good morning, tech stocks. nasdaq hitting new highs now on the longest winning streak futures pointing to a pull back this morning covid cases are surging. maybe the reason for the weakness today some states are rolling back reopening plans and adding new restrictions plus americans not welcome a new report says eu is planning to reopen with tourism but perhaps without travelers from the united states. wednesday, june 24, 2020 "squawk box" begins right now. good morning, everybody. welcome to "squawk box." i'm becky quick with joe kernen

and andrew ross sorkin we'll start with the markets this morning as the nasdaq logged another record high nasdaq now on an eight-day win streak the longest since december last year watching u.s. equity futures today. there is a pull back the dow is indicated down 265 appointments s&p off by 28 and nasdaq down by 50 the nasdaq has seen its best quarter since 1999 and the dow the best since 1987. check out the s&p, for this quarter, s&p is up for its best returns it has seen since 1975 looking at the treasury yields this morning you'll see the 10-year note

yielding 0.7005. that is kind of our comfort zone >> pretty comfortable if you need to borrow money for sure. the u.s. is weighing some new tariffs on experts in this case from france, germany, spain and uk related to the 15-year old wto fight over aircraft subsidies. saying the eu is guilty of unfair subsidies to airbus the u.s. has been accused of unfair subsidies to boeing, negotiations have been at a stalemate. andrew thank you, joe in the meantime, we've got an update on the pandemic the seven-day average increased more than 30% compared to a week ago. growing by 5% or more in 26

states arizona reported a new report of nearly 3,600 cases texas reported nearly 5,500 new cases and 12th straight day of a new record the governor urging texans to stay at home unless they have reasons to gather out and limiting public gathering over 4th of july weekend. all of the folks that are coming together tightening regulations in day care centers after a surge of cases among staff workers and children and dr. fauci gave congress an update on the pandemic >> we are now seeing a disturbing surge of infections that looks like it is a combination. one of the things is an increase in community spread. that is something i'm really quite concerned about.

>> dr. fauci said state with outbreaks like texas, arizona and others might need to pause their reopening but an absolute shutdown will not be necessary i wonder if the moves today comes because of the increasing sense that reopening would be slower than anticipated. >> remember scott gottlieb said yesterday, if you saw 5,000 cases in a place like texas that would be concerning. that is what happened yesterday. it makes you wonder how you stop it and bend the curve now. we'll talk with him in a moment. >> and we are back to -- we still need to watch most importantly for the health care system that it is not overwhelmed. that's the metric you need to

watch in places like arizona and texas. apparently they are getting some what close but we are not going to have zero cases what is worry some, sure, it is texas, arizona and other places, we are opening up a lot of travel and flights are starting to open up again that's why i don't think you can say it is just texas i don't know what it would take to come back to the east coast but it doesn't seem like it would be that difficult. >> and the east coast is so much denser that's why the problem was so much more pronounced here because the spread is easier with people right on top of each other. >> we'll talk about the eu in the next block when we go to break, i have something to read about it i was thinking about that. if you were the eu and you were

reading what's happening in the united states, you probably wouldn't want a lot of flights coming in. you know, in paris, they see a lot of people coming from some of our states, i'm not going to single out texas in paris, i don't think they like me anyway i got the hat, ugly hat and flip flops. i still have a camera. i use my phone but i still wear the camera to look like a dorky tourist. they are like, we'll let the americans in if they bring their money but if this is a problem, i can't say -- we did that to europe anyway when they had a lot more cases >> exactly in the beginning, we told them they couldn't come here. so there is a bad will already sown you are right, if you feel like you have things under control why would you want flights

coming from somewhere else >> right but in europe and those places, that is the life blood >> the question i ask both of you is why don't we do that across our country >> stop flights? >> if you are governor cuomo in new york and you feel like you've done such a great job to this point to get the numbers down just by the way, when people are starting to reopen and come together and then you get infection coming in from arizona, texas, florida, other places >> it goes back to commerce. how much does new york city rely on tourism too >> we don't want to close again. we've done that. we've seen what happened in the unemployment rate. making the point that if the health care system is not overwhelmed. this is something, if you protect the people that are

vulnerable most people recover. if you never get a vaccine, you are never going to get herd immunity >> you just said it is bad for paris. >> i can see why they do it. i'm not sure it is the right move for their economy we eventually need to live with a certain level of this virus. it is almost july and we are talking about texas and aisrizoa the flu is normally long gone. you've got a virgin population that hasn't seen this virus. i don't know if it is like the flu. it is new, that's why it is called novel between now and a vaccine. fauci said he's hopeful. if it is within months, that is better than years.

that is a positive you read about a whole continued people on the other side that say, look, the original idea was to not overwhelm the health care system not to go to zero. you'll never get to zero >> joe, to that point, i believe there were a number of doctors, hundreds i think it was texas maybe arizona, who signed a letter asking the governor to take steps because to that point, local municipalities were not able to say you had to wear masks. doctors came forward saying, look, we are being overwhelmed the governor had a change of heart and is allowing some local municipalities to go ahead and say you have to wear a mask here if not, it will overwhelm our health care system if you have the doctor saying forget it, we have a serious

issue. >> they can't manufacture enough plexiglass washington is mandated they looked like they were in a good position. now they are mandating masks as well >> i had to take my daughter to the doctor >> something about abbott resigning. they are mad at greg abbott as well >> they are mad at desantis in florida too. >> villain and hero. florida is hitting record cases. a lot of people on those beaches without masks, are there not >> i had to go to the doctor there is no hand sanitizer out in the front i finally found it it gets ripped off it is hard to come by this

stuff. >> guess who is here i guess he said i need to get in on this conversation i think gottlieb was at home -- >> i think we said that. >> don't call us we'll call you thank you for being here dr. scott gottlieb you heard us talking california and texas both reporting over 5,000 cases if europe says don't come here, why doesn't new york say to texas don't come here? >> i think it will happen. we've talked about that it may become difficult for americans to travel abroad if the cases continue to build and they've really crushed their infection there. they don't want to import it back in. i think you'll see some restrictions of intrastate

travel i think states are going to make a decision to do it. you could see some states quarantining people coming from other states being enforced. the other thing you could see states do is impose restrictions coming from miami, hartfield jackson, houston, you'll go through screenings they'll make it inconvenient for you. i think we could very well see those kinds of restrictions to the extent that they are legal those kinds of measures could be legal and could get around restrictions >> some threatened that and the other governor took offense. so that's already -- the subject has been broached -- >> desantis did it >> that will be another one of

the things we'll talk about that will hold back a complete economic rebound not a reclosing it is not a reopening. that's for sure. >> that's the least of the things that could potentially happen as we head to the fall. it will be hard as we talked about decisions. schools if you have this spread in the south. >> that will be a drags on economic activity. very soon, probably into next week, hospitals in texas, california, florida and arizona will have to make decisions to suspend elective surgeries if the cases continue to build at the rate that they are and there is no indication that they are not. you'll be on the tropajectory t get overwhelmed again. probably people themselves will pull back.

but hospitals will contemplate and toward $the end of next week, they'll have to start making those decisions i suspect we'll hit 5,000 cases a day in texas and california this week or next week we hit those flesh holds yesterday. california hit 6,000 cases, texas over 5,000 if that continues to build towards the end of the week, that's a really bad sign >> dr. gottlieb, what would be the next sign. you said 5,000 would be your concerning point you said continuing to build what is it 7,500 what is the next flethreshold? >> continued growth. you start to see 500 to 1,000 in states like california, florida, texas. they rise and fall every week to the reporting of cases

also the reporting of hospitalizations because of delays over the weekend. you expect that if case counts build where they are right now, they'll build and come up over the week again it is a pattern we see a lot of community spread will be hard to extinguish that they may have to make decisions to close bars before hospitals close elective procedures. if hospitals make that decision, i suspect they are actively discussing that right now. states will be forced to take measures ahead of that to close down these settings. they haven't done contact tracing war to know precisely. surmiezing the spreading is going on >> scott, is there any chance

what we are going to see we are seeing numbers go up and hospitalization rates go up as well we'll see a larger portion or group is on the younger side when it comes to deaths and when we start to look at the morbidity rate relative to hospitalizations and testing, that it will look better we'll get into the whole behavioral science number and that is what people take away from some of these numbers >> susceptibiity is declining. the demographic getting infected is different it is younger. but also we are doing a better job of treating people no question about that doctors have learned a lot about how to treat covid the total number of deaths falling because the total infection burden is lower now than in april.

even though. numbers look the same, we'll eclipse april. we'll eclipse 37,000 a day. those 37,000 infections probably represent 30,000 at the peak right now, we might diagnose one in five or 1 in 10 representing 200,000 the overall disease burden is down younger people are getting infected, we are reserving more life right now, the demographic getting infected is younger people with this number staying in texas, arizona, california, florida, it doesn't stay that way. they have to be worried. they can't say, it's only 20 and 30-year-olds, they'll weather through it as much as 60 and 70 year olds are protecting themselves right

now, it is not going to stay that way at this level >> going back to what you said in terms of states potentially not wanting visitors from another state oregon through a particular airport i wonder how our air travel system has changed over the years where it is hard to get to places that have a major hub unless you fly through some place else does that change coming from a stot not high infected going through another state, if you had to stop in chicago or atlanta, would you be considered someone who passed through a hot zone if you were just in an airport >> potentially you've already seen the behavior you've seen them impose restrictions on visitors coming

ba being to florida. you'll see the different measures take those rates down at a cost. why would new york, new jersey, connecticut want to readily import infections from other states they had restrictions on their own citizens ill think you'll see those come up soon. you've already seen them pull back on athletes even the nba has to make a decision about orlando now we'll have to see which way florida goes if it ends up being the epicenter similar to california and texas it will be temporary i don't think these things will be permanent and permanently change the travel.

the other question is what do we do about travelers from europe >> that point you made why we are not seeing the same death rate is really -- i was worried that the death rate was a lagging indicator and that it could go back up as cases started spiking. that's not necessarily the case until you move into those demos. could happen for arch reason >> we will see the death rates go up because of the higher case burden >> dr. gottlieb. thank you. we'll see you tomorrow coming up, baseball is back. details on the plans for a shortened season as we head to break, look at

shares of etsy that stock upgrade by rbc and goldman sach people looking for hand made masks and sanitizer and more we are coming right back businesses are starting to bounce back.

