apparently because best buy i think you go shop there, you get some service. >> if you build it they will come. >> might even buy it there anyway, i'm going to have a smooth trip in tomorrow, i can feel it. >> cross your fingers. >> fingers crossed make sure you -- they're panicked we might not hit nine straight up. easy, i got it "squawk on the street" now ♪ good tuesday morning, welcome to "squawk on the street" i'm carl quintanilla with jim cramer and david faber. futures are solid, pointing to some fresh record highs as the u.s. and china reaffirm their commitment to that phase one trade deal got some changes to the dow as well plenty of upgrades and price target hikes for names like facebook, apple and starbucks. kay shiller is in as well up 4.3. the roadmap begins with the do you -- do you jones.

how apple's shakeup is driving the blue chips plus the online surge, best buy notching is 242% gain in e-commerce sales in the second quarter but can it last? trade optimism, u.s. and china officials reaffirming their phase one commitment, the s&p is poised to add to its record run. jim, i saw you last night mentioning those changes to the dow and your general point was don't be fooled in thinking there is as much money indexed to the dow as to the s&p. >> we said that last night, it's been the theme all morning and there's been no sellers. one of the reasons there's been no sellers are the people who are now trading stocks in early hours have tremendous conviction in the face of being wrong it's rather incredible because the hubris of these people they must think dow jones has a lot of money to it and it has to come out of exxon and into

salesforce david, you have been at the forefront of the network in explaining the nature of the dow and you see this, too. aren't you shocked that even after we say that this is not necessarily the right thing to do that the buyers get more fesh oesh ferocious? >> i try to not ever talk about the dow jones because it is a statistically irrelevant index given it's price weighted. you can look at a chart and see it make sense, the s&p of course is market cap weighted although lately we've talked a lot about how even that index is not necessarily reflective of the broader market any longer given the incredible weightings of five enormous companies in it, jim. this is a snapshot of a moment in time. i think that makes it interesting, to see what the decisions are in terms of what goes into the index and out, but i kind of leave it at that to your point there is a little bit of money, maybe 5 million

shares need to be bought, but so little it is not like the s&p at all, there is hardly any money index against the dow jones as you say, jim i always come back to the fact while it's an interesting snapshot the dow is not a statistically relevant index sorry. >> it is curious, of course, we have amgen which is a not particularly fast gross drug company replacing pfizer which is a not particularly fast growing company but is very big. we have honey wisconsin try to reinvent itself as a software company, considered to be the gonel gaininger. the doppelganger sales force is a company most people don't know what it does it makes it so you are a better seller of things, it's the way to run your company and digitize it exxon is -- if we look -- if you go back in time in 2013 the

second quarter it was the largest company, in 2010 the largest of all four quarters it was the largest. even in 2017 it was the sixth largest and 2016 it was the -- in the fourth quarter it was -- geez, it was first and second. this was a huge company. it has been crushed. i think the dividend is very much in question and they kept chevron, the gall of it. standard oil of california, they kept the wrong one >> right >> they kept the bodies, they moved the grave stones >> now, jim, there is sort of this highly anecdotal reputation that it's somehow a "sports illustrated" cover kind of curse to get added and somewhat of a relief to get exited do you buy any of that >> no, these are -- they're fun. look, i think what will happen is someone is going to say, jim, you said no and then salesforce

reports and that goes down, you're washed up, the usual. i would point out this, i would point out there is no curse and as david said it's been -- you know, it's kind of a bragging point. i think i informed mark last night, mark was working en masse and i said this is great whoa it's a very nice thing to tell your mom >> yep yep. it is. i mean, and for salesforce i think they can be proud of it because it is -- that's it that's what it means. >> right. >> it's, okay, you know, look what we've been able to accomplish in terms of at least the reputation, so to speak, or our importance in the overall market, jim. i will leave it at that. now, as for salesforce's numbers i will leave that to you in terms of -- because this has absolutely nothing to do with the performance of the company over time which obviously has been extraordinary and you of course having been a big supporter of this stock over that period of time. >> since 8, proud of it, but,

david, i've -- every time you say something good you have to say i'm a total knuckle head and got this wrong amgen surprised me amgen was the beneficiary of a justice department breakup of a key drug in order to get bristol-myers to be close. the whole move has been because they won a court suit and they got this one drug from celgene i don't think that amgen -- this is personal pride hurt for pfizer wasn't pfizer riding high on the vaccine? what has amgen got how many divisions does amgen have >> it's weird. >> yeah. >> well, who knows anyway, it's a marketing tool for dow joneseven though they don't -- >> it is salesforce -- i bet you they do the greatest crm company and in the dow unlike oracle, you know, unlike google. whatever how about -- all right

let's get to the heart of things, carl what the hell is walgreens doing in there what is that i mean, have you seen that stock? i mean, you want the dow to go down, you put a couple walgreens in there that's one of the worst. remember, walgreens was a partner of thernos and that was the hope >> we could do that all day, jim, playing the chess game of what belongs and what doesn't belong more importantly, jim, was yesterday the influence of convalescent plasma and vaccine hopes, today this phone call with lighthizer and mnuchin and the vice premiere reaffirming their commitment to phase one even though china has to pick up the face in terms of their commitment for purchases for the year how important is that? how surprising is that after the president said he didn't want to talk to them anymore >> it's very surprising because they've been putting out navarro, peter navarro has been on our network, peter is talking about some of the outrageous actions that china is taking and

the president is nonstop talking about what the numbers would be like if it weren't for the china virus and in the meantime here we go. game on china. and secretary mnuchin has become the point man for what i regard as, let's say, i don't know, how about, david, how about reason do you like reason david? >> i will take it, sure. >> you'll take it? >> sure. reason sounds fine. >> reason. >> sounds fine, yeah. >> all right look, we want -- do we want a china deal some of us are hard line on china, but what this does is i know apple is about to split, but apple is being sold off because it's had such a run but they are the big winner if they think there's going to be trade conciliation. >> do we really this i that, jim? this formalizes ag purchases to some extent, the chinese by the way need does this really change the tenor between the two countries which has done nothing but get worse? >> i think it's nothing. >> i know you do and i know you are a hawk on this.

>> yes. >> and have been for some time, but, you know, it's not like it's -- >> but why did they do that? >> going to help huawei in some fashion or tiktok's owner bytedance or tencent there's so many different roads that have only gotten much more difficult in terms of the relation between the two countries. >> you can go buy deere, deer has been on fire there was a friend that came out with a sale right before t i'm calling it ill-advised before they reported. carl, the one thing i would emphasize is that the administration could change its mind tomorrow. so if you are buying these stocks, maybe have a little more time frame than just 24 hours because we have seen vitriol against china, i still think the oracle deal -- did you see the scoop, david, by the way the journal had a story about how general atlantic was involved -- i could -- what an exclusive. >> i heard -- yeah, i heard that

somewhere. i'm trying to remember -- >> david, it wasn't on you broke the story about the celtics getting a pretty good guy. carl, it is painful. it is painful to be the tv station of record. >> as long as they're watching that's what's important. that's what's important. >> as long as they're watching. >> don't get caught up in the scoops i played that game for too long. >> all right i'm a news guy. >> yeah. >> don't worry about it. you're a news guy, that's great and you have to be on t you have to be on it and i love it and you did have the details on this i still wonder about the complexity of that actual offer and the ability of bytedance's owners in the form of -- to be able to monetize their move in to a u.s. tiktok ownership stake with oracle which, again, does not seem to be as much of the driving force as perhaps microsoft.

