>> thank you. >> we appreciate you being on this morning we want to thank mel sachlt i saw a couple overdue books in the stacks behind her at one point. i don't -- >> i'm at the library, joe. >> sorkin, see you tomorrow. from your compound, the undisclosed location we're going to do it again make sure you join us, "squawk on the street" is next. >> we will do it again tomorrow. good tuesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber coming off that big nasdaq reversal on monday, worst day since june 26th. futures have lost a little steam as banks are in focus, jpmorgan, wells, citi, along with covid as california the nation's biggest state economy closes indoor operations oil is above 40, we watched cpi, jim, but once again, we are prepped for another day of interesting inter day action.

>> yesterday carl was a discouraging day for a lot of people who have been chasing momentum because last week was maybe one of the best momentum weeks i can recall since 1999, which meant that if you bought it went higher and how much fun is that? yesterday was the day that you bought it went higher and then you got crushed. so i think that usually takes a couple days of reset where maybe you can after stocks that aren't as hot, say, as tesla. so you would focus, say, on something like the banks i've been through the banks and i know dave and i talk about this all the time, they are incredibly complex beasts, they are not like, oh, tesla, hot and when i first went over them i thought they looked pretty good but already they're reversing. this is not an uncommon pattern as people find one line or two line that they don't like and then they sell these stocks. david, it's happening once again. you know that these banks could have had littered with bad loans, it's not, they have great trading, they go up and then they spent the rest of the session going down. >> i feel like to your point i feel like we see that often on

earnings day that same pattern where there is an initial positive response to what appear to be at least top line beats to a certain extent, when i talk about it i mean actually revenue and earnings exceeding analysts the commentary around the quarter and what is coming we're going to be getting that now from jpmorgan's call i think started at 8:30, wells fargo is a bit later, citi, and that gives investors pause. and then the reserve builds. >> right. >> i mean, they're very significant. now, we knew coming in capital markets activity was incredible and that's reflected in the numbers. we knew trading would be strong. that is reflected in some of the numbers. what we didn't quite know is where are they going to build and how much would they, jim you know, again, early days here -- by the way, typically you want to wait until you actually see the queue because there's a lot more information in there than are in the press

releases to really understand what's going on at these banks. >> people keep saying i don't want to buy those expensive stocks who is going to go out there and buy netflix, spotify doubled downgra downgrade, but here you have a bank, citi citi group has a tangible book value which if you close the bank, i know you are not going to but if you close the bank it's the what the bank is really worth. the tangible book value is $71.50 this stock is at $51 that is the definition of cheap. they are not allowed to buy back stock or be additive if you want cheap come and get it a 4% yield they don't want cheap in this market they don't want value in this market they are waiting a few days before they come right back and start taking up faang again and that is what's going to happen. >> yeah. well, i mean, others would argue, jim, cheap for a really kayla touchy pointing to this goldman poll of small business saying that 84% except their ppp

money, small business owners, to run out in the first week of august we know what's going to happen with c.a.r.e.s. act funds at the end of the month maybe that's one reason why the first jpmorgan call said we are preparing for a more protracted recovery. >> citi was talking about how only 60% of the people said, listen, we will take advantage of your forbearance plan and then only half those people actually did i was quite surprised at that. then again you are being paid to be at home more than if you are working and about ppp, i think that the idea that it might be over is going to be wrong. that's where i think the stimulus is going to come because when it runs out there will be more until we get a vaccine and people may say, jim, when the hell is that going -- i don't know, but they can't afford to let it run out because the numbers would be awful if it ran out. >> citi's numbers to your point are certainly interesting to look at. you know, end of period loans $685 billion largely unchanged from the prior period. deposits were up 18% from the

prior year $1.2 trillion in deposits as of quarter end, as you pointed out book value 8341, tangible book 7115 and, again, they did increase significantly their allowance losses, 3.98% of total loans, they had been at 1.82% of total loans as far as what the funds represent as a percentage of number. >> people are paying their bills. that's my take away this morning so far even wells fargo looks like they're paying the bills, wells fargo is a conundrum because most people remember this as being the best run bank, charlie sharp is a great banker, he's got a great pedigree, visa, he was bank of new york, but, i mean, he comes out and basically says don't own my stock. you don't want to touch my stock. melissa asked an analyst is it a contrarian play, i said let me

check with charlie sharp, the ceo. no, don't buy t if you want to come in and buy it you don't have charlie's blessing. i always like it when the ceo likes their stock but maybe this is one of those rare occasions because he bought a ton of stock at 28 and it is no longer 28 this is not the jamie dimon call shot that we remember. >> that was one of the first big sort of signs at least of insider confidence that purchase by sharp at 28 david and i in your absence last week talked about some of the sell side arguing that this could be a tactically constructive band-aid quarter for wells. are you suggesting the stock could turn around or not >> i'm suggesting buy johnson & johnston if you want the band-aid i would not touch this wells yet. the ran i wouldn't touch wells, maybe they have to offer stock we are extremely disappointed. this is his quarter, the second quarter is charlie's

charlie looks better than that will you get rid of that picture? >> i agree >> charlie is a cool guy. >> that is not a good looking picture of him we have to change that >> let's do that instantly when charlie says, listen, i have it under control, you buy until then, this was one of those it's not even kitchen sink it's like every sink it's like five sinks. >> jim, explain to people what the difference is, though, in terms of their portfolio and jpmorgan's or even citi's and why there is so much more concern about wells. >> they have no wammajamma you know what that is. >> i do. >> trading desk. >> tell meme what that is. >> when you are at a trading desk people talk about wammajamma, mojo, they're throwing money around, making money on the vig, just to use a gambling term. wells fargo is a bank, it's like monopoly, it's a community chest, right, it's a very good bank but they do not have those trading desks that t way, had a

great trading desk experience. >> yes yes. they were strong listen, we will hear from goldman, we will hear from morgan stanley. >> goldman better blow it out. >> yeah, you would think that that would auger for good numbers. we know how strong fixed income has been for all of these banks and equity, the capital markets have been incredible, but we will see what the trading looks like there that is one of the key differentiators with wells at this point $1.4 trillion in deposits. some of these numbers you just forget how enormous these financial institutions are. >> isn't that incredible >> yeah. >> david, paypal, it's two times of market cap of citi, well past goldman sachs and morgan stanley. paypal fbi te fintech, david. >> you mentioned fintech there is an ipo today. and ncno 7.6 million shares, cloud software for financial institutions, fintech, that thing was 45 times

oversubscribed we will want to watch that ipo. >> i want that what is it ncno? >> yeah, n-c-n-o, ncno. >> done. i want 10%. >> i can only give you 5 sorry. >> carl, we are in a world where if it isn't fintech, there was a company on robin hood yesterday this their change in popularity board that was a fintech gambling company and i'm sure people don't even want to know what it does because if you do that much research you might not like it. >> is that why gall man in their initiations today go sell adp, sell paychecks and sell western union? >> i thought that was a vicious, vicious attack i have paypal, i have -- i have paycheck on tonight. paycheck -- i have -- marty musy i have on, i have to tell you, paypal was -- it's the greatest story ever told since it was at 33 paychecks has a great yield, low

and steady wins the race, did very well and it's despised. it's despised. >> why >> because, david, it has to do with small business and they're going away i know you thought they were the backbone how about this -- >> oh, you got to reach me we're too far. >> i'm not your son, i don't have a cannon for an arm. >> we're 40 yards away from each other. >> get that kid in here. >> we keep getting further from each other i was hoping as the pandemic went on we would get closer. >> give me a break. >> now you won't even allow me within 10 meters. >> 60 feet now we added a zero. carl, i need you in here just to throw pennage. >> i want to get back in there, guys it reminds me to the degree that you guys can't social distance, the language around masks is getting a lot more targeted admir admiral gerard saying if all of us put on a face covering for five to six weeks we could drive

