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tv   Squawk on the Street  CNBC  December 29, 2020 9:00am-11:00am EST

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>> all right fantastic. the futures, thanks, guys, thanks, serat, thanks, paul. i want you to watch. i want you to hang on every word, all the way up to 5:00 every day. make -- i said that just for mel. i'm kidding. all the way to midnight, make sure -- thanks, guys thank you, mel thanks, mike join us tomorrow "squawk on the street" is next good tuesday morning welcome to "squawk on the street." i'm david faber with morgan brennan and bob pisani nice to have bob here this morning. let's give you a look at futures as we get ready to begin training one half hour from now. as joe just was discussing and mike, and melissa, we're going to be looking at a higher open here and potentially some new records. let's get to our road map this morning. it begins with that rise in futures as stocks are looking to build off those record highs >> then, a return to service for the 737 max.
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we're live on the tarmac ahead of the aircraft's first commercial flight in the u.s. in 20 months. >> and later, a change at the top for the s.e.c. a primer on the agency's new acting chairman. >> well, we will start this morning with as you might expect the markets aas futures are indicating, another higher open, bob. it is great to have you. at least virtually of course, you and i have not seen each other in ages, facet face but, you know, as this year ends, as we hit new heights, i love your take in terms of where we stand right now, with a handful of trading days left in 2020 >> well, this is certainly a year for the record books. i think it is important for in these kinds of situations to remind everybody what really did matter in 2021 and what might matter in 2020, big story of 2020 was a belief that the vaccine was coming and that a vaccine rollout would matter that's the number one story for the year i think that's what motivated
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stocks most importantly. elsewhere, number with, i would have to say, monetary and fiscal stimulus particularly the federal reserves stimulus, remember, we started out with what, $3 trillion balance sheet, $4 trillion on the fed, up to past seven, we have doubled the fed's balance sheet. and the reopening. the market is looking past the covid winter towards a better 2021 better second quarter. a lot defeof debates about whetr the markets were undervalued or overvalued the multiple is pricey, expensive, on a belief we're going to have a significantly better second half of the year and finally, i want to remind everyone about the liquidity situation out there. there has been plenty of money to buy stocks, that's not been a problem, that fed qe program has been enormous overall. doubly, essentially, the balance sheet for the federal reserve. and i think that's the ultimate thing that matters if you talk to anybody out there and say the fed did not intervene with that liquidity program this year, the markets, would they be lower?
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heck yeah, anywhere from 20%, 30%, 40% lower on the earnings situation, i can't emphasize enough how much the market believes is going to be an earnings explosion in 2021 if you look here, we had a great numbers in 2019, $162 for the s&p. we dropped to $135 in 2020 and we're going to get new highs in 2021. we're going to be past the old numbers. 167, 170, 175. there is going to be an explosion in earnings or at least that's what the market believes and that, david, is what is animating stocks right now. >> yeah. and, of course, we talked a lot about the multiples we look at every day, not just earnings, but multiples to sales on some of the high flyers not stopping many of the buyers from continuing to plunge in >> yeah. multiples to sales because those are companies that aren't in many cases especially when we talk about some of the smaller tech companies that have been incredibly high flyers this year on that whole stay at home tech
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boom covid trade, if you will, that are not profitable. that being said, i think there are also a number of risks for the mark net et in 2021 as well back to your point, david, valuations, what is the right price to those earnings, especially given the fact the markets have gotten over their skis or some pockets of the markets have -- there are also key risks, right we have seen investors taking bigger bets, bigger, more risky bets that i think will be a bigger story in 2021 in terms of the trading strategies out there, retail investing, trading strategies out there the senate runoffs next week that's a key thing to watch too. what does a biden administration mean for the markets are we going to see higher taxes, a rollback in the deregulations we have seen or a roll forward maybe i should say, in terms of regulations that we have seen under the trump administration, and a lot of that is going to hinge on the results in georgia that we get next week as well.
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the other thing i'm keeping a close eye on, we have been talking about this on the show quite a bit, the dollar index, the fact we have seen such a weakening in the dollar index. it moved back above 90 in recent trading sessions now seems to be testing that level again here right now and what is that going to mean when we talk about that liquidity situation, and talk about monetary policy coming to 2021 with earnings, with the economy firing back to life amid the vaccine rollout. what is that going to look like in terms of inflation and what does that mean for the dollar and commodities which we know moving adversely to it. >> exactly i think the point here is that it affected the stock market in two ways lower rates, affecting the dollar, lower dollar, lower rates, driving more people into the stock market there is no alternative. you can't have 0.9% ten-year bonds. that's number one. low rates, low dollar, driving
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more people into stocks. number with, lower dollar has tremendous influence on emerging market economies not just commodities, but also in their ability to export and be more powerful as exporters. so there you can see this and you can actually see as the dollar index weakened over the course of the year, emerging market economies like vietnam started moving up. vietnam is now at a new high that's a small market. but you can go down the list and look at how well emerging markets have done since the dollar has been weakened >> yeah, absolutely. and i think just to that point, in general, looking internationally, we talked so much about the fact we're at the record highs here in the u.s., equity markets, but just looking around the globe, you know, the nikkei, for example, is at a more than three decade high right now. really speaks to the fact that we're seeing this surge in the markets more broadly internationally speaking as
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well >> yes and -- >> yeah, bob, you brought up the prospect of vaccinations being such an important component of the thesis and the fact that stocks have maintained it not extended their gains as the vaccine rollout has begun. but, there had been a hope that vaccinated 20 million people by the end of the year. doesn't appear we're going to be anywhere near that at least at the pace we're currently going in terms of getting those needles into arms right now. i don't know if that's going to have any impact in terms of the way people view the market right now. but it is important to point that out, and, of course, unfortunately that i think hospitalizations are hitting record highs here in this country right now as a result of covid, which continues and scott gottlieb said it many times, these next six weeks could be very tough >> right so big question has been amongst those who are, say, more
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pessimistic about the economic outlook is looking at the stock market, i get these emails all day long, hey, bob, when is the covid winter going to matter, when is the stock market going to wake up an see the economic damage being done, the deaths, people being admitted, the loss of jobs out there, when is the market going to wake up to that. the simple answer is the market is looking past all that towards a belief it is going to be a lot better in the second half of the year people can say people are living in fantasies, but that's the way the stock market works in terms of the rollout, very clearly, david, the stock market is not upset that it is not going perfectly. that it is not getting the maximum amount of vaccinations possible it seems okay with that. i think what it would not be okay with, if suddenly a new strain developed that was vaccine resistant. that i think might be a bigger problem. so far we are hearing that they may be efficacious, these new strains that may be developing in the uk are likely the
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vaccines there will likely be efficacious, we don't know that for sure that seems to be the case. i think the market would react differently if that was in the t not the ase. >> so part u.s. administered more than 2 million doses, it is the most of any country so far we still have a long way to go here, nearly 16 million first doses of the pfizer, biontech and moderna vaccines scheduled for distribution over this next week so we're definitely starting to see the numbers ramp up. i'll tell you from special experience, the first member of my family, my stepdad, a doctor on the front lines in a hospita in the poughkeepsie area got his first shot yesterday we have some other names to keep an eye on too. which i think is going to continue to add to this conversation and the coming weeks and coming months, whether it is the astrazeneca vaccine that is under review in the uk right now, whether it is novavax starting its late stage trial of the vaccine or another name, ark
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terrace therapeutics, plunging in the premarket now, despite putting out some it looks like favorable study results. there are these names to continue watching that will continue potentially depending on the outcomes of some of the trials add to the supply scenario as well i wonder, david, how much of that is being factored into the market discussion too when we talk about things like supplies and vaccine rollout. >> yeah. i don't know j&j of course is a very important one as well. that is expected to be the next one out of the shoot remember, that's only one -- home get it once, not three weeks apart as is the case with moderna and pfizer vaccines, which could also prove helpful, certainly in terps of the rollout as you say other news to get to, bob, glad you're with us, you follow it closely, that leadership change at the s.e.c., jay clayton resigning, lloyd royceman becoming the acting chair, not in that position for too long.
