Transcripts For CNBC Squawk Box 20240712

Winning streak falling by 300 points yesterday take a look at whats happening. Yesterdays session, the dow was down s p dipped back in for the year inching its way in the day before the nasdaq did power to a new record close and briefly broke above 10,000 for the first time. Lifted by amazon, apple, facebook and microsoft which all closed at record highs adding about 5 trillion. About the amount well spend in federal spending this year also take a look at whats been happening with u. S. Equity this hour both the dow and s p are under a little pressure. Dow indicated down by about 60 points s p down by 3. The nasdaq, even after all these gains is indicated up by about 17 points this morning taking a look at whats happening in the treasury market the 10year seems to be yielding 0. 797 crude oil prices are in the red. Crude oil prices, talking about the recovery theyve made. Talking about wti. Down about 2. 3 . What an improvement or a gain in crude oil prices now above 38 thank you it is fed day today. Investors will be watching closely for hints about the feds view on the economy and plans to the stimulus which it declined to do at the height of the season in march. Well be parsing every last little word and comma. Gives us something to look forward to, i guess. An update now on reopening america. More states moving forward this week new jerseys governor lifting the states stayathome order yesterday. I saw allowing outdoor gatherings of up to 100 people. Not sure im ready for that quite yet. Not sure i know 100 people not that many people i like at my house delaware entered phase two allowing personal Care Services such as tattoo shops and massage parlors to reopen at 30 capacity thats good. Small businesses, right . Kansas is in phase three allowing gatherings of up to 45 people massachusetts is in phase two allowing Outdoor Dining and retail opened with capacity limits michigan has fully reopened bars, restaurants. Swimming pools and day camps best buy said yesterday, it will allow limited number of people inside most of its Stores Beginning on monday without the need for an appointment. Restricting occupancy to 25 about 60 people per store depending on the size. Bringing back 9,000 previously furloughed workers this is all happening with the back drop of what we read about with 10, 11, 12 states he showing increases and pretty crowded hospitals and emergency rooms. I dont know how to gauge with all the new testing about whether it is a big spike or whether a reopening. There has been a lot of demonstrations there has been memorial day. Things you can point to plus the increase in testing. I still dont know if this is really scarey going along sort of what has been planned looks better there than we have seen in the states. Trying to figure out if the higher numbers because of testing or because of a real increase dr. Gottlieb has pointed to us, you need to look at hospitalizations it is confusing. You know there is also this political overlay of governors, president s, mayors wanting the economy to come back too you wonder what you are going to be hearing if it has those overtones. People are wondering what underlying risk there may be of people speaking up loudly at this time. W. H. O. Echoing yesterday saying, maybe not. We dont really know asymptomatic cases i dont know if you saw the other side of the political or scientific aisle says they were basically forced to do that because Certain Health people and the media forced the w. H. O. To come back out and say that. It is all so confusing it is hard to figure out who p is telling the truth forced them to say it because they didnt have the underlying data to back it up it is really difficult to come out and say, hey, here is what we absolutely know if we dont have the underlying data to know that they are saying, just focus on those with actual symptoms then walking it back is them not saying never mind and an admission of the Scientific Data not being as strong or supportive we live in this world where we dont know there is a whole group of people out there, becky. This is the problem. We are trying to figure out who is the expert . Who is the expert you are going to believe there are people suggesting that the w. H. O. Is flip flopping on this not because of the Scientific Data but because they are under pressure this is happening across the country. It is very, very difficult for viewers and the public to even know who to believe anymore. Thats the hard part about all of this. Thats the question we dont know. Pga commissioner will be on. The tournament starts tomorrow hogans ali big deal tiger wont be there but all the top players will be there. They are going to test 300 or 400 people all the players, all the caddies, all the staff there will be three mobil stations there pcr test, you get a pretty accurate test. No fans yet. Did you see what they are doing for flights. Offering charter flights depending on where you sit on the rankings those guys have wheels up on net jets or something. Are those the pcr tests i read it was a pcr test. Thats good. Dont you think . Pcr is better that quick abbott test is not. Pcr test, take it and it is two to four hours, you get an idea pga is going to do a lot of things in memory of george floyd and everything we saw yesterday inthe commemoration. I thi. Mgm saying it had a strong reopening in las vegas all opening at the end of last week now the company says it will reopen excalibur and adding the luxor including the shops at mand lay bay they will reopen aria and mandalay bay amc expects to reopen in july most have been closed since midmarch all of the screens will be open in time for Christopher Nolans tenant and disneys mulan. Col clorox is advising how best for theaters all of these companies coming out with deals whether it be to get masks or tests or clorox probably part of the reason why some things are still hard to get. Have you been able to get napkins . All my shirts have smudge on all of them. Ruffian on amazon, could you order the industrial hand towels they have in the bathroom at the nasdaq you can get those in a big bulk case we just use those. It is weird what was in short supply very strange some other things i havent been able to get. Usually it has to do with cleaning, sterlizing lysol and clorox will be in lard supply. This month, nascar will allow fans to attend the dixie vodka 400. You may ask what is that based down in charlotte in South Carolina and it is gluten free who knew you think of the other ones. You got to by a gray goose guy, sorkin what do really cool people tit os. Im not a vodka drinker. Pellegrino water. Also the geico 500 june 14th in florida june 21st in alabama, the racing organization will chorequire sol distancing guidelines. So the stands will look sparse or not. Circa 1919 baseball games with everyone in the stands. Some what similar to that. So gluten free vodka did you know normal vodka had gluten i didnt know. I didnt know either. Coming up put that on your calendar. Big swings in the futures this morning well talk strategies. Up next, cases of hospitalizations rising. Well check in with dr. Scott gottlieb after the break check out the market caps of nikola the little electric truck startup. Surging on the potential on electric transportation. Eclipsing fords value of 28. 8 and fiat chryslers 25 billion. We are back after this oh, we love our new home. Neighborhoods great. Amazing school district. The hoa has been very involved. These shrubs arent board approved. You need to break down your cardboard. Thank you. Violation. Violation. I see youve met cynthia. At least geico makes bundling our home and Car Insurance easy. And it does help us save a bunch of money. Two inches over regulation. Thanks, cynthia. For bundling made easy, go to geico. Com bbut what if you couldg do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Global cases have topped 7. 2 million with nearly 2 million in the United States texas, one of the first states to loosen restrictions saw the second straight day of record hospitalizations cases rising in parts of california officials there placed nine counties on a watch list a warning that more than 18 Million People may need to scale back reopening efforts as a result of what theyve seen. A warning the pandemic isnt opiate speaking to the Bio Technology and the way pharmaceutical industry is meeting the challenge. There are a lot of Companies Involved for die no, ticks, they are pew ticks. Typical antivirals, antiinflammatories, coaing u lags im heartened by the fact that the industry has really stepped to the play. Very much different than what we su with sars because the industry is not stupid theyve figured it out an update on what we told you about yesterday, the w. H. O. Walking back some earlier comments about asymptomatic spread saying much is really unknown. Joining us now, dr. Scott gottlieb, former fda commissioner, cnbc contributor, serves on the board of illumina and pfizer talking about the comments from the w. H. O. , they seem to have been walked back there are people suggesting that this was done under some kind of pressure from the media or health care. How are we supposed to think about this especially because the w. H. O. Has flip flopped on issues i dont think they walked it back i think they made a premature statement about the asymptomatic spread china went back and retested all the citizens of wuhan, they found cases of asymptomatic and not a second spread. Other studies have looked at Contact Tracing and studies that look at the viral tighters in people that are asymptomatic and presim toe magnetic spread a single data point on testing in china to show it isnt as robust as we previously thought. Thats what they seem to be talking about, probably prematurely. I dont think they so much walked it back as they clarified it we are seeing a growth of spread in texas specifically where it seems to be moving higher because the public doesnt know how much spread is, quote unquote acceptable what is expected and not expected, how are you thinking about that right now when you look at texas and you start to think what look, i think politically, we are going to tolerate a lot more spread Going Forward than the first go around. The Health Care System will be more resilient weve been able to stockpile resources. We should be able to reduce fatality it will be hard for places to go backwards. I think youll see much more spread tolerated before we take mitigation steps which will be more targeted. Texas right now has an outbreak. They are reporting about 15,000 cases. They cant claim they are testing more so turning over more cases the positivity is going up indicating an outbreak is under way. They will have to figure out how to quell that. One thing if they had good contact traiting, which they dont. Find out where things are occurring and take mitigation steps in those places. In wuhan, they trace it had to certain places and targeted those. Texas will now have to target intervention they are now in phase three. They started may 1 basically reopening everything a lot of things have been open by at least 25 levels since may 1 and 50 since may 18 the state has been open a while. Theyll have to figure out the spread and take mitigation threats in a surgical way where the spread is occurring. Doctor, to build an andrews question, its really confusing even for people following the news and watching what has been happening. In new jersey, they lifted the stayathome order people have already been going out moving about more freely before that. They now say you can have gatherings of up to 100 people with masks it was confusing before but getting these mixed signals says it is okay and some say it is not. Advising to people to listen you get invited to, say, a bridal shower. Do you go . I would listen to local advise there is a patch work of approach some states with more spread are opening up more. Some states being more aggressive the tristate is aggressive in terms of reproduction rates. I would limit socialing and wear masks. Limit trips out of the house and Shopping Trips particularly in settings where you know is more conducive to spread. Certainly in the tristate area that we know are hot spots areas like california and texas. Around houston right now, they could lose sight of this quickly. Talking about the seasonal effect we might not get more effect in july and august. This might be it we might be stuck with this level of spread and we have to figure out how to keep that from going any higher doctor, just to follow up on that final question, when you think about what is taking place in texas you said we wont go back. What should we think is acceptable you said we had 2,000 hospitalizations in the state of texas right now. I hate to say this but it appears based on the statistics, it would appear that 2,000 hospit hospitalizations would result in 200 deaths the way they seem to go the question is if that number gets to 5,000 or 10,000 in terms of hospitalizations, there for, the risk of death becomes higher i know you are saying states will continue to stay home politically and within the health care community, at what point do you think there comes a real fight over this i think they are going to base it on hospital utilization and resources. The idea that we could manage towards a certain level of disease and keep it there. We are not going to be able to fine tune