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tv   Squawk on the Street  CNBC  October 13, 2020 9:00am-11:00am EDT

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in the election. >> all right, great to see you, j.j., thank you so much. >> always a pleasure >> great to see all of you today. we hope you'll be back here tomorrow see you guys back here tomorrow. right now time for "squawk on the street." good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber welcome to q3 earnings season. as j&j, jpmorgan and delta and black rock first out of the gate plenty to break down there and we'll get set for apple's iphone event. earnings season, big banks and loss provisions are in focus jpm and citi are higher premarket. >> j&j hitting pause on its covid-19 vaccine trial why? because of potentially an issue. we'll be examining that. and as well also reported earnings by the way. shares moving a bit higher
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amazon also boosting, well, going up, of course, and apple, man, you've seen them both over the last day and this morning perhaps no exception, later today, we get the apple phones, prime day has kicked off, carl it is a big day. and as it was for yesterday, in terms of the stocks. >> indeed, we're within 2% of all time highs on the s&p, trying to get back to the september highs, jim but i wonder if you think the lead this morning -- are these loss provisions at jpmorgan. >> i am surprised positively i think what has happened is people aren't spending, not borrowing, credit card losses, fine small business loans, i don't know where the people are that they're not suffering. this is -- it is not a happy -- maybe jpmorgan is lending better i will say this, david noticed this, there will be a call that goes on, simultaneously when we talk about it, and that call is going to take the wind out of our sails, david, if we say something really positive
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because there will be one comment and some comment that comes out in that call this happened again and again. which has made us pull in our horns. i tried to figure out which one they're going to say that is not great. i'll do my background call with citi citi's quarter looks amazing you got $71.95 book value and it is scrub book value. that seems to be impossible. so, david, you know in this day of days that you and i always -- we're going over the quarters, there is something in these numbers that someone will not like and that is typically sent jpmorgan down and citi with it. >> it has not been able to keep a lead that's for sure. neither one of the stocks, even during earnings days, you say i remember the last quarter. it appears they were both quite strong, but they did not stay strong in terms of the stock market at least, jim, to your point. sometimes it is comments on the calls as you say that perhaps are more concerning. we don't know it is coming we don't
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they don't when it comes to future provisions for loan losses that said, i mean, jpmorgan actually releasing is a lot of reserves, the provision came in well below what it had been anticipated. the weakness that you've been concerned about has not showed itself, it wouldn't seem, on the consumer or even on the corporate front, not that we're expecting that much there. it just is not there, jim, not to mention deposits are extraordinary. >> up 28%. >> 28% of jpmorgan, i think what was it 16, 17 at citi. it is amazing. >> people aren't spending and their balance sheets are getting better that's something i did not count on and one reason i didn't count on it, i want to make this clear, the fed scared the living daylights out of me. one thing they said is, listen, you can't buy back stocks and dividend boost they ignored what may be happening at the banks because they didn't want to repeat it 2007-2008. i say, okay. listen, if they're so nervous, they have seen this.
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and they either haven't seen it or they're ignoring it this is -- this is the kind of thing, if you're a republican senator, right now, i this i nku go say to secretary mnuchin, what do you need here? are you kidding me these are banks doing better than ever. it is ammo in favor of no stimulus >> although, jim, in the slide deck this morning, jpmorgan's macro forecast, their base forecast for unemployment, let's say, this is not for this fourth quarter, but a year from now, 7.3. gdp in four quarter of next year, minus 2.4. so maybe that's what they mean when they say these loss provisions are the reduction of loss provisions is not reflective of a change in economic view. >> look, it is true. that's something they have been saying jamie dimon quoted this weekend, there is no turn until 2021. i guess what i'm looking at, i'm looking at a snapshot. it is a good one but if they're going to go on
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and say, listen, before you get too excited, let's just level each other, the economy is not going to where it was a year ago, so therefore we have got to be ready, then, david, even though they released a lot of reserves, have to question what that was about >> you got to do it based on what you're seeing, right? >> snapshot. >> yeah. >> snapshot is positive. >> and took -- to carl's point, though, they do, third quarter 20, fourth quarter 21, 7.3 that's their sort of where they are in terms of their base case outlook on unemployment. but you got to make your decisions. they're keeping up the balance sheet, right they got return on -- they got return on equity back to the 15% it was in the first quarter of the year after dipping substantially in the second quarter right back to where they started the year return on tangible common equity also more or less right back to where it was in the first quarter. >> well, look, i -- you have to
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like the quarter if you don't like the quarter, you just -- you never like a bank stock, but if the outlook is not so great, then it is not so good. look, we're -- we have to remember what citi did citi had a good quarter. citi's losses were not bad strong capital 11.8 is much better than it nedded to ned needed to be i haven't seen this level of tangible ba tangible book value since the days of the savings and loan crisis >> yeah. you would come in and say 80 but the stock is at 12. >> basically every bank in the state of texas went good-bye i remember covering that jim, there are allowances for credit losses, $26.4 billion at the end of the quarter that's 4% of total loans, that compares to what was $12.5 billion a year ago or 1.82%.
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that gives you some sense. that is citi that is citi that's where they stand now. 4% of total loans is where they have their allowance for credit losses. >> look, during the 2008-2009 period, that would be way too high you would be very worried about it. >> in citi, it is about the change of management, about what jamie phraser is going to do and how much they have to spend on risk controls. not necessarily about one quarter. >> no. but at the same -- you're right. but the tangible book value is good is citi as good as -- not with that number, david that you mentioned, versus jpmorgan business is good in terms of all the different segments that we like, right? trading, this cuts very positively for goldman it cuts very positively for morgan stanley, which has got no risk nobody wants to seem to give morgan stanley any credit.
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what do you think of bank of america? did you make a projection? >> jpmorgan did upgrade morgan stanley. they resumed overweight today. >> i like that piece very much there are a lot of upgrades today. today is a day where if why decided, i'm going to spend some time looking at our stock market, you're going to have to spend about five days. there is just -- these are more complicated. we're going to get to quarters look a boeing, you can say airbus not so good off of delta. but we're going to get to quarters easier than these these are all one liners there will be a liner, just be aware, the last day was bad. david, you know -- i'm not saying they obfuscate, i'm saying their willing to punch holes into their own documents. >> they are. i always say wait for the 10q, the filing, go through it, if you really care. you can't rely on press releases. >> no. definitely not. >> carl. >> to jim's point, we get to a lot more of the upgrades and micron, hilton, marriott, ford,
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foot locker, dimon making more comments about buybacks and return to work and when we come back, the other stn llrnings story, delta, ed baiawi join us when "squawk on the street" continues. my parents worked long hours and i helped raise my younger brother. when college felt out of reach, the kpmg future leaders program was there for me. it was more than a scholarship. it was four years of mentorship and support.
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delta out with quarterly results. let's get to phil. >> ed bastian joining us from the ompany's headquarters in atlanta. ed, you reported a loss of $3.30
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a share on an adjusted basis, a little worse than what analysts were expecting, but everybody is saying, look, throw out the results from the q3 in terms of whether or not it meets expectations the bottom line is you guys are still burning through cash on a daily basis. pant a picture of what you're seeing now when you look at not only your business, but the airline business. >> well, good morning, phil. thank you for having me. 80% reduction in revenues in the third quarter makes for a very, very difficult set of numbers, tough quarter. but that said, if you look through the numbers, you certainly can seat impact of the pandemic, but we can see real encouraging signs of improvement in things that we can control. demand, demand was down 80%. so we're at 20% recovery levels in the third quarter the second quarter at the peak of the pandemic at 10% versus 19 third quarter, 20% we expect the fourth quarter to be somewhere between 30 and 35% of the fourth quarter numbers.
