Transcripts For CNBC Squawk On The Street 20240712

And as andrew was talking about, with mr. Lansdale, big tech will testify. The ceos of facebook, alphabet and twitter will face questions from a Senate Committee this morning. We, of course, will bring that to you carl guys, a lot of jitters, jim, this morning, as to what macron may say later on tonight, european time. Your point on social media has been this premarket weakness is not about the earnings themselves. Right look we would be in a stay in place order if we adopt what merkel is talking about. We have never been on the same page as merkel when trump came in she is more rigorous about hygiene and about masks and social distancing than our country is our country is not the way of germany. I would say you see chicago close, all the dining places, and restaurants and start thinking about travel, leisure, hospitality, it then bleeds into boeing we have this morning and i think it is impossible to think about boeing without thinking about once you get there, where can you go . I think thats what we face, which is there is no place to go, might as well stay at home, nobody is paying us to stay at home, like we did in march now were staying at home and we got nothing to do other than play Take Two Interactive and Sony Playstation Sony Playstation numbers i didnt like very much. Thats where we are. Not great. Not great. Yeah, im here. Im here im listening to you market is not great either rough week thus far at least, jim. The question becomes, though, we have been through this before. How much of what is coming is already reflected in stock prices at this point are we going to see the bifurcation of the market, companies suffer from stay at home and those that benefit. Yes i think we go back to the five bull markets ive been talking about, 5g, digitization, hygiene, home renovation, and cars we need them, because we have to go places and we cant use Public Transit and then we revert the question is do we revert to campbells soup . Can we include campbells soup and cocacola in the list, like we could in march and april. The answer is after the blast zone today,you usually have a stabilization tomorrow and those groups will should work but we do have the wild card of the election all these themes transcend an election even an election. We have the wild card of the election, well continue, of course, to focus on vaccines and therapeutics and every data point we get, when were going to hear from the pfizer trial, information yesterday during the Earnings Call. And what else we get that would certainly seem to be Something Else getting that data or even hearing the positive things which we hope and expect will be the case doesnt mean that any vaccine will be widely available anytime soon but given the potential of lockdowns and some of these countries that were talking about, whether it is germany or france, and what were seeing here in terms of new highs and so many states one would anticipate that will continue to be a focus for the market. Look, a grooming market does not mean a market you have to sell microsoft, that was one of the cleanest beats ive seen in a long time. Expectations were for a very clean beat the fact that they could have said anything they wanted in terms of prediction forecast isnt dawning on people at all the stock did a big uturn i think thats wrong can i buck the market and buy it no, the market is putting microsoft on sale. I get an opportunity to buy it it is a remarkable quarter whether it be gaming, whether it be azure, whether it be linkedin, windows, which is now less than azure, i dont know, i like microsoft we have to deal with the fact that the gloom is pervasive, you dont buy gloom the first hour that doesnt make any sense. Yeah. Well get to some other calls today, jim, including one for Morgan Stanley about why these phase three events in their view are coming along slower than expected as you said, earnings are a big piece of the story today we talked about microsoft. Boeing is another one and phil lebeau joins us with a very special guest. Hey, phil. Lets bring in dave calhoun, ceo of boeing. You just reported your Third Quarter earnings, dave another massive loss more job cuts are coming are you more concerned now than you were lets say three months ago about the state of the Airline Industry and potential recovery over the next couple of years . Good morning, phil. No, im still quite confident in the next couple of years there is no question that the second wave as it hits the United States and europe is taking a toll. And we will not finish the year as in our Airline Customers will not finish the year in line with their early expectations they all believe they would be somewhere in that 40 to 50 of 2019 traffic as we cross the finish line this year. I suspect it will be closer to 30 to 35 . Thats true both here and maybe even to a greater extent europe. And then the flip side is asia asia seems to be coming back and has almost recovered its 2019 schedules. Dave, you guys have announced youre going to be cutting about another 11,000 jobs by the end of next year essentially eliminating 18 of your workforce if you go back to the beginning of this year all the way through the end of next year are you in a position yet to say, i think thats it, i think we will have right sized the business at least the commercial airplane business by then . Well, im very close to being right about that i will never just draw a floor on the other hand, we have to make the adjustments that we have got to make our production rates will hit their low, the same production rates that we have described previously will hit the low the midpoint of next year. So those gradual reductions as we move rates down will occur over that period of time i do believe those rates are appropriate knowing everything i know and based on every latest conversation with airlines around the world, so, yes, im confident that forecast we are that were handing out today is conservative, a forecast we can live to. I also believe by the end of next year there is a chance the psychology with respect to the virus, if provided a vaccine shows up somewhere over the course of next year will be very different. And im hoping that the recovery comes sooner rather than later. You guys have made it clear that you will pull other levers if need be you expect to need to pull any more levers this year over lets say in the next six months well, dont want to predict that the 25 billion we raised based on the world we see ahead was an appropriate number and a good number and it remains adequate for us to deliver on the plans that we have ahead of us but having said that, we will stay conservative on this front. Liquidity is the metric of the day for the travel industry and for boeing and we have to keep our eyes squarely focused on it, stay conservative with the balance sheet, make sure we have got enough so when the turn happens, were ready for it, and we can respond to what i think will be ultimately a robust Recovery First question. Do you think that the max is the most important thing facing boeing or do you think it is liquidity . No, it is always been the most important, the two are perfectly related. The max has cost us a lot of money and we have had to sort of up the ante with respect to liquidity to make up for the fact that we couldnt ship the worlds most popular airplane. We are getting close to the finish line with repicture speco certificate fight the ma certifying the max i think were at that moment im not going to predict by day or week, but Fourth Quarter i believe we will be in recovery mode with respect to the max and i am very proud of our team and im very proud of that airplane it is a remarkable machine and it is as safe as anything in the air. Why is it possible that people do not understand the narrative that airplanes are safer . Yesterday we had a terrific study come out of Harvard University talking about gate to gate experience and how it is certainly safer than going to the grocery store, going to a restaurant and yet 19 people is what we understand you could argue have gotten covid since it started in airplanes. People wear masks. There will be testing soon i keep hearing the same thing, who the heck would want to get on a plane why is that the narrative and not the correct narrative . It is not the correct narrative. Youve been pretty well ahead of this, this whole subject with respect to travel. It is an incredibly safe environment. That cabin experience is probably as safe as anything any enclosed space you can imagine. Boeing did its study and, remember, we designed these cabins so that they are refreshed. Every two to three minutes, every all the air in a cabin is refreshed it is run through a hepa filter, same thing that filters air in an icu even if youre sitting next to somebody, it is the equivalent of being seven feet away from them and with the protocols the airlines have now called out and require with respect to masks, it is a remarkably safe environment. So the word is getting out between boeing study, the iota announcement, and now the harvard study, they have all said precisely the same thing. It is an incredibly safe environment, compared to a grocery store, i think you choose the in cabin experience last week we heard from Southwest Airlines and gary kelly, he was right here on this show, after they reported their q3 earnings or loss of the Third Quarter, all the airlines reporting losses and during the analyst call, he came out as did other executives at southwest and said were interested in a smaller single