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. welcome to "squawk box" here i'm

andrew ross sorkin with joe kernen becky is off again today a little in the red. the treasury yields and earnings that may have an impact on all of this. the 10-year note, we are now below .6 we are down to .592 we can debate what that means for today. >> discussing market recovery and earnings kansas city southern and united

airlines ceo and health and human services secretary you want to stay tuned to squauchl >> the nasdaq down pretty significantly. >> it was up two or three hundred. it was up and did you know and up and down. it was really crazy. you heard cramer talking about that it was truly crazy. >> insanity. the didn't hold on to the big gains. i think it was down almost 300 when cooperating on that at the end of the day, we'll

see. i heard it said, well, you gave him an out he could have been resting on his laurels by now saying i would at least nuance it so i could claim to have been right if we had extended here. doesn't it feel extended here. if i were paulson. fur trying to be right all the time what do you think a good average would be >> a good average of what? >> being right about the stock market >> 70% of the time would be respectable. >> young buffett >> it has to be better than throwing a dart. >> but it is not >> i know. that's what is crazy

it is not. >> if we didn't throw that, we'd have one here. >> i wanted to have a "squawk box" chimp on the set to throw darts. see who does better. it would be great tv what was the famous chimp's name that poor thing. do you remember? what was it? i'm sure you know. bubbles? was it bubbles >> yes >> that sounds right >> bubbles >> how appropriate

>> interesting, they moved the chimp because they were worried that the chimp would hurt the children. >> they are definitely not like dogs i don't think. doe meft indicated dogs can snap and stuff but i wouldn't trust a chimp. >> my favorite book was curious george i always wanted to have a chimp. >> by the way, that wasn't a real chimp that was a drawing >> the more you know >> what aboutrainbow the cartoon. >> did you have a yellow hat the guy with the yellow hat. he was a very kindly guy, i thought. he was adorable. okay we'll go he was

those cute little sounds and everything serious story coming up. the deterioration on u.s./china relations. the u.s. ordered china to close its houston kons late. the u.s. state department said it directed the closure in order to protect u.s. intellectual property a spokesperson said the u.s. will not tolerate the safety of our information. a report of a fire on the roof top of the consulate video of someone who lived nearby showed open bins. they didn't even use shredders there you could sort of put stuff back together. but burning is serious

>> i think the way it is being viewed here especially on social media is that the staff were in a rush of the order. there has been some upset because of the way this is being treated. the counter measures being called political provocation it is said to be a move by president trump as a distraction to blame china, yet again ahead of the u.s. election another popular theory going around is that the u.s. is trying to force china to allow

more american diplomats to return to the country, the negotiations for the return has been very slow going the information is that they will retaliate the embassy is here in beijing but the u.s.has several consulates around the country. just the global times editor and chief said that the staff in houston has 72 hours to close shop so if you are in one of the states the consulate cover and maybe have any business there that this cover.

this is like alabama, arkansas, florida, texas, puerto rico. what is sad is that this is china's first consulate established in 1979 when diplomatic relations had first been established the atmospherics at that point were a lot more optimistic than they are right now >> that was like table tennis diplomacy. that was probably 69, wasn't it when it first opened >> i think the chinese have been playing table tennis quite some time, yes.

>> do you remember that's how our initial overturn to china playing table tennis. you don't remember you didn't see the moon landing either, did you? admit it >> i don't think anyone here did, except me >> i've seen it on tv afterwards >> i don't mean apollo 11. it happened. when it first happened we had relations i wonder if the very first consulate survived >> i don't know. the u.s. hasn't been clear on why they decided to shut that consulate in houston it sounds like what the state

department says, there is some decision around protecting american data as well as american intellectual property wanting to make sure that information is reciprocal it seems to suggest the reason why. at this point, it is still a guessing game. >> we are hoping phase one sticks we wouldn't do anything until phase two until after the election at this point, who knows thanks we'll check back in as this story develops >> all right, man in the yellow hat. >> am i the man in the yellow hat? i don't know >> it was the whole suit melissa. remember, you were bidding on

the one glove but it went for too much money, right? as a kid. >> that was me many, many years ago i bid on the glove and i lost. >> there was more than one, wasn't there >> there were many, many more than one there are a lot of questions before all the issues with michael jackson but a lot of them coming up on the other end, a change in the tone of the president. we'll get reaction from dr. scott gottlieb elon musk qualifies for $2.1 billion payout after the six month average market cap has reached $160 trillion triggering

the second bit of vesting and traunchs to buy tesla's stock. he has ever reason to dance at this point we'll see whether the stock stays where it is at they'll meet a major requirement four straight quarters of gap profits. we'll talk about it t sonhehow later. back in a moment save hundreds on your wireless bill

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welcome back to "squawk box. president trump is taking control. yesterday on the coronavirus task force briefing. said americans should wear a mask when social distancing was not available and a warning about the virus. >> we are in the process of developing a strategy that is going to be very, very powerful. we develop them as we are going on some areas of our country are doing well other areas are doing less well. it will unfortunately get worse before it gets better. >> california, texas and florida continue to see the rise in cases. california has surpassed new york as the state with the most infections texas and florida hit a grim record with a record of daily coronavirus deaths dr. scott gottlieb is here with

us today want to start with what appears to be a shift on the messaging from the white house >> the epicenters are shifting you mentioned california, texas and florida. those states will start to peak in two or three weeks. the virus will shift to other parts of the country georgia looks like it is heating up, missouri, kentucky, tennessee. we have an expanding epidemic nationally even as it starts to peak in certain states and it will take a while to get it under control in florida as it hit the upper limit of testing capacity and will run its course for the time being. you'll see a new epicenter for the spread we are far from done with this

>> is there anything we can do about that my question is if we made you the covid czar of the country, what would you be doing to end it without closing down the entire economy >> right we have the inspector right now where parts of the country are making decisions to close the schools but the bars and restaurants will stay open we need to make a decision of what we are willing to keep open until we get to the other side of this. the other side is probably four to six months. you can control the spread what is happening in the south in texas and florida, california and arizona, the reason why it may peek in several weeks, if

you look at google mobility andres everybodiation -- reservation data declining if we all decrease activity a little bit and adhere to masks, that could adhere things important to us including sending our kids to school there are ways to keep this under control. some states have chosen not to do that. that's what we feed to find ultimately in our country. >> you said and these are hard facts. maybe as many as 50% of people eventually have the virus at some point as it goes through the population i don't know if you've changed

that notion. i've seen even worse click bait that says we'll all get it over the years unless you get the vaccine. the latest fatality, the most complete study yet let's do that .5 and if there are 300 million people in the country, let's say 200 million people are not in far out rural areas. that's a million people can you flatten. there is one model where you try to flatten it out over time and hope somewhere along the line that vaccine comes in. how do you stop it >> if the rate of transmission slows down as more people get

infected once you get to 30 or 40% of the population, you'll see the spread start to slow because of what they do, the way they work, jobs they have to engage in. once they get infected, it is not going to transfer as efficiently. we'll continue to see this spread we are infecting 2 million to 5 million a week right now we'll see this continue to spread >> 30%times 25

if you don't change that, you could change the math. we are preserving more lives in the hospital when i talk to physicians treating patients, they say it could be cut in half right now, we'll break our old record in terms of hospitalizations we are at 59,000 now even if we end up preserving more life in the hospital, which we are doing if we end up hospitalizing more patients, we'll end up with more casualties >> aren't there documents now in terms of antibodies showing the half life is shorter than we thought. how does that change the notion of a vaccine in even the

research phase they are vaccines that need research down the line >> they start to take quickly. like sars and mers, you get antibody that is enduring. it might be more like a seasonal immunity so people who may have had coronavirus in march or april, by this fall and winter, you may be susceptible if you get reinfected, you might not get as ill you could get infected against and pass that on you could need a seasonal vaccine. you'll get it in advance of every coronavirus season >> that's what i was going to ask you about.

we've talked about the vaccines and the developments on the they are ptherapeutic end. remdesivir you can just take in an inhaler you get from walking into walgreens with a doctor's prescription that information that could be used as well as the treatment. those doses not as effective as a prophylaxis. likely from merck will be and in-hospital used drug. it might have activity like coronavirus. it underscores a fact that we'll

improve hospital mortality that death rate that joe is reporting could come down even more that could show improving there. >> that is the optimistic side of the ee equation >> coming up, twitter crackdown on a conspiracy theory and bill 5:0man talking about his new blank check company debuting today. we'll be right back. >> announcer: today's big number, $7 billion that's the maximum total value of bill ackman's new special interest acquisition companies

pershing square set to be the biggest blank check holding when it begins trading today. and northern trust delivers more. with specialized expertise. proven strategies rooted in data and analytics... and insights borne from over 130 years of successfully navigating economic turbulence. giving you new clarity. inspiring confidence. and helping you uncover new paths forward. northern trust. wealth management.