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so steady improvement, it is slow but clearly consumers are getting more confidence in travel one of the reasons for it is the great job our team is doing with respect to instilling confidence and the comfort with respect to their travel experience. our net promoter skills, customer satisfaction scores at all time highs in our -- in our company's history. and when you think about what that means going into 2021, there is real momentum that we're seeing starting to be built. cost story is really good story for delta. we were able to eliminate 50% of our total cost in the third quarter. same as we did in the second quarter. but even more impressively in the fourth quarter coming up, our total unit costs are going to be flat to down versus 2019 levels despite the fact that we have 40% less capacity flying and you put all that together, what it means for december month when we expect our cash burn to get down to $10 million a day, which is
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the pace we see in the further quarter 10 to 12 million, and we have real good line of sight to getting to cash flow break-even and cash flow positive in the spring so -- >> let's talk about that >> you put that story in place, phil, you think about it in a 12-month cycle from the start of the pandemic to turning cash flow positive, it is an encouraging story. >> absolutely. people are encouraged, you can see at least -- you have line of sight in terms of when you think you'll hit break even, which you have said will be in the spring. but admittedly you're in the midst of what is going to be perhaps the toughest five-month stretch here because q1 is always a rough month for the airline industry nobody is quite sure what you're going to get for the holidays, especially if there is another spike in covid-19 cases. what is your outlook for the holidays are you perhaps dialling it back a little bit, given the fact we are seeing this spike in cases >> well, you know, there has
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never been a time in our history we had more uncertainty. that said, our early advance look for thanksgiving and christmas is encouraging consumers are wanting to travel. they feel confident in travel. one of the things about the air travel, phil, that people need to know, get the facts, the international aviation authority came out last week, said over a billion people have traveled by air this year. over 1 billion there has only been 44 documented cases of suspected covid transmission amongst those billion, and virtually all of those happened in the early weeks of the panpandemic, janua through march, before the protocols, masks were not in place, all the things we implemented since. consumers are feeling really safe with travel it gets down to what the experience will be when they land, will the hotels be in place, will the restaurants be open, what is the condition of the virus in the local communities? but as more medical technologies
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and solutions come to bear, as rapid testing comes to bear, i think going into the seasonally difficult months as you suggest may actually be counterseasonal and people will start to travel this winter at a higher relative clip than they have done in prior years. >> ed, jim cramer, ed, stunned, 19 people since the pandemic 19 people sick there are many more people sick in an office building. and yet this is the first time i've heard these numbers from an airline executive. i don't get it why not just say, listen, we got masks, we have great systems, the air flow is incredible we're safer than wherever you are. we're safer than a restaurant, we're safer than an office building i find that i have had to defend you more than you defend you what the heck is going on? >> i agree with you, jim we have been saying it, but candidly i don't think people have been wanting to hear it and it has been a question of
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the -- the airline industry had to get a renewed set of confidence needed to get the experts to opine on what we're seeing we're in the midst of a pretty significant study with the harvard public health school which is telling us the same thing, confirming the same fact, the risks of transmission aboard our aircraft are absolutely minimal. so what i think we got to get to is we need to get the economy moving, we need to get businesses reopening we need to get to a place where people start to feel confident in when they arrive at a destination. they have something to do. not just that the air travel itself is going to be safe. >> couldn't be more of that, that is a huge problem now how about this number of roots that are losing money, that you can chop, in order to be able to make it so that your cash flow is better and how about this idea that you don't need new planes >> our capacity in the fourth quarter is down 40%, so we already eliminated a significant amount of those loss making
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rounds it is going to take some time before -- into the spring, early part of next year, before we start to see profits and as well as cash flow positive results. but the reality is that this is going to take some time, but you think about -- if we can get to that point in 12 months time it pretty remarkable from the start of the pandemic. >> it is carl. my question is not about cutting routes, but adding routes. southwest going to o'hare yesterday, something they admitted has been on their wish list for a long time looks pretty opportunistic do you see yourself doing something similar in certain markets? >> well, we're restoring key service to our markets, as you know we're big in the coastal markets in new york and boston, l.a., seattle. we want to get those markets back up. the demand frankly has been more impacted in those markets than it has been in the interior of our country, the mountain
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states, the south has been really strong. weaver we're going to where the demand is we have a great playbook as to what works here and as consumers start to get ready to go, you know, they know what delta can deliver. and i want to give a big shoutout to the delta team, the great work they're doing because customer satisfaction, net promoter scores are at 75. that's over 20 points higher than we have seen in our history. consumers are telling us they're enjoying the experience. the evidence it is very safe to fly. and more and more people are itching to get out and every week we see continued improvement in those numbers >> ed, it is phil again. you have $21.6 billion in liquidity, what you ended the third quarter with how many months out does that cover you? is that just to when you believe you get to break even? and related to that, would be the other question, are you fairly confident that you have done all the borrowing that you need to get through this or do
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you sense there may need to be more borrowing >> we're in pretty good shape on liquidity, phil. against that $21 billion that we have at the end of september, we only have about $5 billion of maturitieies due through the en of next year we're in pretty good shape liquidity wise if we get to, as we expect to get to cash flow positive, by the spring, we're going to start to pay that debt level down. >> and one last question for you, ed, you have -- capex being cut by $2 billion as you push out delivery of aircraft, what happens with the airbus a-220. you were going to be the first ones to fly. the first a-220, which is rolling off the lines for airbus in alabama do you plan to take delivery of that plane this year or is that being pushed out what is the plan there >> we already have taken delivery of the new 300. we took it last month. we expect to be flying it this
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quarter. so airbus is a great partner and they worked very collaboratively with us over the next couple of years to push out and defer orders into the back end of the cycle. but we feel good about where we stand on our rotor book and we forward to getting you out on that 300. >> i would love to i would love to get back out on the road come back down to atlanta and see you again. ed bastian, ceo of delta airlines joining us, exclusively here on "squawk on the street" on a day, guys, where, yes, they reported a loss of $3.30 a share in the third quarter, but as we said earlier, everybody knew that it was going to be a bad quarter. the focus now is when do they get back to break even and you heard him say they're targeting spring for getting back to break even >> phil, great stuff as always thanks to you and ed bastian of delta. that's our phil lebeau we'll take a break and get to the upgrades and downgrades we mentioned before the bell as we had a pretty nice day yesterday, giving some of that back, but not all. and pelosi with a new letter to her democratic colleagues giving
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two big events today, apple's iphone event and amazon's prime day begins. both stroocks up in the premarkt we know the impact of that on the overall indices. the opening bell in about five minutes.
