Transcripts For CNBC Squawk Alley 20240712

Twitter and facebook scheduled to testify before the Senate Commerce committee on wednesday. Examine whether that content liability shield section 230 is still relevant and needed. This is one of the days in the market, im not sure what is happening in the overall dow matters so much to the tech story. April sl about flat on some promising iphone 12 order lead times. Then if you look it at the nasdaq zoom is up amazon, etsy maybe thats some halloween eagerness. Yeah, a bit of a mixed bag today, jon you have the stay at home names you mentioned. Tech broadly lower weve got that doubleheader again this week. A hearing following by earnings from the Big Tech Companies. And its interesting, looking at facebook and alphabet this month, theyre actually outforemaniou outperforming the big tech names. Alphabet is up 8 . Facebook up 7 again, we see the theme. The pressure is on in terms of antitrust and regulatory scrutiny yet, the stock prices not really reacting those are the two names that have been in focus the doj investigation into google and the expected ftc decision on facebook yet, not a whole lot of movement there, carl. And today, of course, were seeing amazon as the only, you know, big tech names up about. 3 . Zoom is the number one leader on the s p 500, kroger and amazon also helping to lead. Sort of has a familiar ring to it it certainly does this notion, carl, this idea that if covid19 infections are starting to pick up, you will see certain parts of the market that have faired better over the course of the past six months. Maybe return to that leadership roll carl, we just crossed beneath the 3400 level 3399 the last trade. The level that some traders are watching entering today is 3408. That represents the 50day average price for the s p 500. And to put that more graphically speaking, look at a year to date chart of the s p 500 what youre seeing is this area over the course of the last two months where things are kind of consolidating in this triangle zone right here. If were seeing some movement, maybe there is some case to be made that the s p 500 and at these levels is trying to find a reason to move up and down to establish a new trend. Two of the hottest spots in the nashgt we markets that weve been watching is in semiconductors and software these last two etfs are both up. The Semiconductors Index etf is down now nine of the last ten days then to cap it off, facebook and going the around social media companies. I would note that over the course of the last month, check this out look at the outperformers. Facebook is up 10 alphabet up 11 . Meanwhile, the large cap tech come Services Company like apple and microsoft not up nearly as much keerous curious to see if that continues to happen. Well watch facebook and see if that establish thats trend short term, carl will ill send things back over to you. All right what a great breakdown, dohm for tech stocks, ggb capital Jeff Richards is with us to discuss. Good morning good to have you back. Good morning. I know you have all kinds of tools and metrics at your disposal i wonder if you think were in for another round of record covid19 case growth, if were going to see a similar echo in the things that helped the world go digitsal like it did in the spring youre seeing the market predict we may have a rough winter ahead of us one thing i want to chat about is the health of Small Business in america and how do we make sure if there is a rise in cases and challenges with things like dining in restaurants, how do we make sure that Small Businesses survive and thrive this winter thats what were spending our time thinking about. How do you think thats going to work . For the ones that are still around, looking for Additional Support from the government. And they can embark on exercises that help the existing business and try to grow it. Yeah. One thing that were we created is what we call s b tech index, it tracks 23 companies that provide technology to Small Businesses in america as you know, 60 of americans work for a Small Business. Its 40 of you usgdp. We can talk about airlines and cruise lines and all these other things, 60 of americans work for a Small Business the companies that provide technology to those Small Businesses have become power houses docusign is up 196 . So the companies arming the rebels at the ceo shopify have done well this year. We believe thats in anticipation of the be tag that Small Businesses are actually healthier than people think. Jeff, the question then is how much better can they do . As i look at this morning, zoom, amazon, etsy higher. Those are all companies that have this play in Small Business as well. A lot of the stocks are richly valued given Everything Else happening in the economy, can they continue to capitalize its a great question, john a couple data points new Business Applications in america are up 40 year over year so 2019, we were in a booming economy. New Business Applications are higher this year than last year. Thats because some of the folks who were laided off in q2 and q3 started a new company. Anyone starting a company today is going to build it on technology youre not going to build a Boutique Clothing store without any Commerce Website youre not going to build a restaurant without a mobile app ordering capability or takeout we did a survey. 83 of Small Businesses in america are bullish heading into 2021 that is a much higher number than we anticipated. 