this. Not having to take those tough mitigation steps and get above those levels this is a very precarious situation where we seem to be following the level of disease looking at hospital resource utilization. I think you will start seeing push back from providers they arent going to want to provide medicine in the covid19 taking forward the decision to reduce the spread and tough mitigation steps what we really need are states with good Contact Tracing. It isnt just to keep numbers down but to fine tune those steps to know where the spread is occurring if texas finds out that the spread is happening in bars. They can bring them back down and shut them back down and have a surgical intervention. The Contact Tracing will tell them that. Is there any state right now you think is doing Contact Tracing well, should be a model . Massachusetts ive worked with the governor of massachusetts, new york, california, maryland, those are states that have made investments. I dont know all the states. Those states i do know and they are making a lot of investments in that. Okay. Dr. Scott gottlieb, we look forward to talking to you again tomorrow becky, over to you when we come back, many in america are struggling to see what the states will look like well take you to china to see how some there are returned to some form of normality take a look at the biggest market gainers and decliners in the s p 500. This is decision tech. Find a stock based on your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. A newlywed. A guy who just got into college. Thats why behind these masks, Johnson Johnson scientists are working to accelerate development of a covid19 vaccine, drawing on decades of experience responding to Public Health emergencies like ebola and hiv. For the life behind every mask, the clock never stops and neither do we. music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. As states begin to reopen, be inmbeijing may offer some insight. Eunice, you led us through the beginnings of this we saw it there long before it hit our shores wondering what life is like for you now . It has gotten better. It feels odd, i no longer have to get my Temperature Checked everywhere thats one of the latest changes as china emerges from this pandemic up until this weekend, boxing with others in a basement gym in beijing was banned now the Chinese Capital has loosened restrictions, people like this are working out even without masks. Translator i feel safe, the gym is professional and vent lain is good. Beijing is becoming less strict about masks most people still wear them. Rules are relaxing this is a Temperature Check. It is empty. More and more places are opening up restaurants no longer require customers sit three feet apart or register i. D. The looser approach is bringing more to businesses like the basement gym and their workers translator our staff hasnt been able to work for the last six months and was paid less than usual now we pay them their full salaries another welcome step towards normal life. Another way things have normalized all the schools here have reopened schools screen temperatures and make sure desks are socially distanced. Also, domestic tour groups are now allowed to restart so people can travel domestically, just not in group that is so good to hear i dont care if i ever go back to the office but i would love the kids to be able to go back to school. They miss it i could use a break. Please please a lot of parents here have said the same thing. The way they are doing it, they have Temperature Check at the beginning and various channels to keep kids farther apart. It is hard to keep kids from hugging eachother. Thats one of my big fears. Desks are farther apart with p. E. , they have more intervention from teachers but also made a couple of changes where classrooms everybody stays in the same class. Before, people would switch classrooms now all the teaching is done by one teacher. They are making changes in order to adapt was there any debate in china about teachers in the United States right now among teachers unions now is which teachers go back do certain teachers not go back and do they get paid was that an issue there . No. It hasnt really been an issue as many say in the United States the system is really different here the pay of teachers hasnt really been discussed. Talking about if you are not at work, the fear is that you wont get paid as much thats the discussion people are having here but not so specific to teachers. Up eunice, it is a ray of ho for us you look great thank you. Futures now are not down triple digits. They are down 86 or so s p and nasdaq are both negative they have been a little above the flat line. We will talk Market Strategy ahead of the break, well look at s p 500 winners and losers. As business moves forward, were all changing the way things get done. Like how we redefine collaboration. How we come up with new ways to serve our customers. And deliver our products. But no matter how things change, one thing never will you can rely on the people and the network of at t. To help keep your business connected. The nasdaq briefly topped 10,000 yesterday as continuing to move higher dow futures down by about 80 s p down by about 4. Joining us now to talk about investing in this market, managing director at douglas lane and partners and chief investment strategist at capital wealth and planning. It has been phenomenal to watch where this market has gone over the last week and a half what do you think and what are you telling people what would you be doing with your own money . I think you are right the market has had a vshaped recovery weve been consistent to say stay invested. Within the market, there is pockets of opportunity im not getting too aggressive doing the same thing with myself looking for some wait and see Going Forward. If you are too overallocated to Technology Stock like the faang. This is a good time to stay invested there are pockets of maturity and pockets with he still like in there well come back to you on some of those opportunities in a moment jeff, your thoughts. I know you had a particularly positive outlook in terms of where wed be headed how do you feel now . We had a pretty good call we had a buy signal on march 24, the day after the market bottomed we think you are in a secondary bull market. It is not usual to try to pull stocks down here i dont think it gets very far or deep. I think well make new highs before the snow flies. Joe i want to grill down on what you are saying you did call it. You said wed be at 3,200 at least. Year end, you went as high as 3,400 or 3,450 are you there . Even 3,400, there is not that much left, jeff. You think above 3,400 is coming or are we going to consolidate around this . If you believe my earnings estimate of the s p of 170. I can make a very strong case even though the pe ratio is above historic norms in this rate, we ought to be above the pe model that would give above the 3,400 to 3,600. The Retail Investor is not only conscious. They are scared to death before it is over, that money will find its way into the equity markets lets talk about some of the opportunities you are seeing if you are telling people some of the faang stocks risen so much, they should pull back. Where should they put their money to work . Youve got jp morgan and bank of america you look across different sectors. Companies like cvs trading at deep discount and industrials like honeywell great Balance Sheet, good dividend ba being to technology not just with the faang but 5g, qualcomm and American Tower there are opportunities there. Investors have to be very careful there. The market has been driven by these faang stocks also in other specific stocks. As we go forward and we see more of the opening of the economy in fits and starts. Given where we are with the amount of stimulus we are with the fed and fiscal stimulus behind it. I think the opportunity for the stock market over the next 6 to 12 months is higher. Given how far weve come back, we need a little consolidation and we go forward from here. Thats a good point just the amount of fiscal and monetary value, well hear from the fed chair jay powell if we hear anything from them to suggest that they may be as concerned maybe these wont last as long, would that make you change your mind about the breath and the depth of this potential rally . No. It would not, becky. I dont see any policy change out of the fed talking green chutes the equity market is looking past these youll get a much stronger rebound in the third and Fourth Quarter than most people are expecting. Thank you both. Youve both made some really good calls we appreciate having you here today. Well check back with you both soon okay coming up when we return apple shares hitting a new alltime high. What sent that stock soaring and how to play the news some of the biggest leaders. Led by Cosmetics Company coty. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Coming up, apple shares soaring to new highs along with the other big guys like microsoft, facebook and amazon well get reaction from an analyst next as we head to break, take a look at shares of vroom whose shares more than doubled on nasdaq yesterday. The online retailer allows autos to be bought and sold without customers having to visit the stores well be right back. Announcer dont forget to subscribe to our podcast youll get interviews, original content and behindthescenes content. Look for us on alepp podcast or your favorite podcast app. For. Fidelity. Try natures bounty sleep3, a unique trilayer supplement that calms you, helps you fall asleep faster and stay asleep longer great sleep comes naturally with sleep3. Only from natures bounty. Find a stock basedtech. On your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. Apple, the shares closing yesterday at an all time high. Stocks rallied 50 now has a market cap of 1. 5 trillion joining us to discuss apple and other tech names, tech strategist at wolf research. Apple is the most valuable lets check. Its been up in a perverse way by covid19, i guess, accelerating the Digital Transformation, stayathome, things like that you have to mention the flood of liquidity from the fed which has been more important for these stocks point ever liquidity is more important for the entire market. I remember we talked a few years ago could apple become a trillion dollar market cap we put out a report a few days ago, if anybody is a winner, it has accelerated Digital Transformation and apple stock has been absolutely amazing. Even if you take the top 25 market caps in tech its the best former in 12 months, the best performer over three months its 25 times over earnings. Theyve had five quarters of beating numbers and Earnings Growth looks like it will accelerate so still in pretty decent shape. We had some broadening out of the move not just tech but markets in general your troubled so much is concentrated in these beloved names right now . Well, we certainly have been troubled that within tech its been very focused on large market caps and our universal is equal weighted until april its been a market performancer for the last 12 months within the last two months, it has broadened, so in tech im encouraged were seeing broadening in terms of tech dominating the market it looks a little bit like 2000. Things are different these days. The quality of companies is much better the Software Companies are real not just about eyeballs. Were gets over bought in the market so eventually consolidation is likely. If you look at the hardware, semi, software, Internet Services would you buy them across the board or which of those would you segregate the main part of your interest you know, joe, we would be selective. Were still under weight because of hardware and semis. Semis are doing a bit better its still early software we downgraded its become expensive. Most expensive names in tech company are up 40 and you got some really high sales ratios there. Were getting a little more concerned about software we tend to be in internet which has done extremely well particularly ecommerce and services particularly in the Transaction Processing payment space. That comes back with the economy. So square, names like that we would be overweight in services. When did apple, even as steve jobs first talked about making their own chips for the mac. How long ago was that . Now it looks like its really happening as of some news yesterday. Is it going to happen . Why is that is that a positive for apple or just more a negative for intel it probably a slight positive for apple. Its been speculated on for a couple of years. Theyve been working on it for longer than that it says a couple of things number one, apple always wants to control its own technology. It expects to bring better products and experiences to customers. Second, as you point out, it is at least marginal negative for intel. Tsm and taiwan has moved past intel in terms of processing capabilities and. It argues nvidia the is the processor doe watch Going Forward. So i think nvidia will be a big winner already has been and will continue to be in the future i think its positive for apple. I dont have an apple car yet. Cant fly around in an apple car. Nothing really in terms of a great apple tv still phones, right . Here we are at 1. 