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all right, we got about three minutes to get started with trading here on a tuesday let's squeeze in a mad dash. royal caribbean. >> yes, david. now, the people who trade have certain stocks they really love. one thing they really, really, really love are cruise ships don't ask me why seems to have captured their fancy. that's carnival, obviously, royal caribbean, and norwegian
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royal caribbean takes advantage of the overexuberance of the people and offers 500 million in common stock and 500 million in convertible note and just they are not -- they are pushing back hwhen they can sail now the end of november. it is a pipe dream they say the bookings are fantastic for next year. why not? you can book for very little, but there is a vaccine, it is fantastic. so, anyway, royal caribbean taking advantage of the overenthusiasm of the crowd to whack them. >> they're not the only ones i speak to portfolio managers, quite a few are focused on robin hood traders, so to speak. apple is having a big meeting. it is probably going to go up when they all find out about that >> let's go by some -- >> let's buy apple last week amazon has prime day i'm sure the robin hooders will get in on that. >> 1984. >> it is working i had one conversation with a
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veteran fund manager, like managing money in the old days before the quantitative funds. >> isn't it something? >> before the quantitative stfud started dominating. >> last night instead of ford versus ferrari, i did ford versus ge. i know the guys will be, like, i think the race -- i think it is ford, no, it is on ge. they're placing bets like we're at belmont >> yeah, then there is also the softbank element, the guy who runs the vision fund says we're in the even a dolphin, let alone a whaem. the whale are the robin hoods doing the options buying, jim? a lot of short-dated stuff >> and robin hooders have gotten very quiet because of some issues that happened the robin hood crowd discovered options. and they are so enamored of them that i think they're determined
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to just become options traders and not common stock because there is not enough action, david. they need -- they need dfs, we call it. >> dfs. >> daily fantasy daily eality they need another $1200 to go into the -- >> i thought sports was back >> they're all back. this form of sports is good. no covid unlike the titans. aren't the titans a disgrace why doesn't the nfl say, okay, guys, you lost the game. >> with the titans, i don't know why. >> the nfl has very little discipline to me >> on the team level. >> shouldn't something happen to the titans instead of just treating them like it is coach boon running it and we love him? >> they have passed out 2 million in fines to coaches who wouldn't wear masks. but i guess, yeah, we'll see
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what their -- where they're coming from in terms of enforcement, jim jim, you mentioned retail participation. larry fink had a lot to say about that this morning on "squawk box. i tweeted out a chart of household equity exposure versus ten year forward annualized returns. it is tough. when households have a lot of stock, it is a tough forward grind on stocks. >> look, i think people, they went through -- 2001, 2007, 8, flash crash, the chinese mini crash that we were all on where the prices were impossible to find and just said this asset class is just not reliable enough. now, against that, there is faang. and you made a -- faang, you made a fortune these younger people did not see or experience the big disasters. they just looked at it and say, you know what, i love facebook instagram is great david, i'm going to buy some
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facebook >> okay. you do that. >> but that's the way they think. >> it is it is. >> it is refreshing. >> you think it is refreshing? >> i think it is refreshing. now, look, they buy work horse and they buy tesla, you know, the price target for tesla is ridiculous and if you criticize them if you go on and see something on twitter that is negative about them, they're haters, okay they want you to cheer lead. they don't want you to be critical i was critical of nicola in the '50s they made me feel like i should have been positive >> right >> the new thing here is that these are people who root, they root for stocks, like they root for teams. when -- they stay with their team, they are fans of stocks. i'm not kidding. they want to own calls on the stocks that they're crazy about. you'll see some things, you know what they love they like okta they love fastly now, do they know what fastly
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does what they say to me is how dare you ask, how dare you ask, meaning no, they don't but, shut up because fastly goes up david, don't smile you know fastly goes up. >> it does it goes up you pointed it out there it is up again today by the way, apple yesterday, of course -- >> up 340 straig40 straight pois >> only up 545% for the year come on. >> it does tiktok, the new york times. >> tiktok, first time we mentioned it in weeks. we're waiting on that hearing, see whether -- whether the injunction -- i guess let's move on from tiktok nothing new. >> there is apple going down. >> apple yesterday was up dramatically, up over 6% as we head into, of course, the big announcement today now, it is turned around a bit, and it is down what did you make of that move
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yesterday? by the way, we should note, prime day, today, amazon, up again. before i get to apple, jim, amazon has increased its fulfillment capacity by 50%. >> that's incredible >> think about that number. >> the big worry is that can amazon meet the demand of amazon prime? >> 50% in a year -- so far this year their warehouse, just the fulfillment capacity of that >> they're like the army in world war ii they ramped up. >> and hires hundreds of thousands of workers. >> don't hear a lot about it it has been monumental you do hear about it, it is reflected in the fact that the stock is up 86%. >> there is also all this other e-commerce, walmart, target, that's why my travel trust bought u.p.s these companies are -- they go up every single day. a whole complex goes up. now, i -- one of the most disappointing things today is j&j because this one person is
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sick and i hope that one person comes out of it, but j&j does not make any money off the vaccines, everybody. they make money off their company. and i think people should recognize that drugs were really fantastic, the healthcare business, people -- they don't use a lot of e-commerce. they need to get back in that channel. but it is real good, but the pause, remember, is not a halt it is an adverse effect, we hope they know something in the next couple of days you know who is able to talk a stock up better than the robin hood people? >> who >> disney. >> yeah. wait, are we moving on from j&j already? i want to -- >> is it a faber report? >> no, no, no. jim, you know, they have a similar delivery of the vaccine payload. they use the adenovirus to deliver the vaccine payload. no expert in this stuff. but that's what astrazeneca also does they have that case of
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transverse myolitis. there might be some concern there, jim, if this is -- we don't know what it is. but if this is another case of that, is it related somehow to the way -- >> we don't know you check the company -- i try to figure out whether it is -- is it the person or -- did the person have the placebo? well, we don't know. >> you're not going any answers. >> i'm getting no answers. which, you know, david, frankly, no answers, you feel great, right? >> listen, we'll see worst case it does -- it may be somewhat concerning in terms of those two -- those two vaccines. not the mrna stuff, not pfizer and moderna, not -- >> you want the moderna one? >> no. >> why not >> i'm not focused on getting in a vaccine. >> why not i got rejected by j&j. i got -- i got steroid shot in my arm that was the end of that >> jim, we are going to get a pfizer -- probably results from the pfizer trial >> that could be big.
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>> before the end of this month, could be any day, who knows. >> sanofi will be big. and people, you got to be in these because otherwise, j&j, people in hot spots, you don't have to worry about it because we have hot spots all over again. they're back the hot spots. >> yeah, no trouble finding people >> like france >> india 7 million people. >> look at that. we have a countdown to the apple event. geez >> we do >> 23 minutes, 22. like, cape canaveral cape canaveral >> carl, are you going to be looking for any new devices at that apple event today >> well, i see that piper has the survey, david, 10% of iphone owners say they will upgrade we'll see what that means in terms of unit sales. interesting, jim, making a list of stay at home economy indicators, disney is part of it, the commitment to streaming, but ethan allen upside surprise, williams sonoma resuming the buyback, gardener says pc sales in the quarter, ten-year high,
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and now we got this piece from the times that says july is the new january in terms of companies bringing workers back to the office. microsoft, ford, target and "the new york times" in the past week. >> i -- that's true. but i also think that there is a lot of subjective ty to how many days you have to come in and that's why you still want your home office is loved, snacking side is loved the peloton is loved but today is the day where people say, you know what, people are coming back i think there has to be a recognition that people may have more choice about whether to come back. they -- david, they may just say, you know what, i don't feel like coming in today i'm going to zoom -- i'm zooming in today instead of -- >> yeah. nobody is going to have an issue with it. i have heard from a number of -- the more senior people at firms who are coming in, their disappointment that younger people are not
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which is not what you expect and i heard this, you know, there are so many people here now, so few people, younger people, would could be learning and taking advantage of the fact that many of their colleagues, their peers are not around to really learn even more and to strengthen relationships with senior people, but they're not showing up >> they're the lead vulnerable to the virus >> they're asymptomatic, what's the problem? but that was the prb oblem in te nfl. i think everyone in the titans was asymptomatic. >> there is a frustration i guess is what i'm saying, jim, among some senior managers and a number of firms, names we know well, i won't name them all, their employees are coming into the office. >> you listen, ed bastian call, he's saying, well, we got to get -- people have to go, it is not just the plane but it is where they go when they get there i know there is still a lot of quarantines. you're not sure where you can go you can't -- you don't know, but i think in the end, the people that you want to go see to
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clinch the deal they don't want to see you particularly if you're from a hot spot. >> yeah, i thought bastian's comment about 80% basically saying the economy is an 80% economy of precovid economy is right in lynn wiine with what a said, since resuming u.s. operations, same theater attendance is down 85. you can see there, more news from the hollywood reporter, they see cash basically running out at the end of the year, if current trends persist >> well, i mean, as everyone -- i had a gathering, went to 20 people this week and there were people i didn't know some of the people, and having a couple of cocktails and all i could do was tell my wife, we got to get out of here, we got to get out of here, i don't want to get sick the next morning i woke up with a stomach ache, said i'm sick, i have it, i got it, i gave it to everyone, i got it from everyone, there is still a sense that it is coming. david, it is coming.
