place those, as well we think there are some value traps out there. you're exactly right >> david, great to speak with you. thanks for your thoughts thank you. david bailin, citi private bank. great to be with you, beck make sure you join us tomorrow >> that's right. we'll see you back here tomorrow >> see you later on today. >> thanks, guys. good morning and welcome to "squawk on the street" i'm jim fab. another week here in august you can see we're set up for what appears to be a higher open no shortage, jim, of topics to discuss and related to secretary mnuchin is where do things stand in hope of getting a larger bill

out of congress as opposed to just these executive orders from the president that are taking quite a bit of heat over the weekend. >> yeah, look, david, i think that there is a sense initially that it was a white house grab and it kind of went through the weekend, there was a recognition that, wait a second, maybe it is a grab if you're going to give 400, 100 has to come from the states and many of the states including red states are in trouble. the thing that is most compounding people is that 12% of the people who make 80 to $100,000 get this bizarre payroll tax cut when the problem is not the people employed but the people who are unemployed. i think that its arer so counterintuitive our old friend larry kudlow always believed in that. we have secretary mnuchin right now, which is terrific >> let's do it let's do it. go ahead, jim. >> mr. secretary, always good to see you on "squawk on the street." we get a little bargaining done on the show.

how have you been? >> good morning. how are you? >> i'm doing fine, thanks. i know you're not happy about things off the rails because 31 million people are unemployed. how do we get things restarted and how do we get it that speaker pelosi doesn't think that your side because i know you do and i know you want to help the most vulnerable people. >> well, jim, i think there is a compromise if the democrats are willing to be reasonable there is still a lot of things that we need to do and that we've agreed on. let me just go through a few of them first of all, schools. the president wants to make sure that there is enough money to open schools safely. that's something that is very important. i think you've heard me say the democrats and the heroes bill had 100 billion. we put in 105 billion. i have spoken to many governors over the weekend to understand their direct costs i'll be getting on a video call this afternoon with all of them and the vice president to talk about schools. we've agreed on more money for

ppp and businesses that are particularly hard hit getting a second, a second check we've agreed on more direct payments like we sent out last time the democrats wanted money for food, so we compromised on that. we want money for vaccines, hospitals, rental assistance and we've given them flexibility and we offered more money for state and local but we're not going to give $1 trillion to state and local. that's just not a reasonable approach >> right i completely understand that but i guess where i feel that there's some unrealism is how do we get something for small business right now i know that you are actually the voice for small business in this country. those are the ones directly in the crosshairs of covid-19 it is certainly not their fault. you spoke from the very beginning about business interruptions insurance. why can't we make it retroactive for small business so we can get

these places in shape because half the revenue coming in and the costs are the same >> jim, i'm highly confident if we put another ppp bill up for a vote that had second payments for businesses that were down 50% that make sure we had money going for distressed and minority areas i'm highly confident we'd have an overwhelming number of people on both sides of the aisle pass that normally in negotiation what you do is say let's agree on the things we can agree on and let's pass legislation so that the american people get the benefit of that whether it's small business or schools or other things let's not hold up everything over a few things that we disagree on. >> actually, this sounds much more positive than the way i felt this weekend. let me ask you i know there is a belief that the $600 a week discourages employment but i have to question that isn't bogus given incredible job growth in may, june and july

just when the checks are going out. some sort of worry about the constitution and fiscal responsibility because i know these people are not unemployed because of their own fault >> well, jim, no question about that and the president wants to get every single person back to work who lost their job as you said, we got a lot of people back to work. the previous plan has worked we need to do more and we want to do more but let me just put this in perspective. during the financial crisis, we had a $25 top up in the obama administration for federal unemployment we put on the table a $400 top up we thought that was a fair compromise we also put on the table, by the way, 70% wage replacement up to the $600 for people who make more money and we think those are very fair because there wasn't legislation. the president went forward with executive authority. he wants to make sure those

people who are unemployed no fault to their own get paid. >> secretary mnuchin, david faber, specific to that new unemployment benefit or the one replacing the 600. 25% of it is supposed to come from the states and i know some question to whether the states have the wherewithall to provide that $600 from the state and $300 from the fed that 100 coming from the states, what do you say to those who question whether they have the fiscal wherewithall to pull that off? >> the 25% isn't coming from the states because we're authorizing them to use money out of the $150 billion we just sent them so in essence all 100% is coming from the federal government. i have from every single state how much money they have left over they have plenty of money. and the answer is we've also said in new legislation we'll top that up. it won't cost them a dime. to the extent they use money out of those facilities now when we pass legislation, we'll make

sure they get that money back. and on top of all of that, if there's some states that really have problems, the president has the ability to waive the 25% entirely so, what we need to do is we need to get legislation passed that helps the american public get back to work >> all right well, specifically, back to your resistance to the trillion dollars that the congress or the house has passed in terms of aid for the states you know, i've heard the objections being about, well, we don't want states aiding their ailing pension fund systems and things like that aren't there ways to make sure the money is used specifically to help states that are suffering huge budget deficits that are going to face huge layoffs as a result of reducing expenses aren't there ways to go about spending that trillion to make sure it meets your objections? >> well, let me just be clear. the trillion dollars is just an absurd number. >> why is it an absurd number? why is it absurd number, mr.

secretary? >> again, i have data from the states let me first say that the states have money left from last time i have already given them flexibility and they can use that money for firefighters, policemen, first responders, health care workers so there is no reason they need to lay off those people i have state by state how much money is left. so, there's plenty of money now and we put more money on the table. so, you know, certain states had financial issues coming into this because of bad policies i mean, new york keeps on raising their taxes and everybody is going to move out of new york. i saw your segment earl iier abu how with people working from home and remote locations, it's going to be easier for businesses to move their headquarters out of some of these states let me tell you, florida has no problem and, by the way, i just spoke to the texas -- >> kentucky have a problem, too. i mean, it's not just blue states and i know as a native new yorker it pains you to think

about the fiscal strait straig your city and not just the blue states or those who have higher taxes, secretary >> let me just say i spoke to the governor of texas over the weekend just as an example, you know, that's obviously the largest state and based upon our proposal, i think they have more than enough money to cover the deficit. so, look, i understand new york has problems and, you know, i wish they didn't have financial problems i thinkthat perhaps the state should put in financial control board over the city because the city is really going in the wrong direction. and it reminds me of the '70s. i want to see new york city succeed. >> when you and i grew up there california is the largest state and may have a $50 billion budget deficit, i believe. >> i don't believe that is the number for california. that may be a multi-year number, but i don't think that's correct. >> mr. secretary, i wanted to

talk about something -- >> yes, you are correct. my mistake texas is the second. so, i apologize for that thanks for fact checking >> i do love -- makes a mistake and comes out and says it. that's how we all should be. something that confuses me, mr. secretary. you and i are completely in sync about the idea that the small business is really the backbone of the country, as is mr. kudlow but when you do a payroll tax deferral what you're doing is just delaying the inevitable and the people who are most helped are the people who are employed isn't the problem the 31 million who aren't employed? >> jim, you keep on saying 30 million. you're way too high. we have a lot of people back to work we're far from the 30 million. but the answer is, we have too many people unemployed so, what we have to do is we have to do a combination of tax cuts and regulatory relief and

direct help to, as you said, small businesses they're 50% of the economy they can hire people back and we need to have stimulus with that. so, the direct checks are a very important part of economic stimulus they go to people who work and people who don't work and, by the way, people spent that money. you've seen that in the retail sales numbers. and we need to then have a fair unemployment system for the people who can't get jobs. so, it's a combination of an overall package. thepresident's economic plan worked we had the best economy in the world. this covid terrible disease shut down the economy and now we've got to reopen it safely and get people back to work >> right i completely agree with that that's why i'm trying to figure out what is the point of the payroll tax deferral what we need is defer small business from having to pay rent they don't have -- let's go back we're in a pandemic. you and i both know.

