Transcripts For CNBC Squawk On The Street 20240712

Conocopillps acquiring contra resources. The largest deal this year and well have conoco ceo join us this hour. The 737 max or comeback european r regulators saying it is safe to fly and planning a december return to service. Carl jim, heard you just talking to becky about stimulus as we continue to kick this around it does not sound like this new sense of urgency, quote unquote, will do much to push the package forward. We are too close to the election and either side gives then the other side. I think has them so, lets say the president gives a little bit more than i think that Speaker Pelosi will make it even tougher because the president wants to get that check to you to the least amount of money donald j. Trump wanted. I know that is something that a lot of people, wow, the president gave it to me. I think what we should be owning and trading and buying are companies that are about to go through an Earnings Period that i think is going to be rocky but overall positive and i think one of the reasons why i think its going to be positive is that if you dont, if youre not able to make the earnings, well, you know what, you sell yourself. David, i think the opposition you want to cover and about as good as they get and they couldnt lift their stock price. They just couldnt you said for a long time and i would assume you continue to believe its an uninvestable sector, broadly speaking oil, oil and gas. Whatever you want to call it, jim. Y youre right so many different pressures on these businesses another one esg. Certainly not something youre getting pressure from the administration on but from shareholders and those who allocate capital, jim. That is figuring into the decisionmaking at these companies, as well the additional costs they s thb taking on so they can no longer be uninvestable. When you go to different websites and concho. One of the best there is what they show you right up front is, look, heres how were dealing with pollution heres how were dealing with the issues out in front saying, listen, less flare is what you see when youre an astronaut and you look over our country and you see these bright lights and theyre not cities they are flame and thats burning off the natural gas because we have too much natural gas in the country carl, we can talk about this group and say, you know what, at a certain level it has to be interesting or chevron yielding 7 and the best of the best can they pay that dividend i come back and say people would rather buy 50 times sales than five times earnings in the right group. They would pay, being 50 times sales. Hey, by the way but the companies, jim, will try to continue to position themselves for what is coming. Theyre going to continue to position themselves as conoco is for this world and it doesnt matter what the government of the u. S. Thinks, its what investors think and care about thats part of this. This is a guy, tim leech, chowhs one of the very well regarded making the decision to sell and part of this company, by the way. No, hes going to be running the lower 48 and i think, you know, even though this leak last week that part of it did not. Hes president and he will be president of the and running the lower 48 running all of that. The eagleford and, of course, the permian. He is regarded as the intellectual of the group and thats really important because he early on recognized were not a good swing producer and were going to lower our price and its not going to come back. One of the things he did, david, was not base his whole philosophy on the idea of pump, pump, pump because good prices have to come he really was about cutting costs and becoming a great, clean producer im glad hes staying on because hes one of the few that really has that reputation of being the best we have right right. But meanwhile, not really able to create a lot of value in the current environment. You do an all stock deal, you roll in and you hope for the best in terms of the combined company and that your own Shareholder Base is going to be rewarded over time given it is an all cash transaction. You know what i favor snowflake. Absolutely. Every time were in some whacko market i was on the zoom call last week i mean, zoom was doing triple what it was doing three months ago and i know its 50 times sales but at the same time, i want growth not from cutting and hopefully having more oil per rig, but i want growth that is pure that is dominant in an era where covid, im listening to dr. Ghaly is not saying it is going to go out. I watched last night different network, dr. Fauci, hes very concerned. I know Johns Hopkins is very concerned. Do i really want to be in a world where i think covid is going to end and were going to start driving like mad and oil is going to go up. Im not buying that, carl. Im not buying that better than ever world well, to quote ghaly this morning we have two or three very hard months ahead of us and the hardest phase of this pandemic at the same time, jim, tsa out with their screening numbers they screened a Million People on sunday. We havent done that since march 17th obviously, suppressed off of precovid levels how many signals are pointing to a hard winter and a tepid recovery i think the Airline Industry and kicking and screaming is now willing to admit almost no covid on planes if you wear masks. I have no fear whatsoever of flying by the way, i have no fear of flying on the max which is the most stunning plane in history and thats coming back and thats very positive for the u. S. Economy but i do think that it isnt flying that is a problem david, its finding something worth going to thats really the key its going to a place where things are open that you want to actually go to, whether its restaurants or any number of other entertainment activities in various places you could go what could you really do then theres the Business Traveler which, jim, i would argue given all the conversations weve all had with executives who are typically on the road 40 , 50 , 60 of the time that is never coming back. Will they go on the road of course. Will day take trips . Of course. Will they ever travel like they once did no way not when theyre closing deals with zoom. Carl, when you go over those bank earnings, carl, youll see companies that i think a year and a half ago would have said, its impossible for us to do business really big business over the phone and video ill tell you something else, mark took the first trip the biggest globetrotter and he went to singapore this weekend by the way, no covid singapore and 100 mask required dont go there without wearing a mask because they decide to wipe out covid and they have. Yeah, i saw some pictures he was tweeting from his trip did you see those jim, on stimulus. Note this morning the overall market seems to be hopeful on a package, but subsectors demonstrate no convincing belief on the part of traders i guess that is more in line with your view yeah, i mean, look, caterpillar hangs in there and really incredible because you think thats something software is a steam shovel. Those guys are incredible. Deere is just doing amazingly well and then that whole other group like newcorp this is steel. So if youre going to have manufacturing, youre going to use a lot of steel the other way you have people checks but one thing, did you see the piece about when you gave them checks they paid down debt i did werent they supposed to go Credit Ratings actually went higher we have nothing to do i went to a restaurant and two tables this weekend and it was pretty good food and chef serves it and it was dynamite and you look around and youre like, where is everybody else . Were you inside i was inside. You ate inside . I ate inside. What happened place was clean, two tables within the first section and people within eight feet of us i felt good. You like a lot of other people, jim, youve moved out a little bit on your own risk curve. Obviously, i know youre basing that on rates, positivity rates, exactly where you are. Any moment in that particular area but everybodys moved out a bit on the risk curve. Have you used