digital. let's take a quick check on the markets. we have a flood of earnings across on the tape, dow looking to lose 73 points at the open, s&p looking to be down by 7. nasdaq looking to be down 17 >> thank you ♪ >> good tuesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber. futures are a bit soft as earnings are mixed from a handful of very big players, 3m, mcdonald's, pfizer, raytheon, the gop proposal is out, two-day fed meeting begins, bernstein cuts tesla to sell watch gold as they were just saying hit 2 k overnight but has settled back jim, we do have some earnings to chew on, but there's still a lot on deck for later in the week. >> look, i think that many people want to be able to say we've seen the bottom, you will

hear from mike roman later on today, july has been very good i think you will continue to get a positive from housing, this horton number is the number people should be focusing on because it was stellar you will get a lot of people talking about how there is a lot of good news in anything involving personal fun, polaris, but just -- we're just in such dim tidings when it comes to aero space that's what i'm focused on greg hayes, 2023, oh, my. >> you were just talking about that and then iata, the international air transport association is saying 2024 for pre-covid traffic levels they also point out that airlines are adding capacity, jim, ahead of demand which is coming back slower than they thought. >> personal travel, people want toful tra, we know that. great conference call by

american express on friday about what people want to do, but the business travelers is where they make all the money and the business traveler is zooming they just aren't going i don't know what it's going to take to bring them back. and that is going to be a very important theme, tomorrow is boeing this was a great industry for america. i mean, it was probably what we were leading in and now without customers it's really difficult. citi puts a tactical sell on american airlines with an $11 price target guys, it is $11. i don't know citi is kind of a funny piece. but you can see, for instance, shopify, fwagoldman sachs does a piece. the amount of e-commerce and what it's done to brick and mortar, david, we are seeing a wholesale shift not just digitization but the way people lead their lives and the way business -- wait until we get to the fall when you talk about college. none of these patterns can be -- you can't shoehorn in the way we

look at stocks they just don't add up >> no. i mean, we've said in any number of industries things that might have taken years have been accelerated to a period of months in terms of transfo transformati transformation, but to the extent that, jim, it's also, as you said, things that we're really unsure exactly how they're going to look when they come back, like work, where we're still sort of just wondering what the modern workplace is going to look like and how many people are actually going to be there and what impact that's going to have. but, yeah, i think it seems more and more likely we may look back at this period as having been a seminole change in behavior to a certain extent and the points you've been making since early on that's going to result in certain companies doing particularly well and quite a few others suffering. >> look, i had scour solutions on last night, liam griffin, they had an amazing quarter. they are probably if you want to play 5g to the best way. he's talking about how

everything is just going to be crystal clear, you can get it wherever you want, it's going to be great, you will be at the beach and i kept thinking about zoom and what zoom is going to -- of course, there's webex and we have teams from microsoft, but zoom may make it so that someone could say -- who is a cfo -- i saw you traveled i see you traveled first class to a conference. i don't want that ever again because we're making too much money. i want you to zoom it and we can -- i hope you don't have to gloom baseball, i mean, given covid, but i do feel that zoom has wrecked one of the great back bones of america, which is going from here to there for businesspeople carl, it's never going to be the same ever. >> jim, we know. and stopping for breakfast on your way is a big piece of that. we're watching mcdonald's where breakfast is obviously in focus. u.s. comps down 8.7, down a little better than we thought, june down 2.3. improving every month of the quarter, jim, and they are going

to make a big push in the second half it's pretty clear. >> i didn't understand why that stock was down because i think that what matters is in the end they had a number that in many ways was better than chipotle at the end of the quarter and they're doing big drive through and it's not hurting them that much that they've taken out some tables that was a decent quarter. 3m was a decent quarter because july was good, but everybody is skeptical because you keep thinking, wait a second, it's too good to be true. everything seems too good to be true given the fact of what we have i had leader mccarthy on last night and they're talking about to go a package. there's going to be a package and the package keeps the ball in the air until the vaccines. i think a lot of us are beginning to think, wait a second, the vaccines, can we get a little more skeptical? how does mo derna, nice insider sales there last night, how does moderna said, hey, october -- how do you get 30,000 people and

figure out that the placebo didn't do better than the real i mean, have it by election? by the election? can we be a little more skeptical about what's going on with vaccines please >> okay. i will be more skeptical i think a lot of people, though, jim, are still focused on next year as a realistic time frame in terms of vaccines being widely available, don't you? >> yes, i agree. >> maybe we will get to some point where manufacturing begins on even what might be an fda approved vaccine by the end of the year, but to really be able to administer the doses that are going to be needed across the board. and there are so many other things, i mean, by the way, transporting vaccines is apparently not as easy as it might appear in some ways, you have this anti-vaxxer movement in this country so you do wonder how many people will refuse to take a vaccine there are people who are going to be concerned that it has been rushed in some way for political reasons and so perhaps may not deem it as safe as otherwise

would be so there are going to be plenty of things surrounding it, but, man, do we need it as soon as possible. >> carl, really stirring interview by andrew sorkin with bill gates where he basically just says testing is a joke. we find out so late that you can't do anything anyway he portrayed a country i felt in disarray when it comes to this i still keep thinking about the miami marlins, they come to philadelphia from a state that's a hot spot, 11 of them have covid. i mean, and the phillies, we will wait a couple days and then they're fine i mean, are you kidding me if you were next to one who had covid, you don't wait a couple days and come back so, i mean, major league baseball -- the commissioner is saying, hey, don't worry about it everyone has this don't worry about it attitude. i'm worried about it because the july recovery is fragile, carl >> manfred did say it was not a nightmare scenario yet

there are certain levels at which mlb would start to get very concerned about the longevity of the season. i think we have some sound of what manfred said. >> we talked about the situation. i think most of the owners realize that we built protocols anticipating that we would have positive tests at some point during the season. that the protocols were built in order to allow us to continue to play through those positives and i think there was support for the notion that we believe that the protocols are adequate to keep our players safe. >> i don't put this in the nightmare category i mean, obviously, we don't want any player to get exposed. it's not a positive thing, but i don't see it as a nightmare. we built the protocols to allow us to continue to play that's why we have the expanded rosters, that's why we have the pool of additional players and

we think we can keep people safe and continue to play >> david, it does raise the question if this is happening in a few dozen clubhouses and if testing is as troubled as gates said this morning on squawk. i mean, what does that mean for school reopenings? is that why google says july for returning to the office? >> that's a great question, carl, and i think it's a key one that many of us, certainly parents who have either college age or any age kids in school are wondering about. what's a college dorm going to look like if this is the case there and, again, back to testing. if testing is an important part of your overall protocol, are you going to be able to get results quickly enough to take people who need to be quarantined in some fashion and continue, not to mention how teachers are going to feel about all of that if, in fact, we do see outbreaks or parents so many uncertainties, so difficult to plan for at this point it would seem, but baseball does become in a sense

a reflection of a lot of those fears which is one reason why we're watching it closely, not just because, of course, we're baseball fans. by the way, guys, i did tweet this morning, it is worth mentioning of course on our continued focus on special purpose acquisition corporations, billy bean the noted general manager for many years of course of the oakland athletics, featured in money ball, did start a spac with jerry cardinelli, underwritten by goldman sachs, $500 million and it is going to targe businesses that are specific to -- well, as you might imagine, sports and data areas, although not necessarily because they can't say ahead of time what their exactly going to go after, but i did think that was interesting. mr. bean if he does have some time on his hands will certainly be able to focus on his spac. >> i think that that could be something that would be a very -- look, draftkings is a love thing, robin hood crowd will completely adore that