93 plan to hire ledding into 2021 both of those indicators say that s p 500s are doing better than we think and the tail wind of new businesses getting created and launching on square and wix and big commerce, thats a big trend. And 575 plan to spend more money on technology. Are they going to have the access to capital that they need from banks, from venture capitalists like youre self yeah. Thats probably the biggest i would argue that is the biggest constraint in growth of the s p 500 economy in the u. S weve lost the regional Banking System in america. Theyre roughly half as many Regional Banks as they were two decades ago. So who is Lending Capital to the Small Businesses theyre using technology from companies that we back but most venture capitalists are not backing the local restaurant or dry cleaner or hair salon of getting access to capital is super important. I would say that small Regional Bank is being replaced to day by Companies Like square. Square capital lent over 2 billion last year. I this i youll see a lot of the tech providers because they got great intelligence into the health of the companies build an offering to augment the Technology Capabilities and replace some of that Small Community Banking System that we lost over the last two decades jeff, good morning. I wonder how much of the Small Business story is about fiscal stimulus as you said, as the data says. You have seen Record Number of americans starting new ventures. But how much are they dependent Going Forward on potential more government aid yeah. Its a great question. So of the 4,000 snbs we surveyed, 52 applied for a loan from the c. A. R. E. S. Act or ppp program. We thought it would be higher. We were surprised it was that low. Quite a few businesses were actually reasonably well capitalized. Of course, a lot of the Business Owners are happy to happen into personal savings that is not great. You have big tech Companies Like google that can borrow money at 0. 45 interest meanwhile, the local Small Business owner is having to borrow in the low teens. Its not a Great Dynamic as you mention, when the stimulus does run out, what happens to the 52 that did apply and did receive a loan thats a big concern for us as we head into 2021. You know, jeff, when we were all sort of getting a handle around the scope of the pandemic earlier in the year, there was this underlying narrative that big tech, the giants of our own economy, were going help us develop tools that we could use universally and try to mitigate the worst of it. I wonder what kind of grade you would give that idea and if you think that there is still hope for something to be deployed at scale from some of the giants who have or leading us in the ways of ai, for example . Well, we havent seen the sort of Contract Tracing application widespreaded option you like to see in america which does seem like a fairly strong solution so i would have to give a pretty low grade. But im a venture capitalist im always hopeful i think technology companies, you know, we have this interesting dichotomy, big tech is also under fire from the government and so there is this hard problem to solve where we love their help but were also dealing with sort of a government and business tension that has been going on now for many years even prior to the Current Administration so im syrupuper hopeful i think well figure this out. Im optimistic that Drug Companies will come up with a vaccine. And then eventually well learn how to live with covid19. If you look at northern california, weve actually had a fairly low rate of infection thats because people can dine outdoors and host gatherings outdoors hopefully well see that persist even as we head into the colder months yeah. Well, the mayor of new york city this morning is held a briefing. We thought they might talk about locking down or going remote instead, hes encouraging families to opt in to in person classes because at least a lot of the urban centers learned some lessons so far. Jeff, always great stuff thanks for kicking off the hour. Thank you more prepared than ever that is what facebook is saying ahead of next weeks election. Social media giant looks to fight disinformation well take a closer look next. Stay with us we started goodrx in 2011 because too many people in the United States cant easily get to a doctor or afford the treatment they need. Thats why goodrx has built a leading consumerfocused Digital Healthcare platform. We wanted to make shopping for healthcare as easy as it is to shop for travel or electronics. As a public company, we hope to provide even more services that help people get the healthcare they need at a price they can afford. He liction delection day isa day away Julia Boorstin has more. Facebook is exploring new ways to prevent manipulation into the week and to minimize possible civil unrest after the election the wall street journal reporting on facebook preparing to calm election related conflict with tools to spread to slow the spread of viral content and lower the bar for suppressing potentially inflammatory posts tools previously used in slri lanka and myanmar. We built new teams with experience across different areas to prepare for various sean arrows. We created new products, partnerships and policies to just pausing post election ads to ensure were more prepared than ever. The Ceo Mark Zuckerberg and the coo are involved in all the big decision thats facebook made recently around content such as banning accounts across the platforms. Some other key voices involved in content decisions include nick clegg he is former uk deputy Prime Minister and leader of the liberal democrats