Transcripts For CNBC Squawk On The Street 20240712

Gap, set to speak again and the fate of a preelection aid package could come by the end of today. And the race for a cure, moderna saying its experimental covid19 vaccine could be ready for emergency use in december. Carl jim, just crossing the wires now, doj has filed the suit against alphabets google, and heard you talking to becky a moment ago, reiterating what you said for a long time, this lawsuit essentially is a strange kind of value creator. Yeah, look, i mean, arguably theyre saying there are ties to exclusionary business deals that google has done. Look, google has opened the books time and again to the government it is not their first rodeo. They have understood this. If theyre trying to break up google, all theyre trying to do is exactly what ive been hoping for, which is that to bring out the value in google, you have to break it up. So if the department of justice is going that route, theyre a great investment banker. I joke with david, there is situations where the sum of the parts wont ever be brought out, and the reason is because the company is very complacent and happy. I think that alphabet is the most complacent company ive dealt with they even have a division, a division called were going to continue to lose im sorry, called other bets. And it is amazing. It is like, you and me sitting around the workshop, with a chimney, and we take the money everybody else makes and we shovel it and were trying to make georgia fatwood who is the analyst there ba barr bill barr he in spac didnt you have the actual guy on yesterday delrahim macon is recused from this in particular, because he advised on the purchase of double click years ago. He told me he logged alphabet i was on the floor of the exchange, which i think was prepandemic, like 1917, he was telling me he thought this was one of those Great American companies. We used to think like that Great American companies but now, no, we think theyre too great. Come on, jim. They are great, can be a Great American company and also is a monopolization on search the two are not mutually exclusive. It did create a lot of value. Until we decide there is going to be a lot of talk about breaking up breaking up google that is so far down the road this is going to be by the way, doesnt even mean it would be the remedy that would be needed to deal with the fact the government proves its case that there is a monopolization on search here and that google maintains its status as a gate keeper to the internet through an unlawful web of exclusionary business agreements they have with other companies do they have someone on the inside i dont know what they have to prove their case. It will be years and years, it will be years before it gets to trial, if they were to lose google, it would be years of an appeal, settlement, getting to a point you say theyre going to break up google is theyre not going to do that because the government is telling them to. Im not taking it out of faang, im telling you that. With all seriousness, maybe there are ties, maybe there are ties behind the scenes what is involved what is what is the problem with maybe one of the greatest inventions of history what is our carl, googling is great. There. It is not like it is googling what do they want to do . Make it so it is not as good they want to hobble google well, i heard you joking with becky a moment ago about whether or not they split the alphabet to your point, awe waas we wair the actual complaint, well see what the remedy might be doj is this sort of gifted investment banker, is that specific to alphabet or would that apply to other members of big tech as well . This is not hate them or like them, ill say, i think a lot of people fear that if biden takes the white house, and the democrats take the senate, this is the blueprint of what will happen but it will be much more punitive this is actually lets hope in the if youre the government, that you have people who are willing to say, i was in a room, and blah, blah, blah told me you know what, i want facebook crushed i want bing destroyed. Again youre speaking about other companies that are worth hundreds of billions of dollars. What are you making a face about . You need the courts regardless what do you mean, theyre going to do something you got to go to court, at least you used to have to go to court. Didnt you ever watch perry mason . It was slow at first, but it got the people versus o. J. , okay . Yeah. Yeah well, im just saying, you have facts, but you need facts what do they have . We have to see what they have. Do they have a smoking do they have multiple smoking guns . I dont know. It appears bill barr was very anxious to bring this case and do so before the election. Thats something that we sort of we heard you know, you referenced macon delrahim, he was on yesterday. What a great interview, by the way. At t didnt seem to think so, but, you know, i asked him about this broader issue, jim, of market power we dont have we dont have it ready, and we dont have it . Well get it ready for you in a minute best laid plans. I watched end view. Interview it was darn good disrupted my morning this market power issue, the problem with market power, does it ever matter, david, that america loves something . Right, that i love google, it gets me where i want to go why is that bad . It is not bad innovation has been incredible think google maps, think about that, all the different are they going to make it so i cant link those. The rabbit hole that is youtube we can make arguments about. But i know you want separate you want separate because you think it is going to help create value. It has nothing to do with your view of them as far as violating antitrust laws why is this any different fine. All right. Are they going to agree with you . You got your video yet . I got my video. Want to hear what macon had to say about antitrust laws and where we stand in terms of Technology Market power . Take a look. Clearly antitrust has a role and needs to be applied. But what is the other solution where markets fail, Congress Steps in, and creates a Regulatory Framework i think it is very clear that a lot of these platforms have the market power the question is what theyre doing illegal. Right right. The question is what theyre doing illegal. You need some memos. It is not like theyre up against little guys. Who has tried to do search what that was exactly my next question to you and to david, guys who is the injured party here . Is there some sort of startup Search Engine we have not heard about that tried to break into the market and been crushed beyond bing, i guess as for consumers, we talked about this new lens of antitrust for years now. Produ products free how is the consumer being harmed right, it is more about the dominance of the market and the exclusion perhaps or the being able to dictate terms to everybody, i guess, carl the fact that there are no competitors, and that therefore google is in a position where it can, again, dictate complete and total terms to those who want to use that Search Engine not on the consumer end, but the advertising end. But, i mean, do i have to use it no, same thing as apple, same conversation, do you have to of course you dont have to. But if do you want to have a business you have to use the app store. It is a great thing. You got to use you got to be want to take the same thing you want to be in the paid section most likely. Im not being facetious about this the American People like google. They like how it works if there is something that is in the file, which says you know what, we have gotten ties to be able to block certain people and send it to others, that people think people think it brings up the best, it doesnt, well, you know what, you sticker it and say, listen, this is paid, which they kind of do. You go to amazon, you look up something. I tried to get an n 95 mask and first 17 masks were, like, the fashion masks from etsy. I got to the n 95. I put in n 95. Okay so they obviously got paid off to put in all the others, is that a shocker they got to put in we dont really like this david no, it is not it does raise jim, it does raise the question we had this conversation last year of sorts, the degree to which search on amazon, right, it was beginning to become a first choice for consumers if you wanted to buy something or look for a product, you might not go to google first you might search amazon instead. I wonder how much of a resort were going to hear on that front in the next several months, i suppose. Alphabet is in better shape this time for an antitrust suit than before. They have good people by the way that theyll get really good lawyers and what youll find is davids right, this is a 2025 experience but it wont be steve balmer who we now think as the owner of a Basketball Team who directly tacked the Justice Department. That will not be anned edned n an ad homonym attack on the Justice Department. A lot of lawyers will mack a lot of money over a long period of years here and well be sitting talking about a r resolution of four, five, six years from now. Unless they have a smoking gun. They have to prove their case google is going to settle . They would have settled already. This is just the usual thing. So make them stick, what are they going to do theyre going to give them lets say we give a startup, a through c. It is like when you used to i dont know, we didnt have that much money, you go to the supermarket, they give you the remember the encyclopedias, you get a free. Well give a to snowflake. Okay. Well, and then well give b to, i dont know peloton. Well give c to netflix. D to data dog. You come to some sort of Consent Decree which opens up the market for search. It allows those that want to advertise. What well do, well let microsoft in this market to go directly against alphabet. Oh, geez, theyre there. It is crosby whatever happened to president mentioned bob hope yesterday. Remember ask jeeves. I loved ask jeeves. There were some great ones they failed. Thats the way if you look historically at what the Justice Department has tried to prove here, and they many times, is their really great product does stuff we dont really care about, so therefore we should do something. Thats a case and a half i would rather have a case of schlitts. Were awaiting the complaint when it breaks and well get a chance to read through it, well try to share it with the viewers. In the meantime, a lot of q3 earnings, raised guidance from Procter Gamble, philip morris, Lockheed Martin and ten year back to the june highs well take a break and be back in a minute. 