robin hood crowd reeling from tony sag nelly's sell of tesla robin hood owned tesla, i don't know how they're going to handle it to go back to the college situation i cannot believe -- david, have you looked at how many different schools have many different rules and the schools are all -- i mean, i think that your kid has to be looking at what the rules are at some schools versus others. some schools are basically not taking this thing serious at all and other schools you're out with a couple of tests. >> it's all over the place, though, in terms of the reopening protocols as well. many schools are doing only freshman and seniors on campus, many schools are doing remote but people will be allowed on campus but they will be in their dorms in some fashion. some are bringing everybody back, others are starting early and ending early there's no one size fits all approach or there is no one approach here that we can talk about, jim, but, listen, you know, we focus on it not just

because it's a personal concern, but also because this has a huge impact on the overall economy when you think about towns and cities that are relying on students returning and so many of the businesses that rely on them as well it's yet another important component of the overall economic picture that may not be able to come back to full robust capacity because of the virus. >> i totally agree carl, one of the things that i'm watching, watching closely, obviously i had leader mccarthy on yesterday, talk being $200 extra for unemployment and obviously speaker pelosi wants $600 but that's going to be the key number because we have the is $1200, with he give that to people and we get, say, $400 in unemployment, it keeps the ball in the air and that's what has to happen because the stuff that we're seeing in the papers about all the different protocols and have no idea what's happening and kind of just all -- it's just a menagerie we have no idea what's

happening. i feel like we still haven't beaten this thing at all, other countries, sweden i mentioned was having a problem, sweden is back to having very few people, obviously asia better than we are. i think this could be a free-for-all in september. at least we will have some money in our pockets but it's going to be a free-for-all and that is not inspiring for the companies like 3m that are saying, hey, listen, july has gotten better >> right right. goldman is out this morning, they say we do believe congress will enact a package larger than what the republicans have proposed despite the late start, the odds are high we will get it before the august recess although mcconnell, guys, as you know, is facing resistance not just from within, senate republicans themselves, but from pelosi who talked about this proposal last night. >> if they are not even getting to the fundamentals of food and rent and economic survival,

they're not really ready to have a serious negotiation, however, we will continue, we will read what they put forth. >> well, i don't know. >> jim, sort of an echo of what she told you the other night. >> leader mccarthy said they care more about cannabis than they care about things like food and -- i don't think that's true i think that there's actually more common ground i think leader mccarthy and secretary mnuchin are republicans that want to get a deal done and it's a pleasure to see -- i was blasting on twitter for talking about how it would be great to see consensus. are we really that bad a country that if someone wants consensus that person is now an outlier? that's what you need to be able to get the money in people's pockets. we're listening to a lot of companies, phil lebeau has dave calhoun tomorrow we will have to listen to him talk about -- i don't know, does he have to lay off more people because the orders are not that good i think that we have tony sag netty on halftime today, tesla

has been one of the brightest stars of this market i'm saying this is one difficult week and we are going to have to start lowering expectations about how this country is going to come out of this within the next three months because i just don't see it a magic wand waving from here to the election. david, you know that the -- that it's a flash point, moderna has become absolutely the football of this election they will give you october really really or is it -- how much insider selling they can do between -- let's see, monthly plan, you can do -- i'm sorry to be so part on those promotional guys. >> that's all right. you are not a believer but you've pointed out many times they're promotional. in terms of vaccine we want to focus on pfizer's earnings which i know we will get to as well a bit more after the break a lot of ceos coming up including 3m and ben could you seer >> we will talk to both of them in the next couple hours we will cover a bunch of the earnings we have not gotten to,

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11 1/2 minutes to go before we get an opening bell on this tuesday. apple is the focus on today's mad dash. >> there is an excellent piece

by deutsche bank today that encapsulates a lot of my thinking stocks have run up so much that it makes it difficult or you should be nervous, that word nervous was mentioned in the piece with an underline by deutsche bank of how high a bar it is going into this quarter. apple talking about some delays, i know when i had solutions on last night it's not clear when a 5g -- they can't mention apple's name but not clear when apple has a 5g you might have a situation where you have 12, maybe we want to wait for the 5g. it is a piece that tells me that stocks have come so far, david, that unless things are perfect the stock is going to go down. you know we have a thursday night where we have apple and we have facebook and we have google and amazon it's going to be a jumble. a lot of people will sell things they shouldn't, maybe buy things they shouldn't i am wary of apple apple i say own it don't trade

it but this piece confirms what i'm worried about is that it's pure multiple expansion that's given the stock. multiple expansion drove stocks in 1999. i don't think they are the same, i don't like to comparison, but a piece is a noteworthy piece. >> interesting you've made a similar point on microsoft, again, the second largest market cap out there. >> i was right i reported a great number, people suddenly found things they didn't like obviously there's azure, minor slow down, 52 to 50 and we have to find out whether that is thomas curry at google cloud picking up share or whether it's amazon web services rolling over everybody as they've continued to do. i think we have to be aware and i think people are just coming into the market in which there are many that it's entirely possible that a company could report a good quarter and the stock could still go down. there are a lot of people who have come in who believe that stocks only go up, as someone who has watched the market for a long time, david, is that true >> no, that has not been my

experience there is a period of time when that, in fact, is not the case and often there's a lot of pain associated with those periods of time. >> we just want people to be aware. we are not looking for the market to go down, we don't want it to go down, but it has at times gone down. worth noting for the people who just got in since may and haven't even had a couple back to back days of down >> no, it is absolutely worth noting and it's certainly a highly unusual time in so many ways we're going to take a quick break. of course, don't forget we are going to be joined by the ceo of reckitt benckiser, maker of lieu sole, mucinex, many other consumer products, we will get a check in from him when suite comes right back

major indices coming off their first positive session in three and although futures are weak s&p still ton track for its best july in seven years, needs only a few more points to make it the best july in ten years. "squawk on the street" is back in a moment.

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i'm enthused about all the vaccines that the u.s. has funded, there is the first wave which is about five and then there's the second wave which are cheaper, could be more effective, but, you know, they have to wait because they didn't get done as quickly. so you're just going to hear, you know, various phase threes will start, you know, the johnson & johnson vaccine is a particularly good low-cost vaccine, the astrazeneca's and moderna are two of the first to get out there. >> that's bill gates on a vaccine earlier this meaning on squawk he mention its j & j which did launch trials in the u.s., now pfizer and biotech choosing their candidate. >> interesting that pfizer did not pick the covid-19 vaccine that they had talked about before, it's a large study of a virus -- i'm reading from stat -- aimed at securing -- but it's not the one from which we

were released earlier this month. j & j giving no timeline which i think is a lot better. people have to go forth and some are going to get covid and some are not and we have to make sure there are enough instances of contact that we don't decide, hey, the placebo is doing better than the vaccine i do think that that's why you don't want to shotgun this, you really have to be like j & j and lower the expectations there's an atlantic piece this morning which just says we have to stop thinking that the vaccine is the be all and end all. i do feel that that's what's happened in the stock market in particular i think pfizer knows how to bring a drug, they are total pros, they are not promotional i like what they said. i think that bill gates is absolutely right that the astrazeneca oxford vaccine is very good. a lot of good opportunities here, but i just don't want everyone to get ahead of themselves david, the reason i'm doing that is that i just feel like that the political climate there are

a lot of people who feel that this must happen now i want the best vaccine, not the fastest vaccine. >> of course and the most effective vaccine without a doubt, but to your point, jim, i mean, i've made this point many times, there are anti-virals out there. we talk about remdesivir, but you really don't want to be in a position where you have to get remdesivir because typically you will be in the hospital, it's going to be infused, but there are anti-virals, i've been following one closely licensed by merck that are moving forward for phase two trials that could really change the trajectory of the virus so we do need to keep that in mind. >> antibodies is another way, we have not heard from regeneron which i regard as rather strange. you're right, merck is this friday those are hopeful for me i want a spray that you can take it. >> they are. >> i want to make it so it's less likely -- there are too many people i follow ontwitter who say, listen, it's just a problem for people who are 55.