this epidemic to the ground. what marc benioff told you on "mad money" for our viewers, listen to this >> masks are very important. they are the key if everyone in the united states wore a mask for three weeks, every person, total compliance, the whole virus would be gone. we have to take that very seriously. >> jim, you've been preaching that gospel for months. >> yeah. i mean, i think it's very important, there are a lot of people who on twitter immediately said that benioff is wrong but the only people who said he was right were doctors who were infectious disease specialists as opposed to the bleacher crowd which is thinking that benioff is somehow political. it works we were trying to come up with a contest, we have young people, 15 to 24, hopefully we can find a mask that is regarded as being wearable, but masks are the answer it's incredible that goldman sachs can put out a piece 5% of the gdp going away unless people

wear masks and yet it's still being gated. in my twitter file after spending a lot of money to make this contest -- i'm fortunate to have some money but to have this contest come true, all the people said to me was it's all show boating what is it show boating i just want people to wear masks. we're going to get this economy moving again we have to save lives. three weeks is all it would take there are very few people who would disagree with that in the medical community. >> carl, we know this news from yesterday but it is worth mentioning, benioff is in california where now you can't go to a bar, restaurant, museum or movie theater because of what they've had to do in response to record high cases in that state. 40 million people, a gdp, what, fifth largest, sixth largest in the world. >> fifth largest. >> not to mention l.a. schools, guys, online for the fall. guys, so much to get to today, with he will touch on

delta, we will guess to tesla after yesterday's action, interesting news on the bronco out of ford. the double downgrade of spotify, downgrade of netflixhioe wch ds report this week we are back in a minute. dventure of a bigger world in a highly capable lexus suv at the golden opportunity sales event. lease the 2020 nx 300 for $339 a month for 36 months. experience amazing at your lexus dealer.

starve no doubt you have heard a lot about tesla's price action on monday, a $323 swing inter date today piper goes to 2322

in their words investors will need to pay attention. >> there was a great discussion on squawk about -- with bob lutz about how great tesla really is. the piper piece is trying to find a justification and comes upon software and basically saying that this is -- they're using it isn't a car, it's a technology, a vehicle that moves people around, but i keep coming back to september 22nd i know melissa was talking about the battery, that's battery day, it maybe goes a million miles. look, i think the issue is exactly what honeywell told me, the ceo, you can build a possible battery that can last eight, nine hours. that is a game changer because an eight, nine hour battery takes you very far across the country or north/south so if he has that then i think people will say, do you know what, i see why people paid -- it wasn't just day traders, not

that there's anything wrong with them, i see why people paid those prices because that battery will be able to be a debating issue to whether they can make 2 million cars or 3 million cars this is not a small company, it's a giant company and they can't produce them best enough and they have the best battery it's entirely possible that this might be the only car company that's able to come through this period because we are all going e. we are i think it's the battery that's what we have to watch david, are you a battery believer >> sure. sure why not? i'm a battery believer. >> sure. that's all you have to say were you a die hard? are you ever ready >> i'm aware of the major issue. i'm aware of it, yes even with oil prices where they are, even with gasoline priced at fairly low levels, you think they're still going to continue to be the rapid option. >> i told you i think golf fuels

a -- fossil fuels are dead. >> i would assume that ladies you to say that fossil fuel are off limits >> only chevron and parsley. pe $10 stock, go robin hood yourself yes, chevron for 6% yield. carl, this group the $40 oil seems to be some sort of wall and i think those stocks have to be sold. >> interesting yeah, 40 has been sticky, jim. to your point about combustible engines, i mean, ford bronco, ford said there was a stampede of reservations last night, they had to bring the system down and apologize to people on twitter. >> if it only mattered if it only mattered what they make the f-150 unbelievable, kick the tires last weekend here is the problem, balance sheet. balance sheet is terrible and they need cash they are not an airline. when i listen -- phil lebeau

knows this group so well trying to figure out how many millions is delta losing a day, something in the high 20s, but ford has all these areas, i thought that what ford was going to do was invest and then sell the products that people really want and not try to be ford to all people and all things all over the globe, but they haven't put that strategy in place and you still find, do you know what, it doesn't matter how good the 150 is or bronco, they are loezing money in places that you never thought they were. legacy of the old days when they felt they had to sell cars everywhere >> and supply chain issues, too, with some of the engines out of mexico. speaking of transports, we will talk more about autos and we will get to delta a lot of information, ed bastion providing clarity on cash balances and further capital raising later as delta is one to watch this morning back in just a moment.

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in a highly-connected lexus vehicle at the golden opportunity sales event. lease the 2020 es 350 for $359 a month for 36 months. experience amazing at your lexus dealer. before we get started with the market today that would be the opening bell let's get to a mad dash. you've got a crews theme here. >> yeah, well, david, one of the most popular themes among the

robin hoods, i mention these because they took in another several million dollars as a company, this is where all the action is so to speak, they have about 12 million people, you can check to see what they're up to, they like the cruise lines suntrust has a piece out today which says don't like the crews lines, particularly they're saying no cruising in north america until at least the second quarter of 2021 which means there's -- there's not a lot of liquidity in the group. they say royal caribbean only has about 14 months, carnival 15, but they are their favorite of mine, norweigian. those who are speculating on a quick return may be looking at a genuine buzz saw. >> any chance you and i could get lucky, we took a norweigian cruise and ent up being the only people on it, sort of like we have the boat to ourselves, ship, whatever they call them? >> my daughter flew from madrid on a gigantic airbus and there

were only three other people on the plane. >> really? >> yeah. how do you like that >> you can walk around. >> she said it was a private plane from iberian air. >> we have an opening bell a lot more to cover, speaking of airlines we will get to those delta numbers, we're back in two minutes. this selenite grey is so pretty isn't it?

wow. jim could you pop the hood for us? there she is. -turbocharged, right? yes it is. jim, could you uh kick the tires? oh yes. can you change the color inside the car? oh sure. how about blue? that's more cyan but. jump in the back seat, jim. act like my kids. how much longer? -exactly how they sound. it's got massaging seats too, right? oh yeahhhhh. -oh yeahhhhh. visit the mercedes-benz summer event or shop online at participating dealers. get 0% apr financing up to 36 months on select new and certified pre-owned models.

>> announcer: the opening bell is brought to you by nuveen. a leader in income, alternatives and responsible investing. this is all about cash it's about protecting the balance sheet, raising as much cash as we can, knowing that it's going to be a difficult winter and certainly the next 12 to 18 months is going to be important to have a cash reserve. and then for delta, and all the airlines, reducing the cash burn and while it was a very difficult quarter for us, the worst quarter candidly in this company's history. >> delta's ed bastion on squawk in morning talking about a wider than expected loss and that cash burn going from $100 million a day down to $27 million a day and the hope he says that they might be able to avoid furloughs given that a fifth of the workforce is taking some early

retirement. >> the presentation by bastion, the presentation of many of the ceos in the airlines always very impressive i thought that he has this under control from the point of view of the cash burn it wasn't as bad as i thought it would be he did say that there's not going to be as many flights as i would have liked to see because there's obviously not enough demand, but they're in pretty good shape and they are able to borrow if they have to because they can borrow against a loyalty program. would i want to buy the stock? no but those who think that there is a vaccine coming, you would want to buy the worst, which is american, and maybe the best, which is southwest, but you could do worse than owning delta. again, these are vaccine stocks, they are not stocks based on earnings because you can't justify that because the term might not be at hand this year, but if you think we're going to get something that's going to make it so we feel good going out, there is your group right there and you can pick them and it won't matter.