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be open to the public for swimming on july 1 he urges people to maintain social distancing and face coverings when at the beach. the city will hold scattered fire works through the city. the grand finale on july 4 over the empire state building and an nbc broadcast with musical guests >> fire works not looking good for a lot of places. i have three people that are really happy about that. not really people. >> the dogs? >> yes think if you where a dog every once in a while that happens. it would be frightening. it should. it's thunder is. >> it is official.

baseball is going to return. all remaining issues have been resolved the season is expected to start on july 23 or 24 the league is still working out. mac has another jersey on him. he's lucky really lucky we got no one operating the camera who are the mud hens he's going over. >> hi, mac i thinks that the same name of

lea the band mud heads. andrew when we come back, microsoft announcing plans to ramp up diversity in senior ranks. we'll tell but that. the dow will open up a little over 1%. s&p close to half a percent down take a look at the bgeigst pre-market decliners in the s&p 500. away from your body. so you feel cool... night after night. during the tempur-pedic summer of sleep, save $500 on all tempur-breeze mattresses.

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welcome back time for the executive edge. now outlining plans to double the amount of black managers and senior leaders at that company in the next five years saying senior executives would be judged for progress and rewards.

last count, black workers represent 4.5% of microsoft's u.s. work force. want to get a check up on how things have changed over the last year. we have the exclusive data on that and that story now. >> good morning. in recent weeks, companies have been issuing statements and making pledges fresh analysis of the top 200 companies of the s&p 500 shows people of color make up only 20% of directors up 1% from last year the percentage of black independent directors have decreased. minority women have seen no progress stuck at 10%. can diversity be a priority of a company if not reflect the at

the top. even though test after test shows having a difference of opinion at the board room is good for business. part of the reason is said that some of these businesses tend to have longer capital investment cycles and less con fumer facing with diverse boards. 71 percent e or more have one or more minority member that is an up tick from last year >> when you think about the issues, one of the things stated all the time is pipeline to the extent that there is a time line for all of this and companies are now saying we can do this, do you think this is a

one-year -- do you think it is a five-year out issue or decade out? >> it really depends on the company. whether it is a smaller business or larger company, it has the resources available to make those changes at a faster rate speaking to officers, they'll say diversity is a public priority very few evaluate that metric. up for their performance review, looking at the quality of work and how productive they are, developing his or her team did they priorities gender and racial diversity they see that coming up in discussion across the nation >> appreciate it thank you for bringing us those numbers. when we come back, we are going to talk about today's pull

back in the futures and the incredible runup we've seen in technology stocks. the nasdaq closing at another new high yesterday the five biggest tech giants making up the market cap let's look at yesterday's s&p 500 winners and losers you're first. first to respond. first to put others' lives before your own. and in an emergency, you need a network that puts you first. that connects you to technology to each other and to other agencies. built with and for first responders.

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good morning watching u.s. equity futures after another update, you are looking at pressure. futures down by 27 dow futures are by 160 that index has closed higher for eight straight days since the longest winning streak since november the s&p 500 rose slightly yesterday. now up 36% from its march closing lows for the month there, the quarter we are watching, it is looking impressive too on track for the first quarter since 1975 a sustainable rally you are watching above the 3,000 level will require the participation

of sick lickly sensitive groups. for more on that, we are joined by jason hunter. just watching what you've seens you are concerned about those gains. >> that's right. what we are more focused on is the key buy for indication from the technical perspective. what you saw was a brief period of rotation to signature calls where you saw small caps that type of rotation if you go back and look at recent periods of the last business cycle when the manufacturing cycle has started to lift, those rare brief period

you saw that leadership. >> what might be different this time we haven't experienced this in our lifetime to watch a pandemic play out and the closures as a result is there anything you can map this up against? >> sure. in terms of what could be different. certainly the monetary policy is something that could be different. that is used as one of the reasons why the growth stocks continue to move up. containing the rationalization of why those move up now in the continued movement back to that monetary policy that has to translate to the economic growth. if manufacturing is going to start to show a sustained

recovery overall performances you already mentioned the strong performances year over year, you don't typically see that in these groups if the economic data proves to be a false dawn and equities come under pressure again. the fast money that moves groups quite a bit are more susceptible than the rally groups that haven't participated >> the concern about the tech stocks that read the way higher, those have been out there for a while. those really push us out of whack. >> looking at a technical view, there is a very well defined channel that has extended.

not from the 2009 low but from the european sovereign crisis of 2010 and 2011. the nasdaq stalled there now it is right back up to that travel resist tense. from year over year growth, that has moved to the upper end of the same range. >> that is not surprising. they are one in the same that is kind of the way we are thinking about that group should start to get sticky here and start to sell off. there should by some sense of value and performance if the rally persists from here >> are there other rallies or charts that interest you whether the commodities like oil or gold or anything else >> absolutely.

a couple of trades going on. one is linked to the manufacturing cycle. value versus growth. small versus large they are all correlated to things like the pressure metals. high beta versus the dollar. that suggests the beginnings that point to the market cycle are things like strul versus other metals those are widely watched by bond participants if we look at that ratio and high beta effects.

they are still holding on it keeps us optimistic here >> great talking to you. see you again. >> joe sfl coming up, we'll talk to shark tank's kevin o'leary a look at some of the names driving the move in the s&p 500. a reminder you can watch or listen to us live or any time on the cnbc app as we head to break, some scenes of the past few days states reopen for business across america (vo) at audi, we design cars that exhilarate with versatility, whether on the track, or the everyday drive. today, that philosophy extends to how we connect with you.

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coming up, mr. wonderful will be here kevin o'leary will talk to us about reopening economy and how small businesses are trying to make rent when revenue is hurting. >> announcer: don't forget to sub describe to our podcasts you'll get interviews and behind-the-scenes content. look for us on apple podcasts off your favorite podcast app and subscribe to squawk pod today.

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welcome back to "squawk box. closur closures still continue in states joining us to talk about navigating the reopening of the economy, kevin o'leary, "shark tank" cohost, mr. wonderful. tell us how it is on the groundworking with so many businesses and how it is trying to renegotiate rent and a path

forward. >> when you think about the original ppp, the design was you through the end of this month, 30th of june in my portfolio, 80% were in states like new york, florida, texas and california here we are on the cusp of the end of the month and obviously as you have been reporting openings are sporadic and challenging. the best way to put your head around this is think about -- i ask this question of my own ceos just to motivate them. if apple closed every single store they had in america or never re-opened them would it in anyway impede the business and the answer is no people would find a way to buy those products miami, where i'm living or was living until last week we don't

have that apple store open the same is happening with my small entities as they try to figure out okay i lost my store in amarillo, texas or chattanooga, tennessee, i guess i'll set up a direct digital basis and set up as a partner with facebook or walmart and sell direct to my customer here's the trick you can lose half your sales, half which represented your retail business and if you're able to capture that customer direct you'll make the same cash flow because now you're making 100% margin instead of 50% remarkably in locations like hudson yards where i had stores or in boston they are gone at least we're not using them. those he company have actually achieved better than forecast free cash flow in this last four months this digitization in america is why the markets are buoyant. what happens to landlords i'm

not feeling so good about them it's not just the office space we won't be opening any marginal likes when this is over. if we have a retail store in c grade strip mall we just won't re-open it i'm not the only person saying this you ask me why the value of banks are impeded or why people are questioning rates of real estate the world has changed. it happened real fast. on the upside we got a lot of figuring out to do in terms of value of those assets going forward. american business has pivoted. they figured it out. not every sector weddings are big and gifting are big, they are decimated. we haven't married anybody in months is love dead >> kevin, it's great to see you. on your point about the landlords, do you think that's an issue only for like the c and b mall landlords who are out

there? if you have a prime property are you still going to be able to charge prime rates or do you think those rates will have to come down too? >> you know, becky, that's a really excellent question because one of the largest institutional allocations -- i work in the index business -- is real estate, particularly aaa rate high prime in new york and boston and miami, et cetera. i was in a high rise yesterday, in an elevate orthat supposed holds 12, 16 people and there were decals on the floor where only four could go in. the lineup was out the street. you think about that i know that everybody is hoping to get back to normal. if they don't, that asset which might have traded at 4.5 cap will trade, in my view as a personal opinion 6.5 cap going forward. that's 20% impairment to the value of that asset.