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tell us what you know. >> the reason it is likely he will not be is because it is the acting chairman and elad roisman is a republican. it is a five-member commission there are two historically two democrats, two republicans, and the chairman is nominally neutral. but actually usually is the -- a member of the party that is in power. so jay clayton resigned. clayton was essentially 3-2 republicans/democrats. clayton resigned now 2-2, roisman, one of the two republican commissioners is now acting chairman. it is 2-2 and we need another person, a permanent chairman that will happen down the line but i wouldn't hold my breath and expecting somebody immediately. there is a lot of other fish to fry for the biden administration in terms of appointments so it is quite possible this might be several months. nonetheless, this very interesting things going on already in terms of what we might be able to see from the
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biden administration in 2021 in terms of market enforcement, market regulation, there is an awful lot of noise, awful lot around climate change. and the s.e.c., there is noises being made that the s.e.c. should be calling around the companies and asking them what policies do you have in effect for climate change this is controversial because is that really within the s.e.c.'s mandate. remember, the mandate here is -- the s.e.c. is capital formation, fair and orderly markets, and investor protection. and a lot of people are saying, wait a minute, climate change activists, you want to ask questions about what everybody's policies are, that's not the mandate of the s.e.c you can expect people to turn around and say, okay, let's cool it on that, and the question is, how much real power does the s.e.c. have, to ask the question, not to say, you're violating something, but just to say, what policies do you guys have and that's the way to get the conversation going so it is a back doorway, guys, to essentially get into the esg
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debate the other thing is board room diversity, saw what nasdaq was doing, starting to ask questions about what kind of people do you have on your boards? and finally, regulation best interest, that's a very interesting question about if i deustc fiduciary standards. i think look for climate change and board room diversity as very hot button topics in 2021. >> yeah. that's interesting to hear about the s.e.c. and climate change. i would imagine it is going to raise quite a number of eyebrows both in corporate board rooms and on wall street as well actually makes me think of those lawsuits that we have seen playing out at some of the courts i think there are ones that involved exxonmobil, for example, i don't know too much about them it just makes me think of that around this idea of climate change and the legalities of climate change and what that means for an investor standpoint so certainly will be interesting
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to see how that plays out in 2021 just a couple of days. am i right yeah it is -- i wonder, bob, if you heard any names and i realize you said we're probably a few months out if you heard any names floated from the biden administration about potential new s.e.c. chairs, because that's going to be one that i would imagine the markets watch very closely as well >> yeah. there have been a few. this is -- this is a speculation that i think don't think is terribly profitable. it happens, preet bahara's name has been floated mary joe white came from the enforcement community. jay clayton did not. so there are debates that get into democratic policy initiatives. and so if you had people who are in the markets structure, market regulation area, are they going to be moderate, are they going
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to be progressive, more aggressive the more progressive wing wants somebody who is more heavy on the enforcement side but i still maintain watch the climate change and the diversity debate that's going to be the thing that really is going to get headlines in 2021. >> yeah, i think we're going to be talking more about things like esg in the next hour of the show as well in the meantime, boeing 737 max is back with passenger flights starting today here in the u.s we are live in miami that's coming up next. don't go anywhere. boeing shares up 1% in the premarket. so you want to make the best burger ever? then make it! that means selling everything. and eating nothing but cheese till you find the perfect slice... even if everyone asks you... another burger truck? don't listen to them! that means cooking day and night until you get... [ ding ] you got paid! that means adding people to the payroll. hi mom. that means... best burger ever.
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the 737 max is back in service for passengers first commercial flight in many months will take off shortly from miami and land at new york's laguardia airport phil lebeau, as you might expect, he'll be on that flight. he joins us now ahead of it.
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phil, quite a story here >> it is, david. one that we have watched play out over the last year and a half, two years, going all the way back to late 2018 when first 737 max crash happened we're going to take off in a little over an hour to give you some perspective on how long it has been since we have seen a 737 max commercial revenue flight in theunited states you've got to go back to march of 2019. so 636 days since there was a u.s. revenue fight for an airline here in the u.s. daily flights for american, start with this one, it is going to be daily round trips between new york and miami just a few minutes ago, we heard from the present of american airlines and i asked him point blank, look, are you worried that people are going to say, wait a second, i'm not getting on board the max here is what he had to say >> as we take a look at our loads, there really isn't anything to distinguish these flights from the rest of the system
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and we haven't seen anything that would suggest people are looking away but at american, we're trying to be incredibly transparent about the aircraft that people are flying on. >> as you look at shares of american airlines, keep in mind that they now have 34 737 maxes, 24 in the flight, the others they'll take delivery of, i have to point this out, i hear this from a lot of people, who if you book a flight and it is on a 737 max, can you reschedule. they said time and again, yes, you can, if you notice that the airplane is a max, when you book your flight, you can reschedule, and at the gate, they'll be announcing this is a 737 max if you're not comfortable at that point, they say they will rebook you when that happens on a particular flight. we take off in an hour we're in laguardia we'll talk to you later on this afternoon. >> phil, i cannot wait tho see
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you make the journey and hear about the before and after i'm curious, i realize there were so many costs attached to the 737 max when it was grounded and we watched all the investigations roll out and how hard hit the airlines were by that now that we are still in the midst of this pandemic and we do still see air travel, mind you maybe the last couple of days, you know, aside, pretty depressed, the fact it is cost efficient, fuel efficient was seen before the groundings as such a work horse, do you think that's going to spur adoption or readoption more quickly? >> yes in fact, robert iceman said one reason they're bringing the max back into the schedule as quickly as they are is the fact that it is a more cost effective plane for the airline to fly and they believe that all the changes that have been made, whether it is the flight control software, or the enhanced pilot training, that makes this plane ready to go. so if you're sitting on a more cost effective option, why not get it into the sky as quickly
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as possible. >> phil, thank you and, of course, we will be checking in with you, you're about to board that plane. phil lebeau, who has been following the story as he said from the very beginning. the tragic beginning of it let's give you a look at futures here we're heading to break very quickly. we'll be back with an opening bell as you see, we are set up for a higher open yet again on all of the markets. stay with us change is all around us.
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here is a lot of stimulus and i think there is a chance that for the end of the year, growth could be explosive. and if it is, then the fed would have to reconsider how long it wants to keep rates so low but at the moment, i think it is -- enjoy it while it is unfolding. >> that was ed hyman from yesterday. and i noted the comments because he had a very good track record in terms of accurately forecasting broadly speaking the economy. he also had positive things to say as you might imagine about his view of the equity markets in 2021.