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and all you want to do, david, is get it last >> well, if you waited this long, you're in a much better position thankfully than you would have been six months ago anybody and everybody -- >> i closed my bar yesterday and got a nice -- i mothballed it. i'm optimistic that j&j, pfizer, will make it so people can go to a bar. i re fuse to give it up. nice break on rent, thank you very much. i'm not going away, david. >> i'm glad to hear that. >> we're going to have fun again. >> we are not going to go away guys, we didn't really hit disney and it is worth -- >> disney. what kind of segue is that >> what do you want from me? i'm trying to work with you. i'm trying you're not giving me much. >> wear a suit and not jeans >> you have to out me? >> levi strauss? >> this is a ralph lauren suit, it had no pants.
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i don't know where they went i don't know where they went if anybody has seen them, please let me know. >> marshall's. >> i had to put on jeans but disney is up 3.3%. basically simply put the reorganization is taking place, just simply showing how important direct to consumer streaming is for the company and all the different things that they're doing in terms of new lines of reporting and responsibilities that's kind of the way to put it people look at the letter from a third point a week ago, unclear, my experience indicates these kinds of changes that disney told us about yesterday are many weeks if not months if not even longer in the making and likely no connection whatsoever to that third point letter they'll it, i'm sure stock nicely up. carl >> all right, guys we're ready almost to the major averages this morning.
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to bob pisani. hey, bob forgive me, to rick santelli >> hi, how are you doing, carl intraday of 10s. we had inflation data on today and it was generically as expected but if you look at the charts, the long data treasuries started to give up ground on price and yield long before the data was released now we're down about half a dozen basis points on the longer maturities and if you open the chart up month to date, you can see that we just haven't had the horsepower in a ten year to close up into the 80s. that's important, especially considering all the data and information that has been coming out and when you look overseas, the story is exactly the opposite it isn't about the high side of yields, we're at minus 55 in a ten-year bund. should they close, the lowest yield close since the fourth of august so over 2 months since we have been closing at these levels
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and i think what it really is the conversation that we're having right now in many parts of the globe, certain aspects of the economy and new businesses that are opening up to dealing with corona world are doing pretty well but we're still not at 100% and even though certain areas are more productive considering how they had to do the work around, it just isn't 100% and starting to show up in the numbers. let's look at what's going on with the foreign exchange side on the dollar index if you look at the dollar index on a chart going back, what you see for august is the end of august we had a low established, 27-month low. right around $92 and change f you look at the high from september, shy of 95 we're hovering around that midpoint now, which means that foreign exchange lost some of its mojo much of that is the euro currency, much more active it settled down as they're starting to deal with some of the debt issue and trying to put together a stimulus package. for the moment, i would look for any major moves of foreign
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exchange, but i would continue to pay close attention to sovereign rates with regard to the downside of the equation carl, jim, david, back to you. >> all right, rick, thank you very much. a quick break here markets are slightly red today got apple and amazon in the red and of the four major earnings this morning, delta, citi, jp and black rock, only black rock is in the green. before we talk about tax-smart investing, what's new? -audrey's expecting... -twins! ♪
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we'd be closer to the twins. change in plans. at fidelity, a change in plans is always part of the plan.
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a lot of data and commentary out of jpm's earnings. to wilfred frost. >> the headline is that they both had decent beats on the eps line why? because the provisions for bad loans came in lower than expected significantly lower than last quarter most importantly the scale of the decrease impressive for jpmorgan, but it is the direction that is key if last quarter does indeed mark the peak for provisions, then the worse will be behind the banks. trading and investment banking
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revenues remain strong, up comfortably year over year, down quarter over quarter on the flip side, net interest income down for both banks year over year, due to lower rates. just lower for citi. jpmorgan down year over year here is jamie dimon addressing stimulus and back to work. >> i wouldn't say that policy is determinative here this is unprecedented times. and what we're saying is policy will matter andwill skew the odds in favor of better outcomes so i think the fed is doing what it can to keep markets open, but the policy of the fiscal side is some continuation of unemployment insurance and ppp for those are the two most vulnerable areas just maximize the chance of better outcomes. getting back is a little bit important because you look at citi and travel and a whole bunch of stuff, there are a lost
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people under a lot of stress and strain who won't be able to survive another year of complete closedown. a nuanced rational, thoughtful return to the office, done properly, which will help all those businesses support the big office towers and that, and most of these max miles the chance of a good outcome. >> jpmorgan's call overall neutral in tone. citi's call starts in ten minutes. guys >> wilf, looking at the so many times from dimon on the buy back, i hope we'll be allowed to do it before the stock goes much higher >> also, the cfo saying they'd like to start in the first quarter if conditions and regulations of course allow it at the moment they're restricted from doing so. i would say that dimon overall his tone was that stimulus will give the best chance of a good
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outcome, as opposed to stimulus being required for a good one, and with that in mind, i got the impression that as long as the regulator allows them, they will start buying back stock as early as possible which could be q1. we know it won't be q4 and he hopes that will be before the stock rallies but it's kind of binary, one imagines when they're allowed to again, it will be because conditions improved and then probably the share price will already be higher than it is now. >> right, jim, what are your thoughts on that >> i think it's a little kind of pretty optimistic. a lot of people are long jpmorgan and think it's the best and the safest, and they didn't get anything that's new, so i don't know why it would necessarily go up, if there is no stimulus. i know there's a lot of people feel no matter who is elected there will be a stimulus citi's trading was good and fees were good but traditional banking not that good. i don't know anyone would want to go -- there's no hurry to buy the stocks i love jamie dimon's approach to
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life it's going to go up so get it in now. david, you need to see he buys a million shares and maybe he is >> he has been on aggressive buyer in the past of the stock at certain points. i he is an incredibly wealthy man. it's not as if he hasn't put his money where his mouth is in the past >> he's saying the train is leaving the station and he wants to be buying well, i don't know take a ride on the reading here. >> stocks just don't really -- >> i know nvidia, david. this isn't nvidia. he's not jensen. he's jamie dimon from queens >> yes, he is actually >> another queens. >> another queens boy. a lot of us out there, for better for worse >> anyone from the bronx >> we'll take a break. dow is down 100. don't go away. .uh...
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laggards this morning are the cruise lines after a week or two of cancellations, royal caribbean offering half a billion in fresh common. rsti sceepow the 50-day for the fit mein stember 24th.
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don't settle for silver #1 for diabetic dry skin* #1 for psoriasis symptom relief* and #1 for eczema symptom relief* gold bond champion your skin time for jim and "stop trading. >> people ask me why does this market keep going up i point to service now, a company that you use, this is a
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piece by rbc this company is doing incredibly well. you have to bring in the web, you have to bring in the cloud you have to bring in bill mcdermott, used to be from s.a.p. and they've done these chats and say listen, business is terrific and you got to go buy. what are you going to do, sell the stock because of the stimulus no stimulus? no servicenow gives you service now. david, when people from the robinhood ecamera, you asked them what does servicenow do, what do they say >> gives you service now >> bingo how can you beat that? >> you can nt' >> not service later, before, service now. jamie dimon saying one day i'll buy my stock that's friar tuck is waiting for the stock to be cheap. servicenow, talk with partners, carl, and they think business is excellent. wow.