i'll also tell you this and it's no secret. i'm just giving it to you the way i see it every day many businesses are taking advantage of the pandemic as a cloak to trim a lot of employees and their jobs will never come back and this is great for earnings on the s&p not great for employment because they wanted to do this anyways and they are doing it under the cloak of gee i can't open so i'll just do it. as a demand factor, i think at least 15% to 20% of job in high rising will remain remote. values will go down, i think >> if that's right, what do you think of the markets right now >> well, i'm quite oatistic because i just multiple what happened to me in my own

portfolio. i say to myself in two years i bet the s&p is enhanced its margins by 5% or 6%. i on the know what happens to the china debate you know how i feel about china. i want to keep squeezing we have political issues there right now. >> i'm trying to understand the demand picture -- you talked about the demand picture and then this unemployment pick the you're the and i'm trying to weigh those things, the margin story you're talking about and the employment story on the other end. >> i make this assumption, 60% plus of our economy is consumer demand courtroom demand hasn't diminished that much as i've seen across the board. i have businesses in practically every sector we haven't seen any slow down in demand yes, maybe that happen but right now i think i'll be selling those businesses or i'll be selling those consumers product and enhance my margin materially by digitization. which is why people to stay me

how about facebook, amazon, why are these businesses at crazy valuations they are not crazy valuations. they are the engine of transition and that's why the market is buoyant. i look at international situations in terms of where we're going with this covid thing. switzerland had 17 cases yesterday, they have 8.2 million people people there are willing to wear a maverick we can do so at some point we can figure this out even if there's never a vaccine. i watch it happen every day. if they can do it in switzerland we can do it here. they are not taking away anybody's personal freedoms. swiss people want to walk around where they want to walk around today they opened up the airport. we can do that too that's why i remainoatistic on way or another, end up with a higher margin of s&p in 24 months >> boy, i hope you're right.

meantime, though, i under you have a new webisode, got a money dispute ask kevin. coming out today we want to show people on the other side of this this one you're helping jewelry get retail back from a supplier. >> i run my family jewelry business with my dad and we've been hit very hard with this pandemic especially with our retail partner niemann marcus declaring chapter 11 we have tried to contact them and get our inventory back before they declare chapter 11 but we're unable to. i would greatly appreciate any help and you getting back to me. >> this is completely unfair i'll tell you why. it's $200,000. it means life or death if she doesn't get it back and turn it into cash. this is where i can help one of the aggravate things about being mr. wonderful is everybody returns my calls >> kevin o'leary, always

returning the phone calls. kevin, appreciate it very, very much watch all of this on youtube and get that episode you can see it, that's today at 2:00 eastern time on c infectious diseases.com/youtubelive appreciate it very, very much. we're right back right after this.

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tech stocks on a roll. nasdaq hit agnew high. on its longest winning streak since december as america slowly opens up despite rising cases a look at how the post-shutdown recovery might compare to the financial crisis plus a read on the real estate market in the bounce back in home sales. is now the time to buy or sell >> second hour of "squawk box" begins right now good morning welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick and joe kernen.

got a little bit better. we're off the dow by 1% right now. s&p similar story, little bit better than that nasdaq futures look like they opened off half a percent right now. oil is off close to 2% you think about some of the futures recently they've been tracking each other pretty closely. >> talk about oil in a little while. should be interesting on the demand and supply side lots have been happening to get it back to pretty respectable levels from where we were, negative at one point. the economy slide into recigarettes was quick and sharp but as activities start to pick up investors are asking how the post-shutdown recovery might compare to the upswing after the financial crisis steve liesman joins us now >> reporter: good morning. the great financial crisis and this covid-19 shutdown are so different they barely belong or

even fit on the same charts. but what i tried to do here is compare the two and see what lessons we might have learned and help investors figure out what does it mean both with how we fell and how we're coming back and how the government responded for the recovery first, take a look at this unemployment chart you can see the trouble it takes to fit it on the same chart. you see the orange line? that's the surge in unemployment from this covid-19 shutdown and what your x has there are the months since the beginning of the recession. surged up to 14%, 15% in the second month that might have been the peak. we don't know yet. but if it was, it was a much faster peak and you can see the blue line that's the great financial crisis that took us 22 months until unemployment peaked and i would also tell you it took seven years before we got back to that 5% where we started.

part of that may be, take a look at how the federal reserve responded. the fed came in very quickly with lots of money this is months since the recession, the zero month is the start of the recession $3 trillion extra already by the fourth month in the great recession 1 pi.3 now you can see how the fed using its balance sheet as a tool just a traditional tool at this point finally you can see the treasury coming in. very strongly compared to the last crisis. by the second month year-over-year treasury outlays up 30%, two months in a row. it took until the tenth month of the recession until they got that big the stimulus out there up 36% over time okay so, obviously, the market responded pretty strongly, and

had much better results when it came to stocks 53% decline for the great financial crisis, only 37% if that marlow was the lowell then it hit that low much faster than it did the last time around 17 months until we hit that low. what are the lessons here? it sure helps to know what you're dealing with and how quickly you deal with it there was talk in '08 and '09, it took time for that to sink in bipartisan support for aid right now and i think the lesson is act early, act often, act in force and act without doubt. that said, joe, the balance sheet and interest rates never got back to normal and the question now, did this sharper deterioration followed by a much more forceful response is it leading now to a faster recovery markets sure think so. becky? >> steve, i think the big

question is how will the recovery kind of marry each other or will they will this be very different in terms of the recovery or much faster bounce back what's the early guessing at least on that? >> reporter: so, if you guys put up that unemployment chart again, what i didn't do is put in the projections from our cnbc fed survey it takes a while, according to that chart, according to our forecast for unemployment to get back to normal it remains elevated through the end of the year into 2022. there's not a believe that with it will be a seven year road back and powell has been very strong in saying we need to do a lot much policy to get back to where we were. he's not mincing words saying i want to bring the unemployment rate down, i want to make it much more modest in terms of decline. he talks about getting back to

where we were, this idea of striving to get back to 3.5% i don't have a forecast when we'll get back to normal most people i talk to say could be a couple of years which should be better than seven. >> let's open this conversation up and talk a little bit more about what's happening to the economy. joining us for that is john riding i know you've written about this too. your point is the big difference between these two is that the banks are in much better position this time around, they've been able to keep loaning. how does that change the structure and feel of this downturn >> it stopped in this case what was a medical crisis that halted the economy from spilling over into a big financial crisis. we got those very violent move down in the market in march. but we've rebounded since then because as steve since the response is more forceful, more aggressive both on the monetary

and fiscal side. the constraints in 2009 was a financial system impairment of the financial system the constraints in 2020 is the virus spread people have been reporting in a number of states that virus spread is rising fairly rapidly right now. so, we have to overcome not only governments being able to re-open the economy but we have to overcome people's reluctance to be closely connected physically and that, of course, hits a lot of industries negatively, transportation, air transportation, vacations, restaurant, bars yes, they are coming back and what your previous guest kevin said was to me quite optimistic in terms of how businesses adjusting to that. but the constraint for a full recovery here is a medical constraint and we really need a vaccine to get us back to full employment

and to whittle down what will be the last few percentage points of unemployment related to those industries >> john, one thing i thought about a lot is the extreme measures that we thought the fed and the government were taking back in 2008 and 2009 to try to address what was happening then. but this time around we're looking at the fed i think spending twice as much in terms of their balance sheet ramping things up, maybe more and the federal government already spending three timesas much in federal stimulus we worry all the time back in 2010, 2011 what the blow back was going be from the spending and the big fed balance sheet at that point we never really saw anything that played out in terms of a big crashing that you might have anticipated. what do you bother this time around >> well, let's think of that steve alluded to some of it. the fed took a very, very longtime to begin renormalizing

rates. we'll be in a zero rate environment like less time for a longtime the fed never really made much progress in reducing its balance sheet. we'll have an even balance sheet for a longer per of time this time now, there are two potential consequences the first is inflation we could see some pick up in inflation down the road because our supply curves have been hurt, the supply chain has been hurt, and in a number of industries right now we're feeling the effects of lower prices, in industries where people don't want to be, but people have income to spend. the savings rate was at a record 33% because they couldn't spend in april so that's one. the other, i think, is we have the ongoing fragility of the financial system it turns out financial system is fine as long as it has fed support. but these low rates and balance sheets encourage bummed in

leverage and that build up in leverage manifest it self with problems in the financial system in february going into march this year and started the fed having to take steps to help out the treasury market even before we got into the, a couple of weeks before we got into the lockdown >> reporter: john, i don't want to leave this on a cutting board. you and i spent a saturday on a phone, a couple hour telephone call and i was relying upon your work showing that the government has pretty much stepped in and replaced lost income not everybody got what they lost but in aggregate the government response was almost darn near equal to the income lost for businesses, for individuals. so, talk about that real quickly, but also does the government need to do more here to step in and replace lost

income or has it done enough already? >> well, i think back to that and i going raise that conversation we had where we saw in the personal income report in april that government more than did enough for households in total. i don't want to minimize pain and hardship that a number of households are going through because not everybody benefits, but nevertheless we saw personal income rise 10.6%. we saw consumer spending fall sharply. we saw this savings rate which is unheard of in a recession to get that kind of income replacement. and we're going to get the may income data soon and i think we'll see -- largely hold on to those income gain particularly because we got the 2.5 million increase in employment in may as well the question is what happens after july what happens after the pandemic

and employment insurance of $600 payments expire. what happens when ppp, the ppp loans people took out expire what happens when state and local governments start having to cut spending to close that budget gap those are challenges we have to face >> great stuff, john >> john, we'll have to have you back to talk more about that appreciate your time today and steve liesman. >> coming up when we return the rise in oil price stabilize as full consumption picks up and the economy re-opens oversupply fears do loom we'll get an outlook next. shares of paypal, that stock is downgraded to neutral from buy "squawk box" retnsig aer isur rhtft