aisle airplane, whether the 737 max 7 or potentially the airbus a220. That has people saying is it possible one of your longest most loyal customers might go to airbus how do you convince people that you will keep southwest in the family well, first of all, i cant remember a single deal or competition at any airline anywhere in the world where we werent facing a direct competitor so were doing that again here at southwest and we are going to put our very best foot forward and were going to try to win in every way we can in the meantime, well support southwest as you said, the majority of their installed fleet for a Long Time Coming is going to be boeing airplanes we hope it stays all boeing. Well compete to win it is in garys court to maybe t make the decisions we are confident we have a competitive airplane to offer. You have a number of airline that have indicated theyre not ready to pull the trigger, but theyre starting to look at the other side of the pandemic, when they want to have the freshest, most fuel efficient fleets available. When do you start to see those orders or those commitments start to come in are we looking at six months down the road, do you think it might happen sooner than that . What is your sense there is a psychology here. And i believe a vaccine is central to that psychology and if i look forward, at least relative to our original prognosis of three to five years, the vaccine by all accounts seems to be way ahead of where we imagined it would be we guessed it would be sometime in 22 or 23 based on historic developments for vaccines. If a vaccine comes if a vaccine begins to be distributed globally in the first half of next year, i think by the second half we have a whole new psychology and in light of the incredible number of retirements of airplanes that are going on as we speak, i believe that recovery will be quite robust. I cant predict a month or the day but i do believe it will be robust and then the challenge for the airplane manufacturers is going to be to respond to it. Silver lining for us is we have got a big inventory of airplanes. I wish we didnt, but we do. And ultimately when this recovery comes, we believe were going to be advantaged in satisfying it. Quickly, dave, what are you most concerned about when you lock at the Global Market right now . Is it europe, here in the u. S. And the coming wave of cases that many are predicting with covid19 thats a great question honestly, europe is my biggest concern. And really relates to the entry protocols and quarantine requirements that are getting called out from country to country to country here in the u. S. , we have a little bit of that and it worries us, we want to make sure whatever happens is what is very consistent. In europe, those protocols are going to be tougher. So we are lobbying alongside the airlines, and other institutions representing the travel industry to get some consistency, to make sure that testing is the right level of testing, and ultimately to quiet down or dampen down the number of quarantines required for the flying public. Europe is a little more of concern to me than here in the u. S. , though when youre talking to levels were talking, i would be crazy not to say im concerned about all of it. Dave calhoun, dave, thank you very much for joining us this morning on squawk on the street. Carl, you heard from dave himself. The concern is how do you manage this pandemic in terms of eventually getting people back in the air, visiting places and europe right now as you know with the quarantines over there, it is a mess you talk about the Airline Executives about europe and none of them are optimistic right now. Phil, thank you for bringing that important interview to us as you said, europe is definitely on the front burner today. Phil lebeau in chicago well take a break and get to some of the earnings movers of the morning, including ge and mastercard, u. P. S. , microsoft, raytheon the social media ceos in front of Senate Commerce today on section 230. The dow looks to open lower by 600 points sales are down from last quarter but we are hoping things will pick up by q3. Yeah. Uh. Boss doug . Sorry about that. Umm. What. Its. Um. Boss you alright . [sigh] [ding] never settle with power e trade. It has powerful, easytouse tools to help you find opportunities, 24 7 support when you need answers plus some of the lowest options and futures Contract Prices around. Dont get mad. Get e trade and start trading today. Looking at premarket weakness today, futures lower as we start this wednesday coming off a three day losing streak for the dow and markets at three week lows. Jim, not just about futures. Tenyear yield, twoweek low, everyone is flocking back to the dollar oil is down almost 6 . Glad you mentioned oil. One of the themes, well speak to ge later, one of the themes of the quarter is the rather dramatic fleeing from oil, not just by investors. By almost every company i deal with these Carbon Neutral declarations, theyre real and i think a lot of people are coming to grips, a lot of Portfolio Managers coming to grips that it is not an idle thing to go Carbon Neutral 2030. The way to do it is to cut out oil. I think that oil is ive been beating this drum that it is uninvestable when i look at the quarters, one thing that is going in every single earnings report, every report is how theyre able to get out of oil faster than others thats not an environment where you can own an oil stock. It is not barring the pandemic, of course, that we have been focused on for obvious reasons the last several months, i think we would be talking more about esg and the mandates on allocated capital coming along with it and its growth and importance and to your point, jim, it is not Just Lip Service at this point for many of the corporations that put out when theyre going to get Carbon Neutral by, it does seem to be something they are potentially more committed to now. And it is very important it shows up obviously there in terms of oil, but so many other areas whether it is diversity and inclusion, pure governance, so many different areas where corporations certainly seem to be moving more quickly and more aggressively than does certainly the National Government in dealing with some of these issues because they feel like it is in their best interest to do so, based on what theyre hearing from their shareholders, customers and their employees. That said, when you got germany and france starting to go, i dont know if you want to call it lockdown or whatever, see the tenyear bund yield at negative. 63 you can understand why demand may be coming down again or concerns. They have the madrid rules you cant go out my daughter lives in spain and the rule is that you you get a day youre allowed to go out and thats it. And thats where i think europe is going back to it is not an environment where you want to get on hop on a 737 max, go around, maybe buy a euro pass. No you cant get off anywhere yeah, jim it has nothing to do with restrictions either, just consumer decisions at this point, sort of what is driving some of the caution. Well take another break here. By the way, we mentioned ge, well talk to larry culp about that surprise profit later on this morning what if you could have the perspective to see more . At Morgan Stanley, a global collective of thought leaders offers investors a broader view. 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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. We have three minutes to go before we get an opening bell. For what is going to be a volatile session, one that will be down. We heard from boeing, of course, a big defense contractor still as well. 30 . Last night you had we didnt talk defense at all with mr. Calhoun, last night greg hayes on, a guest we always enjoy having here as well. Rtx has not performed well, a feature on your mad dash. Look, greg hayes on last night, and he is very, very bearish on the airline business, which obviously is incredibly important. Maybe not coming back for three years and theyre furiously trimming, trying to get down, just like ge is, just like boeing is, theyre all trying to cut 20 of the workforce what he said to me is interesting, what are you going to do . A year ago you were going full bore, you were trying to hire everybody to meet the demand, and suddenly demand is full stop and thank heavens for defense and one of the things he did remind us, we have the election, democrats support defense in the same way that republicans do defense is the savior here because 70 billion we are in a strange world, david, where china is no longer just a considered to be in washington an industrial rival. It is considered to be a country that we have to worry about in terms of being an actual not cold war i dont want to say hot war, it is not believed, but, david, i got to tell you, under trump, there is a belief that everybody has to be armed who is our friends and that is the savior of that company. Yeah, it would seem to be and as you say, china very aggressive in the south china sea, unclear where that goes probably nowhere good. I was waiting for you to ask about the hvac division and elevator division. Both have done very well since they have been since they were separated. Just fantastic quarter, even versus a summer session where they were talking about maybe not doing as well. There is a lot of companies that are doing well and theyre all being, id say, blotted out by stay at home. And i think that when you look at what raytheon has to do with boeing, you look at what ge has to do and what later honeywell, what