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again, largely because of the fed and as well the federal government in terms of spending. and the vaccine, just all these things seen as being -- seen that they will be stimulative, bob. so you got that going into 2021, ed hyman saying we're going to keep going >> ed hyman is terrific and i agree with him go back to the fundamentals, what moves stocks? number one, dividends, dividend growth number two, earnings and earnings growth. number three, the market multiple, which is a measure of exuberance, how optimistic are people about the future and number four, which is what ed is getting at is liquidity. liquidity is a simple point. how much money is there out there to buy stuff in this case, how much money is there to buy stocks and as ed has noted, there is an ocean of liquidity. the federal reserve started out this year with a $4 trillion balance sheet. they added 3, $3.5 trillion.
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they're going to keep going, you know, 120 billion a month, that's another billion and a half, trillion and a half dollars that you're dealing with throughout the year. so just think about this, the fed will have a $9 trillion balance sheet potentially in a year a lot of that money finds its way into the stock market. so on the margins, does it matter oh, heck yes and just call your friends, david, like i've been doing all year an say, if the fed hadn't intervened in the way they did in march, with the oceans of liquidity and all those programs, would the markets be lower and everybody says, oh, yeah, and i get 20% lower, 30% lower, 40% lower nobody knows, but everyone says oh, yeah, it would have been lower. so, yes, margins, i think the fed was the biggest influence on the market as well as hope for smooth rollout of a vaccine. >> yeah. record highs for the market, also what it meant for beauoying
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the housing market, and what it means to the income equality conversation as well with that being said, though, david, we have the opening bell here >> yes, we do. as you see, the real time exchange back at headquarters where i've been for the last four months, but not today you can hear those opening bells and take a lock at the nasdaq and the new york stock exchange where we haven't been, bob, for a very long time but there it is, almost all green again as we continue to surge toward the end of the year here, bob. i don't know what the market multiple is right now, you pointed out that it certainly is pointing to what will be significant earnings growth for the first quarter of next year >> yeah. it is about 22.3 for -- if you look at 2021 numbers, and that son the very, very pricey side remember we talked about what matters for the markets. dividend growth, earnings growth, market multiple,
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liquidity. the market multiple is rich now. the bulls say it should be rich because we're expecting a massive reopening and a massive increase in earnings in 2021 okay there is some reason to believe that may be the case but we are historically rather stretched. i think the important thing to point out, david, is not just the s&p at a new high, but global markets are at new high we got a global rally that has been going on for several months now. if you look here, germany had a new high today asia has been doing very well. taiwan, japan is at a multidecade high, morgan has pointed out. vietnam is at a new high because the dollar has been weaker, some of the emerging markets have been strong and china is one of best performing markets for the year the china csi 300, that's on the bottom there, that you see that's the s&p 500 for china that's essentially right near a new high as well so, broad market rally that we have been seeing here. the gainers this year, morgan, i would say three groups, the
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stay-at-home stuff you see out there, there is what you see -- for not spacs here, we should be putting up the gainers, paypal, service now, some stay at home companies have been doing very, very well. on top of hat, of course, you see some of the stay-at-home gainers we have seen the other group i would point out, semiconductors. we have seen a little weakness in the names like nvidia don't kid yourself just look what's going on here with the companies semiconductors are in everything that we make, including cars and, of course, including anything from internet at home devices here the biggest story of the three, the megacaps in 2020, apple as you see here, up 86% for the year microsoft, look at the gains we have seen. you put together the top five, megacaps, apple, microsoft, amazon, facebook, there are $8 trillion in market cap now the s&p is about $32 trillion
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market cap, 31, the top five stocks in the s&p are almost 25% of the market cap and those top five, i would say, amazon and microsoft and apple, we talked about that this morning in the morning call, is about half of the gains of the s&p so that's why we pay so much attention. i get emails all the time, guys, about, gee, every day, four stocks you talk about. >> but, bob, you forgot about number six i mean, just went in, of course, but it is by far the story of 2020, when it comes to a stock and we know what we're talking about here tesla. strangely actually -- is actually down today. but up, let's call it 690% for the year >> that's right. and if you'll notice, not to be a curmudgeon, what was the market high on tesla it was the close on december 18th that's when it went into the s&p 500. there is a lot of research that indicates that megacap companies
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that go into the s&p 500 run up going in, and tend to underperform afterwards. this is a very well studied phenomenon, so far tesla is living up to that. that has nothing to do with the fundamentals more of a liquidity play and the demand play. so doesn't have anything to do with tesla's fundamentals. the highs tesla got was at the close on december 18th >> that's a key point right there, bob i want to go back to apple for a second remember when that was a value stock? i mean, my gosh, what a difference with years has made and trading 35 times forward earnings now i mean, that was -- that's an incredible jump in valuation for that name versus where we saw it historically trading in recent years. so one more thing i think you mentioned, etsy is up 300% to date and the forward multiple il it goes back to the conversation we had, valuations, pockets of
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the market, frothiness, the fact you have an increasing number of investor strategists, analysts pointing to that tech bubble of the late '90s and some of the froth we're seeing here, and maybe i don't know, david, maybe i'm jumping the gun here, maybe goes back to that spac board we just accidentally put up and the fact that we have seen this spac attack and this ipo market, this public going -- going public market more generally being incredibly fervent as well. >> i want to look at the spacs you referenced first, on apple, guys, it is important to point out, of course, let's get to it, we'll come back to apple, if you want, you know, bob, you follow spacs closely as well, we'll keep bringing it up and one of us will actually talk about it, live oak acquisition, that's danamer, the graduate, lastics
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it is still, you know, 1968 or whether it is now 19 -- whatever that was it is still a value. the equity value was 890 million. it has been a great performer. now, by the way, kensington is quantumscape that deal not just announced, but also has closed. kensington no longer is kensington, it is qs quantumscape long view acquisition, larry robbins, we brought them on, the sonogram that is like a stethoscope, you can -- a doctor can have it hanging around their neck and use that. but you see some of these spacs that performed so well something i wanted to point out for some of the investors out there as well, though, the warrants that go along with the spacs. remember they typically price at $10 for a share, but then they also have warrants that are exercised at $11.50. but it is interesting to note the differential, for example, quantumscape, which we can take a look at, where the warrants trade far below where the stock
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price is, even when you count in the exercise, it is interesting because if you want to be a long-term holder it would seem you perhaps are better off buying the warrants than the stock, but it does seem to be something that perhaps escapes some of the traders out there, some of those investors who use these platforms that we well know, we describe them as robinhood traders. when they register the warrants, when they become effective, many of these stocks do start trading down because effectively you are obviously increasing the flow as they become effective and are exercised. so couple of things to keep in mind, but i think oftentimes we have overlooked the warrant side of the spac trade which obviously also allows professional investor to do some hedging if they can actually borrow the stock >> yeah. i think the large -- very good point about warrants but the larger story this year, i think, and this will be in top
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five stories of the year, in terms of the markets, the rebirth of -- the respectability that spacs have attained people forget, spacs did not have a very good odor on wall street up until about two years ago spacs, the burger king thing aside, historically has been used in small caps, and historically the after market performance has been dismal of these. and so for many, many years people thought this is not the right way to do it beginning with some of the success -- including hapatia, bigger people got in, there was a lot of cynicism about this i called it two years ago, trust me, i'm famous, market, people started coming in saying i can raise money, we're going to target something on my name and my reputation and i'm going to be a partner with this up and coming company and trust me i'm famous that actually turned out to be
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fairly -- because big people got in and there were some early successes in the last two years, the whole market has taken off what i think we need to watch more carefully, guys, is the after market performance remember, we have how many spacs out there right now, seeking -- we have 210 spacs now seeking acquisitions we're going to talk about four, five, six big successes. how about the rest of them i want to see after market performance in the next year of the bunch that has gone through in the last two years, then i'll have a better sense of whether or not spacs really are a good deal for the people who buy them, our viewers, after they actually go public and announce the acquisition, the target acquisition. >> to that point, i think you mentioned hapatia, i think virgin galactic was a turning point in terms of the spac craze and the fact that we have seen that stock even though they have not actually, the space company, space tourism company has not even yet actually launched
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commercial operations, the fact we have seen such an incredible run-up in that stock since it did go public through this reverse merger transaction back last fall. another name i want to point out, though, not a spac, did go public, through a traditional ipo, earlier this year, during the summer i believe it is lemonade that stock is up 5% now. midcap online insurance. it had sold off aggressively ahead of the expiration of its lockup today but it is getting a bounce here. and that is going to be one of the key things to watch with some of these big high flying names that have gone public in ipos in recent months is going to be these lockup expirations and what happens given the huge run-up we have seen on some of these stocks bob? >> yeah. >> and, of course -- >> and of course palantir announced a very -- essentially announced a very limited lockup and it has done very well.