triage a couple generations and say that's fine? what is this logan's run it's logan's run google it, people, logan's run. >> two-thirds of our show get taken out here that's no good i don't think even carl wants to be alone yeah, there's the opening bell carl, i will let you take it away do want to get to talking about the pfizer numbers as well. >> if you guys leave me i'm out of here, i will tell you that. there's the opening bell, jim, overnight the president did retweet a post that argued hydroxychloroquine was being suppressed to keep deaths high in this country. >> yeah. >> so that the economy could be shut down ahead of the election. i mean, does that shake your faith in whatever news we get out of any agency? >> high droks color queen, that's a sorry that won't died look, we know that there was a couple studies that were good, there have been articles which say, look, there is just an

exaggeration about what happens in terms of heart problems for people who take lupus. i just don't believe that it's in anybody's interest to have more people die. if there is a medicine that works, you know, this is a hippocratic not hypocritical oath, i just think that, i don't know, i mean -- i know that the science, the new england journal of medicine has completely let us down. they hadsome article about som guy saying, listen, don't add masks, then they add an addendum where they say you've got to wear masks the science has been bad, the stuff out of china has been bad. i mean, everything -- there has been a not straight story about anything yet and so i come back and say we just know very little about what works and what doesn't and it's july and it's a little embarrassing. what bill gates said about the meaninglessness of the tests, how about that how about we have companies like quest and lab corps they can't get -- they're overwhelmed >> yes.

>> we are overwhelmed in fighting this thing and what do we get we get kodak getting a big contract to make pills. >> we are going to talk about that jim, we're going to talk about that in a minute let's say on this topic, 3m we will be talking to mike roman, they are talking about a new rapid mist with michigt. pfizer is up it's so interesting the new world jim has been talking b mike roman of course the next hour this new world of zoom there are no pharmaceutical salesmen in the u.s. who are able to meet with doctors and that's been the case for some time. >> yes and that's how they're sold. >> national markets pfizer says are able to meet with health care professionals for most of the quarter but u.s. unable to meet in person with doctors for nearly all of the quarter. yet they're still selling but perhaps not as much as they might have thought given you can't get your car and drive to a doctor's office if you're selling prescription drugs. >> i was shocked, my wife was a

salesperson for medisis for years and she sold dermatology products and one of the things that i learned is it's one of those businesses, not time-shares, but it's like it, it doesn't move unless it's sold you are so right, david. it is very difficult to sell products, particularly for elective products, elective surgery. i have centine on tonight. 40% down elective surgeries. industries have changed, salespeople, salespeople have found themselves in every profession using zoom and it's just not a great way to do business carl, you need estee lauder because of the problem of the breakout with the mask first you have the breakout with the mask, then you have the really ugly kind of thing you got with zoom. in the end who wants to do business with you? you look like a freak show.

>> this is an extension of your ulta salon thesis from the pre-covid era, jim, you still have to look good, especially now on camera. >> i'm scrubbing and scrubbing, carl, doesn't matter. >> as we're talking, jim, the fed with the announcement that they are extending the lending facilities which were scheduled to expire at the end of september to december 31, not a terrible surprise, i guess there is a ton of facilities that are applicable here, but it is a sign that we're going to have to make this bridge maybe longer than the fed initially anticipated. >> well, good for them when we look at what's going on with horton, we know that it has been a dramatic positive, the housing industry is 10% of this country, punches above its weight the fed is doing its job if you are in favor of employment i say that because i think that the country is very split on, you know, some people actually don't want things to be good because there is an election this year, but horton is up 3. against that i would look at

labcorp. labcorp being up 4 is not a good sign, it means that they are making a fortune off testing and that the testing is going to continue to be tight i would like to see labcorp down because the federal government has decided to get in the testing business itself and not have a laissez-faire attitude with a couple companies dominating it. by the way, who gets quick testing? maybe people from the mets and phillies quick testing is the province of people who play pro sports and really rich people and that is just -- that's a sham. it's just terrible how many times are they going to test football players? do you think they wait ten days? do you think they wait ten days? unless they have the bye week. >> jim, the argument other countries have test and trace and we have test and wait. that's sort of the argument from a lot of skeptics right now. >> yeah. >> steve liesman has more on this fed lending extension steve? >> carl, yeah, you provided very

much the context that i was going to provide which is here is the federal reserve settling in for maybe a little bit more of the long haul with these things we started off this thing thinking, hey, this was going to be something quick, a v-shaped recovery, now the fed and i think others coming to the realization that the economy is going to need assistance for longer i will read you what the fed wrote in this press release, the three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the covid-19 pandemic so all of these 13, 3 facilities, the pvc, money market fund, paycheck protection program that the fed buys the loans from, two were already longer but all of them will now be available through december 31st and it allows people to think it will be around for a while. it's something we can plan on using if niec using if needed, carl. >> steve, thank you for that

jim, back to your point -- i'm sorry, back to your point on housing. "washington post" had an incredible piece yesterday looking at how the pandemic has exacerbated inequalities if you own a house you are doing incredibly well if you want to make money on it if you rent you're worried about being homeless in a matter of months and horton's backlog way above expectations, revenue just blew it out. >> yeah. you know who talks about this more than anyone and talks about it extensively is greg hayes from raytheon, the stock is going from up to down in part because they made their number off of cost cuts his company has always been committed to education his company is really -- his company is a throw back. they've been focused -- they've provided the most scholarships other than the u.s. government he talks about inequality and has always addressed the inequality on the call we now get a lot of calls that address inequality it's almost like they say we

realize things are bad things have been bad for a long time greg hayes uses a term called institutional racism and what a delight that is to have someone use the real terms about what's going on his call will be interesting he always addresses -- it's going on now, it started at 8:30, but he always addresses the issue head-on. it is terrific to hear someone recognize the inequalities in the country and try to do something about it i don't want to be on a sole box about this, but it does annoy me that a lot of companies suddenly woke up to this when many companies figured this out ahead of time. >> greg hayes always tells it like it is which is one reason why we love having him on as a guest as well. a couple quick things to hit before we get to reckitt benckiser this morning we're talking housing right now. rocket mortgage filed an s1. i spoke about this company a few weeks ago, dan gilbert company, quicken loans but rocket mortgage is the name i mean, 150 million shares will

be priced between 20 and 22, this will be the biggest deal of the year, midpoint $3.15 billion will be issued that's a $40 billion plus market value for rocket mortgage. a company in the second quarter did a well billion and a half in income just think about that for a second. >> wow. >> that, again, goes to the point on what's going on with housing right now and where rates are. >> is there going to be jay farner -- >> yes yes. >> everybody loves this guy. >> jay farner is unbelievable. he called me once i said, i don't know, wells may have a better record. this he do have the lowest default, that company, the complex that dan runs has the lowest default ratio of any lending institution. now, i was mistakenly -- i mistakenly said something about a bank that was better and they got ahold of me in about, i don't know, about an hour and gave me -- they really schooled me i like to be schooled.