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>> all right, how about tonight? >> tonight controversial shorts there n there, john fieldly, an interesting company, some feel it's the next monster and others feel what is the story here, they have raised eyebrows. raised eyebrows. >> jim, we'll see you at 6:00. >> i hate to leave >> we covered a lot of ground. things are going to start to get busy >> you always hate to leave but we'll see you at 6:00, "mad money" of course here on cnbc. good tuesday morning, everybody. welcome to "squawk on the street." auto i'll carl quintanilla with david faber and sara eisen yesterday stocks got closer to september highs. nasdaq is up just about 8 points q3 earnings, apple, amazon, stimulus and more. sara >> our road map, carl, for the hour, starts with third quarter earnings j&j, delta airlines all on the move
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plus full stream ahead, disney reorganizing its entertainment operations calling streaming its primary focus. apple's long awaited event starts later today, the most significant iphone event in years, one analyst calls it. let's begin with the markets, and go straight to bob pisani taking a look at financials for the unofficial start to q3 earnings season. good morning >> it's been a great start to earnings season with the financials let's start with the big three that are out there, upmrgen, citigroup, blackrock, all beating wide margins they're down but there's been a bank rally and jpmorgan, citi, up about 6% this month blackrock up eight days in a row. that's i had torque high for blackrock. i want to show you the magnitude of the beat with jpmorgan, they reported $2.92, we have 23 analysts could have gone this $1.08 to $2.85
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23 analysts, nobody got close to the right number that tells you about how strong it was we've been telling you lower provisions for credit losses number one but also strong trading results. similar for citigroup as well. it's early to talk about broad trends you see credit provisions for the banks generally looking lower. trading and investment banking has been strong. deposits increasing but net interest margin generally is lower, that's no surprise, given the low loan rates as for the loan growth, let's tall it tepid, not bad, given the state of the economy jpmorgan 1% growth in loans. wealth management good, getting inflows and they're seeing, trying hard to get some higher fees as for the banks in general, here is what matters here. there's only about six companies that have trading revenues you want to worry about loan growth, that's what matters, number two, the net interest margins is what matters and fees, all the money you pay when
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you take money out of the banks and so far it's been tough and kbe, the bank etf is reflecting that black rock no way to say it, blowout earnings remember, $9.22 is what we're talking about. we have 15 analysts, 7.40 to 8.27 nobody came close to getting the numbers right. they had higher fees and steady inflows that ishares etf business is a monster for them and they keep getting money going into that. even at lower fees they make a lot of money under the assets under management blackrock was $328 in march. that is almost a 100% move in blackrock. it's been up eight days in a row, absolute monster before the earnings actually came out and sara, this is indicative of what's been going on in this earnings season, the numbers reported are billion above analyst estimates. fedex, carmax, darden, all had numbers well above estimates
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the analysts have been underestimating the extent of the recovery, if this continues, it's certainly a great tailwind for earnings, the downside, sara, of course, is we're still sort of hostage to the reopening story, to the vaccine story and to a lesser extent to the elections story and that adds a little bit of pause to all of this enthusiasm, but so far, sara, a great start to earnings season back to you. >> yes, stimulus limbo as well bob, thank you, bob pisani the international monetary fund-raising its global outlook today. it says though the global economy's longest back to prepandemic levels of activity remains prone to setback joining us is imf's chief economist, gitak, good morning, thanks for joining us. [ muted audio ] >> can you hear me >> i can >> i want to start with the headline of your report, which is better than expected growth for this year, we escaped a bullet or the worst of things,
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but next year, you took down your growth forecast, why? >> sara, it's basically this year we have the world at minus 4.4. it's better but it's still a pretty dire number and we just had better outcomes in the second quarter, slightly better outcomes, though it was an awful quarter but slightly better outcomes in the second quarter the revision down in 2021 basically reflects the fact that we have a worse recession this year, so therefore the rebound is going to be smaller going into 2021 but again, just to keep in mind, this still remains the worst recession since the great depression >> as far as the u.s. economy is concerned, how much do you factor in whether we'll get more stimulus i would imagine the numbers they're talking about, $1 trillion to $2 trillion makes a huge difference. >> right now in our baseline assumption we are assuming no further stimulus because that's what we do unless a stimulus is announced
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but we've done the calculations. if there is a stimulus, which is about the size of the c.a.r.e.s. act, that will add about 2 percentage points to growth in 2021, which means that instead of the u.s. coming, returning back to 2019 levels, only in 2022, it would return much faster in 2021 to 2019 levels. so it would be a significant impact >> the imf warns often and including in this report about very high unsustainable debt levels across the world, and yet at the same time you are talking about stimulus, so how as a policy adviser to these countries are you suggesting you pump up the economies and help bridge us to a vaccine or to get through this pandemic in the form of more stimulus money without getting into a debt crisis >> so this varies across many different countries, the extent to which you can build up your debt if you are a country like the u.s., we believe they have the space to increase their debt levels at a time where interest
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rates are exceptionally low and expected to stay that way for a long time. low interest rates, a growth rebound next year will help with, you know, stabilizing debt in many countries, and that is the need to not prematurely withdraw support especially in countries that have the space and the u.s. is definitely one of those but of course, there are countries that are in debt distress, emerging developing economies that don't have that space and for them it has to be a much more measured response. >> what about fears of a second wave how do you think about the economic impact to the u.s. and to the global economy? >> so right now, we are assuming there's going to be the virus, we are living with the virus and social distancing is going to persist, but resurgences are going to be more like what we saw in the summer in the u.s. as opposed to what we saw in the spring, so that's a big difference if on the other hand it turns out that we head to lockdowns more like what we saw in the spring, that's a serious
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downside risk to our projections. >> china's outlook looks better. is it a factor of being able to manage and contain the virus is that what determines your economic outlook and whether you're in a v-shaped recovery? >> china is in 2020-2021, china will be 10% above 2019 level and most of the countries in the world will be below their 2019 level. what worked for china is effective containment. they were able to bring down the virus spread very quickly, and very few lockdown measures are in place at this point, if any, and there's been sizeable fiscal stimulus in the form especially of public infrastructure spending now, of course, we do worry about the unbalanced nature of this recovery and the hope is that going forward, it will move more towards private demand as opposed to public sector demand. >> the thing with china and the u.s. is that trade frictions are still very high and before the
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pandemic, the imf was warning that trading was holding back the global economy how do you see that picture now shaping up, given the fight over tiktok and wechat and the coronavirus and the geopolitical tensions in the south china sea. what has all that meant for the trade picture between the world's two biggest economies and how much that's holding back potentially the recovery >> so in global trade, is contracting this year by over 10% and recovering partially next year. this as you said, these tensions have been growing over the past couple of years and we see continued increases in restrictions both on trade and in terms of foreign investment and this is one thing we do worry about is being as an important downside risk. as of now, that hasn't had a big impact on global trade but again, this is an important factor going forward because we just need everything to work to come out of this recovery and make the world economy whole >> finally, do you revise your
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u.s. outlook, if vice president biden wins the election say and we see a blue sweep, does that totally change the calculus for how the u.s. economy is going to do for this year and next? >> we'll have to see what happens and what policy packages are announced by whoever wins the election, and only then can we project for the u.s. in 2021 how that will impact their projections. >> fair enough i know imf stays way from politics gita, thanks for joining us, the outlook for the world economy, chief economist. a lot of movers this morning, j. a&j pauses its clinl trials for the covid-19 vaccine. meg? >> johnson & johnson raising its full year guidance potentially across all of its business units from pharmaceuticals its lark
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toast medical quiss where it does a lot of surgeries and procedures to consumer health. it's best known for tylenol and band-aids and listerine, all business units beating expectations for the third quarter. one really important measure that analysts were looking for is the medical devices business because that is a gauge of what's happening with procedures and surgeries and you can see this is what analysts like josh jennings at cowan are called a v-shaped recovery here that you're basically back up to where you were in the first quarter for medical device sales. they were expecting a 15% drop in that business for the third quarter and only saw 3.6% drop so doing better than expected there, but of course, this news about the pause in the covid-19 vaccine trials basically overshadowing the quarter here the company saying that there was an unexpected illness in the trial and they are investigating what it is this is just a pause it is not a formal clinical trial hold that would have been implemented by regulators.