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>> let's check the futures we were down 300 at one point. this is giving back the gains from yesterday at this point not that significant. maybe down in recent days seen such an upward bias that i guess you can expect this

occasionally even the nasdaq is going along with the downturn today. as the economy he re-opens oil prices have risen sharply over the past two months there's concerns about supply and demand as they created a recent volatility. you can see there. we were recently above 40. we're at 39.55 today rob raymond is founder of rca energy and rob, it's not supply or demand it's really both and i guess you would say that neither one is as bad as the dire predictions, and let's talk about demand first it's the summer, people might not be flying but i bet a lot of people are driving places and already are. gasoline demand will be up probably to some extent in offsetting the jet fuel decline. >> yeah. so, good morning, joe. i think that's, you know,

directionally correct. you know, clearly we've seen gasoline demand come back very strongly here over the last several weeks and as we get into summer driving season. we thought that gasoline demand and really petro chemical demand would leadous out of the bottom of the cycle and that's happened, you know, sort of in spades i was in florida on saturday, gasoline station outside of panama city ran out of gasoline. clearly the demand pattern are shifting here in a way that people have not anticipated from a demand standpoint. >> for just demand around the world for crude, are we seeing similar things globally, would you say? >> yeah. i think so, joe. clearly jet fuel demand is the laggard here but there are two things that we're observing in shifting demand patterns and number one people are clearly driving more

than they are flying at this point. congestion in places like most cities in texas and a lot of the southern part of the united states is frankly maybe as bad or worse than it was prior to covid, right w-more people driving. second component of that is, you know, the use of mass transit around the world is still very, very low, it's down a lot. it has not recovered you know, ultimately we don't expect that it will fully recover. it's forcing people to some degree to drive themselves or find other ways to get to work or do whatever they need to do, right, as opposed to taking the bus. >> even if there's uneven re-openings in different states that seems like it would affect air travel more than people would still maybe get in that little steri-le tu erceile tube.

>> that's one of those semipermanent changes here that's durable and that is that, yeah people will drive more than they fly >> let's talk about supply now global inventories built a little bit in the second quarter but less than people thought and you see a path to normal levels to returning to those normal levels in 2021 early, mid-year, when >> we would say probably, sort of q2, q3 of 2021. so we'll go back and remember the risk and fear of going through the tank tops and obviously we have the negative point for a day on oil, et cetera what really happened there to

some degree, the supply side of the equation responded quickly whether that's opec or non-opec, western siberia, western canada or west texas, the industry responded from a supply standpoint to balance the market so we clearly built inventory in the second quarter but not to the level that basically put us through tank tops and create the big negative price environment on a sustainable basis for a long period of time the biggest concern, frankly, though, joe becomes post sort of normalization here and that's a function of is there a second wave and how severe, et cetera but from a fundamental standpoint the industry is currently investing at a rate not seen since the '70s and '80s while demand went down a bunch in the second quarter the cap x collapsed. as demand recovers the upstream side of the equation will have

to start sort of getting its act back together here or we're going to end up very, very short. crude supply sort of, back half of 2021 heading in 2022. >> so shale is coming back big that means jobs and help overall in the economy for high paying jobs back. >> it's going to have to people don't really realize that over the last sort of seven or eight years over 90% of total supply growth came out of u.s. shale. so the if at some point right the demand side really recovers, right, u.s. shale will have to be part of the equation and i would emphasize that's both for things like oil but for feed stock for petro chemicals as well >> great, rob. thanks appreciate it. we need to keep your number and follow this closely. it's important for not just for the energy sector but the market seems to key off of it at times

as an indicator of re-opening. andrew >> okay. thanks, joe. coming up when we return new home sales surging in may as buyers find deals during the pandemic we'll discuss what's next for home prices and try to get an outlook for commercial real estate as well two stocks to watch today. shares of delta technology and vm ware spiking in after hours trading on report that dell looking options for its $50 billion stake in their information technology company any news on that front this morning we of course will bring it to you. "squawk" returns right after this >> announcer: time now for today's aflac trivia question. according to beer marketers insights, what is the most popular beer in the united states the answerhe wn cnbc "squawk box" continues fty dollars here. eighty dollars. a hundred dollars. i had good health insurance.

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the dow is off by 243 points the nasdaq is off by 42. when we come back we'll get an inside look at the real estate market turning the pandemic and later option hope founder and ceo john bryant will join us to talk about small business. the possibility of more stimulus and the re-opening of america. m, something's gotten into the office. i hear you. feels like there's no barriers between departments now. servicenow. the smarter way to workflow. can i find an investment firm with a truly long-term view that's been through multiple market cycles for over 85 years? with capital group, i can. talk to your financial professional or consultant for investment risks and information. talk to your financial professional or consultant [shouting] [clapping and shouting]

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welcome back to "squawk box" on c the nnbc. here are stories investors will be watching. number one, becky, you're going

to go into this. i'm not sure what's happening. looks like you're going to do the tech crackdown as one of the stories that we're all watching today, right take it away now you got nothing to read. now i'm -- okay. >> back to you >> new data on the housing market just released diana oleck joins us with some mortgage application numbers how are you doing, diana >> reporter: awesome, joe. just awesome mortgage demand actually pulled back slightly last week despite i want rates sitting at a record low. total volume down. applications to buy a home have surged but fell back 3% last week less to do with demand and more

to do with the intense shortage of homes for sale. purchase volumes a remarkable 18% higher than the same week one year ago refi demand took a bigger dive still 76% higher than a year ago. lenders may not be offering the best rates on refi to keep up with the high volume in addition the difference between where rates were a year ago and where they are now is narrowing somewhat the advantage isn't as much. the afrmg rate on 30 year fixed unchanged but sitting at a record low 3.3% for loans with 20% down that fueled demand for builders. there's now concern construction is still at such a slow pace that the builders can't keep up with demand. back to you. >> okay. diana, just a quick followup to this what about banks how are they hand technology volume of the refi >> joe, they are hiring. hiring by the hundred and even

the thousands because the demand just has been so strong. we saw refi demand strong last year and this purr has demand is overwhelming they did not aspect to see this kind of recovery this quickly. that's why people may be seeing a slow down in getting to their rate, getting to their lock, getting to close and refis may not be offering the best rates on the refi because they are slowing down that volvo they can handle it all. >> great diana oleck, thank you switch gears a little, andrew. >> yep we'll talk about the other side of real estate, the commercial side that is of the real estate business joining us now is a technology platform for commercial real estate investing great to see you this morning, ryan help us understand what you're seeing in the industry right now. i don't know if you saw but we had kevin o'leary on a half hour ago and he had some pretty

fierce words about what he thinks will happen to commercial real estate. he doesn't think it will be needed nearly as much as before. what do you think? >> i think first and foremost the full extent of the economic implications of covid-19 are not known by anyone. frankly, won't be known for some time i think the first order as kevin alluded to is obvious, hospitality, retail. we'll see substantial distress the second order will come to light over the median term and will be more uneven. they will be uneven across asset classes and markets. i don't think you can over generalize across asset classes in terms of, you know, the dislocation. but, you know, as i mentioned hospitality and retail, 100

pierce wi100% will be severely impacted. office, multi-family, different story. it is somewhat dangerous to overgeneralize because real estate is hyper local. everything will change to the degree which these asset classes change i'm more bullish on multi-family, workforce housing. everybody will need somewhere to live office will be reinvented. >> ryan, let's drill down into that what your seeing in terms of rent payment and i'm thinking commercial real estate office, retail, the like what your seeing there >> sure. we own more than 3 billion of real estate across the country about 60% of our portfolio is, you know, in the multi-family housing. we until consider commercial given the scale. we've seen very strong collections across our multi-family portfolio north of 95% we're seeing that renewals are

up because people are getting out and looking at other spaces as much as they would have we expect to see that given how counter cyclical multi-workforce has been we're seeing relatively strong collections as well in the low 90s. we are beginning to see some transfer request rent relief again remember it goes to there's an urban risk versus suburban office dynamic where in the urban core we're seeing real head winds we're seeing a lot of tenants who just can't make rent payments there's a new focus on density in terms of, you know, historically was looked at the more individuals per foot you could fit more valuable your space is the exact opposite now i aspect to see more dislocation and stress in office especially in the urban core in the coming quarters the suburban office play is one we may not know what will happen but now seeing there's actually

a premium, having more space, and it's a premium land lords who ultimately will invest in things like, you know, elevator denity, who will invest in common space areas so overall we've been relatively pleased in the multi-family assets we own, the suburban office the urban office density will see some head wind on the retail front, retail in our view is incredible distressed and, you know, the question now is what comes of retail and how does retail exist? i think that's concerning for a lot of reasons >> right so here's the question over the next 12 months are you saying to your self, this is going be an opportunity to buy retail space, an opportunity to buy office space in the urban corridor or are you saying over the next 12 months i want to get out of that space and i want to move and buy more space frankly in the suburbs what's the longer term gamble

here >> our view is over the next 12 months there's three strategy, three asset classes we're excited about and that implies we're more bearish on. first is multi-family workforce housing as i mentioned we're seeing a ton of new demand from folks who are looking to rent versus buy. just given the shift in consumer spending, shift in liquidity across the market. similar to the fallout from the global financial crisis. so we're bullish on multi-family fundamentals that stay strong. demand is strong not a lot of new supply. people can't build we do like office but we like office within the life sipess context. we think there will be a lot of tail winds there especially in the suburban core. in urban area we're staying away landlords haven't fully baked in the costs of what it will take to be a competitive product and industrials is the third asset class we really like given the

the tail winds from continued growth and expansion and ecommerce. everything else, hospitality a lot less bullish on just given in many ways hospitality will follow the course of the buyers and that's still somewhat uncertain. retail we're very shy, stay away from over the next 12 months >> ryan, before you go i have two other questions. one, you've been very outspoken about the role of corporate america can play in racial injustice, and maybe it's worth just spending a moment to tell your story and speak to this issue right now and what you're doing at cadre, because i think it could be a model for others >> i appreciate that yeah, look as an african-american ceo, and founder of a business, you know not a lot of folks that look like me. i had a lot of people in the past who have invested in me that made all the difference to