the pixel lap corp test that my wife takes constantly you send it and fedex and they say youre fine. Wow. We felt with all this were going to go out. Carl, guess what we were in new hope, pennsylvania and almost everybody had a mask and if anybody didnt, my wife started going, but i tested negative worked every time. You see people pull out masks suddenly we have to do our part carl, we have to do our part masks save lives the next question, jim, is whether or not youre willing to go to a movie. Exnew york city this friday as new york state opens up theaters and amc says theyll have theaters open in 44 of 45 states of which they have operations. I love adam aaron, old friend, ceo of amc i dont think im ready for movie. Maybe like i wear a shower cap, you know they clean them out but, no, movies are right up there with cruise ships. Everything is cleaner than it once was the new york city subway have never been cleaner and airplanes have never been cleaner. Everything is getting cleaned. Why do i have to go to the movies, i have netflix remember you would go to the movies and your feet would get stuck and popcorn in the seat. Then i started going to the movies and getting dinner served you have those movie theaters where you can have a couple margaritas i like those. Steak i was just getting into that. But, carl, the movies, what movies are you going to see, i guess, becomes the key question. Who is releasing a major blockbuster right now . None that im aware of if anything, theyre going the other way, right we have another i think snow from disney, again, going to streaming. So, i think, again, its sort of restaurants, you can open but not be able to get the chefs in and not be able to get the consumers in this was a sweekend that people were out and went to restaurants. I think people felt a little more emboldened. At the same time, the numbers are so horrendous and i think this is becoming ilogical. The left says the case numbers are amazing and over 38 states over 100,000 and the right says, look, the death count is not bad i dont think this should be idiological. I think this should be about therapeutics and about the vaccine. Too many people think, you know, when the vaccine comes were going to be fine this bridge, david, between now and the vaccine where i think that you may have to, look, i didnt go to the eagles game this weekend and it wasnt because theyre not good i didnt and nice comeback i didnt go because i was fearful. You didnt want to do that but you went and ate inside a restaurant theres 5,000 screaming maniacs versus three people in the restaurant besides me. I think everybody makes their own decisions. Youre making me feel like i didnt break the law were not all sharing the same facts you went the day it opened. I did eat inside once i also ate outside saturday night and it was so cold thats going to happen. Thats going to get tougher to do. When i look at the restaurants open outside in the month of november, im going to say where was the stimulus 14 Million People involved in hospitality that stimulus business because we locked two restaurants. I mean, you know, this is generac and youll have outside eating its not working but the republicans and democrats are really thinking about it theyre getting it done. Not. Jim, all good points. And part of the trouble in evaluating how the winter is going to go. Take a break here as jim and david said well talk to the conoc chief on this deal after the break. A lot of price increases for stocks post earnings this week chipotle and cat in there, as well well get to all that when squawk on the street comes back for skin that never holds you back dont settle for silver 1 for diabetic dry skin 1 for psoriasis symptom relief and 1 for eczema symptom relief gold bond champion your skin strong debut for apple new iphone they sold more iphone 12 models in the first hours of preorders than iphone 11 sold in the same period last year Tf International said apple sold up to 2 million in the first 24 hours up from 800,000 units of the 11, jim. Sort of runs counter to what weve seen long term and that is a declining number of, say, google searches for the new phone with each cycle. Look, i remember lining up to get an apple 11 at the old gm building in midtown and just finally giving up and then going up to the one on madison and finally giving up and saying, you know what, ill get it online and that was the 11 which, frankly, was something that people felt was just a placeholder. This is not. This is a revolutionary phone. 5g everybody i know who wants to get this is really kind of a apple 7, 8, 10 im one of the few people with 11 but you can get a Good Exchange and i think that this is one of those where the analysts, the long knives were out once again. A goldman guy has to sell one and ill advised and given lukewarm piece that was the belief and that is just not correct. Yeah. Listen, im more focused on what this means for 5g. The fact that youre going to start to put in handsets in peoples hands and start to use a network that is still under construction by our three Major Companies and eventually well have enormous impact right when you think about what occurred as a result of a move from 3g to 4g or lge and all the Different Things enabled in terms of Business Models and what this will mean. Not today and not even tomorrow but fairly soon in terms of the years ahead. What it means for 5g far beyond the phone itself, jim. Obviously, the enterprise comes first and then so many Different Things that are going to be enabled as a result of these networks where we talk about it so often theyre just so fast give you an example of latency. This weekend i have the directv. Ive got the package for football, the sunday ticket. And every time you were trying to get on it was slow, it was late, it gave you the circle of death and whatever you know, 5g, according to the 5g, thats over. Thats over. Its the same as watching something at home with cable and i think a lot of people want to be on the go and watch and just kind of know it doesnt work thats going to change with 5g one of the reasons why i want the 12 so badly. You watch. Youll get one then yes, i will i know you. You want it badly, youll get it. Coming up Conoco Phillips Ceo Ryan Lance the deal of the week or even the month for a little less than 10 billion of conoco stock. Keept re ihe when i was in high school, this was the theater i came to quite often. The support weve had over the last few months has been amazing. Its not just a work environment. Everyone here is family. If you are ready to open your heart and your home, check us out. We thought for sure that we were done. And this town said not today. Working within amazon transportation services, i really saw the challenge of climate change. We want to be sustainable, but when you have a truck covering over 300 miles, or you have flights going hundreds of miles, its a bit more challenging. We are letting the data guide us to the best solution. Its inspiring to try to solve a problem that no one else has solved. Thats super exciting. Oh, yeah, youre over here lets get to aadjusting. This is how close the tables were when we went inside just keep talking anything else you want to share about anything my spit how about a mad dash. All right now, get this. A company that a lot of people thought they were on the last legs the l brands, Victoria Secret they had the deal with sycamore that fell apart wasnt that incredible . Goes from 42 to 50. Jpmorgan ceo is confident in one of the talks they had of Sustainable Low 20s operating margin and thats 50 bath and body works. People want soap see, its a pandemic, david. People wash their hands a lot more wouldnt you want to ebbe in th soap business during a pandemic . They have all sorts of different soaps. Its a winner. You should get on board. Bath and body works was never part of the original deal. How about Victoria Secret. I dont know. Thats not where it is. Gap Stores People talking about athletta and old navy doing well just kind of putting aside what happened at the mall overall . Shopping center and got cut really badly as 5 yield yeah, this is one that within the mall is doing quite well because it was written off right grab a bite to eat after . Sure. Inside or out . Out its nice and warm today. Its like 70 degrees thats the first thing you have to do now if youre ever making plans. Check the weather. Is it going to rain . Whats the temperature what is it going to be like. Have a steak tonight. Very nice very nice. We have an opening bell for you five minutes away as were just Getting Started on squawk on the street. Conocophilips to acquire conchra resources. The election is two weeks from tomorrow and the street today remains focused increasingly on what theyre calling a blue wave. Today jpmorgan that writes Market Expectations are set up for a biden win and a fiscal package in early 2021. Fears of an electoral process that could last weeks are aba abati abating. 