i continue to believe when you're looking at it from a complexity standpoint microsoft presents the easier deal possibly but let's not forget bytedance's owners want there to be another bidder because that's the only way to get near fair value for the asset. >> what's so difficult is safra catz is a sphinx you are not going to get anything out of safra catz she's not going to talk, larry ellison is not going to talk they're not leaking like seives. it makes me feel like it's going to happen sooner than later because of the stuff with mnuchin. >> there's cross currents, there's obviously the tiktok dance, you have the fades one talks. a lot of back and forth between the chinese and the europeans this morning, jim, talking about being strong economic partners

dave, imd sure you're going to cover this filing for an oip which would give it a valuation bigger than some of our biggest banks. >> we should spend a decent amount of time talking about this and we will a bit later in the show perhaps, carl, but to your point ann financial will not be listed here and i think that's an important point, one that perhaps mr. cramer says is a good thing. >> yes. >> i would argue otherwise, it will be listed in shang phi, hong kong, will be the largest public offering of all time at least according to the people i speak with, $15 billion of stock sold in the domestic market in china and another $15 billion sold globally so u.s. investors will be able to own t you just won't be able to trade it here in the united states. >> what price does the party want it to be. >> alibaba does own 33%. say again, jim. >> what price is the party setting it at? the chinese communist party, have they picked the price. >> come on. >> what do you mean come on.

>> you've literally become peter navarro. you might as well be chaim. >> what's my handle -- >> the student has become the master. >> yeah. >> i've tried to get navarro to be a little tougher. i think he's worried about biden getting in just kidding no, come on, david, it's the chinese -- do you understand -- yes, you do. >> this is an enormous financial services company in china created alley paid, they pulled that business out of alibaba, a lot of their shareholders were not happy about it years ago they own 33%, they changed it from getting the dividend to owning 33%, it's helped move up shares of alibaba but we will keep a close eye on ann financial. jack ma still controls that. >> and who is his hero >> speaking of -- speaking of capital markets activity and ipos, i want to talk pal anterior after the break, the listing from this silicon valley

giant is coming up is coming up

welcome back, guys i want to talk a bit about palantir, a name at the beginning of this year many would not have expected will be coming public will be hitting the markets fairly soon. it would appear. in fact, we're waiting moment by moment for an official s 1 they did file confidentially a

while back but it is going to be made publicly the s 1 any moment i'm told many expected we would have seen that yesterday of course, this is a company the government and defense department are a large user of its services but it is commercialized those services in part under what it is its foundry works part of its business as well that part has very large gross margins as they've tried to move towards profitability. remember peter thiel is a long time investor there, the chairman alex carp the company's ceo has never embraced fully the idea of becoming a public company, but that's where they're going to go it is going to be a direct listing. much of this is already known and been reported on by others at this point. we are expecting i'm told it could be as soon as september 24th that this listing takes place.

you will need a road show prior to that, let's call that mid-september before this hits the market a direct listing, similar to spotify and slack, both of which hit a bit of turbulence early on, there was some concern amongst both of those about selling shareholders what may distinguish this as this desire on the part of palantir, jim, to have a lockup on a certain and potentially large portion of the shares that are sold, that would be a new thing for a direct listing >> i was going to say that until i heard that i was going to say once again we've seen tremendous undervaluations with these, whether it be google back before 2000 or spotify which was completely hacked, hacked meaning cut to pieces by the direct listing you've got something there, david. you've got something there lock it up might be so that palantir gets a good valuation, i have not seen the financials, by reputation

everybody says the same thing which is it's sterling. >> i think their margins are high, still losing money, there were some tech shots s 1 sent gross roughly $50 million, from what i hear, though, they at least are talking a big game at this point about their opportunities amongst corporations not just the government which has been a large user of their services and the prospect of a very strong fourth quarter. we will see. this has been a darling of silicon valley for quite some time, the valuation has changed. they've been able to raise plenty of money in the private markets as so many companies have, but there seems to be a hope that unlike many companies that were able to do so and therefore push off their public offering to the point where they weren't growing anywhere near as fast, there seems to be a hope that in this case their larger growth prospects are still ahead of them. >> we had a discussion about

this yesterday, sort of related to how covid flipped the switch on a lot of issues, jim, would a pre-covid airbnb ipo have been as compelling as it appears to be in the offing now >> no, not at all. >> snowflake today -- >> i'm sorry. >> it's turned a bunch of things upside down. >> their business fell off about 80%, they didn't see anything come, they did layoffs, then the tables were turned people decided hotels were more dangerous, lobes, elevators, difficult to clean versus homes. a pool at a home versus a pool that's a community pool at a hotel. so now business is off the charts and a lot of the hotels obviously are on the ropes and that's why i think airbnb has gone from a deal we were questioning to being a deal that you have to get in you have to get in now that's terrific. >> yeah. >> still funny, jim, i still wonder exactly why they're choosing now to go public. certainly help in terms of the broader knowledge of a company,

the marketing in some way that it helps you do, but they're not raising the money. they are not out there raising the money and obviously they have selling shareholders who have been able to monetize because of all the money they've raised previously. >> look, i think no one thought it was going to be good, even management wasn't sure and now i know that there's people that say i don't want to stay in somebody's house it is the hotels, the amount that are in arrears, versus if you go the value of airbnb, it's working and i think it is a great time for them. which is why i want a piece of it, well, if i could trade. >> i was talking palantir when i just made those comments, but understood. >> okay. >> carl? >> guys, so many names to get to some of the upgrades in price target hikes for names like starbucks, deere, amd, facebook, chipotle, a new street high on apple. we will get to that when "squawk on the street" continues

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watch the banks today, you have the ten year back to 70 basis points, jpmorgan is leading the dow premarket along with axp, as we await fed chair powell from jackson hole later quk t see ck. "sawonhetrt"ontinues in just a moment ♪

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all right. time for a mad dash as we count down to the opening bell about three minutes until we get there. palo alto is the name this morning, jim. >> yes, an old name for you, david, softbank, he took this over, bought a lot of stock at 200, has, i think, made a magnificent turn, he has bought a series of companies and made this into maybe the gold standard for on premise and for work at home cybersecurity david, reports of a blowout quarter. we have ten price target boosts, we've got two other analysts who didn't boost but said this is the one to own this is a new pattern for this period of stocks that have run we saw it for nvidia, nvidia stock was down 8 after 19 price target boosts. we've got palo alto down almost 10 and i predict that palo alto if you buy it with all those price target boosts will work. i think they are doing a great job. i had him on last night, very

confident. really doing well with stay at home, work at home, which, of course, is -- i don't know anybody who works at home, but it must be something oh, hey, carl, do you love it? my wife said -- lisa -- we were at mark and keek key's house on saturday, she said, jim what, the hell are you doing why do you go to that office i said because i'm lonely, i live out here, you live -- it must be great. >> i don't know, david i don't know about david, but i'm looking at jpmorgan this morning, we have a piece on dot-com that jpm is going to start implementing a model daniel pinto says that he thinks will be more or less permanent which is a rotational model, you work one week a month from home, maybe two days a week. that's the way this is evolving. >> that means there's going to be lots of zoom meetings like there are now which means, wow, you can hide.