anyone who thinks i've got it wrong just call me, i will change my mind i thought that rocket mortgage did not have the stringent rules. i was totally wrong. they're fantastic lenders. >> yeah. >> carl, i have to tell you a lot -- >> it's as much about financial services, technology. >> right >> right and the growth there so we are going to keep a close eye on that. it's, i think, next week it's going to be hitting the public markets. finally, jim, you mentioned kodak briefly, this is not the kodak we grew up with, this has been repurposed as a company gearing up to produce ingredients for generic drugs. why am i mentioning it it's a $100 million market company before the opening this morning but it's now about three or four times that after the administration gives it a $765 million loan, government loan under the defense production act, this is the first of its kind, the purpose is to help expedite the domestic production

of these ingredients because so many of them come from china but east man kodak, this buy george garfunkel bought 11 million shares at 250 recently. >> i saw that. good timing. >> sophisticated investors, gso, blackstone, they sold at that level. this is high, high speculation just because they got a $765 million loan i think we have your pal navarro talking about it, jim. want to take a listen? >> he has been death by china drugs. >> we're going to fly up this afternoon to the kodak corporation in rochester, new york, visit a facility which was absolutely made to assist america in bringing back its pharmaceutical supply chains and medicines to u.s. soil what we have today is a $760

million loan, fully collateralized, so minimal risk to the taxpayer, which is going to allow this country over time to be able to produce a full 25% of the active pharmaceutical ingredients that are necessary to make our generic medicines. >> david, let's call this as it is >> maybe it will be a seminole moment, jim, for this company, but, please, please, be careful out there. this is just ridiculous. >> this is a navarro spac. did you know navarro had a spac? >> no. >> it's a navarro spac what else can you call it? >> there you go. >> mylan, they do that business. >> i don't know. >> i think way too much comes from china way too much i do think that eastman kodak -- they used to own sterling drug maybe they remembered sterling drug >> it's going to create some jobs in rochester so that's

good. >> we like that. the red wings, are they holding them up yet? are they called up because the pandemic >> i don't know. >> all right we've got to take a quick break. reckitt benckiser will be on the other side of this we will get an update on lysol and, oh, a lot of other things

welcome back to suite. as promised let's length in laxman narasimnhan ceo of reckitt benckiser. reported earnings, had their conference call. joined us to talk about lysol and some other things as well in the not for profit area. good to have you after earnings this morning, laxman let me start off with your guidance you did get some questions on the call about why not more? why not have, in fact, increased your medium and long-term growth expectations given where you see the business right now and you said, well, i'm confident but at the same time don't want to get ahead of ourselves what did you mean when you said don't want to get ahead of ourselves? >> look, we have had a strong start. lysol detol exceptional performance, strong hygiene sensitivity, tailwind with

e-commerce, big growth, 60% growth in the first half of the year, we have had good sales because of nesting at home and a couple tail winds with social distancing as well as with pantry unloading strategy is taking hold, culture and purpose of flight for the company is taking hold, we're building the business for the long term. going to take some upside and reinvest it in the business but taking up guidance at this point in time for the future in an era of real uncertainty feels premature to me. i don't want to get us out ahead of ourselves we need to do the right thing and build the business for the long term. >> a lot of people focused of course on, as you point out, the sale of products such as lysol for hygiene, for combating the virus, you have had partnerships, a new one announced with delta there have been mounting studies of late, laxman, that indicate that it's not impossible to catch the virus from a surface, but it is highly unlikely.

the primary if not really almost the soul way that the virus is transmitted is through the air does that make you think, perhaps, a lot of this is hygiene theater and at some point it's going to come to an end? >> there's no question that aerosol transmission is important, but it doesn't exclude the fact that there is a chance for this to also transmit from the surface, we've seen that in various places so we fully think that this is something just staying high jen nick, ensuring that you are practicing high jen nick practices is quite important >> sir -- >> i'm sorry, david, go ahead. >> jim, go ahead no, jim, go ahead. please. >> i wanted to thank you for sending me some airborne you sent me a couple bottles of airborne i wanted to know whether those were the only two bottles. have you gotten to the point where you can fulfill the demand of your products because i know when i see these arrangements you're making with airlines and doing some terrific things to try to keep everybody at peace, basically, i am concerned that you're out of product.

>> jim, we are investing heavily in ensuring that our capacity goes up. in fact, we had announced in february an expansion of 2 billion pounds of an investment in the business. we're taking that investment level up, including investment in additional capacity if you look at the growth of lysol in the u.s. it's grown over 70% i don't think there is a lot of people who can really scale up supply in order to meet 70% growth and demand overnight. we are, in fact, making exactly those arrangements with a combination of cold packers as well as investments we are making in our lines in order to meet the demand, including the gummies that you like. >> well, laxman, that's perfect. that's what we're worried about. i've been trying to figure out about the extensions of what you can do in terms of the lysol brand and working with business. for instance, i have otis tonight on "mad money," i would love to see otis partner with you because when i get in an elevator it is one of the places i truly fear

are there many places that need to partner with you in order to be able to figure out how to make people not nervous about doing something? >> jim, our brands are a trust mark and some of the partners that we've already announced have done independent studies and consumers are told us a bra trust mark for them. we're in conversations with many of these verticals that yo mentioned. we announced a few and we will certainly announce more but it's clearly exactly what you're saying consumers are anxious. they need a trust mark lysol and detol are the best trust marks out there in the disinfection space >> i want to talk about the business itself. you came in with the expectation of increasing margin you've done that at least over the last year, first half of 2019, 23.6%, 90 basis point improvement to where you are right now, 24.5. i think that includes 69 million pounds in covid related costs. can you keep doing it or where

are you in terms of margin improvement, when you look at the future and when you look at what the product portfolio is and your expectations are? >> the long-term value on the stock is in our ability to deliver growth what we have talked about in february when i came in and announcement our future strategy was our focus was on ensuring we would be a mid single digits growth company and delivering growth in terms of eps growth. our focus is on that, and we are in fact investing in the business, both this year and next year, in terms of you know, investments and capacity, investments in commercial muscle, investments in r&d and innovation, in orderer us to set the business for long-term growth so the focus is on that. the margin is up, but the reality is that as you look at it, we are investing in a business particularly from now to next year in order to set the business up to hit a mid-20s

margin in the mid-20s. >> all right, and finally, one bit of good news we may be getting here is the expectation that the flu season is going to be less than anticipated in part because of all the things people are doing in terms of hygiene. how is that going to impact your business >> we are prepared for, now he, a flu season of any intensity. you are correct in saying that if you look at a southern hemisphere, the earlier returns of that, you know, the flu season is going to be milder we are prepared. our supply chain did have some issues in the middle of the year last year. we have worked very hard to fix it, and have gotten much closer to our customers in terms of how we do this sowe're ready for the flu season, whichever way it turns out. >> we appreciate you taking some time with us and look forward to seeing you go enin the future. thank you. >> thank you, jim and david. much appreciated shares of 3m at a two-week

low as the company misses by a penny. revenue was light. guidance remains withdrawn july they say up month to date we're back in a moment bigger wd in a highly-connected lexus vehicle at the golden opportunity sales event. lease the 2020 es 350 for $359 a month for 36 months. experience amazing at your lexus dealer.