26 million ballots are already cast and we have early voting begin today in states like colorado and florida i decided after 2016 that its a suckers bet to talk about whos going to win we dont seem to get the adequate polling results i think that a lot of the what looks like the wave does not necessarily add up to the states that need to go which way. I think you have to invest in the fundamentals i think you need to invest in the stimulus thats a suckers play, too. What you have to think is housing is in bull mode and you have some manufacturing that is coming back because china is in bull mode. We have situations that are just positive and where you can buy stocks and, of course, the biggest is software and cloud and as long as were not overwhelmed by ipos, david, we see where the action is. Its in the dominant American Companies that have figured out how to make money off the cloud. And are growing incredibly quickly and being rewarded for that with multiples to sales by the likes which we havent seen in 20 years. We may never have seen something 100 times. Theres at least a Dozen Companies of high quality. Well, there we go lets get ready for the opening bell here on this monday as we get ready for a busy week. Companies report in the next five sessions, including eight dow names and well watch stimulus well watch m a and a president ial debate on thursday, the final one. Earning season potentially being rocky. The netflixs and tesla and chipotle, how do we know what is going to be on the rough side of that rock . I think there are certain stocks that it doesnt seem to matter what they report. I think netflix is set up to be positive even if it goes down, it goes down for a couple weeks maybe and then comes back. Tesla is worshipped. This is a new thing in our market we have younger people who worship stocks i dont think theyre worth worshipping. They are pieces of paper and certain stocks that just cant, i dont know its like theyre lovy blankets. Look at tesla, david come on. Look at that i see it. Ive been watching it 415 billion market what do you make of that . Stocks are no longer pieces of paper just so you know what are they theyre nothing does anybody get a stock si certificate any more just digital representations i speak to younger people everywhere and they recognize me and they always say the same thing, do you like tesla san totolli had a good call r the weekend but the idea that baby boomers are slowly cashing out of this market and handing over what ownership they had to younger, we call them robinhood traders and we call them a bunch of Different Things. A younger cocohort that think ia different way. The etf purveyors have put upon us as being rejected by them what theyre looking for is the next tesla theyre very comfortable owning amazon and who can blame them because the numbers we got about the early look is on amazon prime are extraordinary. Who is going to go against people who have decided, you know what, we are buyers of the semis, which are up 30 for the year i mean, a lot of the stocks that they buy are of companies that are doing well its not like, david, theyre buying, theyre not uninformed they have done work in the sense of they know what the companies do who they know what the companies do who, the robinhooders yeah. I thought we sat here and said they dont talk about what thecompanies do. They dont care about price to sales and things they used to care about they know what snowflake does maybe not just wanted to make sure. They know what tesla does they think they know what tesla does its a Technology Company but theyre not thats probably the way you need to view tesla if youre going to value it the way it is being valued they love apple and they think that zoom is, well, i mean, they use it, they think its a verb zoom is like we used to think its kleenex and now they think its zoom. When you see the zoom numbers, you have to recognize it i was on two zoom calls this weekend. Its a link for heaven sake. You click it even people who have never, ever touched a pc know how to get on a zoom call. They made it so easy it has i can just get on and i just click the link and suddenly im talking to my daughter how did that happen . Zoom has 163 billion market value now. Its one of the Largest Companies out there. Why shouldnt it be its like babe ruth. Better year than the president i mean david, theyre not the dodgers theyre better than the dodgers. 770 increase in the stock over the last is it months it was mispriced. No one thought this could happen this is my first darn pandemic and if you told me, carl, at this point in the pandemic that people would be more worried than ever about going out. I mean, look ill close my deals on zoom. It is true that its like a Hollywood Squares thing when youre in a big room with zoom people and youre doing stuff on zooms and the new product is youre going to a concert. Thats not bad i want to go to a concert on zoom its better than going to the concert and have people breathing all over you by the way, something, yeah, something, carl, that we dont talk about as often and we were talking earlier about how many people and how many executives will get on planes and they will and have meetings, but this is the early days of this Technology Still going to, imagine what it will look like five years from now. About 5g. I will zoom my wife. Why should i zoom her . Lets move on. Yeah. But the ability and you can probably haul graphically recreate people who are virtually in your same space elon musk was right when he called me a hologram he called you a simulation. Carl, where has elon musk been lately . He was part of the excitement of stocks you know, jim, really quick you said something a moment ago about china sort of supporting our manufacturing. I mean, today the headline is tesla exporting from china to europe theyre a model 3. Thats a big deal for the shanghai factory on friday you were out but ford was up 25 in china in q3 we know gdp. Ip up 69 for the quarter how much are we relying on that and what implications does that have for any kind of tensions that we might see between the u. S. And china absolutely. Theyre buying, one of the reason why deere stock has been incredible they are buying a huge number of our ag products. Also around the globe, theyre trying to buy as much iron as possible theyre buying whatever is abroad nickel what happens is even caterpillar is being boosted by that caterpillar is also oil and gas and that ill turn over to david for. Thanks, jim as we mentioned previously on the show conocophilips announced it will acquire Concho Resources. Worth about 9. 7 billion at the time it was announced probably worth right around there both stocks down slightly in the early going as you see right now with conocophilips down 1. 