it is 5:00 here is your "top five @5. the white house warning president trump telling americans things are going to getworse and cob rngress debates the nex round of stimulus. >> and share holders get hammered >> tesla scores another big pay day. >> what does $1.6 billion cash

burn a good thing in when you are an airline >> good morning, good afternoon, good evening thank you for joining us here on "worldwide exchange. aside from those top stories, we are following a massive 7.8 earthquake that hit off the coast of alaska. there was an original tsunami warning that has been called off. that is a very big earthquake. we'll bring you more relevant headlines as we get them thinking about the folks of alaska a quick check and futures will see the bottom right the dow futures are off. this comes off modest gains from the dow yesterday. we finished well off session highs. the nasdaq came off monday's

move again hitting an intraday all-time high. outside of stocks, we continue to watch oil prices tick up. yesterday, officially at pre-lockdown highs crude is a couple dollars more than that, we can see where we were prior to march 11 when all the lockdown and virus stuff hit and negative $40 price will go down in history. oil still down 32% back to pre lockdown levels. as some has rebounded. halliburton up 95% for the past three months why do we mention that it is the single best performing s&p 500 stock over the last 90 days you had to time it right

the stock has been tough long term but either way, the best of the best in the last three months as investors brace for another busy day of earnings microsoft, tesla, chipolte, csc and las vegas sands report higher earnings. >> the shanghai composite alone outperformer things just getting started in europe as well we'll keep an eye. back home, president trump resuming the daily coronavirus briefings for the first time in a few months striking a new tone for americans. dom has more >> that's right. speaking to reporters yesterday, president trump warning the country is not out of the woods yet when it comes to the coronavirus pandemic >> some areas of our country are doing very well. others are doing less well it will probably, unfortunately

get worse before it gets better. we are asking everybody when you are not able to socially distance, wear a mask. get a mask whether you like the mask or not. they'll have an impact and effect we need everything we can get. >> that warning from the white house comes as new deaths in the u.s. linked to the virus outbreak topped 100,000 for the first time since may florida continuing to lead in terms of fatalities reporting 136 in the past 24 hours outside of the pandemic, fiat chrysler have agreed on an exclusive deal waymo will work to integrate the driving system into the ram pro master full-sized van from fiat and other delivery trucks as

well facebook is reportedly using new teams dedicated to studying potential racial bias. the newly formed equity and inclusion team will study how black, hispanic and others are affected by machine user rhythms and how those compare to white users on facebook. comparing to the pre-market trade now. i'll send things back to you >> thank you, buddy. on a macro market basis, there have been some debate. some saying stocks are overvalued as millions remain unemployed others argue valuations probably don't matter anymore others say well if the federal reserve starts buying the

balance sheet, we've got to buy it as well >> doing a lot of big picture work on the economy and everything else. we are pleased to have you on this morning it is a great debate do valuations matter with the way the market is structured right now? >> yes i just think way too many people put an emphasis on the way valuations don't necessarily correlate to returns that is a very big problem right now. what you need to focus on is relative valuations. when the interest rate is pinned we are roughly the 10-year basis point and that is running deeply negative that growth over cycles is expected to be 2% on the normal basis. as long as that backdrop persists where you have that

rate stocks, all things equal are attractive when you make all things equal >> when we talked about negative real yields. >> we throw these terms around to sound smart when you own government bonds, you are losing money adjusted for inflation. yet, people keep buying bonds. that's the hard part to understand i think there is a logic to buying bonds this is not talked about enough. there is a chance, let's say, the virus mutates. going to something larger, then there is a chance of a deflationary spiral. if that happens, your only real

health against that is to fault free government risk you only have three choices for that, jgb, german bund and the treasury the outside of that bell is long equities >> look at the 10-year this morning, it is below .6%. if you buy a bond, you may think you'll get a little equity microsoft isn't going out of business anytime soon. at some point, if you get to 25 or 30 times trailing, do we even have to look side ways at what point do the valuations matter >> the way i think about it is