i think i would pick southwest because i can't believe that's back to 31 >> yeah, jim, there was some reporting yesterday about southwest and the amount of traffic they would need to see from here basically tripling to avoid some very difficult steps to reserve cash. >> they had a good balance sheet. look, i think the government in the end is going to take care of these companies and they have to take care of american first. the government -- david, the government -- we haven't heard a peep out of the government because the money has been spent, with he wait to see until the end of the unemployment benefits, but the government will be there for these companies. they are not going to let these companies go under >> you seem confident of that. >> yes. >> it would seem that that would be the case. there's certainly a national defense aspect to it in a sense. you can't really allowyour airline industry to completely shrivel up even if they wereto go bankrupt, however, you do have to keep in mind they would reorganize as so many companies we have seen recently.

i have heard the pace of bankruptcy is expected to slow, guys, at least on that front and won't include some of these names we are looking at right here many of the bankruptcies we have anticipated have come to the fore so we will have to wait and see if that really does occur or whether if there is another downturn it is going to, jim, bring another series of where we expect them to be, of course, continued and pressure and things like retail and anything else that deals directly with the consumer having to come in and do something >> well, the mortgage failures, the mortgage defaults were not that bad from the major banks. i wonder whether it's going to be the regional banks where we see it the regional bank stocks have been completely crushed. carl, i have to tell you that turn around yesterday, the pirouette where it went back down, those things do not just -- you don't snap out of that in one day, there are too many people who bought at the top who are trying to figure out -- lord, get me back to even let's just let this play out we don't even know which group

is going to come to the fore here, the -- will it be the companies that do better because people think a vaccine is upon us i can't buy into that theory, but that was the theory yesterday afternoon. >> yeah. yep. jim, there is the bell at the nyc, eastman chemical today celebrating its 100th anniversary at the nasdaq. ncno we will talk to the ceo on "squawk alley. the flood of news we got midday, california shutting, the budget deficit and 3235 which people say looks a lot stickier now do you think we're going to be able to get past those june highs? is this a bit of a minor top >> i think we will get past them i feel that we got too hot i do think that the nasdaq is going to take a back seat to the s&p now. i think the nasdaq is going to be okay, but that the s&p is

going to give you a better risk reward here and that's not been -- nasdaq has let us out a lot of different times but i would go s&p over nasdaq right now. >> so that's right in tune with what mike wilson and morgan stanley said and that is no 99 top nasdaq blow off top, better to see a correction and then a broadening of stocks participating, you know, somewhere around 2850 let's say. >> wilson is brilliant he agrees with me entirely >> guys, keeping an eye on the banks what we talked about at the top of the show with all the earnings from jpmorgan, citi and wells fargo this morning we will update you if we get anything of importance from the various conference calls jpmorgan the only name that is seeing some positive movement right now. you know, jim, wells fargo has gone from the best to the worst or first to worst in, what, two, three-year period really. >> yeah, makes you feel like

that maybe it wasn't that good when it was at first >> yeah. well, it also had the buffett machine on it. buffett is still there hasn't sold that one. >> he sold when it got to be more than 10%. >> right. >> he stands by the franchise. i know that the franchise is deeply troubled, we all seem to know it, but we all seem to think that as long as buffett is in there we're okay. that's not been a great -- a great way to invest. i mean, he would tell you be in an index fund before you do that the big win he had was apple. >> yeah. >> if you mimic the rest of his portfolio, you've done coca-cola has done nothing, wells has been worse, american express one of the weakest of the group it's not been a happy time bet for own geico, which you can't. >> right right. and they continue to advertise to your point, i mean, at the same time you have a good amount of faith in the leadership of

charlie scharf. >> i do think that it's too early. the 110 page sterling investigation which was not talked about enough was brutal a few years ago with mr. stump this was a bank that it seemed like it could ride through the scandals this was a quarter that made me feel like maybe they don't have the best book of business and maybe the scandals really did hurt them. no one ever wants to -- no matter who you talk to wells fargo they are going to tell you, look, the amazing thing is the scandals didn't matter, but this was a quarter that you have to just -- everything is in question with wells. everything this was just bad. and i can say that because he said it. >> yeah. we are getting some comments as well, carl, from the jpmorgan call in terms of the recovery, preparing for the worst case, simply don't know, don't think anyone knows and this is unprecedented, rarely is this

time -- it's unprecedented what's going on around the world and obviously covid is a main attribute. just going on to talk about sort of that -- that we are in a key period now in terms of what they call the moment of truth in the months ahead at least. i believe that was jamie dimon speaking although i'm not 100% because i'm getting certain parts of the call here, carl, at this point without who is speaking. >> deposit growth. >> the transcript being reported ft has him quoted as saying if the base case happens we are going to have far too much capital and we are going to be buying back more stock, which i hope we can do before the stock goes up. >> well, look, jpmorgan did a great job. it's just a really good quarter. i know that it gets boring, but the one thing that is amazing is that these banks continue to be a lousy place to be. when the best one shoots the light out, just shoots it out and that's all you get, what does that say about a group? >> hey, it's got a $10 billion more market value than tesla,

it's got that going for it. >> it's bigger than tesla? >> bigger than tesla this time yesterday it was trailing tesla by $25 billion in market cap. >> bigger than netflix >> bigger than netflix towers over netflix. >> it almost was ready to take out walmart or walmart would be next in line. >> for tesla, yeah, walmart was very close. >> we should ban market caps because it's too unnerving because i remember when merck and coca-cola passed general motors it was on the cover of business week how ridiculous it was that merck -- i mean, you know, made a lot of sense in the end. >> yeah, it did, didn't it maybe there is something to all of that. >> right >> i know. >> i mean, let's face it, maybe the judgments aren't all wrong maybe there's something there. maybe you have to go put on some tights and get in robin hood, david. >> yeah, i still wonder about

the data we're getting from that platform, jim. >> why >> not the accuracy, but what it all means. i mean, so what was it yesterday, how many thousands of people were trading tesla on that platform? >> it's nice you just have to go to robin track, david you don't go to robin track? >> no, i don't. >> how can you be in in business and not go to robin track? >> i don't know. >> because it's robintrack.net and you keep going dot-com. >> we are not allowed to own stocks, you do through your charitable trust but that's it. >> they're still buying the ford, tesla they're buying that one, that's good you have to look at the leaderboard. it's real sport. they like delta today. american they're sold on american sorry. american is very good company. >> jim, really quick, just a little trip on china here, we have the uk going against huawei, ripping everything out by 2027. >> yeah. >> sanctioning lockheed, the

chinese say they will, because of the patriot sales to taijuan. pompeo this week with comments about rights to the south china sea. is this heating up >> yeah, i mean, i think that they seem to want everyone to realize it is heating up that when you sell those arms to -- lockheed to taiwan, you are not even allowed to mention taiwan, it's like fight club when i see what's going on the uk bending to our wishes, the south china sea, this was something that -- that even that obama had got an agreement that the chinese would not go down and then the chinese instantly violated it. this is very -- this is very 1947, this is about containment, this is about stopping our enemy, it is not about trading, it is about -- it is about cordoning off china and it's going to be hard to do because the chinese had a lot of money, a red hot stock market, too. a couple things i've been watching here every day, it's a spac world, we are just living in it these days

every day i think we're going to hit this to some extent because these special purpose acquisition corporations become such an important component of our overall market at least day to day, not to suspension the m&a world because essentially it is an m&a transaction, you need a shareholder vote similarly today's news, let's see, we have artias acquisition, upside to 630 million, that is charles zucker and boone sim, a banker for many years at credit suisse. bill ackman will price his biggest by far, it was you up to $4 billion, i think pershing is putting money in you're 4, maybe you're 5, then you bring in additional funds. yesterday's deal that i was talking about, the multi-plan deal, churchill 3, multi-plan merging into that, hell man and friedman selling i think it was roughly half of their stake and rolling the rest, the latest pe firm to open that company, but

they raised another 2 plus billion in additional capital beyond the 1.3 that was being put in by churchill. these deals to get enormous. ackman could be in a position to buy, i don't know, airbnb? you just wonder what it will be. at&t wants to spin off directv the spac world is now becoming a place of liquidity for pe firms in a significant way that's been the case, but even more so. even major companies that are looking for potentially a strategic spin of some kind if they can do it there is the biggest numbers so far, again, the ackman spac will blow them all away, but they keep getting bigger and bigger martin franklin. >> martin franklin. >> who told us a few weeks ago we're a frothy world in spacs, he is launching another one, viking is a partner there as well this keeps going, jim, it's amazing to watch and it has become a real feature now. it's not just sort of a corner of the market.