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this is very hotly debated one of the reasons direct listings, the third form of going public, ipos, spacs and direct listings have been controversial is that traditionally in the few that existed there have been almost no lockup, everybody can sell at the same time. and people who were traditional buyers of this have objected saying, wait a minute, we don't want everybody dumping their shares, we want some time to see how the stock performs and we would like a lockup period so i think that's going to be tested this year, now that the new york stock exchange has gained permission to have direct listings where they are selling shares as well and some companies, i think, will announce some lockups that are doing direct listings, others may not but i think lockups are going to become a little bit of an issue this year and we'll test that hypothesis we don't want people dumping stock at the open, the first day, because that's going to depress the price. that's a theory. it may be true we'll find out we'll see.
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we'll have some test cases this year that will be good. >> yeah. on the ipo front, we should mention sap announcing or actually they announced it in july, their plan, they did file with a company they only bought a couple of years ago, under the previous management when bill mcdermott was running the company. they bought it for 8 billion, taking it public now, perhaps as a valuation as high as between 12 and $14 billion they'll still own 80% of it. but it is part of sort of the plan under the new ceo to de-emphasize that part of their business it has done quite well, perceptionwise, back to the multiples being paid for anything that comes with a cloud in a name at this point. it is having a somewhat positive impact for sap. >> well, the important thing here is this is part of the game of successfully floating ipos, but particularly tech ipos it is very simple.
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float as little as you possibly can. float 10% or less of it and you get a lot of people talking about it, everyone talks about any kind of software, software is a service, any kind of software, there are customer experience software in the case of call trick and let the demand for that overwhelm the stock price. it has been a very successful formula. the same thing is happening here float a small amount of shares, they're going to control 80% sap i believe, the outstanding shares still so this is a great idea. let's float -- we bought the thing, let's float it and sit around and let the thing go up and we still control 80% of it think about it it is a brilliant idea and it has worked for the last several years, why wouldn't it work now? >> yeah. it certainly is showing it was on paper a decent acquisition, though it may not be part of the strategy for the company going forward.
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but to your point, they're creating some value there. if you're keeping track as we head to the end of the year, 44% is the game for the nasdaq led once again by some of the names you know so well amazon, apple and the like let's get to rick santelli and check on the bond markets this morning. rick >> yesterday, we buttoned up the five year note option on the soft side, the two-year earlier in the day, we see yields popped lower. today, we're going to have the seven-year note, 59 billion at 1:00 eastern, record amount at a record 257 offering which totals 176 billion. these are big numbers. open that chart up to early august you can see the all time low yield close above half of 1%, 50 basis points in early august that really has been on an
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assent nice angle upwards as we hover near nine-month highs, best level since march when covid hit. if we look at what is going on with regard to the foreign exchange markets, let's look at two-week of the dollar index december 17 and 18 we traded under 90 for first time since the first quarter of 2018. here we are back under 90 again, within striking distance of extending the low comp, which goes back to april of 2018 and as you see on this chart of june of that year, we're going into year end at the 2 1/2 year lows versus the chinese currency as well. and when it comes to the euro, which has had a pretty good year, the euro versus the dollar, well, you can see on that chart, we're hovering at a level that we haven't closed at since the spring of 2018 let's call it 32 months. today is an interesting day. december 29th, 31 years ago today, december 29th, 1989, the
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nikkei had its all time high close just shy of 39,000 today, we're all excited because it had a nice run, but let's face it, it is still down 29% from its all time highs. that's what happens when banks and the government do a lot of trading together as they did in the '90s on the property and various aspects of real estate david, morgan, bob, back to you. >> yes, some good context there. rick santelli, thank you we'll take a look at where we stand 15 minutes into trade here in this holiday shortened week the gains continue on wall street with stocks making fresh record highs this morning. the dow is up 126 points the s&p is up 17 37.53 with every sector in the s&p in the green and the nasdaq is also up .4%. stay with us more "squawk on the street" straight ahead
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it was a big year for ipos in 2020, as well as direct listings, of course you just saw some of the spacs we've talked so much about. leslie picker is here to break down the public debuts of 2020 leslie >> hey, david. for much of the first half of the year the ipo window was slammed shut, a sell-off in the broader markets, accompanied by volatility served as basically a stop sign for prospective listings starting in june the market came roaring back in a massive way in total listings of operating companies and spacs raised $170 billion, the most ever on inflation adjusted basis it comes shy of 2000 levels the unprecedented surge in spacs
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or special purpose acquisition companies. we've been talking about this a lot, blank check vehicles that go public and use the funds to find a future acquisition. in 2020, $81 billion in such funds were raised. operating companies raised an addition additional $89 billion ipos excluding spacs saw the highest volume in six years. the surge is thanks to a number of factors, experts say, lofty valuations, low volatility, muted private markets, and strong aftermarket performance the average total return for this year's ipos is 48%, more than double that of the russell 2000, but with such a flurry of deal activity, many are starting to draw comparisons to the dot-combubble. recent ipos are trading at sky high levels but that seems to be propping the window open at least for now, companies such as
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robinho robinhood, coinbase, poshmark, affirm, petco, roblex on the docket for 2021 ipos and the slew of spacs i'm told are also in the pipeline, guys? >> yeah, there will be a lot more spacs in terms of pricing i hear it all the time, i'm sure you do as well people considering doing it in part, leslie, because of the economics we talk so often about it, potentially as much as 20% of the spac that then goes to them as a promote if in fact they do a deal that gets approved by shareholders which more likely than not is often the case little downside, bob, for the spac promoters and great deal of potential upside if you hit it back, the likes of a quantumscape quan stum scape's market value at $40 billion is more than ford's and we forget airbnb was a couple of weeks ago, bob, $88 billion market value as we head into next year,
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what are you looking for in terms of the next airbnb >> well, first off, i think we should pause and reflect on what leslie was saying. if in april you would have said this would be the second biggest year ever for ipos, prior, before green chute i have $78 billion raised by ipos, just ipos the only thing beating that would have been the $85 billion in 2014 and that was because of alibaba only if you would have said in april, this would be the second biggest year ever for ipos, i would have said are you nuts this is remarkable the $75 billion-$80 billion in spacs, depends how you add the numbers up, the amount of money raised in the public markets this year remarkable now we have a third source, the direct listings where you can raisecapital with the direct listings, now three routes to go public i expect the way you need to look at this is not just ipos,
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morgan, how much total amount of money is raised via ipos, spacs and direct listings themselves i think it's exciting, after years where companies were huddled down, not going public, because they were getting so much money to stay private, maybe this is the year finally the flood gates open and the public finally getting into some of these smaller companies even that are out there >> yes, conversation we're going to continue to have. bob pipisani, thank you for joining us another hour of "squawk on the street" straight ahead with the dow and the s&p gains fading ene r hitting a record at th op the nasdaq is down marginally negative stay with us
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good tuesday morning i'm david faber along with morgan brennan this morning. carl has the morning off, as we watch markets reaching new highs, although we are off a bit in the last few minutes of trading, as you see there with the nasdaq falling into negative territory. i notice, morgan, the likes of apple has turned around after an initial surge right at the market open. let's get to our road map this morning. it starts with the records that