>> it also means that, yeah, it also means you can reduce your footprint. i'm not sure that that's what jpmorgan is thinking particularly given the enormous renovations that they are undertaking at their headquarters at 270. your actual foot print of employees, your real estate footprint is what i'm talking about -- >> let's break the story every company offline says it's a lot cheaper to have people at home and they work much harder and you can calling them at any hour that's the new world, you work harder from home, it's cheaper never use the word exploitation because i know this is not 1917 in russia, but it is incredible what a bargain it is to have people to work at home and not to have any travel and entertainment, carl, these companies are going to have huge -- watch what salesforce does tonight i bet you they do well they've been people at home -- look, buy a home from lennar that has two offices in it i'm going to try working from home next, just the buttons,

"mad money," it's hard >> there's definitely upside i mean, i'm sure david agrees, there is a nice lining to it i mean, i do miss -- i miss being on a desk what you guys, you miss the chatter quotient of working with your colleagues. >> yes. >> even when you are not on the air. it's mixed it's definitely mixed. >> yes. >> the fact is that it's working out very well for the companies and people are surprised how well it's working out. that's the theme for this quarter. >> there's the opening bell, we will watch breadth fill in best buy comps up 5.8, double the estimate on computers and appliances and tablets they declare a dividend, we talked about online comps up 242, but no guidance and a warning that maybe q3 can't be sustained at 20%. >> and that's the cfo gave you this line says we're not -- i would note that we are planning for third quarter to be higher compared to last year, so far so good, but likely not continue quarter to date level of

approximately 20% growth so why don't you just stick a fork in yourself maybe they needed to feel like they could revise things down, but they are on fire and it's large appliances and home theater. who would have thought home theaters are back. david, do you have a home theater? >> no, i don't think i do. i don't think it qualifies i've got a sound bar, but that's not a home theater, you know, but it's nice. it works it's enough. >> people want it. >> i bought it at best buy a few years ago. >> did you >> yeah. >> i bought mine -- i bought a huge screen, carl, from amazon and now i'd like to have seats because it's how i'm going to watch the games because my season tickets don't mean anything, even though i paid for them already and they sent me a note which says we are delighted to let you know that you get to keep your box in 2021. and i'm fine with it i'm fine with it.

>> where would you put a home theater, jim which house would you choose >> i don't know, the 12th one. >> wait, we jumped ahead, i thought we were ten. >> new one and another one one coming, lisa is going nuts. >> new wave cinema in italy, jim. >> italy you can't get to italy. >> i know. i know we should talk about cowan going to 530 on apple on the heels of katie huberty's 520 yesterday. are we going to do this every day, the $10 incremental move? >> this piece was one of the most boring pieces please let's come up with something new. sum of the parts, are they going to break it up earnings no let this thing come down i am surprised that these analysts don't realize the stock is for sale as people take a little profit and come out after. it's not -- look, i'm a huge advocate of splits but we also know they don't do anything.

let it come in i don't know why people feel like they have to do this call right now, carl, other than this usual, well, we have to take the price target up. we saw some pieces today, with he got a piece today that's completely factuous about apple going up, google we got a facebook piece, their social media is doing well we got a netflix piece saying netflix is doing well. give me something about hormel for heavens sake, give me something about smucker. i feel like ubs, facebook -- i don't know if it was evidence lab. medtronic had a good quarter, mdt. >> ubs took facebook to 330, they were at 242 they're talking about shops being a $10 billion opportunity, jim. >> it will be. >> that's a new street high on facebook as well. >> i think shops is brilliant, it's the ambassadors now of the company, notice the heat has died down. there was a non-story about actually that zuckerberg has

been saying, listen, as long as microsoft -- microsoft can get tiktok as long as it's separate. there were no revelations there but they had to make it a revelation you have mark smucker? you guys have mark smucker >> yeah. >> why don't you cut my heart out. indiana jones and the temple of doom he was my guest. you know how he reaches it and just goes like this, that's what you just did to me. >> you don't get every single one of them, jim. >> the great sara eisen -- i'm not going to mess with the eisenhower >> you should feel better about it, i'm on that hour today with sara, those two hours. >> it's café bustelo, it's dunkin'. >> that's in the 11:00 >> i'm trying to give you the brands so you know the story. >> got it. >> carl, i'm sorry i'm competitive. you know

>> we love it. it's corporate darwinism at work, jim. on smucker you're talking basically a three-month high i'm curious, it's another example, deere was the other one last week, jim, where we had down grades going into the print. >> yes. >> smucker's' case it was morgan stanley they went to 107 said they would be a lesser beneficiary of food demand, the print proved the exact opposite. >> this is 50% -- organic sales up 11%, 70 cent beat, pet up three. a lot of people felt that their pet offering is not that competitive. café dunkin' bustelo one of my favorites. people have coffee at home and buy the well-named brands. i was a uvan guy at one point, that was when i didn't sleep on tuesdays david? >> all right no sleep tuesdays. >> no sleep tuesdays. >> i remember those. >> taco thursday, no sleep

tuesdays >> guys, quick faber report. wading back into the drama that is tiffany and lvmh, remember that deal, of the course, signed last november, 135 bucks a share all cash, remember they moved up at the end, something that bernard arano the richest man in europe regrets they had to extend the merger agreement as you would expect because this is taking longer than might have been anticipated in terms of getting approvals, the key one being from the eu. tiffany did it union naturally which we don't often see and then there was language that tiffany shared with us from lvmh in which they said -- first of all, august 24th they delivered to lvmh confirmatory notice, extended to november 24th. fine we see this often in deals remember how often sprint and t-mobile had to extend their deals. lvmh has notified the registrant

it reserves the right to challenge the validity of the outside data on their merger agreement. that is why the stock is down 4% it is raising concerns as i have reported previously, this was months ago at this point that bernard arneau would like to get a price cut. no the walk away from the deal but get a price cut. that is not something unknown to the tiffany side what remains unclear is whether or not he will be able to figure out a way to get it. the latest foray is around this idea of an extension, perhaps you would call it a mac result of at least at the time that he tried to extend and therefore say you have the right to terminate. very much unclear and you delaware law that that would be something that they could do and, in fact, tiffany has made it very clear at least in speaking to people close to that company that they will go to court, that they are not interested in extending any sort of price cut as you would expect them to say to mr. arnault

even if his advisers are telling him you don't have this great a shot at getting this he wants to continue to put the pressure on. the two companies talk all the time and i'm told early next week you will get a filing of a formal notification to the eu beginning what would be a 25-day review process for the deal. meaning a close could not be that far away, if mr. arnault is looking for that opportunity to say price cut or auk walk it may be in the not too distant future again, guys, this is another covid-impacted deal, not unlike taught man and simon properties, declaring a mac even if we have no right to do so. a key here, jim, will be tiffany's, we're getting them thursday, china has been very

strong, we've seen, from a number of other companies that have reported results in the luxury area. it may make it even more difficult in some way for lvmh to say we deserve a price cut and, again, they may be sng for that opportunity to get one, but it remains very much unclear how they actually will go about doing it it doesn't mean he's not going to keep trying as i r i've said many times. >> the retail have and have not's have been the ones that have great e-commerce versus the ones that don't, tjx's position was a terrible number. why? they don't have any e-commerce i don't know how much e-commerce tiffany really has, but i don't think it's known as one of those and i think that -- look, it's a great gem that has been led fallow i thought the last two years was pretty good. carl, the name was never destroyed. the name was never destroyed but i do think that the world changed with covid and the

answer is if you have e com like facebook shops you are in great shape and if you don't have e com you're questionable. people don't like to go to stores anymore. >> don't you think, jim, i mean, i'm looking at this citi upgrade of gap today, gaap is the number one s&p gainer up 6.5 that come are searching for optionality stories as well. >> l brands the same you look at these -- it's not -- interesting stock -- i think portnoy just bought 2 million shares of gail pacific i like gap as a break up play initially. i like l brands as a break up play initially these are trades the -- i mean, honestly, these are companies that are trades. it's just that the l brand trade worked out a little longer than i thought because bath and body works was good i think in the end these are transitional names and, yes, maybe all the different divisions are worth more, but then what? i mean, you're still stuck with these companies that are