>> david, explain to people why this is different from private equity buying a company. >> well, it's -- first of all, you are reverse merging into a public entity, you're getting new capital as a result of doing that and you are -- i mean, you are subject to a shareholder vote by the spac itself, the shareholders can reject or accept, almost always they do accept, although ackman changed the structure in his to try to make it a little more favorable overall. it's different in that way at the same time the spac does have a level of control which is why you're seeing hedge funds trying to do it. pe is launching their own, pap low this one, we had if i sfiskr automotive you're seeing everyone involved in this. >> draftkings which is a successful spac -- >> those guys -- seganski --

>> that has been what people want that's the gem that's uncovered. >> yep. >> and it is a very good company. now, is it worth $10 billion that's not up to me. i'm saying that that's a spac creation martin franklin has been successful with spacs if you followed him because he did burger king. >> he did. he was early in the game and there have been quite a few that have been successful and they certainly seem to have captured people's imagination guys, real quickly as well, something else we're following the core logic, remember, you've got that bid out there from senator and cannae there is likely to be a meeting between corelogic management and the group that bid 65 bucks a share, it was senator as well as cannae bill foley with them we will see if anything comes out of that.

i'm also separately hearing there has been interest from pe firms if, in fact, they did move to any sort of auction so a number of pe firms i've heard have reached out to banks, see if they can secure financing were something to actually come around we'll see. going to watch it closely. it is the contested situation out there. they could have real leverage here potentially and the company did increase its guidance, there's going to be a lot of back and forth here, obviously still going to wonder about regulatory even though they went hell or high water, they will wonder about value, that would seem to be one of the key things we will see if we get any more from that potential meeting that is supposed to take place later today according to sources carl, over to you. >> thanks, david. so sectors a bit of a mixed bag this morning, let's check in with bob pisani. hey, bob. >> that's exactly right, carl, mixed flag, it's a flattish open, defensive tilt somewhat, still uncertain about where this is going to go today let's look at the sectors, utilities, consumer staples,

health care was outperforming. more flattish now, but what's key here is energy once again underperforming and of course the banks here i've been talking about the bank earnings all day here. wells fargo down about 6%, it's a simple story here about this, larger provisions for loan losses these are very, very hard to estimate wells fargo had a loss of 66 cents, the analyst estimate was a loss of 20 cents that's a huge dispersion they can't get their hands around these problems in this particular case loan losses. the big money center banks have a big advantage because they have trading operations the jpmorgans and the citi groups. we've said this over and over. the revenues that jpmorgan gets right now, they have a substantial consumer division, they get almost half of their revenues from consumer lending and they have substantial wealth advice business, also commercial business out there 32%, that's investment banking and trading, that's what the big regional banks the wells fargo, the pncs, fifth thirds they

don't have that. when you have a profitable quarter in investments that helps balance some of those other issues like loan loss provisions that are out there. look at wells fargo, though, wells fargo makes money the old fashioned way, basically three options, this he lend to consumers and have a substantial one like jpmorgan, this he lend to commercial like jpmorgan and they have a substantial wealth advice business which is pretty substantial and these banks are trying to grow that wealth advice business. this he don't have a trading operation and that's a problem the analysts were wrong in estimating the amount of loan loss provisions and i think this will be an issue for the regional banks going forward that don't have trading operations they can add into their revenues regional banks have been acting terribly recently because the market is well aware of that where are we in the overall market make it simple think in terms of these five buckets of what moves the market the reopening story is the most important thing, maybe it is about k ago reclosing story. a lot of companies are not as

forthcoming, i think in the next few weeks, because we don't have a clear idea of how the reopening is going stimulus, yes, it's there but mcconnell is talking about maybe one more package minute less intense stimulus coming not an overall positive. valuation, there is a lot of profits hiding in tech, tech is up 10% in two weeks, they will take profits quickly if they think there's a short term pull back the momentum are not what you call strong hand players what about other things out there? how about what's going on with the trade war. we've seen intensifying conflicts with china, i don't think there's a lot of positive there, not just sanctions other things going on there. treatment is the one absolute positive, treatment and vaccine hopes the one absolute positive that is still sitting out there, the other four are still iffy right now, that's one of the reasons the market has been fluttering around here how about what fund managers think, every month we talk about this, merrill lunch they survey fund managers, with he watch for a sign of what the big money managers are looking for here.

the most crowded train go long tech, 74% said that was the most crowded trade that is the highest in history they have ever had that's a long trade right there. those expecting a v recovery only 14% that's pretty low, that number is dropping greatest risk to the rally is the second wave of a coronavirus concerns that are out there and the biggest game changer is a vaccine. everyone agrees there. that would completely flip those numbers around about the risk to the rally and the v-shaped recovery carl, back to you. >> all right bob, we will see you in a little while. bob pisani. we did get cpi and will get fed speak this afternoon let's get to rick santelli good morning. >> good morning. let's start out with a seven year i don't normally look at the seven year as closely as other maturities but seven year right now, for example, should they close here under 46 basis points would be an all time new low yield close. look at a three day chart of sevens starting friday, inter day low from i was 42 basis

points, at the end of june it would have point at .467 the reason i'm bringing this up is we had arguably hotter inflation data but yet we're still giving up ground let's go to the ten year look at the intraday, do you see that big break that was actually before 8:30 eastern when the data was out. that started about two minutes beforehand arguably cpi data was as expected, maybe a smidge warmer. but it's not making a difference or record budget deficits aren't making a difference or mcconnell thinking he wants to add to that not making a difference. rates are heavy, buying is intense, maybe it's the only hedge against equities but no matter how you slice it, that ten year open it up to a three-day chart it was trading 56 or friday the intraday, the all time yield close that was the 9th of march at 54 basis points you can see even right now we're getting close.

from it's two year, three year, five year or seven year they are guns out each maturity could make all time yield closes. finally a year to date chart of the dollar index, as you look at this realize 9640 is where we closed, how many times have we settled below that like two you can see it on that chart look at that chart in thirds if you look at the first third that big spike down in march, that was one close under down on the year, then right around mid union june was the other one we're sitting right at 9640 now and just like ten year note yields, you know, theres a magnetic draw here the dollar index is going to challenge and go through this number in a big way so the charts say, so technicians say and the ten year note yield under 54 it's really just a matter of when carl, jim, david, back to you. >> all right rick, well said on rates, obviously a big piece of the puzzle. we will take a break here as the three big gainers on the dow

for the moment, jpm, goldman and j & j are the big stocks that will report this week. back in just a moment.

take a look at the new grocery carts over at amazon, allowing shoppers to skip the checkout lines all together by tracking the items as they're added and charging them when they remove the bags called a dash cart. relevant these days trying to be

contactless. jim, stock is almost back to 3k after spending about a week above. >> it's a winner there is a piece today about walmart being able to compete with them in dwrogrocery. that's about it, though. those stores are in fantastic, the one in san francisco it was scary i felt like i was shoplifting. wow, i walked out and didn't have to pay but of course you are paying and i think that amazon's model is the one that makes it so that people say you know what? i know it's 3,000, but they do have a path. the difference between tesla and this is that amazon has the path tesla has to build 100 factories to meet the demand i'm just picking a number, but they have to build a lot amazon's got it right now and amazon web services is ready to handle any amount of traffic david has hinted and i think said that maybe amazon advertising is going to be the most exciting leg of the stool >> it's a high margin business for them as is aws, such an

incredible, well, rocket fuel for the company's profitability, carl but yeah, we'll keep an eye on the ads as they continue to compete more and more effectively with the likes of alphabet and facebook for small and medium-sized businesses that advertise on the platform. >> juggernauts >> yes guys, we're keeping an eye on wells the low today 2333, is going to take you back basically to the end of may later on don't miss the first on cnbc, earnings interview with wells fargo cfo john shrewsberry, 3:00 p.m. eastern on "the closing bell." we're back in a couple of minutes. don't go anybr 49... 50!

i found you! good job. now i'm gonna stay here and you go hide.