there. He vaz involved in the decision of the New York Post article on hunter biden. And hes drawn criticism for prior opposition to the Trump Administration another name to watch, monika bickert. She is a former krcriminal prosecutor she led the decision to block all content that denies the holocaust. Whatever facebook does in this charged environment, shiit is se to draw criticism from both sides. Zuckerberg will testify on wednesday. That hearing is on censorship suppression in the 2020 election guys julia, i wonder if the stance that facebook is taking this cycle is markedly different from last cycle i mean they say theyre better prepared than ever i dont know how high the bar is particularly for u. S. Elections where that goes. But last time, four years ago there was this idea coming out of zuckerberg to think they had influence was a bit absurd have they embraced the idea of the influence now . Yes i think actually what i would say, jon, is what were hearing from them now is much more similar to what we saw in the 2018 election, the Midterm Election its very different from what happened in 2016 back in 2016, zuckerberg talked about the importance of facebook being a truly open platform. What were hearing now is they understand that this is a platform that can be manipulated and theyre willing to take the steps necessary to try to block that manipulation. All right julia, thank you very much Julia Boorstin as we head to a quick break, going to take a check on the markets. The dow is down 700 points thats about 2. 5 . S p 500 down 2 . Nasdaq down 1. 75 . Well be right back. Tech remains under pressure. The dow down more than 700 points all s p 500 sectors are in the red. Facebook is down in todays session. Nick thompson joins us a very big week for big tech earnings also, we have that hearing on wednesday right before the Big Tech Companies report. Were going hear from the ceos of alphabet, facebook, and twitter. Nick, i know you covered, you know, the twists and turns so closely. For facebook, i just wonder, the company says that theyre prepared is that going to be enough as were just one week away from the election i think the fa account that theyre testing on wednesday shows the perils here. Theyll be accused of censorship and called in for more panels. So theyre trying to walk a fairly narrow path here. Yeah. It seems like an almost impossible task, nick. So Julia Boorstin was just telling us this time around it looks like more the way that they treated the Midterm Election in 2018 is that going to be enough and can they walk this, you know, fine line . Do they ultimately, the leadership at facebook have to choose that theyre going to either censor or deamplify certain posts that they think is misinformation or disinformation yeah. Thats a great question. So my view of the situation is that right now facebook is in an impossible situation but its not an impossible situation because of the external forces, because of the politicians who are angry at it. Its in an impossible situation because of the structure of the platform theres been a lot of Interesting Data released including a new study i just read about this morning showing that when you go on to facebook, you almost inevitably become more polarized when you go into other platforms like read it, that doesnt necessarily happen so there is something about this structure of facebook, the fact that youre connected to friends, that the amplify posts based on engagement and emotion, the structure of facebook inevitably leads to this chaos and this mayhem. So you can take the system and you can add all the measures and put a little ice on it right here and you can put another, you know, referee judging things over here. But ultimately, to get out of the buying theyre in right now, theyre probably going to have to make fundamental changes. Nick, that doesnt sound too encouraging. Were about a week away from the election youre saying they need to make the fundamental shiftsst sho short of that, nick clegg they had to break glass tools do you know what that might mean what that means is if they dont want to have this happen in 2024, they have to make fundamental changes. They wont make them before next tuesday. Are they in it good shape before next tuesday i think the tools thee created behind the break glass sign which probably is some kind of kill switch for viral misinformation, i think thats probably good. Its not a great sign of the tools they have ready for american democracy were tested in myanmar and srilanka. But here we are. I think thats stuff theyre building that julia talked about, i do think its good. It will be helpful i want to take a look at this other one and say given the year that were in and the fact that people have been voting early to such a great extent, facebook to some extent has already dodged a bullet i mean there is a lot of bad stuff that could have happened already that apparently hasnt you know, twitter has taken more flack over that New York Post story than facebook. And just as long as they can sort of get past election day itself without a big blowup, theyve done okay. Why is that wrong . I think they can do okay. I think by fighting fires and carefully deploying airplanes and employing a lot of firefighters this he can actually sort of keep the problem in control i think theyve done a decent job of that well know more in ten days but what i mean is that if they dont want to structurally constantly have to be fighting fires, they dont want to have explosions all around, then they need to make big changes