it's a pandemic. that's a war against an illness. when we get to where we defeat them in the war, then we are fine until then, everybody needs help who is in trouble. let's say it's 20 million unemployed if i add up the number of people who got jobs in the last three months. isn't that the issue and shouldn't we give help to everybody or is there some level where you genuinely think we can't go in other words, some level the constitution can't allow them. is there a limit to the country's borrowing power? if there isn't, we have to get a bridge to where we have beaten covid-19 >> obviously, there is some limit to what we can borrow. we're not at it now. and the president is determined to spend what we need to spend the $3 trillion we spent, plus a trillion dollars more is about 20% of gdp absolutely historic. we're prepared to put more money

on the table there are things, as i said, that made sense to compromise. we've compromised. we're not stuck at the $1 trillion but we're not going to go to unlimited amounts of money to do things that don't make sense. >> but it's not unlimited. i mean, i think that's hypehypey mr. secretary. certainly if this is a war, we can't split hairs. it's unfortunate >> jim, we're splitting things that make sense to split so, let me be clear. you know, if i had started at zero and they had started at $10 trillion, would that have made sense to do a $5 trillion deal of course not. so, you don't just split the difference what you do is you go line by line and say let's agree where we can agree and you're right on things where we agree but we're apart on money, we split the difference things like food, i listened to the speaker over the weekend she's right. we started low on food

we realized there was a lot of kids out there that there's an issue. so, we agreed on more than enough money for this year and through most of next year on food we didn't make long-term policy changes in the middle of covid we did that. we can go down the list and that's what we've done but what we're not going to do is say where there is really bad policy ideas, we're not going to just split the difference. >> when are you guys planning on getting back together to talk? do you have any idea >> again, i'm not going to comment on the specifics or the logistics of negotiations because i don't think that's helpful. you know, there's a deal to do if the democrats are reasonable and want to compromise and if their attitude is, you know, we'd rather give you nothing than agree on things, then we're not going to get a deal. but i heard pelosi over the weekend and schumer and i think thafr they're willing to compromise again, if we can get a fair

deal, we'll do it this week. but the president needed to take action he's not going to sit around we left the meeting on friday. mark meadows and i reported back to him that we were no where and that's why he moved forward >> well, yeah, no where to somewhere would be good. while i got you, mr. secretary something else the markets were certainly focused on is our relationship with china. you have been instrumental in negotiating a potential ban on tiktok in the u.s. and negotiations for a potential buyer of that business can you give us an update of that business. is microsoft in position to buy tiktok or another buyer so it stays a viable business here in the united states? >> i'm not going to comment on the specifics of microsoft negotiations or other parties. i'm very proud that congress passed an updated legislation where now we have all the tools we need to use so we have both

but it's perfectly clear that there's 100% agreement both across republicans and democrats that we can't have an app like this that's collecting information on americans of this size and scale so, the president made perfectly clear. it's not going to continue to exist in this format and to the extent, there is an appropriate u.s. buyer that can get us comfortable with the security issues going forward that deal will be approved if not, the president has given a deadline and it will be shut down >> mr. secretary, when nancy pelosi said that you're basically heartless. it reached a level that we both agree is really terrible is there any way, the president just tweeted that schumer/pelosi wants to make a deal amazing how it all works where they were the last four week s and they know my phone number can we ratchet it back

i mean, look, this is a pandemic the country needs to get together how many states have 100,000 cases and 5 million cases in the country. this is not the time to f, the figure it out for working people in small business. that kind of rhetoric, you'll make an effort to get that rhetoric to calm down. >> well, jim, the issue isn't the rhetoric, the issue is the action so we've done four deals with the democrats on coronavirus we passed the u.s. mca and we got a budget deal. when they're reasonable, we can get deals done if they're going to be unreasonable, we're not going to get a deal done. but what is important is now is the time as we said in the middle of this covid crisis we need the democrats and republicans to come together we did this previous two times

96-100 and 96-0 much more diversity of ideas and we're not nearly in the same emergency that we were in last time but we still have more work to do and that's why we need to pass legislation let's start with education we all agree on education. i've spoken to the governors i know how much money they need. the president will be more than happy to sign a stand alone education bill well, let's get that done. let's not hold up our kids and let's not hold up our small businesses that need to get back to work. this is not about partisan politics let's focus on the kids and the jobs >> well, mr. secretary, i know we have to leave, but am i wrong to have any hope here whatsoever i don't want to be pollyanna i mean, is it just better to say, listen, better luck next time >> jim, i don't speculates if there's a fair deal to do, we'll do a fair deal that's always been our approach. the president wants action that's his first choice.

there's a fair deal to do, we'll do it. again, we're not the ones who are holding this up. we're the ones who are saying, let's pass legislation that we can both agree on. >> all right, mr. secretary. i do hope that something, look, the american people hope that something happens. there's just too many people unemployed thank you so much for coming on cnbc, though you're always welcome because i know you represent a person who wants to get the job done. mr. secretary mnuchin, thank you so much. >> thanks. great to be with both of you bye. >> are you at all optimistic >> there were some things at the beginning he said they could agree on i don't think that, i think it was just up to secretary mnuchin, i think it would be a deal >> i think you're right. but probably not >> right >> interesting comments. yeah, financial control board from new york. he's a child like me grew up in the '70s in new york >> he sees the boarded up

building buildings. >> i mean it's not that bad. it's not good. and the tax base is quickly leaving. you know what, jim, while we were having our interview important news on mcdonald's involving ceo. kate rogers has that >> mcdonald's is suing its former ceo steve easterbrook in a filing this morning the company said it is suing for fraud, destroying and concealing evidence in order to retain compensation package and this is related to his firing last year. the suit says mcdonald's has now learned that easterbrook concealed evidence and lied about his wrongdoing recently identified evidence shows that easterbrook had physical, sexual relationships with three mcdonald's employees in the year before his termination that he approved an extraordinary stock grant worth hundreds of thousands of dollars for one of those employees in the midst of their sexual relationship and he was knowingly untruthful in 2019

the filing adds that an internal investigation into this allegation discovered photographic evidence that while he was ceo easterbrook had engaged in a physical in the year before his termination on the company's server that had not been deleted the point of the suit to claw back some of his compensation package. remember he was fired without cause. this would move to fire him with cause. really unprecedented here. we will reach out to mr. easterbrook and bring you any updates we get back over to you >> okay. thank you, kate. >> yeah. i mean, when you look over the complaint, one could argue because they say it's fraud that if i were an enterprise u.s. attorney i would run with this like there is no tomorrow. david, when you look at this, i

question whether mcdonald's, which wanted to obviously put this thing behind them moved too fast given the fact it was not like a lot of concealed evidence. >> no. well, moved too fast and what. they dismissed him, i think, upon learning of his violation of company policy as i recall. >> moved too fast with the cause or without cause i mean, this is about as without cause as you can get >> yes >> and, you know, lying to the board. doing things that are preposterous, frankly. >> allowing stock grants to people -- not company policy >> this guy. i liked him. >> well, you know, listen -- >> so much for that. >> unexpected. unexpected >> ill advised is the term how many times do i have to tell you. >> unexpected news about ill advised behavior how is that? >> now you're going.

