joining us to answer this morning robert good morning, andrew, joe biden saying the only people who will see higher taxes under his plan are those who make more than 400,000 a year now, by National Measures or most measures, that is a very elite group, representing the top 1. 8 of households, they earn 25 of the nations entire income now, they would face several kinds of tax increases from a higher income tax rate, and new payroll taxes to wiping out the business income deduction. But in high cost states and cities, 400,000 may not be considered that wealthy. Now, the campaign hasnt said or maybe hasnt even decided whether that 400,000 is in combined total Family Income or just individual income now to be in the top 1 of earners nationally, you need at least 515,000 in income, but in new york and new jersey, you need at least 700,000 a year to make the top 1 . In california, its 660,000, and connecticut, that is the highest state. You need 827,000. Now, an analysis by financial samurai, thats a Financial Planning firm, they found that a family of four, making 400,000 in a major u. S. City would be able to afford a 2 million home, a toyota highlander, and two staycations and only one road trip per year so joe and andrew, at 400 k a year, youre not taking net jets, youre not taking wheels up a 200 million house is good but in a major city, you both know, 400k, especially if thats split in the total Household Income is not that wealthy. People that make a lot more money than that also buy highlanders, isnt that right, andrew the sorkin family is trying to get from point a to point b. Isnt it a highlander, i thought you said it was a highlander it is proudly. I just heard robert say highlander and i just immediately thought i know that you got that highlander out in the driveway the prius hybrid electric thing, though, right . It runs on kale or how does that work i bicycle behind it, and push it all right thanks, robert did you do that because you knew, robert, you put that highlander in . Why did you pick highlander, thats weird. I thought andrew was planning to buy the cadillac of minivans, i didnt know he switched to a highlander thats right. No, no, the pacifica is still potentially on the list, though im being told Amazing Things about the volkswagen atlas, but thats a separate conversation go, joe. Who do you talk to, the what . Anyway, for more on Vice President bidens tax plan, and what defines being rich, being rich is just being part of this cnbc family, i think, andy pusner, former cke restaurant ceo and seth hanlan, hes with the center for American Progress action fund. I have no idea what you drive, andy, and seth, and it doesnt matter so who wants to start . I was looking at some of your notes, seth, but you acknowledge that maybe 400,000 in some cities is not rich but then again, and i agree with you, these arent people that necessarily are having trouble going month to month usually in terms of food, and food security, and, you know, paying rents, things like that, right seth sure. I guess, i dont know, i dont know if the labels matter here, whether you want to call it rich or affluent, its sort of not the point here i dont think the point is to label people, and there isnt a hard line. A hard line hes drawing is that no one under that gets even a penny of tax increases, right, so thats the point. Hes defining who doesnt even, theres no chance of getting even a penny of tax increase under 400,000. So thats the point. It doesnt mean hes labeling you rich or trying to sock it to you if youre over 400,000 if you make exactly 400,000, youre going to get zero tax increase if you make over 400,000, your tax increase will be very very small because its going to be only on the marginal income over 400,000. So people making that kind of, like, 400 to 700,000, are going to have a tax increase of maybe 1 or less of effective tax rate increase his tax plans really aimed at the very top, the top 1 or 0. 1 . We think, seth, and i think andy is going to make that point, that you talk about just taxing these people that can afford it, and eventually it seems theres like trickle down government to how it finally goes in. Andy, you point out, biden is going to raise 4 trillion in taxes over ten years to cover 11 trillion in spending on top of 24 trillion in budget deficits over the next decade so i mean, not that republicans wi are worried about deficits either andy. That doesnt add up. 4 to 11, you need more. You need a lot more you look at 2018, people that made over 500,000 accounted for about 2. 5 trillion in taxable income you got to remember its taxable income were looking at. Its not how much you earn its taxable income after deductions and the democrats want to reinstate the salt deduction, youre going to find people that make 400,000 or more actually having less than 400,000 in taxable income. If you take the 2. 5 trillion and assume thats a good number, and raise taxes 2. 6 Percentage Points as biden is proposing, thats 65 billion a year or 650 billion over ten years hes talking about raising taxes by 4 trillion. So even taxing these wealthy people, youre only going to come up with less than 25 of what you need to get to the 4 million number, let alone the 4 trillion number, let alone the 11 trillion number, so youre going to have to tax people. Eventually hes going to have to tax people that make a lot less than 400,000 a year, in fact, if you look at people making 50,000 to 200,000 a year, thats where really the income is theres 5. 4 trillion in income, which is going to be a very tempting target for somebody thats trying to spend 11 trillion so i think Everybody Needs to expect the tax increase, not just the people that make over 400,000 before salt deductions. Seth, i dont know if you believe in, you know, whether it affects the overall growth rate of an economy, but, you know, there are a lot of businesses that arent coming back. A lot of hangover from the pandemic, and just philosophically, theres a lot of people that dont think this is the time necessarily for a big tax increase as we try to come out of this i mean, i think hes going to have to do a lot of stimulus, you know, in the economy, and thiz pl his plan does that, and i think were going to need to do more deficit spending early on. Theres no doubt, and thats part of the reason that moodies, and economy. Com have said that his plan is much greater for Economic Growth than the status quo or President Trump because hes actually going to make investments that we havent made but, you know, its like, you know, the people who have lost their business, right, or lost income, are not making 400,000 by