they have to do, it is ugly the stimulus, all those people will be taken care of. Right . It is coming. It is coming. Oerb, yeh, yeah. I think the speaker is talking to the secretary of treasury. Sure she is. Theyre talking theyre saying hi, happy halloween. In some kind of groundhog day scenario. Terrific. Why dont we go commercial free . I think we might do that, guys market is going to be volatile as david said, just opened there is a look at breath, reminds you how monday opened. Thanks to ian detrik, today, october 28th is the best day of the year for the s p 500 there is still time to turn it around its early, carl. It is early way early. Jim, you were talking about the migration away from oil and gas, and greg hayes on your show last night. Raytheon did say and hayes said on the call, potential for a Hydrogen Powered jetliner, granted by 2035, but that scenario where they start investing in now. Im glad you mentioned hydrogen we also, when we speak to larry culp, theyre making a major push in a different kind of hydrogen, but still in power plant. Hydrogen has become a big theme and a lot of the plug power is 35,000 vehicles that how do you get to Carbon Neutral if youre walmart, amazon it is hydrogen the hydrogen rush, this is green hydrogen, is going to be the next big thing were in the bridge fuel, nat gas moment these things happen far faster than people realize. I plugged power on this week, they said this is the fulcrum moment where companies are saying we need hydrogen planes, we need hydrogen you get power. We need hydrogen it is going to happen. And it is a very positive story, david mentioned that, you know what, if it werent for the stayathome not able to go out to a restaurant, talking esg, david, hydrogen is now is it really now . Yes, it is now. Like i thought automobiles would be i mean, three years ago we were talking about it still not here. If youre microsoft, and youre telling your suppliers that they better get green, what do you do in. They get green. They get green. First it is going to be long haul trucks. Well, now youre making me think of nicola. Between hydrogen and trucks. They have trucks that run that go downhill like there is no the greatest that stock is hanging in there, 20 range lets move on to microsoft, though far Larger Company that report earnings the stock is down, i think one downgrade i saw, guys, as well generally, youre talking about, what, 37. 2 billion in revenue, up 12 year over year, gross margin dollars increased 15 operating income increased 25 1. 82 a share, up 32 or 30 in constant currency. Sounds pretty good to me. I think it is insane. They could have said anything they wanted in terms of forecast they could have talked about gaming and be much better or linked in and be much better there is no reason whatsoever that this stock is being punished for what was an amazing quarter and azure, which is, of course, their cloud business, is remarkable now, this is the one if you want to know, david used to ask me the key to the market, this stock this stock has to bottom before people start buying anything else. And i really when i talk to some of the analysts who cover it, and theyre all kind of amazed, but they were gun shy. Gun shy because the narrative was controlled last night by people who said, that is a real guide down it is not a guide down Satya Nadella is not a person who is going to come out an say, listen, all the analysts are wrong. Were going to do much better. I find the microsoft is being the one that is the best opportunity, but wait, wait, right now, still too early. Yeah. Jim, listen, man a little bit later we have sound from nadella on the call. U. P. S. , jim, lets do u. P. S. First, though. 228 beats 190. We have seen a lot of analysts get in front of this saying that cost cuts, plus pricing power, plus seasonal strength equals Margin Expansion and it does look like that is going to be one of the bright spots of the morning. It is one of those stories where she did say she cant give a forecast saying you cant give a forecast to these analysts, it is like theyre jackals. And cant give a forecast means were going to do terribly i think thats wrong carol tomei gave forecasts at home depot i think people were reluctant to buy the stock. I think thats a mistake shes talking about making money on the double digit growth and thats something that United Parcel hasnt done the stock is ticking up because i said something good. You stupid people who are buying it right now, dont you realize there is trying to get out of it im talking to the seller. The buyers are coming in let the stock come in. My travel trust, because i think it is important when you talk about all the good ones, let me talk about one i was on the other side of, i thought that mastercard down 50 points would find a level, but mastercard is an international company, and there is not a lot of International Travel got that one wrong i believe that can bottom, but not yet. United parcel and mastercard are United Parcel and microsoft are two that had unbelievable quarters and, david, this market is being the tune is being set by people who are panicking. They are panicking when carol tome did not say how big the Holiday Season is going to be. She could have set up 20 if were staying in place, david, were not going to the stores that means United Parcel. It does the stock had an enormous move this year. Well already, jim. Yeah. Yields 2 1 2. Carol tome came in and we all know her as being fedex had an incredible move also. Part and parcel you move the stock down 4 with your negativity. I dont blame you. That was negative look at that yeah. It is moving along with the market overall we have an s p that is down almost 2 , of course this is largely it would seem covid related. We talked about it already, potential i dont you say lockdowns, potential restrictions being put in place in france and germany. France in particular with significantly rising cases here in the u. S. , were all facing the same or similar rise in cases in many states that are hitting all time highs wisconsin, texas. How about florida, where they said come one, come all. Indoor dining. Indoor dining being identified over and over again as the single the single worst place unless you seek covid. If youre in a frankly, you know, carl, if youre in one of these trials, you got to go out to eat thats where youll be able to test whether you thats exactly thats exactly the point out of Morgan Stanley today, jim three weeks slower than we thought, they say, in these trials, because their assumption is the trial infection rates are 50 lower than the general population youve been saying this for weeks. Yeah. You got to go out, got to go out and about, expose yourself to covid and thats not look, it is not like you get it and say, you know what, let me go it a i hope let me go to a jam packed stadium and really figure out what is going to happen. No one wants to get sick or risk getting sick it does take a little longer than the president wanted. The president wanted to identify, what, pfizer j and j. J and j, you get the shot, theyre not saying, go forth and get some covid no. Tha theyre not. General electric is up. You want to take that down how about chub im going to take this opportunity to do a story on a company that is probably going to send the shares higher. How about that i dont like that out of character. Mind if i have a little faber report in here, guys can we do that no. Not that large a company, it is something we have been following closely here and the name is corelogic. Huge beneficiary of the boom in the Housing Market, mortgages. They provide so much information that goes into the lenders making decisions and so much other data as well and by the way, they have raised their ebitda forecast dramatically what we can tell you now, remember, quick timeline check here, remember, made a bid some time ago, raised 66, challenging for the board, got a special meeting on november 17th to potentially replace the entire board, but what i can tell you now, according to people familiar with the situation, they are engaging with there is a look at that timeline by the way, to get people up to speed here, where we were. But the news i can share with you is core logic received what im told is potential interest at levels above 80 bucks a share from multiple parties. Theyre engaging with those parties as well. They include pe firms, they include others as well that may be strategic in nature we can get rid of that timeline, guys and these multiple parties are interested in buying the company. There is a look at the increased in ebitda guidance if you want to try to draw a scenario that gets you into the 80s, it is not that hard if you apply a multiple 13 times to get there. They have raised their guidance significantly as a result of strength in the Housing Market, things they have been doing to change the composition of the revenue base it does appear that theyre moving into option mode. Those are my words, not those necessarily of the sources that ive been talking to but they have in fact signed one nondisclosure agreement im told as well there may be others theyre signing. And, again, it appears to be multiple parties that are expressing interest based on Public Information of bids that may come above 80 bucks a share. Nothing says theyll get there they still have the special meeting a few weeks out where potentially shareholders and by the way, many holders are hedge funds and index funds at this point. Some large long onlies and fundamental investors are out. T. Rowe and others left the