5 trillion. So it happened without that big new move air pods are important i have no vr glasses why did it happen . What does it need to do anything make an acquisition or something or come up with a brandnew exciting product or is it just going to be these incremental steps forward . I think theres a recognition that apple is an eco System Company and obviously the big change in recent years has been services which isnt that unusual. Hardware companies build Bigger Service company. Apple is different than most its a recognition theres staying power. Theres Free Cash Flow and big buy backs you can bet on at the same time theres some concern about lack of innovation and i would say that the wherewithal is really important with apple you mentioned air pods we put out a report about future gaining of internet into combination an real and Virtual Worlds apple will be a big player there with some form of vr glasses they are not as innovative as people hope but its still coming do you have to have some new big products and drive more service over time. Okay. I dont know about the watch i guess its okay. Sorkin, you still got that watch on your sitting in your seat . Do you still have the watch on, sorkin im not wearing it right now because its just upstairs charging i dont have to walk around as much i do wear my aura ring what room are you in right now . What does it say my mood i only got my energy level is at an 83, joe. My readiness today 83. It says easy does it whats good for you says easy does it im doing great. Anything over 87 is a good day anything over 87 is a good day music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. Stocks trying to find their foogt after snapping a six day winning streak Blackrock Rick Rieder will join with us an outlook Retail Sector and what stocks may be in fashion now. We got a look at the sector and names you should be buying or avoiding its back to action for pro golfers. Pga making its official return tomorrow tour commissioner joins us to talk about the changes being made to keep everyone safe second hour of squawk box begins right now good morning, everybody. Welcome back to box right here on cnbc. Im Andrew Ross Sorkin along with becky quick and joe kernen. Take a look at u. S. Equity futures at the this hour well show you whats going on, on this wednesday. You know, just marginally off by seven points s p 500 looking higher a little over two points hire nasdaq looking higher again, up about 20 points. Lots of news coming out of d. C were expecting it later today i dont know how much volume there is but were down triple digits just 15, 20 minutes ago suddenly were up on those other two indices and the dow is almost unchanged theres a fed meeting today, a two day meeting wraps up today and this afternoon fed chair, j. Powell will likely address the outlook for the economy and the pace of the recovery and now with the wednesday edition bringing us the wednesday edition of liesmania, Steve Liesman. Steve, good morning. Reporter joe, a huge outpouring of support for this idea of liesmania, maybe three or four just works too well it is something we witnessed over the years reporter it is it is. Definitely something let me talk about the fed meeting here where i suggest theres some risk associated with it because theres really no clear market expectation for what the fed might say or announce today and thats because there really hasnt been a clear signal from the fed about where it goes next lets look at some of the keys to the meeting first of all, some speculation we might get some more solid Forward Guidance on rates than they link keeping rates to low to some data to inflation, maybe unemployment that could be something that happens later. How does the fed, especially the fed chairman at his press chairman react to green shoots how much more will the fed do beyond what its announced finally the return of the dots the fed skipped its forecast in march and now they come back and theres some speculation, speculation that one of the dots may be negative. Ill talk about that in just a second first i want to show you again from our Federal Reserve survey where the market is in terms of expectations for this question on the fed survey you could have pick any one. It adds up to more than 100. 51 we can get date based guidance 42 said dish additional qe could be announced and 29 said caps on bond yield which would help the financing of the deficit over the years so theres three Different Things that are the leading candidates none expected tomorrow and not nearly an agreement on over time. Lets talk about these negative rates. Chairman powell has quashed the idea it would be something imminent or even in the top tier of the feds tool box. Theres some getting a lot of play is this report from the st. Louis fed or two researchers there who wrote about the need, potentially for negative rates if you want a decent shape recovery you need aggressive policy what does that mean . They said aggressive means the negative aggressive policy they said means the u. S. Will need to consider negative Interest Rates and aggressive Government Spending such as spending on infrastructure i dont think jim is an advocate of this. If theres a negative dot that could be it. We talked about the extreme. Lets talk about the consensus Kathy Bostjancic states at any time best. We expect the fom. C to make clear that the policy rate will remain at story until the recovery is firmly in place. That the fed stand ready to len via its emergency facilities we knew that going into theres some upside risk the fed could surprise by announcing something that the market isnt ready and maybe down side risk that the fed is unclear what comes next and maybe too optimistic about the recent data. Did you see yesterday that the fed will stay at zero until unemployment gets down to 3. 5 and that could be four years do you think they are iran that camp right now does it really need to get back to 3. 5, at 5 or 6 wouldnt you start breaking rates to get some ammo in the tank again reporter joe, thats just a brilliant question because it really posits two issues for the Federal Reserve. Ive been thinking about these things and trying to figure out what is the aim of policy here is it five, is it six . Whats happened to the nonaffiliationanon noninflationary rate. Getting back to 3. 5 is a very aggressive policy. But i think the fed can say, you know what . Im not going to target unemployment, because i dont really know the relationship between unemployment and inflation. What i can target is inflation and let unemployment go where it is and i think that avoid a political issue here of where the fed should aim when it comes to the Unemployment Rate and getting back but, yes, the markets already see zero for a year. And most people think its going to be low at least two years so 2022 before the next rate hike if theres one that comes amazing becky. Thank you were going to talk more to steve. In the meantime lets bring in another voice for us joining us right now to talk more all of whats happening is rick rieder, chief Investment Officer of Global Fixed Income at blackrock and head of global allocation there rick, if that wasnt enough to discuss and talk about, let me add one more layer to this i dont know if you saw james gorman he was on closing bell on cnbc yesterday. He said that if youre looking at the unemployment number you have to remember the ppp, the Payroll Protection Program may have kept a lot of these companies open, the Unemployment Rate down. When that runs out there are questions about it when you look at these Small Businesses you have to wonder if they are viable businesses at this point we still have at that lot of work that needs to be done should we be concerned about those issues or think j. Powell, the fed and federal government will step in if there are additional problems there . So, becky, i think you hit the nail on the head in term of the issues out there by the way one of the paradoxes out there in term of the marketplace, the fed has to keep and the feds goal is maximum employment so while the employment number was breathtaking in term of the speed of the recovery, there is still going to be a persistent unemployment dynamic that will deep the fed on hold for a longtime which well hear from the chairman today because of those Small Businesses, because of by the way, people 65 and above who left the workforce will be a persistent drag and the big question is when that comes back youre going to have whats the higher Unemployment Rate for a period of time going into the beginning of next year youre probably going to have an Unemployment Rate thats in the high Single Digits thats a recessionary type of Unemployment Rate. It means and what well hear from the chairman today is youll keep rates on hold at these levels for a long period of time. That gets into part of one of the challenges well have and is the equity market is going respond to that and financial conditions will get easier and easier thats the bond the fed is in and part of the challenge they have to deal with over the coming years its not just the fed, though its the Public Policy weve seen the fiscal stimulus thats gone into this as well and how just in terms where the markets are right now if we dont see additional the stimulus the white house has said they want to see a fourth plan but you got to look at the differences between what republicans and democrats want at this point its not going to be easy. How much of the gains weve seen recently are riding not only on the fed but additional stimulus money . Youre right. Markets anticipating to get another round of stimulus. Chairman powell has been talking about the most effective form of policy Going Forward is more fiscal and its incredible fiscal state and local assistance assistance around the health care dynamics. So theres going more. I think youre right the markets are anticipating that. I think people and ive heard it on your show and others for a longtime now, people dont think about the amount of stimulus thats gotten into the system is so big and not only is it so big the multiplers on top of it are so significant why people continue to be surprised if you look at the consumption data, the credit card data, the debit card data, some industrial data, consumption is improving by the way, the housing numbers are pretty impressive. I think the markets while they are will continue to want more and ask for more people are starting to realize that this stimulus, monetary and fiscal is very large and will get into the system Going Forward can it bring down unemployment back to that 3. 5 that steve was talking about as he said, i think thats going to be really hard okay. So, what do you do now even after these gains . This wasnt an easy call a month ago or two months ago when people said get in, put money in stocks its even more difficult now that youve seen the gains weve picked up. What do you do i think its much more difficult now. You know the market when you look as you said on this show, the pe multiple its hard to get your arms around the pe multiple on a short term basis. When you think about the text market it is closer to 5 . Thats a pretty generous number when youve got Interest Rates that are going stay low. So what do you do . You have to have equities in the portfolio. In a balanced portfolio to not own equities when Interest Rates, you think about the whole five year, functionally zero you have to be in equities keep a moderate position some names that are running up, some of the value stores some companies that are still going to have a hard time is a bit overzealous but i think technology will do well. Some of the industrials are coming back. Some cyclicals make sense. I think key for a portfolio is while having some equity in the portfolio, building income you got to build income. Why you see demand in the credit markets, parts of the emerging markets,you have to get income fed wont allow you to get income through what they are doing through mortgages, where do you get income. Credits markets are interesting. Build some credit in the portfolio and other forms. Talk about different forms of getting income thats big in the equity market, you can stop call openings against your equity position because credit is still high. Build some balance in your portfolio. What specifically in terms of where you build that income . What else would you the tell people so, i think the credit markets are still interesting other than a little bit because you have so much supply. I still think that market is okay i think some of the secured markets that are clearly starting to come back gets you, whether thats in real estate area, Residential Real Estate area which we would argue is in really good shape. Thats a pretty good place to get some income. Options. Use option strategies in your portfolio. I think makes some sense convertible bond market has opened up and thats an interesting way to get some debt and equity and we got involved in that recently havent seen that market in a robust way for a period of time. Get a bit of if come and get your Equity Upside Potential the market doesnt give you that much data to get it and people need to search for where you get income by the way, there are parts of the emerging markets not in some of the diceyer places, that are creating some greater yield and have some persistent growth dynamics within them rick, thank you i enjoy our conversation well have you back again very soon thanks, becky thanks. Andrew okay. Coming up when we return the latest read on the housing sector as the economy reopens well run you through some of the new Mortgage Applications. Heres an early look in how stocks are moving. Squawk returns right after this can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Talk to your financial professional or consultant bbut what if you couldg do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Welcome back to squawk box we got some news out on tesla. Reuters reporting on a memo sent by elon musk that says its time to bring teslas to production production of the battery and power train would take place at teslas nevada factory and most of the other work will probably be occurring in other states this comes right after weve seen the stock run on the new semi and other truck maker so well see what happens to the tesla stock but also to the rival. I wonder whether these announcements are connected at all. Becky. Thanks. The latest report on Mortgage Applications of just released. Diana oleck joins us now with the numbers. Hi, diana. Reporter rising Interest Rates did nothing to deter the continuing onslaught of mortgage demand from home buyers last week applications for loans to purchase a home rose 5 compared with the previous week and 13 higher than the same week one year ago now Mortgage Rates started the week near a record, low but then Rose Steadily throughout the week with a spike on friday following that surprising may employment report. The average for the whole week was only up slightly those the 30 year fix rose to 3. 