definition. Its the people doing well that would see any possibility of a tax increase. I have my own pet peeve is when you dont say moodies. Com that happened last time, too and moodies is this great, respected organization it looks at bonds and whether their Interest Rate coverage is there. Moodies. Com, we saw the projections last time, and thats zandy, and his own under mood anyway, thats neither here nor there. Whats that, seth not just him. Theres plenty of others. Thats all right. But moodies. Com. Andy, the republicans obviously got hit with the pandemic, and the things had been going, they would argue, pretty well as far as the economy still big deficits, still, you know, the tax cuts still generated big deficit. It rings hollow to a lot of people to hear, you know, republicans complaining about the potential deficits when they have been like drunken sailors, basically. Maybe it was beyond their control, but you at least understand how voters might question, you know, the sincerity of talking about deficits from the right. Well, i do. Its also good to keep in mind that last year the median Household Income increased to its highest level ever, made a 6. 8 increase for americans. That was 4,400 a year, and even with all the stimulus of the Obama Administration during their entire administration, median Household Income went up 3,000 a year. So in one year with programs that stimulated business instead of stimulating the government, we saw normal americans benefit, particularly with the poverty rate the poverty rate went down to a historic low, 10. 5 , the lowest since they started recording the data in 1959 and took the biggest drop of 1. 3 those are the policies that stimulate the economy. Those are the policies we need to get back to there was too much spending in the first four years, first three, four years of the Trump Administration that was exaggerated then by having to address the pandemic we have since spending much higher than we thought it needed to go, and we need to have deficit reduction. We have rebuilt the military, and by the way, the tax cuts didnt reduce tax revenue. Tax revenue went up. The problem is were spending too much, and hopefully this next Congress Working with the president , we can reduce spending the republicans cant do it alone. A lot of it we have no control over because its not Discretionary Spending and the administration wont address medicare or, you know, or Social Security or entitlements, so i dont know, nobody is doing what they probably should be doing. Seth, thanks, i dont know about the Capital Gains effect on the market well see if that, as we get closer to the election, whether we see anything. Someone might decide this is the time to take some profits. Thats another thing we didnt get to discuss anyway, andy, thank you, seth, good to see you. Its a nice backdrop nice look. Thanks i dont know, kelly, you got a highlander, a minivan, what do you got . No, im in the minivan, mark. It was sorkin. We got to talk about this offline at some point. Offline at some point. Lookin hmms and ahhs heard incall. Bought clover. Stay with us good morning, Chamath Palihapitiya joins us live were going to get his take on big tech under fire. The markets just a month before the president ial election and his latest spaq target announced this morning and the big guests keep coming southwest Ceo Gary Kelly will be here he has a strategy to avoid mass layoffs and furloughs as the Airline Industry waits for another bailout from washington. All this, plus breaking Economic Data on trade as the final hour of squawk box begins right now. Good morning, and welcome to squawk box, here on cnbc live from the Nasdaq Market site in times square i am joined by Andrew Ross Sorkin and kelly evans from casa sorkin, casa evans, i thought you were setting up a shot, kelly, of the two little ones. Man, you know about kids, they were so cute i said come visit their eyes, the one on your left, his eyes were so bright and so excited was it to see you or did he get a shot of me in the monitor . W why was he so happy . We saw himself in the monitor, and i think we know where he gets that im a little worried were setting him up for, i think this one likes the camera a little too much. Thats one of the great things about being at home anyway, i see you hustled him off. I dont know where they are now. I hope they come back and mess up a shot at some point. Anyway. They went for a walk, but i would love for them to i know, we got to get to this news we have breaking news on a Biotech Company with a covid treatment. Lets get straight to meg tirrell who has all the details this morning meg. Hey, kelly. This is another antibody drug, this one from biotechnology, which is partnering with glaxosmithkline. They are saying they have taken their antibody into phase three trials the final stage of testing, of course, to prevent severe disease in patients who are not hospitalized this of course is the same setting that we saw the data on for regenerons antibody cocktail, and that was the drug, of course, that President Trump was treated with on friday and ngsk saying they are doing this based on safety and another one of these antibodies, this will be important. If these work and are approved, there wont be enough of them given the number of people still being diagnosed with covid were going to have the ceo of George Scangos joining us. Its not a cocktail we had a long discussion, as you were there, with dr. Schliefer, the spike protein, if it gets blocked, it can accept a cell but a lot of times its able to mutate around a single anti body they have a cocktail, maybe three they thought might work. This is a single antibody . This is a single antibody but whats interesting about it is it actually binds to a shared space from sars 1 and sars 2, and they think that means that it might be more resistant to potential mutations but of course the reason that regeneron has two antibodies is because theyre trying to block against potential resistance so its a different approach slightly very interesting, and well talk to the ceo about it. Fully humanize the mono colonial antibody. Derived from the human. Whats that okay it was derooived from someboy who survived from the disease. Not always that way, right . They used to make them from mice, and try to get out any of the mouse antibody that was left, they would get out they used to actually manufacture it that way. This one actually came all right. Here we go andrew wants to go lets go okay. I want to bring in our special guest right now, Chamath Palihapitiya, founder and ceo of social capital, chairman of the board of virgin galactic, coowner