when p does your cash return yield on that respected basis. when does that move into an area that is much less attractive relative to risk-free rates. if you project that out a number of years, the stock market looks tremendously attractive in the 80th percentile because of the name you mentioned, microsoft but throw in apple, google at some point, that valuation will normalize either those names keep on going up or rates go higher. at some point, if you get to the 50th percentile, it could go lower or higher than that. let's call it the 50th percentile, we'll go side ways we are not that far away from

it at that point, your returns are going to be less attractive. >> you said right now that stock markets look tremendously attractive tremendously >> relative to risk-free rates, absolutely absolutely. >> is there any other place to invest besides equities that make any sense right now ca cash gold baseball cards anything >> i would say relative to your high, stable cash returning stocks right now, the answer to that is no given the information i have it would vo to take some change of information if things get much worse from a virus point of view something much worse for china than what is going on. as you guys see it right now, equity markets are still a good

investment fairly priced relative to good rates and will probably keep going up >> yes that is the uncomfortable truth for people it does seem odd that markets will keep going higher every asset fund looks at this on a relative basis. that's what matters. >> denis, really interesting conversation what a way to kick off a wednesday morning with a deep valuation discussion appreciate you coming on hope to see you again. >> thank you when we come back, snapchat shares are slashed

another payday for elon musk and details behind a bill ackman backed ipo the dow futures are down 170 we are back after this ♪ ♪

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and no credit check on the first two lines. get a $50 prepaid card when you switch. 5g is now included with all new data options. switch and save hundreds. xfinity mobile. welcome back we have a breaking and unusual story we are following out of houston. the united states is ordering china to close its consulate in

houston in a, quote, unprecedented escalation of tensions china says the unilateral move by the u.s. will necessitate equal response in a tweet, the consulate staff has three days to evacuate after a report of a fire with video showing chinese officials burning what looked like documents on the roof top. moments ago on the situation, saying it ordered the consulate closed in order to protect american intellectual property and that the u.s. will not tolerate intimidation of our people a lot more to come out on this bottom line is this, the chinese

consulate will be shut down and employees out in three days after the chinese were reportedly burning papers on the roof snapchat coronavirus bump may have been short lived. best buy is booming and elon musk is a board vote away from cashing in because he's struggling so badly out there in beverly hills. thankfully he'll get a little money to patch him over. >> the idea that he's richer than warren buffett blows people's minds let's get to some of those stories snap ink reporting a loss the slowest since the company's initial public offering in 2017. the daily user growth fell short

of the initial forecast when the growth in the early days faded faster than expected the early impact of the facebook ad impact has opened the door for the company to have talks with high level executives >> best buy sales are up 2% driven by a surge in online shopping sales have jumped more than three fold now sharing at an all-time high up 3%. as pointed out, elon musk has qualified for a $2.1 billion payoff the second following the massive surge. the company's six-month market cap has reached a trillion triggered the second of vesting traunchs to buy tesla's stock at

a deep discount. a report after this closing bell today. if it reports a profit, it will meet a major market necessary reporting to the s&p 500 after reporting the fourth straight quarter. tesla a interesting focus. >> did you say this is the second of 12 could there be 10 more paydays for elon >> yes there are more traunchs. there is a lot more he has to do to get the rest of those vested options. >> he could keep moving up that wealth list. on deck, what your next guest calls the sweatpants and snaeker trade. more on that and whether christmas will be canceled, at

least from a retail perspective. >> announcer: today's big number, 7 billion. that's the maximum total value of bill ackman's new special interest company per shalling square holdings to begin trading today.

look at shares of foot locker down today but up on 10% yesterday after saying the deutsche bank retailer is getting a boost from the work and workout from home trend. what she calls the sweatpants and sneaker trade and how back to school is getting flips on its head are you giving yourself new titles during the lockdown >> we need things to do, so just keep adding titles i'm going to add a few sounds good. we get it. we know the work from home we talk tech stocks all the time will it continue to change how

we dress i'm only going to show you the top up we'll discuss back to school and will our kids go back. we don't know. we think people will hold off on those back to school purchases that goods for any of the apparel brands in that space. >> we've heard eamon jafrs tweeting out his school district will not be going back >> comfort technology. best buy reported last night a little early they talked about the fact that their on line business was up over 200%.