stock at this point. But it could be beneficial to senator which owns as much as 15 of the Company Shares at this point it does appear corelogic is willing to explore the expressions of interest, take them in, try to understand what they are, how they would be financed and whether or not they can get to a deal or not in the 80s unclear at this point thats where things stand. I would also, by the way, company i wasnt that familiar with, costar group is among those that has expressed interest in acquiring the company. And interesting to note, the ceo in their Conference Call said, quote, one common theme for us has been to use acquisitions to enter a new closely related real estate segment that would seem to confirm to a certain extent what had been some questions about costar. That was from their Earnings Call as well on the 27th so, wanted to get that in there on corelogic a company that has benefited from their very strong Housing Market and seemingly is now in a position to potentially hold an auction to sell itself no comment from the company. Great call. Fin tech real estate, intersection of two bull markets. Zillow, a little less than that. Thats a great report. They used to be the guys i relied on to figure out how bad housing was. This is when you havent been able to sink, shares of general electric, it was legitimate beat, it was not one of those paper beats. Why dont we have Ceo Larry Culp come on now . Good to see you. Jim, good morning when i go through the usual deck, what i notice is this time it is not a discussion about how important aerospace is youre talking about industrial, talking about aviation, talking about healthcare, which seems to me to be in a course of real growth power and renewables no longer seem to be the weak sister to your company im wondering whether were getting to a narrative with the layoffs that you had to do in aerospace where in 2021 were going to be talking about aviation, healthcare and power pretty much equally. Well, jim, i think there is an Important Role for all four of our industrial segments to play at ge you see that today in the earnings release, right . 500 million Free Cash Flow in the Third Quarter, better than we would have anticipated, despite the revenue pressure, clearly aviation driven, down organically 12 , had a standout quarter in healthcare and i think the turn arounds we talked about even before covid beginning of the year, in both power and renewables, are gathering momentum we came into this year knowing that aviation was a stellar business, healthcare right behind it and we had work to do in power and renewables, those teams have done, i think, a really incredible job this year on the cost side of things, driving cash better, all the while continuing to innovate, be it with our turbines, gas power, let alone what were doing on shore and off shore wind and renewables plenty more work to do you see signs of traction here. I do believe that renewables had considered to be an asterisk, no longer the case, that healthcare, you sold the crown jewels, i feel thats no longer the case. Is it possible that if you get, say, any sort of rebound in aerospace, that 2021 could be a very meaningful year for ge . Well, we already believe, jim, we said publicly reiterating today that we think next year will be a positive Free Cash Flow year for us, positive here in the Third Quarter, we think we have signed on to 2. 5 billion of free cash in the Fourth Quarter. Full year basis were likely to be negative. Next year we think that turns positive and in no small part because of what is happening in renewables and power. We have got nice volume dynamics in wind, of course but a host of legacy costs and project issues that we are working our way through all the while investing in our offshore wind business. Excited about the winds with our 13 megawatt platform thats a multiyear story in the making i think well turn positive from a free cash perspective in gas power next year, given the very good work the team has done there again. Not only in terms of cost reduction, but being smarter about the new business we take on, the underwriting and the project execution, healthcare should continue to be a strong performer for us and i think we have aviation ready for continued subsequential softness but if we get any sort of recovery, in 21 or thereafter, were poised to be full beneficiaries of that change so what would you say to people who say this is not sustainable. 2 billion in cash actions, which basically says theyre trying to cut their way to prosperity, so therefore dont trust this rebound well, i think that thats just plain wrong, jim. If you look at the way we have run this business, over the last two years, the way we have talked about the issues from the past, the way were working our way through them, the improvements were making through the application of lean principles, getting close to the businesses and making sure were driving safety and quality let alone delivery improvements for our customers, well before we talk about costs, coupling that with ges traditional strengths, not only in technology, but in global reach, this is a company with tremendous capabilities we are far from our full potential and i think what people hopefully get a glimpse of today is the Building Momentum we have toward realizing that full potential. It is a game of inches, we said that all along much more work to do but i think we are demonstrating traction that bodes well for the future we know covid is an uncertainty. But we cant do anything about that, were working on those things within our control. Right, larry, it is david you can only control what you can. You cant control the duration or magnitude of the outbreak, unfortunately. Only respond to it. You got more than 2 billion in cost and 3 billion in cash actions that are i think you said 75 complete. Do you need to start again is that going to be enough given you can only control what you can control . Well, david, those are big actions and youre right, were about 75 of the way through that work. We think well finish most of that bit end of the year, part of the visibility we have around the 2. 5, at least 2. 5 billion in cash we talked about for the Fourth Quarter again, back to lean, in the spirit of continued improvement, there is always opportunity. While i dont think we have necessarily a restructuring effort on par with what we have done here in 2020, completing this work gives us line of sight to additional opportunities to continue to be more efficient, with where we put money, be it reducing inventories, the way we think about Capital Expenditures and making sure we are investing in those things that matter most, for our customers and our investors, be that new technology, be that strengthening our commercial organizations, be it the sales and marketing folks, in addition to the Field Support teams that are with our customers every day. You mentioned lean. Explain to people what that actually means you said on the call it the strongest common denominator. What does that mean . Well, i think what we talk about the transformation, were talking about a lead transformation and were just borrowing from the toyota Production System and these fundamental principles around focusing on the customer. Eliminating waste and always getting better, continuous improvement, in doing that in a way that is geared toward managing the business the same way every day, and doing that as close to the customer as we possibly can i know that sounds simple. But it is also powerful and that is very much the way we are changing the way we operate in every ge business around the world today. Yeah, i mean, you can get lean and you can be, you know, more agile and everything else, but you can also get weaker if you get too lean how do you know when enough has been done . Well, i dont believe that, david, to be honest. We could have a long conversation on that i think what were really talking about is Building Muscle in the organization, right, to know when we have an opportunity to serve a customer better, to see waste in the form of a cash expenditure next time around we want to forgo. I think it is all about Building Muscle, not just about cut, cut, cut, management by objective, it is very much a longterm process oriented way to build sustainable competitive advantage and ultimately satisfy customers and shareholders so, larry, lets say we get a change at the white house and we get Vice President biden comes in page eight talks about Renewable Energy in power and orders, there is a contingent that says coal must be phased out 2024 nuclear done what can you do with renewables that would and can you make it so that it is as profitable gross margin for the traditional natural gas plan in september, we talked about a new purpose for ge thats really part and partial for what drives us. I would say both in renewables and power as we see countries around the world and for coal. We arent as profitable. We are demonstrating we are making progress in that regard that business has an Important Role to play in support of renewables not only in support of determining today but as to countries around the world want to find a role for hydrogen. We have a number of ways we could play our leadership win would be better and weigh think that is possible can you get segment margin up to say 2025 which would change the total mosaic of ge we have a couple of normalable competitors. When we sold the bio pharma leverage what was left behind is a 17 million leader in Precision Health what we are referencing there is precision delivery