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. Plenty of earnings to get o to p g a standout top line, john mueller this morning said was six going into the pandemic now nine just unbelievable sales growth. Yeah, look, you look at whats working, it is really interesting because it comes down to, again, the thing s ts t we need to do in order to be able to beat or at least get even with covid. Healthcare plus, midteens, fabric and home care, plus 14, home care organic sales increased 30 , cleansing products this is all about people staying home, and trying to defeat covid. I know there are some people who insist that covid is just a bad flu. But judging by what procter is saying, there are many people around the world who believe that they have to clean better than they used to. Maybe they have to use the dishwasher, because their hand cleaning doesnt do as well. Theyre staying home, not going out to dinner. When i look at this, what i see is a sea change back to the way we were, when everybody in the country was poor or middle class. Where you didnt go out except for on mothers day. Cleaning all the time. Everyone in the country was poor what are we going back to . We were middle class. And we didnt go out except for, like, on mothers day, key days. So we used to make we were cooking at home, cleaning at home, and except for now were doubling down, cleaning twice. Right now were cleaning twice the question is, the question is with the p g numbers and is the growth in products dealing with hygiene, is it here forever, is it a seminal change in the way people use them, we bumped up to a new level of volume. I dont know the answer. I assume it is possible the answer is yes. Not to get too depressing, but the idea that were not potentially going to see another one at some point, one after that, you know, unfortunately thats probably going to be more likely than not. I spoke with the ceo. Yes. Of lysol and i think he sent you a present. He sent me one a while ago, yeah i talked to him this morning too. Because i thought i had the exclusive. You didnt, yeah. We tied up his morning. But he brings up the idea of a change in temperature and that leads to i guess more longer life of insects. I got that also i thought it was a good rap. Sixfold increase in the life of the insect over the two celsius increase in temperature and then all sorts of transmission risks true. But i was speaking more that he believes that it is a sea change carl, the head of the company that owns lysol is basically saying were never going to go back to our dirty ways that we are more hygenic in this country, there is a whole strain of people who think hygiene is a joke along with masks. These people i dont get theyre like, covid, bring it on, i want to be part of the herd i want to be part of the herd like going to tyson foods, part of the slaughter there sis a move to make it so you live a more hygenic life there was good news for all those single people out there, as you know. What was that sales were up. Is that what he sent you . He didnt he sent me all sorts of stuff a while ago. Lysol and things i think i gave them away. I think he sent you condoms forget it, i wont going to into that. I gave them away i think that company and procter together tell you if there is something major going on, and the thing that is major is that we realize we have not been taking care of our sexes. And ourselves, and if we stay at home more and there are more restaurants to go to, theyre going to be cleaner than they were were going to wash more it is the way of the future. People dont like to go out anymore. They dont want to get sick. Yeah. Some people they dont want to go out, certainly flu season and the Southern Hemisphere has been a include as to how people are changing their habits. No doubt about that. Yes well take a barak hereak he. Get a mad dash after the commercial interruption. In the. Well, saving on Homeowners Insurance with geicos help was pretty fun too. Ahhhh, its a tiny dancer. They left a ton of stuff up here. Welp, enjoy your house. Nope. No thank you. Geico could help you save on homeowners and renters insurance. Geico could help you save on homeowners 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. 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. Lets get to a mad dash, counting down to the opening bell we have 7 1 2 minutes before we get started with trading ibm earnings. Youll see this stock down, youll say, wait a second, they kind of preannounced and did what they preannounced but, david, the call was discordant if i say there were people who were basically saying, what the heck happened post red hat katy huberty, who has a propensity to like ibm at one point says, i have to read this, looking just looking just looking at the cloud and Cognitive Software business, before you close on the red hat acquisiti acquisition, that was a growing business, today on a pro forma basis, it is declining midsingle digit basis and the ceo says, yes, you got it correct. And at that moment she realized, you know what, as they transition into a new company, there is business that is slipping, and the old business which we were very excited about, that cognitive, maybe not doing as well. So this was a story where, and then tony asked about the dividend is the dividend safe and theyre talking about the dividend is sacrosanct it is hard to grow and have a dividend sacrosanct with that balance sheet, which is not bad because they have a huge amount of cash flow, always have. But the call is basically saying, guys, are you really ready for primetime with this split . Given the fact that businesses arent doing well and i found it disconcerting. I found it disconcerting. Yeah, a brief move up, we can see it there, after the announcement of that split essentially, of the company. But this this saying about red hat . Red hat is growing in midteens i dont think thats not asking too much. It is the other business that kind of you like to think it was combined with red hat. It is all the special high growth areas, but what you really felt was, like, and i echo what tony says, we want growth high growth, and do that, you should suspend the dividends, what hes saying and what theyre saying is, oh, no, people are thats an age old issue, when you have that high dividend pay out that much and youre a tech company, because, remember thats not why you own tech you own tech for growth, not for dividend. This is a different generation of tech. Well, different generation somewhat, thats a sotte vocce theme throughout this. Get with the program. Well keep an eye on ibm. Maybe doj gives them something. Google thats a joke. I get it. Thats a joke okay got it. Got it how about the life of ants . I dont even know what hes talking about. Which is good, because we got to go anyway. We got to go anyway. Well be back with an opening bellig aerhi rhtft ts. Uber and lyft are like every big guy ive ever brought down. Prop 22 doesnt help their drivers it denies them benefits. 22 doesnt help women. It actually weakens Sexual Harassment laws, which are meant to protect them. Uber and lyft arent even required to investigate Sexual Harassment claims. I agree with the la times no on 22. Uber and lyft want all the power. So, show them the real power is you. Vote no on prop 22. As far as q3 earnings go, we covered ibm, proctor we havent gotten to lockheed, which not only raises the guide, but got another div hike, which is adding to a longer list these days this is a company now run by jim takelet, he was unbelievable, a lot of people are, by the way, are worried what would happen under a biden presidency they always forget the democrats spend fortunes on defense. They have never, ever cut it back more than the republicans so i think this is a great story. It has been going down of late i dont know why, jim is a very special guy. He has for the longest time been very pro shareholder if you look at that he did with american tower, it is absolutely terrific and i dont care about what happens in the election. David, everyone seems to be so concerned about concern stocks that are democrat stocks and others that are republican, and there is a lot of misinformation about these. You buy defense stocks with a biden administration. We never spent more than we are now. Im not sure as a percentage overall, i guess as percentage, gdp and the budget 800, were over 800 billion, right . Were also selling a lot because the president likes to likes all those sales to look, could it be better than who the heck knows im just saying take whats fabulous i want to back the ceo here. Yeah. Thats great. Yeah. No problem the opening bell at the nyse. And the nasdaq this morning. We havent really touched on stimulus i think we are going to hear from Speaker Pelosi around 12 30. More reports that they have been narrowing their differences. Senate