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downgrade of spotify this morning. ubs goes to sell the stock is up almost 50% since the podcast strategy came into strategy stock's down 4%. we're back in a moment

it's time for jim and "stop tradele. >> carl, this weekend i was at a shop rite with my wife, lisa, at neptune new jersey and she said, look at these. she held up this hands braes prt looks like boxers. hbi developed a $300 million

mask brand, and you get them in target, they're fantastic. they feel pretty good. they feel, well, they do feel a little like, you know, underwear, but they breathe and credit swiss says time to buy, upgrade to outperform and the issue is out of nowhere, they have a $300 million business good for them. it's shocking to wear underwear on your face, but it works >> i'm thinking back, jim, to that key bank note, i think it was ed yaruma called the mask business the $9 billion opportunity for etsy and gap and clearly hbi, too >> hbi saved by the mask, and i like the story it's been, it's cheap stock and now i know cheap doesn't mean much in this market but it is inexpensive just like paychex, downgraded and the stock nearly

gets picked and livongo is one of the fastest growing companies that helps you if you have a lifelong illness like diabetes, a life coach glen tollman is a great ceo. the shorts making up what they want the stock has had an amazing run but i think it's a good company. >> jim, we'll see you at 6:00. >> underwear on the face >> have a good one jim cramer, underwear on the face good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with david faber and morgan brennan live from different locations the crazy reversal coming off of the highs on monday and already some pretty sizeable swings in the first 30 minutes of trading. let's get to citi's steve whiting and abe baker to talk about the week in progress guys, good morning >> good morning. >> good morning. >> lee, i know we're always loath to draw broad conclusion from a couple days' action but

do you think yesterday was important? >> i think yesterday was important, but i think it was important as a reminder. covid-19 was the catalyst for our current environment and until we fully get it under control, i think we should just expect these sorts of occurrences to happen. you know, things look really good at about 3:00 yesterday eastern time, but then all of a sudden they didn't, and governor newsom in california making the declaration that he did. here locally in metro atlanta, we've still got high school about the same time the school district came out and said hey, we're delaying the opening of school and when we do open, it will be virtual. >> interesting steve, with that in mind, and knowing that you're going to have to endure some chop, is this a moment where tactical playbooks need to change is the narrative changing? is the trajectory of the economy changing with the news out of

california, as lee points out? >> look, i don't think we'll see an indiscriminate shutdown everywhere and certainly not across the whole world but you brought it up just yesterday it was interesting that we had catalyst from california that sank the market, and suddenly we saw some of these i.t. defensive shares, covid defensives suddenly sell off harder than the broad market so we've gotten to a situation now where some stocks may have gotten too expensive, others are nice and cheap for a recovery from covid. but we really have moved a long way here, and it's probably not going to be as simple as hiding away from covid. >> lee, i'm wondering now that we're getting into the thick of earnings season here, it does seem like the expectation that's already baked into the market is that it's just going to be a brutal quarter in terms of the drop for earnings, but when you have banks starting to report, you have airlines like delta starting to report, also another good i think economic canary in the coal mine on the industrial

side a name like fasanol reporting. what are the metrics that will matter the most to continue to drive this market into the second half of the year? >> what i think about the metrics, you know, interesting listening to cramer just before we came on the air, some of the things we're accustomed to, things being cheap and great values doesn't seem to matter anymore. there's conversation around tesla and earnings for tesla are supposed toment could out next week what's going to happen unfortunately i think right now, near-term the metrics don't matter so much, because things change so swiftly. we got some surprises out of wells fargo this morning banks were looking good and the pretrade hours but wells fargo came along and things weren't quite so good. the normal metrics i just don't think apply particularly in the short term >> steve, i want to get your thoughts on this, too, especially when it comes to a name like tesla.

tesla basically turned around after what we've seen, what's been a par bollic move in that stock, turned lower yesterday and that basically is what started the markets descent, revers reversal how much does the market hinge on a name like that? >> look, i this i in this recent period we've gone from being a stock picker's market to a day trader's market and i think there are truly, if you can outlast this, there are good opportunities. when you take a look, five stocks in the united states i.t. related have now moved up to 15% of the entire world's equity market capitalization. nasdaq is up at a near 1999 high, versus u.s. small caps, and it's not because of bad fundamentals there's plenty of potential there. we're not immediately doing anything to the i.t. tape. we're using this, we're using technology to cope with covid. this is all fundamentally good, but eventually, you can't grow this to the sky, and so i think

we're going to, even in this q2 earnings season, you look at what a disappointment would be the industrial companies, the financials are expected to have drops along the lines of 90% in eps, and there's a lot of short interest in things like real estate so what we report in the second quarter, what constitutes a downside surprise, it's going to be different for each sector, and you know, certainly the traditional me trictrix of last month's report will not be as potent as seeing where the economy is now mobility data and credit and these sorts of things if we take a spective, some of our defensive shares have moved up so much and a lot of bargains but we have to have a one to two-year perspective for those. >> that's an interesting viewpoint, lee we spent a lot of time talking about the so-called fiscal cliffs we're facing, whether it's ppp exhaustion or

c.a.r.e.s. act benefit exhaustion we mentioned jpmorgan this morning, and with provisions, loss provisions at 3% of the loan book, the analogy has been made that jamie dimon is building an arc on twitter is that constructive or worrisome? >> i think it's constructive you know, when we asked ceos to take a longer term approach, that's good news for me. if i'm working with clients and that sort of thing, i'm not looking at what's going to happen this week or next week or even next month. we look out to 2022, the projected impact of covid that far out into the future looks to be minimal we'll listen to the ceo of delta this morning, again, you've got about 19 months of cash on hand. i like that type of thinking that says hey, listen, right now we have this period where there's a whole lot of unknowns.

there are some things that we know, but we just don't know the impact what's going to happen at the end of this month when the additional $600 in unemployment expires unless it gets extended. how are those things going to play out what do the models look like in terms of the loss by having to stay at home and remote learning for school and what that takes off of the gdp, or perhaps as a country do we get religion, so to speak, and say okay, we get it we're actually going to, everybody's going to wear masks, we're going to do it, and that 5% bump to gdp, it's real, but will we get religion >> yes, and steve, of course you got to see what happens before the end of this month. we have comments from senator mcconnell about another fiscal package. we'll see if we can get it across the finish flline in congress the cvip this morning it seems

like maybe inflation is starting to stir back to life how are you assessing that how are you thinking about that? the coming months and what does it mean for your investment businesses, where you see the potential bargains over the coming months, coming years? >> so look, we had prior to this month's report the first three consecutive months of the core cpi in history, we have mass unemployment, but it's concentrated in three or four industries we're about 60% of the job losses that are there but from a macro perspective policymakers don't care about the lopsided distribution of the impact they'll say even as we have a big recall of workers and i don't think that will be entirely disrupted by what we've seen so far with these partial shutdowns that we have a lot of people to get back to work they will in the end come to some compromise and provide enough stimulus and support for the economy in the very near

term, and what is this going to mean it's inflationary medicine for a deflationary shop. the last cycle the fed took seven years before they took interest rates above zero at the front of the curve i don't think it has to last seven years but in this case it will be a long time, we'll have supportive macro policies and there will be moments when markets won't get every minute of joy out of policymakers, but by and large, it's going to be there, not for financial markets but to support the economy indirectly this will benefit financial assets, other than low-risk bonds. >> right to that point, lee, i wonder, what clients are saying to you about inflation and how that colors their investing playbook. >> so with inflation, a lot of it depends on the client segment. for our more mature clients, if you will, we're having to revisit the traditional playbook, right, if interest rates that you're getting from