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have been renewed, optimism on the government aid and economic growth, fueling fresh highs for the s&p, and the dow plus back in business. the 737 max returns to service, making its first commercial flight here in the u.s. in 20 months, this hour. and covid hospitalizations unfortunately hitting new record highs, this is vaccias vaccine continue across the country. how the health system is preparing for the weeks ahead. we are going to start with the markets that david just mentioned, all the major averages hitting all-time highs and yesterday's trading session starting at record highs, fresh records this morning before fading those gains in the last few moments of trade we'll bring in our own mike santoli to break all of this down in what is a holiday shortened trading week, and albeit one with lighter volumes in general, mike, but the fact that we did start at least the last half hour strong and we're seeing some of that strength come off right now indicates
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what >> well, there were some cracks in the momentum leadership yesterday and i don't think this changes much of the overall trend necessarily but if you saw the ipo index really reverse downward sharply yesterday, the russell 2000, a loft the super high momentum stocks up strongly this quarter since the election, this month so that might have been a little bit of an unstable rotation going on. also, s&p hitting 3750, it's been one of those objectives out there on trading basis, people thought the market could maybe tag 15% plus gain year-to-date in the s&p 500 as of yesterday, up 70% from the lows i'm not saying this is an "enough already" type moment but the russell 2000 faded this morning. it's been the momentum leader and it kind of the rest of the market sagged in that direction. again, we're talking about trading dynamics it's not really about the economic outlook for 2021. it's all about strong seasonal forces and how many of those have already been used up as we get into the final days of the year >> i'm curious, one of the
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conversations in recent weeks in general has been this rotation that we've seen this i guess expectation we'll see greater reemergence of reflation trade as the vaccine rolls out and the economy kicks into high gear energy financials and industrials are the best performing sectors, the financials hard-hit for the year does this have legs? how sustainable is this, even as we're talking about ever-growing covid cases on a daily basis >> well, if you're talking about how much room is there for those types of sectors to make up, if you were to look at a chart, even a two-year chart of the nasdaq or other growth indexes, versus those types of things, then you would say well, there's still more head room for things like financials. i'm not sure about energy but definitely some of the more beaten down industrials and other cyclical stocks. on the other hand, if has to happen on time the reopening and the traction in the economy and the acceleration is expected in
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consumer activity, probably has a few months before it has to absolutely prove that's going to happen i think could you take encouragement if you're bullish in those areas in the fact that credit markets are remarkably strong, totally unworried by the current softness in economic data and the covid case surge, and even things like the treasury yield, it has no real give to it it's kind of hovering above 0.9% over the ten-year. it suggests a lot of money positions for the upturn, whether there's a rude awakening happening at some point in the next weeks or months, it's very unclear. i don't think the market's giving you any indication that that trade is necessarily fully played out >> yes, mike, it's funny, sitting here especially given, having been here during of course the height of well quarantine, and that period where the markets were getting pummeled every day i do remember that boeing deal in particular, we're talking about boeing today anyway with the 737 max, but that $27 billion that was raised is being
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a key turning point. you mentioned the credit markets and in some ways it was a psychological turning point as well perhaps with the equity markets. i wonder, when you look back at this year as well, sort of what you view as milestones for what has been this historic year, so much unexpected in terms of the nasdaq's performance, especially, up 43.6% right now >> yes, without a doubt, not just that boeing deal but the fed essentially all they had to do is say we're willing to buy corporate debt and the market reopened that was one thing i think that the speed with which the huge growth platforms could accrue market cap and just continue to seem like they were almost expanding their dominance in real time, that was probably a little bit, because if you think back to ten months ago, you think back to january and february, we were having a similar conversation nasdaq seemed really overheated, everyone's thinking these cloud stocks can just continue to soar, sentiment is a little bit strained, it was similar after a fourth quarter rally into
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january. the market seemed like it was a little bit overbought you an ov and overloved with the quick check in february and march they went on to new highs that was stunning that you could have that and yesterday was fascinating, too i mentioned all the kind of over overheated, speculative stuff with the downside turn you have 3% gains in apple, amazon, facebook and alphabet yesterday, strictly on the rotational hey, we got to own something and that's somehow flight to quality is those types of stocks. >> we'll leave the conversation there, mike, thank you for joining us this morning, mike santoli. health systems and hospitals all across the nation are rolling out the covid vaccine to their front line workers we are seeing a record high in hospitalizations in the u.s. joining us to talk about this as well as what's going on on the ground at the hospital is the ceo of nebraska medicine, dr. james linder >> great to be with you. >> there are two i guess
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different narratives push/pull narratives playing out right now where this pandemic is concerned. on the one hand we have the vaccine rollout and the fact there seems to be light at the end of the tunnel, as supplies are starting to ramp up here and on the other hand, you have the increase at least from a nationwide standpoint in covid cases and hospitalizations what are you seeing in your hospital system on the ground right now, as you do roll out vaccines >> in the midwest, we actually had some of our peak covid cases before thanksgiving, and so we've actually had a downturn in cases in the last month or so, and depending on what state you look at, down 20% to 60%, and we probably have that peak in early november because for the longest time, the midwest had been spared some of the true pain the rest of the country felt people had relaxed their precautions and so then there was a spread of virus. so now people are being more cautious, and so we're seeing hospital capacity able to deal with both the routine cases and the covid patients
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>> it's interesting -- >> at the same time -- >> go ahead. >> at the same time we are ramping up to deliver vaccine to our employees and to the population at large. >> yes, it's interesting to hear you say peak in november, because there have been, there has been commentary out there i think dr. fauci said something just in the last couple of days as well about the fact that maybe the worst has yet to be seen so far. a lot of concern that, with everybody traveling for the holidays, we could see the numbers continue to surge. are you concerned about that in nebraska or do you really feel like it's peaked because of things like masks and people doing more sheltering after thanksgiving >> as you just alluded to, peaks are entirely related to human behavior if people wear face coverings, if they avoid shared air with nonmembers of their family, there will be a decrease in cases. we cannot loy lower our guard
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until there is wider spread immunity i agree with dr. fauci there could be serious consequences in the coming months because of the number of cases out there nationwide >> dr. linder, i'd like to get your update on the rollout moncef salawi of operation warp speed talked about inoculating 20 million people by the end of the year seems unlikely we're 2 million in what are you seeing on the ground in hospital systems in terms of how many people you're able to inoculate and when you'll get into the broader population >> very good question. we began planning inoculating our employees in october it's a complex process you have to have pharmacists to dilute the vaccine, nurses to administer it and data tracking mechanism. we prioritized the 18,000 employees and students between nebraska medicine and university of nebraska medical center to first address the front line