getting to where i am today. there's not a lot of folks who come from diverse background in tech let alone real estate when you combine the two it's pretty homogenous. for a while i took a back seat to discussing race it's a deeply personal topic but there's been an awakening across your country and i found now more than ever and this is what i'm encouraged by, people are willing to have tough discussions but necessary discussions. i think that's the first step in moving towards greater undering. greater clarity. and really, realizing, you know, the american ideals of liberty and justice for all. so at cadre we're first and foremost making sure that across the board we're listening. we're having dialogue. we're hosting five to six cadre chats with men towards that

diagnosed social inkwekts and proposing solutions. a mentor investor, damon campbell diversity officer at zoom and others. that's step one. all executives should be focusing on is have those discussions. you know make sure your team is heard. engage them. think through solutions not just problems then beyond that what we're focused on is donating a lot of powerful nonprofits and organizations were tackling inequities we're focused on driving change. driving change in a way that's unique to cadre. for us that means first and foremost committing to recruiting and hiring in new ways connecting to new pipelines of talent focusing on mentorship and internships like i had with african-americans and under represented minority groups and making meaningfulcommitments that are unique to your

business i think that's something, again, all corporations can do. for us that means figuring out ways wherewe can help folks from underrepresented communities invest in real estate to know that our platform provides we have a few initiatives in the work the final i just want to say because a lot of people have asked me what bold action can be taken. i think one of the most important areas for action to be taken is on board composition and representation you think about where most of the governance is, at companies it's at the board level. i firmly believe that board representation is one of the most immediate and impactful ways to drive some of these changes in a sustainable manner and it's something that will be bold, something that will definitely shake things up, but it's the kind of step i think that we need to create sustainable change >> ryan, we appreciate you

joining us and we hope to continue this conversation with you. come on back >> thank you all take care. >> you bet absolutely becky? >> when we come back the re-opening of america. we'll speak to john bryant of operation hope about small business and the economy let's check the futures this morning at this point. you'll see that we're one pressure as we have been all morning long dow futures down by under 250 points s&p futures down by 25 the nasdaq off by 46 "squawk box" will be right back. some companies still have hr stuck between employees and their data.

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points we're now looking at some dow stocks these are actually some winners in the dow this morning. proctor and gamble, walgreens, travellers but boeing, american express and jpmorgan is weaker andrew >> when we come back operation hope founder and ceo john bryant will be expecting or says he's expecting a slower recovery than some are predicting and he tells us why after the break an interview you don't want to miss and then the nasdaq looking to extend its longest winning streak since december although looks like it will be opening lower the this morning a look at tech's big run straight ahead "squawk" returns after this.

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welcome back to "squawk box" new york city is opening up further ahead of the july 4th holiday weekend. mayor de blasio announcing the beaches in the city will be top the public for swimming on july 1st. he urged people to maintain social distancing and face conversation even at the beach the city will hold scattered fireworks shows this year as well they will start monday only last five minutes and interestingly the timing is not going to be announced and the goal there is to prevent crowds

from gathering culminate with a grand finale on july 4th over the empire state building and nbc broadcast with musical guests andrew, i hear they are doing fireworks almost every night in parts of the city >> they won't tell you where they will be like a tree falling in an empty forest oh, there's some fireworks what's good is fireworks if no one sees them. why do it. >> you can see them. you'll hear them >> you got to see them from planes have you ever flown around july 4th? very cool. used to be i don't know now nobody is on planes or doing fireworks. >> took care of that anyway small business owners across the united states are re-opening in the new normal

which could bring its own set of unique challenges. joining us right,000 to talk about how entrepreneurs are faring in the real economy is chairman and ceo jim bryant. how are you? >> i'm very hopeful for the reset. very sad that it didn't convince enough of banking corporate america to do the right thing after the last rod die king riot from 1992. i think we got credit scores up 100 points in these neighborhoods, energy up, optimism up, approvability up, you would see crime go down. we would have stability that folks would ride this out. i feel a little sad i haven't done my job enough but, you know, rain follows storms. >> john, what are you hearing right now from entrepreneurs what are you hearing in neighborhoods about how things are going and how people are

weathering this? >> you know, folks have been doing so much with so little for so long we're almost doing everything with nothing. they are extremely resilient and right there down the treat from your studio, you have a young lady who has been in business for 30 years. when this hit she didn't have a strong banging relationship. she went to a major bank in new york and stood in line behind my lo -- millionaires couldn't get service. within 24 hours from operation ownership she got money and back doing hair in a safe and distance way now there in new york, resiliency she doesn't know what will come next there's a young lady named brenda holland, one of our clients who is a daycare

provider and raised her credit score from 578 to 675. she got approved for traditional financing before covid we were able to get her in line. she was ignored by a major bank. get her in line and got approved within 48 hours. she has a daycare, 46 kids in it down to eight. he sanctuary city to do all kind of preparations but takes the ten minutes for each client, each kid, i mean and she's doing all that with a positive attitude and she's able to come back due to short term financing and she's part of the american spirit again, she had that problem before covid that half of black owned businesses, minority owned businesses don't know they can survive for 14 days based on liquidity. half of minority own businesses got financing. a lot of this is because they

don't have a coach or advocate or prepared when this hit. so two recoveries. you have for the investor class at the top that have the benefit of higher education and relationship capital who had lots of liquidity. and you have that hit with the stimulus, third, fourth quarter of this year you have the at the bottom the hourly workers, they make $40,000 a year without higher education and majority small businesses that recigarettes will feel like a depression. we have a bifurcated recovery. >> john, just in talking with some senators we had on this week and last week, maybe the week before there's a sense that at least among some of them there's a bit of fatigue they think they spent so much

already. there's money in the ppp that hasn't been tapped they would like to some what happens before they commit additional funds if you could talk to them what would you tell them? >> go do something ph.d.s are good. ph dos are better. the infrastructure in this country could plug into small businesses to get coached to get the $100 million that's sitting. approve massive new plan, at least elements of it that give people hope. what we have now is a band aid the leg was broken now it's amputated. what i need a prosthetic that's made of titanium with a silicone valley chip in it with a software upgrade so you come

back but come back better. we need better we need software grade we need sectors to know they are incentivize massive internship not two or the threlethree. incentivize minority businesses. people need to get out of their comfort zones. i see the private sector lead. i see the government go, well, you know, i think we'll get through this no we won't get through this we need leadership the bible says where there's no leadership people perish get off your duff and hustle and sweat as much as my clients are, whoever you are, republican or democrat, this is the time to get it done. time to get it done. this is our moment right now for us to lead all of us and do more not time to do business as

usual. >> john, you talk about the people you've been talking to in washington and having a real sense of hope but it sound like you are more frustrated. your running into brick walls at this point maybe the government is caught up with the bigger issues that they are dealing with. do you feel this is falling and slipping the between the cracks? >> i feel people -- it's interesting. like somebody told me recently, a loved one when they were in school in west virginia, only black kid, they were elected to be the homecoming queen. then they were turned down for the cheerleading squad the problem of that the parent were voting for the cheerleading squad even though the girls friends voted her already to be cheerleading captain she was turned down. the kid were voting for the homecoming queen the adults were the problem. you have these young people in the streets with a sense of urgency. white kids and black kids protesting legally and in

nonviolent ways. listen to them you have adults going i'm tired. nobody cares if you're tired this is not about you. normal, what we're going through right now this country cannot don't sustain what we experienced in the last two or three weeks alone. i'm extraordinarily hopeful that this is a moment for us to reset everything but we need have a sense of urgency. we need to making important feel urgent and we need to move on massive system changes right now. this year. this is time for a rainbow >> john thank you. great to see you we'll check in with you soon >> thanks for all you do you're the light on this, all three of you >> great to see you. >> thank you coming up, guess who is here becky and andrew

she's here, waving practicing social distancing i'm not. take care. take a look at these numbers apple, microsoft, amazon, google and facebook make up 22 or 5% of the entire s&p 500 we'll talk much more about big tech's impact not just on the nasdaq composite but affecting everything including the s&p what does it mean? then later we'll hear from a critic of those names senator mark warner will join us to talk about his efforts to regulate tech on capitol hill "squawk box" coming right back (vo) since our beginning, our business has been people.

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good morning tech stocks powering the markets higher with new records for the nasdaq and its longest winning streak of the year but futures are down across the board this morning putting that streak at risk there's another hazard up ahead for new calls of regulation from the white house and congress we'll speak to one of the key political players in this story. virginia senator mark warner fighting the virus at 30,000 feet the head of a union representing 50,000 flight attendants joins us on the most urgent needs for the nation's airlines as travel picks back up. the final hour of "squawk box" begins right now.

good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew ross sorkin u.s. equity futures are weaker this morning as they have been for the pre-market session the dow down 235 s&p indicated down 23 and the nasdaq which we're going to talk about momentarily is down 36 point. treasury yields have been around .7 of a point. for a couple of weeks maybe. we got back to .9 at one point almost went above 1% for the ten year energy prices have been, wti crude up at 40, below freezing $40 a barrel down just below that down 2% today at 39.55 becky. >> joe, thank you. an update right now on the

spread of the coronavirus in this country new cases are now back up to where they were at the peak of the outbreak about two months ago. johns hopkin university says the united states saw nearly 35,000 new infections yesterday there was as we heard earlier from dr. scott gottlieb the number is three to five times higher we're also watching texas very closely because texas's infection rate has doubled since late last month. dr. anthony if you chase told congress yesterday that the next few weeks are crucial in trying to get the latest surge under control. fauci urged americans to not to go into crowds and also to wear face masks when and if they do he said states with growing outbreaks might have to pause or roll back their particular re-opening plans >> we'll talk about all things

related to that and this crazy stock market, especially the nasdaq nasdaq and nasdaq 100 setting new record highs this week and when you look at the ratio between the price of the nasdaq 100 and the s&p 500, you can see it's been on a nonstop march since the end of the dot-com bust late in 2002. rising ratio indicates the nasdaq 100 is rising faster than the s&p. similar story but not quite as extreme. here to explain further and talk about tech's recent outperformance is paul hickey co-founder of an investment group and mike santoli cnbc's senior market commentator. i mean i wish i could look at that paul and say golly that's awesome but i don't have fond memories of 1999 or 2000 there's some key differences or i hope. will you tell us about them?