the banks and bonds aren't paying you much you got people making decisions and say listen, what do i have to do to get some additional yield how can i handle that? there is a near concern safe corporate plays and looking at banks cutting dividends, but we're having to pay more attention and do some tilting in order to get the yield for a lot of clients so they're concerned about it. i'm starting to hear we're having these reviews about discussions of what's happening in the grocery store, how that's eating into the budget gas prices have gone up, but gas usage is still down for most of the clients that i've spoken to, so it's a concern that's starting to creep into the conversations, and we're just having to find other places to get a little bit of yield because again, you know, like you said, it probably won't take seven years but we're going to have a very accommodating environment for some time, i

believe, and we're just going to have them look other places to get some yield for our clients >> great conversation, guys. great way to start the hour. our thanks to you, citi's steve wieting and apex's lee baker talk to you later. >> thanks for having me. speaking of earnings, delta out with those results this morning. phil lebeau spoke with ceo ed bastian earlier on "squawk box" and joins us with more >> the delta earnings call has just begun and not good numbers. a wider than expected loss, the companies losing $3.9 billion. in terms of per share it was a loss of $4.43 a share, worse than the $4.07 estimate. revenue better than expected but this revenue for the second quarter, the worst since the mid '80s it's the outlook that people are focused on, and in terms of the daily cash burn, delta has

brought it down to $27 million a day. it was up close to $100 million a day in late march, early april. liquidity stands at just under $16 billion but they have trimmed their august scheduled editions, it will be 500 flights a day instead of 1,000 flights a way. ed bastian on "squawk box" earlier today talking about the choppy market that they're seeing right now >> i do think there will be some behavioral changes to travel schedules, particularly business travel as we go forward and need to understand that we are preparing to be a smaller airline over the course of the next couple years, why we've had 20% of our people voluntarily retire from the business it's going to help us deal with a lot of the cost reductions in a voluntary manner >> ed bastian is hoping, hoping that they can avoid furloughs, when that decision comes on october 1st. as you look at the airline stocks, remember, we're in that period here where they've either issued warn notices saying there

could be mass layoffs come october 1st or offering morgan the early outs, the voluntary unpaid leaves, and they're seeing how many people they can get to take those so they don't have to furlough as many people as many are fearing. so we'll get a lot of those answers this week and next week, certainly well ahead of october 1st. >> and we know all he be the one to bring them to us. phil lebeau, thank you for breaking down the numbers for delta. as we mentioned, a big week for bank earnings kicking off this morning with jpmorgan, citi, and wells fargo out with results earlier today. it's a mixed picture for those names, you can see stay with us

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jpmorgan, citi and wells far xwoe out with results this morning as earnings season kicks off. wilfred frost is with us, who better to turn to, to get a sense for each of the quarters you've been listening to at least all the calls that have taken place thus far >> jpmorgan's finished, citi is ongoing. wells fargo hasn't started yet provisions rose for all banks q1 to q2 and more than expected focus in credit cards and commercial retail, gas and real estate for wells fargo the jump was most pronounced, provisions more than doubling quarter over quarter. the big question for banks

investors whether this will be the peak for the provisions given a spike in virus cases since of end of the quarter. here's jpmorgan's chairman and ceo jamie dimon on that question >> we feel the same way we did the end of the first quarter mike, we're clear, we cannot forecast the future. we don't know. we're also very clear that i know at least i think you're going to have a much murkier economic environment going forward than you had in may and june, and that you have to be prepared we are prepared for the worst case we simply don't know i don't think anyone knows >> jpmorgan and citi said provision also have peaked if their base case plays out but neither express confidence that the base case will indeed play out. both also acknowledge stimulus has been crucial to things not being worse already. trading and investment banking for citi and jpmorgan strong, fixed income currencies and

xhodsities, a huge offset to the traditional banking part of their businesses wells fargo doesn't have that offset and their increase in provisions was far sharper and dividend cut from 51 cents to 10 cents per share was bigger than expected wells fargo business mixes more similar to some of the regional banks than jpmorgan's and citi's and regionals are trading down accordingly today. lots of uncertainty still. banks therefore trading lower. wells fargo's call kicks off shortly and the cfo will be on requesting closing bell" today >> looking forward to the interview as well. david conrad of d.a. davidson and david long of raymond james for more i'll address both of you with your full names, given we're all davids here. david long, let me begin with you. we heard wilf talking about wells fargo. you have a sell on it. i assume there's nothing you saw from the quarter thus far that gives you any pause in terms of that rati rating? >> not at this time.

the pre-tax, pre-provision income company reported. we were looking for $5 billion in pre-tax, pre-provision income, came in at about 3.4 and factoring out some of the noise with the excessive operating loss against some of the excessive operating gains, you're still at about $4 billion in pre-tax pre-provision income, that's 20% below our forecast and the street forecast. when we look out going forward two years, we are already projecting a 27% decline in pre-tax, pre-provision income, between 2019 and 2021, and again, that excludes the impact of reserve losses and reserve building so from a fundamental basis and a core earnings power basis, the numbers were worse than expected and that does not bode well for our estimates going forward. >> yes david conrad, let me come to you. of jpmorgan and citi and wells, you know, which quarter

impressed you the most and is the market getting it right today? >> i'm a little surprised at citi's a little bit weak, not surprised by wells fargo's decline. jpmorgan was the strongest quarter. if you take a step back with the universal banks, the fed has put up so much liquidity they've been engaged in buying corporate bonds. that's created this backdrop for huge capital markets i don't think it's sustainable, but i think effectively the fed's policy has been a capital race with universal banks. you saw from citi and jpmorgan is plowing that back into the reserves and reinventing some of the riskier loans. jpmorgan now 24% reserves and importantly almost 13% reserve against cards. the total loss rate i think was 16% and the severe ad verse stress test most recently. so i don't think there's a lot of reserve built there

i do expect as jamie said on a call, trading will be cut in half, probably next quarter. ib will be down year over year, that's pretty much in line with expectations but i don't think we have to build reserve next quart sore that will be a lived in the next quarter. >> it's like david cubed this panel. david long, i want to go back to the loan loss reserve piece of this >> sure. >> the fact we did get comments wilfred reported, if it weren't for stimulus, things would be a lot worse. you talk about defaults, son consumers or companies and this idea of having those forestalled or curtailed by government stimulus and the forbearance programs in place right now, it raises the question, are we going to see a reduction in defaults or just a delay in defaults, and how do you game that out as you look at some of these names, some of these stocks, into the second half of the year >> sure. the loan deferrals that the

banks have offered combined with the stimulus from d.c. and the moves by the federal reserve have definitely pushed off the time of recognition of more losses and really loans moving into the non-accrual status. so we don't expect loans to really start to go bad until the fourth quarter that's when we think the rubber will hit the road and we don't think losses will peak until the second quarter of next year. because of all the stimulus and the deferrals, we don't know at this point what the level of losses are going to be so yes, wells built the reserves to 2% of total loans, but look, they still have exposure to retail 5% of loans, credit cards 4%, energy, hotels, entertainment 4%, office buildings 4% so there's a lot of exposures out there. we're just uncertain about, so that creates volatility not only for wells but for the rest of the banking industry, until we really know what the ultimate level of losses will be.