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guys, we shyou remind everybody, we don't know if this was a person on the vaccine or if they were in the placebo group. we talked with the cfo about the event this morning here's what he said. >> pauses are something that are not uncommon if you think about the vaccine trial that we're conducting, it's 60,000 individuals. that's a large study it probably should be somewhat expected you'd see a pause for an unexpected adverse event and we're letting the science dictate here what it should do also is reassure the public that every scientific, medical and ethical standard is being applied here, not only at johnson & johnson but across the industry as we all search for a vaccine to combat covid-19. >> so guys, we have to wait for more details on this j&j says it will take at least a few days back over to you >> not to get too far ahead of ourselves and rely on your
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expertise more than mine but i am told it does deliver the vaccine payload in the same way the astrazeneca vaccine does as well and there you had that one case i guess of transverse myelitis, perhaps a concern if this were to be the same thing >> certainly the conclusion that a lot of people are coming to, just seeing that you had that pause in the astrazeneca trial this is a similar technology, not the exact same delivery mechanism but the same idea. i'm talking with experts who warn we should not jump to the conclusion that it isthe technology right now, just because we don't know yet what this event was for the j&j trial. we should also note johnson & johnson used this platform for many other vaccines, including its ebola vaccine, which is approved in europe, hiv acvaccine so they tested it in more than 2 1 00,000 people. saying they're comfortable with the safety profile david, if it's the same event,
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that would be very concerning. we just don't know yet >> got it, thank you >> definitely waiting for more information, meg, thanks so much, meg tirrell. when we come back, a few hours away from apple's biggest event of the year, as we look forward to a discussion of new iphones and 5g, what investors need to know about it, when we come back in two minutes (♪ ) keeping your oysters growing while keeping your business growing has you swamped. (♪ ) you need to hire i need indeed indeed you do. the moment you sponsor a job on indeed you get a shortlist of quality candidates from a resume data base so you can start hiring right away. claim your seventy-five-dollar credit
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apple's big event is just hours away in fact, you can count down if you want to, the company is
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expected to release new iphone models that will support 5g technology john forte joins us with a lot more good morning >> good morning to you i am counting down of course and 5g is the big wildcard for a long time the question, are people going to hold off on buying iphones as they wait for a 5g version if they want to be futureproof. now the question is particularly in the u.s., are people going to rush out and buy a 5g iphone even if it's perfect from apple because the 5g networks are not ready at the level that many had expected, and the people had hoped, so i think there's a big question here, how is apple going to position this phone are they going to roll out a presentation where they even bring carriers on stage, making a case for 5g, are they going to have some mechanism maybe some service, a website that shows 5g coverage in your area? do they play it differently depending on geography, in china
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for example, an important market for iphone launches, there's been a lot of 5g network build-out and a lot of 5g phones sold already you would think that would be a potentially strong market for them, david, but beyond that, there are questions about how this phone is positioned even beyond 5g, the new processors that are inside, display quality, camera quality. what sells beyond that, for the people who are perhaps in the market for a new phone but in areas where 5g coverage is not yet good >> so interesting, john. of course we talked so much about 5g, both of us for years now, and to your point, i mean, i'll be curious to see whether any of the carriers are involved that is not something i had thought about or anticipated, but the three big carriers are building out their networks, they are spending the money but a lot of the first case usage is not necessarily for the consumers. it's much more for the enterprise, right, john? >> yes, and nobody can get excited about enterprise in a presentation about i-phones.
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we can stomach it for a segment of two if salesforce comes on stage and talks about using ios devices. the question is, what is the argument that they can make here that consumers are going to really latch onto, that's going to resonate. in the past it's been speed, speed, speed 5g has so many different complexities along with it you have low band, you have mid band, you've got high band it's the mid band that tends to be powerful potentially for smartphones, so what has apple built into the phone capability wise when it comes to coverage and consistency of connection that might make a consumer case. >> and i guess that feeds into the price question, john, which we don't know yet but apple's whole thing, average selling prices continue to go higher as they impress people with new technologies i wonder if they're still able to do that at a time where consumers have pulled back a bit in terms of certain things, more
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value oriented, we're still technically in the middle of a recession with high unemployment consumers are in different shape than previous years during the releases >> it's confusing, sara, the iphone 10 cycle apple hit a speed bump i think on pricing where they tried to charge a lot for the high-end phone people weren't willing to fork out for that at the rate some might have expected. since then they adjusted their strategy, four different models today we expect and iphone se already out. i've got one of those here, it's a little bit of an older design with the iphone 11 chip inside, and actually got a home button on it, so you don't have to unlock it with your face i don't love the face i.d. they have a range of arguments to make different price points in the pandemic so far we've seen people are willing to spend on technology, so do they make some adjustment to facetime, anything that kind of calls out that pandemic use case of
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needing to use technology to keep in touch. >> true. john fortt, see what happens, thank you. see you next hour. time for our etf spotlight jets down 4% this year and trading lower on the day down 1.6% the biggest holding is delta airlines posting a wider than expected loss this morning, lost more than $11 billion in the last two quarters. the company also warning that recovery could take two or more years. delta shares down about 45% in 2020, down 1.25% this morning. we'll take a quick break on "squawk on the street. dow is down 90 pois.nt ♪ ♪
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♪ ♪ before we talk about tax-s-audrey's expecting... new? -twins! ♪ ♪ we'd be closer to the twins. change in plans. at fidelity, a change in plans is always part of the plan.
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disney shares up 3% and leading the dow industrials after that restructuring of its media and entertainment divisions. julia boorstin you had a great interview yesterday.