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twitter announced it has begun to take sweeping action to crack down on qanon content with harassment and the spread of misinformation the action will affect about 150,000 accounts from a twitter spokesperson who asked to remain nameless in fear of harassment twitter has taken down 7,000 qanon accounts for breaking harassment rules last year, fbi labeled qanon as a potential terror threat. we are seeing more ahead of what will happen with mark zuckerberg not with twitter but other big tech companies we are a week out from a big hearing that will have something

to do with free speech, skensorship and what is allowed on these platforms >> that and earnings twitter to report after the bell and facebook next week speaking of some movers here, best buy shares are rising sales up .5% on saturday up from last year online sales were up 255 pirs. best buy has brought back about half of furloughed employees and will give all employees $4 an hour raise shares are up 2.2% they are in the sweet spot people have extra money because of stimulus checks and might be spending more on the work from home set up or the school set

up that is all of the things we need >> the demise of brick and mortgage, and especially for people who may not be so great at hooking up my own wi-fi stuff. or even just going in and shopping there a lot of people might shop there and buy on amazon. a lot of people actually like the support of the geek squad. they've got a unique niche where best buy can add the value waited service where people might not be as tech savvy for people who work from home. you look at the rise of netflix and streaming. we need big flat screen tvs. we need those now more than ever maybe not on this show so much let me back up more here

that a little better the lighting is bad back there >> sorkin, i don't know who does your makeup. you've never looked better i don't understand this whole thing and nobody knows do you have a hair person? a makeup person? a clothing person? what is the size of the staff. >> i do it all myself. i've got the brush here like this has how it goes. i take a shower in the morning, i pat down the hair. that's how it works. >> no way. unbelievable >> we got three lights not a lot of action here. >> three lights and it is better than the studio lighting that is messed up. maybe the cellings are lower or something. >> cellings are lower. thank you. you are looking good my friend >> i've decided the hair,

melissa, you mentioned it, being whatever you call this i've decided i like my hair longer so i'm going to go with it >> i think your hair looks good. >> thank you when you say that, it endears me to you indefinitely. permanently. coming up, stock strategy. we'll hear from microsoft, tesla, chipolte. a look at yesterday's s&p 500 winners and losers

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good morning, u.s. equity futures are weaker on the dow. the nasdaq was down 80 points or so up about 35 today. speaking of the nasdaq, retail trading sustained record volumes. the report from online brokers tdameritrade added 660 new

retail accounts after 600,000 were added in the first quarter. they were acquired by charles schwab more than four times the levels from a year ago. interactive brokers said revenue trades increased 111% year over year last year, charles schwab reported similar surges in trading activity and new accounts melissa. still early but this earnings season is expected to be the worst since the financial crisis well below a year ago levels that hasn't stopped stocks from rising what that means for the market the portfolio management the

market measure you always want to go to earnings with low xpectations. you have a number of value that expectation is bad some of the economic data has improved and been better than what is predicted and yet earnings estimates haven't followed better than expected economic data. a lot of lower expectations into earning is great that is not true they are much more vulnerable because expectations are sky high you have a very bifurcated market you have a lot of earnings going

into the market season >> right you are more focused on the value stocks on those or positions on high fliers like tesla as well? >> i'm a core manager. we are slowly moving our bias towards more valued stocks coming out of recession, you can make a lot of money out of these stocks they are anxious they've had a pull back recently in a set up. where you make the biggest money. that happened in 2009 and in the year 2000. the flip side, you have expensive stock. sky-high valuation i think they are getting to a level they were in the year 2000 before the bubble burst. you have a very, very big spread

between the reopening stock and the nasdaq the s&p 500 is high for the year and hit a fresh record high for the session. are the markets looking past right now. the november elections are around the corner. we have increasing tensions with china and the closure of the consulate in houston >> the markets don't seem to be factoring in any of these. i think expectations are down 44% worse than 2009. we talked about the trade war with china which was at a worse place now than in 2018, 2019 when p this story drove the marketevery single day talking about the election and

joe biden with significant lead of growing polls on president trump. higher taxes and regulation. we were seeing fund managers in my inbox talking about this so-called blue wave, which would really give biden a way to some of those taxes when you talk about where the market is and the fundamental factors and plan on expectations from more stimulus from the government and more action from the fed should the s&p 500 go down it is hard to make the fundamental story when you look at the eps and the nasdaq and where that is on the levels and really the s&p is up there as well >> it seems like we are in sort of a sweet spot for the markets. >> the chinese tension, the stock market was up.

taiwan was up. shanghai is up 13% this month. tensions certainly haven't deescalated this month it is the second largest market in the world behind the nasdaq something else is going on to cause these asian markets to do well while many are focused on the po politics, the thing is that the dollar is decreasing that's the bigger story as it pertains to those investment markets. >> even this morning, we are seeing the euro hit the highest level against the dollar since 2018 it seems like we are in this sweet spot for the markets in that we are in the midst of an earnings season. expectations are down to the ground before the period of time where the markets start thinking about

the election and deterioration we are in this lala land where we have the fed at our back. >> certainly you can talk about the weakening of the dollar, if you want let's look at the big picture here that's stimulus. whether it be from the fed, the people's bank of china the chinese party or the u.s. government you are talking trillions of dollars he floi dollars flowing through the market now the fed has made its presence known. the same thing made in china we talk about what is happening there. central banks getting involved in u.s. and china, we are seeing stocks jump up because they have

gotten more expectation from the stimulus and governments as well >> we'll leave it there. thank you. >> when we come back, a real-time read on the economy. kansas city southern's talking about the impact on the freight industry the supply chain rocked on the virus. a look at the biggest decliners on the s&p you can watch or listen to us live any time now or on the cnbc app. we'll do it when we come back in a moment

welcome back take a look at u.s. equities this hour. about 40 points higher the dow off several points some earnings news we'll see where things land. a little over 2.5 hours away from the opening united airlines says it lost $1.63 billion in the second quarter. the company cut thousands of flights to cut costs and expects to reduce the cash burn from $40 million to $25 million this quarter. they did say cargo revenue jumped 36% from a year ago kirby will join us at 8:00 a.m. to talk about this in an exclusive interview. >> have you seen this? this is called a sports page that is someone playing a sport.

it is possible there may be something to bet on this week. do you know anything about this? a question from my twitter people detroit tigers plus 155 at the reds minus 190, what does that mean, sorkin if i bet $20 on -- who is the underdog someone send in on twitter and let me know how to bet on. nasdaq is up because people have nowhere else to go to bet. it is as simple as that. >> that, i think may be right. >> sick society, sorkin. kansas city southern's ceo will give us a real time look a look at the company's results

and freight traffic and what changes the pandemic is bringing to the transport industry in terms of logistics pretty interesting we'll be right back. e future. surprise! we renovated the guest room, so you can live with us. oooh, well... i'm good at my condo. oh. i love her condo. nana throws the best parties. well planned, well invested, well protected. voya. be confident to and through retirement.

second quarter marked the first full quarter impacted by

the coronavirus for many companies. for the rail sector that meant a decrease in volumes, supply chains were disrupted and then an immediate increase after that it's crazy kansas city southern is seeing a recovering joining us now patrick ottensmeyer ceo of kansas city southern we were hoping for a v in the economy in general in your business you did see that didn't you volumes fell off a cliff and then they rebounded almost as quickly. is that fair or is that a u? >> no. it was a very wild ride second quarter. you hit it on the head we started to see volumes fall off in the second half of march. april, the word "collapse" wouldn't be too strong to see what happened to our volumes

we reached a point of stability in may for a few weeks, a short period of time then business came roaring back in june. so we fell 30% in april. hit a plateau for just a few weeks and then we were up almost 40% from the lower level in early may to june. and that recovery has continued on into july so now we are roughly 5% or 6% below in terms of our cargo load volume, 5% or 6% below pre-covid levels >> pretty amazing. what you described -- it would have been nice if you called us. the s&p sold off 35%, 36% then came back. it almost mirrors what you're seeing i'm not sure it's correlated in any event your earnings in

revenue probably reflect more of the downturn than the snap back at least in the second quarter but what's interesting is the way you've had to manage through it and what it means about what your company will look like from here on out because some of the changes you made and it's a fascinating industry in terms of, you know, how many locomotives, how many cars you put on a train, what's in those cars, what you're using and the whole mix changed and it may change permanently can you tell us about that from logistics and what covid has done for your business >> well, i would say that we showed amazing resiliency and very nimble through this 90-day period when you think about the roller coaster ride of volumes collapsing, the things we did to consolidate trains, to park load

automotives, take assets out of the equation in response to very rapidly declining volumes and then, again, just a brief respite at the trough, and then be able to handle all the business that was coming back to us without adding all of the cost and assets. so if you look at where we are now, again, in mid-july our volumes are running about 6% below pre-covid level but our train starts are down by 25% our active locomotives are down by 20. so as we are recovering we are trying to pull and main in the freighting efficiencies we produced on the down side and bring those assets, bring those costs back more slowly i think what's going to happen is all the railroads are doing the same thing by way of the industry in full has shown

amazing resiliency and it will make rail more attractive option more competitive with other modes of transportation. if we can do that, become more cost effective and without sacrificing customer service should be a very good thing for railroads. >> we got to go. i guess we can see from the pin the usmca is going to make a difference in your business. >> it sure well. long term a very positive for us >> and i like one of those pins. where do you get one of those? >> i'll send you one, joe. >> i like it >> i'll send you a couple. >> okay, thank you i appreciate it. please come back and give us another update thank you. coming up two more big hours straight ahead including rbclusive interview with scott

kiy. and about bill ackman and alex azar stay tuned, you're watching "squawk box"

the state department orders china to close its consulate in

houston. how will they respond? plus a closer look at tech stocks driving the market higher as we get ready for microsoft and tesla earnings today bill ackman ready to make history. we'll hear from the underwriters and we'll hear from bill ackman himself as the second hour of "squawk box" begins right now. good morning, welcome back to box right here on cnbc. i'm andrew ross sorkin along with joe kernen and melissa lee who is back with us. becky is off take a look at u.s. equity futures at this hour we do have some green arrows on the nasdaq side up about 50 points joe, we were talking about betting. maybe that's what's happening there. dow, though, looking like it will open off 82 points.