of the Golden State Warriors and i might as well just say spaq king, at least during what feels like a frenzy around spaqs, and well talk about his latest merger with Clover Health and what it means, we want to spend time with chamath looking intensely at the markets and the Political Climate were in right now just really wanted to start with how youre thinking about the marketplace, if you will, but the overlay of politics and whats taken place over the last, say, 72 hours at the white house, and what you think it portends well, i really think its a little mind boggling, i mean, from a Public Health perspective, im not exactly sure what to think on the one hand, i really wonder how effective these treatments are. I hope that the treatment in the course of care that the president got will be publicized and that becomes the Gold Standard so that the rest of us can get access to it on the other hand, i dont really understand anymore of the severity of the disease as its been portrayed to us in the public it looks like he is much better, although in some videos, it looks as though he was struggling with breathing. A lot of it in general is confusing. When you translate to the markets, its the most incredible thing because, for example, going into the debates, the markets were going up. The debate didnt go well for the president , the market went up then he got covid, the market went up. Then he went home, and the market went up and so i think, you know, what it really means is that for the next four or five years, the most dominant factor that i see is the combination of trashy and the federal reserve. And the reality is that they have printed so much money that the likelihood is that we are going to continue to see asset Price Inflation independent of whos in the white house you know, the last several interviews we have done together, chamath, we have often talked about the time line for covid, that was typically a huge part of the calculus for so many investors out in cyclical stocks is the time line for you changed at all, and does it matter anymore . Well, i do think it does matter because, you know, unfortunately 700 to a thousand americans are dying every single day, and i just dont think that thats acceptable. And the reality is we probably wont have a scaled vaccine until 2021, and maybe even 2022, which is to say that once we have a solution, do we have the infrastructure to bring it, you know, to 300 plus Million People in america and so it does matter, and i think that the posture from the federal government as well as state governments and local governments still is really important because the ultimate impact is going to be that if we go back into any kind of lock down of any kind, were going to force people to have to leave the work force, to take care of their kids, schools will remain closed and i just think after nine months of this, its not sustainable. As an owner of the Golden State Warriors, i imagine youre thinking about what the season in 2021 is going to look like. Are you going to be testing. Are we going to be back to florida with a bubble, or is there a different version that will exist where youre doing, i dont know, an abbot test, maybe no one is going to believe. How is that going to change the dynamic, because all of this has a huge economic ripple. Let me tell you how dysfunctional it is. I am trying to get as many of our businesses to be open. Im also frankly trying to get my local school to be open so my children can go back, and i found a bunch of rapid covid tests that were available and being sold broadly through asia and europe, but when i tried to buy it in the united states, i was blocked. Now, i got an email last night from my medical team that was able to secure these tests but what im thinking is, like, if its just me who can do this, what about everybody else . The number of hoops that we had to go through, the thousands of dollars i spent, thats not a scaleable solution and so to your point, the thing that im concerned with is that we dont have the adequate support for broad based testing, we dont have the price points and we dont have access theres an enormous problem here about getting the resources to the people that need it in a Cost Effective way, and to be very blunt, andrew, that is the responsibility of the federal and state and local governments. And so in terms of messaging, the other question i was going to ask is we are getting these mixed messages we talked to eamon javers about this the president said dont let covid dominate your life, taking off the mask do you think that changes the die n dynamic that people have confidence to go, may be misplaced confidence, but i wonder whether it does change the course of all of this . No, no, but thats exactly right, what does that mean to not take that seriously . I mean, every person that i know that has gotten it, unfortunately, wasnt able to get the same level of care and access to the same medical treatment as the president , and im glad that hes Getting Better and i hope that we can get everything that he got but all of my friends and all of the people that i know that have gotten this disease, what they tell me is that it is a really serious problem, and so the idea that, you know, until that course of care is broadly available, we can be heahave ant as the president is not realistic. I hope we can be where we can be in the hospital three days at most and come back to work and live our life. Until what he got, a, is disclosed, and b, is available for all of us to get, irrespective of which hospital we walk into, we can point to that and say i want that Gold Standard of care we have to continue to take it seriously. Okay. I want to pivot to a couple of stocks that you have been following and been a fan of for quite some time, and interesting trends in terms of big tech. Where do you stand right now on tesla. We have talked about tesla for a very long time, and they have had a lot of success this year in particular, but there is also a number of competitors that are really, i think, finally about to come online and i dont know what you think that means competitively to be really honest, i dont think it means anything. You know you and i had a wonderful discussion this summer and my perspective, then, and it is the same today, is that tesla is no longer about the car business the value of this business is about deregulating energy. And thats about batteries and battery storage. And its about disrupting utilities. It is about the combination of hardware and software that will giving all of us individuals the ability to be energy independent. And i think that that is