is back in session. And we do expect mcconnell to set up at least a couple of votes in the next day or two, one of them the reload of ppp. But i dont know, you heard senator cruz on squawk earlier this morning still not optimistic this is going to happen. I know. And the market seems to just believe and is very hopeful and so you see these prices. And you say, wow, i got to get in, the market knows something this is seasonally a period we had a piece last night that demonstrated without question that these are really good ten days, even in a period of an election year. Period between now and the end of october, larry williams, thank you. So i understand why you would want to buy impeerically my problem is that this market is, like, assumes, like yesterday, like yesterday was idiotic i couldnt believe during the 9 to 10, somebody thought they were going to agree. If you agree to a deal, and it includes a check that comes, that is signed by donald j. Trump, would you be more or less inclined to vote for donald j. Trump . No doubt that there is an element of it i would assume on the part of the democrats that say, wait a second, do we want to be having that happen, right in front of an election. But by the way, even timingwise at this point, were two weeks away. I know. You sign the legislation, you get the checks out, they get in the mail, the mail, the mail right could give it, like, pay pal fedex or venmo. Venmo. Venmo you. A little emoji, a smiley donald trump i dont know, i think you buy stocks, you buy stocks that are having good earnings, okay and you try to measure whether those earnings are going to hold up under a biden or under a trump regime and you look at Procter Gamble and say, i know there is very little volume now, i dont think anything that is happening at procter has anything to do with who is president. Same thing with fi5g you look for themes, themes demonstrate, there is worldwide growth, we dont see it, being led by china, i covered last night caterpillar. There is definitely some a couple of things going on out there that are positive. The autos. Listen to what phil is saying. The autos. The used trucks. Aerospace coming back. These are great themes to own regardless of who is president and you got to back away from the idea that somehow this stock or that stock is going to get hurt and i dont care about the tax situation either you have to invest no matter what, carl cant just avoid investing because of tax considerations. I know youve been watching the autos, you had a lot to say about ford, gm, jim, almost back to 34 thats going to take you to midfebruary, we await what will be a pretty sizable announcement about u. S. Investment around 11 00 a. M. Eastern time today. Citi went from 54 to 57 on a number of deals that could occur. I thought that was incredible. 54 to 57 ill take 34 to 37 if i were a gm holder. Look, a lot of the companies, it is almost better to buy the Parts Companies that sell into them you know, if you take a look at a company like ppg, there is a company, the stock is not doing anything today, but it is frankly that to has been a horse. Illinois tool works, they have a gigantic amount of auto. And it is doing incredibly well. I would rather buy parts, and i do like ford because i think that farley is a very good ceo, david, i dont know if you spent any time with him, but hes a car guy, not a steel cabinet guy. No, illinois tool works, what youve been talking about, i know you like ford youre positive on it. Very curious to see if you end up being right. I just think you needed a ceo who basically can stop he has an interesting philosophy. He doesnt want to lose money everywhere in the world. That i know that sounds fords philosophy was to make cars everywhere, including places theyre hemorrhaging from the eyeballs farley doesnt want to do that in f150 all tricked fro eed ou 2019, i dont know what kind of Small Business can afford that, but, wow, you admitted thats a lot or youre reading Something Else thats a lot of money. It is how much is a carton of milk 4 bucks, depends if you get the even more sometimes if you get the one that has completely antibiotic free and all that stuff, that can be even more he has bought things. Very impressive. Thank you, yes. I do know what milk costs. Also, i know what intels nan memory business costs, guys. 9 billion thats what it costs sk hyninx is buying it it is a 9 billion number. This is, of course, korean giant that is buying it. The nan memory and storage business, includes the sb business, and as well the memory manufacturing facility, dalian, in china what is interesting here, you get 7 billion when the first part of this closes, which is seen in late 2021. Then the second part so to speak of it doesnt close until probably the department of justice and google are getting closer to some sort of settlement in 2025 right ive never seen that. Remember, they were final closing expected to occur in march of 2025 i have no idea. Remaining payment of 2 billion. Then they get that is where they get the ip related to the manufacturing and design of the nan. The r d employees, and the workforce at the dalian manufacturing facility thats final closing, march 2025. They never should have gotten in that business, theyre selling it the Company Reports october 22nd, people dont want to get ahead of it because amd has been taking a lot of shares, they have better chips, more chips, still intel business in terms of market share, and a lot of talk that amd is not going to buy xilinx i love how that was floated. I dont think lisa su will try to bankrupt her Company Buying xilinx. A lot of takeover Stock Traders saying, what they know something . They know something . Lisa su do you know something. I know that i was told that there is that when i if there is something, ill hear about it when everybody else hears about it. Youre just surmising that i xilinx is too dispenexpensive. I know someone that doesnt want to do a hostile takeover and ruin the stock they will behind the scenes, a price fix, and buy Western Digital. Now youre alleging there is going to be behind the scenes price fixing once the south koreans own it . Is that what you just said i dont know. Carl, he doesnt know now look, you have an oligopoly that is tightening and you see better pricing in an oligopoly. Im going to be realistic and tell you when d Ram Companies merged, prices got better. I think flash prices have been in a spiral down, hence Western Digital having to cancel the dividend and being able to do nothing in a horrible stock down 35 and i would buy Western Digital in this, though the 2025 thats just daunting look at this green look at this green everyone must think right now there is a secret deal secret deal, carl. Were all set. Alphabet is up. Doesnt seem to be a lot i told you. Yeah. Barr took it from buy to he made it into Justice Department one list like merrill has a one list. Do they use the evidence lab is the question . No, they dont they do not have the evidence lab. There may be evidence against alphabet bill barr. Poor ubs. You get them every time, jim every time there is an evidence lab. I think they like netflix, evidence lab thats thats not a show on cbs. They have like 100 of those with the stamp. Could you believe they had like evidence lab, cbs evidence lab i know. It is about analysts who recommend stocks looking at the screen anyway, i think google is fine because it is 2025 as jim says, doing pretty good here, all sectors green, including financials as the tenyear as we said, nearly back to 80 basis points lets get to bob pisani. Goldman sachs is paying 2 bill i thought that was a good price. Well said. The over was 3 bill remember, port now, didnnoy, die have it as 3 bill . Yes, he did carl, you already sent it to rick i dont know if hes there, but, you know. Im about to send to rick santelli. Hes anxious. I hear him how are you doing, carl listen, we had some important data points today, and if you look at Housing Starts and then look at the intraday of 10s, youll see 8 30 eastern our yields moved up a bit. Look at bunds, their yields moved up a bit gilts, they moved up a bit it was up less than 2 it was actually not up to expectations and we still havent gotten up to precovid levels but, and there is a big but here as diana olick pointed out, 78 of all Housing Starts, which was 1. 