s&p 500 down about five points and maybe some of this coming off of the news that you got, joe. >> yeah. the news i have is i got about 150 twitter things about how to he bet on baseball so, everybody is willing to offer me, i don't know the hyperdermic needle to get me addicted but i never got more of a response with an offhand comment. i'm excited. because it's not that bad. there's no spread. let me get to this news. we'll talk about this later. breaking news on the deterioration in u.s.-china relation china confirming the u.s. ordered it to close its houston consulate. the state department said to close it in order to protect america's intellectual property. the u.s. will not tolerate china's violations of our sovereignty or intimidation of our people the move follows reports of a fire at the consulate last night

with video apparently showing chinese officials burning documents in what appear to be trash cans like everything else, we knew something, there's retaliation i'm hearing there's threats to close the wuhan consulate. have you seen that >> reporter: yep yeah that's right sources are telling reuters that china is now considering closing the u.s. consulate in the epicenter of wuhan in response to what they see as a political provocation. that's the way the foreign ministry described it, the foreign ministry also said that this was an unprecedented move by the u.s., and online, joe, you were talking about how you were happy that you got a lot of strong reaction on twitter there were so far 1 90 million people have respond and discussing hash tag about the

closure of the houston consulate. people are angry about it. there's an upswell of blaming and accusations that perhaps this is political as the chinese government is suggesting, this is president trump's way of creating a distraction ahead of the u.s. election, and from china's perspective blaming china once again and trying to appear tough there's another major theory that not only in social media but justin past hour or so has now moved on to state media and that is that china -- that the u.s. is looking to try to force china's hand and allow more american diplomats into the country. the u.s. had evacuated several of its diplomats, if you remember, because of the pandemic, especially at the epicenter of wuhan and since then the discussions to try to

bring the diplomatic corps back have been painful. a lot of discussions about quarantine, whether or not the chinese authorities should be allowed to take a dna sample, for example, from american diplomats. so a lot of big questions going on right now only very small number of american diplomats have been able to come back. and that has been one theory why the u.s. might have made this move the "global times" editor-in-chief was describing this very short time frame that the staff at the consulate have. they now have 72 hours to try to he close everything down hence from china's perspective a lot of anger over the papers being burned in the trash bins because from chinese perspective it looks like their people are in a rush and that this is really unfair. one note, joe, that we were

talking about before is that this particular consulate has significance because it was china's first in the u.s. established in 1979 when, you know, relations had just been established and the environment around the relationship was much more optimistic than today >> a lot of, you know -- i'm in the united states. when i say misinformation i'm talking about china. it goes both ways depending where you are. remember, we were talking about the virus and then there were a couple of high ranking diplomats that said the u.s. army introduced it into china and that just seemed so flamboyantly false from my viewpoint. maybe it's not but you just wonder, we're not sure what to believe and i guess china is not sure. there's finger pointing on both sides. what's happened is the burning of the papers is after the order

to close that's the way it works. so they got to -- i don't know >> reporter: that's the way it's being seen here. in terms of those government officials, those people described here as wolf worriers and being portrayed in the state media as people who can stand up to the big bad bully the united states so, yes. it's a very different perspective, but, yeah, at this point it's looking as though it's not moving in a very positive direct. one thing, though, i would say, joe, what i thought of interesting with the leak of this being the wuhan consulate is that it could be a way where china is angry but not so angry because if it was beijing or shanghai, these are much bigger missions than the one in wuhan wuhan is significant in that it's the epicenter of the

pandemic, but actually at this point it's been closed we've been hearing some diplomats have been able to make it back to wuhan but the actual consulate is closed. so wouldn't actually be a significant move, and so in that way it could be more symbolic whereas china is retaliating but giving some wiggle room so that the relationship can move forward. >> okay. the whole backdrop in hong kong. so, you know, stay close we need to talk to you a lot thank you. melissa? let's get market reaction to this breaking news on china. futures moved lower when that news broke earlier this morning. joining us now paul hickey, and mike santoli is here as well mike, i'll start off with you. it feels we get this drip, drip, drip of tit-for-tat back and forth with china we have indictment of two hackers stealing information on

coronavirus research it links hackers to a foreign government the market reaction is pretty muted. >> it is the market kind of looks at the headlines and there's a reflex reaction, okay, we weren't prepared to have another round of aggression even if it is theatrical reaction. it doesn't translate into something the market needs to price right now. we came in today with this assumption we have this flourishing global growth picture and trade floss are a big part of the growth story at this point so i think it's a little bit or maybe excuse as we get to the top of this trading to pull back a little bit or maybe reorient towards other names that are not going be as economical lly

sensitive. i've been looking for a couple of clues to see if global markets are trying to say this is a heightened risk situation dollar has been down semiconductor, they are not selling off. those are the tells, i think if it were something bigger >> yeah. i mean, obviously, you look to cyclicals and semis, all of them had strong either pre-announcements or results the dollar has been weak for some time really being driven by strength the at the euro what's your take on what's going on with china and why the markets are looking past these headlines as well as looking past or maybe not looking to the elections? >> i think to what eunice was saying it's more of a gesture and theatrics what's going on obviously we're looking at

strength in the tech futures nasdaq hasn't seen much of a pull back. i wouldn't read too much into it here as far as, you know, the overall market picture is concerned. we're to concussion on bigger things right now, the u.s. economy. and the big question here is how is, you know, we want to stay in tech throughout this earnings season or do we want to rotate towards more capitol hiyclical . we're rotating out of technology and into more re-opening areas of the economy and that will benefit from better headlines on the covid outbreak >> so to that end, paul, we're looking at tesla and microsoft reporting after the bell today tesla trading higher pre-market in advance of the results. you don't think they will deliver and provide the results

that investors need to stay invested in these stocks that had mega runs? >> not necessarily deliver they've had very strong runs heading in to earnings season. the tech sector -- we talk about expectations being low the pace of positive visions to negative revisions in the technology sector going back 2009 only three other quarters where there were more positive he visions for technology stocks than negative revisions at this rate expectations are high. when you see that expectation you tend to see the market, you know, see a little bit of a sell the news reaction those earnings like we saw with netflix we'll see what goes on here. more of a short term play than a longer term play tesla, i think, it's up every morning. in anticipating of earnings or whatever who knows what the catalyst is. the catalyst after earnings is whether or not they report profitability and that sets the stage for possible inclusion to

the s&p 500 which would be truly, you know, a stand out situation for a company so large getting out of the s&p 500 the only situation that's pretty similar to that is berkshire in 2010 in late january from the time it became eligible in late january 2010 after its 51 split of the b shares to the announcement and then until it was add in early february s&p did fall 5% as portfolio managers had to make room by selling other positions in the index to make room for berkshire. likewise you can see that sort of situation play out here for the broader market to make room for tesla. >> right mike, for tesla and microsoft i feel they are in different boats from some of the other faang stocks netflix had an issue pull forward and we'll have that issue in other results as well we sort of saw that snap in

terms of the q2 versus q3. for microsoft and tesla no pull forward simply this whole notion technology provides the greatest future returns in an environment where interest rates are low and capture sort of the growth way out in the future because we don't have earnings right now for any companies. we don't have clarity. so the importance of these stocks to the market, mike, pretty up there, right >> i think for microsoft it's very crucial for the markets i would make the distinction for microsoft the earnings power and the cash flows and the stability are visible and people are projecting them ahead many years in the future. the question really is only how much you pay for that certainty and reliability whereas for tesla the story hasn't changed much in the several weeks since it went from under a 1,000 to over $1500 or 1600 that's more about the speculative future and how big

this can get market share wise but comes back to the same place. the market is not trading who beats bay penny this quarter if i'm looking out in the world of scarce cash flows where can i capture some of those in equity form i think microsoft is like the universally beloved stock of this market so i'm not sure if that raises or lowers the stakes for this one quarter because nobody is buying it for this quarter. >> good to see you both. thank you. really interesting news out of pfizer. pfizer and the government reached an agreement to produce doses of its vaccine it will driver 150 million dose in the united states once the vaccine is approved. the agreement allows the government an option to acquire an additional 500 million dose

vaccine would be available to americans at no cost biontech up 5% we'll have secretary alex azar joining us in the next hour. at no cost you wonder, just every where you go in? you wonder -- there's a lot of concern and worry and questions about who gets it first. how it's allocated all we know at this point it's at no cost unclear when you're starting with 100 million dose how it will work. i don't know how many americans want it initially as well. i've seen conjecture about some people are implying that maybe the side effects haven't been highlighted enough and whether if you're -- if you feel crappie for a day or two, i mean really

bad, over 100 degrees temperature and chills and everything else, you wonder does everyone get it or do some people sit back and say hey everybody else can get it, i'm not going to get that's what happens sometimes. >> that's the issue that dr. dr. scott gottlieb and dr. fauci talked about parts of the country won't get it a lot of people still don't get the flu vaccine. will people wait three months, six months to see how other people do on it. obviously we'll talk to the secretary in just a little bit about it but i wonder when they say it's going to be a no cost to the american public, is it at no cost to the american public meaning am i not paying myself, or are taxpayers not paying, is pfizer doing this as a gift or is the government? i assume some economic transfer of money from taxpayers. >> the government. this is the federal response

that so many people have said is lacking. there has been a federal response for trying to get the vaccine. >> the question, though, from the pfizer perspective though is how much is the government paying and are they going to be making any money you see this great response in shares of pfizer but the outstanding question is will the companies actually end up making money from this pursuit and, yes, they get to say we found the coronavirus vaccine and they probably gain a lot of goodwill from the government doing that, participating in all of this but do they actually make money? that's a big question especially for investors of a company like moderna and the smaller ones where the vaccine is really the ticket for that particular ticket >> for a $30 billion market cap on moderna, for example. >> yeah. >> has to sell some stuff and has some pretty good margins coming up next nasdaq ceo adena

friedman the ipo landscape. tech's record run. and then a read on the housing market and the impact of the pandemic the latest numbers are out we'll look at the data and outlook for house. "squawk box" is coming right back stock slices. for as little as $5, now anyone can own companies in the s&p 500, even if their shares cost more. at $5 a slice, you could own ten companies for $50 instead of paying thousands. all commission free online. schwab stock slices: an easy way to start investing or to give the gift of stock ownership. schwab. own your tomorrow.