a fundamentally disruptive thing and people continue to misunderstand and underestimate this business. For example, if you went into tesla battery day, if you looked at sort of the commentary, it was that it was a dud event, and i think it was the complete opposite what they showed was the legitimate path where, not just for car businesses and for selling cars, but frankly for individuals and the disruption of utilities is now, i think, within two to three years away, and again, as i told you, what we are talking about there is hundreds of billions of dollars of both market cap, debt, all of these instruments that have supported a Business Model that i think is very much at risk and from my perspective, i think tesla continues to be underestimated i think it is generally misvalued, and i think that the people that are trying to compete with them are not the people that they are competing with they have sort of moved on and in that, i think, is sort of the, you know, destruction of a lot of Traditional Market shop in the auto, and i think that has fundamentally sailed. Speak of this, the creek of the critique was the battery tesla had was not so much far advanced than others the secondary piece is to get to the energy Promised Land that were talking about here, that day going to have to raise new money or theyre going to have to become remarkably more profitable at a time when th theres going to be more competition, and frankly, we know the credits that are paying to make the Company Profitable today will ultimately become less as car makers get into the ev business. I mean, thats the same thing that we said a few years ago about the audi etron, that was a dud. We said the same thing about the jaguar f pace, that was a dud. We said the same thing about this line of cars from ford, from chrysler, from whomever, those have been duds, the reality is these guys are shipping more and more cars every quarter. Theres more and more consumer demand, and they have a simplified platform that allows them to scale up at better unit margins than anybody else in the auto industry. Just going back to battery day for a second, the reality is the technology that they built is really meaningful and the things that they have announced, the innovations at the ano, the innovations in the packaging of batteries are meaningful and as somebody who has been studying this, im an investor and owner of rare earths that feed this supply chain of electrification. What i can tell you is that it was a meaningful leap in innovation that these guys presented and so from my perspective, i just think that they are two or three steps ahead, theyre doing all the things to vertically integrate themselves, to complete put the car business, you know, to use a term, on auto pilot, and i think theyre going to focus on energy deregulation, and its going to be one of the most valuable companies in the world and then, separately, chamath, i wanted to talk to you about bitcoin because we have had that conversation over the years, but, you know for some reason, it doesnt seem to be separated from the markets the whole idea was that it was supposed to be, you know, a noncorrelated asset, and every time the market goes down for the most part, it doesnt seem to go up well, first of all, ive always maintained, and i would just tell you today as well, that this is an instrument that you use adds a rej. I dont think this is something you trade. The more people obsess and focus in my opinion at least on what the price acore that it will confound you, the more it will frustrate you, the more that it will look correlated to other assets, but the reality is its fundamentally not. It is under pinned by a set of beliefs that are completely orthognal to the orthodoxy of the world today. From my perspective, i still think that what i talked about sort of eight or nine years ago still holds which is as a 1 hedge in our portfolio, i think of this as the insurance policy i use to sleep soundly at night, just in case the Central Banks and the governments of the world step on a land mine, that will perform. And so between now and then, i just think the more people obsess about price action and the more that they want it to behave like a stock or bond, the more frustrated theyre going to get. Theyre going to find ways of connecting dots that dont exist. Its just not what it is. By the way, this is now going to connect bitcoin and elon musk together and your space efforts with Richard Branson you probably have heard the twins claim that elon musk is effectively going to put the gold business out of business or devalue gold given what hes going to be doing up there in space and thats going to make bitcoin that much more valuable. Do you buy that . I have no idea what theyre talking about. Youve heard it, though, you know what im talking about. Youve heard them say this i really wish i could give you a smart answer, but i have no idea what theyre talking about. Chamath, if you send ben affleck and bruce willis to an asteroid that has 10 trillion tons of gold, your supply demand dynamic is going to be affected. I honestly think thats what theyre talking about is mining an asteroid, which is not that far off. Well, theres a couple of problems, one is called the rocket equation. You know, theres a small problem of getting on to the asteroid, mining it, generating enough energy to come back, you know, bringing back all of these wonderful riches that you find there. I mean, i hope it happens. I would think our technology, just in alchemy, i dont see why we cant move around electrons and protons and make gold here. Sure. Its harder to mine bitcoin, and getting harder and harder than it is to mine gold, and i think thats what youre saying right now. I mean, i think the reality is that, look, the last few million coins of bitcoin are going to cause more energy than the first, you know, 18 million but in the grand scheme of things, again, this is something that, you know in bitcoin parlance, you buy it, you hold it, you put it away, and honestly, i think you hope that you never need it. Because the amount of actual chaos that will drive bitcoin appreciation is not something we actually really want to see. Now, that being said, if it does happen, i think it will create an enormous power redistribution, and it will push power, push financial accessibility to the edges, to billions and billions of people and in that, i think theres something to be really proud and excited about. Chamath, if you take a small percentage of the global currency, financial currency, whatever you use, and you divide it by 21 million even if it were, i mean, it is mind