5 joining us is chairman and Ceo Ryan Lance and mr. Lance, were thankful to have you this morning. In your press release announcing the deal, there is a quote from you that says you believe todays transaction is an affirmation of our commitment to lead a structural change for our vital industry what does that actually mean well, david, thank you. Ap to our esg sfrat grg strategy t deploying as a company and low cost to supply assets and about a resilient and very strong Balance Sheet. Its about adequate Capital Allocation that really focuses on value over growth its about distributions back to the shareholder and then doing that in a Sustainable Way that recognizes the transition, the Energy Transition that were going through as a globe all right so, you mentioned sustainability at least twice just now and esg very early in your answer. Is this a catalyst for trying to reach some of these goals that youre talking about in esg . Well, certainly, the unconventionals in the u. S. Are some of the lowest equivalent carbon of production in the world today. This transaction and bringing in the concho business into our company is the merge of two Great Companies that have a similar view around sustainability and around the communities that we work in and all the aspects of esg that makes this important its a great complement and were going to add 23 billion barrels of resource that average cost of supply is less than 30 a barrel that is the resilience piece the longterm nature of this transaction and one that recognizes all the key drivers that are important in this business another key part would seem to be something that we werent aware of previously that tim lease is going to become, well, essentially running your lower 48 as youre putting it. The president of that. Why and what does that mean in terms of the way you view the company . Well, i think its a recognition of the tremendous company that tim has built over the course of maybe decades. Hes put a fabulous company together that has a huge position of affirming base in both delaware and the midland basins a great augment into our company and really important to these unconventional developments to share learnings and get quickly down the learning curve to create the margins that are really important in a very volatile macroenvironment that were going to see today were going to be the largest independent company with 1. 5 Million Barrels a day of production and one of the most diverse independent company. So we have huge positions in the eagleford and now in delaware and canada so, our unconventional portfolio is growing and thats balanced against a global footprint in a conventional and other assets within the company that just add to the global diverse nature its alaska, its canada, its europe and norway. Its asia pacific and its the middle east. We bring a unique portfolio to the upstream in the space and we think its unmatched by anywhere this acquisition of c orconcho adds to that resiliency and that low cost supply Resource Base that we got from inside the company. It will last for decades, which is really the exciting part. Mr. Lance, jim cramer great to see you i need to come see you, jim let me tell you why i feel that way you run a Great Company. You even raised your dividend last week. You have done every bit of capital discipline that could ever be dreamed of really kind of a wonder in this environment and yet your stock is down 48 . One of the reason why i have been saying it is uninvestable not because of something youre doing, youre giving her all you got. What im struggling with and i think this is a great merger what does it take for investors to decide, you know what, this is the bottom. You got a good yield we have to buy yeah. So, were convinced, jim, that we got to change and we have to attract more investors back to this business. The way we do that is compete against the industrial space you look at the dividend what its yielding today and the Free Cash Flow yield and the top line growth that we can create as a company. Were not going to try to grow were going to do with that strong return and strong value the fund amental things that thy want out of this business. Well run through that volatility and continue to invest our capital and continue to give our returns back to the shareholders so its a growing dividend when we get excess cash, well return more back to the shareholder. Weve committed to 30 of our cash going back to the shareholder. You already mentioned the strong dividend yield we have the resources to grow and low cost and supply. We know were only going to invest in things that have less than 40 a barrel cost supply. That ensures that well get an aftertax return of 10 and growing roc over time and we understand after quarter after quarter of performance together but our past history as a company, thats what weve been doing. A shareholderfriendly approach this acquisition of concho supercharges that and gives us the Resource Base to really do this for decades to come thats what i want to convince you. It is an investable Value Proposition in the empty space but something new and something different. We recognize we have been executing on this for the last couple of years and the concho is a great, you followed them, tim has the same view of what it takes to succeed in this business is what were describing in this great combination. Tim is fantastic. I happened to listen to a presentation in september by jack harper, who is the terrific president because concho is filled with great people he made this point we are terrible to ourselves were not good swing producers we dont know what to do were predicting five and going to seven and then we go to four. We dont really have a handle on things the combined company have a better sense of where oil is going and, therefore, i know you like that great trend line but if mr. Harper admits the industry doesnt have that kind of discipline, how do you change the industry well, i think were going to show the discipline with the combination of concho and con o conocophilips. We create this strong Balance Sheet that is really to wi withstand the volatility when no one comes. The prices are going to go up and going to go down and not necessarily in that order. We created something that will erase that volatility. We think long term it will come down and do the Energy Transition were only investing in the lowest supply resources that we have in the portfolio and we have 23 billion barrels of that sitting inside the portfolio today. We recognize it will go up and it will go down and opec, what did they do, what did the russians do and what did the u. S. Conventional do thats all the pricing but what weve created here is something that can operate through the cycles and embrace the kind of volatility we know will happen in this business and its completely unpredictable. But we know if were investing in low cost and supply, we have a Value Proposition that can be doubledigit returns to the shareholders and thats something to all Value Investors in the business and thats what were bound and determined to demonstrate to the investor so they can come back to investing in a vehicle that can give them those kinds of returns in the empty space. Now, youre talking, as well, about 5 million in annual savings by 2022. We talked a lot about mr. Leech. Will you fully integrate the Concho Resources and businesses into your own and are there going to be layoffs in places like midland well, there will be synergy that we have to capture and we laid out 500 million a year there will be some gma reductions across the whole port f portfolio as we think about that with the resources that were bringing in, were making a strategic shift as we think of longterm exploration for the company. Were going to keep doing some exploration and do that around our big asset areas in alaska and norway and malaysia but thinking about the money that we allocated to finding the new big things out the next 10, 20 years, were going to pair that back so the expense associated with that and the capital associated with that represents about 250 million a year theres additional synergies that we expect to capture on the gma side and that is the run rate that we expect to reach by the end of next year and into 2022 right and, finally, i mean, on one of your top slides here you talk about the fact that youre going to have an elevated commit to esg with the newly adopted Risk Strategy you mentioned it a few times during the course of this interview. Five years from now, what is your Carbon Footprint going to look like . Well continue to reduce our emissions intensity and by, you know, were going to reduce that 35 to 45 by 2030 and thats consistent with a aligned strategy with an ambition to get to the 0 by the 2050 time frame. The emissions that we create by the business that were running today and science tells us that everybody, if everybody were to take care of their scope one and scope two emissions like that, we could reach that strategy of net zero by 2050 thats what were doing. We have a very Clear Pathway to the 35 to 45 reductions by 2030 and then we expect technology and other improvements to happen to get to the net zero approach. Were pretty excited about this and we think its unique for the space. Real quickly. The u. S. Is not a party to the paris climate agreement. Why do you care . We care because we cant afford to go through this grand experiment with our planning all right mr. Lance, appreciate your taking time with us. Thank you. Thank you, david. Carl . Got some comments from fed chair powell today although not about monetary policy. Lets get to Rick Santelli yes, carl the retail Sales Numbers are really carrying through to todays session. Much of that horsepower being up 1. 