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biogen the drugmaker profit came in at adjusted $10.26 the consensus estimate was $8.03. revenue was also above forecast. biogen did say $100 million of revenue during the quarter came from accelerated sales due to the covid-19 pandemic. stay on this topic, nasdaq out with quarterly earnings moments ago beating estimates on the top and bottom lines joining us now to discuss that plus the nasdaq composite record run, adena friedman, president and ceo of the nasdaq host of this, at least where i am on "squawk box," adena, good to see you. i didn't have a maverick on but you stayed ten feet away >> die >> we like some day to have you back here on the set but, obviously, it's still too early but that day may be getting a little bit closer. i tell you, i'm trying to figure

out how well the nasdaq is doing and how much trade is going on because the numbers are like 100% that we're seeing from a lot of these online brokers, et cetera so technology has led the rebound. and technology that focus on the digital transformation and stay-at-home and doing things online stories have gotten sexy about a lot of those companies is that what you attribute this increase in volume and trading and new highs on the nasdaq? has it been helped by the pandemic >> well, first of all, it's great to have you in the studio. thanks so much for being there every day. i would say that nasdaq's performance for the quarter actually is driven by all four of our business segments we had strong trading. 12% overall revenue growth, 26% earnings growth. certainly trading was a big factor in that but all four of our business

segments grew in the quart including our technology business as well as data busine business so it really was across the board. that was all in the context of all of our employees working from home and having remote relationships with our customers. i'm proud of the team. i think in term of the performance of the index and performance of the markets, i think there are three things driving that the first, of course, is fiscal and monetary stimulus. making money cheap making it easy to continue to borrow money, raise capital and making it so that there's an attractive element of liquidity in the markets i think the second is this idea that there are a lot of companies in the tech world and in the biotech world that are driving the economy forward and i think investors are looking beyond covid and saying what are the trends that will persist beyond covid not every sector has performed

equally well i think we're seeing investors leaning into those types of trends the third is just that there's a lot of money still in the system to be put to work and when interest rates are near zero, if you look at the alternatives for investment vehicles, it's very attractive all of those things together bind to for the nasdaq >> we're looking at nasdaq stock, not quite the nasdaq, but really up nicely over the last year not so with most your competitors and i under futures exchanges are not necessarily going to be doing as well with interest rate futures. is there any action -- can't be any action there in fact, i mean the nasdaq has outperformed almost all of your competitors in term of the stock price and probably results >> i think our diversified

business model is really getting rewarded by investors right now. we have about 75% are of our revenue is reoccurring in nature white trading is having a very strong year, so the resiliency of the rest of our business i think is shining through so it's really a combination of all of our boats rising as we have been manage through an unprecedented period of time >> i mean, long before the pandemic you didn't need to have a specialist standing on the floor three feet away from other people so it kind of played into your hand let's talk about ipos. you mentioned health care. biotech, ipos, everything else they are favoring at least to some extent relative to the big board or other places that they are coming to the nasdaq mostly. what are the numbers there >> so far this year nasdaq had 87 ipos. when we look at the operating companies that have gone public we had 85% of the companies come

to nasdaq. four of the top five by dollars raised i think that seamless transition that we were able to create for our clients as we all moved online, the ipo opening process is a process we've been able to manage and seamlessly transition into in a remote situation we've been able to run ipos remotely leveraging our power here in times square but allowing our clients to remain safe in their homes or wherever they are as they are managing their ipo process. i think that seamless transition has been helpful we provide enormous amount of support for companies after they go public and clearly understanding who your investors are, how they may be changing, making sure that they are maturing as public companies a big part of the service that nasdaq offers and i think that's a big differentiator for us. all of those things are combining togenerate a really strong week for nasdaq the fact it had 87 ipos in a year like this i would not have expected that.

in march but i would say that investors are looking to put risk capital to work particularly for companies that are leaning into trends that will be coming out of covid >> when you watch, have been watching the nasdaq and i'm not talking about the exchange, i'm talking about the index over the past six weeks, what have you been feeling, when you watch it are you like yikes or are you like yeah, it all makes sense. this is where the action is. does your eyebrow get raised in comparison to 199? >> we're operating in an uncertain environment and an environment that changes pretty quickly. i think on the one hand i do think investors are looking long term when they are making some of these decisions to say what are these companies going to look like on the back of the current pandemic what are the trends in the economy that are shifting, that will be leaning into these types of companies that are driving

index performance? at the same time i do hear people try to compare it to 1999 when we look back at that time we had about 150 times price attorney general's ratio on the nasdaq 100 and today it's 30 times. additionally the companies that are really driving the index today are the largest companies in the world and the minimum size for the nasdaq 100 index is around $15 billion these are very strong, growing companies. recognizing also that the nasdaq 100 is a fixed number of 100 companies, there's been some rotation in the nasdaq 100 where some of the really strong growers like docusign and zoom have come in to the index and helped drive it. >> i've seen the confetti come down >> we can have a confetti canon go off every morning for you,

joe. >> every once in a while a little piece comes flying through. >> gets dislodged from the ceiling. we will eventually have in person ipo experience as market opens again. >> we're ready for the nasdaq. >> we're ready for anything. >> party like it's 1999. it's a song i think. thanks, adena. great to see you we got some breaking news in the housing market diana oleck has the latest on mortgage applications. >> home buyer demand is heating up with the mercury this summer after pulling back slightly the previous week. mortgage applications to buy a home rose 2% for the week and a remarkable 19% higher than the same week one year ago that's the ninth straight week of annual gains and one of the highest annual jumps we've seen. low mortgage rates didn't hurt average on 30 year fixed inched up one basis point to 3.02

3.19 the week before was a record low that's an average. a lot of folks are getting below 3% at today's rate 60% of all outstanding loans can benefit from a refi. that's according to fannie mae with 122% stronger than the same week one year ago. these are applications and not all of them will translate into closed loans credit is still tight. we'll get a read how sales existing homes did this morning. that's later this morning at 10:00 eastern time on "squawk on the street". back to you. are we expecting this momentum to continue in the fall or is this left over from the spring selling season? >> you know there was certainly a lot of pent up demand from the spring because in march and april there was no activity at all. that's the biggest question.

will this continue into the fall will it continue to be people who want to move and get out of cities into different, larger more hi-tech homes builders are still seeing very strong demand. we'll see if it can make it through the end of the year. prediction it will stay strong through the summer that's the big question, can it hold into the fall >> diana, thank you. coming up, when we return, the stimulus debate raging on in washington president of the american action forum will join us right after the break to debate it all we're back in just a moment. >> announcer: time now for today's of a flack trivia question on this day the aviator return to new york after flying solo around the wldor who is he? the answer when cnbc "squawk box" continues aflac. these are all the cab rides to my physical therapy.

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and now the answer to today's aflac trivia question. on this day, this american aviator returned to new york after flying solo around the world. who is he? the answer, wiley post he was the first to accomplish the feat and did it in seven days, 18 hours and 49 minutes. we got some news in from pfizer pfizer and the government strike and agreement for phaser to produce millions of doses of its covid-19 vaccine pfizer would deliver 100 million duces. the stock moving on that news. hhs secretary alex azar will be our guest and join us in the next hour to talk all about it,

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welcome back to "squawk box" as lawmakers in washington debate the next round of relief spending there are growing questions now about how much support the government should be providing and whether it's better to let the market figure out which businesses survive steve liesman joins us right now with more on that. steve, it's a big debate >> reporter: yeah. it's going get bigger. kevin o'leary, aka mr. wonderful declaring yesterday on box that it's time for the government to cut the cord in helping some businesses survive the pandemic shutdown >> i actually don't want the government to prop up zombie companies any more stop doing that. let the market be the market figure it out. a new america will emerge in 36 months it's going more profitable what we're about to do with this next round of stimulus in my

view could be a mistake. >> reporter: i contacted several top economists yesterday most thought o'leary is ahead of his time there's quite a bit of sympathy. they said o'leary hit on the biggest debate about to happen in washington. it's about time to let businesses go under to avoid creating zombie companies in specific industries compared to what was happening with the entire economy and that's where not all businesses will be viable there was a tough response to o'leary. he told me people calling for the government to get out now are quote being terribly naive how efficient the bankruptcicy and liquidation business will be he said there will be fire sales and prepare for a massive second wave of unemployment if aid is cut to business. glenn hubbard says to me it's really important to help the long-standing mid-size

businesses which the fed is doing that do not have access to equity if aid is going to be cut to businesses and companies the economists said prepare the government -- the government must be prepared for massive support for workers because there will be a lot of unemployment also for credit losses at banks to skyrocket joe? >> there's some expression, steve. no atheist in a fox hole >> pretty much >> no atheists in a fox hole no capitalists -- it's a pandemic but, you know, if you're a pure capitalist i don't know how you handle it steve stay with us joining us now president is the american action forum. initially we indiscriminate lending, we want employees to keep their jobs. everybody is involved. does there come a time where you say some of these business models aren't going survive and we're throwing good money at bad and when i said that yesterday to kevin he said capitalism has

no conscience or compassion, it is what it is. they allocate resources where they are treated the best for return the middle ground. it's nuance, isn't it? >> i think there's a middle ground the key is that in the first-round of response the c.a.r.e.s. act the thoefrt cases there were no zombie cases we indiscriminately handed out cash to keep workers attached to their firms, to keep those firms afloat for two and half months but we're in a different situation. looking forward it's easy to identify some sectors where we feed some restuck during airlines won't look the same restaurants won't look the same. that means you don't keep workers attached to those same businesses you have to move them elsewhere. you don't want to make sure every restaurant survives. you need to have some way to allocate the capital in the

economy. it's fine for the government to subsidize it but you have to have the market picking who gets it it is time to have that enter in the equation >> steve, do you think adam smith or milton freeman -- let's go back to the financial crisis where, you know, it could be argued that some of it was brought on by some bad players themselves should we have found the bottom really quickly rick at times has said just let the system clear and we'll come back more quickly and get rid of the bad actors and that's the way it's supposed to work. should that have happened? should it happen now >> i think this is very different than the financial crisis the financial crisis was a self-inflicted wound where we really had some bad practices. >> steve, what do you think we should do as our resident

philosopher? >> reporter: thank you i actually have some thoughts on this and my conversation with people like doug yesterday and glenn and all those folks got me thinking about this. so one idea which kind of incorporates what he can inventory o'leary is talking about is when you make somebody take a loan out and put equity in, that person is making a judgment or a statement on the viability of that business if you have to pay it back, you think you would be thinking about whether or not the business itself is viable. in this regard the private sector or at least in this case the private entrepreneur would be making the judgment as to the viability of the business and not the government so what i have -- this idea i have and adam doesn't like it because he thinks people will throw hail mary's and take the loan out and default my idea is increasing equity riermtd requirements over time the further we get from the