boggling, but the numbers just sound crazy that you talk about when you do that math. Its hard to believe. I understand. But just remember, like, you know, that will get subdivided many many thousands and hundreds of thousands and unless of times and it will, and it can represent, you know, a large plurality of the monetary supply of the world right. And if that happens, i think the reality is, well, it will just be an incredible technical feat, and i think the great thing is therell be transparency, accountability and fairness those are really powerful traits of a winning product. Around 11,000, i mean, youre talking about much bigger numbers than 11,000, and i dont know and this is why i think 1 position is not unreasonable, and its something that justifies a position where we can all have it. Again, put it under your mattress, dont think about it chamath is going to be sticking with us were going to slip in a quick break, and then when we return, chamaths next spaq target is Health Care Start up Clover Health were going to talk all about it ipc merging with clover p total enterprise value of 3. 7 billion, after the break, yy. Welcome back to squawk, this morning, Chamath Palihapitiya, back with us to explain why. Chamath . Make the argument. Well, andrew, lets just take a step back. You know, when the pandemic started, i like a lot of americans just felt enormous anxiety and what i tried to do was do the best i could to learn as much about the Health Care System and the peandemic specifically, it was very hard for me im trying to understand testing, medicines, understanding a course of care if i were to get the disease, what i would do, and i was left with just a lot of confusion, and so i took a step back, and i wanted to actually understand the state of health care more broadly. And what i found was really disturbing since 1970, what we have done as americans is we have now, on a per capita basis, increased Health Care Spending by 31 times. Meaning for every dollar we spent in 1970, we now spend 31, and what that means is last year alone, we spent 3. 65 trillion as a nation, or 0. 18 of every dollar that flows around the economy is about giving us a basic human right. You would think for that amount of money, you would have great outcomes, but shockingly what i found is that we are now shrinking in Life Expectancy we are living less than we have, living less than 80 years of age, and other western countries who spend a lot less in health care, they live longer and at the same time, however long we live, we are burdened with a lot more disease in fact, almost a third of all americans have at least two chronic diseases like diabetes and heart disease. You would think a market failure like this wouldnt be rewarded but you would be wrong because no matter all the fawning that we do as an industry over businesses like facebook and google, you would have made more money owning Health Care Insurance Companies Like humana and united and so the empire goal was to ask the question, what happens if you build the Technology Centric country that focuses on consumers and physicians more than anything else and directed it into the Health Care Market and the great thing is we found this company and this is why we are really excited after months of diligence and work to announce a merger between ipoc, and Clover Health to take Clover Health public. So what is this business in the most basic form, what consumers need to know is clover offers simple, obvious, and comprehensive Health Care Plans for all of us, and so when you go to Clover Health and you sign up for one of their plans, what they also do is go to your doctor, and give them very powerful software. That software is a combination of Machine Learning that takes all of this hetero genius data, clinical data, drug data, lab results, blood results, genetic information. Merges it together, and allows them to give Actionable Insights and recommendations every time you see your doctor. That allows them to deliver Better Outcomes and lower costs. In fact, when youre a cloud cover member, you see 22 fewer hospital visits and 22 fewer e. R. Visits. That is technology simply and efficiently improving everybodys quality of life. When you have this type of disruptive technology, the goal is to make sure youre launching in a market that can validate it, and then scale, so you can generate a lot of value, and this is exactly what they do when you turn 65 in america, you have two choices, number one is federally sponsored health care called original medicare, and number two is private insurance called medicare advantage. The reason to start in this market is that these are the folks that need the most help. They suffer the most chronic disease, almost seven in ten have at least two chronic diseases they rely on health care, see a doctor five times a year it is a daily use tvractivity by launching in a market like this, not only do you validate the technology, you get the benefit of some enormous tail winds, which as you know creates for us a margin of safety. Number one, it is the largest and Fastest Growing population cohort in america. Number two, it is growing five times faster than any other group, number three, it has broad Political Support across the aisle from democrats and republicans. So this is a business that you can own, not just through an Economic Cycle but also through election cycles. It is a market today, just the private insurance for people over the age of 65 that is already 270 billion, and it is growing so fast that it will be an almost 600 billion market in just five years. The reason is because every single day in america, ten thousand plus people turn 65 and age in and when they do, what that means is this is a market that is growing by a billion dollars every single week. I have never had visibility to a market like this with this kind of defined measurable growth and so when youre a Technology Business thats cheaper, faster and better than all of your incumbent competitors in a market this dynamic, what happens is you start to grow really fast, and this is exactly whats happening with Clover Clover is already growing two to three times faster than their next nine nearest competitors. It is a business that when in market, takes 50 of every single new available member. Every year they compete with these legacy incumbents. What thats created is a business that last year alone did almost 460 million of revenue, and in 2023 will do 1. 