mall-based, that are the numbers are horrendous and i just think that this whole l brands someone came out and said it's not too late to buy l brands what are you kidding it was at 19 it's not too late. rocket mortgage. there is -- there is a time when it is too late if the company is not a great company. it's too late. >> and don't forget, i mean, talking about deals that fell by the wayside, of course, l brand's deal to sell victoria secret to sycamore is another casualty of the pandemic. >> yeah. >> both sides just walked away so, again, it gets back to your point and their concern. that november 24th deal on tiffany just to make it clear that's when they have extended the deadline it doesn't mean they won't close long before that, but now they at least have the time to do that so you don't seem to think tiffany's long-term prospects whether a part of lvmh or not, jim, are that great? >> no, i don't

i think the world changed and tiffany's is a mall-based shop with high prices there are people who -- will be trading substantially lower if they walked away substantially. i don't know this is not the right kind of company in this environment. it's all about e-commerce and, carl, i think that we are never going to be the same in terms of the way we shop. we shop on amazon for th silliest things, hence, why walgreens is where it is, and i don't know about luxury, but i don't want to try things on. i mean, i think that's one of the problems i mean, do you know that cash is down double digit. we don't want certain interactions i don't want to try on -- i don't want my wife to try on a ring that she -- that might have been tried on before i know that they polish things up and whatever, but -- and i

know they probably hate that, but i just don't like mall i don't like mall. >> yeah. no, you and i know some people who work in beauty and the lipstick counter has changed forever. i can tell you that. >> yes,est alloweder back only because of moisturizer because -- look -- >> skin care -- >> do you ever -- do you ever see the ring of fire that you get -- i know that's a great reference, but ring of fire. i like johnny cash live at fulsome has his back. let's get to bob pisani this morning. hey, bob. >> good morning, everybody happy tuesday. respectable open, split, 2 to 1 advancing declining stocks but second day in a lower' getting a little bit of a value tilt, one of these mini rallies that happens every once in while, bank stocks move up, industrials, health care doing all right, tech has been the lagging although it moved into positive territory overall not a lot of new highs, though,

still don't see it on the s&p, i'm waiting for that to happen i will tell you what is pretty hot is the ipo market. did you see overnight, my heavens, four big silicon valley tech ipos announced, believe it or not, these are the first silicon valley ipos of the year. we've had tech ipos, rocket came, but they're based in detroit, so finally we're getting some silicon valley companies. the one i'm interested in is is ant group, this could be the biggest one ever and it isn't even going to be here, it's going to be over in china and shanghai, important thing about this is we don't know the numbers yet but it could be $30 billion that's the speculation, we keep showing that would be a record, folks. if you take a look at the biggest ipos ever, saudi aramco was the largest one in terms of a flow, $25 billion there, followed by alibaba, softbank, ntt and american international assurance. this could be it it's a great time to go public for ant financial. i mean, they are a payment processing company essentially and these companies are on fire this year, not only are they

tech but they're doing well because of the whole covid situation. if you look at some of these payment processing stocks and i consider paypal is a potential competitor for ant, paypal, tencent, square, aiden is in the netherlands they trade over in europe, look at these stocks, this is just this year, good time to go public, good time to to go public as a payment processing company it's going to be hard to own ant financial if you are in the u.s. but one way to own it renaissance capital's international ipo, ipo s is historic high, they will o en that within days of ant going public as for the dow companies, the dow changes that we've been seeing -- by the way, losers on this, nyse and nasdaq, do you think they're not unhappy about missing out about the biggest ipo of all time potentially, they're listing in shanghai and in the hong kong so not here in the united states. obviously they're not going to be happy about that. as for the dow shake up, this makes sense, they're conservative here.

salesforce replacing exxon, salesforce big software company, apple split reduced the weighting of technology and you don't need two energy stops when the s&p is 3% energy having chevron would be enough amgen replacing pfizer, pfizer the lowest priced stock, amgen more representative of biotech, that makes sense honeywell replacing raytheon is like for like by raytheon overlapped with boeing and honeywell a little broader all these changes are conservative but not baffling here index investing, carl, where the money s we talked about this, david talked about this, $31 billion linked to the dow that's not a typo, $11 trillion linked to the s&p 500, the s&p is getting bigger and bigger, $28 trillion market cap and five companies are 23.9%, carl, of the s&p 500 and we know what five those are back to you. >> all right bob, thanks for that financials leading along with the health care today,

let's get to rick santelli hey, rick. >> maybe the financials are looking at the yield curve which has steep end about 3 basis points with ten year note yields up 4, 30 year bold rates up about a handful. the 30 year bond auction on august 13th. it was a thursday. why do i go back on the charts on that session, that's when we started to have this notion there might be a life with interest rates going higher that aren't challenged by the federal reserve and raising the quantity of buying they do, but yet we tapered off but we're coming back we briefly traded over 70 basis points in tens, we briefly traded over 140 bases points in 30s and do remember we have a two-year auction today $50 billion another record size auction, seems like every one seems to be bigger let's look at ten yeear minus bunds. 112 basis points we're starting to outpace bund yields just a

yet. yields growing a little taller and faster with respect to the chinese trade talks that happened this morning via telephone, it seemed like they're playing nice, it's fascinating to look at the euro versus the chinese on shore yuan let's look at year to date the euro is definitely doing better the dollar against that currency is at the lowest level since the third week of january. finally let's isolate that strong currency, here is a month to date of the euro versus the dollar what you can see is that it is losing a little bit of ground here, but nothing huge and we want to pay attention to recent highs in the past. carl, jim, david, back to you. >> all right rick, thank you very much. so s&p 3435, interestingly on the dow at least the biggest laggards include those that are bound together kicked out, raytheon, exxon and pfizer apple is thrown in there, too. we're back in just a moment. some companies still have hr stuck between employees and their data.

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as far as the u.s. is concerned, when you look at this, the head count on the infections because of the cruise ship people come off, we have contained this, we have contained this, i won't say air tight but close to air tight we've done a good job in the united states, hats off to our public health people >> that's kudlow, six months ago

today with our kelly evans larry's addressed that statement several times since, jim, and said it wasn't a forecast. the hope is what he said back then might actually be true now, as the number of deaths and new cases every day continues to drop >> yesterday, the big 12 is going to play football and the doctors advise and mayo clinic differ on this, they were saying hey, listen, who knew? it's easy to nail larry but when you have mayo clinic that didn't know, you have ohio state doctors saying they shouldn't play, there is such division still. we had an fda director take back what he said sunday. is this a fiasco or just hard? look, i feel for larry that was obviously' very ill-advised statement, but is there anybody who has really been completely right on the

initial lancet article in public school of health you have a split like big ten not playing, big 12 playing is because nobody knows anything and i know it's easy to second-guess larry >> well, the answer then, jim, is to not step out over your skis, right? to not make promises that you're not sure about >> yes >> to just say "we don't know. >> that would have been the smartest thing to say. i didn't like the idea that it was kicked back to the states because in world war ii, honestly, i said yesterday you don't want iowa out there in the german theater in europe and we got florida fighting in the midway you needed a united effort, we didn't get that because the president wanted to make it a states right issue but the fact is we know that masks works, yet people don't believe in masks. >> certainly stocks are higher than they were six months ago today. take a quick break here and talk more about what the market day has for us in store, ia mentn [ thunder rumbles ]

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take a look at the s&p citi upgrades gap and a $4 target as well as some of the names added to the dow like honeywell and am gen more "squawk on the street" back in a moment. or face to face, we're here to help- utilizing our resources as one of the nation's largest banks and a local approach with a focus on customized insights. so you're ready for today.