8 million were Single Family biggest in 13 years. Family distancing, think social distancing, post covid, that is an unbelievable dynamic and thats why that number rocked the markets to some extent if you look at twoday of 10s, youll see above 78, yesterdays highs and we traded above that a bit, thats a positive development. And if you look at threeday chart from fridays very solid retail sales, the following day we traded above that yield high at 75. Were building the problem is we havent closed above 80 basis points since june so these are very key levels to Pay Attention to as far as how this figures into other areas, we talked about the Banking Sector doing better, financials doing better, maybe it is because the yield curve is steeper. Look at a threeday of the yield curve 10s minus 2s, the steepest it has been, the widest it has been in 4 1 2 months it is 64 basis points, open it up to june, you see what im talking about, and football inae dollar index and Foreign Exchange in general have seen volatility squashed out of it as of late. We do want to pay very close attention to the euro versus dollar, gets close to the high ev closie est clio closing levels of october. Back to you. Rick, thank you very much we continue to be on alert here for the doj press briefing about its antitrust lawsuit against google potentially one of most important antitrust cases in at least a decade well monitor developments dow is up 178. Bouncing back from yesterdays losses, breadth pretty good here, not many s pers in the red. Led by financials, up 1 industrial is not far behind as the reflation trade tries to rbaco bk. Wee ck in a moment if youre on medicare, remember, the annual Enrollment Period is here. The time to choose your coverage. Ends december 7th. So talk to unitedhealthcare and take advantage of a wide choice of plans. Including an aarp Medicare Advantage plan from unitedhealthcare. It can combine your hospital and doctor coverage with Prescription Drug coverage, and more, all for a low monthly premium or in some areas, no plan premium at all. Take advantage of 0 copays on all primary care doctor visits, all virtual visits, and preventive dental care. Plus 0 copays on hundreds of prescriptions. And with renew active, enjoy a free gym membership. So call unitedhealthcare and take advantage of the range of plans we offer, including ppo plans that let you see any doctor who accepts medicare, without a referral. Enrollment ends december 7th. Call unitedhealthcare or go online today. [sfx mnemonic] jim, the reviews for the iphone 12 starting to filter out here the wall street journal Joanna Sterns saying the speeds will knock your masks off, as we say in 2020. The bad news is, to get those speeds, you basically need to locate a high speed tower, stand right next to it and dont move. Thats the story of 5g in these early innings. Yeah. Look, i would rather be early as long as the Technology Holds up and youve got these companies that are all bidding remember when john legere argued that were going to be able to build out 5g faster than anybody else i think you can build out 5g within the lifetime of this phone, i think youll have substantial buildout of 5g especially because the companies are advertising. Theyre not going to if theyre advertising broad rollout an you dont get it, youll go to another company. Thats true it is going to be a while, though lets not mislead people to think that to the point that was made that carl just read, yeah, want to stand next to a tower, youre going to get great speeds more towers available to us during our daily life the way were accustom md to ued to using our i think it will be a little while. A lot of chips automotive. That will be able to be used, but within a manufacturing facility, or in all sorts of different ways, that may be sort of earlier applications. But in time, it is going to happen and eventually we are going to be talking about a Broadband Wireless product in the home, home via 5g essential. I like the flashy to what we still call cable flashy stainless steel case i like newcorps. The largest Steel Company in america. Report this week, could be a good quarter thank you no problem. Take a break here, apple is one of the many dow components in the green were back in just a moment. At fidelity, you get personalized Wealth Planning and unmatched overall value. Together with a dedicated advisor, youll make a plan that can adjust as your life changes, with access to taxsmart investing strategies that help you keep more of what you earn. And with brokerage accounts, you see what youll pay before you trade. Personalized advice. Unmatched value. At fidelity, you can have both. More than this get to an earnings mover this morning albertsons digital up 243 , as customers stay home and shop for essential supplies online. Joining us this morning in a first on cnbc interview is albe albertsons ceovivek sankeron. Carl, good morning, good to see you. Quarter had a lot up for everything, sales up 13. 8, meng are mentioned digital, a buyback edition and you see comps for the year up better than 15 give us a picture of the environment right now, given what we know about how the grocery business has changed carl, first thanks for is that youre right its a sound beat on just about every dimension this quarter and i think it goes back to we are in the eighth month of this pandemic and starting to see some behaviors that are becoming entrenched, customers are eating more at home, theyre coming less often but shopping a full basket, making a onestop shop its centered around fresh and its centered around having the full variety in a store, and thats helping us significantly, and we continue to innovate around that and thats what youre seeing, carl. We mentioned digital. Can you give investors a picture of whats been behind at least in terms of investment behind that push that apparently i guess you would argue is now paying off thats right. Were expanding whats called drive up and go. Its the Fastest Growing piece of our digital business. So customers want to order in a store theyre familiar with, because they go in there every so often and know that its high quality product, and then they want to just have the convenience of staying in a parking lott spot and having the product brought. Thats growing fast. Were going to expand that were going to expand that to 100800 stores. We thought it would be 1,600 were going faster between this year and next year thats one the second thing were excited about is a microfull filment center and these centers are automation that might sit attached to a store that quickly helps us pick things faster so we can reduce the cycle time of the order, the time she places the order or gets the delivery or picks up. People are looking for the convenience of ecommerce and looking for it in many ways and were offering all of those. Vivek, jim. Ive been a huge supporter of your stock since it came public. Hello, jim. But i want this barclays question answered because when you get the people who lets say maybe not understand the story, a lot of people who buy the stock will be better armed share gains are not sustainable considering pricing that remains well above the competition true or false . Share gains are a factor of multiple things. I look at share xwagains not ore dollars but units. When you have good growth margins and unit share, that means something in the to remember lais working and the formula working for us is the fresh assortment you have. When you have somebody eating at home you want fresh assortment when it comes to fresh, Quality Matters and thats the advantage were seeing and were building and doubling down on it. We think its incredibly sustainable. Okay, i know youre also acquiring kings, thats my supermarket. A lot of great, fresh things at kings that are no longer really palatable in an era of covid how do you treat what i thought was really the finest part of kings, the stuff made an hour before i picked it up . I tell you why were excited about that acquisition, jim. It is accretive from day one, okay we got it for such a great multiple its accretive from day one, even where our stocks are trading. Second, we learn a lot from kings, but we can also bring a lot to kings and balcuddis, especially in the back end and the nice thing, it gives us another premium banner, like we have hagans or pavelilions and gives us banners where question learn across the company on merchandise. Its a fabulous stock in acquisition from financial and merchandising strategy standpoint walmart is an example last week where they said in communities where were starting to see a is he sur jens of covid cases, there is the hint of the kind of bulk purchasing that we saw in the early spring. Does that ring true to you a little bit, but im very hopeful, carl, we are seeing steadiness im seeing steadiness in demand, similar pattern established by our customers, and im hopeful that even if the pandemic gets worse, as we go into the fall, that there wont be that kind of a rush we saw, because it doesnt need to be that kind of a rush theres plenty of supply and were preparing for but we are preparing for it we are preparing that people might come in and want to stock up again, but were certainly preparing for the holidays, when we think there will be a lot more consumption at home than in the past sure. Vivek, thanks for being with us, as always. Stock up 5 as you can see, thats going to take you back to early august well see you next time, thanks. Thank you, carl thanks, everybody. Take care. Jim, whats on mad tonight . If i had to do a mad dash logitech is an incredible number, how they and apple tussle, and damon john, black entrepreneurship and i cant wait because i think theres much more to be done and everyone can be more lets say aware. So were going to do those two issues and this was a great show and i want to applaud the Justice Department for their incredible move to bring out value in alphabet. Jim, well see what they say, probably in the next few moments. See you tonight. All right a lot to talk about mad money 6 00 p. M. Eastern time good tuesday morning, everybody. Welcome to squawk on the street. Im Carl Quintanilla with david faber and sara eisen as we said earlier, markets trying to bounce back from yesterdays losses which were the worst since late september here, dow is up 219, s p 3455. Sara doj set to file an antitrust suit against google over its Online Search dominance. Well bring you the briefi inin live stimulus hopes, Speaker Pelosi and secretary mnuchin prepare to speak once again. Ibm, Phillip Morris international, a few of the big earnings movers to hit as we get net flick tonight after the bell lets start with google, and our ilan moye has the latest with the doj and what were expecting. The Justice Departments antitrust complaint is expected to span googles search and advertising businesses and look at the way the two have been intertwined in order for google to maintain its dominant market position now, we are waiting for the Justice Department to start a call with Deputy Attorney general jeffrey rosen, and reporters in just a few minutes, where we hope to learn