a little weakness in faang this morning despite the fact that deutsche goes to a street high 1975 on alphabet, and jeffries says that amazon will meet or beat when they report on thursday, that's one reason the nasdaq though is down ouabt 0.8. we're back in a minute

riding an all terrain vehicle, look at that, polaris, despite the fact they had some manufacturing issues, it is on fire, because we love the great outdoors during a pandemic it is something we saw from campus world and the rvs now and from the atvs. >> conference call from harley will continue from benefit from interest in auto activities post-covid

people looking for things to do, not go to a big party with a deejay where you're all clustered together watching the chain smokers, not what you're supposed to do >> harley talking about exiting some international markets, might be why some of the shares are down >> the great outdoors. >> how about tonight >> otis elevator, why i mentioned to lysol, i find elevators to me are frightening right now and centene, we have to find out about testing. tell me that you're afraid when an elevator opens and three people on it hey, i'll take the next one. >> not because of the surfaces and not because of the surfaces. look at this one from honeywell. looks like sprm, do you like this it has the filter. get them on amazon

this is the game plan, all right? >> look at that. >> honeywell, of course. >> we will see you at 6:00 >> i love a good mask. >> "mad money" on cnbc >> stay away from me and let me wear my mask and we're all good. >> see you tonight, jim. good tuesday morning, everybody. welcome to "squawk on the street." i'm carl quintanilla with david faber and leslie picker. consumer confidence, get to rick >> reporter: consumer confidence for the month of july expected up around 95 to 96, a bit of a disappointment 92.6 and if we look at the present situation it moved from 86 and change up to 94.2, and if we look at expectations, this one really lost some ground from 106 all the way down to 91.5 the headline at 92.6, well of course it's reversal of last time, rebounded up to 98, so we want to be a bit careful here,

85 was the april low a six-year low. let's move to richmond fed also a july number, this number is coming in at ten, twice expectations and it is the best level since january, when we were at 20 and the low water mark was minus 53, of course that was in april. leslie picker, back to you >> thanks, rick. starting to see those confidence levels trickle into earnings so bob pisani is with us to break down what's going on on a busy day, during a busy week for earnings season. bob, what is going on? >> well, leslie, we're about a third of the way through earnings season and it's a complicated picture. there are some winners evolving, emerging all the work from home plays, sherwin williams had a great number overall they raised guidance in a quarter few people are getting it the home blrps are killing it. d.r. horton had a big increase in orders, the same with mdc but these are the exceptions no guidance from a lot of the industrials, that's really an issue here, 3m missed, didn't

give any guidance. xerox didn't give any guidance, raytheon didn't give any guidance, neither did harley and they had an unexpected loss. mcdonald's a modest miss as well there's two stories emerging one story is the reopening is going slower than people were anticipating a month or two ago. xerox said this essentially today. "the continued uncertainty around the spread and resurgence of the virus has changed our prior expectation for an inflection point following the second quarter we now expect a slower pace of gradual recovery in the second half of the year." so there's one story, reopenings going slower and yet the bulls are maintaining the second quarter was the bottom, and the numbers are getting better and they have some support the earnings estimates for the third quarter on the s&p are getting better they were down 25% a few days ago, now only down 23% it's rare for the numbers to go up in the middle of an earnings quarter. there is some support for the idea the second quarter was the bottom if you don't believe that, head

to mcdonald's this morning, essentially said that things are tough but "i believe that the second quarter represents th trough in our performance as mcdonald's has learned to adjust our operations in this new environment. the two stories competing for attention, one the reopening is not going that smoothly and second maybe not going so smoothly but the second quarter was the bottom and slowly, things are getting better. that's the competition for the story ideas. guys, back to you. >> all right, bob, thank you very much. we want to dive a little bit deep near mcdonald's as bob was talking about, shares are down second worst performing dow component of the morning, second to 3m on that miss on the bottom line, although they did see better than expected u.s. comps. david palmer is senior managing director of offercorps isi joins us this morning, has an outperform good to see you as always, good morning. >> good morning, carl, thank you. >> everybody's looking at komco

but you're more interested in costs sounds like. >> well, going forward, these guys are going to have better cost outlook but yes, in that quarter they certainly spend a lot of money on sg&a and some was prespending on the advertising. the major story is how things evolve for their international business the u.s. business is already getting back on track to some degree with the exception of breakfasts made or headwind but what intrigues us is probably the next thing to look around the corner at, is that international business mostly europe, will they be gaining share in the future? >> europe i guess we're framing this according to what c camchinski is saying, europe is opening at a faster pace and more ripe for share gains. is that the take >> yes, and a lot of this comes down to format and the format of

competition. in the u.s., the fact these guys are back up slightly in july is still slightly below where the chain fast food industry is in terms of drive-through units there's a lot of them out there that are up. the format is robust, socially distant in europe, mcdonald's has about a third of its business precovid was from drive-through. 70% plus of its orders were from the counter in europe pre-covid so that's a brutal starting point and also brutal fort competition for mcdonald's going forward there's a lot of share to be gained not only the drive-through sales for mcdonald's builds back up, but also a lot of these other stores the competition fades away they don't, they fail to reopen and left with more share to be gained in some of the cities in europe >> interesting he did say they have what he called a sizeable marketing war

chest to invest in the second half, couple hundred million dollars. i wonder what do you expect the marketing strategy is going to be in the second half, if in fact you're looking for sg&a to come in? >> they're holding off a good bit on the stuff this was supposed to be the year of breakfast innovation and chicken innovation i think they're holding off on the premium chicken for the u.s. what they're doing now is cranking that drive-through and keeping the menu simple, so they're going to be trying to reignite that breakfast day to symptom degree and also marketing to their favorites, the core people want what's familiar these days, and obviously a pretty stressful year of 2020, and so i think they're going to be advertising to that they kicked in $160 million in this first half of the year but the advertising spending it self was way down, so they pre-funded a lot of marketing weight into

the second half. >> what do you think a weaker dollar might mean for mcdonald's moving forward >> it's a big deal for this stock. the multinationals have had to fight the tape in terms of their earnings revisions for a long time, and as we know, there was a golden era during parts of the 2000s where mcdonald's earnings revisions were positive for most of that decade and it was a beautiful time for the stock and so you know, inflation often goes hand in hand with that, and you know this is a franchise business model these guys do not mind inflation. they do not mind a weak dollar that is a great cocktail for the earnings of stocks so we start to see a global reflation trade. this stock along with some of those blue chip cbg companies would participate in that. >> finally, david, relative to wendy's and dpz and papa's,

where does mcdonald's rate, given some of the extraordinary kompz we ha comps we've gotten from a few other players? >> it's great to be a meal oriented player like the pizza guys you certainly see it with chicken, chick-fil-a in a private world or kfc, popeye's from restaurant brands, they're doing monster comps because they have a huge check growth at dinner mcdonald's has to fight the breakfast decline rate, major double-digit declines, 8-plus point drag to mcdonald's comps alone is breakfast longer term, this thing will do well internationals could be a slower buildup so that's what makes us rank behind a more domestic oriented earnings revision story and casual dining will have serious earnings going forward so within the world of casual dining and darden would rank higher and wendys has more earnings in the near term but long-term mcdonald's does deserve the premium it gets as