pandemic the more a person should have to put up or business have to put up for government assistance. this let's the private sector headache the choice and let government continue to aid and help businesses that are viable. that's my thought. >> sign me up for the steve liesman plan that's right way to think about the problem. what it means in particular is that ppp no longer hands out loans and will be forgiven it makes loans and makes them on stricter terms as time goes on and allocate capital based on viability of business. not all of them will make it and we need to start accepting that fact and encouraging those workers in businesses that will not make it to look elsewhere, support them in their job search and let the economy restructure. >> creative destruction that d engen denver

engendered itself. is anyone ever -- should we have tried to keep those -- you're laughing, seriously, that's just one example of a lot of different businesses that maybe made sense before the pandemic >> joe, kevin very smart in this regard i don't know if he's right, but we're on the cusp of a debate. i have to say austin pointed out the me had we solved this virus in a similar way that other european countries we wouldn't have to have this debate because it's gone on longer and it's going to have a more wrenching impact, we're going to have to make choices about use of government funds and it won't be easy. there's a moral imperative the government shut it down the government ought to finance and keep it alive and that's something that will be around for several more months. >> steve, one more thing

if we're going to have government support and we'll need government support for the economy as we go through this, you support people and you also support companies. companies come, companies go investors take risks and lose sometimes. to frame it which companies lose is wrong take care of workers make sure we have opportunities to start businesses and have opportunities to work in them. that's the key >> you look at the china model where they dig holes sometimes just to fill them back up. make stadiums, nobody sees sports build apartment buildings. a lot of times you're propping up companies just to keep employees but employees do need jobs creative destruction is tough on people getting displaced and nowhere to go. >> i hear the music playing, joe. but real quick everybody i talked to yesterday agreed with kevin about avoiding wide long-standing zombie

company. they don't want a zombie corporate apocalypse >> we don't want a walking dead apocalypse either. the way you rank things. >> don't give loans to "the walking dead". >> okay. thank you. appreciate it. the philosopher. maybe professor of philosophy. yeah, oh, that's good. melissa? >> coming up, special purpose acquisition companies are increasingly popular today the largest of its kind will hit the market. we'll speak to bill ackerman in just a few minutes first on cnbc, "squawk box" will be right back. achievable steps along the way... ...so we can spend a bit now, knowing we're prepared for the future. surprise!

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welcome back to "squawk box" special purpose acquisition companies are increasingly popular and now on track to eclipse last year's deals also known as blank check companies investors put money into spacs the kwool is to acquire a private public and convert it into a public one. notable spacs is being taken public bill ackman's is the largest one. it's selling stock of $20

looking to raise $4 billion in outside capital. so total value could reach $7 billion. bill ackman will be right we're us in the next hour. two underwriters, joins us this morning to talk about the popularity of spacs. this spac in particular and what trend we're seeing here. i'll start with you, suzanne this is a pretty unique deal spacs for many, many years had very bad name. people thought they were effectively a compensation scheme masquerading as a compensation scheme because they typically took so much, such a big piece of the deal. what do you think is driving it now? >> well, the -- thank you for

having me. spa skrrch a great market environment in general now for spacs. financial investors have significant liquidity, you know, interest rates are low, public equity market valuations are at all time highs, the number of public companies available to own has declined steadily, and, obviously, the covid pandemic has challenged the financial position of vast majority of companies. so all of these factors create tremendous opportunities for a great sponsor, the right sponsor to get a deal done >> let me go to jim on this those. jim, the big question about a spac you can either go the public route, go the ipo route, requires a lot of diligence and a lot of exposure to the investment community this short circuits that but there's oftentimes a cost for it as well. why is this the better path if

you well than the ipo route? >> well, first of all, thanks, andrew for having me and it's good to come on and talk about this particular spac because it's so unique and different generally speaking, spacs had a very, very bad name going into it because it was viewed as sort of a vehicle for of a promote of the sponsors now you've had several legitimate investment professionals and you've outlined several managers accomplished investors promoting the spac structure this is just a very easy way to get a deal done if you are a company, if you're looking to go public, if you want to access the public markets because it's already a public vehicle all of the regulations, all of the things that you have to do to go public, it's avoid because it's done already.

so i think this market is actually here to stay. it's become legitimatized because of the players that are now in the market that actually have investors that are significant investors entering the market so if you stop and think about it, it's like going to the ipo route except tremendously easier. so it's got significant appeal now. >> all right what do you think -- i don't know when we'll have to merit but three years out what do you think performance, though of these are going to look like relative to companies that went the more traditional ipo route >> well, i would tell you this i think it's going to depend on the manager significantly depends on the manager, the investment manager depends on the thesis. depends on the sponsors. the line of interest and performance of the company i don't think that it's going to come down a spac versus an ipo for performance. i think it's going to come down

who you invested in and why you invested in them and what business they buy and how they ran it i think that's the metric. >> i would agree >> suzanne, one of the other -- go ahead >> i would agree with that a spac is only as good as its sponsor, its structure and market conditions in which it's operating. and, you know, the average spac size so far this year in 2020 has been roughly $300 million. what makes this transaction so significant as you noted was the size, and it's the largest amount of committed capital ever for a spac so given the size and the fact that the strategy is to buy only a minority interest rather than a controlling interest in a company, is clear the acquisition target will be a large and high quality company that should perform very well. >> and we should make mention, we'll talk to bill about this later, that's the unique part about this it's not necessarily a take over of a company but the strategy

he'll here is to take a majority position in a private company that therefore turns it public two quick questions for you suzanne and for jim. one of the things that bill ackman is doing this transaction which is unusual and hopefully is the beginning of a trend is that he isallocating about 20% of the underwriting fees to minority firms you know, minority firms have oftentimes been incorporated into ipos but oftentimes at much lower levels what's happened here >> you're exactly right. both of our firms have participated in a number of sizable ipos we have investor relationships that add value but usually limited to tiny percentages. and in essence, bill ackman has blown up the traditional rules and limits of wall street and expanded his team by hiring diverse firms in a significant role he's hired black own firms,

women-owned firms, veterans own firms not only to help economics which are great but a meaningful role you basically have life long entrepreneurs who have built successful careers on wall street now invited to the dance in a meaningful way and able to add real value to the prospects in identifying pent up demand. >> okay. suzanne and jim, we want to thank you for joining us this morning. we wish this transaction lots of luck and we will be talking as we mentioned with bill ackman in just a little bit in the next hour but thank you, guys, for spending time with us this morning. we will see bill at 8:15 to walk through this transaction, also get his thoughts on the markets. his first since his now famed conversation on cnbc back in march when he said hell was coming

melissa? >> also coming up, andrew, united airlines scott kirby joins us in an interview you don't want to miss pfizer and the government struck an agreement for the drugmaker to produce millions of doses for it's covid-19 vaincce. alex azar will join us to discuss that "squawk box" will be right back. and you can even see how your predictions might affect the value of the stocks you're interested in. now this is what i'm talking about. yeah, it'll free up more time for your... uh, true crime shows? british baking competitions. hm. didn't peg you for a crumpet guy. focus on what matters to you with thinkorswim. ♪

good morning it is 8:00 a.m. on the east coast and we got a very big hour ahead of us. first, we'll hear from united airline ceo scott kirby on the airline industry plus an interview with the health and human services alex

azar and a can't miss interview with pershing square ceo bill ackman. his message to ceos. hell is coming okay and i felt -- i never had this experience before in my life the closest was the financial crisis where i said bad things are coming >> we'll find out what ackman thinks four months later as the final hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with andrew ross sorkin and melissa lee. becky is off today the futures are now downtown

dow. nasdaq continues to trade positively this morning. opposite yesterday dow ended up about 150 or so, nasdaq ended the session down. treasury yields earlier in the session were actually lower than we've seen recently down under .6, now .589 is where we're seeing treasuries this morning melissa? >> we have a developing story we're following for you this morning. the u.s. has ordered china to close its consulate in houston within three days. the state department spokesperson citing the need for u.s. to protect it's intellectual property and americans private information. commenting the spokesperson said the united states will not tolerate the people's republic of china's violations of sovereignty and inat the my dafgs our people just as we have not tolerated their unfair trade practices, theft of american jobs houston media said firefighters respond to reports of papers being burned on the consulate

grounds last night but denied entry. this is the latest example of deteriorating relations between u.s. and china since the outbreak of the coronavirus. china blasted the order. a foreign ministry spokesperson called the order an unprecedented escalation of america's recent actions against china. andrew >> okay. another important piece of news just a short time ago. pfizer and the u.s. government have struck an agreement for pfizer to produce millions of doses of its covid-19 vaccine. pfizer would deliver 100 million doses in the united states once a vaccine is approved. the price tag for the government nearly $2 billion. the vaccine would be made available to americans at no cost we'll speak with health and human services secretary alex azar about this deal in just a little bit later this hour melissa. >> united airlines reporting

what it described as its most difficult quarter. the carrier saw revenue drop 87% as the pandemic ground air travel to a virtual halt unite the expects its liquidity position to improve and forecasting a lower daily cash burn phil lebeau joins us now >> reporter: let's bring in scott kirby. we talked about the numbers. massive loss in the second quarter. no surprise. what's the state of the business right now? what your seeing and how either optimistic or concerned are you about where things are with passenger levels >> well, one of the strengths of united going through this has been to be neither optimistic, concerned, pessimistic, to be focused on being realistic that's important in a crisis and served us well so far as we've gone through this. the pandemic has developed really since late march. very close to what our expectations were going to be and it continues to develop in a way that we think is consistent

with what we've been planning for. because of that we were able to match our capacity down 88%, the revenue down 87% but also by being realistic we found opportunity because the revenue super36% so that realistic approach has allowed us to really do the best that's possible. we expect demand has taken a step back wards here in july from where it was in the middle of june but it seems to have bottomed and we expect to be back where we were in late may and demand will start to gradually recover once again as we get through the rest of the year >> we're down 72% to 74% as an industry relative to the same time last year do you expect us to be in that range let's say for the rest of the sumner to fall do you expect to it come back to 50%? what's your internal projection? >> we want to be flexible and adaptable to what the data is