a little bit more about the scope of this complaint, particularly the agreements that google might have struck with mobile phone manufacturers over preloading its Search Engine as a default setting as well as the theory of consumer harm that they are pursuing as this looks to be potentially one of the defining antitrust cases of this generation what we also do know is that 11 states are signing on to the Justice Departments complaint, all of them areled by republican attorneys general, including texas, florida, and arkansas, and already were even hearing from republican lawmakers like senator josh holly, who said that the Justice Departments suit is just a first step and that he will continue to seek legislative slup solutions to end the tyranny of big tech we are expecting to hear from the senator next week when he testifying before the Senate Commerce committee we will hear how he responds to some of these allegations from the Justice Department and hopefully learn a little bit more on what exactly their complaint will be. And allegations potentially serious here, abusing a market power, ilan . Do we have a sense yet of what they are going after as far as penalties and a resolution not just yet, sara. Were waiting for the complaint to go live in the court filing system so once we were able to dig through that, we might have a little bit more information, but obviously, from a political standpoint, what we have heard from lawmakers on both sides of the aisles is the potential of breaking up companies, of making them divest certains aettes or having a new glasssteagall for big tech those are some of the potential legislative solutions, clearly beyond the scope of what an antitrust settlement could be at this point, but right now, we are waiting to find out how the doj will be making its case against google this is out of the administration obviously and i mentioned republicans attorneys general. Where are the democrats . Have we heard any reaction and what does it mean if we get a change in power in the election in two weeks those are all really good questions, sara. It is notable no democrats so far have signed on to the suit what i have been told by two sources is that the Justice Department required state ags to sign sign a good faith commitment before they were allowed to read the full complaint i expect that means Many Democrats felt like they didnt want to sign on to something they had not read yet and there was some concern that other issues such as section 230, liability shield, some of those other ancillary concerns could perhaps be brought into this broader antitrust fold, and that would raise red flags for democrats. Of course, this does mean that democrats state ags could continue their own investigation and potentially file their own lawsuits republicans state attorneys general could still conduct their own investigation and file their own lawsuits, so this is certainly not the end of the line for google, but the Justice Department taking this step is an important and notable and perhaps risky maneuver for google itself. Alphabet stock up 1. 25 ilan, thank you. For more on googles antitrust lawsuit, lets get to our guest, an expert on the subject, stephen h. A. W. Awke former new yk state antitrust chief and lead attorney for the u. S. Versus Microsoft Case its great to have you, stephen. Good morning, i was the lead attorney for the states along with david boies i want to give him credit. David boies, okay fair enough. Lets get to the nuts and bolts in the process here. What happens next and how far away are we from a potential penalty or consequence well, i think were a long way. We havent seen the complaint yet. Im sure google will move to dismiss it unlike microsoft here, the problem from the very beginning has been the lack of consumer harms. So googles products are wellliked by consumers, theyre free, unlike the Microsoft Case, where the whole objective of microsoft was to enable itself to continue charging high monopoly prices for windows. So very different cases. The conduct apparently is going to be alleged is also very, very different, much more severe in the Microsoft Case i followed a little bit the european antitrust charges against google from their top antitrust commissioner. It looked a lot like these kind of similar allegations they also went after google for allegedly preloading the app, for instance, on certain phones, and that sort of market dominance. That ultimately led to a fine. What do you think the department of justice is after here from what i understand, the allegations may be similar but american law is very different, and just if i can illustrate how different it is for microsoft to google, i use the example of apple. So in the Microsoft Case, apple wanted to load not microsoft internet explorer, netscape navigator on their systems, they thought it was better for consumers and microsoft coerced them they threatened the consequences to apple if they didnt do that. The court said it was a threat here its entirely different apple from what i know decided on its own to load search in chrome into its system because Google Search is the preferred search by consumers, and other companies had a chance, so it wasnt something google got because it coerced apple but simply because apple let it, itself its very, very different. Stephen, what should we be looking for, what will you be looking for in the complaint perhaps to give you a sense as to the governments argument here and the weight of that argument from what i know, the arguments were fairly weak ill be interested to see what they say i think its also very striking, there are no democrats on microsoft, it was a bipartisan effort from the beginning. Doj here evidently made an effort to persuade the democratic and all republican agencies, they dont have all Republican Ags to sign on and it was a rebellion in the ranks according to the wall street journal and New York Times that the staff attorneys didnt want to sign on. So its a very bad look, coming out of the gate. Judges are human beings. They read this i think its going to be very tough sledding for doj here. Yes, this sense that the attorney general rushed it perhaps to get it out before the election correct give our viewers a sense over the time which this conseechbl of receivablely will stretch you the u out. Probably years. Like what happened with microsoft. Google has the right to discovery. The government has been doing some investigation, but google hasnt had a chance to do that so there will be a significant amount of time, you know, a year perhaps, i dont know, its up to the judge to set a time for discovery, and then there will be a trial microsoft the trial spanned six months and then the judge had to write a decision and there was an appeal, so were talking about a very lengthy process resourceintensive is antitrust law the right lever to be pulling to deal with these kinds of things in a Technology Industry which is only accelerating in terms of how quickly things change . Right, so in general, one of the things the Microsoft Case proved is that you can apply antitrust through hightech, and it is through that innovation is very fast. In fact, thats mainly how these Companies Compete, by proving their product, improving their product continually. Theres a lot of innovation and you know, unfortunately it lags a little bit, but i think the problems here are more fundamental than that. Some of these issues are likely to be novel issues and you know, the facts are entirely different. I mean, the big problem for the government is what has beenfro day one, is that theres no consumer people like the product. Microsoft for example the district judge ordered the company broken up, and it got reversed by the court of appeals and the court of appeals says there has to be a significant causal connection between whatever it is you can providence the alleged harm. Here, its going to be real hard, because people like these products and thats why they use them theyre not coerced. You can go onto android, google play, and download all sorts of competing products, Search Engines, browsers. Thats 180 degrees different from Microsoft Microsoft tried to eliminate all choice for consumers all right, so i mean, im listening to you make this argument, how its going to be tough sledding for doj well hear from them in basically a few moments, but i mean, how would you build their case if it was up to you, if you were mandated to help do that . What do you expect them to say about consumer harm in the next few minutes . Well, you know, im not really sure, because what theyll probably talk about is harm to competitors, and sort of a basic rule in antitrust is youre trying to protect the consumer under the consumer developer standard and protect competition itself and not particular competitors i will be curious. Thats been a problem from day one. I dont think its going to succeed in making the requisite showing. Its going to be tough, and im glad, actually glad im not working under these conditions, like some of the staff who are very dedicated people, and clearly theyre under a lot of pressure to bring a case and bring it quickly before the election thats very unfortunate. Thats not how we did the Microsoft Case at all. Yes, stephen, you keep making the point and this is likely to be part of their defense, that they are claiming it doesnt do any consumers harm, their products are free, the consumers like them. If you look at the market share statistics around google it is staggering, they control 87. 