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>> thanks, carl, good morning to you as well. disney is separating the groups that create content from a new group focused on distributing content. this will enable more nimble decision-making about how content is released. here is what john chapek told me why he's making the move now >> covid something realitied the rate we made this transition but this transition was going to happen anyway. essentially what we want to do is separate out the folks who make our wonderful content based on tremendous franchises from the decision-making in terms of where the prioritization is in terms of how it gets commercialized into the marketplace. >> disney shares moving higher this morning, up over 3% on disney saying digital distribution and disney plus are top priority theater stocks tumbling on this news and amc saying its cash will be depleted by the end of this year or early next if
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these trends persist >> we are tilting the scale pretty dramatically towards our direct-to-consumer platforms, increasing our investment and content that's going to fuel the machines in direct-to-consumer >> loop capital upgrading to buy saying "no investor will disagree that the future or o arguably the present is all about streaming and sacrificing current profits to be better positioned for streaming to the correct move." needham cautions disney's streaming services monetize the fabulous content at a steep discount to linear tv and thee attical releases it feels economically risky to us." we'll learn more at an investor day which disney just scheduled for december 10th. guys >> julia, i think important always to stress here they're still loozing money on this. it's an enormous investment for
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disney that continues and i guess some analysts are wondering is this going to change the way they report those losses do you have any insight at all >> well, look, i think we'll learn a lot more about not only whether or not this is losing money or how much money it's losing but also how many subscribers disney plus has. the last number we have is 60 million subscribers. they hit that target much earlier than anticipated, but i think there are questions about how much they've been actually able to grow those subscriber numbers after scaling them so quickly. i think we'll get more on earnings and get more when they do that investor day in december, but i think they'll likely have to reorganize the way they report these revenues now that they restructured the company so much. >> julia, thank you. disney shares adding to the dow. still to come, oil billionaire harold hamm, find out how much he thinks gasoline prices would rise if joe biden wins the presidency. and jane wells is live from
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iowa with a look at what's still ahead in the show. good morning, jane >> reporter: good morning. we're in the middle of harvest, farmers bringing their grain into the cooperative run by land a perfect storm of bad news for farmers. would you think with the president coming here tomorrow that maybe farm support is getting shaky. it's not we'll explaiwh lern quk the street. even shells represented value. then currency came along. they made it out of copper, gold, silver, wampum. soon people decided to put all that value into a piece of paper, then proceeded to wave goodbye to value, printing unlimited amounts of money as they passed the buck to the future. that's why it's time for digital currency and your investment in the grayscale funds. go digital. go grayscale.
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welcome back, everybody. i'm sue herera supreme court nominee amy coney barrett saying her catholic religious views will not affect her approach to cases. at her second day of senate hearings barrett declined to say if she believed the 1973 ruling that legalized abortion was properly decided social security recipients
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will get a modest 1.3% cost of living increase next year or about $20 per month. that will raise the average social security payment for a retired worker to $1,543 per month. you can go to to see how next year's increase compares to other years. scientists have confirmed the first case in the u.s. of someone getting covid-19 twice it happened to a 25-year-old in nevada the patient recovered from both infections, but the second case was more severe. and in northern spain, doctors and health care workers starting a four-day strike demanding better working conditions and more resources to fight the pandemic you are up to date see you again in an hour i'll send it over to you, carl >> all right, sue, see you in a little bit, sue herera crude oil on its worst pace since 2014 as the hurricanes shudder production the sector faces election risk
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our next guest says a win for biden would send gas prices to as high as $6 a xwgallon harold hamm, welcome back. good to see you as always. >> good to be here, carl, thank you. >> how do you get to $6? >> well, frankly what we have right now, we're in an era of abundance of energy in america that's god for consumers gasoline $1.80, $1.90, whatever, but if you revert back to the era of scarcity, like we had with carter, when biden voted the fuel use act of 1978 in, i mean, could you get back to scarcity again, which is not good for consumers, so doubling and tripling the price of gasoline certainly that could happen it happened before it could happen again. so you don't want to go there.
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talk about the climate and everything going on right now, when you mandate that natural gas could not be used as a border fuel back in 1978, you set up a situation then that the climate was going to suffer, and it did acid rain, rwe remember what happened. it managed all the energy and fuel would go to coal so it did for ten years, over ten years it was 1987 until that was repealed, and that technology went around the world, so all the new power plants that's coming on today that's coal fired in india, china. the chinese took that technology and went around the world with it, so that's what happened. this air is global we're breathing what they produce. >> yes harold, i got two questions. one is, the $6 gas price, is
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that implying restrictions on production as well as additional taxes, and what would $6 gas imply in terms of a barrel of crude? >> well, today all this has been brought about by horizontal draling and that's what biden has said they're going to stop they're going to stop that technology from being applied and they want to end all fossil fuels. well, that's oil and gas, too, and here we are exporting natural gas around the world, clean burning fuel around the world to combat what's going on with the climate today and they're going to eliminate that? boy, that doesn't make any sense. so yes, it could have that dire effect on energy prices right here in america, both, and that's what happened you think back with the carter administration, we saw natural gas prices spiral from less than $1 up tos s i$13 so that could
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happen again >> i feel like we have to get a few facts out there, harold. number one is you are a friend and adviser to president trump which i feel we should disclose here and number two is vice president biden has said that he would not ban fracking he said that very clearly in the debate, kamala harris said that in the debate, so what exactly are you so concerned about here? >> well, i'm concerned about what they said prior to the debate that's been their whole game plan on the campaign trail all you have to do is follow them across the country and everything they said so now they've changed that, because it suddenly wasn't popular to the american public so yes, they've changed their tune right here at the election, yes. president trump, he thought that oil and gas and abundance of energy could drive the economy,
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and reach energy independence and we did promises made, promises kept so here we are, but now we're going to throw all that away and become dependent again on the middle east, saudi arabia, iran? i don't think so and i don't think we should do that. >> well i don't think anybody's talking about that, harold, but to your point, i get that rhetoric is important and president trump has been very supportive in his rhetoric for the energy industry but didn't the energy industry boom in this country under the obama-biden administration versus in the last few years and whether that was out of president trump's control or not, the pandemic and the recession and the lower price of oil, it hasn't exactly been a golden era for energy >> it is not up right now. demand is down 30% with coronavirus, but let's talk
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about what's good for the consumer we had over the last four years has been good for the american consumer we've had cheap energy prices and the right kind of energy all-time largest producer of natural gas in the world, and also light sweet crude america's come back from a pit that nobody thought we could crawl out of to where we are not today so it's tremendous let's talk about oil and gas and what could happen here is our reserves are going to be worth a lot more if you go into the era of scarcity, absolutely. we'll see prices soar, but i think public needs to understand what's good for them and what's good for america and that's what we're talking about today. >> harold, it's david.