ill advised means that you're a real ambassador of good faith. let's get another look at futures, everybody, as we get you ready for an opening bell. coming off of oil, we're 15 minutes or so. erill looking for a slightly high open. a lot more "squawk on th street" when we come right back. ♪ ♪ ♪ ♪ ♪ i keep working my way back to you, babe ♪ ♪ with a happiness that died ♪ i let it get away servicenow. the smarter way to workflow.

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company that made chemicals for the generic and for the drug industry that loan is in question now the international develop finance corporation in a tweet on late friday night said we're not sure any more. jim and ha wmoi veill re on it quick commercial break and right back on "squawk on the street.

all right. we're counting you down to the opening of the market about a minute from now which gives me time when carl is out and we do this as a tradition, jim i didn't give you any heads up what you think the key to this market is this morning >> i hate to bore you with this, but two huge notes on apple. both of them saying the stock has been basically mispriced and go higher. i was hoping norfolk southern with an action call from deutsche bank saying with federal express it's time to buy the transports because that's really united parcel, david. they're looking at united parcel i have to default to, yes, the largest company on earth and why it is worth even more raising price target the easiest call in the world,

the easiest call in the world. >> just keeps going and going and going, doesn't it? >> we have a have and have not market the have nots are completely out of control in terms of how no one wants them >> a lot more have than have nots and as we made the point time and again just five stocks represent almost a quarter at this point of the movement in the s&p 500 index. it is a market weighted index which always said statistically relevant, but it's still thrown off. >> the people who afrankly take advantage of it. i see maybe going after mgm, they took a stake in it. that's someone who believes that there might be something going on that is worth investing in. >> no, without a doubt listen, i'm not saying there isn't stuff going up things are busy when it comes to even transactions and it feels as though things are getting back to a busier place and i'm not just talking m and a

and we talk about everybody's gut one. but beyond that. and then to scandal, too this mcdonald's story is truly amazing. not sure it will have any impact on the stock price, jim. >> no. just, it's shocking. we were calling it tplaxico burris who shot himself in the leg, i struggle to find a better metaphor but i think the controls of mcdonald's are lacking here. not just because of the pictures which, obviously, but the stock option grant that's something that must have, should have hit someone's radar, don't you think, david >> you think when you're awarding that stock to a particular employee. oftentimes i know it's signed off on by the board. at least in some way someone is taking a look. >> david, it speaks to a party atmosphere it's not one man >> no. >> it speaks to a delta heth alh

situation. >> i always appreciate it when you have an animal house reference. >> the board has to be looked at and you can't sweep this one under the rug because it's obvious that there is a culture there that even though they made a change at the top that it's lacking in controls and that's just not right for a company of mcdonald's stature i know the complaint reads as if, hey, listen, we're great, he's bad no it's just not one man. i mean, there had to be a culture and anything goes because easterbrook is real good and came up with a breakfast menu when you have that, not good enough to say, hey, you know what, it turns out there was one guy doing some bad things. no and i'm disappointed in the company, frankly just very disappointed mr. easterbrook who has distinguished himself as a fool. >> well, yes you could use that word. he's distinguished himself as something.

>> i picked fool because it seemed, i don't know, kind of vanilla. >> it is vanilla and i think we're better off staying on that territory and moving on, perhaps. jim, our friends over at nicola got a deal to make a bunch of trucks for 2,500 battery electric waste trucks for republic services. >> waste company >> 2,500 and the option to increase up to 5,000 units the largest single order in the waste industry commitment to zero emission vehicles, onroad testing likely to begin in 2022 i mentioned because last week that very interesting and entertaining interview with the company's founder, trevor melton where we said we'll hold him to his contention the next four months is going to be huge for the company and we said we'd beat him silly if it wasn't the case >> look, this is a very interesting development because

both republic and waste management have been at the forefront of other ways to deliver. very important to remember they oftentimes pick up waste in areas where their pollution is regarded as being something very negative by the mayors and this, this nikola order and the stock is only up 6 you know, david, when the bulls get going in this market, they don't stop at up six everything is taken to an extreme in this market everything so, those who look at it up six, look, i have no dog in the hunt, but that's obviously not enough. >> you mentioned mgm and we should take a look at it because it is up barry diller company making a significant investment in the company is what we're told i want more specifics. i'm not finding it in the release that i have here

although i did think it was 11%. but i want to make sure, jim i don't know if you have any more on it specifically. but a very positive impact on shares of mgm this morning >> put a bid on a lot of the -- >> i'm told they need more money for the build out in japan, apparently, as well. project in osaka, which could cost enormous amounts. and this is one of the ways for them to stay in that process so, that's a significant move in mgm bringing aic and not necessarily a name we would immediately associate with a gaming company >> i thought that aic interested in toiktok and it was a cricket situation. >> what was? >> my should be interested in tiktok >> you have been trying everybody out for that >> you know what, i didn't

include twitter because i thought twitter is a fraction of the size and wouldn't be able to do it and the verizon and i the iic, twitter >> twitter is fairly small listen, i think there is the potential to bring in other investors were you able to actually pursue it you're referring to "wall street journal" report over the weekend that cited preliminary talks i'm somewhat dubious to their ability to pull it off we asked secretary mnuchin who is at the center of this process in some way in terms of at the negotiating table for the u.s. microsoft continues to be focused on it. they don't need any help, we know that. i come back to the part of the story that i've been reporting on the transport or the movement of the software code within a year's time. and the undertaking that represents and the fact that there are very few companies and twitter may not be part of that list that can even undertake that forget the financial side of the equation we'd have no idea where this thing could end up >> when i interviewed, really, the issue was the code