for the next time. Yes, i think youre right. They have avoided the worst outcomes and done very good things how much does it matter which way this election goes if President Trump retains his Office Versus if there is a big blue wave, i guess, theyre going to potentially get criticism about censorship in one case or about, you know, poisoning the well on the other. Is one easier to defend than the other . Zuckerberg has two Interest Groups who are very important to him. One are republicans in washington theyre hammering the much more than the democrats theyll be way more upset if biden wins and facebook suppressed republican content. The other group that is more important to him are his employees. And theyre pretty much mostly democrats. And theyre going to be really upset if trump wins and it looks like the platform didnt slow down misinformation helping him. Zuckerburg is in a tough bind where he has to weigh the two Interest Groups that have divergent views. Nick, everything you said about the polarity of the facebook audience and how things are tailored to individual user and the effect on the employees, but as an advertiser sh thats exactly what i want to hear. At what point would facebook want to turn their back against the group that is giving them revenue . The advertising thing works both ways. If facebook gets lots of negative press, the employees are frustrated, ultimately becomes a less attractive platform for advertisers even if they realize they can micro target effectively what is so interesting about 2016, right, we think of it as this moment where facebook hammered stashgts hammered, started the backlash but it is also the case that the company was able to say, look, look how well donald trump used our platform to find donors, to find supporters. These tools work really well it was an incredible advertisement for facebooks advertising platform so it is true that there are some political outcomes that can lead to employee backlash and bad press and actually look good to advertisers again, zuckerberg has to weigh all of the different factors when choosing whether to change things right i guess the question then is you believe that there are some advertisers who take into account whether or not the Employee Base at the platform is happy or unhappy or whether there are a significant number of social things as a Small Business person, im not sure i care about that stuff at all no advertiser actually cares, you know, first order effects of employees being satisfied. If the employees are dissatisfied, the best employees leave and the quality of the tools can go down. It is also true that there are many large advertisers who look at the press, right . We saw the boycott in july where many large advertisers pulled money. They all went back in in august and it was a warning sign that if there is enough negative press about privacy, about racism on the platform, it can pull away some sector of your advertisers. Again, not the mom and pop auto store which make up the majority of facebook advertising. Nick, google has been able to stay under the radar at least relative to facebook and twitter when it comes to accusations of bias in article 230. Does that continue past wednesday at that hearing . Do you think that theyll be in for some due heat . I think that they probably avoid much of it they dont have a social network that amplifies extremism in quite the same way as facebook and twitter. They do have youtube they also have done a lot of work to make sure that misinformation and fake content doesnt spread as quickly on youtube as did it two years ago. But at the same time, google is under less pressure for election manipulation and way more pressure for antitrust so maybe it is going to be okay on wednesday but you got, you know, bashed in the head last week hes having a tough month as well yeah, he is as we noted at the start of this programming, both facebook and google are relative outperformers this month but you just said did you say that youtube has done enough to combat misinformation . Or maybe not enough but more than the others . To me, it really feels like google and youtube are lagging well, okay, so theyve been lagging in the public statements so youtube is much less clear what youtube is doing. There is a lot more drama and conversation about facebooks policies and twitters policies. But if you go on to youtube and search for conspiracy content and do it now and compare it to a year ago, theres a huge change and they really put a lot of effort into reworking the algorithm so there is less conspiracy content so it gets downgraded also because youre not connected to Friend Networks in the same way on youtube, obviously the algorithm is taking into account what you looked at and search for and Everything Else. Because youre not connected in the Friend Networks, there is a tendency for viral miss information to at least not have that vector of spreading which i think is useful for youtube during an election like, crazy election news probably wont spread quite as fast on youtube as it does on twitter and on facebook. Okay. Interesting perspective. Nick, thanks for being with us today, Nick Thompson thank you thank you for all great questions. You can see that the s p 500 laggers there, Royal Caribbean is the worst performer at the moment shares down. Going to take you back to at least a twomonth low. Were watching all this today. Stocks under pressure here. The rise in covid19 cases, carl, in the u. S. And the new lockdown measures being introduced in europe sending cruise stocks