8 low rates to start the week fueled the 11 jump in applications to refinance a home loan that volume was 80 higher than the same week one year ago and thats when Mortgage Rates were 74 basis points higher refis were up for the week the annual comparison is getting smaller as fewer borrowers are now able to benefit. Lenders are not offering the best rates on refis because of added risk in the market because of coronavirus mortgage relief programs diana, thank you. Coming up, golf guesting back in the swink thing. Pga making its official return tomorrow on the golf channel well speak to the pga commissioner jay monahan about whats going on, precautions they will be taking to keep the players and okcaddies and essential personnel safe who will be there. When its on golf channel. Meermoow and friday. Well be right back. Eighty dollars. A hundred dollars. I had good health insurance. Why isnt this covered . Well, then they started getting bigger. Eighthundred dollars. Eighteen hundred dollars. I saved for this. But not that much. Im glad i had aflac. They gave me money when i needed it most. Thats why aflac is here, to help with the Expenses Health insurance doesnt cover. I love that aflac duck. Aflac get to know us at aflac. Com our Retirement Plan with voya gives us confidence. Yeah, they help us with achievable steps along the way. So we can spend a bit now, knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Oooh, well. Im good at my condo. Oh. I love her condo. Nana throws the best parties. Well planned, well invested, well protected. Voya. Be confident to and through retirement. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Pga tour making a big robertson since the coronavirus. The Charles Schwab challenge gets off tomorrow. Spectator free jay moynihan ive played with you you need broad shoulders that the entire country and sporting world is watching how this goes, and precautions youre taking to make sure that it can to be done and all of us, i think i speak honestly for all sports fans, we want this to work. We need this to happen you good with this we are good we are excited were confident. And our players are ready. They certainly have been eager but, joe, its hard to believe that on the pga tour we only played one round of golf since i left the three you on march 9th. Since we left here on friday the players championship a toch work has gone into resetting our schedule, thinking through eligibility and obviously developing a health and Safety Program and protocol and that began last week, players, vast majority of them are already on site in fort worth, have gone through testing and its going exceedingly well i want to talk about that as a golf fan i just want to talk about whats going to happen down there. So except for the players tournament, there are more tour winners, guys that have won a tournament than on any other tournament, i think. So theres only what 40 guys that could be first time winners out of the 147 or something, right . Exactly right we got top five in the world 16 of the 20 in the world. Virtually all the top 30 coming into this in the fun and one of the only times we ever had 100 winners in a field so players have been away but been eager to return we got a stacked field at Colonial Country Club and players started come in over the weekend to prepare not just for this week but for a great run that will take us to the end of the fun playoffs 14 tournaments over the course of 1 weeks like a lot of other sports were coming back in the heart of our season with a lot on the line. Youll see great fields in the weeks that follows tiger wont be there. I wish he would be there at every tournament the only guy similar to Michael Jordan in terms of just dominating i wish he was there. I dont know why hes not. Rory is number one, right . R hes never competed in this tournament koepka and jon rahm. Its going to being a great even without tiger. Joe, like i said, youre going to see the best players go on a run here not only through the fedex cup playoffs its really a great moment for our sport because as weve worked through this pandemic, a lot of golf courses have been opened and today you got 50 states, 95 plus percent of golf courses opening. Now to see the worlds best players in the heart of the golf season a good thing for our industry and i know our players are excited to inspire the game and make a great contribution to the game and to peoples well being. You guys have covered this really well as you talk about the return much sports and were honored to be in a position to be one of the first. Weve and the it very seriously. We feel its not only a responsibility to our players and our constituents, but as you see more and more sports getting back up online this is a really important moment as you displayed, i will tell you that, you know, when you talk about reopening, we sit here on wednesday morning, we had every player and caddie that was coming to fort worth tested last week. Pga tour players on site this week, we had 481 that have been tested through or Sanford Health lab and to date we dont have any positive tests so were invited guests in every community where we play and to come in and to know our small bubble has tested negative, i think really puts us in a good position as we walk into this week and as we move from market to market including going hilton head for the rbc heritage next week and travellers the following week becky, you got a question for jay i do. Jay, just on that point, it seems to me like you all are in a pretty unique position i dont think other sports will be able to have the same luxury golf is a noncontact place you think other sports leads will be able to come back as quickly like you all are doing well, you know, im excited to see that other sports have announced that they are going to be coming back in the coming weeks. But, becky, youre exactly right. Thats why people have been able to play our sport over the last couple of months were not taking anything for granted. We have identified every movement a player and caddie has over the course of the week. Were executing our testing plan but then an on site safety plan and our sport lends itself to social distancing. Were going make certain the sanitization we have on property, the fact were limiting spectators. To us its about returning this week and doing so in great fashion but a sustained return and were going to be we think we have an excellent plan, a plan thats been developed with a lot of medical advice from our medical advisors to outside experts and keep adapting that plan to make sure we put ourselves in the best possible position again to sustain pga golf for a lightning time to come pga tour in terms of charity has always been socially conscious and responsible and youre honoring the memory of george floyd as well and youve weighed in a heart felt letter that i saw as well so its impossible not to at least mention that i think at the beginning of the tournament, people tee off at no one. Will be teeing off at 8 46 were observing a moment of silence, moment of prayer, moment of reflection each of the four days. And, you know, to your point, joe, the tour has an unbelievable platform. I mention the fact were invited guests in every community where we play. And as we look at where we are right now, coming off the pandemic and with the racial and social unrest to us, as i said, were going step back. Be a part of the dialogue. Be a part of the solution. And well work with all of our tournaments in those markets as we go forward to make a difference our sport and the pga tour platform puts us in a position to do so and im inspired. I know our constituents are inspired to do exactly that. We played, so you know that me and the caddie, major social distance hes usually off somewhere, you know, nowhere near where i am, looking around, you know, trying to or after a chip hes very close to me because its usually like three feet from where the first shot was anyway youve seen that. Jay, well be watching i was going ask you,000 bet on this because i havent hit the name of the bet on draft kings i can pick the guy to win out of 147. Is there a way to do it, pick the top ten. Do you know . Have you tried i cant try but im certainly well aware and i do know this week theres over 3 million pool from draft kings, i believe the largest ever look at you were all backed up. Theres an opportunity they have what they call a millionaire pool we got a partnership with draft kings. So a lot of innovation youll see here in the weeks ahead. Koepka, he hasnt gone anywhere hes been playing well. Okay. Jay, thank well be watching on our sister network. Thanks for coming on today i appreciate it. The tournament kicks off tomorrow on our sister station, golf channel will broadcast for the first two days and then some other network will try to do as well as the golf channel and nbc does watch thursday and friday. Watch even if its on cbs. Go ahead andrew still to come this morning on squawk box, shares of Chesapeake Energy dropped. The company considering to file for bankruptcy well get whats next for the fracking pioneer seeing some big moves. A lot of bankrupt companies that people are day trading later well drill down Retail Stocks amazon, costco and walmart who have been big winners during the pandemic a look at what other names for the retail rally as states reopen. Squawk box returns right after this. It has been a dramatic week so far for chess speak energy. The stock of halted numerous times after spiking and sinking and theres talk that the volatility was driven in part by Retail Investors investors are doing some crazy stuff, brian between this and bankrupt companies and everything else. I wonder, it looks a little frothy maybe is this a sign of that, do you think . Reporter everybody wanted the Retail Investor to come back and they are back and everybody is bashing the Retail Investor you said crazy week. Look at that chart chesapeake 13 five days ago to 80 bucks, back down to 22 the company on intelligent bankruptcy and i want hasnt hasd it may hertz and j. C. Penney, booming many stocks of bankrupt companies are trading or were trading above where they were before the bankruptcy. Now i dont need to remind our Intelligent Office that often the bankruptcy process deequity goes to zero or at least close to it because equity holders are the very bottom of that credit tore chain whats going on . Is it Retail Investors its partly. We all know and talked about robin hood but its market structure, guys. Its how the order flow may be processed. I know its early. I dont want to be too wonky even earlier on worldwide exchange, they track order flow and market moments and he reminded us of one very important point. Robin hood sells its order flow to the High Frequency trading firms. Listen to how that works in all of these firms sell their order flow to highspeed traders. And this is a key reason for how some of these stocks have behaved that you would think have very little to back them, that would support the equity valuations that you see today. Reporter so, guys, think about that andrew think about that. Trade on robin hood. The order flow goes through schwab or whatever and sell to it a high frequent trading firm. The firms know what stocks investors either are going to bet on or soon to bet on they can push back that stock up they can push that stock down. Its all very interconnected and i have a feeling if this goes on, it gets blown up as they say in terms of buying it at five and having it go zero overnight it might get the attention of regulators nothing illegal. Its how its structured High Frequency firms who capital people are buying ahead of everybody else weve been talk a lot about robin hood for a longtime and some of these other trading platforms selling this data. Why do we think its showing up right now . Why are we focused on it in this way . Wouldnt this to be done across the board with