you saw double digit organic growth in the Third Quarter. Healthy operating expansion from the standout im not sure we are ready to go for 20 to 25 as we are ready to go from low to single digit range in 25 basis points of operating per year that is a business that will surprise a lot of people what about good old energy . On shore demand. Off shore deals as well. Weve watched the price of oil declining. The price of growth, how are you managing that. We dont have a lot of direct exposure there getting away from maker hues our equity state our gas power business and the installation of the base despite covid. We have seen Oil Price Pressure playing out in our services particularly in upgrades we thought we had upgrade opportunities in the middle east given what is happened, our opportunities have faded a bit thats where we have the most direct pressure from the Oil Price Dynamics in our power segment. Larry, thank you so much. There are a lot of people banking on that turn i know youve been banking around the clock to do so. It is auflz good to see you. Dow session down 589 some wire reports of potential lockdown proposals out of france and germany. Lets get to Rick Santelli hello we are looking at our fourth session down in yields right now, we are down a basis point and a half or so i would look for some of that to move into the treasuries in the form they are now at sevenmonth low yields the news regarding possible shutdowns in places like germany even though there is a lot of debate on if shut down is the way to go. That chart starts in may finally, we know there is safe harbor and credit. But now look at the dollar the dollar is usurping the euro. Up nearly 1 now back to you thank you. Saying early flush circling wagons 10 30 to 11, your close may be to watch weve got two markets going on thistech market people feel is beginning to implode i disagree with that then the Industrial Market or the renovation market. Sher win williams. Ive seen pockets of strength. Making really good points. Weve got to see europe close. Europe is in panic mode now. They are really in panic mode. I think spain will follow. Thats not the way we are approaching here Many Companies have found ways to make money despite this lets watch ge. There are other businesses that are benefitting or at least neutral. Again, im focused on the younger investors they need to see hydrobegin and wind. It is two. The birds. Windmills do kill birds. Categories kill a lot more birds. Some incredible number like 2. 4 million. The cat cause of death is off the charts if you are comparing it one of carls tweets. It is like 2 billion birds. How about when the birds killed susan brichette i always liked her. She really had it. Jim, you said you were panicking. It is important to point out germany is handling this how many deaths are there overall . You had 28 times the death, Something Like that. Gotten in lockdown mode but we have to shut whole places what will happen is that people will stop going out if there is no place to go to. Right but you described it as panic. Is it appropriate panic . I think they are treating it as if they had nothing for covid. We are better for they are they are ptherapeutic and something for drip when people get to the hospital the story now is trying not to get to the hospital as capacity gets tighter. Saying what youve been advocating for months. That is masks. They are practically free. Whether you believe in the science or not call it a health a health that you wont have to go to the hospital my Mask Initiative is now being led by companies honeywell, 3 m, underarmor and Companies Taking the leadership mode, the National Association of manufacturers, nam because they are not going to let the u. S. Government be the influence. I swoop those companies. Someone said what is business really doing what is 3 m doing . He is determined to save lives through masks. Hes not going to let the government decide that people should die from not wearing masks. David, these companies are serious about developing masks they know the government provides no leadership whatsoever when it comes to dying. There has been a lack of leadership the frustration with 3 ms inability to get ahold of consumers. There is not a national mandate. There is in russia now. We saw putin yesterday National Mask mandate. Mask or death there jim, what is on mad tonight ive got united partial which is a subject of dramatic decline. Mark tritton on bed bath and beyond what a stadium i want to be one of the five people that go to the next game. Netflix isup. And 3 m is up because the sellers there are pessimists im done with posseessimism im going to neutrality. Good wednesday morning welcome to sqwawk on the street. A weak start dow session low down about 600 we are not that far away as we are watching europe. The potential for announcements and lockdowns. Facebook, alphabet and twitter set to testify this hour at Senate Commerce about section 230 and a bunch of other things monitoring that q and a. Something flagged not just by commerce but by judiciary as well it is not their first time in the hot seat these executives appeared virtually when the conversation was about antitrust. Republicans have acknowledged the important of having the conversation about whether these platforms should have broad immunity to the type of content being shared they have raised questions about whether that needs to happen that is what the market is focused on comments from the former fda the u. S. Is on track and we are awaiting remarks from the french president reporting a lockdown, citing the local media reporting there that a National Lockdown could begin as early as monday, november 2 certainly, there are a lot of troubling headlines about the path of the virus. With six days before the election, there is no stimulus, no vaccine and the numbers are going in the wrong direction they are. You mention merkel has been very aggressive from the outset germany has very few deaths among large developed nations. I think around 10,000 or so. Appears posed to become aggressive in terms of administering the lockdowns. Rick santelli mentioned the German Market at five month lows and a negative. 63 yield on the 10year bund bring us back to our market here are we some what similar to what we saw the first time we saw the virus moving rapidly around the world . I would say we are going back initially to ate second phase back in june the s p now is just about the levels you peaked at at early june discussing the reopening and the idea we got the case curved moving in the right direction. Stocks in the upside yields up about 1 culminating in june. You had a bit of a sharp market set back people had to hunker down and defer their expectation we would have a big burst of earnings we are closer hopefully to that moment where we do have some kind of normalcy everything that has happened has caused everything to think the timetable. On top of it, you want to under estimate the fact that stocks have transmitted poorly on earnings year over year declines. Microsoft and revenue guidance it feeds this narrative that has the substance behind it. Companies willing to spend as heavily. All those things basically getting this market back down to the lower range. Keep in mind, they were at the lower level of the s p and those points below that now. Those are the levels we toyed with now those are the levels. We had a lot of diversified companies. Whether ge or 3 m or boeing who cant figure out what the future will look like and cant give us any guidance to work with. Right the market is always going to run ahead a little bit in return they did anticipate the global turn caterpillar talking china demand and moving in the right direction. It was hard to explain it away when you see things like copper rising the whole sick call story was falling into place then on the company by company level, they say maybe not yet. Thats all they are really trying to digest is that type of thing. One of the more bullish encounters what will be a block buster gdp report as much as 36 how much of a red herring will be in the gdp it had to do with the decline but now i think the nuance will be tougher i dont think it will resonate and more to the point anticipating the Current Quarter now pencilled in for a continued gain in gdp. Many smaller is the fate for those heading into next year i think, yes there are going to be the headlines. We have had a good down trend and all the rest of it it is not going to be, i dont think in harmony of how most people are experiencing this moment yep it is a backwards number as we know well see tomorrow certainly hoping it is better than expectations. Nasdaq went negative for the month. All three are negative for the month across the board making sense of what is at work today cofounder early facebook and our own jon fortt as we begin and await this before we get to pichai, dorsey and zuckerberg. Getting to a lockdown, do you think the u. S. Would react to lockdowns like they did in the spring is. There is so much uncertainty to the actual numbers. Earnings have been excellent and the gaps have been so large, it is really difficult to make sense. The threat of the lockdown is something. The country really never experienced the kind of lockdown europe had, which explains why our numbers are so bad the notion we would not prepare to take steps to limit the harm of another wave. That is going to be very, very bad for investors and earnings we are not going to be able to protect the economy if we dont stop the virus one of the more optimistic takes we got you look