telling us you're looking at the psa numbers which is the number of passengers i want includes the number of employees, airport employees, airline employees to go through. we've focused a lot more on the revenue because that's the best measure of demand and unfortunately it's down even more than your 72% it's down more at the moment more like 83%. we think there will be a gradual recovery we don't expect to get anywhere close to normal until there's a vaccine that's widely distributed to a large portion of the population. it's a guess nobody knows for sure. our guess is that revenue will get to about 50% of what it was in 2019 and in pre-vaccine world. once we get past the vaccine and widely distributed we'll quickly get back towards 100%. we'll plateau at 50% before we get to a vaccine >> let's use that as a baseline. you got roughly $16 billion in liquidity right now. you plan to have more than $18 billion by the end of the third

quarter. is that enough to get you through not only third and fourth quarter but the first quarter which is notoriously the slowest part of the year for the airline industry or do you think hey the airlines will need more direct help from washington. >> i am highly confident we can get through the pandemic given the $16 billion we raised. we'll end $18 billion of liquidity. unfortunately it's going to require difficult, you know, we sent out 36,000 notices to our employees. that's as a last resort. something we would absolutely have wanted to avoid we've taken every step we possibly could to avoid those. if the crisis will last as long as we think it's possible. we have to reduce the size of the airline. until there is a widely available vaccine and because of that we'll have to reduce employment so i am confident that we make it through the crisis without any more funding

but it's also going to have an impact on employment >> scott, i'm wondering because the longer the pandemic goes on the deeper behaviors that we learned during the pandemic set in, things like remote working, zoom meetings, et cetera do you really expect post-pandemic, post-vaccine levels will return to 100% are there certain structural changes that will carry forward. >> a lot of us have spent a lifetime thinking about. at united we're staying focused on not being too prescriptive of what will happen we're social creatures united is about connecting people and the world we went. through this 20 years ago when video conferencing first started

and people thought it would decimate business travel did it the exact opposite. if anything it helped grow business travel. we need to be there in person. my guess is that it will take time won't happen immediately but the first time, you know, business loses a corporate account to a sales team, took a team to dinner instead of a zoom call they will be back out on the road there was a great commercial from united you look up on youtube. it ends i'm going see that friend and i think that commercial from 20, 30 years ago was true then and true in the future and a year or two after the pandemic is over, we will be back to travel as normal we won't count on that we'll have flect built and see what happens >> scott, you know the expense side of things is one way to try to deal, obviously, through lower staffing, but on the revenue side i just have a suggestion and it reminds me of the old days too everybody right now is saying

i'm going see a friend i'll drive it's 13 hours. i'm bringing the kids, they are 4 and 6 and we're looking forward to it. okay they haven't done that in a while. after they do that they are going say i'm never doing this again and i'm willing to pay more to go on a united flight. don't you think you need to raise prices as an industry given the new realities. i know it's hard in a slow period to raise prices but it just seems like it's worth more than what you're charge. same as it was 20, 30 years ago to go to a lot of places isn't that just coming prices are going up >> well, look, thanks for the question i'll take a slightly different tack on it which is to say, what's not clearly understood. people to understand better that you need a safe environment that an aircraft is it is inside but unlike anything that you're experiencing in the

world. not like being in a restaurant or office building or even a hospital for that matter and it's because more of anything of the airflow and air infiltration where the air comes out of the ceiling, designed to go the floor, into the ventilation system where it's recycled through filters and mixed with fresh air from outside every two to three minutes air in an airplane is refreshed. it's a unique environment unlike you see anywhere else. it's one of the safest environments you can be in, indoors. that's the message we need to get out more to help with confidence pricing will follow whatever demand will be but getting skoofrms and the public at large to understand that incredible things that happen on board airplanes, and the cleaning regiments we have aircraft are uniquely safe

environment. >> let's talk about that a little bit you have an enhanced mask policy you just announced twin last hour essentially saying you don't wear it you won't fly and that's not just being on the plane, that's any united area, the concourse, frequent flyer lounge, whatever it might be are you seeing much resistance in terms of people to the current mask policy? is that the reason you put out the new one? >> we're seeing very little resistance vast majority of our customers and employees agree with the maverick policies, applaud the maverick policies. united, i'm proud we're a leader we were amongst the first companies in the world to require a mask and that was back when it was still controversial to ban customers that don't wear a mask we do still see places in airports in particular where customers wear a mask on board tarp because it's clear that it's required they are not always wear a mask in the airports we're just extending that policy

really trying to close all the travel gaps, all the gaps in the travel process i talk earlier how safe it is on board an airplane. but we've taken steps to keep it working on the ground and this mask policy in the airport so our customers can feel confident from time they get out of their car to the airport they will have a safe experience >> scott, you've been around this for a while this snouis not your first rode. you've seen how the industry operates you've held the line on fares. can you do that going forward given the fact there are nor flights, seats and competitors are slashing their fares >> this is unlike any of us have experienced. my guess is price is going to go lower for a short term all of the normal metrics we use, in this pandemic are a

little bit irrelevant. the most important metric is cash burn. i'm proud that united is doing the best on that front i talked earlier about the realistic things that helped us to get to that level our focus really is on cash flow and cash generation as we go through this crisis. we've taken aggressive steps to match our capacity for demand and be looking out 60 days. at the beginning of july and june as the pandemic expanded and we've taken steps and you'll see more steps to adjust being quick to adjust is the biggest thing we can do. taking quick steps to ad just is what's in our control. >> scott kirby, thank you for joining us exclusively on

"squawk box" guys there you heard it from scott himself. they do not expect to get above 50% revenue until vaccine is here and once that vaccine is here then they expect the full return or at least closer to a full return for the entire airline industry guys, back to you. phil, planning a long -- i'm telling you. i'll be so ready i'll take my chances, i think after 14 hours in a car or whatever i'll be like put me back on plane. give me a mask no middle seat i'll take my chance. thank you. coming up first cnbc interview with bill ackman we'll spatalk about his new spa and that prediction he made on this network back in march that hell is coming futures indicated, some of the best levels we've scene. the dnasdaq iups

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welcome back to "squawk box" futures right now, the dow is down 40 points some improvement after the vaccine news today's vaccine news i like to double things up seems like just about every day. isn't that to be expected when you got basically we're trying to do a moonshot operation warp speed, whatever. so there are 26 in development going to be some frequent news come out about these maybe too much, andrew, i don't know when you get results you want to get them out so we hope it

works. i expect to it keep on going on the vaccine front. >> meantime, bill ackman's pershing square holdings poised to become the largest special purpose acquisition company to date investors putting money into spacs without knowing when or how the capital will be deployed with the goal of acquiring a private company and making it public his company is listing on the new york stock exchange today under the ticker psth. joining us bill ackman bill, great to have you on the program. want to talk about the spac, also want to talk about your investments and the markets and your comments since this is the first time we've had a chance to talk to you since march back then and even some of the critique of that let's start with this spac because it's the biggest one yet. i don't know if you saw the segment we did in the last hour. spacs for a longtime had a bad

name they were considered compensation vehicles for sponsors, for the managers, oftentimes at the expense of the investor what do you think is changing right now and how is this to the degree that it is different? >> sure. so what we've done is we've and the what i think is a good idea, the idea of raising a cash shell to really bypass the going public process which is a risky time consuming process i think it's a good idea the problem has been the terms for investors really has you described. what's new in our structure is it's the first fact where we're taking no compensation no management fee, no promote, we're not buying cheap stock no compensation to the sponsor the sponsor in this case is not us ersonally it's the pershing funds. we set this up to create an investment opportunity for pershing fund and employees of pershing, we own 23% of pershing

funds are indirectly invests and we set up an align meant that was very appealing to investors. we created the most investor friendly spac in the world went we had an enormous reception that gave us the ability to do very large scale we have $5 billion equity check, if you will, that will be trading in an hour or so on the new york stock exchange as the ability to issue securities. we can -- our goal is to buy a minority interest in a business and what i mean by that we'll merge with someone, take them public, our shareholders will own 20%, from 5% to 30% of the company. we believe we can make an advantage deal for our shareholders, really creating a great opportunity for a doe accelerate its growth, deleverage balance sheet and provide capital for investors seeking it ate great structure and a wonderful reception. >> bill, if i'm a company out there, and by the ways, big companies have been speculated about everything from michael

bloomberg's company to airbnb as a potential target for your spac if i was one of those companies, why would i prefer to go public via this route as opposed to going public through the ipo route? >> sure. imagine you are airbnb and you got however many employees waiting for that one day you're going to go public one day employees learn this is been a filing of an ipo prosp t prospectus next day everyone gets a phone call from financial adviser giving them advice how to exercise their stock options early. you should buy the home. much starts focusing on things that have nothing to do with running the core business. airbnb is going through a challenging time because of the crisis six weeks later and by the way the press you guys start calling around to current employees and former employees to gate story then about six weeks later if they are lucky they file a

revised prospectus having received something from sec. then you receive all kind of commentary look what happened to wework it ultimately destroyed the company. it's a very challenging time for a business to be under that kind of a microscope and not allowed to respond to the media because under the sec rules you can't. then, a few weeks later they file another prospectus and then start at that road show. they go on a road show and fly around the world meeting with investors. it's not until the last day of the road show they know how much capital they will raise, at what price they will raise it and whether or not even if the deal gets done. if the u.s. government decides to break ranks with china and the market is down whatever or trump tweets something or biden is ahead or behind in the polls, whatever tissues are, we think the next six to nine months are

very treacherous times and the ceo and board has to make a decision do we go public. looks like we can only raise a billion. do we go forward with a bad ipo. do you pull the deal you create this period of uncertainty for your employees compare that with us we sit down with the ceo of airbnb we come to an agreement on the value of the company we buy only a minority interest in the business so they are not afraid to leave a little money on the table we do deep due diligence we announce a transaction with the company. we committed a billion, billion and a half of capital and give every investor an instantaneous ipo with some of the most important investors in the world. one of the things we did -- >> bill, let me -- >> sure. >> let me ask you a question you talked about the need of transparency when you shorted companies historically you talked about how healthy it is for there to be more

transparency isn't the ipo process unto itself, we take out the structure you built into your spac but other spacs are not built this way wouldn't the ipo structure is healthy and actually creates that transparency and when a wework doesn't go public investors could look into the books and raise questions that are much harder to raise in the context of a spac? >> investors don't get to look into the books they get a prospectus, that's the only document they have. in our case they get the same thing. the difference is they get a lead investor like us who are committing a billion, billion and a half of our own capital. we'll have the benefit of inside information. we'll put together what is called a merger proxy. with similar and actually can have more extensionive information about the business

that we provide to investors every investor in a u.s. spac has a full right to redeem if you don't like the deal you get your money back with interest so if idea of a lead investor, you know, looking throughout the world the find the highest quality best business in best terms nexting a transaction, committing capital and only then do investors get presented with detailed information they need to make a decision and have a full opt-out typical process ipos are announced several days it's a scramble. investors are competing for allocations. they don't have the time to do due diligence in a spac process. there's 45 days between the mailing of that document and all investors before they have to make a decision. it's a much better process much better for the issuer and much better for the shareholder because they get to make a thoughtful decision that's not rushed >> all right bill, you know, the last time -- i want to pivot.