all stocks or is this something particular about stocks that are bankrupt or just so unusual were all looking at it and going this makes no sense and now were trying to make sense of it. Yes to all of your questions i think theres a few things number one trade is now free just a couple of months ago everybody went to Commission Free trading number two, stuck at home for a couple of months not much to do joe just talked about golf why not get in the market. The number three, these stores lets be clear, are cheap on a real basis if you mayou 35 correspondent cu can get in for a couple of hundred dollars. The stocks are inexpensive free kind of sexy again, if i may use that the Justin Timberlake trade. I just coined it they are bringing sexy back. Remember that order flow and what you and i want to do in robin hood is all interconnected do you know of anybody that works i got to think about that i like that. I like that idea brian, thank you bringing sexy back we appreciate it well see whether, whether it ends sexy or not for, for our viewers and for traders playing this game. But in the meantime well discuss a little bit of realty brian, thank you again looking forward to seeing you soon, of course, on worldwide exchange. I want to discuss the individual investors role chief investment strategist at td merge and mike santoli, good morning to boston you. Weigh in on this were looking at these stores companies that are filing for bankruptcy, they are likely to end up with, you know, maybe zero, maybe its a couple of cents. I dont know what you think. J. J. , whats behind this well, if i could address a couple of things number one in terms of how order flow goes, very public information. Its on the 606. We do regular and irregular with anyone who interacts with your order flow to make sure our clients get the best fill possible 90 of our orsd get improvement in terms of price. Theres more to that story and, you know, an accusation that firms are racing our order flow, i think people should be a little bit careful in making that type of thing because, again, this is all public and very, very well regulated by the sec you know, andrew as far as a march negative around retail traders. 18 months ago we would throw up our hand on wall street and say oh, my god the retail trader, households arent participating, why arent households participating in the market. Now households are very much participating in the market and all i hear i cant believe all these people are doing this. So the one story thats not being told here is, when we are seeing, you know, unbelievable theres no question about that. Were seeing a three expert participation in our education with the number one thing that people are looking up is fundamentals of stock investing. Are some people making bad decisions . Of course. Always going to be some people that make bad designates but people have the time to actually look at their investments for maybe the First Time Ever and understand not only what they are trading but hopefully their 401 k s, et cetera dont everyone is talking about go ahead. Just to respond to this i want to bring brian back into the conversation just because weve been having the conversation before we began ours and i know he has a thought and wants to bring it in brian . Reporter yeah. Thank you, andrew. J. J. , i love you but im no accusations. I want to be clear what im saying and maybe my mouth isnt working right. Totally everything is above board. What i was trying typical ply and obviously i did a terrible job, was simply because the way the order flow works it can push these stocks either up or down a lot faster than it normally would because lets say i want to buy 500 shares of a corporation and and everyone. Reporter and they see that order flow coming from a lot of Retail Investors, maybe they buy 5 million shares not because they are going anything illegal but they can see the way the wind of investments is going and it works up and down. All i was trying to suggest because this is all set up, all above board is that it might be the reason for these extreme price moments because of that. Is that a fair statement yes or no . What i would say is ill never speak for another firm but the experience we have, citadel being one of them has been phenomenal as i said everything is very highly regulated how anyone else runs their business i cant speak for im say our experience has been very good. Let me bring mike into the conversation mike, do you think theres any i mean clearly theres money to be made or somebody is making money trading these bankrupt zombie companies. How dangerous a game is it obviously some reckless stuff going on people yes, s people less informed if you the think about it, so Many Companies were driven down to prices, stocks were driven down prices where it implied a high probability well go extinct or get life lines. You got Government Support the for airlines if you looked at macys or American Airlines or Carnival Cruise lines they were on the brink. So my point is its sort of an extension in an extreme version of whats going on in the market in general where companies are getting reborn and we thought they were on the brink and then they came away from the brink now, i think multiple things can happen at once, which is you have this sort of pocket of hyper active trader activity sort of speeding on its own. A lot of things came together at once zero commission. People staying at home on the other side more traditional investors have been very skeptical of this rally floss in terms of equity funds have not been strong hard to extrapolate whats going on in the pocket of the market and saying everybody is too bullish, the market is too crazy and it says something grand about where we go from here in terms of the Overall Index j. J. , speak to that the other thing i want to say the 6 00 hour this morning he made the point theres 3 trillion sitting on the sidelines here making the bullish argument. Youre seeing the flow youre seeing what retail customers are doing. What do you think the sentiment is right now well, you know, its interesting, andrew. We saw what our clients are buying and selling we have a volatility factor interest what it does show its at the low end of the range i would your point is well taken here our clients, they are definitely being involved in the market but they are not all in by any stretch of the imagination you know, if its the old toe in the water, maybe midthigh at the absolute highest even below our average level of exposure to the market okay. J. J. , thank you so much for helping to explain all of this mike thank you brian, thank you for stirring up a little bit of a debate this morning but an important one im glad view earns the public could under it better. Thank you all for the conversation becky, over to you all right, andrew. When we come back, Retail Stocks you should be buying now and the names you should be avoiding well take speak to a Retail Consultant he has some thoughts now that macy has secured funding for him that was okay. At the top of the hour well speak with senator Jeanne Shaheen. Squawk box will be right back stock slices. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. Welcome back to squawk box the dow will be ready to turn positive down about three points. Nasdaq now showing some pretty good good gains up about 44. Setting new highs. S p is now indicated up too. So news out on what happens in the stock market today as it always is at this time stalling box will be right back at leaf blowers. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start trading Commission Free today. Dont get mad get e trade and start trading bbut what if you couldg do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Welcome back, everybody. Winners and losers are emerging in read. Amazon, walmart, tar gaent coge costco are the ones doing well they were allowed to be open during the pandemic. Macys is in a position to do well as well that 4. 5 billion helps us invest in our business as we define as the strategy back in february and it also helps us retire debt ma the tony stewa maturities coming in january 21 and january 22. The ceo of jay rogers worldwide and yesterday you sent me a note that laid this out you said now that macys has secured funding you can see the entire chess board you know who the winners and losers are we know nordstrom will be with us. Macys will be with us kohls will be with us niemann, saks, lord and taylor are gone we know that as you come down from that weve got the belks, dillard, some will go away some will be less relevant macy is the only big player. They are well secured through 2022 at least. As far as funding. So they are going to be with us. We had some doubts about that for a while and how that sector would work when you get below that kohls makes it but penneys or sears shrinks or goes away the ones you already mentioned the essential retailers they never struggled at all they were already winning before covid. Now they have a huge head start on everybody else. They got plenty of cash flow they can invest in new technologies everybody is going to have to get better and better at online digital and all the things the customer will want to feel safer as well as contactless transactions thats who will win people who can do all of that and remain open and now we see what thats going look like. When we get to space inside the mall well see a lot of attrition. Williams and sonoma 60 online will be fine and lululemon will be fine because theyve been selling during the pandemic and their business got better and selling the kind of product people wear when they stay home. Theres winners even inside the mall in general with malls losing ground for a longtime. Now its losing ground fasterer and is going to lose it faster i expect to see 20 of the inside of the mall going i expect to see a third of the malls go a lot sooner than we originally thought we had that plan somewhere in the 30 range now we have something in the 2021 range i was thinking about how retail has changed over the last 20, 25 years used to be that in retail it was this battle between the great merchants and the bean counter moneyball of retail where if you had a great merchant or somebody with that special eye heres what will sell and well put it every where and win then well run, well operated companies that were run by the bean counters and those were the ones that sometimes outperformed for the market and more steadier operators. Now i look at it i dont know if either of those can survive in this new world. You have the to be an operator i guess but maybe more importantly you have found how to run an online shipping and holistic retailer, how to do all of those things and i dont know if anybody can survive if youre not willing and able to reach out to the customer in the way they want to shop. I believe youre right. Macys was one of the pioneers of omni channel retailing. But despite that they still struggled because the space is struggling you have to remember, i was in the industry and for 25 years we had a 17 annualized return on shareholder up sales and up earnings for 25 years in a row before 2000. 1975 to 2000 that was a year where the Department Stores were failing fast and the bean counters which we were were still winning the game but that inevitably was going to be surpassed by things like off price selling. Now you go across the street you go to t. J. Maxx or ross and they didnt really exist at the time that Department Store was winning the game they were just starting to grow. We didnt have amazon that could sell anything you could sell pretty much at a price that the customer wants to pay and get it to them the next day that didnt exist either until 1999 for all practical purposes. All that damage thats been done in the whole space, if you call it damage, i call it creative destruction, but that all occurred from 1999 to now. Walmart started its game in 1962 destroying retail. So its been a big change to the retail world thank you good talking to you and well see you back here again soon thank you andrew coming up, thanks becky when we return treasury secretary stephen mnuchkin heading to capitol hill for a hearing on Small Business protections. Well talk to senator Jeannie Shaheen on what to expect when squawk returns right after this. Ever since weve gone mobile on the now platform, somethings gotten into the office. I hear you. Feels like theres no barriers between departments now. Servicenow. The smarter way to workflow. You have the support of a, probiotic and the gastroenterologists who developed it. Align helps to soothe your occasional digestive upsets twentyfour seven. So where you go, the pro goes. Go with align. The pros in digestive health. And if stress worsens your digestive issues, try new align digestive destress. It combines aligns probiotic with ashwagandha to help soothe occasional digestive upsets, plus stress that can make them worse. And try align gummies with probiotics to help support digestive health. Good morning markets ready for their next direction. A day after the dow snapped its longest winning streak since september and tech gains powering the nasdaq to 10,000 for the first time investors once again pay close attention to todays message from fed chair j. Powell the hunger indicator what consumers are craving restaurants are seeing renewed business lock downs easing. New data to enhance our under of nationwide openings. Special skinterview on equalityn america. Citigroup vice chairman ray mcguire will join us as the final hour of squawk box begins right now. Good morning and welcome back to squawk box im joe kernen along with becky quick and Andrew Ross Sorkin now the dow is up. The dow has been the laggard in the premarket session for most of the morning now up 20 points nasdaq really led the way higher for the averages its tried to stay positive for most of the premarket session and, obviously, has been leading the market higher. Those big names in technology, many trading at new highs. Like amazon and microsoft and apple and trillion market caps and like nothing has happened almost they almost skipped at least where the prices are of the stocks almost skipped what weve all been through for the past four months or so s p now up about 8. 