3 of Search Market share within the u. S. , more than 92 globally so how do those numbers then get used in an antitrust case like that, like this . Well, you know, they may or may not have high volume depending on how you define the market thats the reason theyre being investigated, and i would reply with a quote from the famous antitrust case where it was said a successful competitor having been urged to compete must not be turned upon when he wins. So its not being successful or big thats a problem its the nature of the conduct you engage in, and here i think the conduct is very different from the kind of conduct we found in the Microsoft Case. European regulators obviously operate under different rules and regulations from going after alphabet, much harder than we have here at least to date you seem so skeptical. I just want to make sure for our own purposes and our viewers, are you representing anybody in the Technology Industry were not aware of im not representing per se, but i consulted with people. Youve consulted with google. Correct on this very issue or you know, over the last couple years i have, yes good, i wanted to know that, but your skepticism would be there regardless yes, these are my own views, i should, you know, say they are my own views, so yes its getting at a question how prepared google is for this, fighting the european regulator for a while. How long do you think this has been in the works, and how prepared are they . You know, its been in the works for a while, probably over a year now, i would say, and sort of ironically, many of these same issues like preferencing for example and some of these socalled exclusive contracts were looked at by the federal trade comission back in 2012 and 13 i think. The very same issues, and as you know, the ftc is an independent commission, so unlike the attorney general, much more insulated from politics, made up of antitrust experts from both parties, and the ftc three democrats and three republicans all five found the same kinds of conduct now being challenged were not a violation of the law. Its been in the works, governments been looking at this for eight years, i would expect that google is going to be fairly prepared stephen, if you dont mind, stay with us if you can for a couple moments as we await the beginning of the briefing. Sure. Ilan moye, whether we know anything about the timing of this suit, the briefing itself its been in the offing for several weeks, 14 days before an election does raise some eyebrows the call with reporters is expected to begin momentarily pu there has been some questions around attorney general william barr democrats feel he has potentially politicized the process, and there are questions around his handling and sort of active role in this investigation which is unusual in an antitrust case. You guys had del rahim on yesterday and we to recuse himself because of a prior work for a company that google eventual lay quirevent eventually acquired. There are questions surrounding the politics of this case on capitol hill and amongst the industry itself. We will see exactly how they make their case, and i wonder if this will break any new ground in that theory of consumer harm, and how an antitrust case can be structured when a product is free that has been one of the essential questions around these Tech Companies and the way that they wield their power our consumers are paying a price whether its with their personal data or some other way well hear how the Justice Department frames that story stephen, thats a great point ilan just made this difference between consumer harm and businesses being the focus of consumer harm, when theres alleged anticompetitive behavior, and you really got to go back to decisions from Robert Bourque in the 70s, we look at and potentially undo some of that historic idea of what consumer harm means. Right its pretty embedded in antitrust law that kind of thought has been, you know, it appears in numerous report cases thats the standard. I dont think theyre going to be able to change the standard hey, ilan, can you run us through the backdrop here of how many other regulators and lawmakers are looking into either google or facebook. Clearly this is the most advanced and potentially most serious with the doj filing suit but there are so many moving parts here around facebook, amazon, apple and google thats right, the ftc is also investigating some of the major Tech Companies we just saw the House Judiciary Committee wrap up its nearly yearlong as well investigation of these companies, so there has been interest on both sides of the aisle in how these companies are using their power in todays technological framework. I think one of the interesting stories and carl, you kind of alluded to it that were going to see play out post election is whether this remains a bipartisan backlash or whether we see republicans and democrats really sort of splinter off and have different issues with the companies and the way that they might be able to address some of these issues democrats are saying theyre going to be important in combating misinformation around the election republicans are concerned that theyre actually suppressing information surrounding the election, so this is becoming as much a political battle as it is becoming a business battle stephen, these legal battles are all so different it would seem to me the ftc looking into facebooks Acquisition Strategy is this doj complaint when we hear it in suit going to set any precedent for the rest of the investigations that are ongoing . Im not sure. One of the things about antitrust law is the cases are very fact specific and fact intensive. So they really turn on the specific facts of each case. Each of these companies is different. They have different products, do Different Things so i dont think you can refer too much from one case to another stephen, youve been pretty clear, not to use the microsoft oh, i think were getting the briefing starting. Its a phone briefing we understand, led by the deputy ag, jeffrey rosen. Im going to offer some preliminary comments, and then a couple of my colleagues will do the same and then well open it up for questions so the first thing i want to just address is this morning, the department of justice in 11 states filed an antitrust civil lawsuit against google for unlawfully maintaining a monopoly in general Search Services and search advertising, in violation of section 2 of the sherman act. For years, there have been broad bipartisan concerns about Business Practices leading to massive concentrations of economic power in our modern online economy hearing those concerns, during his Senate Confirmation hearing in january, 2019, attorney general barr committed to examine the impacts the asserted concentration and Technology Markets may have had on free, fair and open competition. As a result, in july of 2019, shortly after i joined the department of justice, the department announced a review of market leading Online Platforms, with the stated goal of assessing the competitive conditions and the online marketplace in an objective and fairminded manner, and to ensure americans have access to free markets in which Companies Compete on the merits to provide services that users want one of the Online Platforms that was investigated for antitrust concerns was google. The antitrust decision has been looking at google and its competitive practices for more than a year now. In Technology Markets, it is necessary for antitrust enforcers to move promptly google is the gateway to the internet, and a search advertising behemoth google achieved some success in its early years and no bun begrudges that but as the antitrust complaint filed today explains, it has maintained its monopoly power but exclusionary practic practices harmful to competition. The Justice Department determined an antitrust response is necessary to benefit consumers. If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation if that happens, americans may never get to see the next google ill also observe that today the departments review of competitive conditions as to online digital platforms has reached a milestone, but not a stopping point we plan to continue our review of competitive practices by market leading Online Platforms, and where necessary, address those as well. Finally, i want to note that the attorney general made this case a priority within the department as did our many partners among the states whom i would like to thank for their helpful engagement on behalf of both the attorney general and myself, i would also like to thank Deputy Assistant attorney general alex aculiar of the antitrust decision and all of the men and women of the antitrust decision who have worked quite tirelessly on this case and the Online Platform competition review more generally. And i would like to add particular thanks as well to ryan shores from my office and to Lauren Willard from the Attorney Generals Office for their indispensable work on these issues id like to turn it over briefly to my colleague who is the Senior Adviser for technology industries, ryan shores, to tell you more about this antitrust lawsuit. So ryan, turn it to you. Good morning. Thats jeffrey rosen, deputy ag, briefing thepress about th doj lawsuit along with the addition of the ten state ags saying theyve been looking at the company for morning a year, calling it a gateway to the internet search advertising behemo behemoth no one begrudges their leadership position but maintains power through exclugary practices and if we dont take stock of that, he said americans may never get to see the next google. Not sure how much you learned just then. The one thing that surprised me, he said it included search advertising, which was not something that i expected in part because advertising prices have been going down, not up thats usually antitrust problem when prices are too high and he talked about future innovation the way Tech