>> yeah. >> it's always the code. unless you went to sftanford business school, you don't understand the issues here >> if you're bytedance you want the appearance of negotiation. as you negotiate with microsoft, you want microsoft to think maybe there is someone else out there and increase our bid by a little more than we anticipated because of the possibility they're talking to someone else. that remains unclear if that is the case >> we didn't mention foot locker which had better than expected you close your eyes and buy the stock of nike and there we go. up three by the way, this and lulu lemon are what we regard as the survivors. a lot of the retailers up today. why is that? because there is pressure taken off of them all because simon property group may have had an idea for sears and jcpenney. wouldn't that be something if you didn't have those giant

empty stores in the box? >> i know. so amazon puts them out of business and then takes their space to make fulfillment centers? >> david, what can i say only the strong survive. >> kodak, jim, before we get moving because we want to get to bob pisani we mentioned it briefly. listen, we have been following it closely because such a bizarre situation. the company we knows in terms of photography up in rochester, new york, lands a loan from a an unknown and name changed u.s. agency that invests as much as $60 billion in time in developing countries but had its charter changed via executive order that allowed it to invest in the u.s. in supply chains and response to covid. what did the dfc say the other night on friday night, hey, we did sign this letter of interest but recent allegations of wrongdoing will not proceed any further unless these are cleared. they're talking bout insiders

getting hit with more stock. now, we also know, by the way, a director i pointed to george filed a 13-d and gave away $100 million worth of the stock after it moved up enormously this embraces so many different things that we have been following, jim the opaque way that our government works in certain ways lately executive orders and the like and then crony capitalism. we're never sure exactly how or why they chose kodak and then the speculative nature of the market itself where the robinhood traders so to speak sent this up to 50 bucks a share. >> by the way, wasn't paul simon, it was garfunkel and not billy paul when i see this, again, u.s. attorney where are the u.s. attorneys that want to run for governor? don't you remember those guys? they would look at something like this and say, okay, i'm making some phone calls. not the sec. the u.s. attorney has a fabulous

opportunity to do something. and making it, which is prosecutorial discussion this is one of the worst i've seen it does make easterbrook look like an egg mcmuffin >> we will keep an eye on the dfc to see if they tweet something else >> why is that stock down six. kodak does have an existing business >> yeah. >> yeah. maybe. >> all right let's get to bob pisani. always good to see him welcome back, bob. >> thanks very much, david good to be back. happy monday, everybody. nice start for the week. 3-1 advancing the declining stocks and, once again, getting that value rotation and a big story in july and one of the reasons the market is holding up and there is your energy rotation tech is lagging a little bit compared to that and health care a story really all month we will get a little mini

boomlet in value for the month if you take a look the banks and industrial sectors and the energy stocks and the technology stocks are lagging here you can see that value boom and tech and health care still not enough to say a real big trend but going on for the last couple weeks or so and that'swhy the s&p is holding up so well, folks. you see 3351 we closed on friday remember the old high 33.86. only 30 points away from a historic high on the s&p and these are closing numbers that i'm giving you 33.86 on february 19th one reason is earnings are much better than expected close to 90% done with the second quarter earnings. look at these extraordinary numbers. the company is beating average company has been beating by 32%. that is amazing. normally companies on aggregate beat by 3% look at the revenues only beating by 1% wait a minute here no top line beats going on and no revenue beats going on and a

huge bottom line beat going on ask i think that is about cost cutting and how aggressive companies have been. john veil pointed this out i think there is going to be a k-shape recovery that's what he was talking about where some companies do really well in earnings and other companies haven't. interesting term but he said quite often these earnings beetsz abeat are driven sgna is selling general administration costs and that's everything. that's salaries, commissions and that's advertising companies are saving money by firing people and reducing costs and that's dramatically helping the overall bottom line. by the way, one company that did really well on top line, they were the exception foot locker. these are extraordinary numbers. preliminary numbers including july 60 cents. they were expecting a loss of 60 cents. that's not even close. we're talking about different galaxy at this point estimate up 18% and the analysts

thought it was going to be down 23%. what happened? people bought a lot more sneakers than anybody anticipated. pent up demand and the effect of fiscal stimulus and the company, david, also cited expense management there is that managing expenses and keeping costs low. and, of course, keeping hired employees down, as well. david, back to you >> for sure, bob thank you. bob pisani, good to have him back shares of gold up more than 55% this year. an earnings beat coming on top, of course, of what had been the record high gold prices. we'll talk to barrick ceo. keep it here

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luvs, parent like a pro. beating on the top and bottom lines the shares, well they moved up almost 60% over the course of this year. let's bring in barrick ceo and good time for your company going on with the metal. what are your expectations for gold itself. are we going to continue to see it move higher and are you going to continue to generate free cash flow, the likes your company hasn't seen? >> back in the first of january

of last year to pull the real value driven company and basically what the gold process has done in the last while is just brought everything forward. but we're on track and we certainly are designed to make, you know, significant returns at long-term process of 1,200 these are great and you're seeing the benefits of it, you know, visually >> hey, mark, it's kramer. how are you doing? >> i'm good, jim thanks, you? >> i'm doing better than good because i always believed that gold should be part of people's portfolio. do you believe that is what is happening? do people believe 10% of their portfolio should be gold given the fact that things are crazy out there? >> yes, i think, jim, somebody is really getting their head around that and we've seen it, we started seeing that before this big run up where we were, you know, even in the big funds we're now spread across the sort

of more generalist investers and i do agree that, you know, go back, jim, late '90s when people were not interested in gold and no one thought the dollar could ever weaken and now we have the situation where, you know, gold is the, sort of the reference currency of the world and certainly that's benefitting the gold now >> i don't think people realize you put together which has a cost that is so low, particularly in nevada but more important, you keep emphasizing that you did this despite covid-19, which is obvious when you have all these miners working together it would spread pretty rapidly, but it hasn't attribute that to the fact that this is not your first pandemic. >> that's correct. i grew up in africa. we deal with processes that i

shared with you before, we have some in the morning and a few in the afternoon. so, i think the point here is that, you know, this crisis is a genuinely unprecedented event and i don't believe that anyone can say that the world dealt with this on a global basis and it is a global crisis. what we've done is what we have done before and that is the first thing is you understand it and the second thing you set the protocols and, you know, as much as everyone would like this virus to go away, it's not going to go away and our behavior and the way we manage our business is critical to continue to build and develop that economic component of, you know, a successful world economy and as humans continue to live and earn and grow. and what we didn't do is we thought, we thought, actually, that we could just lock this

whole thing away and it's not the case and, so, we've demonstrated you can work if you adhere to the protocols and we've been able to manage different scenarios with different social situations difn through north america, central and south america, and more importantly, across africa and we've been able to keep our operations operating >> mark, one thing that's confusing after listening to you and knowing others did not share your knowledge of how pandemicing steal, and the tremendous demand for gold versus where gold is and you benefitted from nevada but you're still using 1,350 gold is at 2000. isn't it time? >> we allocate at 1200, and we are using 1500 now just to manage the short-term horizon. but i would take you back to the

gold price performance back to 1972 there have been two sparks 1980 and 2011 spark, and of course, we're busy with one now. but look at the shape of those rising gold prices they come back down, but they've never come back down to where they left. and so sure, we are going to see another base lift of the gold price. i'm absolutely convinced but it's going to take us some time to understand what their base is. in the meantime, it's important as i pointed out, to maintain the discipline and not do what the industry did back in 2009 to 2013 and just become a reckless al cay or the of capital that's why people invest in gold mining companies and gold companies is they want to benefit in times of crisis and i'm very pleased to say that we're certainly benefitting our

shareholders >> yeah. well, mark on that subject of being or not being a reckless allocator of capital your cash flow and free cash flow are up a great deal you raised your dividend about 14%. but i wonder given you brought your indebtedness down, do you think shareholders are going to clamor for now in terms of return of capital. >> i think the shareholders understand me. we're mindful, and that's my ticket i'm a shareholder, and i love dividends. but we want sustainable dividend policy, and we've got a little bit more work to do, but certainly we are getting the new barrick into shape where it's able to deliver value throughout the cycle, the gold price cycle. so watching the space. >> all right dr. mark bristo. known as mark to us because he's been such a faithful guest he was the ceo of barrick gold

it's great to see you and thank you for giving us perspective on the price in gold. >> pleasure. coming up this wednesday, don't forget, it's the small business play book virtual summit we're gathering the most trusted voices including sheryl sandberg. >> who's interviewing her? >> i don't know. >> be self-aggrandizing for me >> would it be you >> bingo >> good. well, are you going to just talk about small business or get in there and talk about other stuff? >> what, mcdonald's? we'll talk about business. >> go to cnbc.com to learn more and make sure to register. what happens when a wireless carrier

puts its customers in charge? well, the good news gets shared. and it gets rated #1 for customer satisfaction. but don't just take our word for it. take theirs.