time for jim and "stop trading." >> the idb has been horrible, down, down amgen is the largest holding number four, you've got a very good one, you have regeneron in there. regeneron is the next one the president starts talking about, the cocktail that they have with roche that needs to be tested right now. they don't have enough people, the trial starts in september. it is for people sick already, the magic bolt david talks about. i know he'd like it to be a pill amgen is going to break the spell. buy regeneron. >> interesting take, jim >> right, biotech index kept everything down. >> good point. what's on "mad" tonight? >> mark benioff, salesforce replaced exxon well, you know, standard oil, easy come, easy go and jim snee from hormel

just because he didn't blow off the numbers like smucker's does, can be an interesting get and i understand there's measure behind the scenes and i don't let this happen again. i'm taking whoever you have. anyway, good show. i'm jimmy chill. >> jim, we'll see you tonight. "mad money" 6:00 p.m. as always. good tuesday morning, everybody. welcome to "squawk on the street." i'm carl quintanilla with david faber. sara eisen is with us for the hour we get new homes and consumer confidence rick is up first >> reporter: yes, confidence is a disappointment for august. we're expecting to read over 90, maybe 93 we end up with 84.8. 84.8, basically a six-year low, going back to april of this year, when we had 85.7, right in the same area, and if we go

through the present situation, down about ten points, down exactly ten points, 84.2, and on expectations what's ahead, 85.2 versus 91.5. these are weak richmond fed manufacturing index was strong, came in at 18 versus ten, an august read and new home sales up almost 14%, wow 901,000 seasonally adjusted annualized units, more than we're expecting. last month gets upgraded to 791,000. you have to go back a dozen years to see this type of horsepower on new home sales, and nobody does new home sales like diana olick diana, pretty impressive number in housing once again. >> reporter: once again, rick. this is a blockbuster number, up 36% year over year now the street was just expecting a small gain, but everything we've heard from the builders especially with builder sentiment hitting a record high in august showed that this was

going to outperform. what's interesting here, prices up 7.2% year over year and supply down to a 4.1 month supply from a 4.7 month supply that's going to keep pressure under prices we saw that in the existing home market we have existing home supply down to a record low three-month supply, that is benefiting the builders what's really interesting here, though, is that you're seeing the price category shift you're seeing a much bigger gain in sales for higher priced homes, that is shifting that median higher but also we know that the builders are increasing prices why? because they can they know there's a low supply on existing, and therefore, they know people are also really wanting new, they want high tech homes, homes in the suburbs. you have the urban flight playing into these gains and you're really seeing the gains across the board, when you look from region to region, the strongest sales gains were in the midwest, up 58% month to month. 81% year over year sales were lower month to month

in the northeast, very strong again in the west. down slightly again, northeast not seeing the best gains but still that's a blockbuster number you'll see the builders pop on this one toll brothers reporting later today, the high end of the market and you can see the high end is selling sara >> another very strong read on housing, diana, thank you. our road map for the hour though is going to start with the blue chip shakeup. exxon, raytheon and pfizer ousted how apple stocks split is reshaping the makeup of the dow jones industrial average best buy's growth outlook after a 242% online gain in sales in the second quarter. what the ceo is telling cnbc about the path forward >> and a post-pandemic bounceback jerry seinfeld amongst those pushing back against the claim that new york is "dead." what does the data say

big changes coming to the dow jones industrial average three new companies will join the 30-stock benchmark before the market opens next monday salesforce, amgen and honeywell replacing exxonmobil, pfizer and raytheon technologies respect e respectively, a sign of the times more than anything a lot of people are familiar with the dow, they know it the indexing numbers are much smaller, a fraction of say the s&p 500, so that gives you a sense of how professional investors look at it, but still, quite a badge of honor david, i think i know you always say it's statistically irrelevant index but it certainly is a big deal for the company, like salesforce, mark benioff started this company after leaving oracle and quite a milestone to end up in the dow replacing exxonmobil >> yes you can't argue with that and as jim said earlier benioff can call his mom and say look what we just accomplished and that is

true, but it is also true that it is a price weighted index as we've said many times so for example apple, which has had a significant impact on the index, being a let's call it what is it today $496 stock soon will not have that impact given the four-for-one split you know, so that is what we're dealing with sara talking about the dow. we are seeing those stocks, carl, move higher this morning, despite the fact as bob pisani indicated there's only $31 billion worth of stock that is actually tied to the performance of the dow, versus some 11 trillion of index funds that are tied to the s&p 500 index money, money that is indexed to the s&p 500. >> right it does have the advantage of bigger history i guess, right, more duration of history, probably better known, although sara, i would argue that we've

talked about the s&p levels in absolute terms probably more than we've talked about the dow this year, right i mean, 27k comes and goes but 3400 gets everybody's attention. >> right and a new record close yesterday. all the bears are capitulating citigroup the latest that a lot of people are talking about. capitulating and raising its s& 500 target for the second time this year against the powerful force that is monetary easing, fiscal stimulus, which the market is still expecting and then a lot of technical levels being breached, leaving a lot of the bears behind, and now i think the question is, just as how bullish is everyone? the enthusiasm seems to be growing for the day, as people do capitulate not just analysts on their individual stock prices but hedge fund shorts go to lowest levels we've seen on the market in years. for a closer look at what to do next, with this market, which continues its rally, s&p flat

holding its gains, we bring in morgan stanley wealth management lisa shallotte and northwestern's brent schute. welcome to both of you lisa, you sound a little cautious about chasing this rally. why? >> absolutely, and i think that the reason is that increasingly the index itself is not representative of the economy and the data that we're seeing we are very enthusiastic about the economic recovery and the v shape that we are seeing in manufacturing, in housing, as we saw in some of the supply chain related parts of the economy that are doing well and are reflected in improving pmi numbers, but that's not what the market is. today, this index is all about this work from home, technology, everything is digitized,

everything is internet, and we believe that that disconnect is just getting too big so while we love the bull market narrative of an economy with a v-shaped recovery and massive stimulus both from the fed and the federal government, we think the way to play that is through individual stocks who are actually going to benefit from the change in the data it's not entirely clear to me that blowout home sales are going to excel new iphones everyone who wants an iphone or ipad got one back in march, and so we do think that there is -- >> lisa -- >> -- rotation that needs to happen >> which types of stocks, you're talking about value, are you getting into value stocks? >> we're talking about cyclical sectors. we're talking about small and mid caps we're talking about value-oriented sectors, so we're buying financials.

we're buying industrials we're buying transports, we're buying parts of the health care value chain. we're buying various parts of consumer discretionary that have been left behind, all of which we think are linked to housing, so we've got lots of things to buy. they're just not those, you know, largest cap mega tech work from home names. >> lisa, sara mentioned citi's new target one of their lines is that despite the euphoric sentiment, equities continue to advance we see shades of '99, tobias writes, but the feds started tightening then rein there's no hint of a repeat now would you go that far? >> yes so i agree with tobias' spirit of what he's saying certainly, but exuberance is exuberance nonetheless. we know what it looks like and know it doesn't end well

anyone who is going to jump in here needs to have a strategy for what is it that's going to get them out of the market, because we know that at some point, these things catalyze and break when you're this disconnected so while i can't talk about, you know, specific stocks, let's just say, you know, it's hard to fathom the idea that one of the world's largest electronic carmakers can increase their market cap 50% 16 trading days and that not be labeled irrational, and so i just think liquidity goes a long way until it doesn't stimulus goes a long way until it doesn't, and i think that folks who are just chasing here really need to look at that consumer data that you guys, that just reported the expectations, we got to remember the u.s. economy is 60% to 70% a consumption oriented