being a shared gainer that should slowly get out of this from europe and u.s. breakfast >> um-hum. finally, we got to go, david, but before we get into starbucks tonight, are you feeling, you got an itchy trigger finger on starbucks in front of the print? >> yes, well, starbucks is doing everything it can, especially coffee is a tough zone right now. we heard from the big breakfast player in mcdonald's, it was tough to be in the morning day part starbucks was down 75% the last time they checked in with us late may their on premise business was down. their comps were probably down over 20% mid-20s probably in june so it's a slower road back for starbucks and that's a problem that the good news is for them that they have net earnings where they want them, and so the earnings are modestly set by the street and them, but we are in line on that stock because the

slow climate they're having on sales. >> right david, great insight as always we love turning to you on restaurants. thanks again see you later. >> thanks for having me. ces has been con seanceled. julia boorstin has more. >> big news on the consumer electronics show in las vegas every year, it will be an all digital experience the organization saying they're no longer going to have an in-person component and they're going to try to figure out how to have a digital gathering of thought leaders from media and technology from across the world. i think it's going to be really interesting to see how they figure this out leslie, because this is an important time for tech companies to unveil new gadgets and talk about the future roadmap for what their technologies will look like and important time for the advertising industry to come and look at new ways that they could reach consumers and start negotiating deals with clients that are sort of concluded around the up fronts that happen in may

so a very important meeting both for tech and advertising industry, now moving untirely online back over to you >> julia, thank you. julia boorstin i don't know how you do it, digital ces, not sure how that works. shares of 3m down about 5% take a look, see for yourself. there it is, yes, after reporting earnings we'll have mike roman on the other side of the break, ceo

it's time for our etf spotlight. looking at the health care spdr ticker xlv rising today up about 0.1%, and up over the last three months pfizer giving it a lift on the dow component's quarterly ayituss. st wh ♪

♪ ♪ ♪ ♪ these last three months, i have been wondering about the future in many ways. i'm not the only one going through this. some of my dearest friends, their businesses are still closed. there's always peaks and valleys. even through this pandemic, we're all in a valley at this moment. but the one thing you can always know is that there's a peak on the way. ♪

>> welcome back. we are getting mike roman ready for air, given he just got off the company's conference call at

3m the stock is down about 5% i'm told mr. roman is ready. organic sales were down about 13%, adjusted earnings per share of $1.78 for 3m, and mike, i want to bring in now, i think you're ready and let me start sort of on the outlook if i can. your cfo talking about it on the conference call saying you do expect to see a global economic activity stronger in the third quarter than the second quarter. i know there are people here in the united states at least who are a bit concerned about whether that will be the case. what gives you the confidence it will >> yes, david, you know, we come off of another strong performance in the second quarter, in a challenging economic environment, and as monish talked about, we're seeing q3 improving outlook versus q2. that's coming through our july sales trends we've seen improvements across our businesses, across geographies, really early days, and a lot of uncertainty and we're watching it, like

everybody else, day to day, month to month, but i'm encouraged by those early sales trends showing that we're seeing a pickup in some of the end markets so hard hit during covid, some of the areas like elective procedures in health care starting to improve and broader industrial, automotive getting sequentially a little better, less bad in terms of rates. those trends are encouraging us to see it through that lens at this time. >> yes well you did have your adjusted ebitda margin up for the quarter. now you've been cutting costs. i remember the last time we spoke i think you unveiled the $400 million year over year reduction in costs do you think you need to take even more costs out of the business or are you comfortable with where you are right now in terms of your expense load, mike >> well, it was very important part of that strong performance in the second quarter was cost management it was across the board and the company really taking stock of

what we were saying and the outlook you saw, the organic sales declines in the quarter, so taking, adjusting our costs in the face of that was really important and that was broad-based. a lot of that was i would say temporary and not a lot of restructuring actions in it. it was really managing our costs against those slower end markets. as we move in to third quarter, we'll continue that discipline and we are going to be ready to act in face of whatever we see coming, but at the same time, as the economies improve and sales trends improve, we expect to invest more in that growth, and so there will be some of those i would say those temporary costs that will start to come back, but that cost discipline is going to be an important part of delivering and we talked about an incremental improvement in margins coming from q2 to q3 that cost management will continue tobe very important that hallmark of solid margins, strong cash flow and i would say managing our balance sheet, we're going to continue that as we go through the third quarter.

>> yes, and you did reduce net debt by $1.7 billion, about 10% in the second quarter. mike, let me turn to the pandemic, given the various products that you have to deal with it. of course, we talk a lot about you in the past about respirators. let me come to you about testing. 'a huge issue in this country, particularly our inability to receive test results in a timely manner you announced the dlabration with collaboration with mit and diagnostic test that aspires to make testing faster. what can you tell us where you are in the development of that, when you conceivably could see it to market and how quickly it would be able to deliver accurate results >> david, this is another example when i talk about fighting the pandemic from all angles we launched a collaboration with mit earl wiy in the outbreak of covid in the u.s. to look at taking advantage of 3m technology, combined with the capabilities in technology at

mit to develop that faster, easier to use, lower cost test and we worked together to get to a point where the national institutes of health is sponsoring us as we move ahead we have work to do to demonstrate the performance of this capability, but it's an exciting opportunity to do just what you talked about, be able to meet that demand for a large number of tests, frequent testing, fast response, low cost, make it widely available, so it's something where we're in the middle of working on the really to prove it out with mit, a great partner, and then we will be ready to scale as we can demonstrate that it really is a solution that we need. >> any time line for us in terms of when you expect to know >> more work to do right now we are ready, the strength that 3m brings is the manufacturing, the ability to scale so we'll quickly scale once we have a proven solution. so it's no time frame yet but we get that solution proven, we'll

scale quickly. >> mike, you said that you're on track to produce about 2 billion n95 respirators by the end of 2020 if there is an uptick in the wave, do you believe that's enough supply and inventory to combat the crisis? >> leslie, you're talking about really halfway through the year we produced and delivered 800 million deployablely, 400 million in the u.s the 2 billion number represents a step up in production rates as we go through the rest of the year we're adding capacity. we added capacity here at the end of the second quarter. we're working with the department of defense to add additional capacity in the second half. right now, the demand for n95 respirators outstrips our ability to meet the demand and industry we are working to catch up to that so that 2 billion will be a total year number, at a run rate of 2.5 billion by the end of the year

we continue to step into it doing everything we can to ramp up that capacity and the industry is looking to do that as well. so we've got to get ahead of the near-term demand and at the same time build enough capacity for any possible further outbreaks >> i want to switch gears and ask you about pfas bloomberg's litigation team estimates the total reliability of chemicals that seeped into the water supply between $9 billion and $10 billion. you have he taken charges related to cleanup with regard to the issues in the past. can you give us sense on what your anticipation will be with regard to the total liability for ppas >> leslie, we are proactively managing pfas. there's multiple dimensions to that and one of that is the liability and the uncertainty around that, and that's something that we are working to help with our investors and i would say our stake holders broadly, helping that uncertainty, but it's just not possible at this point to really

estimate the impact of pfas more broadly. we've taken reserves where we can make a probable and estimated view of what's going on, around where we historically manufactured and proposed pfas taking the steps to resolve that including remediation. it will take time to get a better view and in the meantime there's a lot of things that we are focused on, one is working in support of the epa's management plan around pfas. there's more to come we're being as transparent as we can. we have a clearinghouse for all the research around testing and measuring and remediation and also continuing to update information on what we face in pfas, everything from the remediation work to the litigation so we're going to try to help that uncertainty, as we go forward. >> mike, do you think that the concern about liability, and not