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workers and about 15% have been vaccinated by the end of this week and look to getting more vaccine so we can continue that. probably the supply chain is the most challenging not knowing when we'll get vaccine >> and what about a state like nebraska overall, a rural state. is it more difficult in some way to get to certain pockets as you roll it out more broadly >> it's clearly more difficult but i give immense credit to the individuals who run the critical access hospitals in nebraska and the state health department. they worked diligently to make sure the vaccine would be delivered to those citizens and with the availability of vaccines that require less cold conditions that should be handled in the early part of 2021 >> dr. linder in terms of the vaccines administered so far, what have you seen in terms of side effects in your employees and those that have received,
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have people been calling out the next day, for example? >> we've had very view side effects no more than many vaccines people receive. the major side effect is joy people are genuinely happy to be vaccinated because they've been on the front line battling this virus for ten months and see this as a way to protect themselves and their family. they are very happy. they'll bear a sore arm for that >> dr. linder, thank you for joining us today >> my pleasure >> happy new year. after the break, boeing's 737 max is in flight, with passengers for the first time in more than 20 months. what it does mean for the airline industry, we'll have that story after the break keeping your oysters business growing
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major brands such as starbucks and dunkin' are shifting business models kate rogers explains >> reporter: hey, david. consumer routines like grabbing that cup of coffee on your way to work in the morning have been up-ended by the pandemic major coffee companies are taking note and tweaking some store formats in response. on the recent earnings call starbucks will be closing 800 locations across the americas in 2021 but also opening up 850 new locations in varying formats across the country, including pickup stores, those with
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curbside options and those with drive-throughs in fact, at its investor day, new store formats including pickup and drive-throughs would expand to 45% of its portfolio by 2023, up almost 10% from its mix today. business is bouncing back, faster than expected in new trends like stores in the suburbs with drive-throughs in particular are seeing a big boost. dunkin' announced up to 800 unprofitable store closures in 2020, more than half of them in speedway gas stations but dunkin', too, has been working on a next gen store concept, pre-pandemic that caters to onthe go preferences, freeing up franchisees to invest in drive-throughs it has 800 of the next gen store concepts today not to say consumers aren't buying off kaie. when they do go in they're spending more money potentially treating things to fancy lattes or iced beverages and at-home
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coffee has seen a big uptick in business retail coffee sales up 10% sales of keurig systems and nespresso systems in the early months of the pandemic were very high because people realized we may not be going out, our routines are disrupted and we'll be making some of the coffee at home morgan, over to you. >> we have could havie pots coming up to my eyeballs and i still go out for an oat milk latte because i can't get right on my home system. >> reporter: that's right. >> kate rogers, thank you. shares of lemonade up this morning as its lockup expires. 5%owstock is up about 4.5%, up 5. n stay with us we're back in just a moment. ♪
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that's why we offer some of the lowest tuition rates in the nation, and haven't raised tuition in nearly a decade. so no matter where you want to go, snhu can help you get there. visit today. american airlines is set to make the first commercial flight of boeing 737 max this hour, but as the aircraft returns to service, will customers be willing to fly it? here's what american's president told phil lebeau this morning. >> as we take a look at our loads, there really isn't anything to distinguish these flights from the rest of the
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system, and we haven't seen anything that would suggest people are booking away, but at american, we're trying to be incredibly transparent about the aircraft that people are flying on >> joining us is joe leeader, airline passenger experience association chair. given your non-profit is supposed to accelerate passenger experience improvement initiatives, tell me, is this one of them, having the 737 max back in action >> david, i think that having the 737 max back in action will really help in terms of getting costs lower for airlines long-term. it has about a 20% lower cost basis than aircraft than it's replacing and what you'll see over time is passengers embrace all the advancements that boeing has placed in the max and making certain that it's the safest
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aircraft flying. i think you'll see it really help lower prices long-term for consumers. >> that will be a good thing what is your sense right now in terms of willingness of flyers to get on the airplane itself? >> i think that you're going to see some hesitation from a handful of flyers that airlines will accommodate so for example, if you book on to a max aircraft and like to be moved to another flight, i think it's across 2021 the majority of airlines worldwide will absolute lay come tate that but once you have hundreds of millions of additional hours, once it's viewed as a seamless member of the 737 family, i don't think you'll see that type of hesitation anymore. really what customers want to see is they want to be on a new aircraft that they know is totally safe with the max, with what's been done in the most simple terms, they basically put the aircraft fully back in the
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hands of the pilots that are the professionals designed for anything that goes wrong with the aircraft, the software that had caused the incidents on the two previous aircraft has been fully basically made to be a one-time software, with double safeties, and you'll see customers once they realize that the pilots in command are absolutely in command, i think they'll embrace it fully >> joe, all of that sounds positive, sounds good for the 737 max, as it takes to the skies again here in the u.s., but the re-branding, the fact that there was no re-branding, is that a missed opportunity is that going to make this whole process longer in terms of convincing passengers to get on board? >> morgan, that's a great question one of the things that we see on the 737 max is that you'll see different approaches taken at different geographies. in north america, we have yet to see an airline make a change from the max name, but in europe and other geographies, for
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example, orion air is naming the 737 max 8 the 737-8200 in europe, and that's a choice for them to make i think that as you look forward across the horizon, i don't believe that the brand itself is going to be what matters as much as the reliability so i think having, you know, truth in advertising to consumers, especially the plane retakes to the air is great and that you'll see the north american carriers do that and around the world as it's a newer aircraft in different parts of the world, you may see it re-branded with the 8,200 or call it the dash eight or dash nine and ultimately it's a marketing choice left to the airlines >> we're talking about the 737 max now but more broadly as we saw tsa screen a record almost 1.3 million passengers on
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sunday, the numbers for air travel begin to tick up around the holiday season what is it going to take more broadly especially as we do see vaccines roll out now finally to get more people more comfortable flying in general as this pandemic continues into its second year? >> i think that in the united states and in china, those are examples of domestic markets, where there's been healthy resilience in the traveling population in china, for example, they're nearly at 100% of domestic pre-pandemic domestic capacity in the united states we're running much lower, but i think you're going to see the numbers continue to climb and that april will be the real turnaround point. my wife is a medical doctor that was vaccinated just two weeks ago, will likely see by this summer, you'll see that later this summer, you'll see every american that wants to be vaccinated will have been able to have received the vaccine and
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ultimately, if you're looking at the safest mode of transportation outside of your own car, an aircraft, because of the hepa filters, the amount of cleaning that's going on, it's the safest environment that can be created in a covid-19 environment, and i think you're going to see some real resilience in numbers especially from people moving forward people really want to get back in the air to reconnect with family, connect with colleagues, and i think that the max will be a crucial part of that in terms of airlines being able to meet capacity that begins to rebound. >> yes, or go somewhere warm, that also is another reason to get on a plane >> here in hawaii with my family, so appreciate the time, david. >> oh, man, you're welcome way to rub it in there, joe. thanks yeah, all right. well thank you >> [ laughing ] thank you. here in gloomy new jersey,
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not really, a quick programming note as we head to break do not miss "streets of dreams" with marcus lemonis on cnbc. he travels across the country, pulling back the curtain on the most iconic and influential streets that fuel america's most n'wa ttus.ness culre dot nto miss that. we'll be right back.