>> yes first thing when you look at that chart in 1999-2000, the nasdaq was outperforming the others by leaps and bound. this is a more steady increase when you lack at the market and what's leading the nasdaq 100, the five largest stocks, they are not cheap today but they are a heck of a lot more reasonably valued than the top five stocks were in '99-2000 median of the five largest stocks is in the s&p 500 back in '99-2000 was 49 times earnings, 33 multiple points higher than the broader index. today top five largest stocks median multiple was about 30 times or nine multiple points higher than the s&p 500. they are not cheap but they are not insanely valued.

>> santoli, disappointed where the hell are you where's the clap board where is the cnbc sign that you had designed >> reporting for duty right now. >> you're there. you're stepping out. you're re-opening. >> yes >> you're venturing forth. >> i'm part of the vanguard. >> mike, when you got a handful -- i mean it's one hand, basically. and that is doing all the heavy-lifting. is there anyway that this isn't troubling? i mean can you the find a half fullway to view this >> you can definitely find somewhat half full way to explain it first of all the nasdaq 100 is about half of weighting in those five stocks. the s&p is about a quarter that explains the last stretch much that outperformance that paul showed right there. i think there's a little bit of concern that yes there was a steady march for almost a decade

in terms of the nasdaq ratio but did accelerate higher recently one thing i would point out is right now the move towards those stocks is more defense than offense. back in late '90s it was about speculation, about unending growth for these companies or new business concepts that was overtaking the market. right now it's just people gravitating towards the scarcity of long term cash flows that seem reliable. yes, bidding up valuations of those stocks there's concentration risk if you go back and look in history. not a super concentrated market if you want to go back many decades relative to what it used to when it was ibm, at&t and standard oil there's absolutely risk there. it's the market's way of getting through this period because the median stock in the s&p is still 20% off its high and those stocks making it took like the overall equity market is holding up much better >> paul, stocks like apple, apple was cheap on a relative

basis for years and years, on multiples and, you know -- back in 1999, those pes were infinity multiples. i under that it's not like that ate real company the other thing some of the reason for the move in these is the hunkering down and the shelter-in-place and not traveling also almost played into the hand of these companies that helped us move to the digital future, going to docusign or take your pick of any tech stock it's been custom-made for the mast we're in t-- market that we in too >> two things. we talk about the concentration and how these five stocks are doing the heavy-lifting. in the nadler 100, the performing of those fast five

stores facebook is up 45%. there's 18 stocks in the nasdaq 100 that are almost 20 puerto rico of the index that's doing better than facebook so far this quarter. so there's a lot of stocks in the nasdaqed 100 that are doing better just not high of a weight when you talk about valuations some of them traded higher than these fabricate five stocks. that's one thing you brought up apple we talk about concentration. we talk about the concentration of the five largest stocks berkshire hathaway's investment in april many represents 20% of berkshire hathaway's market cap. if you want to talk about concentration it's pretty mind blowing that the most famous value investor in the world has 20% weight in apple. >> so, that's true that is interesting. so santoli, when we go down and times we regain 50%, we go up,

sometimes get back 50% do you think we're at the top end of a range where there's reckoning with troubles re-opening and spiking in cases and things do you think maybe 3,000, 3050 >> the last five days the s&p 500 has kind of crested intraday around 3150. if these five or whatever you want to call them a dozen stocks in the mega cap growth area continue to work for their own reasons or none at all because really it is just incremental money flow going into and overpaying for the safety of those then the overall index gets the insulated from that there's a rotational defense mechanism inside the market that's prevented the reassessment from really taking hold the equal weight of the s&p is down 9% in two weeks it doesn't feel like it because of these stocks and because of that good rotation so, yeah, i do think it makes some kind of intuitive sense as we get into a new period we'll

have that retrenchment or something like that. it's very difficult to know. you're handicapping what will happen with these liquidity beneficiaries and top five obvious favorite stocks out there. i want to say in comparing to 1999 all you're saying when you say this isn't '99 is the nasdaq won't go down 75%. it won't be dead money for a did. that's what happened back then it's kind of praise guess what it's not 1999. it's not clear but to be clear what we're saying in that context >> there are still people who think we're in for not 75% but when the realities of the new normal do set in they think we're dreaming about the prospects of things returning to normal paul, the real question and i'm not asking you to be a top down guy, but should dips be bought or should rallies be sold if you're sitting at home trying to

preserve capital and minimize risk and just do what you're supposed to do with your money what would you be doing, buying gifts or selling rally >> i would say the last time mike and i were on eight days ago the futures were down 2% nasdaq hasn't been down since then what we said then we're still more comfortable with equities than uncomfortable with equities equities have outperformed by a wide margin. so you could see some profit taking areas into last week. historically you have these strong quarters showing weaker than average performance heading in to the final week of the quarter. if you did see that dip, we would be using that opportunity to buy and add exposure. >> santoli, is it as simple as the fed, don't fight the fed or are there, are there green shoots >> i think the fed is the

backdrop the fed told you there won't be some runaway credit default cycle. the fed brought the credit down. investment yield is 2% also the equity market loves a reset and we got a comprehensive reset, you're able to try to handicap the come back the median stock is still down 20%. not as if you're plowing new territory to the upside as we wait to see if things actually get traction on the recovery front. >> okay. gentlemen, thank you this is permanent, mike? >> we'll see >> more domestic bliss she with you now >> no. no i hope she's okay. no >> the chalkboard. >> chalkboard. and that beautiful cnbc -- i'm surprised that someone at cnbc didn't say can you make more of

those. seriously. >> i know the artist >> not cheap don't miss our interview thank you. don't miss our interview at 8:30 eastern time with virginia senator mark warner. we'll talk a lot more about regulation and efforts in d.c. to roll back part of a long-standing law that has served as a shield for southeast industry's biggest companies we're coming right back. when we come back, maverick up, folks. that's the message from message of flight attendants as more people board planes. in a few minutes we'll have the top official, a union representing 50,000 flight attendants whether a federal mandate is the answer as we head to a break take a look. two stocks we're watching very closely dell and vm, spiking respectively dell is looking at openings for its $50 billion stake in the

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welcome back to "squawk box," everybody. it has been a huge quarter for the markets if you've been watching the nasdaq it's looking at its best quarter it's experienced since 1999 for the dow all the way back for 1987 for the s&p best quarter we've seen all the way back to 1975. how far futures are seeing pressure looks like dow futures are down by 213 points. s&p down 20. nasdaq off by 25 joe? >> thanks. airline stocks have easily outperformed the broader market over the past month. american and united are up more

than 40% delta is up 30%. jetblue more than 20 as passenger traffic slowly comes back phil lebeau joins us >> reporter: it is slowly a case of more people flying and as you look at the numbers and we're going to show you this chart to show you how far down traffic went and how much it has slowly started to come back the high point since early april when it bottomed out at 87,000 came on monday that when more than 600,000 people traveled here in the united states. pulled back a little bit yesterday to 171,000 not surprising tuesday is always the slowest day of the week in the airline business that level of passengers yesterday, 81.2% compared to the same day last year june is on pace to double the number of paeps that were flying in may 10.3 that's just through june 23rd. it will be up over 13 million.

there you see numbers for may and low point in april with 3.3 million people flew. you mentioned the airline stocks increases that you showed just a few seconds ago that's including a pull back and we're seeing the airlines stocks under pressure in the last week as you have both american and united going to market, raising capital american raising $2 billion. you got united pricing an offering for $3 billion. this is what we talked about airlines will be doing this for the next several weeks if not the next couple of months building up their cash as much as possible. southwest airlines out with a fare sale. southwest do a couple of big fare sales one in the springtime and one in the fall this is the one targetingthe fall let's see what happens in terms of how much it stokes information say okay yep it's time for notice book that trip maybe i'm going away for the weekend or visit some friend we'll see what the results are