just pfas, i know a judge ruled against some key 3m defense that you are offering and an earplug lawsuit about faulty ear plugs for the military do you think that liability issue overall mitigates against your stock price moving particularly higher? >> well i think there's that uncertainty we were just talking about with pfas, certainly something that is a concern for investors, so that is out there. the other litigation that you're talking about, there's a number of other litigation issues that we face, some of them have been something that we've been managing for some time it's something that goes along with the product development and sales that we have around the world. in the case of the combat arms, that's something where we have had a strong partnership we really believe in supporting the brave men and women of the military, and we continue to work with them to support them

we don't believe our combat arms ear plugs were defective and caused the injuries that were talked about, but that's something we have to manage as we move ahead, and it is another litigation issue that we face, but we are managing very proactively. >> all right, let's talk about managing this economy. back to school is important for your company as well of course given the stationary, all the supplies that you may provide. there's a lot of concern that kids are not going to be back in the classroom. how much of an impact will that have on your business, if in fact we see a lot of students not actually in class? >> david, you get a sense of it as we came through second quarter. you can see our consumer business, our retail businesses. we saw strengths in areas like home improvement we saw strengths in cleaning products and disinfecting

products we saw weakness in our stationary office, partly because of the remote working but a big part of it as schools shut down for the remainder of the year you can see that potentially having some impact if schools don't reopen as they come into the fall now our retail partners and our teams, we're preparing for back to school, and we are scaling up and getting ready for that there's another one of those situations in the middle of covid that we're taking almost day to day, really how is this going to play out? how much demand will we see? i think we are hoping and expecting to see some improvement from what we saw at the end of second quarter, but it remains to be seen as the markets recover. >> finally, let's just quickly hit on the rest of the world china as well. i know you've said some positive things or at least on the call i think it may have been your cfo said some positive things about a recovery there what are you seeing globally >> well, globally, talk around the world is i would say consistent as we came through

second quarter we saw emea, europe, middle east, africa in the u.s., contributing to the second quarter. asia was down but china was up china was up 3% in the quarter, starting to show the signs of reopening their economy, and we saw broad-based contribution to that, electronics, transportation, general industrial, our consumer businesses all contributing. health care may be lagging a little bit, even in china, the electric procedures were coming back slower, so it's maybe an example of how economies will start to reopen and we're watching that in each of the geographies, looking at what we will see coming in to third quarter and as i mentioned, early days in july, we're seeing low single digits growth broadly and it's really contributing from all those geographies, improving sequentially from second quarter to third quarter,

early days of july >> all right, mike, always great to get your take on things, given the tie versity of products you provide around the world. thank you. mike roman, chairman and ceo of 3m >> thank you, david. let's get to sue herera with an update. >> good morning, everybody everybody. reuters reporting that today's game between the new york yankees and the philadelphia phillies has been postponed again as some phillies players await covid test results the largest trade group for airlines say passenger traffic will not recover to pre-pandemic levels until 2024 and that is a year longer than its previous estimate you can go to cnbc.com to see how the air freight business is doing during all of this a new nbc news survey monkey poll finds 68% of u.s. adults say they wear a mask every time they leave home, but there are some stark differences along party lines. 86% of democrats say they wear one every time versus only 48%

of republicans and in portland, oregon, hundreds of protesters once again faced off with federal agents, flash grenades and tear gas were used to disperse the resistant crowd. calls for the agents to leave have gotten louder mayors of portland, chicago and three other cities appealed to congress to make it illegal to deploy mill trialsed federal agents to cities that do not want them. you are up to date that's the news update this hour "squawk on the street" continues after this

stocks are overvalued, steve liesman has what they said, hey steve. >> carl, yeah, they think they are indeed overvalued. get to that in a second. i want to shore you the outlook of our 41 respondents for the s&p 500 and it's just not pretty if you look at based on

yesterday's close, 3239 and the outlook for the end of the year is below the current level 3174, the average response or forecast for the s&p. it does go up a bit in 2021 so that's some good news but just about a 4% increase. this group typically bearish here i will tell you, the economists in this survey have a much lower forecast than the equity people and we'll get to that difference between the two in the outlooks in a second. equity guys are 200 points i want to show you the affect over time and what you see is that a lot has been taken out of expectations back in 2019 the expectation was 3.2%, that fell in 2019 with concern about the economy and the fed being too tight to 2% and 0.76, for the end of this year about 2.5% of expectations taken

out of the ten-year in the market on this issue of stock prices being too high, 78% say it's extremely or somewhat say the stock values are extremely or somewhat high. 20% extremely, 51% or majority of that group saying just somewhat high. 100% of the fed say nothing will happen in tomorrow, nopolicy o change in rates. next move august 2022 and it would be a hike but that's eight months later than previously fed balance sheet growing to 9.2 trillion, currently 6.9 and two-thirds say they'll be more action coming from the federal reserve. here is some of the differences between the economists, "the virus is out of control and investors don't think that is an issue which makes me wonder if they are rational or not." look at what hank smith says, "unlike previous bear markets, there will not be any test of the lows made on march 23 mpbd

the enormous monetary and fiscal response delivered extraordinarily quickly. leslie, tale of two worlds right there, the economists look at the market and say what's going on, equity guys say makes perfect sense to me. back to you, leslie. >> thank you, steve. in the meantime, senate republicans have unveiled major parts of their coronavirus relief plan including a wage replacement of 70% in extended unemployment benefits. labor secretary eugene scalia joins us on the stimulus initiatives. thank you, ecretary, for joining us republicans unveiled a $1 trillion plan, it includes reducing the unemployment supplement from $600 weekly to $200 weekly until september and state benefits combined with other stimulus will go down to about 70% of previous wages. with everything kind of down to the wire here, do you think that this is likely to get passed what american people want to know essentially, will they be seeing more money in the future

and how much will it be? >> leslie, good to be with you yes, the american people will be seeing a substantial additional aid from the federal government during this difficult time as you said, the $6 hub a week benefit which was passed by kng in march expired kng in march agreed it should end at the end of july and so that's happening now the president, the senate republicans have stepped forward and said let's continue, a federal supplement on unemployment insurance which is very unusual unemployment insurance is a state system it's funded by contributions by employers, but the federal government stepped in during the great recession, the weekly federal supplement was $25 a week now the president, republicans and the senate are saying let's make it $200 a week until we can transition to what you described

which is this 70% wage replacement rate, so that people on unemployment would get 70% of their working wage and a couple quick points on that this concept of wage replacement is fundamental to an unemployment insurance system and worker advocates say we shouldn't have wage replacement about 60% to 66% of the wages people had while working but the president, the senate republicans have come in and said let's make it 70% during this challenging time. now that is less than the $ 00 a week payment but i was pleased to see this morning that house majority leader steny hoyer acknowledged there was $600 week is paying nearly 70% of people on unemployment more than they got while working and again, so when you look at a wage replacement approach, $600 a week was a substantial payment

as we were closing our economy in march, but it's not a sustainable approach toward an unemployment insurance system. >> in temples of the stability of the economy, we've seen a spike in coronavirus cases over the last few weeks is it the right time to really be decreasing benefits amid kind of the backdrop of this virus which seems at least in terms of the potential for additional shutdowns in the future nowhere a certainty? >> it's a good question and let me emphasize first of all that we've made great progress from where we were in march, in a couple of ways we understand the virus better, much more how it's transmitted, how to treat it, how to contain it and we've economically been able to progress much farther than people were projecting back then as you know in may and june together we added 7.5 million jobs we are farther along in a strong recovery than had been projected, but it's not time to