it's your wireless. your rules. only with xfinity mobile. call, click or visit a store today. faang. yes. my partner over there named it there it is. next picture this morning. apple as we talked about earlier getting the benefit of positive writings among analysts is the best performer of the group. this selenite grey is so pretty isn't it?

wow. jim could you pop the hood for us? there she is. -turbocharged, right? yes it is. jim, could you uh kick the tires? oh yes. can you change the color inside the car? oh sure. how about blue? that's more cyan but. jump in the back seat, jim. act like my kids.

how much longer? -exactly how they sound. it's got massaging seats too, right? oh yeahhhhh. -oh yeahhhhh. visit the mercedes-benz summer event or shop online at participating dealers. get 0% apr financing up to 36 months on select new and certified pre-owned models. let's get to jim and stop trading. >> david, for months american airlines is one of the top ten robin hood names people very excited about it now is the time to be excited

about it i believe phil earlier this morning was talking about a bailout. american is making a comeback. i think there's a belief they would never let the airlines fail and american has gotten too cheap. there's buyers all over the place. >> you like it here? >> i do. i think that group is going to make a comeback. i think eventually we beat the virus. in the meantime the government would never let them go under. as phil said, there's too many congress people who don't want air flight in their district to be curtailed >> but the airlines have talked about years before it's a full recovery it doesn't mean the stocks don't recover too fully. >> you were talking about the fundamentals david, i've taught you nothing >> you've taught me so much. hopefully i've taught you a couple things. >> you sure have the fact that the balance sheet matters? >> sometimes >> what's on mad tonight >> i have take two, sailpoint,

and then inseego the note about apple this morning was maybe it's web bush. all 5g phones? >> was straus just on? >> it was cancelled. some people don't have reception in their houses. i don't know when you're here, you're probably know. >> i'm here. my internet this morning didn't get going. no >> it didn't >> but they've been making incredible efforts and we were lucky to have it over the weekend. it just disappears when i needed it >> it's a joy. >> i'm happy to be here. >> how did the mets do >> they won again. >> good. >> good monday morning welcome to another hour of "squawk on the street. i'm with leslie and mike we're going to begin with stimulus talks as the president signs several executive orders over the weekend, extending coronavirus relief in some areas. this, of course, after congress

failed to get together on a deal that they could pass the treasury secretary steven mnuchin gave us a sense on where things stand last hour >> i'm confident if we put another ppp bill up for a vote that had second payments for businesses that were down 50% that make sure we have money going for distressed and minority areas, i'm highly confident we'd have an overwhelming number on both sides of the aisle pass that >> let's get to eamon who joins us from d.c. and he's got the latest on all sorts of moving parts here >> reporter: yeah. david, that's right. you talk about the sound bite you just played. the treasury secretary was saying there he wants congress to move forward on a series of bills on just the things the democrats and republicans agree on that's because the president thinks he could get another ppp

bill out of it it could help small businesses he could get other items he likes and wouldn't have to take all the things the democrats want what the treasury secretary said is they don't want a billion dollars of funding for the states and local governments by going ahead with the narrow bills the democrats would be giving up all their political leverage to try to get their political priorities in place. it's not likely the democrats are going to say you know what we saw your interview on cnbc. we think that's a terrific idea and we're going to go ahead and give you everything we want and not get anything we want that's not how congressional negotiations tend to work. we'll see what the democrats come back with, but i don't think it's going to be exactly what treasury secretary mnuchin said he wanted this morning. >> i asked him specifically about the state aid portion given it's such an area of -- not negotiation, unfortunately i guess that's what it is. it's a stumbling block and trying to understand to a

larger extent, the significant opposition and why he came back again to the idea of bailing out state pensions, talked on the new york and then started talking about the city and high taxes and people leaving and a control board. it was kind of funny i think he was having flashbacks sometimes we have them from having grown up there in the 1970s, but is there any hope to make real progress on that should the democrats stand hard on wanting more money for the states >> in a negotiation you can always meet halfway. there's the possibility for that it's the egos are entrenched on all sides on this. when you heard the treasury secretary talks about the states and how badly run they are, he's echoing the commentary from the president who said a lot of the states that are in the worst fiscal shape are democratic states so the federal government shouldn't bail them out from previous year's mistakes

they should only be on the hook for damages related to the virus, not political mistakes of the past the president has been eager to hammer home that point and you heard mnuchin making that argument this morning with softer tones but the same point. and that's something the democrats are not willing to live with right now. they want a massive aid pack kalk for state and local governments. they say they're hard hit and they don't want to start differentiating between states based on what's happened in the past politically so again, it's an impasse. and the question is who is going to take the first step to meet halfway. >> and is there any forcing mechanism out there we see whether it is calendar-based, whether it's some sort of pain point on either side that might create another round of willingness to negotiate >> we've already blown through the expiration date for the $600

bonus unemployment insurance a lot of people thought neither side would want to let that happen and that would be the trigger to come together and get a deal they blew through that that's expired, and people are going to start to feel the pain of that with no end in sight in terms of what the replacement is going to be necessarily. what the president was doing over the weekend in signing these executive orders was trying to come up with a mechanism to replace it with at least $400 a week, and trying to take some of that pain off the table politically. and also point to the democrats as being the party that's blocking this if they decide to sue and try to stop that from happening. so you don't see a forcing mechanism on the horizon that's the thing that gives a lot of people the jitters here in washington that maybe this is not a solvable problem >> we'll be following it closely. and always relying on your reporting. thank you. >> thank you