the last time you were on this network was back on march 18th you had a dire warning where the coronavirus was taking this country and business specifically in this country i just want to play that segment for a second >> hell is coming. okay and i felt, you know, i never had this experience before in my life the closest was the financial crisis things are coming, bad stuff is coming. but this was a feeling like i've never had, like there's a tsunami coming right? the tsunami is coming and you feel it in the air >> bill, you have been both right and wrong with that call but i wanted to get your thoughts on the markets today but i also given the critique then about the fact that you were short, i know you had been public that you were short prior to coming on the air then, i also just want to understand your own positions today because when people say bill will be talking his book, i think we

should all that have that transparency to know where you're coming from today >> sure. let me just go back, to again, that was a 28 minute segment and that was about 15 second piece of it and i want to remind people the message and i encourage you to go watch it we're at a fork in the road. at that point we hadn't shut one state in the country right? march 18th, you see the compounding of the growth of the virus. look one path is we do nothing and if we do nothing hell is coming but i'm bullish. i'm buying stocks. why? because i believe the president, the government will shutdown the country. the answer is we did stoiomethig in the middle. what we recommended was a 30 day hard shutdown of the country statewide, every state in the country and then a careful re-open to go back and watch what i said. had we done that, okay, we would not -- we would be in a much

better position unfortunately than we are now. we're somewhere in the middle. the day after my remarks california shut down the state next day new york shut down their state. we had a state by state what i would call sloppy shutdown and had a state by state sloppy opening. multiple people died skmi in a worst place. had we taken the pain and ripped the band aid off cnbc played that 15 second segment. number one at the time of the broadcast i been bullish we've been very public on this on march 12th we decided to completely unwind our hedges and took that capital and invested over $2 billion more in the market by the time i had done that segment and we completed -- >> bill, just to clarify you had not closed out your shorts at that point though completely

>>er with were unwinding first of all, massively long in the market we were 85% invested in stocks prior to what a hedge on okay pap march 12th we took the hedge off. we had, you know, liquidated a billion three of the hedge and invested 2 billion in the stock market in the six days before that interview we were at $3.3 billion more long than on march 12th which took us to a lot more than 100% invested we were absolutely bullish in fact, again, made it very clear we're buying hilton, restaurant brands, every stock that we are able to buy other than stocks on the board and by the way it was the low that day if you go back and look. low for hilton low forrest rant brands. low for starbucks. we were making a very bullish call at the time where we are today --

>> bill -- >> go ahead. >> just to clarify that position because i think that people will listen to that and think oh, well he had unwound the shorts he went on the air said hell is coming then plowed that money back into markets after he made that comment that hell is coming but to be clear you had actually unwound those shorts and put that money directly in prior to going on the air with the dire forecast >> that's absolutely correct my comments were not dire. what i said if we do nothing things are going to be dire, hell is coming but i don't believe we won't do nothing. i don't think we have an alternative. i think the president will shutdown the country my recommendation was for a hoard shutdown in america that's where our federal system and, you know, states were allowed to make their own decisions. that toledo a slow extended shutdown what i call a sloppy shutdown and the result is we had a middle case.

my bullish call on markets was correct. we were dollars 3.3 billion more long on march 18th than march 12th we made a decision to go long. i meant to deliver a very bullish message. if you look at my contemporaries instead of talking about the hell is coming part of my interview, i understand why people are confused look at the bullish statement i made i'm buying stocksnow it was the low point for all the stocks in our portfolio that day. some people listened to what i said and bought hilton and lowe's and restaurant and starbucks and bought, you know companies that we talked about on air and if you had listened to what i said people have done very well we absolutely turned bullish and we were very long going into the segment. i can talk where we are today.

>> depending where you stand people bring up sweden and it's controversial. wasn't quite as much of a lock down there obviously when i hear hell is coming and amudslide it was only a 15 second snippet we had. and the market did, obviously, it speck down 38% but came back very quickly so i'm not convinced that was the right forecast for what -- here we'll get into again 150,000 deaths is hell and for the families affected and for people that, you know, have lost loved ones, young and old, it is hell. but just in terms of the way the market has bounced back, it almost looks like that was an aberration and too much pessimism about what was going to happen in the be markets at that point you're saying now you were both. were you surprised at how quickly the market had rebounded to where we're at new highs in

the nasdaq and i know the stimulus and everything else, but it doesn't look like hell to me hell never came in terms of the markets. >> i would say yeah, the markets are a representation of the most successful, the largest, the best capitalized, most dominant companies in the world unfortunately the markets don't -- there isn't a market for the private family owned business right? and that market is down 80%, 90%, in some cases 100%. think about closed restaurants think about gyms the bars if you live life using the s&p 500 as your reference point for how everyone is doing you're leaving out of a meaningful percentage of the country and there are a lot of people suffering. suffering economically and they are unfortunately people who are suffering, dying and more died 150,000, unfortunately, is not, you know, is not the maximum we'll lose more. by the way, the sooner -- again the approach was a rip the band

aid approach shutdown the entire couldn't for 30 days. stay home. i call an extended spring break. if we do that economy can recover very quickly and be back to somewhat normal life for a period of time until there's a vaccine. but instead we did a gradual rolling shutdown where each state got make their own decision and each state made their own decision about re-opening some states re-opened too quickly. >> we never would have gotten to zero in term much case as end tried to flatten the curve it was always going to at some point have burns and places around the country where still going be present obviously until there's a vaccine. you're saying that the way that it was played by the media the 15 second clip is unfair because you were bullish you can see how -- i mean three days later that was, i think, that was a wednesday we bottomed on a monday. a lot of people that weren't

fortunate enough to be short going into that essentially sold they could have sold based on those horrific forecasts, and probably bottomed out the market and haven't been able to recho 40% of whatever it is the market come back. you're saying that wasn't your intention and not your fault, it's by playing that 15 second clip >> i would say i really blame cnbc took 15 seconds of my interview and ran around scaring people because it was good television i hate to be in your face for this but that's what happened. i gave a very bullish message. i said i was buying stocks which i was doing. you guys kept playing the hell is coming. i said we're at a fork in the road if we shutdown the country, okay, we can be like hong kong which actually is going back to a normal existence

that was administrative recommendation to the government okay that was my recommendation you know, why the market bottomed because california shutdown the day after my interview. because new york state shunned two days after my interview and people said okay now there's going to be an to end this the market bottomed because states started taking actions that would lead to the end of the virus. the reason the stock market was down 6.5% before i went on tv because the government wasn't taking the virus seriously enough and states took it into their hands to shutdown the states investors understood a shutdown would kill off the virus and return to a more are normal existence. >> so bill, given where we are today, now covid cases, what seems like a record surge are you bullish today? are you bearish today? let me also ask you specifically

about your positions, not just your thoughts but your positions so we don't get into a thing where viewers or others or saying that you're saying one thing and doing something else >> let me be super clear we're long term bullish on america. long long term bullish on stocks. i'm cautious on market which hatve a short position on market highly levered businesses will struggle because it will take time for the economy to re-open. we're about 80% -- about 20%

cash in our publicly traded entity and we're approximately 98% long so the entity itself the leveraged. the cash offsets the debts, effectively 100% long and shorter opposition in the high yield credit index which is a composite. >> do you foresee a wave of bankruptcies >> yes i don't think the fed is going to bail out companies that have too much debt, and it's not clear to me -- i view it being short high yield credit as a good hedge i don't know whether it pays off or not i think the defaults cover the cost of carry unless bad things happen and if there's a vaccine soon which we hope there s-i think things could snap back pretty quickly but a levered energy company -- what's

happened in the energy markets, you see multiple bankruptcies, companies re-equityize and become more competitive and leads to more brauankruptcies. a bankrupt company doesn't have to go fire all the people particularly a large cap, large enterprise company the equity holders lose their investment credit tors can convert their into equity. it can continue to operate and hire people. that's actually a pretty healthy process. lending money to highly levered companies only ends in tears >> bill, right now we have more cases per day than when you said that hell was coming i think there's much less likelihood that texas or a lot of these hot spots are probably not going to do anywhere close to what you thought needed to to be done last time so why wasn't hell coming this time

considering the virus probably is as prevery lent as it was back then or is it because you think a vane is near term? because a lot of states like new york took drastic action >> texas, california are not going shutdown and more cases coming now than when you said hell is coming last time why is hell not coming this time >> i said if we do nothing, okay -- if we do nothing, okay, we have 18 months of the virus running roughshod across the country hell is coming if we take aggressive action we can end this quickly right now we're somewhere in the middle my expectation is things don't get meaningful better until the second half of 2021. if the vaccines work we're in a much better place. sooner everybody in america wear

as maverick in a public place, the more quickly the economy will recover, more quickly people can go back to normal and it's not a big deal to wear a maverick it isn't it's not a political statement it's about protecting other people it's everyone in houston, you know, or dallas or other parts of texas wear a mask a lot more people will be safe. economy will recover markets will go higher longer people say hey, liberty, america, you know i don't want to cover my mouth the more we'll be in a mess and so i don't know what will happen over the next six or 12 months we're having as i say a sloppy re-opening of the country. once miami is completely overwhelmed south florida will have to be shutdown or the tens of thousands of people are going to die governors, mayors are going to take their own actions and if we had a coordinated federal action at the very beginning we could

avoid a lot of this. that's what i was saying >> a question about the markets. you know you're investing in starbucks, chipotle which will be reporting after the bell today. i want to get your thoughts on that and so many others but we haven't talked about the high fly terrifies big tech companies and i want to get your thoughts there have new vested in any of the big tech companies that have been leading the amazons of the world and facebooks and googles and others or a tesla? what do you think about that >> look, what a crisis does is advantage some businesses and harms others amazon, i think i even mentioned in my interview on the 18th i think is an enormous beneficiary and we scramble to do the work on amazon and our bad for missing. we don't own any of the great high flying tech companies whether or not they justify their value acceleration valuea

complicated. everyone who sitting at home and ordered amazon for the first time becomes a long the term customer and this is an enormous, they are an enormous beneficiary. i bought a tesla a great car. i have some issues with it but there's a reason why you compare a tesla to a traditional gasoline car it's the future. that's why people believe they are going to take a huge market share. the current valuation you have to believe a lot of very good things to justify it and we like to own things where we don't have to be so visionary about future cash floss to justify buying a business. >> you're not shorting tech business >> we're bullish on america.