>> and david konrad, let me conclude with you. i imagine it's not the greatest time to be a bank analyst when your group is out of favor the way it seems to be in this market what's it going to take for that to really change >> i think a couple things one is obviously more certainty around the dividend. i thought jamie was pretty confident on the jpm call where the dividend and and iccapital s the w-shaped economy say risk. getting through the next few quarters with better visibility of the dividend and as dave long said, q2 next year peaking credit costs the market wants to see provisions come down which we'll see that but it will be tough for the banks to work with net charge-ups ramping up. we want to see the delta come down as well the big all clear sign will be more next year

>> davids, thanks so you both. appreciate it. >> thank you, very much. >> thank you it's time for our "etf spotlight" looking at the technology and robotics etf, ticker arkq, up thanks to tesla making up 15% of the etf it's under pressure today, but doubling over the same period up 110% since mid-april hyper taking its price target on tesla up to a street high of 2322 this morning. we're going to ask morgan stanley's adam jonas about that in the next hour in the meantime, stay with us.

good morning everybody i'm sue herera the u.s. carried out its first execution in 17 years. daniel lee lewis died in terre haute, utah. earlier this morning the supreme court ruled to let the execution go forward go to cnbc.com for more on the story. in california, the orange county board of education recommends that schools be opened without social distancing or mask requirements, although local districts will have the final say. the guidance stands in stark contrast to los angeles and san diego, where there will be no

in-person lessons this fall. and in britain, the government has dropped plans to allow the use of huawei equipment to build out its 5g telephone network over concerns the phone company's gear could allow the chinese government to infiltrate uk networks with you are up to date. i'll see you in an hr.ou "squawk on the street" will be back after a quick break experience the adventure of a bigger world in a highly capable lexus suv at the golden opportunity sales event. lease the 2020 nx 300 for $339 a month for 36 months. experience amazing

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we're seeing thea, your own, in arizona, in texas, in florn several other states so that when you try to reopen, if you're not handling the surge well what you're seeing is what we're seeing right now we need to drop back a few yards and say okay, we can't stay shut down forever economically in the secondary unintended consequences on health, on a variety of other things, make it completely non-tenable for us to stay

completely shut down for a very prolonged period of time so you've got to shut down but then you've got to gradually open >> that was dr. fauci with our next guest, talking about what went wrong in the first phase of reopening across the country we're going to talk to dr. lloyd minor in a few moments first we bring in steve liesman for more on the economics of what schools may or may not do this fall. good morning, steve. >> good morning, carl. keeping schools closed will be bad for the kids, most folks agree, and hurt working parents hard, but the impact from lost work on the overall economy not necessarily overwhelming here are the numbers as estimated by barclay's 14.4 million workers married and both are employed in the household. 8.2 million single-parent employed workers total is 14% of the workforce, low income workers, minorities and single parent homes will be hit hardest. the hit to gdp through january

would be 1.2% but that's before families and businesses take steps to reduce losses as are expected among them some of them already, working from home, people can share child care and bring in non-parents like grandparents or the older siblings, and also surplus and existing workers can take up slack at the workplace so while individuals would lose the hours and the pay, the overall economy would only lose some of the total output the potential for lost output that needs to be gauged against the potential for the disease to spread through the school reopenings joshua epstein an nyu professor of epidemiology told me "this is not an enormous impact to the level of gdp and the risk of massive school-age contagions and the further transmissions to adults is very great. if you just do it, school reopenings that is, in a haphazard way, you'll get another spike and the whole reopening will crash." take a look at the map of school

reopenings map from the online community calendar company burbio shows four states with schools opening in july, compares with ten last year. 23 states have start dates after mid-august that compares with 17 last year. it's a terrible set of choices all around, no easy ones to make if you think schools can just go online, consider this. there are estimates that tens of millions of kids in k through 12 may lack either the devices or the internet connection to do effective at-home learning carl >> steve, it's david -- >> david, sorry, go ahead. >> that's all right, carl. steve, a quick question on the methodology here thinking of new york, for example, 1.1 million kids. it's just hard to imagine the entire economy of an enormous city with the gdp contribution that it has, getting back to anything like assemblance of itself, until those kids are back in school you're measuring this in one

way. i wonder, is it the right way? >> if your criteria, david, is normal, then you're 100% correct. it would not be back to normal there is no way to get back to normal without the schools reopening. what i'm measuring here is the cumulative hit to gdp of an effective 14% of the workforce, which it's not everybody that has these constraints. those that do, david, it is absolutely catastrophic for them and calamatous, what you do with the kids, how you do your job. the cumulative total you won't lose all the hours and there are ways to mitigate you mitigate by working from home for some people you bring in grandparents for others, share child care for other people that, reduces the 14% and for a period of time, my whole point here, david, it's a manageable level of gdp, not a catastrophic level of gdp overall, even while it can be

calamitous at the individual level. >> your point, steve b the school calendar. anyone knows from the south we're getting to the date where school is supposed to be in session. thanks we bring in the afo aforementioned dr. lloyd minor, dean of medicine at stanford good to have you back. good morning >> good morning. it's good to be with you >> fauci talked to but all kinds of things. obviously the shutdown policy so far, the time line for a vaccine, but what do you think was the lead in your conversation >> well, i think there were many it was a very informative conversation, and dr. fauci shared some real wisdom and insight from his vast experience in infectious diseases and pandemics. one thing i would mention is our public health infrastructure in the united states. dr. fauci talked a lot about that we only about 3% of our health care spend is on public health, and our public health infrastructure has really eroded

over the years five decades ago it was much stronger, when we still had many infectious diseases in our midst, and then perhaps due to our success in eradicating many of the diseases that, infrastructure eroded. we have to rebuild it now, and we have to rebuild it at all levels, the federal, the state and the local level, because public health is a federated endeavor it involves guidance from the federal government, and from the states, but it's implemented at the local level and all of those infrastructure methods and elements need to be rebuilt and rebuilt as quickly as we can >> absolutely, and in a hurry. i wonder, he mentioned the california, the l.a. school decision yesterday, in that bit of sound that we played. i wonder how that conversation expanded in the chat, and what your own view was on some of the decisions from public schools in california >> well, we talked about bringing things back on, reopening is not like an on/off

switch governor newsom described it as a dimmer switch. things turned up and turned down in california things were turned up, perhaps in some areas more quickly than was needed for public health, and so now they're going to have to be turned back down and restaurants, indoor restaurants, movie theaters, things like that will need to be shut, until we get the incidence of the cases lower than it is right now those are some of the principles i think guiding the reopening. as they quote at the beginning of this segment from dr. fauci indicated, we shouldn't go back to completely shutting everything down, but we're going to have to be very prudent about restoring, reopening and then moving on. >> dr. minor, this is morgan i understand all of that, but in terms of the case or the arguments specifically around school reopenings, we have had

for example many day cares across the country that have stayed open or found ways to open a navigate and have been deemed essential, because of health care workers, for example, that need to have a place for their kids to be watched right now. i also realize that the data is still being collected and the research is still being looked at, and assessed where children and the impact of covid is concerned, but in general, there does seem to be many case studies of many other countries able to reopen schools what does the science tell us so far, and why has this become so politicized? >> what we do know is that for most children, covid-19 if they become infected is a mild infection. there is a multisystem inflammatory condition that has been reported in several hundred children in the united states, but that is fortunately rare, but we have to also remember that in the school environment, there are teachers

there are food service workers there are custodians, many of whom at much higher risk of severe consequences from an infection. i wouldn't want to second-guess the los angeles district or the san diego districts made in deciding they need to start online, but those are the types of data points along with the prevalence of the virus in the community, how rapidly it's transferred and spread from one person to the next those are the types of data that public health authorities are considering i believe when they're looking at when to reopen schools and how to reopen them >> doctor, what about colleges and universities, including the one of course that you're associated with? their financial future to some extent really will rely on students showing up on campus, perhaps not some of the wealthiest universities but many others, and we're seeing a diverse sort of group of approaches here.