we need more tablets for our kids at home we need to be comfortable and connected. that trade continues and amazon has gained 100 macy's over the last month in market cap brands are leaving department stores and will have to consider adding on to amazon's platform because they need that distribution and there is no choice >> i saw that graphic there that said bts represents a percent of macy's by 20%. i've been spending a lot on line but i didn't know it would be called 20% >> amazon has delayed prime minister -- prime day, which is

ironic based on the number of boxes that come every day. let's look at christmas and the holidays this is the time retailers stock up if you are a retailer right now, what are you doing will there be a black friday >> this year, it is take back your turkey day. walmart has talked about not being open on thanksgiving they always take the lead on this and everybody follows we are already seeing that sales and discounts are less they can't handle the moving traffic. they are moving online the customer will be moving online back to school is delayed. amazon is delaying prime day because of this. we are seeing so many more shopping holidays. doing a holiday in august. you are going to see so many

more events on line that continues to move the consumer there. >> it is incredible. 10 years ago, we were debating whether or not best buy would survive. they are booming >> they've done an incredible job. you argued it was a survivor i know you can't put your money where your mouth is but there is a sales life analyst >> you are right, we are not allowed to own individual equities but those were the days the sneaker and sweatpants trade rolls on

i'm in flip flops right now. i'll throw that out. it is also 90 degrees in my house in new jersey. ahead when a $25 million daily cash burn is a sign of relief we'll break down united airlines and the entire sector. dow futures are down 166 we are back after this ghbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. make ice. making ice. but you're not mad because you have e*trade which isn't complicated. their tools make trading quicker and simpler so you can take on the markets with confidence. don't get mad get e*trade and start trading commission free today.

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button as investors weigh quarterly results. a long way to go time to cut the cord breaking down the debate whether washington should continue to pump trillions in aid to americans and business here with more on the great debate >> nuclear power plants and more the scandal developing that has rocked one big u.s. energy company. the story you've got to hear to believe. this is "worldwide exchange" on cnbc welcome back good wednesday morning i am brian sullivan. we are about half way through the 5:00 hour

investors bracing for no doubt another busy day of earnings microsoft, tesla, chipolte, csx and of l.a. sands reporting. capital one did top expectations but revenue did fall short the stock right now is down 4 dat -- 4.5%. texas instruments offering third quarter guidance slightly above estimates. not a lot. up 1%. this is maybe the story of the day in a heavy news cycle. you've got to watch this space a bizarre breaking story out of texas. the u.s. is ordering china immediately close the consulate

in houston china calling it an unprecedented escalation of tensions and that the move will necessity an equal response. in a tweet, the editor and chief of china times, a state-run newspaper said the chinese have 72 hours to evacuate why is the u.s. forcing them out? we don't know but the news does follow reports of a fire this is right downtown apparently on the roof where it looked like consulate workers, delegates perhaps were burning what appeared to be documents in trash cans on the roof we got a little incluclue from state department on what is going on they said they ordered the consulate closed in order to protect american property and

private information. talking about whether or not this will necessitate other chinese embassies. we don't know. apparently workers were burning documents and have 72 hours to leave more to come there president trump during his coronavirus task force briefing, which have come back warned that the outbreak will get a little worse than better others down playing getting new virus relief approved before unemployment benefits expire at the end of the month making provisions and clashes with the trump administration even before talks with the

democrats begin. the question being ask whether the government and fed are going too far to prop up business and given time to sort out winners and losers i don't even know where to debate after that houston consulate story, my head is going in different ways you'll have to own this segment and carry it yourself. where do you debate stands right now and ultimately ends up with regard to relieve and stimulus >> it is a big debate and just about to get started began yesterday, kevin o'leary declaring yesterday on "squawk box" that it is time for the government to cut the cord >> i've got 20% of my portfolio that is really hurting i actually don't want the government to prop up zombie