"the wall street journal" reported over the weekend twitter held preliminary talks with the owner of tiktok about a possible deal to acquire the business in the u.s. that would challenge microsoft's attempts to buy tiktok from the owner. who knows how that are they'll be able to get or even if there's truth of the twitter part of this but overall, we know and having spoken to the treasury secretary earlier as well, that tiktok will be shut down here in the u.s. in a relatively short amount of time, mid september, if they don't reach a deal let's bring a cyber security analyst, former chief security officer at facebook. alex, i guess, how big a risk do you think tiktok represents in its current form and current ownership? >> there are legitimate risks from chinese-owned applications but when i think about the

companies holding onto data, tiktok isn't the top five or ten. i don't think the threat from tiktok themselves is as interesting as talking about our overall relationship with chinese tech companies >> yeah. but this has been thrown into that and obviously it's a very important relationship as you point out. although, it does seem to be unraveling in a lot of areas given your knowledge in terms of the software and things of that nature, let me ask you something that's come up from my reporting. it's specific to the code the algorithm, the a.i. that runs tiktok and the fact that any buyer and in this case microsoft would have about a year, not about, one year to transfer that code i'm told social securityit's a undertaking. do you have any sense as to whether what the ability of companies to undertake a task like that would be >> it would be a huge task any deal would have to include a

license for tiktok's what we call their back end code not the code on your phone, but the code that runs in their data centers and in the cloud that stores all the videos and what's especially important for tiktok is as you said, their a.i. code that decides what to show you next this is what's really interesting about tiktok versus the popular american central networks like facebook or twitter. tiktok is not based upon who your friends are or who you choose to follow tiktok decides what is the next thing you see. and that's what they've really hit upon here. that's been successful they've been really good at trying to figure out what does somebody want to see next and showing it to them that's also the cause of a lot of concern because it means a chinese company can decide whether the political videos people can see it would be a big deal i think a year is probably reasonable for a company like microsoft. the problem here is that the vast majority of the engineering work that goes into tiktok happens in china so microsoft would need to have

a transition plan with bite dance where the engineers are supporting the product for a period of time they would move the code over into probably microsoft azure, their cloud service and slowly replace components and sometime in the year they'd finally push the button and everything would swing over, but it would be a significant challenge both in engineering and a management challenge. >> and alex, from that perspective, actually transitioning over all the data and creating a security mote around that data to ensure none of it is left in china if that's the end goal of the u.s. government and the strategic or other financial investors who may be coming into purchase tiktok, what is the hurdle there to ensure that the data actually is all transitioned over, that nothing gets left in china as a result of the deal >> we will never have full assurance there's nothing left in china the parent company built this as

mainland engineers have had access to the data warehouse this entire time i think it's pretty likely there is a backup of at least some amount of data not the huge amounts of video, but when it comes to tiktok, the content isn't that interesting because it's teenagers dancing it's the metadata of who people are, their interests and stuff it's quite possible there's a copy of that there's nothing we can do to prevent what happened in the past but what you can do is you can guarantee in the future. the big question is dowe end u with multiple tiktoks? the discussion the last press release from microsoft is they were looking at buying tiktok's operations in the united states, australia, canada, and new zeala zealand. is that separate from tiktok europe or tiktok south america if they are different companies, you have to have a way for them to talk together and raises the data protection concerns again >> alex, do we have precedent for anything like that, whether it be the way google operates in

europe under certain rules and things like that, or would this be a novel structure >> we don't have a lot of precedent for this this is actually the real danger in the way the administration is going down this path again, i think there's a legitimate concern here. but you can't just come up with an arbitrary 45-day deadline and see you have to make up the rules. what the united states is trying to do with tiktok is what europe has been trying to do to american companies for a decade. we're only a couple weeks from a really big decision from the european court of justice. it's followed other decisions that has made it harder and harder for american companies to service european customers from their american data centers based upon u.s. surveillance law. creating the precedent that any trading block or country can decide arbitrarily to force local operations to be sold to a local interest is an extremely dangerous precedent for the united states. i think this is really going to

come back to bite us in our economy. >> another question on this whole movement of the code you know, they are constantly making updates and changing the algorithm, making it better. that's why tiktok has been so successful what happens during that period? does it keep updating, and then it's left up to microsoft to make those kinds of changes which will be different than what's been going on with tiktok the last few years >> right this is a big concern for microsoft. you're right one, do you let the engineers continue to improve the code and under what circumstances can they do so while also providing a high assurance of data protection eventually they have to cut the cord and microsoft will be in charge and microsoft has no history of being successful in this space microsoft's one popular consumer brand is xbox. they've done extremely well with it but the difference with xbox is

the creators on xbox are business to business relationships. microsoft has no history of what tiktok has done, creating an eco system of creators that create all the content and build an a.i. to pick it out of the big lake to figure out the stuff that people really enjoy and so it will be a huge challenge for them to continue tiktok's success once they are responsible for it >> yeah. we hope to have more original reporting from right here on what's going on with everything al educati alex, but thank you for enlightening us on the things microsoft has to be thinking about as they continue to pursue a purchase of tiktok thank you, alex. >> thank you in the meantime, another developing story mcdonald's suing the former ceo alleging he lied about relationships he had with workers and destroyed evidence related to his firing. kate rogers has the latest here. hi, kate >> reporter: that's right.

mcdonald's suing the former ceo in relation to his firing last year the company says it's suing him for fraud, destroying and concealing evidence to maintain his package. they have learned he concealed evidence and lied about his wrong doing. recently identified evidence shows that he had physical sexual relationships with three mcdonald's employees in the year before his termination that he approved an extraordinary stock grant worth hundreds of thousands of dollars and he was knowingly untruthful with mcdonald's investigators in 2 9 2019 it adds an internal investigation into the allegation discovered photographic evidence that while he was ceo easterbrook engaged in a physical sexual relationship with three employees in the year before his termination. this was uncovered via emails on the company's server that had not been deleted by him. he was initially fired for a consensual relationship that

involved sexting but was nonphysical. the aim is to claw back his compensation package for firing him with cause instead of without cause. we are reaching out to his lawyers and will bring you any updates we get >> it's not everyday you see a company sue its former ceo for compensation to claw back. thank you for staying on this one. >> take a look at shares of marriott posting the first quarterly loss in nearly nine years as covid-19 continues to ravage the travel industry you can see shares of microsoft up about a third of a percent this morning not getting hit too hard off of these results. we'll continue to keep an eye on that "squawk on the street" is back in two minutes some see a grilled cheese sandwich and ask, "why?" i see a new kitchen with a grill and ask, "why not?" i really need to start adding "less to cart" and "more to savings."

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this baby is the total package. it streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. yup, the best really did get better. magnificent. xfinity x1 just got even better, with peacock premium included at no additional cost. no strings attached. >> many colleges are asking faculty and students to sign waivers. we are looking at the debate over who should assume the risk. >> reporter: that's right. the fight over liability protections on capitol hill is playing out at college campuses. schools are asking students to sign agreements to come back to come pus some students are pushing back arguing they don't want to let schools off the hook if students and staff get sick athletes in the big ten are

calling for a ban on coronavirus liability waivers. at the university of alabama students convinced the school to change language in the consent agreement stating that students voluntarily assume the risk of returning. and at the university of new hampshire, a law student is fighting to get rid of similar language they have had virtual protests and used viral memes >> it's not exactly as voluntary as they make it out to be, because we've got students that have on campus jobs and that need those on campus jobs to pay their tuition and their cost of living, and universities are a go between for providing health care for students. there's a lot more on the line than a decision to remain on campus a spokesperson for the university of new hampshire said the coronavirus pandemic presents an unprecedented and

inherently risky situation for college campuses she said those who sign the agreement will still have the right oh to the sue. >> thank you that's a very good setup for the next guest this morning. university of kentucky president joins us now doctor, good to see you this morning. thank you for being with us. >> thank you good to see you. >> well, before we get to the sort of protocols and procedures you're putting in place to prepare for the start of the year, how are you viewing this liability waiver issue what have you required of students and faculty >> we never even considered a liability waiver or informed consent. that hasn't been part of our policy or part of our thinking >> you haven't okay and so there will be no advisers or anyone who said it would be a good idea to do that >> i have to say we haven't