>> okay. phil, thank you for that report. we'll continue this conversation right now and take a closer look at covid's impact on air travel and the challenges that the industry front line workers are still facing i want to welcome international president of flight attendants that represent 50,000 flight attendants across airlines how concerned are your members especially when it comes to flying in and out of cities and states like arizona, texas and florida right now? >> well, we're very concerned. we're concerned about the health ramifications and have been since the end of december and we have been asking the federal government to come forward with a plan that keeps everyone safe. you know, the supply chains have made it impossible for us to have the proper protection for crews and n-95 matchings there's not enough for workers on the front lines of the health care professions and the the airlines have done what they can. they instituted these mask

policies but there's not a federal mandate behind that. people don't take it as seriously. they are not properly instructed on how to wear the masks so we see people with them sort of half on, underneath their noses, all kinds of disparities and been told this is a political issue instead of a public health issue. we're left on the front lines to deal with this it puts us as risk and our jobs at risk. >> so let me ask you, delta airlines ceo said that delta will not be forcibly removing passengers who don't wear their masks. what do you think of that decision >> i don't think ate great one i think that, i have some questions there because the federal government is not backing us up and that's what we need here. i flew on delta yesterday. actually they did a very good job of social distancing and messages and everyone was wearing masks and it was very orderly. but it is very important to send

a clear message to the traveling public that this is an expectation and there will be consequences if people do not follow these instructions. every single person has to be wearing a mask in order for this to work. this is really important as we saw yesterday european union is talking about not allowing american travellers to come back. we just saw phil lebeau talk about the fact that travel is down 81% we're talking about rebounding a little bit but we have to be realistic about this this is not sustainable. airlines are going now and trying to get cash they will be burning through that they are trying to do everything they can the federal government has put us in a position here where our jobs are much more at risk, the airline industry is much more at risk because they have not taken these health concerns seriously and taken them in place simple procedures to inform the traveling public, simple procedures to keep all of the face covered in air travel where we can't properly social

distance >> do you think your union is aligned with the major management of airlines i'm not hearing it from ceos of the large airlines directly to the federal government on this issue. >> i think that the ceos of the major airlines are in a tough spot because they need to work with the administration. let me just call it out right now. we're on front line. we're the people facing this flight attendants have to go to work as essential workers and also our jobs are on the line here 11 million people count on the airline industry for their jobs. we're talking about the unemployment roles increasing. we have job security for the end of september we need an extension of that because federal government has not handled this properly and we're going see mass layoffs in october, the last jobs report before the election if this is not extended but also if they don't take matters in to their own hand

right now faa, d.o.t., can put in place health guidelines for the traveling public to protect the airline industry, protect traveling public, and to protect millions of jobs >> sara, can you tell us of your 50,000 members how many have contracted covid >> we have had hundred of cases of covid we've had ten flight attendants who died because cognitive individual we also had other flight attend jackpots who suffered severely and said please take this seriously, take this seriously if they do not have proper safety procedures in place that's enforce that everybody understands and treatmenting this as if we're all in this together then the risk is too great. people have suffered really greatly for this, and, you know, a flight attendant is very concerned right now about the stability of the airline industry we're used to flying over tory corner of this earth we represent the best of what america is and right now the rest of the

world is saying we may not even accept you because you're not taking the the basic steps that the rest of the world recognizes we need to take to keep people safe and get this under control. >> what percentage of your members are saying, you know what we are not going to work right now. either because of age issue, because of co-morbidities or other pre-conditions >> yeah. there are approximately 20% who are in a condition where either they themselves have health conditions that they are very high-risk and the risk is too great. there are others who are very concerned and still go to work and have people at home and concerned about what they are bringing home. but we also have a whole group of flight attendants and other aviation workers who actually can't get on the job and the only reason that they still are getting a paycheck even though

it's about half of what they are used to because they lost their overtime hours they are still getting a paycheck because of the c.a.r.e.s. act and we were the only industry that actually worked to get a relief package that focuses that money directly on the front lines to pay benefits for the workers to keep us on the job and out of the unemployment lines we have flight attendants sitting at home, waiting by the phone, waiting to be called to the airport. going to the airport and waypointing to be called on a flight without this relief and ensuring we're continuing to get a paycheck we would be out of work >> sara, maybe there's a political question, maybe a philosophical question, boy do i want all of your people to be employed and never have to go on the unemployment roles but there's a lot of people through outthis country that are on those unemployment roles that are not getting the benefit of this type of government assistance what do you tell them about why

your employees should be perhaps considered a special class >> actually i don't think the word special class is fair this is a program we promoted and supported that with congresswoman's bill and mark warner who will be on in a little bit and bernie sanders in the senate this is something that can be applied over tory other industry as well. the best thing to do here is essentially freeze the economy, keep people in their jobs as much as possible continuing through this paycheck program and keep them connected to their health care during a pandemic it is the best way to preserve our economy, preserve jobs, and to bring down unemployment numbers. it's the best way for us to bounce back as well. let me also note that in the airline industry, we have certifications, we have claurt clearances if you put people out of work, in order to build that business back up, if there suddenly is a

demand if we suddenly get the virus under control, the airline industry will have a much harder time bouncing back and it's the back bone of the rest of the economy. we bring those goods and services, we bring people to disneyland, we bring people together for business meeting, and so it is critically important that we keep people in place with their credentials and able to get back to work >> sara, we also appreciate talk towing we appreciate you coming on this morning and hope to have you back very soon >> thank you very much you bet. still to come this morning we will talk tech regulation companies are now feeling the heat once again. both democrats and republicans in washington are wading into this debate. in a few minutes we'll speak to one key player virginia senator mark warner. take a look at the futures been one pressure all morning. dow future down by 211 points. as we head to a break check out the price of gold. i want closed yesterday at its

highest level since k of 2022, gold is on pace for its best quarter in four years. it's up another $4.30 this morning. $1,786 stay tuned, you're watching "squawk box" on cnbc terrain. helping you fill portfolio gaps. connect to client goals. and strengthen confidence in you. flexshares. powered by over a century of investment expertise. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. we hope you find these digital solutions helpful to bank from almost anywhere. deposit a check with your phone or tablet. check balances, pay bills,

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welcome back to box this morning. take a look at the futures right now. we're trending lower at the moment dow off about three quarters of a percent, s&p similar story, nasdaq down just about a quarter percent at the moment. joe? coming up, andrew,a senator mark warner joins us to talk about regulating big tech. stay tuned some companies still have hr stuck between employees and their data.

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welcome back to "squawk box," everybody. we the talked earlier about the outperformance of the technology stocks and their importance in what's been powering the markets higher over the last few months but the at the same time washington is turning up the heat on big tech alphabet, facebook, amazon and apple are all facing multiple investigations from authorities ranging from the department of justice to congress to even the state attorneys general. senator mark warner is spearheading a number of efforts to regulate beg tech he's joining us this morning senator, great to see you this morning. >> good morning. >> good morning. let's the talk a little bit about what's happening i guess maybe we start with what the department of justice is doing in terms of going after section 230. those are rules written decades ago that were there to protect some of these internet start ups but at this point it's been

turned into a protective layer that keep those most profitable companies on the planet out of trouble and not liable for things posted on their social media sites. what do you think the department of justice is now doing because you've been critical of some of the 230 protections in the past. >> 230 was put in place in the late '90s when these platforms were start ups it made sense at that point. now it's kind of a shield of invulnerability that says for example facebook and google 75% of americans get their news, some or all of their news they have no responsibility for content at all and this kind of content protection has frankly led to whole series of harassment activities. it's led the civil rights community to say these kind of protections that say they have no responsibility at all to have any say over your content what

you appropriately do for your network just doesn't make sense any more so i've been pressing section 230 reform the justice department has taken on their own efforts but the justice department's efforts seem more driven by donald trump's political wishes rather than a rational theory of the case and quite honestly i don't trust anything that comes out of the justice department with bill barr the leader and because he clearly has shown time and again he rather protect donald trump than actually enforce the laws of the country so a barr driven 230 reform i don't think makes much sense a bipartisan congressional reform, count me in. >> senator, i read what the department of justice put out and despite the rhetoric, it looks like it's doing some of the very things that you said you would like to see. it's rolling back protections, if there's child porn graphy, child exploitation, terrorism,

online cyber stalking, those are things that seem pretty good so they are doing some of these things since the senate and the house have not been able to come up with something they could agree on >> let me point out some things you may have missed. we already have protections on content against child pornography. we already have content protections against terrorism. we already have legal protections against sex trafficking. congress did act let me finish and answer your question some of the other things that have been proposed by the justice department, i think makes sense. i mean cyber stalking. some of the harassment activity. my concern, quite honestly is if this justice department reform was being done by the career professionals, again, sign me up it's going to be driven and directed by bill barr as an agent of donald trump that's not

the kind of unbiassed reform we need >> what i will point out is despite the protection out there for things like child exploitation things have gotten worse on the internet. there should be a way to hold big companies accountable if they are taking part in that any concerns you have about the department of justice we've not seen bipartisanship even though it's been talked about, we've not seen anything that'scome what are you doing about it. how do you reach across the aisle? >> i think that's a fair comment beyond section 230 i got bipartisan legislation, i'll be honest it says if somebody posts political ads on facebook they ought to have the same reporting requirements as if they post political ads on cnbc that's equality of treatment and the access act that says let's make sure if you're tired of facebook or how google treats

you, you can move all of your data easily from one site to another. data portability same kind of things, i was a telecom guy that we had when we had a number of portability in the '90s and '90s that opened up to a degree the telecom market it ought to come in other operability. you can still talk to your friend if you move to a new platform if you have friend on facebook again bipartisan i got another bill we call the access act that says, you know, actually, another legislation not the access act but frankly says, you know, you have a right to know what your data is worth to these companies so a lot of transparency requirements that i think makes common sense your critique, congress has not acted even on the honest ads act. it's a reflection, frankly it frustrates the heck out of me because the there's a lot of bipartisan interest, and we

still haven't seem to be able to bring something across the finish line. >> senator, i'm just trying to figure out a hypothetical the worst case scenario comes around and president trump is re-elected and bill barr is still attorney general you won't take any action on these issues would you take off the next four years? >> absolutely not. somebody who has consistently been about bipartisan reform, put forward legislation. works with the administration. for example, half-dozen provisions of the c.a.r.e.s. act i negotiated with steve mnuchkin who i think has been a very fair guy as secretary of treasury my concern, though, if the justice department reforms are going to be led by justice department professionals, that's one thing. i just feel that mr. barr does not have much credibility left and frankly on both side of the