lower. Theyre down by 8 to 9 were five days away from the no sale order sail order is going to shift they have taken a more cautious approach they pushed back the start date to december 1st. The need is to bring back crew members from overseas to florida. Even with the new protocols being put in place, some analysts dont see the cruise lines returning to sea until 2021 well get more clarity on that front when Royal Caribbean reports results this thursday. There is also an active discussion being had about whether a biden win, what that could mean will the white house listen to the cdcs recommendations more so than the Current Administration and if so, what could that mean for the cruise lines and whether this no sail order is delayed once again. Watching royal here now down nearly 10 carl all right thank you for that Dave Rosenberg joins us, Research Founder slated to join us earlier we got him on a little bit of a delay. Good morning to you. Good morning, carl. So the price action today, do you see it being related to just election jitters is it curfews . Europe is it stimulus talks running a bit dry here or Something Else its really all of the above. I mean, lets start with the stimulus you know in, the past month weve had eight different sessions where the dow moved 300 points or more on stimulus talks. It looks as though were not going to be getting the stimulus at least not that quickly in terms of what was being priced into the market. You know, your point about the politics, i mean, i think that what got the market really excited the past couple weeks is the sweerense were going to ge blue wave and with the blue waive is 3. 5 trillion of stimulus and, of course, we all know what that means for the stock market so this view there is a clean sweep, its no the that evident. At least not right now and so we have to face it, you know, waking up this morning, you know, you see the coronavirus getting worse everywhere but i really think it was the lockdown thats were seeing in parts of europe. I think thats making investors really nervous here. Right right. On treasuries, how should we be thinking about them right now what is that saying about yields the next 60 days the next 60 days, i think were going to be where weve been the past 60 days which is in a range longer end of the curve. Of course, the front end is anchored by the fact that the fed is not going to do anything. But i think were in a range on treasuries i think that, you know, you get up towards. 8 and appoint appoint 9 in the ten year, its a buying opportunity you get to. 5 ,. 6 , were at a point you want to trade at on the short side but i think were really in a range. I dont understand why people think that were going to go into a bear market on treasuries i mean, here we were heading into the recession this is back in january. The ten year note was sitting at 1. 5 before the recession with the Unemployment Rate and coming off a trillion dollar fiscal deficit i dont know the size of the deflation airy cap we have, its going to take reoccurring rounds of stimulus to close that gap any time in the next few years there is no rate risk coming from the fed there is really a limit, i think, unless we get real strong inflation. So i dont know. I think that at worst im bullish on treasuries. I think that, you know, at worst agnostic after a 20 point basis move, think about that we had the ten year note yield move up 20 basis points so far in october up until today we have 50 of those. Theres lots of reasons you want to have bonds in the portfolio bonds act as a balance the beautiful things about treasuries irrespective of how low the yield, is its the only security around on the planet where you know with certainty where youre going to get paid upon maturity. There is no default risk or earnings ris n earnings risk in the treasury market dave, i want to go back to something you were touching on before people tend to come on and tell us that divided government is good for investors, are you saying that because of stimulus a biden win and a blue wave is better than a biden win and a gop keeping the senate look, i think that if the premise is that were going to get some really big stimulus that provides impetus to aggregate demand, if youre of that view, then a clean sweep by the democrats gives you a lot of stimulus thats going to happen i this think at the margin you argue thats good news for stocks and cyclical stocks if we get the vaccine. And it would be not so good news for my bond call near term when these people that say well, gridlock is good, i dont think history is going to be helpful for you as an investor when you consider that were in such a totally different political climate. History in the sense with only take you so far. I refuse to believe that gridlock is going to be good gridlock means no stimulus at a time when we have a huge deflation airy output gap no matter how you measure it. I think the economy actually needs the stimulus so i think a divided government this time around, when you consider in the old days, look, reagan passed an epic tax cut in 1986 you see back then, we had reagan democrats. What if it we get a trump win and the gop keeps the senate if we get a donald trump win, i dont see how the gop doesnt keep the senate. Doesnt pelosi then have to back down and do a deal well, i think that, look, the i think you still need the senate as were already seeing we could see, you know, the question is, you know, where is Mitch Mcconnells realign . And what sort of will there be 60 votes in the senate . The senate Still Matters here. So i would say that, look, if you get a clean sweep by the gop, were going to get stimulus but its going to be the thin stimulus its not that 3. 