5 points. Then either skipped or benefitted some technology from the lockdowns and pandemic kind of a strange way warped anyway, the ten year note is at. 8 of a percent this morning becky. All right, joe, thank you very much. Were going start this hour with the nationwide economic recovery from the coronavirus a group of senators is pitching more relief for Small Businesses those with 100 employees or fewer. This push comes as treasury secretary Steven Mnuchkin gets ready to testify today on the c. A. R. E. S. Act and paycheck Protection Program joining us is Jeanne Shaheen a member of the Small Business committee that will be hearing todays testimony. Senator, thank you for being with us. The announcement is just being made in the last couple of minutes. Why dont you tell us what it includes and the other senators who are doing this with you. You know, New Hampshire is a Small Business state and i heard from a lot of Small Businesses that they got the ppp loan early, the they played by the rules, but now they are about to run out of money this week and next week those loans will be due and for many of them particularly in the Hospitality Industry they were shut down fixes last to open and worried if they dont get some additional help they will go out of business. This is an effort to respond both to that concern and also to the concern of so many very Small Businesses, the mom and m pop shops with under 10 employees who had trouble getting loans. The way the guidance got rolled out many of the Bigger Companies who had long term relationships with some of the big banks got the money first and so we want to try to ensure some of the smaller businesses get actual, get the help they need youre proposing this with two of your democratic colleagues, though i believe senator coons and cardin and i just wonder seems to me the era of bipartisanship is starting to come apart again at some point because different senators represent different states and different stages of reopening and being back in business what the is the reaction, do you think youll get from your republican colleagues on this . Well, i hope they will be helpful. The original Small Business provisions in the c. A. R. E. S. Relief package were bipartisan i worked with senator cardin and senator rubio and collins the four of us helped design that program and got a lot of support for that and im sure that much across the country is hearing from their constituents that Small Businesses still the need help and we need to be able to provide that help. So we wanted to go ahead and put together provisions in a bill that we could then try to get some bipartisan support for. So well be working on that and hopefully the administration will help as well. As you pointed out secretary mnuchkin and administrator will be before the Small Business committee. We have a lot of questions for them and one of the questions i have is are you going to support this effort to ensure that Small Businesses can stay afloat have you spoken with either senators rubio or collins to this point about this idea that you have right now, this new proposal i have. Both of them have expressed interest we havent yet gotten their support for or sponsorship for the legislation but well be continuing to talk to them i guess the reason i push this, senator, is just that we have started to hear kind of the splintering of opinions at this point and that comes from places like senator ted cruz who has tried to make sure hes threading a fine needle with this he wants to make sure he supports the Police Departments and First Responders weve heard from senator down in florida who talked a little bit, rick scott, about how hes concerned about the amount of money were spending at the this point. You can under it from different states perspectives where they have been open for business, where they have tried to get back and reopened things. Here in the northeast we tend to look at things different leadership because weve end in the hot zone and shuttered for much longer. Had much higher number of cases. I just wonder how do you do that outreach and are you concerned at this point about it not being necessarily a National Perspective thats coming at this point i actually think there is a National Perspective among the Business Community that they continue to need help. And as i said, one of the big groups i heard nationally is the Hospitality Industry who feels like they have been among the hardest hit. The tourism via where people who do big venues still are not able to open up and thats true not justin northeast but across the country. I think its incumbent on all of us and what weve heard from j. Powell, what weve heard from economists across the country is the worse thing we can do right now is to pull back on our efforts to stimulate the economy. Because what we need to do is encourage businesses, encourage growth, encourage the economy to open back up virtually every state in the country is in some phase of reopening we are in New Hampshire. But so its incumbent on all of us, i think, to try to continue to support that economic reopening and people getting back their jobs, and thats how were going to get this economy moving again the jobs number we got last friday was better than had been anticipated. Talking about horrible numbers overall. But actually jobs gained, 2. 5 million jobs when people were looking for another big drop and Unemployment Rate not as high as had been anticipated we heard from james gorman he was on close bell yesterday and talked about how a lot of Small Businesses, the rehiring has been there, has been because of these programs like the ppp where do you think the real picture for the economy is right now between these different reads were getting and then questions about how much of the hiring is because of the federal spending thats been there well, i think a lot of it has. Certainly the numbers on last week were positive a lot more positive than any of us thought but 13 Unemployment Rate and millions still out of jobs in New Hampshire one in five granite staters are one employed right now. Thats not good jobs news. We got to do everything we can to help get people back to work. Thats why a conround of help for Small Businesses is so important because many of the people as you said who are employed right now are employed because businesses they work for were able to get help through the paycheck Protection Program and despite the challenges that it had in New Hampshire we got 22,000 businesses who have gotten over 2. 5 billion thats help for a lot of people and if we let that help stop then we got a lot of Small Businesses who are going to have to layoff those employees again. They are not sure they will survive. The this is still an urgent situation. I can imagine anybody thinks 13 unemployment is acceptable we need to keep working on this. Senator shaheen, thank you. Well be watching later today and we do appreciate your time thank you very much thank you. Joe . Thanks. Coming up we continue our talk with americas biggest Business Leaders on battling racism and attempting to heal the country of century old wounds. Citigroup chairman will join us for a rare interview as we head to break take a look at the tesla hitting an all time high in the premarket reuters reports the ceo elon musk says in a memo its time to bring teslas semi commercial truck to volume production if there is anyone still short, who has any money left, because theyve been short since like 300. Anyway if anyone is still short its really painful. Thats all i can say of course this comes amaid the extreme volatility we saw yesterday in electric truck rival. Well lkta about the latest developments when squawk box returns. We hope you find these Digital Solutions helpful to bank from almost anywhere. Deposit a check with your phone or tablet. Check balances, pay bills, and more. Send money to people you know and trust with zelle. Explore all you can do with our Digital Tools from almost anywhere. Pnc bank. From almost anywhere. Bbut what if you couldg do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Welcome back to box. Futures are now those are some gains almost 50 points nasdaq indicated up 73 or so and s p indicated a level we snapped a six day winning streak yesterday and gave back about 300 points but some green numbers this morning. Andrew okay thanks, joe. Were going to continue our conversation this morning on the roles of Corporate Leaders in making American Society more just and equitable our next guest has adviced on some of the biggest deals. Joining us this morning is vice chairman ray mcguire and chairman of citis advisory business ray, thank you so much for joining us this morning. Theres so many important things to talk about in society i do want to get your thoughts before we even delve into that just on the markets right now, Capital Markets, youre talking to ceos constantly about the way they are feeling and trying to understand whether you think the way they are feeling is reflected in the market as the u. S. Reopens right now. Thank you for having me im reminded today of the great 21st century philosopher, we started at the bottom and now were here with respect to your question with the markets, the debt markets are wideopen. Equity markets are also open prior to the confidence that appears to be on wall street, we saw companies accessing their revolving lines of credit. Today we see them going into the public market. There appears to be some disconnect, however, between what is reflected in the Capital Markets and the stock markets and what is getting reflected in the neighborhoods. Or the reality of the neighborhoods, i should say. Ray, just so im clear, in terms of the way you talk about these neighborhoods and whats happening on the ground, is there do you get an optimistic sense from ceos about their own business right now my sense is that theres some cautious optimism. Weve never been here before and, therefore, we take each day and each days market volatility and we assess how well plan the for it supply chains have been disrupted. Its not clear how the American Consumer will react to todays dynamics and when i discuss the neighborhoods, the neighborhoods are unsettled. Ray, i want to talk a little bit about your story i went back and found it and youll remember, i wrote a piece about rayma gwi mcguire grew up in dayton, ohio. Tell us your story especially in the context of whats taking place in america right now yeah. Thank you. Again, thank you for having me my story started from the bottom, i started from the other side of the tracks ive been on wall street this september for 36 years my mother who is 94 years old and a social worker raised me and my two brothers with the help of our grandparents i started getting bussed when i was in the sixth grade there was a teacher who recognized i had some talents. So i got busted to the suburbs in dayton. Hour, hour and half away after i walked two miles to get the bus. And i went to a school a teacher said if youre as good as they say you are test yourself against the boys in the east i got into thesixth college of which i applied. I eventual went to Harvard College and then took a year off on a fellowship and went to Harvard Law School and Harvard Business school. I have today been the longest standing head of investor banking in probably the history of wall street ive been at citi for 15 year and as assad on wall street for 36 years remember, i was on scholarship from sixth grade until i finished graduate school they asked me how i got here and i tell them its a combination of prayer, preparation, performance and paranoia this is not about me its all those kidsed who look like me and many dont its about education education was our ticket today the educational system is simply reflective of the institutional racism we have experienced or at least for 400 years. And so i lived through the crisis and the systemic racism every single day but i think maybe george floyd is different maybe george floyd is different. Remember we know the roll call of the innercity from emmett until to Ahmaud Arbery to Breonna Taylor to eric gardner and now to floyd maybe this time, maybe this time, maybe this time its different because theres no confusion. We saw coldblooded murder eight minutes and 46 seconds and so when my 7yearold says to my mother or to my wife, mommy why is that policeman has his knee on that mans neck, mommy is he going to do that to me and mommy, will he do that to you . Will doe that to papa . Will he do that to cole and else gentleman . Ella . Mommy why are the other policemen are standing around. Why is he saying i cant breathe. I cant breathe. Remember eric gardner couldnt breathe. So what do we tell our children, what do you tell your children, what do i tell leah . Ray, its heartbreaking let me ask you this. As somebody who advises Corporate Leaders around the country and around the world and so many Corporate Leaders are trying to step up, talking about stepping up, thinking about what they can or cannot do, what would you tell them to do right now . Well, first you have to acknowledge the covid and all its disaster, acknowledge the disproportionate impact covid has had on the black community disproportionate what covid has done is expose the virus that existed here for 400 years. There is systemic racism of economics. The systemic racism in education. The systemic racism in health care the systemic racism in the criminal injustice so what i say to the ceos and to the Corporate Leaders around the country and around the world is that this time should be different. This time has to be different. I applaud the tens, hundred millions of gifts and messages weve been there before. Let this just not be another stop by another grave marker what the world has now acknowledged is this racism exists and since wall street is focused on numbers and Corporate America is focused on numbers, we have to understand that in 1955 the fortune 500 was created. 