9 was really a bit shocking to many and i know were still debating stimulus but as it sits you can see the two day there open the chart month to date and tenyear yields are knocking at the door on the 80 basis range and getting close to the 160 area again in 30s. Now, if we go back to last week and look at booms on top of 10s, we could see the divergence there. If you look at the actual distance between going back to march when covid started to show its ugly face, what youll see is were now basically close, as wide as weve been then around 140 basis points and thats something to pay very close attention to finally, the dollar versus the yuan this chart goes back 37 months this is really important we talk about the economy getting back faster in china and many other spots in the world and this is evidence as their currency continues to extend not only the u. S. Dollar but the euro dollar, as well carl, jim, david, back to you. All right, rick, thank you very much. Interesting market session of the 30 dow names. Only one stock is up or down more than 1 thats apple, barely up better than 1 . So, pretty tight range here. Index is up 87 were back in a minute before we talk about taxsmart investing, whats new . Audreys expecting. Twins wed be closer to the twins. Change in plans. At fidelity, a change in plans is always part of the plan. 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. Not much, how about you . Are you answering my text in person . I am, yeah. Lol come on in. This is tech that helps you be there. The Nissan Altima now offering the most techadvanced engine in its class 33 years ago today, it was black monday on wall street. The dow fell 508, 22. 6 . The dows biggest oneday drop equal to about 600, 700 points in today many were not working at the time, many may not be alive or remember it. People cannot believe there could be that much cha yos there were stocks trading within 10 points of each other. 3 m might be 50 and then 60. Caterpillar might be 80 and then 40 it was chaos you may remember there were many people who were trading by phone and the other side wouldnt pick up the phone, the broker, because they didnt want to get hit. Yep it was a fascinating day i remember standing by an actual dow jones ticker tape, news wire ticker tape watching it. Fortunately, we were in then. Thank you. We didnt know each other then guys, a quick break. We are back in a minute. If youre concerned about the environment and climate change, how do you find companies that are driving the right outcomes . If you care about economic equality and social justice, which firms are addressing it in their workplaces and their communities . For nearly 40 years, calvert has delivered competitive returns by investing in Companies Making a difference because we see value in doing good. Talk to your Financial Advisor about investing responsibly with calvert. Whats on mad tonight . What are the most overvalued stocks people did he serve this we have insight. It may not be what you think is overvalued so enjoy the show. Ive been putting it together all weekend. Youll be surprised. See you at 6 00 s p trying to reclaim 3,500. Good morning monday. Welcome to sqwawk on the street. We get set for a big week of q 3 earnings stimulus watch president ial debate later in the week a record high for the second month in a row it jumped to 85 on the nahb index. The first two months the index has been above 80. Anything above 50 is considered positive all three set records or match their highest readings sales rose two points to 90. Expectations increase three points to 88 and buyer traffic unchanged at 74. A threemonth moving average, sentiment rose and midwest up 75 and the south rose despite these gains, builders continue to say they are ham strung by a lack of building and labor and spiking material cost. Family home sales are out pacing by historic margin, carl fascinating numbers across the board. Thank you. Our road map begins with stimulus hopes trying to stay alive. Speaker sets a 48hour deadline for any preelection deal next, bluer skies for boeing. Announcing plans to return the max to service in december and d. C. s antitrust chief. Well discuss some big sectors that face the antitrust scrutiny we continue to try to watch the tea leaves and an indication of how this may or may not go from the speaker, majority leader and the president too she sent a long, Dear Colleague letter, house Speaker Pelosi saying shes optimistic but set this new 48hour deadline to do so. She did appear to take direct aim at an agreement on coronavirus testing language that was an agreement the secretary had touted and she said essentially the administration had reneged on about 55 in her estimation of that language. She did signal on the language that the president did reappear on the campaign trail and said he would go even higher than the 2. 2 trillion pelosi had offered. He said essentially hed be willing to go higher but believes that perhaps republicans who had been a road block for this would go along if there was an actual bill to send over to them there is still a question of whether that is actually the case, Senate Republicans had previously backed a package of one quarter of the size now. Tomorrow theyll vote on something even smaller reauthorization of unspent funds. The chief asked about the heart burn among the republican party. Here is what he said earlier this morning it passes proloug nancy pelosi is going to put out this 48hour deadline shes not going to move anymore or at all. By saying anymore, i havent Seen Real Movement weve been trying to provide additional areas of relief where we could compromise. How hard would that be . Meadows said the president wont call republicans to shore up support until there is a deal on the table. Here is the way party lines break down Chuck Schumer would likely get his party to support leading to those votes. 