at europe, a lot of it is occurring in the same cities that had the problem in the spring thats not the dynamic in the u. S. In our case, it is involving areas of the country, mostly rural areas that have not had a spike before so the narrative there is it is more of a Cross Country burden as opposed to a repeat it is complicated here. You and i know in the east coast, new york, new jersey, we were hit hard. We did experience the kind of lockdowns europe experienced the rest of the country going through Something Like that but our medical professionals are working. People not as well off, who dont have health insurance, who cant afford to miss work and go to the hospital. How they would deal with this despite the fact that perhaps death is less likely an occurrence at the same time, all of this, this issue of the United States hangs over earnings. This is reflected in enterprise weakness in the u. S. In china, come roaring back almost back to normal. There is a cost here in the potential lockdowns and not dealing with the virus and as many would have hoped we would have dealt with right now. The split screen well see in a few moments is on one hand looking at the market and what is happening with the coronavirus outbreak and on the other hand, the executives on the hot seat and whether that should be updated in this day andage and whether that should be overshadowed everywhere else inthe world i think what youv see is a hearing with two completely different world views going on on the one side, the democrats will be pointing at covid denial and the way it was amplifiedon twitter i think in fact, there is support on both sides this is an addition on the republican side and an opportunity to score political points they have been working very effectively accusing them and not true namely that there is a buy as against conservative voices every day we see, thanks to kevin ruso at new york times, the top 10 links on facebook almost every day, they are conservative voices. These companies have a Business Model that amplifies the most extreme and dangerous content out there. They currently escape responsibility i think there is on both sides real interest in fixing that that we are not going to get to today because we are a week before the election and there is too much red meat lying around not any longer being eamon oply on search. The thing as investors we need to internalize it doesnt matter who is in control of the house if democrats control all three chambers youll see a little more motion if thats not the case something is going to happen it ought to happen as investors, antitrust in particular, that is sort of the prize for winning the game that means you could do Everything Possible to do and to play the game. Weve gotten the lesson and well learn that for our benefit again. The outlook is a lot brighter. 230 is a different thing because it goes after the root Business Model of facebook, alphabet and twitter. If they change it, their numbers are going to be a lot less i do believe theyll be forced to change it the notion of them trying to do this through moderation. I just think you can expect any company to manage speech thats just not realistic. They amplify the dangerous parts of it and that has amplified those dangerous parts. Tweeting the conversation between the former Vice President biden and the Editorial Board of the times talking zuckerberg no ive never been a big fan of facebook or a zuckerberg fan section 230 should be revoked immediately number one for zuckerberg and other companies doesnt seem like theyll get an easy ride out of biden either. Who could say they are a big fan of zuckerberg. Mean it and play well. If you mess with section 230 they think a thousand flowers will bloom probably what youll get is an am if i indication of mainstream voices the people that are supposed to be responsible about what they say and then the fringes driven to smaller or darker corners of the web. Is that true you look at ways in michigan where people were plotting to kidnap the governor. That was discovered in conversations on mainstream sites. If youve got to go hunting for it, maybes that it or maybe thats bad both sides are playing with fire here as it goes with the statements and this testimony moves on guys. Well monitor it. Great to touch base with you before that. Roger, john, thanks. Othat big tech hearing is nw under way. Well take you there live as soon as q a begins looking at the mississippi governor republican ror. Ge more sqwawk on the street and that major hearing right after this by making it more affordable, thats why were keeping our tuition the same through the year 2021. I knew snhu was the place for me when i saw how affordable it was. I ran to my husband with my computer and i said, look, we can do this. [narrator] take advantage of some of the lowest online tuition rates in the nation. Find your degree at snhu. Edu. Heart monitors that let your doctor watch over you, just like you watch over your best friend. Another lifechanging technology from abbott, so you dont wait for life. You live it. Hello carl last week we were talking about the narrative breaking down. The narrative was the stimulus for the banks. The story of lockdowns and how theyll be widely available in the Second Quarter is that the story or is Something Else happening we talked about the market and traders being a little too complacent that a vaccine would be nearby and bail everything out. Concern maybe that wouldnt be correct. As i predicted in my preopening comment, the market would see a flush out of the near buy sell stock. People have been searching the trends of the market we saw them flush out in the early selloff. Right now, we are retesting those lows for argument sake the dow 268. Ordinarily, the next move would be once that seems to hold, a little part of a rally today, because europe is center stage. Europe is ready for the 11 30 closing. At 8 00 p. M. Paris time when markets closed speculation they may even close the borders and do a complete lockdown for two or three weeks or even a month. Ordinarily that bounce is going to be held up as we watch what happens in europe from 11 00 to 11 30. I think they close at 12 30 because of the time. This wasnt part of the narrative. If we keep going on, there wont be any problems because of a lockdown i dont know what youll call it lockdown light you had Scott Gottlieb on and he said the problem with the u. S. Lockdown is that there doesnt appear to be any public support of it. People saw how bruised we got early on covering early and people wont give guidance. Thats going to be a problem i think the real problem here is what does happen in europe we are focused on france and germany. Spain and italy and places like that may be about to go rampant. They are talking about maybe closing the borders down the European Union is about to su seed from it self. You can see from the oil market and other places will have a broad economic impact. The message that we hear from the administration, the president , treasury secretary and many republicans in congress is that there will not be another lockdown in this country. They are not effective and the American People do not want them what dr. Gottlieb was trying to say, even if you did have a lockdown or lockdown light, there is such dissidence about that what does that tell us about the longevity about the impact of the virus . I think the great concern is to see what happens in europe. Are lockdowns or new lockdowns tolerated and complied with. Kayla, let me throw you a real wildcard here. So far, the virus seems to be under control in asia, particularly china if we start to see a second wave pop up in asia, hold the boards. We might see a much more Global Impact and a more let down in the markets. For now, the center of everybodys attention is europe. In the back of their mind, they are worried about asia art, in terms of policy response to all of this. Dudly has got a piece out this morning titled the fed is really running out of fire power. His point is that powell is not bluffing when he leans on congress for fiscal support. Even if they did more, that would not be effective how much does that light a fire among lawmakers is that have not been able to put together a package . They dont have many ways they can promote actual spending they could only do that at some republican behest. We wont see any operation going into the election. My only concern is if the election is very close in several places, is basically contested, you can hear it on both sides weve already gone through President Trump whose election was discounted heavily i think if it is a tight election and there are lawsuits and we wont know for days who is there people will assume the election might not be legitimate. That could limit stimulus all the way through. The assumption is after the election, lets cooperate. Recordless of who is there it may turn out not to be the case let me tell you who turned out. Theyve been stellar beating expectations by a wide margin. The problem here is that they are expecting great numbers. The second and Fourth Quarter when numbers go up dramatically. Thats the narrative the reopening story. Is all of that in perilled we have fairly high valuations for stocks already expecting even higher ones expecting that the market is a higher one right now ups not giving any guidance. Not for numbers but we have no idea what will be happening for those quarters again, that is something we discussed on cnbc. That was that earnings were not really going to move the market because people cant really buy