Companies mainly compete is not in price, because a lot of the products are free, but through continually innovating, and one of the risks of this government lawsuit is that it may threaten consumer access to these Free Products they find useful and use because they like them, not because theyre forced to. Ilan, we learned that the ag, ag barr apparently made this case a priority and he also said in reference to what carl said about how americans might not get to see the next google, we could lose the next wave of innovation thats clearly how theyre framing this what stood out to you . Yes, i thought that point was interesting, because theres been so much discussion about whether changing and forcing the companies to change their Business Practices could actually make them less competitive, but now the doj saying this is actually preserving competition for the next generation, so that was an interesting point. I also thought that he brought up very specifically that the doj is continuing its sort of review of Tech Companies and market power if you remember, the ftc and the doj had sort of split up the companies in this space and the doj was going to be looking at apple, so i would keep my eye on that and see if theres anything else that comes from this, but clearly google was the biggest target, perhaps the lowest hanging fruit and something that the department prioritized to pry to get done in speedy fashion before there could potentially be a change at the top. Stephen, finally want to come to you here and again, we rely on you for your opinions here, but again, you did tell us earlier you have consulted with google in part on some of these issues, but let me read to you from the complaint and just get your thoughts. The doj says googles anticompetitive practices are especially pernicious because they deny rival scale to compete effectively. They go on to say as well that they just have access to so many data and the fact that their algorithms are constantly learning which organic results and ads best respond to user queries the volume and variety and velocity of data accelerates the automative learning of search, makes their product even more powerful. Scale is the key they have a former ceo saying of google, we just have so much scale in terms of the data, we can bring to bear, and they use these distribution agreements to lock up scale for itself and deny it to others, therefore unlawfully maintaining its monopoly what will googles response be thats sort of a novel theory and a question of fact whether theres any merit to that, but the fundamental problem with it, its another way of saying google is bad because its large and successful and people like their products that comes because consumers pick their products. There are plenty of alternatives but they continually decide they make their own selection my way of thinking this is consumer choice. Consumers are free to choose other products they like the google products and the government shouldnt be intervening in this way in a free market economy. Its sort of a basic tenet of our system, very different from europe yes, thats exactly what google is saying now in a tweet, guys, reading todays lawsuit by doj is deeply flawed. People use google because they choose to, not because theyre forced to or because they cant find alternatives. It will have a full statement later on this morning. Sara with that well thank you, stephen, for staying with us my pleasure, thank you. For talking this through with us google shares up 0. 8 , they were up 1. 5 but reversed a little bit of weakness we saw premarket this morning. Were keeping an eye on the broader market, nasdaq up 0. 5 squawk on the street will be right back right back. What do you look for when you trade . I want free access to research. Yep, td ameritrades got that. Free access to every platform. Mhm, yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. Now offering zero commissions on online trades. We charge you less so you have more to invest. Welcome back everybody im sue herera nearly 32 Million People have already voted across the country. Thats according to the university of floridas u. S. Elections project. That is about 23 of the total votes cast in the 2016 election and in texas alone, more than 4 million ballots have been cast, 45 of that states 2016 total sproom court is giving pennsylvania up to three days after election day to count mailthis ballots. 44, the justices were zedlo deadlocked the debate will mute the mic to not allow for interruptions President Trump calls the change very unfair. Scott gottlieb warning the u. S. Is a week away from a big rise in new covid19 cases you can go to cnbc. Com to see his full interview with shephpad smith. Back to you. Thank you time for our etf spotlight, ticker ibb is giving up earlier game, currently trading a little bit lower in the red, had a strong run lately thanks to the highflying vaccine makers moderna in the spotlight, the companys ceo saying that its covid19 vaccine candidate could receive emergency use authorization from the fda in december depending on results, expected next month from a big Clinical Trial the stock is up more than 250 on the year and just turned positive on the session, up 0. 3 squawk on the street is going to be right back reviews of apples iphone 12 are out this morning, generally praising the hardware design but drawing attention to some of the early limitations of 5g so far cnbcs digital editor todd hazleton and tech editor of the bone good to see you. Good to see you todd, normally a new iphone purchase is complicated enough, think about the price, think about the features to what degree does this complicate the decision for the consumers folding in uncertainties how 5g is going to help most of the time these years people are buying phones for three years and upgrading. Thats why we have super cycle, analysts think well have more than 420 Million People upgrade in 2021. So if youre among those people that are going to buy a phone and keep it for three years, 5g is good, buy it, it is futureproof. On the other hand i dont want people to buy the new iphone 12s and think theyll get home and see faster 5g networks immediately. Because theyre still rolling it out around the country and there are fast pockets but you have to be in front of the tower to get in a speed and the other thing hard time getting answers for what can you do with the speed apple allows facetime hd but you can download movies but i never really complained about that before deder general review and comment about the Consumer Experience is going to vary wildly for those who actually buy it, right . Yes, absolutely apple wants us to be the super cycle. In addition to 5g theres a new oled screen, brand new design that looks really, really nice, and theres also this mag safe thing to charge it wirelessly. Put all that together and apple really does want everybody to upgrade this year i think and thats going to be a stuff call in the middle of a pandemic opinion the experience depends on where you are and funny Little Details with 5g because its a new network your sim card may not be compatible you might have to update your plan on top of whether or not you get a 5g signal. Im in the heart of downtown oakland and i dont have 5g on verizon. That could be a problem todd, ultimately, do these reviews, i mean, we love your reviews. Were kind of geeky about the electronics, but do the reviews matter for consumers or is there just so much pent up demand for new upgrade cycle that analysts are expecting strong phones either way consumer, probablying to reviews to understand what theyre getting and whether or not it works so apple makes promises or other Companies Make promises, we review and try to see if it meets those promises and give the consumer sort of the knowledge to go out and make their own decision but youre right. You have hundreds of millions of people deciding whether they should upgrade or not they might buy the phone whether i say to or not the competition is steeped samsung has a lot of great phones and googles latest phones are out, although they have tiny market share i think mainly id go back to say people will stay in apples ecosystem. They can buy the new phones because they are big upgrades and i have them here, too, but you know, its a threeyear thing, so if they dont buydono during the pandemic its hard to tell people go out and spend money although we saw in q3 the mac, iphone and ipad sales were up so people are still buying gadgets. A lot of time spent at home kids and family members who need extra equipment. Dieter one last thing. If we gave you an 11 and 12 and blindfolded you and didnt tell you which was which, would the camera, the blacker blacks, the faster speeds, would it be obvious lifs which it would be obvious to me because im a huge geek but if youre not, it feels a little bit smaller. I think its tough for most people to see the screen differences, for example a lot of android phones have a higher refresh rate so look smoother scrolling. So it is a nice bump and you will notice it but its not such a huge bump, even with 5g that i think anybody with an iphone 11 needs to rush out and upgrade. Now the race is on to monitor unit sales and the channel checks todd, dieter, thanks, appreciate it, very helpful today see you later. Thanks, guys. Wanted to pit p g, strong showing from the consumer giant today on earnings. Few metrics here that are helping fuel the stocks rise up 2 organic Revenue Growth for Procter Gamble up 9 we havent seengrowth like tha since way before the financial crisis u. S. Saw growth of 16 and china 12 . Two key markets. P g also raised its outlook for both sales and for earnings. Organic Revenue Growth in 4 or 5 , almost double the