11 republican senators whose reelection races are tossups or le laens meaning they would have incentive to pass it has the clock run out to the point there is no revenue left it would have been higher in august or september that it would have been guaranteed this money would hit accounts before early voting began and the impact would have been more noticeable in the polls. Well see what both sides come together with in the next 48 hours, if that is the deadline looking at some of the tweets from from pelosi testing language, child worker tax credit, child funding. The issues we are talking about on the air, small ball easily could get settled. Should we be thinking that way or not it is hard to say, prior discussions and qualitative aspects are a little murkier there is a lot of room if its true that administration argues they do or do not want to back the deal there is a lot of qualitative stuff they can go back to to reedit the market is going to be watching that as well. Thats where we are going to start with our next guest who is joining us right now Northern Trust head of programs and citis private bank market thank you for being here kristin, the headlines have head the market is up or down but the moves have been pretty small do you think investors are taking any of this in stride they are definitely taking fiscal stimulus very important it is very important to them the one question we have to ask is looking at how the market is interpreting everything, fiscal stimulus is very important i think the market feels like it is a very low probability. The market is not reacting that much to it as biden is reacting to the polls and the perceived certainty about the outcome and as we see a trending blue wave or blue sweep, the market is aing if we get a deal now or in the future, just getting it done is the thing can markets really be complacent question learned in 2016 that believing in a certain outcome is inevitable. As you think in terms of stimulus no matter who occupies, stimulus is likely to happen after the election into 2021 i think investors are not being complacent but what is necessary to bufferer up the economy there is not kplas si but that stimulus will have to come through and keep the market functioning and keep people employed and moving along. There is general consensus around this. People are talking about the bear case politically in terms of the set up and that it comes down to a split White House Executive Branch or senate where biden is leading the senate or vice versus. How much gridlock do you think is built into that i think we have to take a look at the term over the next couple of weeks or months and then look forward over the next weeks or months. Really two to three months where you are seeing this get an implied and delay in election results. Probability has come down, making people nervous. We are seeing a lot of clients right now analyzing their risk we are having some issues with the audio ill throw the next question to you, the outlook for the coronavirus, dr. Gottlieb said the u. S. Is two weeks behind europe that is a collision course with the election day how do you think investors should be positioning for these case counts to rise . Is to really try to dampen the volatility we are seeing a repositioning and where we see a satellite asset classes. Natural resources, and high yield as a way to buffer some of that from a covid perspective, it is quite interesting because as you think about the Health Care System prior to covid19 emerging into a pandemic, you saw that Health Care System seeking to recalibrate itself. More anytime ball to see those increase as well from that acceleration to accommodate the increase as they go off rails. There seems to be a lot more buffers in place in u. S. And europe as well to sustain an increase of covid19 cases it still feels as a risk case for us the question will come down to how the Health Care System, what that looks like in broad adoption in looking to seek a vaccine. It does still sit as a risk case for us and working koordively and to accommodate that within the risk profiles. World Health Organization are saying young and Healthy People may not get this until 2022. So whether two weeks or two years, well see how this plays out. Thank you for joining us today after the break, we have a packed hour for you on sqwawk on the street. Well be monitoring the virtual global conference where Goldman Sachs David Solomon is speaking after the break, assistant attorney general for antitrust will join us talking about big technology, competition and a lot of other things hes seen during his exciting tenure well be back after this now for our etf spotlight ticker xle down close to 50 since january due to continued week demand. Three names making news today. Halliburton, concho and conocophillips beating on earnings but missing on revenue conocophillips agreed to buy the all stock transition at 9. 7 billion biggest s p lagarde year to date well be right back. Welcome back technology has been a big focus. Joining us now, been on the job over many years, longer than many predecessors. I know you are recused from the case has your thinking during your tenure evolved as in how you think of their market power . Good morning, david good to be with you. My thinking is really focused on the application of the law to the fact we continue to have more information from what is publicly available, whether investigations or the house judiciary report that was released with more information, i think thats very clear that a lot of these platforms have the market power. The question is, is what they are doing illegal . The other question is what is their solution to curb their power and can it be accomplished through antitrust . Any thoughts i gave a speech in tel aviv a year and a half ago, antitrust should apply to the market power whether or not they can adequately address all of the problems for the market power that they deal with, they do it fast enough. Thats the bigger question that is what has been healthy about the conversation within capitol hill and the ftc and Justice Department those discussions among academics as well is really important. How are we to deal with the type of issues we are raising they have real impact in economics and policy if the department of justice judges that google has eamon op lization of search, one thinks that case would take two or three years. You and i could be sitting here. Youll probably be in private practice by this could be five years from now technology moves so quickly. How can we think anything done in that amount of time will apply to anything being done now. Thats a great point the fact of rule that needs to be applied where Congress Fails and sets in to the framework like the sec and others and perhaps there is a role for that as in other areas. Weve seen reaction in facebook and other things the question is, are these platforms utilities to convey information between you and me or publishers with the same editorial standards as cbs, wall street journal and nbc important policy questions for the whole country. They are. It is very much unclear especially youve seen very large deals at t time warner, which you opposed and disney fox, which you let happen and tmobile you allowed to move forward. Weve been talking about 5g and the new phone coming from apple. Are you confident dish will be a competitor coming up with 5g im as confident as anybody could be dish made commitments and the judge believed the commitments as far as im concerned, the approval of that deal created more competition than what we would have seen would two competitors be a dupoly or three or four with a deployment and that was the justification behind that deal it would have been easy to block deal and there for sprint shouldnt. They made strong commitments to the fcc and Justice Department well have to wait and see you still remain confident that they will have the needed capitol and wherewithal to become a real competitor they will and look, a big part of the negotiations come down to what kind of freedom do they have to be able to do that there was a number of change of control provisions i had to get involved and negotiate as you could imagine, the two competitors did not want to have a third or fourth competitor involved this was negotiations between deutsc Deutsche Telecom that controls we put provisions in there that allows them. We dont make markets succeed or fail all we can do is allow provisions to be able to raise money from banks, hedge funds, private equity firms to be able to continue to build. What we have seen is a demand for connectivity will only go up i would expect demand for that network will be high well be watching closely we also watched the stock market here one company that has not done particularly well since that deal was approved is at t. Down 30 tmobile and sprint has made a very strong move do you feel like that was time well spent the company says that it cost them a lot between frighting the Justice Department instead of closing the deal i dont really think fighting the Justice Department are our actions. They can still believe with sound what was really the effect of what they are facing now. At t and time warner are two Great Companies, great brand, great content on time warner side some of the best intellectual property there is. At t has been a Great Company since the beginning of communication since this company. I think it is more of a problem. Offering the top proofic at 15 when disney was at 6. 