5 trillion heroes be act. Its going to be more along the lines of what mcconnell wants or something maybe in between youll still get stimulus. Yes, youre right. But less than what the market was hoping for when visions of a blue wave is coming to the fore in the last week or two. You get stimulus, yes. It will be light david, you know, the selloff today is so broad. You see the big tech names lower. We have them reporting this week and they really led the markets high they are year making 40 of the s p 500. How much is riding on how they do this thursday when you got facebook, alphabet, amazon, apple, all reporting you see, the Growth Stocks have command such a large share of the market that, you know, if they go down, there is nothing the value stocks do to make up for that so takes the overall market down as well. But i would say, look, you know, even for the people that are hoping for a return to the normal, you know, the precovid19 normal is still low flags, low growth, low Interest Rates. And thats still fodder for growth of foremaning value i say, yes you know, the Growth Stocks right now, id say, look, this is not somebody that is a permabear but im a bigger advocate for the value stocks. The problem with the Growth Stocks is theyre overvalued if they come to more trafkt leve attractive levels, thats still the area you want to be in right david, speaking of the stay at home stocks, i mean, todays selloff has something to do with the rising Coronavirus Infections that were seeing across the country today when you look at the names, zoom video is higher. A lot of the other names like shopify, data dog, twilio, theyre all down what does that tell you about this especially if were heading into were in this second wave were unlikely to see the kinds of lockdowns in this country that we saw earlier on in this year is that right . Yeah. I dont think were going to be seeing lockdowns i dont think that i think there is some concern, obviously, you have a price things in at the margin. I think people are surprised this is happening in europe right now. I dont think were going to be seeing lockdowns in the u. S. Look, the reality is that the recession started in february. I mean First Quarter gdp was negative 5 annualized consumption was negative 6 . This is before the detonation in the Second Quarter you see before the lockdowns, people themselves were already starting to adjust spending behavior now weve had tremendous stimulus i mean, i would say that gdp in the third quarter, believe it or not, would still be negative if we didnt have the leftover stimulus that is really fueled into Consumer Spending we dont have much of an outlook Going Forward. My sense is i still believe were going to be in a low Interest Rate low inflation, low growth world for an extended period of time i dont think anything from that has changed. I think that a lot of the Growth Stocks are overvalued. Priced for too many good us in once the valuations get more trafkt, i think thats going to be the place to be now if you have a different view if you believe that a vaccine is going to change the world is coming around the corner, were going to have inflation, were going to have accelerating growth and a massively steeper yield curve, the fed is going to have to raise Interest Rates the Value Proposition is going to take over to me, thats a doesnt mean you dont get a trade off that every now and then like weve had the last couple weeks, a trade is not a trend to me the trend is going to be in the Growth Stocks right now everything is thrown out. The baby is thrown out with the bath water the growth proposition today is doing better than value. But the point im making is that what is undermining the Growth Stocks really is there is too much good news priced in thats a problem i can live w once the valuations get more attractive, you can go on a buy and the better prices. Value needs the assumptions of inflation, growth, and Interest Rates to come to fruition. And you have to ask yourself the question, we had massive Infrastructure Spending over the last cycle we had huge tax cuts under trump. We had lots of talk about inflation. And, yet, you look at most of the last cycle, what outperformed, growth or value . Why is that . There is a lot of structural factors. Demographics being one of them excessive debt loads another one of them. Low productivity because we had no capital being another one of them that is holding Interest Rates down and Holding Growth down that is not going away any time soon so structurally, growth, if you have a longer time horizon is the place to be until that day we get the inflation, get the str rate cycle and get accelerating Global Growth right now the only place you have accelerated growth is really in a sustained basis is china. So maybe if you want to do a value trade in china, thats what you want to be focused n. I say as far as although, david, yeah one last question on households. I can already hear people trying to rebutt arguments about weak households with the notion that consumer sentment didnt collapse housing is on fire they have a big nest egg from the transfer payments. Saving rates are up. How long do you expect that to be an active ingredient in, say, retail sales look, most of the stimulus checks that had the lagged impact are already through the system i think that, you know, tend of august i estimated 75 of the