65 years later there have been 20 ceos. Today there are five who are black. Of the 70 trillion assets that we manage less than 1 , less than 1 are managed by diverse, what they call diverse managers. If you think about africanamericans, its going be significantly less than that in new york city, which has 65 minorities, less than 3 of the contracts go to those minorities at my alma mater which has served as a feeding pool for wall street talent, this year they had 938 in a class of 2021. Theyve held consistent with 50, 50, 50 africanamericans and that number is held constant not increasing those numbers for three decades. What i do tell ceos . We welcome the millions of dollars. We welcome the relatable messages but, we need to do more. We need to change the relatable messages and the 10 million which are important. They dont get they dont begin to get the systemic racism we can satisfy ourselves that we check the box yet again. We can satisfy ourselves that at a george floyd funeral we had more mourners, a wider television audience, and six months from now or maybe six weeks from now we forget the george floyd eight minutes and 46 seconds knee on the neck by those who take an oath to protect us that abuse us. What should corporate, the corporate world do we need to change a mindset. We need to have conviction to change the mindset its not check the box it is not check the box. We need to have the courage to recognize this is a defining moment if i look at those protesting, as many white kids, millennials, boomers, generations out protesting i got some rioters, some looter, some people out there that are political opportunists people are now saying this is a defining moment in the course of American History and we taught thakt moment otherwise another sad day in the neighborhood and we all will have witnessed ray, are there concrete things that you think companies should be doing . We all talk about diversifying the boardroom, diversifying management doing more to recruit africanamericans and the like but are there specific things that you would like to see right now . Let me give you one example here where we can make a material difference. By looking at education and the racism that exists in education. Look at the results in august of not so many months ago of the new york state education you look at the testing results, 65 of black or africanamericans are below proficient were in this debate about public versus charter and kids suffer we had to, unfortunately, go to home schooling we didnt have internet for computers in the neighborhood. Why doesnt Corporate America facilitate that . Why dont we invest in compute earns technology in the neighborhoods . Thats one tangible way to go about it why dont we invest in back Office Support for the 96 of Small Businesses that are sole proprietors . Why dont we put capital into the neighborhoods . I can come up with a project that is not a project but something that will overhaul the system i got infrastructure that allows for Vocational Training and technology and i got capital 1 less than 1 of 70 trillion. That then helps me create, that helps me create more wealth which goes into the community. So theres a number of tangible things that we can invest in ray, before we let you go, i got to ask, because its been in the news the there are a lot of political leaders and Business Leaders in the city of new york that are trying to recruit you to run for mayor and i gather youve had conversations with them, theyve had conversations with you would you like to run for mayor . Would you run for mayor andrew, listen, ive read the same reports ive received similar phone calls. This is the moment in time where leaders have to decide what difference they will make. What role will they play leader have to lead and soldiers need to get prepared we need to do whatever we can and commit every resource we have, every single resource that we have combat this 400 years of systemic racism across every one of the important, important areas, education, economic, criminal injustice and health care i will do whatever it is that i can, my part, to take on or to continue to have a leadership role in this great city of ours. We can do better we must do better. Its important for us to survive. Ray mcguire, its a powerful message. We appreciate you being with us. A privilege to spend time with you. We hope you come back and continue this dialogue with us thank you for having me thank you becky andrew, thank you thats great to hear when we come back a shift for starbucks. Well bring you details on some pandemic driven changes that have just been announced by the coffee giant stay tune uyore watching squawk box right here on cnbc. Developed it. O align helps to soothe your occasional digestive upsets twentyfour seven. So where you go, the pro goes. Go with align. The pros in digestive health. And if stress worsens your digestive issues, try new align digestive destress. It combines aligns probiotic with ashwagandha to help soothe occasional digestive upsets, plus stress that can make them worse. And try align gummies with probiotics to help support digestive health. Okay, give it a try. Between wisdom and curiosity, theres a bridge. Between ideas and inspiration, trauma and treatment. Of more pounds. Thats good for the babies. Between the moments that make us who we are, and keeping them safe, private and secure, itheres webex. Beautiful. Welcome back to squawk box on cnbc. Seconds away from the latest consumer data. Futures turned positive. Rick santelli is standing by at cme in chicago the numbers please reporter Consumer Price index is down. 1 follows. 8 unrevised and stands as the second worse level meaning the second biggest drop in headline inflation since 1947 the first was november of 08 at minus 1. 8. Food and energy, also down. 1. Last month that was down. 4. That stands unrevised. Unlike headline didnt start in 47, notion of course started ten years later in 1957 and last month down. 4 was the biggest drop ever in core. Yearoveryear numbers cpi is up. 1 yearoveryear core is up 1. 2. These numbers are very largely as expected although on the yearoveryear numbers you can argue that up. 1 is a lot cooler than up. 3 we were looking for when it comes to inflation and just pricing issues in general, obviously whats going on around the globe, it makes it pretty difficult to handicap what the true picture is because as Many Companies open up of course and demand in other countries remain low. Highly depressed and many of them like oil have come back historically over the last seven or eight years its still on the low side how pricing pressures end up after the globe gets its traction back. Joe, back to you stay there, if you would. Not ordering you but Steve Liesman joins us now with more. Hey, steve reporter hey, joe, how are you . Some fascinating numbers in here just real quick. Theres one item thats going up in price and thats food and home, 1 im interested down the road, joe, when we do go back and i guess were going back now and demand increase is supply able to meet that demand and do you have some turn around in some of these prices when people start buying stuff but lets talk about the more prevalent issue here, gasoline down 3. 5 Energy Services down 0. 5 some of the other items were looking at apparel down 2. 3 Transportation Services down 3. 6. Overall a pretty strong deinflatid deflationary we hit a new record down 0. 1 . Very strong disinflationary impulse in the economy right now and well see if this becomes a deflationary impulse you hope thing settle down price wise as things come back but youll have a couple of months of residual difference in the economy and thats a wideopen big green light for the fed to continue very easy Monetary Policy rick, i asked you to stay, comments on steves interpretation of those numbers and the forecast reporter well, i have one thing to add and i think steve is right theres more of a green light at this point with deflationary issues for the economy and the fed. But does that light turn red when it becomes less so and that has been the rub with all these very aggressive fed actions whether it was in 2008 of the financial crisis or credit crisis or now obviously everybody looks towards the Federal Reserve because if you look towards the politicians youll probably be sending you to bellevue if you think they are going figure any of these issues out with all the politics involved at threat of apolitical fact gets the green light from both parties, does whats necessary to help the economy, arguably maybe more than is necessary which isnt necessarily a bad thing when a shutdown is forced. But when things get better are they going be able to really pull it back this notion that things become subsidized, we become nose fwliend to these subsidies thats what i worry about. Reporter joe yes, steve. Reporter can i comment on that real quickly. I need some guidance from you and rick when is the time to start worrying about the this . Ill tell you why. Because the fed couldnt pull back a 4 trillion Balance Sheet. It tried to do so. There was a massive total in the markets. Now you think it can pull back a 10 trillion Balance Sheet once it gets up there i dont know when the time to ask that question is or to start worrying about it and i just wonder it is in the markets mind that there is a day when they are going to have to stop and there may be a day they will have to pull it back unless we decide the fed will zbo 7stay there and no issue what do you think, rick everybody is doing it. Reporter unfortunately the latter i can make a really good case that in 20112012 we should have pulled back a good deal of what we did in 2007, 08 and 09. But we didnt. We waited the until ten of 2015. Steve is right its not that the fed doesnt recognize they can pull back its whether they desire to do so and desire to shape things up after they went to Great Lengths to fix there are other things going on we never know if thats why. Certainly at least correlated if not caused by that i dont know the big Balance Sheet now. We talked about that earlier why worry about billions when you can worry about millions i dont know anyway all right. Gentlemen thank you. Coming up, some new numbers out from starbucks that stock is under pressure as a result details are next or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. Dad, im scared. Its only human to care for those we love. And also help light their way. Its why last year chevron invested over 10 billion to bring affordable, reliable, ever cleaner energy to america. Try natures bounty sleep3, a unique trilayer supplement that calms you, helps you fall asleep faster and stay asleep longer great sleep comes naturally with sleep3. Only from natures bounty. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Welcome back to squawk box, everybody. Were getting some business updates from starbucks kate rogers joins us right now she has more on that front kate reporter thats right. A lot of numbers out this morning. The biggest one here starbucks saying it has lost as much as 3. 2 billion in revenue during the fiscal inquired quarter during to the covid pandemic some other numbers in the u. S. Currently 91 of stores were open at the end of may. Comp store sales have improved they were down 63 in april to 43 declines in may. Final week of may sales fell by 32 . That marks the sixth consecutive week of improvement. 90 of sales in the u. S. Are mobile in q3 for the u. S. Business Company Expects comps to decline by 40 to 45 . China, 99 of stores are now open comps fell 21 in may. Down 14 in the final week of the month. 