we own restaurant companies, hotel companies, real estate companies. i'm very bullish on america and we'll go through a very uncertain time in the next six to nine months we have a high l contested presidential election whether it's a second term of president trump or first biden term it will create uncertainty in the world. the fact we won't have a vaccine until the first quarter, getting back to what i want to talk about today, that's why having a cash shell where someone can instantaneously raise $5 billion and be in an offense position in accelerating the growth of their business or deleveraging their company is a good opportunity. it's that uncertainty that creates that opportunity looking forward to watching a trade in the market and partner with our shareholders and accomplishing that >> all right okay bill ackman, thank you so very much for joining us this morning.

it was a pleasure to talk to you and talk to you about so many different issues thanks again we look forward talking to you and following the progress of all of it. thanks bill. >> appreciate it the u.s. government will spend $2 billion on 100 million doses of the coronavirus vaccine being developed by pfizer and germany's biontech >> reporter: this is a deal that will be paid only if this vaccine is successful through phase three trials and gets approved pfizer does expect to start that phase trial in the u.s. this month. if all goes women potentially seek regulatory approval by october. there's also an option to acquire an additional 500 million doses under this deal. they say americans would get the vaccine for free this, of course, follows deals

that the government has struck under operation warp speed with astrazeneca. it includes 300 million dose these deals are different because those support manufacturing development and whereas the pfizer deal is just if this gets through the regulatory process and gets on the market back to you. >> great, meg. for more on the government's vaccine deal let's bring in health and human services secretary alex azar. secretary azar, this deal, i guess has been in the works for some time with fierz is that an indication the government thinks pfizer has the lead there's an oxford team there's moderna. 26 teams why pfizer >> first it's important to recognize we now have five major investments in vaccine portfolios and we're going keep

looking for additional one physician need be. the pfizer one as historic as meg described it is a contract, advance purchase contract where we can acquire 100 million dose of this vaccine as early as december of 2020 and have the option to buy an additional 500 million doses and we just saw clinical trial data from the phase one of the pfizer vaccine this week that shows it produces what we look foirn an early stage of vaccine which is neutralizing antibodies at levels better or equal to covid patients in their convalescent plasma it comes on top of four other major investments that we've already made in astrazeneca, moderna, and johnson & johnson >> what would the timeline be? nothing would be made, not a single dose would be made until

the phase three trial? >> no. >> public? it would start before then >> this is what's really unprecedented with president trump's operation warp speed we're literally making the commercial scale vaccine now as we're going through the clinical trials so we're doing that at risk using the full power of the u.s. government and our financial resources to do that >> how is the supply chain in terms of what we need? is it domestic are there concerns there would be a shortage that's coming from china on this particular vaccine? >> no. we're not concerned about supply chain and it's domestic manufacturing across the portfolio that we're investing in we've even gone already to ensure full finish capacity, syringes, needles, et cetera this is where having the partnership with the defense department in this is so critical they bring just incredible logistics and procurement capabilities to the table.

>> melissa >> secretary azar, who pays for this individuals who receive the vaccine have to pay anything including a co-pay do insurers bill for this. >> for any vaccine we bought, the pfizer vaccine, those 100 millionvaccine, those $100 million doses would be acquired by the u.s. government and given for free to americans. that's the same with the astrazeneca or the novavax vaccine. we continue to be engaged in discussions about others, but we will ensure that any vaccine that we are involved in sponsoring is either free to the american people or is affordable >> secretary, as you're speaking i've been getting some questions about readers. not just about this, but related to this, and one of them is why hasn't the defense production act been utilized to get ppe in the same way that the government is being very aggressive on the vaccine front, why haven't they been more aggressive on the ppe

front especially considering that retail customers still can't get n-95 masks. >> it's an absolutely false premise. we've been using the defense production act since the beginning around ppe and that's why we have been able to build up supplies. we have created a supply control tower that has never existed before so through fema and the defense department what we do is we now can survey the95% of ppe that is actually out there in the commercial distribution channel and we can direct it through the med/surg distributors to make sure it goes where it is needed and build up a strategic stockpile here to supplement that right now we're going through hot spots, you were just discussing that, we really are not seeing requests from our health care providers coming in for personal protective equipment because of the tremendous success over the last three months of hospitals, nursing homes, community health

centers and states being up 30, 60, 90 day reserve ppe capacity. we're building that up at the national level to be able to back them up and support them. we are not getting many requests right now. >> so do you also have the sufficient inventory, secretary, of needles and syringes once these vaccines hit the market and are ready to be distributed to the american public. >> that's right. that's what i mentioned. with he right at the beginning of operation warped speed locked down fill finish capacity, as well as syringes and needles and glassware. we will be able to ensure we will be able to vaccinate the american people once we get vaccines demonstrated safe and effective to the fda's gold standard of approval or authorization. >> the testing that we're seeing, we still hear anecdotal examples of long waits and not only to get the test but also to get the results, mr. secretary

i mean, obviously this had to be done on the fly. hopefully the vaccine administration will have plenty of time to get everything logistically set up, but would you take a lot of confidence in the way the testing played out for the vaccine? >> i think they are very, very different situations with testing we had to build a national testing system for a novel pathogen really from the ground up through a public/private system that was never built for this so we are experiencing some delays, the commercial vendors, the lab corps, the quests are at about capacity, although as they add pooling of testing samples that will increase some of their supply capacity. but that's about half of our testing in the united states the other half is point of care and hospital and that's -- and public health labs and that's turning around either immediately or within the same day and we need to get some of the demand shifted from these commercial labs over into our

public health labs which are at 58% capacity right now we need these states to crank it up and get double, triple shifting in there to use the equipment. we need hospitals to use their thermo fisher equipment that's sitting dormant even as we have 40 million test supplies available. >> secretary azar, thank you. >> go ahead, andrew. i thought we were done. >> mr. secretary, before you go i have to ask because it was just reported this week your number two, your deputy eric hargen's wife emily registered as a lobbyist on behalf of several health care companies and is now lobbying in fact your agency i gather he is going to recuse himself, but how concerned are you about the appearance of conflict this is something i have heard a lot about over the past 25 hours from people in washington. >> i just saw that news report, i had not been aware of that i assume that the deputy secretary is going through all the appropriate ethics procedures in terms of clearance as well as appropriate recusals. one of the core values we are

here at the department of health and human services is ensuring ethical integrity in our work. the deputy secretary was in the bush administration here with me, so i am going to look into it to make sure, but i assume that everything was done according to our ethics procedures we have a very tough career ethics department here that i have tremendous confidence in. >> mr. secretary, thanks we appreciate it keep us updated. we appreciate it thanks andrew >> okay. thanks i want to get to cnbc's headquarters, our good friend jim cramer i really just would ask you, jim, to react, if you could, to some of the comments that bill ackman made both about the markets back in march and the markets today and the way he sees it. >> right well -- >> do you think you are aligned? >> this is -- i see the problem of having been on tv for many years and realize that what happens is when you say all hell breaks loose you may not realize that's going to be a sound bite but i think that that's somewhat

obvious that it would be and then when you say you buy i don't think people necessarily listen to that they see the whole market come down the futures i'm not saying there was manipulation i'm just saying here is the facts. the idea that he was buying when he said that all hell is going to break loose but it won't if things go better, no one is going to pick up the but it won't. i think he is a seasoned player. i, therefore -- but on his defense i would say, hey, listen, i said everything i was going to do. so let's just say it's -- i would say inartful what happened here inartful i think it's a shame because i think there were a lot of people who were scared. that's not his fault he used scary words and you could say, well, he should have just said, do you know what, i don't like the market here, instead of just saying that all hell is going to break loose. >> jim, there's more cases now there's more cases now and he's not saying there is no closure

coming, no full closure coming. >> he is raising a lot of money for spac why would you say all hell is going to break lose if you raise a lot of money. >> if it's three days later you hit the lows and it's just -- you know, i think it speaks for itself >> i think it speaks for itself. so when you get the call from his people and he says, listen, we didn't mean to say that i'm just going to shrug, i'm not going to say tell my moment. i'm much more genteel now. >> you're jimmy chill. >> my mom died years ago, you would never get her on the phone. >> jim, i want to thank you. looking forward to what you have to say about tesla and some of the other companies that will be reporting today and hotow play that we will with a much it on "squawk on the street" in just a couple minutes melissa. save hundreds on your wireless bill

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final check on the markets dow down about 33 points that's all i'm going to say about the nasdaq is up melissa, thanks, andrew, thanks. did we read tolstoy? was today's show like "par and peace" i laughed, i cried >> all of it. >> three hours sounds like it was years ago. great booking, andrew, i'm glad we did that with ackman. make sure you -- and we will see you tomorrow, melissa and andrew make sure you join us tomorrow "squawk on the street" is next ♪ good wednesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber. got some chop to futures this morning amid new china tensions, the u.s. telling china to close its consulate in houston got results from united, snap, microsoft, tesla tonight, pfizer news, oil is b