economy, and if consumer confidence is flagging as much as those numbers suggest, it's going to be very hard for this market to run simply on fumes, and sentiment. and so i think that folks who are chasing need to have a strategy for what is the catalyst to get you out? the policymakers aren't going to tell you when. >> brent, i want to bring you into this conversation we are often now making at least connections to 1999 in some fashion. you point out significant differences including of course the yield on the ten-year treasury, flinor instance. explain who you mean >> sure, estimated valuation as an absolute metric is more of a relative metric. in 1999 it was 6% and aaa bonds, aa bonds didn't exist back then,

yielded 7% or so so if i can compare and contrast that to today the ten-year treasury 65 basis points and two-years whatever it is today, 0.2 and the fed is suggesting they are completely shifting, which we'll hear about more on thursday i do think from a relative valuation perspective there still is support for equities. i think as lisa is mentioning that this does remind me of 1999 in a different way than i just mentioned. that's the compare and contrast. i think the market concentration right now ten stocks representing somewhere around 30% of the s&p 500, which is similar to what it was in the 1990s, i do think that poses a risk, and so the stay-at-home stock as she is mentioning have driven the market higher on a narrative they're changing the way we live forever, which is similar to 1999. i guess what we thought over the next few years that narrative worked economically but the

stocks had already discounted that, so i think as you look forward, i do think you need to focus on some of the areas lisa mentioned, so value stocks, small cap stocks, mid cap stocks i do think there are opportunities there, and as the virus continues to lessen its impact on the u.s. economy, which is t has gradually over the past three or four months and we expect it to continue, i think as the earnings and economic recovery broadens past just housing and manufacturing, i do think that's one of the biggest potential gains are in the coming years, not in the names that have driven the market higher over the past few months >> interesting, because we've heard that so many times and yet growth continues to outperform value and these big cap stocks continue to outperform their smaller brethren as well, brent, you make that point of course when it comes to valuation in terms of extraordinarily low yields right now, you could also make an argument there is simply nowhere to get a return so people will keep piling in to those growth names regardless of the

multiple >> yes, so small have worked in periods of time where we weren't having a trade war 2018 we were introduced to a trade war. it did decrease global growth and put back on the defensive s&p and the brightening of the economic outlook toward the end of last year, small cap and value did start to work because historically they are more leveraged to economic upside and then we got introduced to covid. i think that that provides a framework to think about what the future looks like, if we do have covid lessening its impact on the u.s. economy which i think we are pushing more towards each and every day >> brent and lisa, thank you both for weighing in today >> thank you >> thank you >> as the s&p trades a little bit lower, carl, it would be the first down day in the last four if we close lower on the major averages >> yes, watching those confidence numbers did not help a few moments ago. when we come back, we mentioned apple earlier, ahead of that

four-for-one split one analyst has raised its target to a street high 530, he'll join our discussion when "squawk on the street" comes right back hey, kids!

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in which case, why? just say "summer camp" into your xfinity voice remote to join. apple's been off a tear coming off four straight highs it is down this morning. joining us the analyst behind

the call coen's krish sancar and tom remains bullish on the stock. gentlemen, thanks to are both. krish, let me start with you and the 530 price target you say valuation may appear skrechd on absolute basis but not relative to peers. explain what you mean. >> sure, david, thanks for having me. a few things i want to highlight pen first and foremost the multiple expansion for apple started almost a year and a half ago. a large part of it was driven by services and what you saw post-pandemic was the fact that because of getting more important there's lots more value in countries that show the technology staple and also the fact when you roll it all together the way we looked at it, you compare the services recurring revenue type business compare it to companies like

cadences and snap sis which have recurring revenue, apple trades at a discount to that given the fact that apple is a higher revenue growth rate than them but lower recurring revenue base, and compared to mega cap tech like the amazon, googles of the world and compare it to them and if you put it all together, you compare the free cash flow and revenue growth rate, in the ball park and the last bucket is the consumer staple for clorox and look at it, i would probably say given the growth rate and the free cash flow yield in a relative discount to a consumer staple and if you add all of it together apple as a single entity looks stretched on value valuation basis up b to its history but on a relative basis it's not >> right, yeah, people make the cloer red sox comparison sometimes including our jim cramer compounded revenue growth 5% or 6% over the last five years,

krish. a 38 multiple is a lot of years of earnings to pay for that kind of growth on the top line. >> fair yourself and i think that the biggest thing is that the revenue growth rate, the trailing five-year revenue growth rate hasn't been sumer impressive but the biggest thing was the mix has shifted more towards services so the mix has shifted towards a more higher multiple business, even though the growth rate has not been that good. second thing i would probably say, if you look at where the stock is today, most of the buy side is probably expecting around $17 in earnings, and sell is around $16. apple is trading at 30 times buy side estimates so not a 35 or 38 times it looks on a trailing order consensus basis. >> tom, not to knock the analysts like you guys which do very good work on valuation, but some people are just scratching

their heads every single day, a new, krish is raising his target, you raised your target recently and under review to raise it higher. are the fundamentals changing that quickly as the price targets continue to run or are you chasing the price action >> sure, so feel free to knock the analyst. it's important to question analysts i appreciate the questions when i think about apple, i think it's a confluence of thre factors that drive the stock forward from here. short term logitech pointed out the billions of consumers working remotely and learning remotely you have on the verge long-term of a multi-year upgrade cycle to 5g and because of the billion learning and billion working, you have a short term lift to their hardware sales outside of smartphones, tablets, laptops and lastly a multiyear effort by the company to increase their non-hardware revenue, their services revenue, which is

garnering a higher multiple. so i think a confluence of this three short term factors is what is driving the stock and will continue to drive it from here >> why doesn't anyone on the street seem particularly worried about anti-trust concerns, regulatory risks around the app store as the company passes $2 trillion and more companies including microsoft now join the epic fight, spotify, a lot of well-known companies are seemingly going up against apple here on these app store policies >> i think the concern that apple may have to charge a lowered rate staggered rate for subscriptions, 30% for year one, 50% or year two and thereafter, so perhaps they have to do that all across the board, or come one a graduated rate to the extent that the app developer generates more revenue, the commission rate declines over time, but i don't think anyone's worried it will go from 30% to

zero >> krish, what strikes me is that some of the concerns that someanalysts have pointed out, that is china risk, obviously app store risk, margin compression, volume risk if they try to make up the margins with higher asps, sort of get dismissed out of hand by other analysts like yourselves how do you process some of of those concerns do you have them at all? >> no, i think we have the concerns for sure, obviously you can't ignore them but two things i'd say, some of the concerns, you know, the china risk, the app store issues have been there for a while. these are not things that popped up in the last week. what you're seeing is things getting exacerbated now, which is what it was prior the app store, epic games, called the pepper case going on for a couple of years, i think what you're seeing is more like, you know, magnification of some of the issues. the second thing i'd also say is

that you cannot just ignore those risks but the fact is that these things have been around. one of the things they did last week was the math on trying to figure out the app store impact and the bottom line is, you know, probably 6% of total revenues for apple and 10% to 15% of eps say app store goes to zero that impact is on the numbers but the bottom line is i think apple as a stock has not moved for a specific reason. it's moved for a multitude of reasons and for those same cases, i don't think there is one huge overhanging issue that's going to bring it down as part of a confluence of things like you point out they are given to valuation, app store risk, china overhang, et cetera, et cetera. >> yes, and a rare down day at least thus far, a lot more trading to done today. gentlemen, thanks to you both, tom and krish, thank you

>> thank you now time for our etf spotlight. today a look at wisdom tree mid cap dividend, etf ticker d.o.n. down 20% for the year and currently trading off a third of 1% different story for one of its big holdings, j.m. smucker, today's bigger gainer on the s&p 500, up sharply upping guidance and better than expected quarterly results helped by strong demand for coffee, consumer foods, pet foods. it was a blowout for smucker up 8.3% we've got a first on cnbc interview with the ceo, mark smucker, coming up next on "quack alley" in the next hour we'll take a quick break on "squawk on the street." oil is trading higher. the dow is down68 points the s&p just goes positive but trading along the flat line trying to digest which were poor consumer confidence numbers in leg usg of very stronhoin sas. we'll be right back. ♪