99 and other competitors coming in cheaply, so i will let the markets decide thats really not my role. I dont think they can blame any problems they have on the enforcement of the antitrust laws look, i dont know what they did. There was several settlements on the Table Including the sale of 51 of at t. Ive been watching some of the press about the sale of at t lately i think the valuations two years ago may have been a lot more than what they are today yes, if they had listened to you, maybe they would of done better very good company look, i have strong faith theyll figure it out. It might be some tough times people might lose various jobs but those are some great, Great Properties in time warner. That was a Great Company i just hope they didnt devalue that during the merger staying in the entertainment area a Current Issue is movie theaters you recently moved to immediately end the paramount decrease back in 1948 that would not allow the Major Production Company to own the movie theaters getting back to this industry where paramount can actually own its distributors again a great question. Just the time of year and distribution of movies, most people wouldnt have appreciated. The Justice Department and the company presented new innovative models rather than protecting any consumer before the pandemic started, we started the process to end those decreases which the Southern District of new york would agree. Well see, i love theaters have young kids and love to take them to the theater, even though i could see the same movie at home, perhaps. Im hoping that will still be a product out there. Who doesnt want to see his or her film in a theater. Perhaps the removal will allow for the Business Model circuit dealing which means you could license a film throughout a circuit or being able to tie one film with another. If you could go out with a star wars, there could be another film you would want to give away some of those presented that. Some could be a lifeline for the theaters who are phasing this because of the pandemic. A lifeline is something they need always great to have you thank you for taking some time with us. Thank you antitrust chief at the department of justice. Carl thank you. Dow session high up 105 before briefly going negative lets get a news update with sue herera there are now more than 40 million confirmed covid19 cases worldwide. The actual number is likely far higher u. S. Cases has been rising, europe has been struggling with cases that have pushed some countries to record levels belgium with new cases doubling every eight days bars and restaurants have been ordered to shut down a month to curb the spread. New Associated Press poll found one in four u. S. Workers considered quitting as the pandemic grown more than half employees say their employers are doing the right thing and some say going above and beyond in los angeles, dodger fans celebrating their team going to the world series this is their third trip to the world series in four years you are up to date thats the news update for this hour back to you. Watch parties look a little different. As we head to break, we keep an eye on shares of nikola still expected to strike a deal with General Motors by december 3. We are back in two they made it out of copper, gold, silver, wampum. Soon people decided to put all that value into a piece of paper, then proceeded to wave goodbye to value, printing unlimited amounts of money as they passed the buck to the future. Thats why its time for Digital Currency and your investment in the grayscale funds. Go digital. Go grayscale. We did it c crowd cheering [narrator] wherever you start, snhu is where you can finish. crowd clapping crowd cheering here we go. [narrator] and its it. [group] yay [narrator] you did it, high five Southern New Hampshire university. [man] that gets a hug. laughing look at that masters degree, i did it i did this for my children. I am very proud of myself. [narrator] finish your degree at snhu. Edu. American airlines bringing back the 737 max the phil has more this goes as expected the max is recertified, ungrounded by the faa sometime over the next month and a half and that the plane is ready to resume commercial service. The plan for American Airlines is to have the first flight of the 737 max on december 29 it would be from new york city, laguardia to miami passengers would be notified look, you are going to be on the max. Are you okay with that if not, you can reschedule boeing has been steadily working towards the recertification of the max. Expectation is that it will happen likely in the next several weeks. Most are saying, look, we wouldnt be surprised if it happens by midnovember. All of this comes at a time when the number of people flying continues to move higher not a dramatic increase. Yesterday was a milestone of more than 1 Million People flying in the United States in one day for the First Time Since march 17 keep in mind, that is still down 61 compared to a year ago but that is improvement given the fact that they were down, what, 95 in midapril take a look at the Airline Stocks today the expectation for a number of these carriers is that we see a steady increase between now and next spring. How much is that increase. Another 5 , another 10 . That 1 million mark is an important milestone. More on boeing in america today. Our next guest is calling for a break up of facebook to combat misinformation founder ceo with common sense on regulation good to be with you section 230 our viewers understand what that is youve seen people from President Trump to much more progressive people calling for an overhaul of the act this is a good thing you mention my new book which side of history. I wrote a piece in there about why section 230 is bad for kids. There is a lot of content on platforms like facebook, youtube, instagram, that should be regulated it is such an important issue and should be dealt with by whoever p is president in 2021 i wonder if you can give our viewers with what say twitter looks like with that immunity stripped away and how it would affect how politicians are to get the message out. Some of the politicians that criticize it would say their dishonest tweets would be tagged or removed if they include violent messages or really inappropriate content, theyd be takendown. From a kids standpoint, obviously really important in a democracy standpoint as parents who are concerned about what may be on your in sta gram feed or snap chat or youtube, youd have content moderation that would be in the long term squawk box is mod rated, so is all broadcast and radio. It would be a much healthier tech and media environment and better place for civic discourse and democracy as well. The subcommittee have acknowledged that they cant write legislation to call for the breakup of a single company. It would have to break up categories other companies could get swept up in categories as you know, common sense along with the adl have been leading this stop hate for Profit Campaign where weve largely targeted facebook and instagram. In the case of facebook, we think they should be forced to divest themselves. That cant be done by legislation. The state ags will have to bring a case around that from a business standpoint, it would be healthy and might benefit the companies themselves in terms of the value. What you would see, i think is a less dominant play by five or six really Large Companies it would be up to the attorney general of the United States in 2021 to enforce this or the state attorney general but we will see some degree of antitrust actionin 2021. Facebook was a much Smaller Company when they did this and then an even Smaller Company. What if they do the action you are suggesting it is a case by case decision really, what we need is a case by case antitrust laws it is fair to argue that now, a break up might be healthy for the market, consumers and everybody. You