stimulus was spent were close to 100 at the end of september i think that youre going to be seeing i think youre seeing it in the survey numbers on the Holiday Shopping season are looking really, really bad so i think that the consumer and especially when you take a look at the fact that Employment Conditions are softening, i think were in a more elevated period of precautionary savings. Its tufd fough for me to beliee that consumer is going to carry its weight here without additional stimulus. Housing side is a shift from multifamily to Single Family everybody is doing the calculations and seeing rent against mortgage payments because wrf Interest Rates are look, youre rending before. Who wants to be in inner city in a condo on the 20th floor with no balcony so everybody is flocking to the suburbs. They want a bung ga low with a backyard low Interest Rates helped out that calculation on housing. Housing to some extent, when you think about it, there is a lot of companies and sectors that benefitted from the pandemic one of them is housing of course the other is stay at home or work at home anything as far as wiring up the house as part of your Office Anything with out the characteristics related to the house including home renovation. Income growth is double what it was before the recession which never happened before because of the government payouts thats why the stimulus is so important. Without that on going source of support for incomes, where does that take the consumer unless you think the savings rate is going back to writ where it was precovid. Given the had istorical behaviors. David, glad we have time good to talk you to. Thanks so much same. Take care. Meanwhile, casino stocks down between 3 and 5 this morning the dow is putting up losses was down more than 700 now its down around 670 points, just shy of 2. 5 Contessa Brewer has more on the selloff. Jon, the casinos here, im looking, it looks like all of them are posting losses greater than the broader market. Caesars down 4 . The wynn, mgm, penn is off 4 as well and look at wynn is down 5 this year draftkings down 5 resurgent covid19 infection simply are not good news for casinos. Which face the threat of reclosure or customers staying away to avoid the rising risks so certainly caesars, mgm and penn have widespread exposure throughout the nation with the regional casinos if covid19 shuts down professional sports, its bad for the bottom line and youre seeing that reflected in the draftkings stock and all of the Casino Companies one more note here Las Vegas Sands which had gained some share price last week on its Earnings Call talking about the resurgence of visitation and just the last week or two in mccow. Its down today as well. Looks like down 3. 3 the were not seeing quite the ramp up that analyst has been expecting to see in mccow. But certainly Las Vegas Sands had injected optimism there. All right con t contessa, thank you. S p 500 is one of todays biggest losers, shares of that company are tanking on news of the disappointing q3 results and lowered guidance wiping 35 billion off the market cap heres what saps ceo Christian Klein said earlier today on cnbc europe as the ceo of sap, i have to be focused on the long term valuation of this company. I cannot trade the success of our customers and the significant revenue potential of sap against short term marginal optimization this stock is down 23 at the moment there is just bad news across the board. Total revenue was about flat in constant currency. Cloud subscriptions and support was below consensus. If you look forward to the guidance, the guidance came down in cloud in cloud and software as well. So given what weve seen with salesforce and some of the other cloud names actually surging ahead and outperforming in this period for a legacy player like sap, which like many others has tried to position itself as doing well in cloud to turn in results like this, well, thats not going over very well no. Of its not a great way to kick off such a big earnings week when were going to hear from a lot of the other cloud players but, you know, you have to ask how much is sap a barometer for other businesses this is a legacy name. Reminds me of ibm trying to transition the business to be more reliant and take advantage of the cloud well hear from microsoft, alphabet and amazon this week. I think youll see strong numbers from their cloud businesses but of course, carl that, transition for them happened a lot earlier on so, you know, i dont know how much investors should read into this but its certainlynot a good indicator for the week ahead specially when we see markets sell off like this yeah. And often when we talk about that, we talk about it in terms of hardware but to some extent its legacy and i think the question that these sap results raise, dierdre, is to what extent have Companies Like sap, like ibm, like oracle made a real fundamental transition to the cloud thats going to allow them to see continued growth and healthy margins, even as perhaps their legacy businesses deteriorate or flatten or to what degree have they bolted on this cloud story and its not real and perhaps, you know, as the tide goes out here, were going to start to see a little bit more than we would have seen otherwise. As we ponder this, lets bring in job lipton who covers tech for us out in san francisco. Josh, what are you hearing whats your take on sap and how it fits into the broader narrative . So its interesting, i was just talking to j ps patrick wallraven. The bottom line is he thought things would