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welcome back shares of best buy moving lower after reporting earnings this morning. our friend has the latest frank holland. >> despite beats on the top and bottom line weak q3 guidance i just got off a media call with corey barry, the ceo explained stimulus is unknown variable in q3 she said in part the stimulus provides a level of confidence and backdrop against which customers feel like they have purchasing and spending power and lack of that stimulus, may only underscore the heightened

levels of unemployment and some of the kind of lack of confidence and it's hard to say how long the kind of overhang of the last stimulus hangsing on adding learn from home is expected to be a driver for q3 some students will likely start learning in person and may end up learning at home which means this could be a sustained longer period of need around the technology that you have to have in order to make that work in your home. and so we definitely believe we're seeing high demand and it's not just learning from home, it's likely a combination of many people both working and learning from home simultaneously best buy will pilot a store as a hub model focused on big cities with the high on the holidays where online orders are shipped directly from one of the company's 1,000 stores with employees making residential delivers here she said a fifth of our stores that are in those more dense areas that could help us deliver with speed, but also with a bit more efficiency as you can imagine, whenever you're shipping out of the back of your store, you're doing the best you can to pick the products quickly, get them put together and get them with the right carrier. you have a much better shot of doing that efficiently so again, best buy really

leaning in to their online sales. miss barry added about 60% of their online sales either picked up at stores or shipped from their stores back over to you >> down day today, frank, but this stock performance of best buy has been stunning, over the last year up 70%, over the last three months up 40%. how is best buy positioned relative to some of the other retailers that justify those kind of gains, even if today is looked at as maybe a reason to take some profits especially around that stimulus uncertainty. >> sara, great question. their online sales jumped up about 240%, so you compare that to other retailers like a home depot and lowe's that saw strong online sales it looks like best buy is positioned to take advantage of the fact that consumers aren't as eager to go into stores and want to shop online more and trying to focus on using their stores very similarly to what target's done as a place where they can ship things and get things more quickly to try to optimize same-day shipping.

>> what a quarter. a lot in there, frank, frank holland on best buy, one of the major retail stories of the morning. let's get an update with sue here herera >> a tropical storm no more. laura is now a hurricane with sustained winds of up to 75 miles per hour texas and louisiana residents continue preparations for the storm's landfall which is now expected early thursday morning. you can go to cnbc.com any time for updates onthe storm's progress the the father of the black man shot by police in kenosha, wisconsin, says his son is paralyzed from the waist down, according to the "chicago sun times. jacob blake's father also says his son was shot eight times, and the doctors do not know whether the paralysis will be permanent. protests over the shooting intensified overnight. several vehicles and businesses were set on fire protesters clashed with riot police who then fired tear gas to try and disperse the crowd.

still developing story we'll follow for you today, that is the news update this hour. i'll see you back here in one hour carl, back to you. >> all right, sue, thank you very much. so we're watching the indices try to hang on to some gains here had a nice open earlier this morning, but then consumer confidence hit and well below the 92.5, at 84.8 and with that the dow is down 117.

jerry seinfeld writing a new op-ed, saying new york city will bounce back in a big way after covid-19 our steve liesman investigates whether the research actually backs up his claims. i hope it does, steve. new york is not dead >> yes, sara, there's a good bit of research backing up seinfeld's contention in his op-ed that new york city and other metro areas will bounce back from the pandemic people flee cities from epidemics for as long as there have been cities for millennia

here is an article in the "jstor journal" observing in the 1798 yellow fever epidemic of majority of citizens of philadelphia rented at outrageous prices, rooms and homes in nearby villages sound familiar if people flee, do they come back plague outbreaks in amsterdam 17th century and cholera in 19th century paris, marc france and matthius korevaary heavily affected areas recover in prices and rip price growth return to their initial growth paths within a few years after an epidemic on average they found housing prices in cities hit by pandemics fall 5.5% in the first year and another 4% the year after but both housing and rental prices after a few years rebound to prior levels. they say we attribute the absence of any long-term effect

on house prices and rents to the resilience of cities to major shocks new migrants often underpin the rebound as do infrastructure upgrades technology and work from home present a bigger challenge this time around but these technologies have been around for a while as seinfeld pointed out. the attraction of cities is social, cultural and economic as well sara, what the research shows is that the real city killer is violence that could lead to a serious lasting exodus from metro areas, but not too bad for the comedian his economics, sara. >> no, that's reassuring actually, the point you just ended on was what i was going to ask about, is this time different, because of this resurgence of violence on the streets of new york that the number of shootings, is it turning people away in any sort of permanent way is that in thedata yet >> i think that's an issue i think if you could pair t the

studies i read about inner cities in the '60s, there was a sustained period of four or five years of riots i guess that began with the riots in los angeles and lasted for a long thyme we have this terrible upsurge in some inner city violence but it's not i think on that scale at this point. it's hard to know how people will be affected the idea is once things clear, people have tended to come back and it's kind of like almost like it's obvious, right, paris underwent so many different epidemics, as did london, by the way, and fleeing london was just sort of a normal part of being wealthy in london. they'd flee to their manors out in the countryside, and that's what's happening now, but the data show they will eventually come back, sara, and prices will rebound. >> steve, it's david count me of course in that camp as a life time new yorker,

lifelong new yorker. >> yes >> that knows it will come back, knows. it will be though some time, and to the larger question that still remains, of course, as congress seems unable to negotiate a new aid deal, steve, is the one of aid to states and cities i mean, 1% of new yorkers pay 42% of the income tax, those are the higher income people some are leaving sales tax, tourism is nowhere, that is going to be down sharply, property taxes are going to be town there is going to be an enormous budget shortfall, not to mention the state, which is suffering greatly, and contributes to the city's budget, not to mention separately the nta these are not insignificant challenges that new york along with many other municipalities face in the short term here, certainly without aid from the federal government >> i agree look, the studies do not suggest that people magically come back. they come back as a result of actions that are taken, new

people move in also this is not an issue now, but what you found in these epidemics in the 17th and 18th and 19th centuries is they made major changes to the sanitary conditions inside of cities, and where they didn't, those neighborhoods didn't recover and that is akin to the challenge that's faced now if the cities cut back on services, then maybe people don't move back as quickly until it's realized that they have to get the aid that you're talking about, david i think you're 100% right that if they don't get the assistance they need, they'll just lengthen the recovery and by the way, minority businesses among the hardest hit in this downturn, and where are they they're in the city. so we can decide to call it democrat or republican cities or whatever, but at this point, these are american cities, and they're being hurt right now, and they're going to need help to get back. the history shows they do and can come back, david >> yes well said, steve the seinfeld piece was emotional