22 of orders were in mobile and in q3 starbucks is projecting comps to be down between 20 and 25 in china the company is announcing some new store format changes say it will open up 300 new stars in fiscal 2020 down from an original projection ever opening up 600 stores. Repositioning stores and blending store formats and ininclude the closure of up to 400 stores in the next 18 months thats in conjunction with the opening of a greater number of new and repositioned stores. The company also saying its vision for each large city is to have a mix of traditional cafes and pickup locations and the strategy aligns with customer preferences that have been accelerated to the covid pandemic and finally starbucks now sees adjusted full years earnings between 55 and 95 Cents Per Share for the fiscal year ending in september current consensus is estimated 1. 37. Back over to you guys. Okay. Thank you for that a lot of people will be focused on that news this morning. Meantime when we return, we know were in a recession whats the next chapter in the winning investors playbook. And take another look this morning at shares of tesla youre looking at that stock up over 5 . Elon musk saying its time to ramp up production of the companys commercial semi truck. Check us out and listen to our podcast, squawk pod. Get analysis and so much more. Subscribe for free wherever you get your podcast stay tune. Squawk box returns after this. Welcome back to squawk box Tesla Ceo Elon musk saying its time now kick the companys production of electric semi trucks into higher gear this company deals with a similarly named rival and that stock closed in on 1,000 tesla closed in on 1,000 a share. Phil lebeau joins us reporter a source familiar with the northwestern alternati internal people intern j internal memo by musk. This memo, elon musk say yes its time to move up production with the battery and power train being built in nevada. According to a source familiar with this memo, one quote from it says it is time to go all out and bring the tesla semi to volume production. Its been in limited production so far which allowed us to improve many aspects of the design not surprising we see or here from elon musk about bringing the semi to market given the ramp up in shares or explosion of shares in nikolo. That stock has exploded. The ceo say they want to be leader when it comes to electric vehicles look at their market cap it briefly surpassed ford. Nikola has no products, has no revenue and at this point they are going show their first design for a pickup truck a little bit later this month. That hasnt stopped investors from piling into this stock. The market gap just about to fords level not quite there at this point speaking of ford today the company has finalized its agreement with volkswagen when it comes to the development of autonomous and electric vehicles volkswagen and ford and they first announced the plans to collaborate, form a partnership. This is not a merger, this is a partnership. What they will be doing is part nearing on electric and commercial vehicles. By the time they are all done they hope to build or Work Together on the production of 8 million vehicles over the Product Portfolio lifeline over the next several years so a lot happening when it comes to electric vehicles were going be talking about the this with ford ceo jim farley. You dont want to miss this exclusive. As soon as hes done hell join us exclusively coming up in about half our on squawk on the street. Guys, back to you. Thank you for that when we return we got jim cramers first take on trading day ahead. He may have some comments. Markets in top sectors to watch with Morgan Stanleys mike wilson the index hitting 10,000 for the First Time Ever. Ay tuned, squawk returns after this headquarters, jim cramer joins us this morning. Jim, weve been talking every day about where the market is, if we are ahead of ourselves, if we are not anticipating some of the things to come we just got those numbers from starbucks and there were some pretty interesting take a ways from it. I think of them opening up in china and feeling like things are back to normal from what we heard at least in beijing and getting back to some level of normal when you hear the starbucks numbers about how much they are down in their same store sales for the month of may it starts to make you realize, okay, people are not back in their normal habits, stuff like starbucks when you are going to work and in that normal habit how many of us have kicked that habit in the months weve been home. Going back and forth with Kevin Johnson the ceo this morning, talking about pulling forward plans to transform the store portfolio and says we also provide a Prime Minister earnings per share equipment for the balance of fiscal year 2021 which is directionally consistent with the expectations we outline on our earnings call. Im trying to go back and forth with him to get what directionally consistent means i know that there were some previous misinterpretation of his m soft of the things that he put out theres so many moving parts here, but i hear you i thought that china would have been better by now, china is down, at the same time i wonder whether i heard right the first time because kevin is a straight shooter and i do feel like that hes trying to say, listen, jim, theres really nothing new here. So im wary, i know the stock is down, its been a good stock of late, but, yeah, i agree with you, i mean, we are not back some of china is back for some different aspects of of their businesses, but i think most of it is online thats back and thats important for what happens with us. Yeah, i mean, we have had so many conversations about this, about how the report for the jobs number was better than anticipated, we spoke with senator shaheen earlier this morning and the plans shes bringing forward to try to support Small Business owners for longer its a proposal that they just put out this morning i just wonder if youre going to have that same bipartisan support to do some of these programs particularly as different states have different experiences in terms of where they are, in terms of opening up and how many cases theyre seeing or not. Its so important there was a note this morning about chilis numbers coming back, i was thinking about individual restaurants versus chains and how much leg up chains have versus the individuals. Listening to ray mcguire and im thinking how many minority businesses are going to be storefront open and anyone can go in, but who has the money to go well, a starbucks does, maybe a chilis does, they can pay the rent a lot of the landlords are saying who can pay the rent and they are not going to be happy with individual proprietors because once the ppp money runs out maybe the companies cant pay the rent this is very much of a divisive issue in our country and we are not looking at it like that because we dont realize what its going to be like when that ppp money ends to 4 million businesses, i think its going to be the time for the big chains, they can pay the rent, they get the space jim, thank you. We will hear more from you in a few minutes. Its good to see you this morning. Good to see you. Futures are up about 60 and change this morning. Lets get to mike wilson, he is Morgan Stanley chief u. S. Equity strategist mike, we have talked a lot recently and for a while i thought, wow, you were two bearish because you were kind of looking for a recession and then the covid thing came in and you said its not just about covid, that the market was stretched, the economy is stretched and this was almost eye leave yated some of your concerns and you got real bullish especially from where the markets were down in the low 2,000s for the s p and you gave us a bull case of 3250 on the s p, a base case of 3,000 and a bear case of 2,500 and here we are lets just round it the s p at 3,200 is that a yearend target for you or going out a year . Yeah, thats a yearend target, joe. All of those so we are approaching kind of that bull case scenario, probably even a little faster than we expected, but here we are. So were not going to argue that its wrong, in fact, the reason were here is a lot of the reasons that we were suggesting, not all of them, and i think, look, i think people are getting a little bit more comfortable that we are going to have a reopening, that we can get back to normal. Not immediately as jim was just saying, its going to take some time and there are some question marks around whether or not we can extend the fiscal, you know, policy that has already been implemented. I think they will. And, look, theres going to be some back end filling here, but, no, i think we are on track. Im starting to lean towards probably higher numbers for the end of the year if we can get through this summer, we can get the extension on the fiscal package, we can kind of calm down some of these u. S. china trade relations which are percolating at the moment and we can actually see a reopening without a huge spike in cases. Those are big ifs, but if those things were to happen those targets might have to go up for yearend. If your base is 3,000 i was just wondering whether you think its time to lighten up. It doesnt sound like it it sounds like you might actually be having numbers that might be a little bit above that if things play out you are thinking that within the markets that cyclic alt and cyclic als might be a place to shift am of sis, right thats right, joe the market i would say at the index level is fully valued right now. I dont think theres a ton of upside in the near term at the index level, but whats more interesting to us is this rotation thats going on so lets just i mean, lets talk about whats happened we are in a recession, obviously Everybody Knows that and we are going to have a recovery it looks like the trough of the recession was probably the month of april because it was so steep and lets just remind ourselves, you know, bear markets end with recessions thats what happened and thats why we got more bullish. If you think about, you know, kind of whats gone on since then, weve gotten more visibility on policy, gotten more visibility on kind of the reopening and i think those are all supportive factors but the cyclic alt is whats underpriced meaning we still have this huge divergence late cycle, defensive oriented which i would include growth socks and the early cycle cyclicals are cheap. People havent embraced this at the stock or sector level. Thats whats been going on the last couple weeks and thats probably going to persist. I wonder what 2021 looks like you guys never get to rest you get one yearend target and sooner or later that year ends and then you have to have the next yearend target it seems like you just said, i think, the overall averages may be fully valued or were going to be looking for some backing and filling. Do you foresee good Economic Growth in 2021 will we get back to something close to normal . Will the underlying earnings catch up to the s p and where multiples arent stretched next year and its more supported by the underlying earnings, do you think, mike . Well, thats exactly what we see, but i think thats also exactly what the market sees thats why were trading at 3200 because the market now is making the bet or the viewpoint that mid 2021 is definitely going to be better and the request he is how much better and can it sustain into 2022. So this years market is basically looking forward to 2021 and weve started to have a more positive outlook. Lets go to 2022, then. Will we get a 10 ever again an s p earnings gain from, i dont know, where are you for the s p, 175 or something 200 coming some day . Oh, i mean, definitely its coming some day, the request he is will it be i dont know. I dont know if were Wearing Masks and everybody has a quarter of the patrons they have had in the past, i dont know. I mean, i think, look, i think my view is that we are in a bull market again, cyclical bull market, secular bull market, we had our recession between the two cyclical bulls and i am very much of the view we will get to 200 at some point. I dont think it will be in 2021 but it will be the outyears. I think the bigger request he to ask is whats the composition of the earnings going to look like, will it be narrow in some of these big Platform Companies or more broad across a bigger part of the economy including, for example, the banks and industrials and materials and some of these areas that have been left behind i think its more the latter and i think thats a healthier environment for the equity market overall. He have with the fed talking today. It depends on how long they stay this easy, too as things get better you cant count on as much stimulus from the fed. We have to run now, mike we will check back in with you i have to say that was a good call from down in the low 2000s on the s p here we are almost to your bull case thanks. We will see you final check on the markets, we will take a quick look we have the dow now in positive territory, so that would be that would be seven out of eight if it were to close higher today. Well see. Nasdaq is very strong. Thats it for us this morning. We can take a can we get everybody in usually we dont have time for that but i skipped the rest of the futures just so we could say see you tomorrow and thank you. Byebye. See you you tomorrow. Squawk on the street is coming up right now. Good wednesday morning, welcome to squawk on the street, im quintanilla with jim cramer live from separate locations, faber has the morning off. Futures are climbing into the green after the dows first drop in seven and the nasdaqs first inter day trip above 10 k. A lot of news today. A fed statement, a News Conference this afternoon, Corporate Updates from starbucks, delta, yum, high profile down grades, oil 38, ten year 80 basis points,