initial expectation, and also wanted to call out ecommerce growth which is changing so many different consumer companies, which grew 50 . I did speak this morning with Ceo David Taylor he told me in a world with uncertainty and concern over the virus and the economy, health and hygiene are important. The home is the center and brand choice matters to consumers. And that, he says, is why they are taking share across a number of their categories. We also talked a lot about this question that i think is key for investors, which is the future should investors be concerned that this kind of sky high growth for p g is going to slow down as soon as the pandemic fades and hopefully we get a vaccine . Taylor tells me he believes that weve developed new habits he believes there will be increased consumptioner have sincerely yours the prepandemic period around hygiene, new habits around cleaning your house. He says i expect accelerated Consumer Spending in the u. S thats what gave him confidence for raising guidance i asked whether that depends on more stimulus which could obviously help the consumer . He said stimulus or not. Stimulus, taylor says, would be helpful for the economy, get many people who were unemployed potentially employed, and help his categories in his portfolio overall but the core of the upgrade in terms of their outlook really has to do, david, with the homebased life, which is at the center of everything and the bifurcation and the way we live and the way we spend were not spending as much on air travel and vacations and on going to movie theaters and sporting events. Were spending around our home, and thats why mr. Clean and cascade sales are growing more than 20 right now its why people are paying high for oral care. They own crest toothpaste, released Premium Products that are growing really fast because theyre willing to pay up for taking care of themselves and their families during this period, something that he expects is going to stay with us tell you Something Else, sara, that investors seem to be willing to pay up for is this stock. I mean, where is the multiple . 25 years worth of earnings right now . 4 to 5 top line growth is great but i dont know if p g has ever seen a multiple quite that high. No. 25 times next years earnings puts it significantly above its historical average, certainly over the last five years and also well above the category a lot of these big Consumer Staples are getting pretty high, valuations, though the analysts that are bullish on this name and continue to be so say that they deserve it because they are outgrowing their competition, and p g started this, david, before the pandemic. Youll remember a number of changes in terms of the structure of the way they do business they got rid of that matrix structure in part because of a push from nelson peltz who eventually joined the board after a public fight they are operating on all cylinders and growing market share and putting out Premium Products and the time is right for them and thats why analysts are saying, are justifying the high valuation, but youre right. It is higher than its been and i think about 30 higher than th what were seeing across Consumer Staples that may speak more about the market itself than p g specifically sara, thank you. Take a look at shares of kohls, that stock is up after the Company Announced a new private label athleisure brand, as it plans to make activewear 30 of its business and streamline less productive categories and expand margins. Should have asked sara about that, too, nobody knows athleisurewear betert than sara eisen. 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. Top strategists, find out why trouble for the market and what it is on adgniocn. Com more squawk on the street coming up. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. Before we talk about taxsaudreys expecting. New . Twins wed be closer to the twins. Change in plans. At fidelity, a change in plans is always part of the plan. Welcome back my opinion us the impact of the pandemic selloff, defense stocks have outperformed during President Trumps years in office, but how would they fare under a biden win . S seema modi is looking into that for us the prospect of a democratic sweep has paired gains for some of the major defense contractors in recent weeks. Vice President Joe Biden stopped short of cuts to defense that increased under President Trump. He said trumps aapproach abandoned all fiscal discipline. Bernstein seize it similar under biden based on michelle fluornoy, and space, cyber, hypersonics like the push we have seen out of northrop grumman. Palantir is struggling as of late, but looking back through the prepandemic trump years, major defense stocks outbrmpled, Companies Like boeing, l3 harris, trancedigh and teledyne, worth noting as Tech Companies get bigger the overall weighting of defense and industrials has shrunk to 8 of the s p. The focus of the 2021 budget on infrastructure will be in high focus. Carl seema, thank you very much. When we come back, Phillip Morris international will ing , ocjoinusstk slower despite a beat and a raise were back in a minute underperform the s p 500 so far this year. You can see. Stock also is down right now at least in the session despite Quarterly Results ahead of what wall street was estimating joining us now on a cnbc exclusive is philip Morris International ceo. Andre, always good to have you icos is such an important component of the companys strategy 16. 4 million icos users. That includes estimated users in various stages of conversion to icos is that a number you feel like is good enough or are you disappointed in some way that its not a faster Conversion Rate what happened with the progress, i mean, we had two million new icos users in the quarter. Of course we always expect to have fast eastern better and for that, its not only produce the effort and the products on the market, but we need better alignment, i would say, and people in Public Health and also regulatory frame works that encourage the people smoke and the need to switch im hopeful science will become more evident and prevail but acceleration will happen but i have to say what happened with the progress, 29 up here to date on the volume of the heated tobacco units you are talking as well about a total industry decline of about 7 to 8 but a 200 basis point expansion in your adjusted operated Income Margin on an organic basis where is that expansion coming from, andre . Well, the industry decline includes obviously the very high confinement months we had in march, april, may. The expansion in margins and combination of the number of factors. Clearly the increasing contribution of the noncombustive products which is not close to 25 of the revenues and also, initially we add a lot of infrastructure costs to support the products and the consumption the consumers. And now the infrastructure is used by more and more units, obviously the margin improves. And we made the particular efforts and focus on gna during this confinement period. So i think its all factors possible, cost side and revenue side and i think this will continue andre, the letter last month made some peoples draw drop when you said the future in which cigarettes is obsolete is within reach we believe cigarette sales can end within 10 that 15 years in many countries can you just expand on it briefly . I mean, maybe give us a sense of which countries would come first . Well, we have countries like japan, for example, where the tobacco category and the other products, theyre none combustible products more than anything else, the absence of combustion is the big risk to continue where really youre in different category of risk so i think the combination of manufacturers more and more investing in the products and including money where their mouth is like we do at 70 expenses. [ inaudible and regulatory frame works when, you know, governments and Public Health really put this into progres progress with the demand side measures, we can accelerate the switching of products and eventually phase out cigarettes. So we can discuss a number of countries that can do that clearly certain countries like southeast arab why Southeast Asia will take more time and some of the products are not available. But the important thing to retain it is takes collaboration between the companies, the Public Sector and the private sector to achieve this change and what im saying doesnt really apply only to cigarettes in phasing them out, it applies to anything we try to achieve on this planet. I think with the right approach from regulators and i would say in certain policy, that incentivized investment of the companies i think we can get there and im ready discuss with any government in the world to get to that point. Now in the u. S. , clearly, we have one advantage we have already the fda and its very clearly articulated policy where alternatives should be made available with i would say the right evidence package, obviously. Icos was authorized as an example has the first step the second step is the fiscal policy right and some other measures and then we can accelerate there as well. Andre, we have to leave it there. Were a bit short on time today. We appreciate you joining us look forward to seeing you again soon the ceo of philip Morris International. Squawk alley is up next. 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. Keeping your oysters growing while keeping your business growing has you swamped. you need to hire i need indeed indeed you do. The moment you sponsor a job on indeed you get a shortlist of quality candidates from a resume data base so you can start hiring right away. Claim your seventyfivedollar credit when you post your first job at indeed. Com promo