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protesters clashed with riot police in wisconsin one day after a black man was shot by police in the back multiple times. the officers involved were not wearing body camera technology, one concern. the city had reportedly planned to buy more than 100 body cam a cameras from our next guest this year butdelayed that due to funding shortfalls and other concerns rick submit is enterprise ceo and founder, launching a new autonomous drone program that will enable departments to view livestreamed footage thanks for joining us. good to see you. >> thanks for having me on today. >> i know maybe it's not policy to comment on pending contracts, but can you discuss kenosha at all? >> there's really not much that i could talk about we don't currently have a contract with them and obviously

we're watching like most americans the tragedy unfolding there. >> i wonder what you make of the pressure from the public or certain parts of the public certainly to have police activity documented more thoroughly with body cameras and maybe drones versus the budget shortfalls and the pressure we'll see tons of cities come under in the coming years. >> when we went through this back in 2008, there was also tremendous budget pressure, and i think one of the ways that law enforcement had to respond was to use technology better, to go after some of the inefficiencies in the process, and when you think about that, a police officer spends about 50% of his or her day documenting, writing up reports, there's tremendous efficiencies that can be gained and we're starting to see that with body cameras playing a role in not only documenting cases so that you can know what happened in critical incident but you can also help more rapidly create the case information for all the

everyday cases and that efficiency typically will more than pay for itself. >> rick, how widespread is the use of body cameras in police departments across this country right now? what percentage of police members actually use them? >> i would say body cameras are more prominent and more prevalent in the big cities, so probably around 80% of the larger cities have body cameras. when you get down into mid size cities, they're a little less prevalent and i think that just tends to be the larger cities tend to have more of a focus on the issues around police accountability and smaller towns, but as we just saw, these sorts of things can happen anywhere, and i think we're going to see continued movement even from the smaller cities >> how do you explain or describe the acceptance from the rank and file? if you are a beat policeman on the street, is this something

that you want on you for protection later on or maybe to make your documentation easier or is there still a sense that you've got big brother following you around on your job no matter where you go >> well, there's a saying in policing that no one hates a bad cop more than a good cop because it sullys the reputation of everyone who wears a badge we find officers are concerned about wearing a body camera if they've never done it before it's a big change but after about two months of wearing one, most officers will refuse to go on patrol without one, because once they understand and actually experience hey if i do everything right, this is going to protect me and there are a lot of false claims that happen in law enforcement, which there's also times officers cross the line and body cameras at least can bring an impartial truth so to speak about what happened in these incidents so we find officers overwhelmingly support from them after they've had a chance to wear them for a while. >> what's your demand been like,

rick, for instance in the wake of the george floyd obviously horrific video that we all saw, which raised awareness for things like police wearing body cameras. what have you seen in terms of orders >> it's actually been fairly consistent law enforcement we have to remember our agencies of city government they tend to have rather lengthy cycles and city processes to go through so we're definitely seeing strong demand from the public and strong demand from law enforcement in general, but it's not like these aren't impulse purchases that happen immediately we do think that this is really cementing the body cameras are going to be here for the long haul and i think in the next few years they will be a standard issue as a gun and a baton >> finally rick on drones, any conflict we've been talking about drone technology for years, mostly in retail delivery, for example, but i mean how complicated is the low altitude air traffic control

situation as municipalities get used to things that i guess at that altitude they've never really had to think about? >> yes, that's actually one reason our announcement today is exciting we partnered with a company called photo kite has a tethered drone that can operate autonomously because it's attached to a patrol car, literally push a button and the drone flies itself, because it's tethered to the vehicle, it's actually not considered an aircraft it's considered like an extendible ladder with a camera on it, effectively, from a legal perspective, which means you're able to get eyes over a scene in a matter of seconds. it can be operated by remote dispatcher, whereas traditional drones you have to have a dedicated pilot on scene who is flying the drone this is the technology i think will be a breakthrough that it will give law enforcement the ability to have eyes over the scene from anywhere without all the complications of as you talk about air traffic control and the faa, and all those legal issues that make it much more

challenging with free flying drones >> fascinating we'll have you back to talk more about, i'm sure pricing is a whole other story and the degree to which that comes down over time rick, thanks so much >> thanks for having me on >> rick smith of axon enterprise coming up, a new street high for facebook and news from google's fitbit, all of today's tech news, just moments away stay with us here on is it t"sqn the street." s&p is down three points and nasdaq lower by a point or two we'll be right back. you say that customers make their own rules.

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the street". stocks lost a bit of steam, new high on the open among the most effective, energy, despite energy trade with the laggard, we find big oil gas nails, phillips 66, rfme, quil is one of the worst peorrs"sawk on the street" will be back in a moment c'mon! hurry up!

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while we're all stuck at home but will that trend continue post pandemic. joining us ceo of find body josh mccarter josh, let's talk about how your business is impacted overall by covid-19 obviously, you jumped on the digital train, but still so many people are staying away from gyms and fitness centers >> absolutely, in march, we saw nearly all of our customers close, tens of thousands on our software when they went down, we saw bookings dropping 70 to 80%. in places like new york city, they're still down about 80% >> what's happened as the country has reopened have you seen people eager to get back to gyms or is it more of a permanent phenomenon that they're going to stay away >> no, we've done a lot of consumer research. in fact, we're doing consumer and business research.

and what we see, 95% of consumers say they want to go back to their precovid workout habits so, that's something that we see as different states reopen now, about half of those say they want to add some type of virtual component to their workout, that can be either on demand or streaming. >> how have you had to change your focus and your business to address what consumers want, whether it's working out at home, or what they want from their gyms, in terms of safety >> yeah, absolutely. well, there's a couple aspects to that. first, we have to pivot quickly to address the needs of our businesses and launch what we call our virtual wellness platform this is a system that's fully integrated with our business management, marketing and payment system that allows studios to do streaming or on demand that is fully tied in with their business management systems. we've now taken those videos and on demand streaming and

integrated it into the mobile app. we're seeing about 1 million, 1.5 consumers come in every week and through the app. there's definitely a pivoting through the industry and we think that's going to last we're putting in a hybrid business model which we think is the future, where businesses offer in-person and virtual classes to their consumers on the topic of returning to the gyms, most businesses right now, have made plans from reopening they're looking at everything from checking temperatures, as people come in reduce class sizes and reduce occupancy gyms where you walked in and had a workout, in many cases, now, it's going to require an appointment ahead of time. >> hey, josh, if you're an instructor, how can you possibly be making now through digital workouts or lessons what were you before >> yeah, it's definitely an issue. the economics of the entire

fitness industry is changing at the capacity, most states and countries when they reopened, are only reopening with 25% to 50% of capacity, and frankly, these businesses were never meant to run on that no business is meant to run on 25% or 50% comphaefapacity. so that flows all the way down to instructors providing those services and impacts other services on our platforms like spas and salons, you're just able to employ fewer people. and that's one of the things that's a shame, the way the pandemic has been handled, with the elness industry, is that, you knoll, many of these businesses are small/medium businesses that form the back bone of the u.s. economy and frankly, we're seeing thousands of them close every week and that is -- that's, you know, that's not good news for the future industry. >> yeah. we're watching the stock video from your company about people getting facials and all of these

classes. things that cannot happen right now during a pandemic. >> right yeah >> you were just talking about the impact on businesses across your sector, how do you expect this to look, say, in the next 6 to 12 months? how many businesses are actually going to close >> well, you know, we don't have a view on how many businesses will close but we certainly have seen that in markets that reopen, the bookings rebound rapidly in fact, in some markets we're looking at hong kong and australia, when they reopened, the booking levels went back to higher than they were prepandemic. we think there's going to be a fundamental shift. i mentioned this hybrid model, that's what we're going to see in the fitness industry. and separately in the spa and salon industry, we're talking about a low-touch journey where it's almost like an uber experience, somebody can book on an mobile app. they can check in remotely and therapists can check them in and

never have to walk in and touch anything we think those are some of the changes going to happen with the industry going forward >> josh, thanks for joining us to talk about it >> thank you so much >> appreciate your time. >> find body the dow down about 130 points. carl, back to you. >> yeah, the biggest loss of august, so far for the dow good morning, everybody, it's 8:00 p.m., at facebook headquarters at menlo park in california, it's 11:00 on wall street and "squawk alley" is live ♪ ♪ ♪ welcome to "squawk alley" for a