pull away entirely from federal aid and that's why even though congress had previously agreed the $600 a week should expire, the president is stepping forward and saying let's continue with something very unusual with this $200 a week payment. so unusual to have the federal government joining in funding unemployment insurance, and as you know, there's more there are another round of economic impact payments, $1,200 per taxpayer, additional substantial support with another $500 for dependents, support for the paycheck protection program, another $190 billion there, and then another $1.3 billion in worker training and to help dislocated workers so this is another really very substantial package to help americans during a period that remains difficult, even though i think we've certainly come a long way from march. >> consumers on the tape now

saying that the plan has tax breaks for three-martini lunches but no money for feeding kids. i know the deductions are a piece of this but what is the hope behind deductions for meals and entertainment? is the expectation people like ourselves will get our corporate cards out again? >> i believe there is a provision that would provide tax deductibility for meals and of course that's targeted the restaurant sector, that is a sector that we know has been hit harder than others by the virus, and i've certainly heard from restaurant owners who think that's one way that they can weather this period. so that kind of a tax credit is about sustaining those businesses, sustaining their workers. there are other tax credits for hiring workers who were laid off as a result of the pandemic to incentivize rehiring of workers and i don't think we should apologize for a moment for tax incentives meant to restore the

strength of our businesses, restore jobs what we want is the economy that president trump had built until the virus came, and that was an economy built in part on tax relief which incentivized job growth and a record economy. provisions like the one you described are aimed for sustaining businesses and support the workers at those companies. >> yes, a record economy certainly with the unemployment rate where it was, not necessarily gdp, mr. secretary i have a question about the wage replacement to the 70% you were describing from the $200 benefit. there was a memo out yesterday from the national association of state workforce agencies that basically said, given the state of many states' computer systems, it can take from eight weeks to 20 weeks to get to a point where they could actually process that, once they get guidance from you. is that a concern for the department of labor? >> we can make this work as you're describing, it's true.

the way that this will function under the senate bill is that for two months, it will be a $200 a week payment and then states will transition at the end of two months to 70% wage replacement approach we surveyed the states the great majority indicated they could get this done within eight weeks. there is a process by which they can apply to the labor department for a waiver if they're not able to achieve it but i'll tell you, senator schumer and senator widen of oregon put forward their own proposal a while ago that required more changes by states. it would have fluctuated up and potentially on a monthly basis depending on the unemployment rate there are a number of problems with their proposal but states would have made changes more frequently than our approach we looked at it and think this could be done. another important part of this legislation is more than $1 billion more for states to

administer their unemployment insurance systems. we know they've had problems we've tried to help them and $2 billion to build a better system over time, so that among other things, we can reduce fraud on the system, which has been a major concern. maryland reported a couple weeks ago in part as a result of investigation with us at the labor department that about 20% of the claims that they had appeared suspect, and that they believed they'd been defrauded by $500 million, and so introducing more integrity into this unemployment system is important, too, and that's another thing this legislation will do. >> all right, well we'll see what happens we'll be watching closely over the next few days. secretary scalia, thanks for joining us >> thanks so much. when we come back, is major league baseball season in jeopardy with the postponement from yesterday, the yankees/phillies postponed today. what does that mean for the planned restart of other sports this friday? we'll talk about that after a quick break, as the markets are

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intech rising as they announced phased trials for a potential vaccine. meg tirrell has more on. >> hi, david they are the second group of companies to announce they started this last stage of testing of their covid-19 vaccines, after earlier in the day yesterday moderna started its phase three trial. what these phase three trials really are is the last stage of testing before seeking regulatory review. they seek to assess safety and efficacy and they are the largest trials run these ones will be in about 30,000 participants. half will receive the vaccine, half will get placebo own in terms of success the fda is looking for 15%efficacy. nobody knows who gets what and they observe the side effects and infections the goal is for there to be half as many in the vaccine group as in the placebo group in terms of the details of the

pfizer and biontech trial, they'll enroll up to 30,000 participants between the ages of 18 and 85. they started last night, dosed the first participant in the united states, and they will do this globally at 120 sites they say if all goes well, they are on track to seek regulatory review as early as october guys, what's really interesting about the news last night is that the candidate they selected of the four they were evaluating is a different one than the one they already presented data on they say that both of the candidates showed favorable immu immunogenecity the immune response in t cell and antibodies this one had a good tolerability profile. they had data in older americans between the ages of 65 and 85, which is so important given how hard the disease hits older folks. we'll be talking about all of this and more, including the quarter with pfizer ceo albert

bourla on "the exchange" today >> that's an interview you do not want to miss thank you for sharing that with us >> thank you with a few colleges offering discounts for distance learning, cnbc has the top schools that provide the students the best return on investment stanford, harvard university and the university of chicago are among the top private schools, while the university of washington, baruch college and purdue university west lafayette lead the best public schools my alma mater did not make the list see if yours did at cnbc.com/makeit. we're back in a moment experience the adventure of a bigger world in a highly capable lexus suv at the golden opportunity sales event.

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i don't put this in the nightmare category we don't want any player to get exposed. it is not a positive thing but we built theo play thate have a pool of

additional players and we think we can keep people safe and continue to play >> that is the mlb commissioner on the mlb network last night. a lot of concerns about the safety of baseball with us on the impact on this and what it might do to advertising. thank you for the time, good to see you this morning >> thank you, good to see you. >> i won't ask too much about how their handling this inter l internally, but is the season in trouble? >> definitely. a look at a lot of major advertisers, and you take

anheusan anheuser busch, they decided to reallocate to their nonprofit partners to help covid relief efforts. j.p. morgan chase said q 3 will be a large decrease in tv ads around sports. we know they're trying their best to do what they can to bring sports back, and when i look at their aggressive -- and they want 60 games, and traveling all over the country at the expense of the players. the safety of the athletes should come first. so we don't know what is going to happen. taking a look at how we connect

with the fans that are isolated, quarantine, they're not having the experiences, so what can we do to create experiences that will help connect fans to games, to their teams, their favorite players without having a live game what is happening is a lot of the ads for tv is going to digital. so some of these players want to opt out. they're traveling all over the country and we look at the nhl, major league soccer, and the nba, and they put their athletes in a protected bubble.

but with mlbs plan it was so much exposure to so much risk. i think if that is the continued mode of operation they need to look at alternative things to do because who knows what will happen later in the season >> the argument that baseball by it's nature, the physics of the game, some argued it's more socially distance than say basketball, but the bubble that the nba is creating more than off sets that? >> no, i'm not a doctor. i just look at the facts and what is happening and right now there has been no positive tests there. major league baseball has just started and look at what has happen

happened if i could say from the commissioners statement, expecting to play with positive players, having players that can step in, we know our athletes are great, but they are human. to think that player is sick and we'll put in a new one the brands that are trying to be good corporate citizens, and i think that with what the nba, major league soccer, and the nhl are doing their trying to serve the fans and we all want sports to come back >> as you pointed out, they believe this is be managed we'll look for more information in the day to come as always, shelly talking about

mlb. welcome to 'squawk alley" on a day when fang is regulartively supportive, john, but there is so much coming up in the week, the fed, big tech hearings, and investors might be sitting on their hands and in front of it >> facebook in the green barely but the best of the fang names not fairing well i think the big unknown is what comes to the surface in the hearings perception is important here and that is where we're going to begin this morning with big tech and the hearings that are happening later on this week the pressure being put on the big four, amazon, apple, facebook, and alphabet ahead of