aisle these days >> senator, let's talk a little bit about some of the other issues that we're facing we know there's been concern among the tech community and again this community you know pretty well because of your past history as a telecom venture capitalist there's been a lot of concern about the visa program with the idea there won't be new ones issued through the end of this year this was original leah 60-day program. the president renewed it and said it will last through the end of the year because he's concerned about the job market here and americans losing out in terms of jobs that would be going to people coming in on visas. what are you thought when you hear from the tech community chamber of commerce pushed back and said this would hinder the economic recovery? >> i agree this is not only karen of the tech community it's a concern of the chamber, a concern of the business community at large i mean we live in a global

market and our value is at who has the best talent. who has the best human capital i think the h1b program the fact we'll shut it down won't add to american growth. we still don't the place that collects the world's brightest, most innovative, most entrepreneurial talent i think that's been our history. and, again, this has been a position that's generally been held by both parties and frankly for the most part even stronger advocating for by my republican colleagues and so i think mr. trump's decision here is, appears to be playing into his idea about being anti-immigrant across the board i think at the he end of the day it hurts our economic recovery >> do you hear back from any republican senators on this? do you think that there will be legislation that you would

propose to push back on these issue? >> whether there will be legislation in a way immigration has been kind of third rail. i was a part of 69 senators that put together bipartisan immigration reform from top to bottom that dealt with dreamers, dealt with h1b i think it was a pretty good start. i wish we would go back to that. whether in the four months that we have before election day there's enough push back to overturn mr. trump's decision about h1b visas will depend. but clearly there's the vast majority of republican senators are on record as supporting the h1b program. >> senator warner, thank you for your time today. it's good to see you >> great to see you guys thanks so much >> thank you andrew >> thanks. when we return, much more on the markets including a conversation

on whether the turn afirst round the pandemic low is here to stay check out the futures right now. we're in the red this morning. also taking a quick check in just a moment on the major cruise line stocks carnival debt rating was cut to junk by s&p as it forecast continued weak demand for the industry due to covid-19 pandemic they are down grating royal caribbean and norwegian to equal ig twehthis morning. stay tune. we're watching "squawk box" on cnbc we're back in a moment

welcome back to box. an update on some stories investors will be watching today. wall street firms are likely to cut bonuses by up 20% this year according to a report by compensation consulting firm johnson associates the report reports significant layoffs. health products retailer gnc has filed for chapter 11 bankruptcy protection

plans to keep its stores open while exploring options to re-organize or to sell the company. amazon is stepping up its battle against counterfeit products it announced formation of a counterfeit crimes unit consisting of former prosecutors, experienced investigators and others amazon says it blocked more than 6 billion suspected counterfeit listings last year when we come back jim cramer will join us for his first take on the trading day ahead then is this recovery for real futures this morning are under some pressure. been watching an awful morning dow is down 220. s&p down by 20 nasdaq off by 28 "squawk box" will be right back.

♪ ♪ yeah ♪ ♪ y-yeah ♪ ♪ yeah ♪ hey, hey

morning. u.s. regulators have opened an investigation of the company's model s. this follows reports of touch trains failures. this probe covers vehicles from the 2012 through the 2015 model years. that's about 63,000 vehicles in all. joe? >> beck, thanks. let's get to cnbc headquarters and jim cramer joins us now. jim, it just -- it's been apparent to everyone, i think, that some of these high flyers they look asomtotic almost and at that point moment tim is not fundamental. i think when you have people write that they've sold some or keep going you you say maybe it's not a bad idea in your view. >> i think in the end this is about making money for a

lifetime and if you're going to make money for a lifetime there's various times when you have to say i don't want to put some of those put gains at risk and i think that we've been watching these stocks go up, up, up we have curious reversals intraday yesterday in some of what i called the fast leaves because fast leaves is a great company whose stock reversed i say to myself i don't want to look back and say, wow, the fourth quarter of 1999, i had this quarter, if i had only sold then, yes, and it did go up again for another three, four weeks after -- maybe even i guess it was about five weeks in 2,000 that you had some great sales. don't feel badly if you see the market go higher after i do believe right around july 3rd, this worked yesterday with larry williams, right before the holiday you historically almost 85% had a run, but i don't think that people should feel badly about making some money, making

real money, putting it in the bank and seeing what happens nothing wrong with that. >> you put it in the bank. you would not necessarily buy something that wasn't moved and should be moving. >> no, there is no sense i mean, i think that there is a moment to make money and then there is a moment to say, do you know what, i've made money and i think that making money is a fabulous thing and it's not being regarded as such right now. >> it has not been made until it's taken off there are a lot of people, joe, you and i both know that who said they made a lot of money but they never sold. i'm saying nothing wrong with it that was the theme of last night's show, my theme up until the holiday just to remind people here is what other times have looked like when i was time to take a little off the table this has been such a good run and i hate to be able to make it so you don't have that money for other things in life.

>> in addition to fastly what other names, can you go over some of them is bigly one of them or just fastly you don't have a bigly >> my friend heather bolini put out a great piece today about how there has been tremendous expansion in some of the big cap software stocks and i think that we know which they are i alsoby the way -- again, i a not saying these companies are bad companies, i am saying the enthusiasm for a square is so great, but square sells into restaurants and i can't think of a worse group. they sell to a lot of small business you know, it's okay if you're brick and mortar to try to bridge the gap of ppp, but the gap isn't bridged, wow that's kind of a negative. >> jim, we will be tuned in at 9:00 to see more on this. >> thank you. >> we will see you in just a couple minutes andrew >> okay.

thanks, joe. fascinating what jim had to say, let's continue that right now, the s&p 500 reversing much of the decline suffered ben the coronavirus hit, the index down over 3% this year having risen 40% from the lows on march joining us to weigh in on all of this and what it means for your worth in the second half of the year is david b aechlt hlin. jim said take a little off the table because we might be running hot right now. what do you think? >> well, the market is really divided in half between those things that are done well, you know, defensive stocks and the software companies are among those and those things that have done poorly. take a look at real estate, banks, lots of cyclical companies, industrial small and medium sized companies, emerging markets have all done poorly i agree with jim that we should be taking some money off the table but i also think we should be rotating into cyclical stocks, in our midyear outlook

we talk about the need to move from stocks that have done extremely well to those that have done really poorly and to really add over the next 12 to 18 months by moving there. i in part agree with him. >> so in terms of the cyclical stocks that have been unloved, is that where you would put your money or do you think there is a reason they are unloved right now? >> i would absolutely put money there. they are unloved because right now they are being most impacted by the virus and there are obviously immediate concerns around the virus and the pandemic, no question about it, but when we take a look over 12 to 18 months which is how an investor should be thinking about the market you want to own some of those companies. those of these small and medium sized industrial companies have opened back up all sorts of inputs to the economy are actually picking up right now but their stocks haven't picked up at all you can identify these names, both market leaders and strong

companies, and put money there and feel it, again, 12 to 18 months from now they will have quite a run. we have never seen the dis burgs between the cyclicals as great as they are now in the past 20 years, that's because the virus is hitting one portion of the market much more than the others. >> david, as you know, we have many viewers who are buying individual stocks but we also have viewers buying etfs and other indexes and the like are there indexes right now that you think capture this unloved market that you think is going to go on a run over the next 12 months >> absolutely. there are russell subindices that doing that, you can buy the s&p mid cap etfs, you can buy the brazil and mexico etfs all of these are simple ways to get your portfolio aligned into these less valued areas or undervalued areas of the market. you don't have to be stock specific if you can identify these large segments these are strong parts of our

recommendations for our clients, wealthy and medium sized clients all over the world because it's unusual to get this level of disparity between the software stocks and the cyclicals >> okay. so let's talk software stocks because those are the ones that have felt the hottest at the moment what do you do are you going to wait for a pull back if you are going to play this as a several year outlook or several year game, is that a different sort of calculus for you right now? >> yeah, so two things, i think what jim said is absolutely correct, you want to remove some money, you want to do some rotation from the defensive and software stocks into your more cyclical stocks, no question, you want to book some of that profit what i disagree with jim talked about is the concept of marketing timing that putting it into the bank is the right thing to do. portfolios should be invested and reallocated from high growth to cyclical shares or emerging

markets which have done very poorly we want our clients to stay fully invested and make tactical shifts the other thing you are asking is do you like these things for the long term, software stocks, and we really do we can't really market time them it's a matter of shifting 2% or 5% of your portfolio from this area to that area and staying fully invested >> david, just to be clear, this sort of outlook that you have, does it include or not what might be described as a second wave or let's just call it a tough fall >> yes, we are expecting that there are going to be these waves in the pandemic, really, you know, for the next 18 months it's going to come and go and it obviously depends upon how the country or individual states respond to thepandemic and you've seen actually a very poor response by half the states in the united states. we're measuring state by state and msa by msa right now we see accelerating

cases of the pandemic in 50% of states and msas around the country. we built that into our model we are not expecting to get back to a 100% economy for a while. >> okay. >> we are expecting, though, andrew, a vaccine in 2021 and other treatments as well there is a lot of work going on that we're confident will lead to good health outcomes no 2021. >> thank you, david. we have to run appreciate it. make sure you join us tomorrow, "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm quintanilla with jim cramer, david faber coming to you live from various locations. we are coming off the 21st record nasdaq close of the year. record case growth in texas and california and trade worries as the u.s. reportedly weighs tariffs on $3 billion of eu exports. oil back below 40, gold coming off of a f