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which is why we're making our chevy... ...employee discount available to everyone. the chevy price you pay... what we pay. not a cent more. so wherever you go, happy holidays from chevy. use the chevy employee discount for everyone to get over six thousand eight hundred dollars below msrp on this equinox. get the chevy employee discount for everyone today. i'm seema mody, here is your covid update at this hour. president-elect joe biden will accuse the trump administration of "falling short" on the pace of covid vaccinations and how his own plan to speed them up in comments following a meeting with his covid advisory team that, according to a transition official speaking with nbc news. vice president-elect kamala harris is set to get her covid vaccination today, about one week after biden got his shot. we're continuing to see an increase in people traveling by
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airplane the tsa says it screened 1.1 million passengers yesterday, the third straight day after christmas that screenings topped 1 million. dr. anthony fauci telling cnn it's too late to prevent holiday travel people should try to avoid large gatherings, warning january could be worse than december, which is already the deadliest month of the pandemic. morgan, back to you. >> thank you markets near all-time highs and the economy struggles. steve is looking at the data in his rollback barometer >> good morning. we end the year with a set of mixed high frequency economic indicators when it comes to travel, jobs and consumer spending, sums up a year of mixed contradictory data since the beginning. here's a look at some of the new data sets that forecasters follow to figure out what's going on in this covid economy in real time let's look at the road back barometer. 1.3 million passenger traffic on
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december 27th. that's the big christmas travel day. jpmorgan credit card data down 9.5% on holiday. we did not see a surge in spending, says jaesse eggerton from jpmorgan. look at detail, it's done a reasonable job of tracking what's been happening with overall jobs, minus 0.2% that led us to the overall weak december report. david gillber sont from ukg doesn't as strong as the 1.5% implies but it will be better he believes than november that's good news for people getting back to work apparently late season retail hiring speaking of retail, we just can't get a break when it comes to the rebound in consumer spending it was doing well and then it starts to trail off again, jesse egg eggerton said we did not see the rebound or late push of
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holiday spending and put the passenger traffic in context here 2.6 million was what we did that day last year. we're about 50% of it, so that doesn't seem like a lot except we have been running we'll call it between 30% and 40% and david, as the economics reporter, i look at this as good news that there's more commerce and travel going on but then you kind of, we all have minors in epidemiology right now, and you worry about what this means for the spread of the virus, when you see that, those kind of travel numbers >> i know, yes it cuts both ways as you say, steve. >> right >> good in some sense, although still down 50% but worrisome for january as dr. fauci said, without the vaccine being broadly rolled out steve, thank you >> pleasure. our next guest is walking the talk in saying the moment needs to be a movement he's leading the charge on diversity and inclusion.
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northern trust asset management president shonndron, thank you once again you've been on in the past talking about the larger start of esg movement so to speak. i wonder from your vantage point with the trillion dollars in assets broadly speaking at your firm, how do you judge the progress of the companies that you're investing in or make those decisions, what kind of metrics are you looking at and how much can you believe them in terms of deciding what the gender diversity of a given corporation looks like >> well, the good thing is that as we think about gender diversity, what you're seeing is more improved metrics and more disclosure, whether it be at the board level or company level so we're looking at first and foremost starting at the senior ranks. what does the leadership at the company look like. mckenzie study diversity wins, for the last five years there is
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the tangible business case for diversity. in gender diverset, the top quartile performing firms perform from a profitability standpoint about 25% better and see the lower quartile firms in terms of gender representation as you might imagine they don't perform as well. we see that is symmetrical, a positive correlation at every step along the way so we're looking at that representation at the board level, we're looking at it at the executive level, as a firm focus in terms of the progress that companies make. >> yes, money talks here, certainly, and given your decision to allocate assets in certain ways but i wonder, do we ever get to the point some of the bad actors are called out, where corporations that are not doing a good job on these things are actually taken to task publicly >> well, i think we see moves towards that think about the move made most recently by nasdaq in terms of
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representation on boards both from a diversity on a gender and ethnic diversity standpoint and by the way that companies like ours invest in how we vote with our pocketbook and our shares. we're also seeing that in areas like supplier diversity, so while i would say over time, the movement has been slow, i really believe that it's picking up steam. >> shundrawn, i'm curious. we've talked about this on air in the past but worth revisiting it again what is the business case, the investment case for encouraging more gender and diversity? >> i talked about it on one level in terms of the relative profitability. >> yep >> so again that mckenzie study, this was done across over a thousand large firms over 15 countries. i also want to talkabout the cultural benefits. if you look at research that's been done, it shows you've got higher trust you've got more inclusion, better creativity, even better risk controls when you have meaningful gender representation or gender diversity at
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companies. so one can argue in simple terms you have stronger cultures when you have that representation now the progress has been slow we need to see that accelerate the next thing i would say, morgan, importantly, the progress we've seen, while moderate over the last decade, hasn't really included all women. when we say female diversity, it has to apply to all women. so that means we see much more in the way of strides in ethnic female diversity in particular, programs for blacks, hispanics, and asian women. >> of course i bring this up because you are applying these principles it looks like to your own management and to your own strategy with your own team. we had a conversation in the past hour about the sec and the potential there for the sec to maybe start looking more increasingly into things like board room diversity and enhans forci enforcing that what would you expect in terms of the regulatory framework on a federal level and whether that starts to become a bigger conversation and a bigger push
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in 2021 and beyond >> well, it's interesting. so my reasonable expectation is less so frankly that we see a big push at the sec in terms of putting things in place in a sense in requiring diversity i do think the sec can be supportive in certain ways with respect to the advancement made by the nasdaq and moving that forward. i think what you're more likely to see is an increased market response so as you see more demand in our business for example, from asset owners that are putting pressure on us to see this reflected in who we do business with and where we invest as you see esg scoring, factor these into account more and more you'll see a natural progression driven by the market that's going to influence the behavior of companies >> yes, i guess i come back to metrics. this has been such an important year for esg and perhaps we haven't focused as much on it given the avalanche of other news we've focused on,
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shundrawn. the likes of state street, blackrock or vanguard, they've made significant moves in terms of how they assess companies do they have the information necessarily to make the right decisions in applying this esg framework? >> well, the answer to your question, david, in part is partially, but i think that's important. so for example, one of the things, if i go back to the example of the nasdaq proposal that's put forward is not just about the representation a big part of it is about disclosure, and so i think one of the things that's gone sort of without notice is how much improved particularly among public companies the disclosures are getting and i think as we see more of that, david, what you're going to see is an improvement of the metrics and the weighingings th weightinged we see it establishes more permanent framework to make the empirical investment decisions >> and it's here to stay, shundrawn? was this a seminal year or last
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12 to 18 months for esg? >> from my standpoint, esg is without question here to stay. i think that we have to be very vigilant with respect to the portion of it that refers to diversity, because again, these are more cultural impediments. these are systemic issues and so we can't rest on our laurels with the modest progress that we've seen made this year, but i'm very encouraged and i mean very encouraged by what i've seen in a number of places so i believe it's here to stay. >> all right, we always appreciate your coming on and getting a snapshot of where we stand. shundrawn, thank you >> thank you speaking of snapshots, we're going to show you live pictures of the first commercial flight for the boeing 737 max here from the u.s., first commercial flight in 20 months, that's the tarmac in miami, that flight is going to take off momentarily on its way to new york's laguardia airport. phil lebeau is on that flight and going to report on this process throughout the day tune in later for the landing,
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and in the meantime, stay with us we're back in just a moment. with major averages higher
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>> today's market harkens back to the bubble in 2000, according to one strategist. how he's navigating the noise, on more "sqwkn e re" mi up. othstet
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just moments ago, there it goes the boeing 737 max taking off on its way to new york, as we mentioned before, phil lebeau is on that flight, going to be reporting on that for us throughout the day first commercial flight of the 737 max in 20 months meantime, world oil production fell to 94.25 million barrel per day in 2020 from 106.1 million in 2019, expecting to recover only to 97.42 million
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barrels a day next year. opec is set to add another 500,000 barrels of output to the oil market next month and will meet next week to decide production levels for february ray monies james senior vice president energy analyst joins us pavel, great to see you. thanks for joining us. my gosh what a year 2020 has been for crude and refined produc products we're up for the quarter and down year-to-date and the last 12 months. what are your expectations as we do go into 2021? [ muted ] >> -- to state the obvious we have seen the worst oil demand collapse in modern history, as a result of covid so to get out of this rut, the solution is simple it's vaccines.