into the earnings. Yes, you know what you earned and you know what you saw that there has been no guidance to be able to come out with great numbers and say, well, i really dont know what that looks like for next year that doesnt give any encouragement to anybody youve got all these problems. Election uncertainty and no guidance from companies saying so much of it based on what the world will look like with covid breaking out with the close, the game is certainly not here it is elsewhere. Putting this in an important context. Do you remember a time when there was so much macro uncertainty. Not just the election. High priced stocks the stimulus, the role out, election and the vaccine issues. Can you remember when weve had this much macro uncertainty. Thank you for reminding me how long ive been here. I came in swadling clothes weve had periods of great uncertainty. This one is almost global as we discussed. That is highly unusual weve had things centered in europe, asia, even the United States i cannot think of one in which the entire Global Economy is so tied up. I would tell you, keep a very weary eye on asia if there is a resurgence of the covid virus in asia, all bets are off art, appreciate that. Youve been doing work online and on tv. Thank you and bob, thank you as well my pleasure almost all dow components are red except for travelers vix close to 39. Dow on pace for the lowest close. Dont go away. With two new haunted houses, the screams are just getting started. Wear your favorite costumes and the fun never ends. Come get your halloween on, happening now at universal orlando resort. Lets get to elan moi. Thats right, we are seeing that this meeting has already turned political we inspect to hear the ceos offer robust defense of the section 230 liability that they say is foundational not just to their own businesses but to the internet jack dorsey giving his own testimony saying removing section 230 will remove speech from the internet. There was connectivity issues for Facebooks Mark Zuckerberg he is now able to connect and offer his temperature. He did say he is willing to work with congress to update section 230 and work to regulate what should be defined as harmful content. All the ceos are warning if they go too far, they risk undermining the law and the future of tech and innovation, guys we are looking at zuckerberg there. Seeing jack dorsey there the Senate Commerce committee has already brought up the New York Post story about hunter biden and restrictions around sharing that content thats an example of a double standard and stories about President Trumps tax returns and the steel dossier that were not taken down he said reasonable servers could use that to restrict a certain political party. Of course ceos will deny that. Pichai will say outright bias does not move through their company. On the one hand, republicans are saying platforms are taking down too much information what we are hearing from democrats is that they want to make sure they are cracking down on hate speech ahead of the election that puts these companies in a difficult bind today stay right there, julia is joining us from the west coast in this pressure from these companies that have long said they are not Media Companies to try to refine and scrub their platforms before the election. How much can they do in the space of a few days with so much pressure on them right now in terms of the censorship and the fact that they are trying to walk this line and have free speech and preventing their platforms from generating or spreading harm on their platforms. What we are really seeing here is different approaches from dorsey and zuckerberg. Zuckerberg is giving his prepared remarks talking about how he wants to change the regulation and amend 230 hes spoken for many years that he does not want to be the arbiter of truth and he wants regulators to help define those lines so he is not responsible, so facebook is not held responsible. Interesting that zuckerberg is taking the opportunity to say lets work on this together. That will be a challenge for him as he navigates through the criticism on both sides of the aisle. Thats how theyve responded to pichai has responded there could be unintended consequences if lawmakers crack down further dorsey in his prepared remarks is expected to say that there needs to be more transparency but it raises the question of why it really would take action from washington to get these companies to make public the rules by which they govern some of these decisions that get made especially that it is such a big issue. The hearing has turned to q and a. Well turn it back to washington to the Senate Commerce committee. On the scheduling and alleviating the necessity for actually exercising the subpoenas. Mr. Dorsey, your platform allows foreign dictators to post propaganda typically without restriction, yet you routinely restrict the president of the United States. Here is an example in march, a spokesman for the Chinese Communist party falsely accused the u. S. Military of causing the coronavirus pandemic he tweeted, quote, cdc was, quote, caught on the spot. When did patient zero begin in the u. S. How many people are affected what are the names of the hospitals . It might be the u. S. Army that brought the especially deputyic to woo hand auhan and on and on. After this tweet was up for some two months, twitter added a fact check label after beg up two months however, when President Trump tweeted about how mailin ballots are vulnerable to fraud, a statement i subscribe to and agree with a statement that is in fact true, twitter immediately imposed a fact check label on that tweet mr. Dorsey, how does a claim by Chinese Communist that the u. S. Is to blame for covid remains up two months without a fact check and a tweet from the u. S. President about mailin ballots gets checked immediately first and foremost, we did label the tweet. We consider receiseverity of of harm we have taken action against World Leaders all around the world including the president. We did take action on that tweet because we saw it, we saw the confusion and we labeled it accordingly. You are speaking of the president s tweet . Yes our goal is to provide more context so people can make a decision for themselves. Weve created these policies enforcing them and things we can do faster. We believe the policy was enforced in a timely manner. Yet, you seem to have no objection to a tweet by the Chinese Communist party saying the u. S. Army brought the epidemic to wuhan . We did. We labeled that tweet. It took you two months to do so, is that correct . Is. Im not sure on the time frame i can get back to you on that youll get back to us on how a tweet from the chinese Connecticut Communist Party falsely accusing the military for causing the coronavirus pandemic was left up two months with no comment from twitter while the president of the United States making a statement making a statement about being careful about ballot security with the mail was labeled immediately. I have a tweet here from mr. Ajit pai, the chairman of federal Communications Commission which twitter did not place a label on all three glorify violence the first tweet says this, i quote each time, the zionist regime is a deadly cancerist growth and should be uprooted and destroyed. The only response to removal of the zionist regime is firm armed resistance third, the struggle to free palestine is jihad in the way of god, i quote that in part for the sake of time and number four, we will support and assist any nation, any group anywhere thats the senator with some crossexamination of jack dorsey of twitter looking at some of the policy which even jack dorsey has been late or poorly communicated. Well see how this q a or framework develops at some point, the question is going to be why not try another platform and maybe the market will return to the idea that these are private companies and each individual interaction has been guided in some way by a human hand with so much content on each of these sites, there is so much material for these lawmakers to work with so much examples where these policies were not applied evenly these lawmakers are going to be going back to the well and putting these executives on the spot to answer the decisions made in each instance. The wall street journal had an indictment in a fairly lengthy article that said he doesnt take part in some of these major decisions, which on one hand would allow him to say he wasnt in the room and doesnt know exactly how those decisions were made on the other hand because he is both executive of twitter or square, it could lead to criticism he is spread too thin and doesnt take a hands on approach to managing these issues well see how lawmakers choose to look at his management style and whether that plays a role in the way twitter goes about this. Certainly the criticism dorsey is familiar with and the line of attack that lawmakers are familiar with today. Will be interesting if they sort of question management in that way criticism Share Holders are familiar with and investors have pointed out as hes the ceo of two publicly traded companies. This one and square. Some speculation that at some point hell step up to become chair. Lets turn back to the markets now, if we can well be checking in on the tech hearing and the questions that the ceos are getting we can all see things worsening there. You can see the dow, the s p down 2. 