7 billion of revenue. Now, the set up here is for something that we also love, which is to create an incredible Virtuous Cycle when you combine the power of technology and a great initial market and scale, you can build durable motes, a defensible company thats hard for laggard competitors. They get into a market, they acquire a doctor or acquire a member capturing that data allows them to run their learning, to use their software, to help the doctor improve your quality of life every single time you see them that saifves costs. They reinvest in growing faster, making technology better, and improving the plan so you continue to get more breadth of choice for less money. That consolidates the market, which brings on more members and more doctors and the comp and the cycle skills so when you bring all of this forward, and you think about the future, heres what i see in a nutshell number one, what we have is a business that is actually delivering the promise of technology improving, Better Outcomes and lowering costs and health care. Number two is a market that i think is huge and growing quickly. And number three is a business that is consistently taking share year over year over yoear. When you put all of these things together, in my opinion, this was one of the most straightforward investments i have ever made its a business that i think will become extremely valuable it will build a lot of enterprise value, and be what i think is going to be our next 10 x and 10year investment so chamath, thank you for the explanation. I have about a million questions, and weve now gone through the pros i want to go through some of the cons and some of the big issues with this company. Call a spade a spade, right now, this is a money losing company, it does not make money today, correct, its still losing money . On a per unit basis on an operating margin basis, it is almost at break even and profitability. By 2023, we will have overall profitability. We still have to wait three years for profitability. Big issue in terms of being able to compete with the big guys im talking about humana, united health, the metric that investors look at is mlr, medical loss ratio, what is the loss for clover versus the big guys its a great question out of the box, theyre already meaningfully better, and whats great is their Gross Margins start better because theyre a Technology Business, and we think its going to get better and better over time, and the reason why is because they create transparency. They dont play games, motivate doctors to up code or do all kinds of things in order to get paid they have created an extremely transparent and efficient business their Gross Margins out of the box are better, and continue to get better like united and humana. And we have to talk about the issue we always talk about which is fees. I know we went back and forth on this a couple of weeks ago with your last spac, and jay claden, the head of the s. E. C. Has spoke out and says he wants to bring more transparency to fees, given that you want to democratize an allow Retail Investors in, i want you to walk through in a granular way how much money you as the sponsor are getting, what percentage of the company youre getting as a result of this . So in the case of ipoc, i think we invested 16 million to get it off the ground. Now that the deal has come together, we have invested another 160 odd Million Dollars in a pipe. The total investment by myself and my partners is about 171 million the post Money Valuation of this business is sort of fiveodd billion dollars, and so well loan about 5 or 6 percent of the business youll own 5 or 6 of the business thats it. Yeah. From my perspective, i think thats a wonderful go ahead. Go ahead. No, i just think just so were clear, theres no warrants or other preferreds that would get you to a higher percentage of the company . Again, this is all on a fully loaded basis so i want to make sure that youre not confusing fees with investment fees, i dont make any right . And just to remember how a spac works, a spac is not dissimilar to many other investment products, so for example, if you take a private equity fund or a venture fund or a hedge fund, we all operate very similarly theres a principle. We raise money from investors. We allocate that capital typically funds take a 2 fee every year we do not. And all organizations typically take 20 of profits if it works. Incred incrementally, we invest more money so we are aligned with the company, the employees, and all shareholders, so just to give you an example, andrew, across all three spacs so far, ipo a, b and c, we have invested 450 million of our own money. Typically we are 15 of every single dollar invested and the reason we think its important to be this meaningfully at risk is that i think it creates better diligence, it does create better closures. With businesses, they have enormous amounts of detail, and it creates the right alignment. There is no way that i can win unless the stock goes up right for example, in virgin for the first two months, when the stock went down to 725, i looked like an idiot. When the stock is 18 or 20, wow, great deal same thing with open door, theres risk in all of these things the reality is im putting my own money, and putting my reputation forward. And youre but what you suggested is youre getting no promote . Thats not what im suggesting what im suggesting is that you have 16 million initially, plus 160 million on the back, total, total, total, i have just told you what we own. So youre saying now thats going up to about 250 million right now automatically . Yeah, for example, in open door, the position that we have invested, so we put, i think, 12 million initially up front, another 155 million i think that was 169 million we invested total, thats a 2 point x on our invested capital. What im trying to tell you, andrew, this is not some get rich quick scheme, at least for me there are different spacs where you can take a very different form of compensation you can put a very little amount of money you dont have to invest on the back end and have much higher multiples of return. I have chosen to take a different path, and hopefully over time what people are see are high quality businesses, a high quality sponsor, and were trying to do a thoughtful job so that when employees and shareholders win, we can win as well, and we think that thats reasonable. Right we want to bring in the ceo, i know weve talked a lot about this deal. Were running out of time. I apologize. I wanted to ask you, specifically, why do a spac, so a opposed to an ipo, this is the big question that ceos across the country in your shoes are thinking about right now yeah, we were actually in a unique position, so we ran a parallel process and went far down the ipo route we brought on underwriters five, six months