companies anymore. let the market be the market a new merge will emerge in 36 months and be more profit. what we are about to do with the next stimulus in my view could be a mistake if a company has to die because the world has changed permanently, let it die and something else replace it. >> i contacted economists who mostly think o'leary is ahead of his time one said o'leary has hit on the biggest debate about to happen in washington. he said it is time to begin letting businesses go under to avoid creating zombie companies. he said normally companies shouldn't rely on that but when the issue is specific to industries, whether hospital or retail or restaurants, the argument for being tough on zombie companies goes up

the ceo under president obama was toughest saying people calling for the government to get out now are, quote, being terribly naive about how the liquidation and bankruptcy will be whether millions of businesses go out at the same time he said to prepare foor mass liquidation and massive second wave of unemployment ceo and chair under president trump said it is too early for the markets to take over he said it is time for the long-standing businesses to provide that saying the first phase of the government aid was to lend to everyone that was the right thing to do now we are in a different phase. coming out of any recession, the economy reconfigures itself. i don't think all the restaurants, airlines and movie

theaters are going back to where they were. we shouldn't be preserving them and think everybody survives the government has to be prepared to provide massive support to workers and credit losses at banks to skyrocket >> there are so many angels to this people that are losing restaurants, and so many businesses supporting families you've got mom working the counter and dad doing this they are struggling on a macro level. any indication that this crisis becomes a deeper debt as loans get deferred and mortgages go unpaid and there is about $100 billion of collateralization out there. >> there is the morales inspect of this. if the government shuts it down, does it have an obligation to keep those companies going until the pandemic passes?

the other thing said, hey, if we had done what other countries did and gotten rid of this more quickly, would we be having this conversation you'll see many banks surprised wall street in taking longer than expected loss perspectives. you will begin to test that and you could have essentially a credit crisis to go along with the pandemic >> that is the real risk as well >> look at denmark -- listen, the united states is large we have rules and rights i get it i think we are going to rewrite the history books on this one? don't you agree? in many ways >> stories like this are absolutely wrenching you want the markets to make

choices. in a situation like this, pulling the plug or cutting the cord seems premature to me >> there are sml business owners that are terrified right now appreciate it. >> broadening the side of that laying out the macro back drop creating the valuations in the stock market where you are not getting any return anywhere else do they say, i don't get the disconnect between what is going on on wall street and main street >> that's the biggest question

the anxiety around how is the market doing so well you look at the faang stocks and then nearly half of the stocks in the s&p are going down participating in the rally and where do the risks lie going forward. >> i've been a broken record going forward. do you think it is dangerous i'm not knocking these companies. i'm saying when you have six or seven companies controlling the entire market in the exposure, i'm saying, you worry if they

don't want pate we don't believe these stocks will see a major pull back, it will likely bottom out. looking at being proactive if you've got this disparity between these. be proactive look at gifting or charitable giving look at areas that may be less in favor we find some of these beaten down bio sectors given the opportunity and the need for innovation, therapies and vaccines you can see value in the emerging markets look at how the dollar and low oil prices have prompted the return there

i think investors need to lock beyond >> you've got the medium return is actually a loss of 8% this year the markets have done better than that. >> we'll talk to you soon. thank you very much. a long way to go >> coming up, u.s. airlines facing more head wind as united faces a $1.5 million loss. that may be a good thing looking at which airlines are best prepared to thrive and even survive when the pandemic ends we are back in a moment.

welcome back we have another bizarre story surrounding energy giant first energy which is a growing scandal in ohio. shares falling yesterday and down 4% again today. the company is being subpoenaed in connection with an fbi investigation to bail out two nuclear power plants that stock fell 20% yesterday. ohio's state house speaker and

four oaths were arrested and put into handcuffs yesterday accusing of receiving more than $60 million in bribes from first energy to secure the bail out of those power plants if you are confused? don't worry, so am i on a complicated story basically, first energy to bail out the power plants is that roughly correct? >> this is one quick technicality the company itself first energy went through bankruptcy preceding for the subsidiary nuclear assets and emerged as harbor energy. neither of those, none of them have been charged yesterday.

that is what was surprising to a lot of people watching this unfold yesterday they are wondering in the case laid out by larry householder, they referred to it as company a. they were wondering why that is saying that there is strong inference that the house speaker went looking for someone to bribe him also said that these charges often take place one at a time the big question remains what happens next for first energy.