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listen, the market takes precedence, most of our viewers would believe that you can look at coal which the president supported throughout his administration but has gone away because it's cheaper to burn cheap natural gas and better for the environment but over time, i wonder, how do you position your business, wher than plants fired by natural gas in electricity generation. how do you position your business for what is coming? the renewables will eventually move to a point of superiority >> continental is a technology company as well and we' wilns l company as well and we' wil do l in the future as we have in the past well let's talk about renewables they wouldn't be where they're at today, tremendous amount of subsidies poured into those renewables, so someday the consumer is going to get tired of that. we don't need windmills as thick
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as hair on a dog's back all over the country like in western oklahoma >> we don't? why not? >> we need to change that. >> why don't we need windmills all over the place and solar farms? you've gotten subsidies, too, haven't you? nothing? >> we do not have subsidies. let's get this straight. we do not have subsidies in this business and we haven't. so we're unsubsidized. our business is totally unsubsidized >> finally, harold, i want to make it clear, sara did. you don't believe biden at all when he says they're not going to ban fracking. you think they will? >> well, you know -- no i don't believe him at all and i don't think anybody in america does. look what he said all along the campaign trail, you know, he's been repeating all of the terms, we're going to get rid of all fosi it fossil fuel? that certainly means oil and gas. >> they didn't say he's going to get rid of it right away, they want to get rid of it over a
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30-year period, right? >> he said he's going to ban fracking on the campaign trail he's getting rid of it now when it gets here, you know, comes down to right close to voting by the american people, they change their tune nobody believes that we believe everything that's been saying all along. and we also believe his voting record we believe his voting record >> that brings me to my last question biden's been running for president for about a year and a half, and we've had you on a lot, and now three weeks before the election, you're invoking $6 gas and carter's energy crisis you can't blame some viewers for thinking you're just nervous about the polling? >> no, i'm not nervous you know, i think it's very ironic that it comes down to this point and swaps horses here at this point of the race, and
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so yeah, i've been on several times and answered all your questions exactly like you've asked them, carl and david, and certainly am today and you know, this is what i think and i think that the american people and american consumers need to be fully aware of what's coming down the road at them. >> that's why we listen to you, harold, get that point of view out and we really appreciate it. it's obviously going to get more fiery in the next three weeks, three weeks from today >> appreciate you. >> harold hamm it's been a difficult year for farming and yet support among farmer force president trump higher than it was in 2016 our jane wells is live from iowa where she has more for us. jane >> reporter: hi, david we're going to talk about weather, politics, and money this is a local grain co-op run
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by land and farmers are bringing their corn and soy beans because it's the harvest futures prices are up, lower supplies, what was supposed to be a bumper crop in iowa is not. a massive wind event in august called a duratio wiped out more than a half million acres of corn after one of the driest summers in a long time, followed by rain in september which was too late >> back here is where we had two grain storage bins >> reporter: dave struthers figures the duratio cost him 180 grand. subsidized crop insurance is down there's a downtrend in demand and a trade war. >> this is probably the worst chaotic year you though covid into it and all the other stuff that made the turmoil seem unending. >> we've seen anywhere from, you know, 10% to 20% that has been
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affected and i'd say at least 10% that will have severe or complete elimination of that crop >> reporter: now as bad as it sounds, farm incomes are supposed to be up this year, why? aid from the trump administration the usda committed up to $30 billion in coronavirus relief to farmers and that is one reason as the president comes here this week while iowa is a toss-up state, support among farmers is polling at 75%, guys, that's higher than it was in 2016 back to you. >> wow big supporters jane, thank you. jane wells as we head to break, take a look at shares of amazon today, higher again by 0.75% after a big drop yesterday its two-day prime day shopping event is under way after having been delayed from its usual summer date due to the pandemic. we'll look closer at prime day
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and what to expect the impact on other businesses on "squawk alley. "squawk on the street" will be coming back. amazon is one of two sectors higher along with communication services in this market. before we talk about tax-smart investing, what's new? -audrey's expecting... -twins! ♪ we'd be closer to the twins. change in plans. at fidelity, a change in plans is always part of the plan.
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amazon and other retailers kicking off two-day sales events but the bigger winners coulden the delivery stocks. find out more on more "squawk on the street" coming up. before we talk about tax-smart investing, what's new? -audrey's expecting... -twins!
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♪ we'd be closer to the twins. change in plans. at fidelity, a change in plans is always part of the plan. we're committed to making college more affordable., that's why we're keeping our tuition the same through the year 2021. - [student] i knew snhu was the place for me when i saw how affordable it was. - [narrator] find your degree at welcome back to "squawk on the street." i'm dominic chu. the s&p is down 0.5%, close to there. two s&p 500 sectors are in positive territory you can see discretionary and comm services. the real estate sector is the biggest gaggard down 1.5%. the worst performer is bornado
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realty trust, other underperformers, sl green and boston properties so keep an eye the real estate rates and companies. more "squawk on the street" is coming back after this break we're carvana, the company who invented
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the general view is that stock market is comfortable with the biden presidency our steve liesman reminding us here how bad market predictions were back in 2016 and whether they can be wrong again, steve >> yeah, sara, interesting question based on how it's trading, the stock market is at ease with a biden victory or a clean sweep by the democrats but we have been here before it was the wrong take in 2016. the polls hit wrong. the experts could not have been more wrong in their predictions about a trump victory. take a look at what it's showing now. the s&p 500 has risen in recent weeks. markets are more comfortable with democratic control. maybe that's not the cause but certainly not selling off in response to the change in the polls. but predicting how the market will react after the election
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based on how about it hafz befo behaves, it worked out badly in 2016 a cnbc story, 50% crash of stocks in president trump won. barons quoting four money market managers predicted a swift selloff and a academic study by two economists saying a 20% selloff. they were all correct. for about three hours. stocks crashed overnight and re rallied for the next 14 months during the trump presidency. what mistakes were made? i read the articles. market predictions overreacted of the trade war that did take hold later on, also the impact of immigration policies and overall policies uncertainty the deficit impact on the tax cuts also seem to be overestimated in terms of the economic effects the predictions underestimated the economic impact of the tax cuts and maybe deregulation along with perhaps they
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underestimated their own biases in looking at the data of course, this time is different in several ways. there is the covid-19 pandemic with the possibility of a second wave and the possibility of a vaccine. there is markets positive take on cutting stimulus from democrats and a fed pledging easing monetary policy for years. how the market seems to trade before an election may not tell you how it's going to trade afterwards >> indeed. that's great to go back and look at that, steve, thank you. steve liesman. let's talk more about the markets and election risk and bring in our managing director and head of equities nice to see you this morning i spent a lot of time talking to the highly compensated people in this country, namely, people that allocate assets and have complex strategies one would expect, try to get the best performance and mitigate risk. they always come back to the same point which is money is free the fed is printing $120 billion a month.
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just buy stocks. do you see it that way >> yeah. st this is what the market hire for the last few months, certainly the fed has been doing its share. the government on the fiscal side, they started very well and they did their share now further stimulus is unlikely before the election. we'll see. but that's going to hurt pt that's going to hurt the consumer people are counting on the checks to pay bills to buy basic necessities. and so that's what's going to put a crimp on the evolution of growth and that's not going to be good. and that's why we're on the positive side. maintaining exposure to equities because of the good liquidity coming from the fed. doing so in a defensive way because of the uncertainty around the stimulus in the short
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term we know they'll come in the longer term and the evolution of covid-19 which is a big unknown even though we're making a lot prove gr of progress in resolving the treatment and coming up with a vaccine in the very near future. >> ernesto, speaking of stimulus, the majority leader mcconnell is making comments right now about potentially voting on at least ppp let's get more on that >> mitch mcconnell now saying that the senate will bring up legislation to extend the payroll protection program to help small businesses. in a statement he said that this will be the first order of business for the senate when it reconvenes on october 19 ng. and that there should be time to take this up before they turn their attention to confirming president trump supreme court nominee. now in a statement, mcconnell said republicans do not agree that nothing is better than something for working families
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the american people need democrats to stop blocking bipartisan funding and let us replenish the ppp before more americans lose their jobs. needlessly the white house most recently over the week did call on lawmakers to take up this ppp extension as the stand alone bill while negotiators continue to work on a bigger deal house speaker nancy pelosi is very clear that this is not something that would pass muster in the house but now the senate at least we know will try to act on this before the election. guys >> thank you thank you for that important news on mcconnell and the ppp. ernesto, i want to come back in the short time we have and get your take on this broader market you were discussing the positives and negatives. what do you make in particular of the significant move up in so many of the big cap technology names over the course of the pandemic can it be sustained? is it a reflection of what we were talking about in terms of an incredibly lenient fed and a
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lot of money >> well, the fundamentals for the big tech companies are fantastic. their valuations are almost nosebleed. and there is a concern but the fundamentals are strong, the valuation doesn't matter until it does. so they can keep going and doing well until something makes sentiment shift away from the positives of the fundamentals to how much people are talking of those. there is talks of option trading surging again like it did a few weeks back probably that's a result of -- that's what caused the meltup in the last few days. and maybe we'll get a positive here and maybe a correction of sorts in those talks it's hard to predict the fundamentals, again, apple is having the apple day to day it will be a great day maybe more room to go here >> we're going to talk more about that in a moment when
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"squawk alley" begins. thank you. we're back in a minute ♪ ♪ ♪ ♪ "hmm's and ahh's" heard in-call. ♪ "a good education takes you many different horizons" and that sticked to my mind. so, when $1 a day came out, i said, "why not"? why not just utilize that resource. and walmart made that path open for me.
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