ago, went through a full underwriter Due Diligence process, followed our s 1, got comments back. During the process, we had met chamath, reconnected with chamath. Chamath and i have known each other for ten years, and he has been following clover, and we have been unbelievably fortunate to have Great Technology investors since the early days, and really, when we looked at the diligence process that we went through on the underwriting perspective, we just could not tell our story in the expansive way that we wanted to, and we think about alignment of interests, having a Technology Investor who understands clover, and being aligned with those is really really vital, and thats the path we took okay. Well have to have you back to talk more about this unfortunately weve run out of amh, chat we appreciate you joining us as always this morning, and before we talk about taxsmart investing, whats new . To you ver change in plans. At fidelity, a change in plans is always part of the plan. Welcome back to squawk box, breaking news on the housing market, we are seeing home values rise at the fastest rate in two years. Prices jumped 5. 9 in august annually, and were up nearly 1 monthly, that may not sound like a lot, but these numbers from core logic usually noouf move i fractions. Price gains are even higher up close to 9 at the entry level segment of the market. Why are prices so hot. Too much demand and too little supply with inventory down 17 year over year that stayathome culture of the pandemic has consumers looking to up size and get outdoors, that is bigger suburban homes with big backyards some of the hottest cities include phoenix with prices up nearly 10 denver and right here in washington, d. C. The new york metropolitan area saw prices fall. Top states, idaho, arizona and maine. Prices will cool over the coming year as unemployment takes its toll on various markets, especially those with entertainment based economies like miami and las vegas back to you, joe. Thank you, diana. Were going to move on to because we have gary kelly which is great, southwest asking unions, to accept pay cuts, goals to avoid furloughs and layoffs as the Airline Industry waits for the word on a bailout from washington. Joining us now, southwest chairman and ceo, gary kelly is this where you are now . Thanks for joining us, by the way, its great to see you you get, joe. Is this where you are now because you have decided you can no longer assume that something will pass in terms of what Speaker Pelosi and mnuchin are talking about so youre taking matter into your own hands or you would do this even if there was a deal in fruition. Its because the payroll support is expiring here, and theres no certainty that it will be extended through march you know, if we dont get the support, were just going to have to borrow that much more money, and we just need to get from here to there im very confident that well get past this pandemic, well be in a strong position to not just survive but thrive, but weve got to do everything we can to conserve cash between now and then, and this is our largest cost opportunity that we have, and, you know, weve not asked our employees to take any pay cuts or do furloughs, layoffs in our history, so im proud of the fact that once again, we can be different, avoid furloughs, avoid layoffs, and you know, cut pay rates, which i dont like to do but its a shared sacrifice, and this is the kind of company, you know, that i think is up to that task. And you think that you could get approval from unions and from your employees. What would it entail describe it, 10 in 2021, and then you can say that wont be any layoffs or furloughs for the entire year. What were looking for is savings of at least a half a billion dollars a year, so its real money, and very meaningful, and especially in the face of losing billions of dollars a quarter. So about 17 of our employees are noncontract, and with those folks, you know, i can guarantee them no layoffs through the end of next year, and well reduce pay but it will snap back at the i feel very good about that. With the unions, well have to reach out, excuse me, to each one of the union represent tys a representatives and go through a negotiation process. We can furlough employees without negotiations but if were going to make any other changes to the contract, that has to be negotiated, so were starting that now in october, because it will take some time to work through that process, and thats why ive targeted january 1st to have cost saving initiatives in place so well just have to see, and, you know, obviously any reasonable person realizes that this is a huge crisis for not just the airlines, but for the country. And we need to do everything that we can to make sure that we save Southwest Airlines here as our number one priority, but second is job security we need to do everything we can to save every single jock, ab, d im proud of the fact i can do that we have never had a furlough in our history, and we can continue that streak here as long as we work together. Gary, have you spoken to congress or the Administration Since friday and can you tell us where things stand as far as what you know . Well, yeah, theres a lot of action last week, and ive spoken to members of the senate, members of the house, members of the administration, and the good news is that there is very broad support for maintaining the essential service of the airlines and also maintaining the jobs to support that service. The frustrating thing is we just cant get that legislation passed so i think im still very hopeful, based on what i hear that something will happen, but because of the long cycle here, we just cant wait indefinitely, so well kick this off, i hate to put our employees through this only to find that the payroll support ultimately passes, but that will be a high quality problem if in fact it does. Right, exactly. So still burning through about 17 million a day, can you just tell us in terms of, i think, the middle seats are open do you feel confident that even on a long haul, passengers are completely, youre never completely safe obviously, but you would have a high degree of confidence that someone could get on in new york, or any type of long flight, and not have to worry about the recirculated air or the, i dont know, trade tables, whatever it is that people worry about on planes yeah, i think the, you know, based on how our knowledge about the science here continues to evolve, the primary risk is vapors, and less so about surfaces, but weve got very stringent cleaning protocols in place on the surface, and i think its become very widely recognized that