what do you think is best and how much does it depend on where the university's situated in terms of state and even in terms of rural versus city >> well, you mentioned some very important factors, and certainly here at stanford, it's something all those factors are something we're monitoring on a daily basis. we have announced that we hope to bring freshmen and sophomores to campus, or at least to have that as an option for freshmen and sophomores during the fall quarter, but it's not going to be a normal quarter. most of the courses will be online we will avery to have definitely social distancing, masking, other safety precautions in place, as well as the implementation of testing. all those protocols are being worked out today, but we for sure want to protect our students and we want to protect the people who work with our students as well >> finally, doctor, one thing fauci's been pretty consistent on is the vaccine time line,

optimistic, cautiously optimistic that we get at least one safe and effective by the end of the year or early '21 we've gotten incremental news from the likes of pfizer this week are you surprised at how resolute he's been in that view? >> no, i'm not surprised i mean, dr. fauci is an expert in this area, many other experts also share that enthusiasm of course, we never know until the phase three trial is finished, but what we do know is that many people are infected with the sars covid-2 virus mount a robust response, they make antibodies to combat the virus. we know in many case the antibodies are neutralizing, they blocked the binding of the virus to its receptor. that's a good sign because if the virus is eliciting an immune response the variety of different techniques and approaches that can be used to elicit that immune response without actually using the live

full force virus, and that's exactly what pharmaceutical companies are working on today i think it's also very encouraging that there are multiple shots on goal there are lots of different approaches being pursued to the development of a vaccine, and that's good. i hope that more than one will actually work, because the scale-up and the distribution would be rapidly, would be aided if we had more than just one vaccine available that is shown to be effective. >> all right, dr. minor, great chat and our thanks to you for being such a strong voice for us these last couple of months. look forward to talking again soon >> thank you it's a pleasure to be with you thank you. let's get a check on where we stand across the major averages we're actually at session highs in what's been a topsy turvy session. the dow sup 0.9%, the s&p turned positive up fractionally about

0.25% and the nasdaq the underperformer down 0.5%, led by some of the mega cap tech names and momentum flyers that outperformed recently. we're back in a moment -turbocha? yes it is. jim, could you uh kick the tires? oh yes. can you change the color inside the car? oh sure. how about blue? that's more cyan but. jump in the back seat, jim. act like my kids. how much longer? -exactly how they sound. it's got massaging seats too, right? oh yeahhhhh. -oh yeahhhhh. visit the mercedes-benz summer event or shop online at participating dealers. get 0% apr financing up to 36 months on select new and certified pre-owned models. hey! lily from at&t here. with some helpful tips. tip #1: you can currently get the amazing iphone 11 for half-off on at&t, america's fastest network for iphones. second tip: you can put googly eyes on your stuff to keep yourself company. uh for example, that's heraldo. he's my best friend.

oh, sorry nancy, i forgot you were there. get the amazing iphone 11 for half-off on at&t, america's fastest network for iphones. with big banks kicking off earnings this week one top strategist breaks down what to expect this reporting season and key trs lmeictoook for. more "squawk on the street" coming up.

with the s&p earnings in the secondr expected to show declines, dividend payouts, they become more important than iests frank holland has a look at the stocks to own during the pandemic >> s&p earnings are forecast to fall by more than a third year over year in q3, leading more and more investors to look for the high dividend stocks historically on the s&p 500, dividend return exceeded price return in the same recession we'll look at some of the biggest names that have a dividend above 3%, a payout ratio between 30% and 70% and rated as outperform according to evercorp. isi, includes big banking, jpmorgan, pnc, bank of america and state street all passed the fed stress test to maintain dividends. biotech and pharma, gilead sciences and merck on the list fill yad said friday remdesivir a potential covid-19 treatment

showed a 62% reduction in the risk of mortality over standard treatment and also the boards of both companies maintaining the dividend last month. industrial and energy names, caterpillar, conoco phillips also on the list, maintaining their dividend during the pandemic and outperforming the market over the past three months as investors were encouraged by rising pmi numbers. three more big dividend stocks reporting earnings this month, ups, citigroup and altria with a dividend over 3.5% go to the pro section of our website for more thank you. this afternoon, speaking of dividends, and unfortunately dividends being cut, don't miss a first on cnbc interview with the cfo of wells fargo, did cut that dividend from 40 to 10 cents, john shrewsberry, 3:00 p.m. eastern on "the closing bell." don't go anywhere right here, we'll be back in two minutes

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welcome back to "squawk on the street." . back to squawk on the street thanks, you know when my kids were young they loved a movie called "mean girls." we're going to talk about mean moves. not the unsightly kind there is a common denominator on big, mean moves. this is the 1987 crash

it was a biggie. you draw the high, low, point and you draw a big line. the big moves always come back to that line as a matter of fact if we extended the chart it would follow that line for months and months and months. let's look at the most recent crash, the coronavirus when they closed the economy 1 18591. move it out there and we continue to track it you could fudge it just a little, but i think this means that we're going to continue to walk towards it. finally it is not only the equity markets, the clarn index.

we see this is about an 8% move and you have to have it in a very tight, concise time frame the credit crisis was more spread out, but as you can see high, low, midpoint, not only do you track it but you come back an track it, how do you know when to get out? we'll leave that for another segment. this is your stencil. fine tining it with other tools in your tool box back to you, carl. >> thank you, rick the ceo of white castle is going to judge us on the challenges of reopening and some of the row potic co -- robotic cooks you might see. kpts

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. welcome back, the restaurant and fast food industry continues to search for a path forward joining us now is lisa ingram, thank you for being with us today. >> thank you so much for having me honored to be here. >> so i want to start with this news of the day. we have been talking about the adoption and implementation of automation in fast food for quite a number of years now, but it has been pretty slow doing so far. today you're announcing that you're working on robots that can grill and fry food and what you expect for increased

productivity >> we have been talking with them for about a year. they're a great partner to work with we're excited to have flippy who will help us on the fryer area make that more e fifficient andt more throughput for our customers to serve great tasting products along with our wonderful sliders. >> what will this do to jobs >> we believe this is a way for us to enhance the jobs in our castles. so we have introduced over -- we have been around for nearly 100 years and we have introduced new griddles, new register systems, coca-cola free style machines and we have been able to help redeploy our team members to other areas of the castle. we don't see it as a

replacement, but an enhancement to our team members to help create a better experience for our customers. of course this technology comes at a key point given everything that we're seeing with covid in the midst of a pandemic, that i think raises the other question, you have 400 locations. we're seeing coronavirus cases increase in quite a number of places how is it affecting the company? >> so when the pandemic first hit, our first priority was always team members. we wanted to keep as many people employed as possible and we wanted to make sure they all felt safe. we implemented the proper ppe and continued to keep team member safety inmind in our dining rooms we're not open for for dine in service

so that is a decision that we made, we felt that that was a way to keep our team safe. we asked our team and that was something they told us that they would like for us to do right now. and looking back that seems like the right decision as cases have continued to rise in many cities that are reopening our dining rooms are not hope for sit down, but you can still come in and get carry out and do drive through and delivery to get the sliders that you love. >> got it, and we recently had a list released by the government around ppe applicants, and they received money at a time when there has been so much scrutiny over larger companies receiving that funding it was something that enabled you to preserve and save jobs? >> as i said when it first hit

it was a very big impact to our company with restaurants being shut down across the country so we went through and we did massive budget cuts. we cut our incentive programs, our executives took massive pay cuts and we really focused on how can we continue to keep as many people employed as possible so by making all of those cuts that was one way, and obviously having an opportunity to apply for the ppe loan, that was another way. and that loan allowed us to pay a gratitude bonus to our team members in our restaurants to thank them for continuing to work and pay premium pay to our team members in our plants that money was very helpful for us to weather the pandemic and coming out on the other side

i love those crinkle cut fries, thank you for being with us. >> thank you for having me >> good morning, everyone. welcome to "squawk alley." we're coming to you live from various locations on another interesting tuesday. you see the southbound hanging on to 3156 we're keeping an eye on the p l volatility for tesla adam, good morning again, good to see you >> good to see you, carl >> let's talk about yesterday and this on going debate a controversial name that burns a lot of cas