7 and nasdaq roughly the same i want to bring in wells fargos margie patel let me get your take on the market now whether these are accurate concerns world wide i think this is kind of emotional anxiety and masks the fact underneath it all that u. S. Economy is overcoming it all and improving. Continuing to report good results. David, we have seen fairly good earnings but when it comes to the economy, you know you often express concern. Do you have continued concern as a result of what we are seeing on the ground. Given new record highs in many states for new cases of covid. Right, look, we have to assess what really drove that big Third Quarter rebound and gdp. Most was the fact of the stimulus most has already been spent. We had the he roo openings and inventory replenishment. I would say, look, over and beyond what has happened in the last couple of days, everybody is nervous about these lockdowns we are siege eeing in europe. Take a look at what we are seeing at the start of this week we had eight days they were up or down all on what was happening between mnuchin and pelosi on the budget talks even before the breakout of the virus, a big expectation there would be a 2 trillion package and right now, we have nothing without the extension of the stimulus, not only do we have a huge potential eviction and mortgage forebearance crisis going to negative zero in q 1. A lot of this is starting with the assumption we are going to get Something Big on stimulus. That was really the first leg down we had going into this. The last couple of months inside out, overall the last few days would impact the election 69 million americans have already cast their votes thats half of all voters. Those who havent cast their votes. Do you think the market turned down the rise of covid cases and the suggestion that if there could be a democratic sweep, you could get 5 trillion in the stimulus pretty soon after the turn of the year does that factor into the calculus at all . I think the stock market and Investor Expectations are pretty short term you look at the economy, there are socalled negatives happening. Consumers are in very good shape. In the rise and with a high savings, very, very strong the fed is easing. Those arent the slow down continuing into the new year regardless of covid and even regardless of the election david, margie races support to largely stay flat that savings have gone up and at least consumers were relatively conservative with the income that they were getting from april to this point. We are getting this mosaic of headlines aroundchicago, for instance, is closing restaurants and bars for indoor service. Im wondering if you think we could start to see some of this data turn down if there are many more chicagos and headlines like that that part to pop up across the country. Of course thats a high likelihood and we have to go back to when the recession really started, which was in the First Quarter. Remember, First Quarter gdp before the lockdowns was 95 Consumer Spending in the First Quarter was negative 6 , before the lockdowns. Why . Because people were already adjusting their behavior because of the spread of the pandemic. What happens when people get nervous is they pull back on their spending behavior. I want to go back to something that was said, without the impact of the fiscal stimulus, the Third Quarter gdp would be negative it has to be understood that the vast majority of that growth was the lagged impact from the stimulus on spending in the Third Quarter. The savings rate peaked at over 30 . Its been cut in half most of the previous stimulus has already been spent in the economy. I would hazard to say that were going to see sluggish numbers over the course of the next couple of months to go and say the economy has been kodoing fine, thats not a forecast without the stimulus the economy did not have the training wheels that it had over the course of the past three or four months and its going to slow precipitously. The first problem, the markets problems were starting before what happened this week. You can see it in the data and you can see how the market was reacting to what was coming out of the negotiations on the budget side. This is a really big deal, because even without the latest hurdles that were having in terms of the pandemic, we can talk about the outcome of the election, but people, i think, have underestimated how important the lagged impact of the stimulus was in the Third Quarter. And without the extension, the economy is going to stagnate i would hazard to say that it will contract in the First Quarter. Margee, to that point, as we see the s p now down 100 handles, it does seem like, just looking at the 52week low list today, wells fargo, boston properties, equity residential, Empire State Reality trust, some of these names are being sold not on the narrative that things are going to get markedly worse from here, but just the ongoing trend of people not returning to the office in ways that we saw prepandemic. Yes, and its really targeted those companies, you mentioned are all very closely tied to real estate and i think thats why, again, thats one of the sectors that have weakened and we talked about the stimulus and the other factor that i think is even more important is the fed policy of lowering Interest Rates to near zero, and that to me has put a floor on the financial markets, its provided liquidity, which i think will limit any downturn in the economy. If consumers dont spend their money going to restaurant, theyre going to get their kitchen remodelled with all the extra money they havent spent so with the Interest Rates low, thats more important than the socalled stimulus in keeping the economy afloat and having this growth trend intact, even if it does slow down as we get into 2021. David, on the subject of spending, which margee was just referring to as well, the lower wage earners seem to be most impacted, unfortunately, by the pandemic but i do wonder, have you done any work in terms of buying power for that group, who obviously needs and potentially is going to have a great setback as a result of a lack of stimulus, versus the higher earners who mostly kept their jobs thats the thing, is that, you know, who are the people that were hurt the most, were the people that are in the low wage sectors and the Consumer Service area leisure, hospitality, restaurants and the like they make about 30 to 40 lower average Weekly Earnings than everybody else does. So theres no question that because of their heightened job uncertainty, a lot of these people dont know if theres going to be a job to come back to a lot of them have been called back, but they have no idea whether theyre going to end up keeping the that job and that leads to a certain level of uncertainty. Theres a lot of people who still havent been recalled. So i havent done the work, but i think it might have been the new york fed or one of the banks that did some work on this, looking at these particular individuals, and they saved quite a bit of it. Of course, theyve been able to meet their rents and utilities and get food on the table. Theyve not been the ones really driving the system its been, as you said, the rest of us that dont have job insecurity that kept our jobs, lets face it, its true the unemployment rate, the percentage of the people in the labor force with a job over 90 , they havent been nearly as affected and theyre the ones that have been doing a lot of the spending whats interesting to me is that one of the biggest sources of stimulus has been the fact that because nobody is really flying and nobody is really going out for live entertainment, theres been a plunge in Service Sector spending nobody talks about that, because of spending that we cant do, thats put 700 billion in our pockets. So thats exactly what we were just talking about we talked about the stimulus from the government, but a lot of the money that were saving by whether its not sending our kids to daycare or were not going on vacation, so, yeah, were remodelling the home because were spending that much more time on it. But a lot of the spending, its very interesting when youre looking at the bank lending data, what were seeing is that Consumer Credit balances are really plunging. So in some sense, you know, whats been happening is that in terms of are consumers in better shape, theyve been cutting back dramatically on their outstanding credit card balances, so maybe thats not the worst thing in the world. That at least is one Silver Lining david, margee, thanks to you both for joining us. Thank you carl, of course we have the s p down about 3 . It has been a bad week, at least for those who are owning stocks. We are still up on the year, but just 1. 8 for the s p. Of course, the nasdaq continues to be, by far, the great outperformer, given what weve talked about for so many months now, which has been the excellent performance from so many Large Technology companies, companies that are benefiting from the acceleration of digitization that weve seen take place really in the last seven months and, carl, weve got microsoft earnings, but not getting a great reaction, as you see, with the stock down 4 , which is obviously far more than the overall market decline right now. Yeah, and david, i think last night it was pointed out that going into the election four years ago, s p was down nine straight days. So its very much an echo of that, whether you call them election worries or disappointment on stimulus we have seen recent precedents where the markets get cold feet going into the election. S p down 100 handles, 3290, first trip below 3300 since september 25 it is 11 00 on capitol hill and 11 00 on wall street as well and sidewalk squawk alley is live