the air quality in the airplane cabin is superb with the hipaa filtering and then the cycling of the air every couple of minutes. So yes, im very confident about that, were awaiting a study from harvard on that very topic, and that will be key in us continuing to either block the middle seat or begin to sell that obviously there is no path to profitability if we bought block a third of our capacity. So at some point, weve got to make that change but not until we judge that it is safe, and were one of the four airlines in the whole world that arent booking airplanes full, so were definitely a vast minority in that position. But i think it is the right position to do until we get a little bit better read on the science here thats one revenue opportunity that we have the other is just to continue to expand our route map and tap into new sources of revenue, ie new customers. So shortly well be adding miami, well be adding palm springs, steamboat springs, colorado, and we have a host of other cities that were exploring. So were not just trying to cut costs, were also trying to play offense here and generate more revenue so that we can get that cash burned down to zero. Do you think business comes back will people want to meet in i dont like zoom. Makes me want to i stop listening after about a minute and a half i mean, not our seminars here at cnbc, not those, but normally i start do you think youre going to get back to, to face to face meetings . Thats a big part of the Business Travel and some people think it is not coming back, gary well, no one knows. And, you know, there is no reason to prejudge that right now. Were going to have to monitor and adjust and if Business Travel is less than it used to be, i think were perfectly positioned for that because were very efficient and low cost and have a very egalitarian product that we offer my own personal view, yes, Business Travel will recover but it may be five years, joe, it could be ten years, so were going to have to be prepared for a long Recovery Period here. All right, well, at least for me, i wish you a lot of luck, gary i think it is important that the whole industry is there when this is all said and yy prtg n y welcome back to squawk box. Over to jim cramer for his first take on the markets this morning. The dow is positive. Were at 105 the nasdaq was lagging a little bit, but what are your thoughts this morning i see europe turning around very aggressively from early in the morning. And i think that, look, that shouldnt necessarily carry over we have such a specific market to our country but there is, once again, a lot of capital flowing into the market, kelly. Yesterday was one of those breakthrough days where i was listening to mike santoli earlier, everybody was buying everything no theme to it, other than dont buy the restaurants. I think it seems to be carrying over again today maybe people feel biden people feel biden will win big the trump people feel that trump came out triumphant and so a lot of people are buying everything. Yeah, but that can hold, right . One side or the other. Right only one president so, you know, if there were two president s, absolutely this wouldnt be an issue but there is only one president. Lets figure out who is right and who is wrong great to see you in the morning by the way doing a terrific job. Great to see you too. Were looking forward to hearing more from you at 9 00, jim, thank you. Jim cramer with some early thoughts on this market. Lets turn to meg tirrell with a special guest for us this morning. Meg . Thanks. That special guest is dr. George skangos. Thank you for being with us this morning. On the news you moved into phase three testing for your drug for covid19 tell us how your drug sort of fits in here, how it would compete or sort of play alongside these other drugs. Sure, meg i think the data that regeneron and lilly published is encouraging. Seems s to indicate the antibs have an effect, they reduce viral load in patients and they can improve outcomes as well we like our antibody it not only neutralizes the virus, which is important, but it also has the ability to kill infected cells we think those two characteristics give it a potential advantage. It also has a very high barrier to resistance. Viruses evolve, change, can escape, being inhibited by antibodies, thats the reason why regeneron has two antibodies our has a unique characteristic in how it binds to the virus, makes it very difficult for the virus to escape. And that means we can give a lower dose and treat more patients and it is more convenient. We also engineered the antibody so it lasts longer in the blood, provides protection longer and has a higher concentration in the lung, where it matters we are encouraged by the data and excited by the particular properties of our antibody and you made the decision to move into phase three based on safety and tolerability for from phase two. Indicating these look safe and tolerable, if it applies to all antibodies is good. When we will see your first efficacy results from the previous trial or this one were enrolling very quickly. Were treating patients who have covid. And actually measuring the meaningful end points, the ability of the antibody to re duce hospitalization or death. We are enrolling about 1300 patients we should have our first data by the end of the year. And to have complete data in january. And you know, not asking you to comment on somebody elses drug, looking at the entire class and your deep understanding of how antibodies work, were you surprised that the president was treated with an antibody on friday . And do you think that signs are it helped . It is really hard to know i think the president got the antibodies, which i think probably do help remdesivir, which probably helps, steroids, i dont know what else he got, regardless of who what outcome he has, it is hard to say what extent that any of those contributed i think from the public data that regeneron and lilly have reported the the seems to be reasonably well tolerated as well so together, you know, with dr. Scangos go ahead, im sorry. Were at the end of the show. Im so sorry thank you for being with us and we look forward to hearing about your data as you get it. Thank you. Meg, thank you for bringing us that interview. Kelly, thank you for hanging out with us. Join us tomorrow squawk on the street begins right now. Good wednesday morning, welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber futures are solid after the best day for the s p in nearly a month. Watching the president s return home, pelosi, mnuchin, talks continue 30year yield at a fivemonth high road map begin