considered and haven't put one in place we didn't have it in athletics we don't have it for our student body >> so now you are very much on the cusp of having everybody back to campus tell us exactly what your plans are for testing and everything else as folks return >> sure. we're welcoming 30,000 students back to our campus from 120 counties in kentucky 50 states in more than 100 countries. so we are testing everyone we have five sites set up on campus i visited all of them yesterday. it's going quite smoothly. tested around 6,000 students 30 to 35 have been positive. so we have a .6% positive rate it gives us a good target so that we can stay under that 1% i think in talking to all the families and students that i did

the past two days, they much appreciate the testing and then everything else we're doing. resign designing our classrooms so we can respect the physical distancing, and having adequate supplies of masks, sanitizing solution we have 6 million new square feet of space here so we can do the distancing a little easier. every person is one person to a room we're not sharing big rooms and so forth so we've done a lot, we think, so respect the cdc guidelines, and give our students a safe environment in which to learn. >> you have an ambitious plan with regard to testing and contact tracing but lexington is not a small town, and how can you control students who go off campus to say, go to parties or

do shopping or go out to dinner and so forth does that hinder your ability to kind of put a bubble around the students on campus >> that's a very good question first of all, we set up our own contact tracing platform we work with the county so we can react quickly. any positive tests we follow up. we have four residences dedicated just for isolation and quarantine, so we can quickly do that we get food to all our students who may be in those situations and since we wired all our classrooms, you won't miss any class. there's two-way communication. we're trying to take the inclination that you're going to miss something out of the equation so that you can make a safe decision. and yes, many of our students do

not live on campus they live in the surrounding community. we're working very closely with our city to keep a lid on any kind of behaviors that would lead to any spread of this disease. our student code of conduct applies to a student regardless of where they may reside we think our students are responding positively. we'll be able to work with them to encourage these positive behaviors. and if anybody goes too far, we certainly will exercise those needs. >> doctor, what's the protocol for when somebody does get the virus? i mean, 30,000 students. i would assume at some point someone is going to get it what do you do >> we strictly follow cdc guidelines

whether it's a test, symptoms, how long somebody remains in isolation. we're just making it easy for you to isolate yourself. we've secured a residence on campus we have some off campus. they will be manned by our resident assistants. it will be just like a residence hall on campus, so unfortunately if that's going to happen, we know it's going to happen. we have supports in place to keep that individual isolated, and also an aggressive contact tracing platform that we developed with salesforce. we've been working with them for over four years to include improved student success, and so it was only natural that we expanded it into this area as i've said before, this virus can hitchhike across the world in a day it can hitchhike across campus much more quickly.

we needed to leverage technology to do our best to contain this >> doctthank you for sharing yor plans. good luck with the semester at the university of kentucky >> all right speaking of hitchhiking, it's time for etf spotlight looking at transports, ticker iyt moving higher today. down for the year. up almost 2% one name helping the group this morning is fedex up more than 6%. bernstein taking that stop to an outperform rating. stocks up 30% to year to date. ayitustake a short break st wh

here yours update at this hour in hong kong jimmy lie has been arrested 20 0 police raided the head quarters of his new group. t a chinese official says he's a representative of people who are, quote, anti-china and anti-hong. t in chicago a huge police response to looting early this morning with more than 100 arrested people were seen running into stores and carrying out merchandise. it occurred hours after officers shot and wounded a suspect who they say fired at them first in new york a major fire at a home belonging to rachel ray

her representative says ray and her husband are safe ray has been filming her show at the home since the beginning of the pandemic that's our newdas upte for this hour "squawk on the street" returns in just a moment

relations remaybe tense between the u.s. and china as sanctions ted cruz and marco rubio over issues with hong kong we have the latest >> well, as you said, china is sanctioning 11 americans which includes very prominent american politicians. this is a tit for tat retaliation after the u.s. imposed sanctions on hong kong officials over the national security law in the city now, there are no details on what the sanctions really entail, but they came as authorities are doubling down on national security in hong kong for example, today the authorities arrested ten people

and that included the outspoken beijing critic and media mogul jimmy lie. jimmy lie, his sons and several executives are accused at colluding with foreign forces. and state media said the arrest shows that hong kong wasn't intimidated by the u.s. sanctions and that bail for the uk citizen is going to be, quote, difficult now, democracy advocates very concerned about what this means about press freedoms in the city they've been calling on investors to buy the stock and the paper's parent next digital. the stock shot up today by 344%. spl separately, another sensitive issue, taiwan was in investor's minds because the health secretary alex azar visited taiwan this is the highest level official to visit the island since 1979 he met with taiwan's leader and as you'd expect, the chinese

foreign ministry blasted the trip said this was a very, very sensitive issue. and that the u.s. should continue to adhere to the one china principle, and also leslie, the chinese said they did, in fact, send fighter jets which just skirted the midline at the taiwan straits in order to they said, have a show of their attitude >> wow a show of intimidation, it sounds like. thank you so much for staying on top of this story. >> yes of course this follows the trump administration's ban set to take effect on september 15th of parent companies of tiktok and wechat we are joined by the former chairman of -- it seems like every day between the chinese and the u.s. governments, what other retaliations do you think

we can expect from china and the u.s. as these tensions continue to kind of ratchet higher? >> good morning. there's no telling what's next this is an unfortunate example of political theater running amok between these two powerful nations. if you take the actions literally that the u.s. initiated over just the last few weeks, whether it's tiktok and wechat operation clean network, the president once again resorting to racial slurs in characterizing covid-19, you would think that china has really taken actions that are exceptionally extreme over that period, and yet, they have

really not done that i certainly am not thrilled with the arrest of jimmy lai, but barring those types of unfortunate retaliatory actions, what's really gone on is a political foil by the united states to compensate for the trump administration's malfeasance in dealing with coronavirus. and the deeper the hole the president goes in, according to a strategy document from politico in april, the more the attack strategy against china can be expected to intensify and that's exactly what's going on right now this is politics, not substance. >> does it become something more than political theater as you described it does it become political reality? will we start to see impact from some of this tit for tat that

could have broader economic implications >> that's certainly possible there will be a review of the so-called phase one trade deal struck in january of this year that is scheduled for friday of this week. and the review will find china has not come close to satisfying the stipulated trajectory of the deal so the u.s. could certainly be expected to take further retaliatory actions for china based on noncompliance due to understandable co-vid-related pressures. that could be another area to explore. this report with military traffic in the air and obviously tensions ongoing in the south

china sea, the risk of an outright military accident in this climate is something that i think raises serious concerns about. so we've created what appears to be a generational existential threat out of a very complex trade dispute, and by taking it to the brink, there is legitimate risk to be concerned about. >> steven, it's david. bigger picture here. i mean, we've been talking to you for years about what's been the deterioration between china andthe u.s. with very brief moments where there seems to be progress we seem to be in a deepening spiral what's interesting is even if you saw a change in leadership in the u.s. government, it's not clear the posture toward china would change a great deal. longer term, what's your view of how this relationship is going to evolve or maybe i should say