get better with the pandemic in europe, as such corporations would start to feel better, would feel more confident. Instead we see this threat of new lockdowns as though covid19 infections surge, no doubt corporations feeling more cautious and so theyre tightening those budgets so patrick says what you saw here was that the sap really took a hit remember, of course, they also run travel and expense management and that got impacted here patrick says he maintains his outperform on the stock. Hes still a believer here he kind of breaks it up in a day one, day two themes. Day one meaning right now youre seeing a lot of cloud soft area names clearly benefiting were all working from home, we want to work from home securely. You have seen investors playing that with names like zoom, like cloudfare, like docusign when corporations feel like they want to spend more, he believes youll see that followthrough with other names and he bets like sap with a big new product cycle on the way, a tough day but still theres some bulls out there, guys. Yeah, tough day is an understatement, losing nearly a quarter of its value josh lipton, thank you john, one other thing we should mention about sap as well, a lot of its business is tied to business travel, the sap conkur, another reason you saw them not meet expectations and the biggest ipo that could be takes place and that is ant group, nothing small about it. Bankers were reportedly rushing to get it out ahead of potential election volatility but due to some approval delays, you will now see that go public likely just days after the u. S. President ial election. Overnight we did get pricing its going to be raising over 34 billion in total priced at 80 hong kong shares. This gives it a valuation of 313 billion again, this is largest ipo ever. We can take a look at some of the other ones that came close alibaba, 25 billion this is just massive what a time to go public john, takes a look at its valuation based on pricing last night, that 313 billion makes it bigger than many, many of our u. S. Financial institutions, including all of the big five banks, jpmorgan, trading around 313 billion market cap. That is a monster. Well see how it does. Microsoft, adobe and c3. Ai are taking on sales force in the crm space. Joining us is tom seibel, seibel and crm are joined in the minds of people who do know tech how big of a deal do you think this could be . Its a big deal whats been going on is microsoft and c3. Ai have been working very closely with new customers around the world and our customers have been asking for a new generation of crm that takes advantage of the full power of ai. Microsoft had a very close relationship with adopey adobe so we put our efforts together for banking, for telecommunication, that take advantage of the full power of artificial intelligence. The product you pioneered is still out there. And salesforce is no slouch. We expect them to answer what is it that you at c3. Ai are bringing ingredientwise that will be hard for others to match . What were doing with microsoft adobe is creating the next generation we have created the next generation of crm basically through innovation whats going on at salesforce today, its a fine company, theyve done a great job with the crm market, but theyve been growing not through innovation but through acquisition. So theyve been going through acquisition. If we look at the Underlying Technology of salesforce and sales. Com, it might be 2002, 2003 technology so its a coupling of decades out of date. What do you think it says about this environment that were in where earlier this year we expected it to be so tough for text and for startups, it has not been as tough as expected and m a is on tire. M a and Technology Markets are on fire, particularly as it relates to digital transformation, transformation, ai, anything like that. When we combine the marketing reach of adobe and microsoft, this is an order of magnitude larger revenue than salesforce i think we have a very credible offering and i suspect that i wouldnt be surprised if we dont establish a leadership position in this new generation of crm, which is all about artificial intelligence. Looking forward to seeing what you do and how do you tom siebel, thank you. Guys, we continue to watch the markets. Its been quite a morning so far. The dow still down not quite 700 points so off the lows of the session, down almost 2. 5 , the s p down just shy of 2 , the nasdaq 1. 5, carl all dow components in the red, john. Friday we were talking about how some of the earning stories have been at laggards of the week i will say this morning, the few stocks that were able to hang on to the green are names that are going to report later in the week, like starbucks, et cetesy apple. And it will be all about the Holiday Shopping season. Are consumers going to get out there and continue to spend money with the lack of any stimulus and is fulfillment capacity in order . Thats going to be a key question, carl especially with some of the logistics carriers like fedex and ups told us is the Holiday Season will be capacity constrained and you might want to budget additional time to get the packages to where theyre going. For now lets get to the half back at hq im scott wapner. Front and center the selloff in stocks, the virus surging and stimulus fizzling. Joining me are joe tearnova. We do begin with this drop for stocks investors grappling with the rapid spread of the virus. The election is looming. Mega cap tech earnings this week, there is your market picture. The dow is down 733