approach everybody on a case by case and wouldnt be a situation where Small Companies would be acquired by larger ones it would be a more thoughtful application of the antitrust laws the reason i wrote this book, technology is not only driving our Economic Future but an impact on our life and democracy. How we regulate them really matters and it matters whether we want to be on the right side of history we had megan del reem we had an idea of how long it takes to prosecute the cases in 2021, moving to try to breakup facebook, it could be five years before you could enforce. It could be a settlement you need something that actually gets to the heart of the matter more quickly, arent you that is a really good point reform of section 230 is so important, number one, also why you can see things that happen in the short run for example, even if our prior guest did enforce the antitrust laws and take on one or two of the giants, it would help your behavior on a couple of parts. Even the threat of action sometimes will lead to healthy stuff for the market this in the long run should benefit consumers and companies themselves and the broader accomplishment in the market looking back to the landmark one where we saw the breakup and really important antitrust action, it ended up being an incredible driver of innovation in the tech world. I think that will happen all these discussions will lead to innovation. It wont lead to Smaller Companies being ash soshed but it will create a healthier market, healthier social discourse and thoughts that our company should live by we would all benefit if that happens. Content moderation. You make the point that we mod rate content billions of people actively providing content at any moment. You could argue facebook and youtube are having checkered success. How does that analog even work at scale. These are the Largest Companies that even work at scale, they are even bigger than cnbc. I actually believe, and it has been shown in Academic Studies that we could create a much more healthy moderated environment meaning much better invested slow to move to switch simply the platform theyve all been critical of the way you do it is by putting real resources behind it no one said this was an easy solution that being said, these are the most important platforms in the world, they should be regulated in a common sense kind of way. Well benefit from that. The market would benefit from that as well we have a future positive common sense markets will come out. Well be talking about this on squawk box and companies can be held to account the consumer and you and me and the market will benefit. Jim, great conversation certainly not the last one great job on the book. We love squawk box. Thanks for having me on. He loves sqwawk on the street as well. Tesla lower ahead of Third Quarter results. The company did get a boost briefly add wedbush raised the price target to 500 but as you see it is down so slightly we are back after this the mighty consumer proving resilient even as the u. S. Grapples with the pandemic one top strategist lays out what this could mean for the trading come back. More sqwawk on the street coming up. Welcome back to sqwawk on the street. Im dominic chu, markets have been floating. Right now we are at the lows of the section. Right now, s p just 3 below the record highs we saw. From a sector perspective, materials and industrials the best performers with hopes for the stimulus continues more data points and positive Economic Sentiment honk the Home Builders that is helping the materials sector to a near alltime high a wide range of companies. Minors, chemical players and dow as well. Corrugated packaging like west rock as well watch those material stocks. Kar carl, ill send those back to you. Three in every 10 Hotel Employees are either furloughed or laid off. Well speak to theeo o cf best western to call on the perfect easy for more stimulus after the break as stocks go red 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. Its time you make the rules. So join the 2 Million People who have switched to xfinity mobile. You can choose from the latest phones or bring your own device 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 dollars a year on the network rated 1 in customer satisfaction. Its your wireless. Your rules. Only with xfinity mobile. Ceos of Major Hotel Brands including marriott, hilton, and best western are calling on President Trump to provide the Hotel Industry with what they are saying would be immediate modifications to an existing Stimulus Program that they have not been able to join us joining us is best westerns ceo, david kong. What are the modifications you think would specifically help the Hotel Industry to unlock these funds that the Federal Reserve already has to lend . I think first of all the government needs to understand the dire situation to the Hotel Industry we were hoping for a strong recovery in the summer, but regrettably it didnt man oupan. At this time we would enjoy corporate meetings and convention business, but all those segments have been compromised and winter is usually slow as we look at the next six months, according to a survey, three quarters of the hotels are planning further layoffs we already lost 4 million jobs thats four times more than the National Average twothirds of hotels say they only have reserves to last six more months. The main Street Lending program is supposed to provide muchneeded relief to the industry look at the 6 billion they approved for lending, only 2. 5 billion has been provided. So that speaks to the inadequacy of the guidelines provided specifically i think its really important to look at how the banks are being instructed to lend the ebita base test is just not relevant at this point because obviously the industry has been decimated. Assetbased tests or using ebita from previous years would be more appropriate im curious to explore that a bit further. As it is structured now, the main Street Lending program has a 5 billion cap on revenue, a 15,000 cap on employees, defers principle payments for two years and Interest Payments for one year the fed and treasury say that would be structured to allow small and mediumsized businesses like Hotel Franchisees to access this money. What is keeping Companies Like best western from qualifying for these loans . If you look at the lending guidelines, they are debt ratio coverage requirements, theyre all based on the current ebita performance. The fed is asking banks to underwrite the loans, and banks are not in the business to lend money to failing businesses. And in addition the drinks are on the hook for 5 of the loans. So when they look at the performance of our Current Hotels theyre hesitant to lend. Thats the problem the furloughs and the layoffs, xwroefr aoverall indusn room rates if leverage is Getting Better s a fallacy to think about the occupancy level on its own reality is for our segment, usually we run 45 , 50 occupantity, youre at a breakeveryone level the average rate is down by 20 . So, though we are currently because of the strong summer, traditionally the best time of the year, were running 50 , 55 occupancy. Because the average rate is down so much were continuing to lose money. Right now were up 40 until the end of the year where we expect to be down by 50 , which is a very high number. Its the unfortunate reality for so Many Industries right now. David, appreciate you bringing the story of the Hotel Industry to us. David kong, ceo of best western international. Thanks. Dow is down about 27 points here as all three indices marcslht ihed iglynto the red. Were back after a break 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 settle with power e trade. 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. Dont get mad. music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. Good morning it is 8 00 a. M. At apple headquarters in cupertino, california and its 11 00 a. M. On wall street welcome to squawkbox live. Good monday morning. Welcome to squawk alley. Markets started out with a nice start to the week. Dow up about 105 lost some ground here as we continue t