devolve? >> that's an important point it's a fraught relationship that needs a major reset. that's a dangerous word to use when you have political transitions possibly occurring this november. but i think it's -- if there is a change in u.s. administrations, i think the most important thing that will occur would be simply to really alter the framework of engagement this whole sort of section 301 phase 1 escalating tariffs did not work it led to dangerous con c confrontatio confrontations we need to find areas of mutual

engagement that's not whimsical and altered by the heavy handed thumb of someone using twitter we need a new approach there are a number of things that can and should be done to put this relationship on a better path. the concerns that we have over china in many areas are legitimate in this areas have been exaggerated. we need to sort that out >> steven, there is a sense as perhaps we await the possibility of sorting these things out that people who run companies are more inclined right now to diversify supply chains away from china and maybe reconsider exactly the depth of their reliance i mean, is that just an understood phenomenon that's going to be with us for a while, or is there going to be more nuance to it than that >> i think there's some of that going on, but the research and experience in examining supply

chains, especially for complex products like your favorite iphone shows the supply chains are quite sticky they take years if not decades to assemble. you don't just push a button as the decoupling leads to believe. in some areas like medical supplies and the like, there is some diversification going on. and that can be done more effectively. the broad nature of just reconfiguring supply chains is not something that happens with a flick of a switch. in contrast to what political leaders might want to lead you to believe >> all right we'll be paying close attention to that. thank you for joining us >> thank you in case you missed it, amazon and simon property groups are in talks to turn sears and

jcpenny in fulfillment centers

wells fargo top strategist says china tensions aren't a huge threat to markets but he's watching one contrarian indicator for signs of when to get defensive. more "squawk on the street" is coming up.

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welcome back to "squawk on the street." markets are mixed with outperformance in the dow and the s&p. the nasdaq bucking the recent trend of outperformance and lagging today. that's driven in large part by sector weakness in technology. the worst performing s&p 500 on the day. meanwhile you can see behind me

the best performer is energy as oil prices move to the up side those moves are being helped by better economic data out of china and positive commentary from oil about the recovery of global oil demand. the up side, diamond back energy and occidental and marathon as well watch those stocks in that sector with oil prices more "squawk on the street" coming up after this break

there is a heated debate on how states are taxing people that work from home during the

pandemic robert frank explains it for us. >> massachusetts is trying to pickpocket new hampshire residents by taxing themselves during the pandemic. his attorney general is reviewing a massachusetts rule that taxes out of state residents that krused to commus but now they're working from home for the pandemic. a special rule to thwart the existing law if they're working here six months plus a day, the majority of their time here they are taxed here and they are here over 80,000 new hampshire residents used to commute to massachusetts. they will continue to tax them as if they're still in the office even thousagh they're working from massachusetts now they say the rule was aimed at

helping companies avoid changing all of their payroll systems, but this is likely the first of many battles they'll likely now face they say they will continue to collect taxes on people that worked in those states no matter where they're working now. new york collects a fifth of their income taxes or about 700 million a month from out of staters. governor comeau saying they outreach would have a very negative effect on new york city that is why the end we'll see more state by state battles and with will like i will be ultimately decided by the federal courts guys back to you new york city and other big urban areas. robert, specific to new york again, where you have high taxes, people who left the city even if they're still residing in the state, that may try to

not pay new york city taxes. is that anything they can get away with if they're working fewer than six months in that jurisdiction >> they can't get away with not paying the new york city income tax, but what they l try to get around is the unincorporated business tax it means if you're part of a hedge fund and you're outside of the city you don't have to pay 4% income taxes for the income you earn outside of new york city in is a little known tax, but it raises hundreds of millions of dollars a year for manhattan and new york city. i have talked to a lot of edge funders who say this will end up to be a huge tax bill because so many of the guys are working in the hamptons, connecticut, and elsewhere and they won't pay that tax >> thank you >> shares of mgm are soaring

this morning after iac has accumulated a 12% stake in the company. this is fascinating and were very happy to be joined by joey right now. i'm reading your letter. can you hear me by the way >> yeah, you take a 12% stake in the open market. you're focused on trying to get mgm to focus the opportunity on online gaming, if i put another name on this letter, elliott or something else, it would read like a activist letter >> no, i think they're doing a wonderful job focusing on online gaming they're trying to focus more on online gaming and that's where we're excited about it we think bill is a great leader

with the right vision for the company, and that they're pushing into digital >> did you talk to the board before you started to accumulate took >> we told them all along what we're doing. >> you told them all along what you were do. what are you doing >> we like the company, the opportunity, the sidze of the market when we talk about our history and what has worked well, offline to online has been a huge them theme. we look for large markets, players that have a fundamental advantage in marge markets with this kind of undergoing transformation mgm is in seven states, going to 11 by the end of the year, and the proper term to get to 19 states, which i think is ahead

of everybody else, related to getting that step forward. and they're executing here they're investing real money here and we believe that had the winning formula in this is the full picture of offline to online when you say you can offer the consumer the full experience of what it means to come in a venue, be entertained, stick with them when they're at home, when they're on the go, we look at that as a really excited customer relationship. >> you said you will be a minority investor, but you would welcome the opportunity to tribute in any number of areas what does that mean? do you want to be on the board is this a long term righ relationship >> we're happy to help where

ever they want us to help. if they want us on the board we would certainly welcome that we, any where we can help, we want to help >> that was conversation part of the constitution troundidiscussd why did you go to the market to purchase them at $19 per share, i'm curious why that was not happening. would there be a way to get a better deal. >> mgm doesn't need capital right now. they made very, very smart moves. i mean technically very smart. timing wise lucky in the sense that no one saw the pandemic coming but they had the right strategy going in. they have, i think, at the

parent level four or five billion dollars in cash enter. they have the capital to get through this obviously veg as right now is very, very far from it's peak potential, but they can round that storm up. >> you view this, you say, as a long term -- with a long-term view even if we never advance our involvement from here it was too compelling to ignore >> think about the same thing we see at iac up until recently we had two public subsidiaries. and the cash that we had on our balance sheet, many times that exceeded our total market value. mgm is similar that they had some subsidiariesubsidiaries, av a cash balance and debt.

we don't normally have as much debt as they do but they have cash as well if you add all of that up you get to, now, a -- stocks are going up today, but you get the domestic business which is a huge cash flow business for free that is what we see as a really good opportunity. >> what are your expectations here to wrap up? do you think you will be long-term involved in the company it is a razor stake at the time >> everything we ever do is for the long-term. so we are certainly not flipping stocks here. our goal getting involved here is to be involved for a long time and that could go in whatever direction it goes right now we just saw an opportunity and we wanted to lean into that opportunity >> joey, watching some of the other stocks in this area here penn national down 7%.

those stocks are up a lot. but do you view the online gaming or sports betting markets as zero sum? the market seems concerned about the implications >> there is penetration in the usz. and i don't now enough to know, we're just very much learning in this category and we have a lot to learn here. in the general experience when things are so early there is room for lots of players to fig it out as far as the market goes >> in your letter you talk about how, you know, the company is basically earnings, dp you rounded down, it's zero on it's digital games business right now. if you assessed the valuation for this company as you