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normalization will require widespread vaccination for literally billions of people around the world and the pace of that process will determine how quickly demand recovers, particularly in relation to aviation and long distance travel more broadly now, will demand get back to pre-covid levels by the end of '21? highly unlikely. i think that's a '22 story but it should get pretty close, maybe within 1% or 2% of where we were precovid as we end '21 keep in mind supply the other side of the equation that you referenced, this is also important to keep in mind, so we know that u.s. shale is declining, we know that opac continues to be disciplined. this is bullish by ultimately the only way to get back to kind
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of that $60 plus a barrel price level will be if we get successful vaccination for billions and billions of people into the second half of next year >> it's interesting to hear you say that demand may not recover in 2021 but it may recover to pre-pandemic levels in 2022. we've seen a number of forecasts published, bp, an example that has highlighted scenarios global oil demand may have peaked in 2019 if there's one other thing that 2020 was, it was i guess the mass realization or mass adoption at least from a market standpoint of evs and alternative energy sources have we seen the peak? is it possible we've seen the peak for oil demand? >> doubt it. the short answer is, peak demand will come. it's a matter of time, but it's
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not in the rear view mirror. more likely than not, second half of this decade, maybe around 2030 is when the people come -- keep in mind, chinese oil demand is already higher than it was a year ago and of course china was the first country to get out of the pandemic so as long as the rest of the world follows that general trajectory, we should see demand surpassing pre-covid levels, sometime in '22. now, electric vehicles at the moment are irrelevant for global, they're a rounding error. you're right about the realization, by realization is not the same as substance. the substance of electric vehicle displacement of oil demand is not going to be moving until 2025 at the earliest by the way, energy transition
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broadly, it's not just evs, it's solar, wind, hydrogen, batteries, you know, this was an amazing year for clean tap, renewable energy stocks, up 200% year-to-date, at a time when oil is down by half. so the sentiment around all of these themes is extremely powerful, that is not the same thing as saying that electric vehicles are going to kill the oil market tomorrow. >> pavel, more specifically and near-term, the biden administration begins in 20-odd days do you see any impact on the shale plays here in the united states in particular on the supply side? >> biden cannot do anything remotely to shale that covid has not already done as a result of covid, we have seen the rig count in the united
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states fall to the lowest levels since the days of rockefeller, 100 years ago. nothing biden can do is going to, you know, come nearly to that level of disruption on the margins, some regulation of methane emissions, offshore drillin drillings, lease sales, cafe standards for fuel economy is minor stuff, nothing close to what covid has wreaked havoc in the last 12 months i think the more interesting question is, what could congress do contingent on the outcome of the georgia senate runoffs one week from today? if it's a 50/50 senate, then at least it's possible that democrats could pass some climate reform, that would be a lot more needle moving than anything the administration can do with executive action >> all right, not to mention how geopolitics will play into all of this is incredible to think
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just a year ago we saw the air strikes on soulmani and the worry and the impact temporarily on the crude market. pavel, great to see you. happy new year thanks for being with us >> thank you let's get over to frank holland with a sector story for us frank? >> seven out of 11 s&p sectors higher today health care hitting a record high and leading today, am jgge leading up more than 2%. mckesson up 4% some of the biggest leaders amgen and cvs off 52-week highs. s&p trying to avoid its third consecutive down day oil service stocks pulling down the sector shlum berger, halliburton, baker-hughes all week. boeing is the leader in industrials as the 737 max resumes flying with passengers
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today. back over to you, morgan >> thank you hotel stocks are getting crushed this year but our next guest is betting on a rebound. that's coming up after the break. stay with us new projects means new project managers.
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in the sin city, 777-room hotel tower officially debuted more than a month after the downtown vegas casino opened the resort, guests are now in the rooms. the owner and ceo joins us always good to have you back let's get an update from you in terms of how many people you can have in there sitting at slot machines given the current covid restrictions in the city >> in nevada the current directive allows us to be at basically 50% capacity in some areas. 25% capacity in others basically on slot machines every other machine is on.
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we keep social distance for everyone that comes in we've been able to stay open it's the same thing at the bars and restaurants are 25% for in-restaurant dining >> when you model out 2021, what are your expectations for when you'll be able to get back to the idea of full capacity? >> well, i think the one thing we're seeing right now is we're seeing something that's transpired over the last five or six weeks and weekends in las vegas have been strong it's the weekday business that's been pretty soft it's the convention business and the business element that's been off monday through wednesday weekends have continued to get stronger every week that's gone by when we look at 2021, we're projecting a robust year we think 2021 will be one of the best years for las vegas casinos, we believe.
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>> to that point, is that business travel? are those conventions and the like are they going to make a comeback or is this aspect of las vegas travel going to be fundamentally changed now? >> yeah, i think there's two parts to that. i think the convention business and that business component will be delayed that's going to take a little while longer for businesses and conventions to come back but it's the frequent independent traveler that's really what's happening we're seeing this really around the country this weekend i mean, florida will be very busy nevada is going to be very busy. and really has to do with the fact that it's the independent traveler is the one that's making the decision to make the move for traveling >> got to leave it there congrats on getting things open. we'll check in with you again soon >> great happy holidays for everybody
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take care. >> thank you that does it for us on "squawk on the street" coming up on "squawk valley," why someone sold their stake in airbnb don't go anywhere. with powerful, easy-to-use tools and interactive charts to give you an edge, 24/7 support when you need it the most and $0 commissions for online u.s. listed stocks. don't get mad. get e*trade and start trading today.
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>> "squawk alley" is live. ♪ good tuesday morning welcome to "squawk alley." stocks this morning are up although off the highs of the session. the s&p is up about 2% nasdaq performing during the first 45 minutes or so of the
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session backed off significantly from those new highs but still we are in positive territory we're going to start this hour with some breaking news. this out of the fed and for that let's get to steve liesman steve? >> david, thank you. the federal reserve announcing they have extended the termination date of the landing facility to january 8th. it was supposed to expire december 31st. there was an influx of applications after mnuchin declined to extend the program the lending in the last report by the fed up to $14.5 billion as cnbc reported a couple weeks ago, when the treasury secretary ended that program, it left a lot of applications s which leo


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