>> okay. hold up. someone had $61 million lying around to bribe these individuals. there was a political action committee-type groups. somebody had the $60 million to apparently bribe these individuals. these are allegations. >> it is clear it is first energy he's referring to he outlines direct transcripts from their earnings report there is so much detail with regard to who company a is no doubt who is involved here. they had a 501 c 4 that they are

funneling called generation now. according to what householder was using according to his role as speaker of the house in ohio. >> i looked and saw newvine bought shares. other big-name investors whose names are attached or may be attached to this >> first energy in 2018 raised $2.5 million there is blue scape run by the

man who used to run txu. a lot of big names circling this one. >> the speaker of the house of ohio has been arrested a couple of others charged handcuffs, wiretaps. nuclear power plants sounds like down to road intruder tech series 5 >> i would tune in >> and i would tune in to you. and we are tuned in watching each other live right now. heck of sta ory there. dow futures are down 103 we are back after this

♪ ♪ now is the time to support the places you love. spend 10 dollars or more at a

participating small business and get 5 dollars back, up to 10 times with american express. enroll now at shopsmall.com. welcome back reporting a loss down from a billion a quarter ago prepandemic and lockdown revenue sinking to $1.5 billion.

that was an 87% drop from a year ago. your next guest says the bad news may end here. the daily cash burn. joining us now is savathi. do you think the worst is hindu nighted? >> caller: good morning, brian yes. i doubt we'll go back to three months of nobody flying. it is definitely the worst behind us but that doesn't mean smooth sailing ahead there is a lot of work to do but do think the worst is behind us. >> i guess united would see more people traveling

what are you hearing about demand and load factors are people becoming more confident and we are separated in two groups, those who will fly and those who won't? >> yes business is still not flying in any meaningful way i think the earliest that will come back around is in maybe act or until 2021. the pace of recovery was encouraging for airlines in the last two or three weeks, that has snowed as well and maybe flattened out here a result of the rising covid

cases and some states like california rolling things back and new york not letting travelers from other states come in unless they quarantine. >> listen, they are burning millions of cash a day are there going to be airlines that don't survive this? united will have a little over $18 million in liquidity if they continue to burn cash at this level, that is great it gives them runways of cash to burn here. people will slowly increasingly start flying

especially if a vaccine is more readily available, things will return to morp all of the airlines are resizing themselves for what they believe will be the new normal for a couple of years. that will help reduce the cost as well. unfortunately, that means it comes with a reduction of employee levels. >> there are hard-hit jobs this is our fourth pandemic in 100 years and unfortunately one to last. what is your buy rating on southwest? >> they have a strong balance sheet. they are going to spend a few years building the balance sheet. southwest benefits from the fact that they don't have a lot of international. united drove 40% from internation yl

southwest is almost all domestic that recovery is faster and easier for people to travel domestically traveling a little more leisure at about 60% >> the buy rating on love. love, love have a great day we'll talk to you soon united ceo scott kirby will have more on results when he joins "squawk box" and the team at 8:00 a.m. eastern. not much more for us to talk about because the show is over the a forementioned "squawk box" is next. have a great day we'll see you tomorrow save hundreds on your wireless bill

without even leaving your house. just keep your phone and switch to xfinity mobile. you can get it by ordering a free sim card online. once you activate, you only have to pay for the data you need, starting at just $15 a month. there are no term contracts, no activation fees, and no credit check on the first two lines. get a $50 prepaid card when you switch. 5g is now included with all new data options. switch and save hundreds. xfinity mobile.

good morning

a change in tone from president trump warning that the pandemic will probably get worse before it gets better breaking news overnight, the u.s. confirming it ordered china to close the houston consulate reports that documents were burned there beijing now threatening to retaliate. sales at one major retailer rising bringing back furloughed workers and hiking pay it is july 22, 2020 and "squawk box" begins right now. >> good morning.