tells me he thinks the stock is too cheap and he's been buying every day. >> under armour reporting good numbers. i think nice has a good setup under their print. >> jim >> qcom, a leader below 1. that does it for us at "halftime. bill griffeth is on "the exchange" right now. >> yes, i'm bill griffeth in for kelly evans today. evictions beginning and a stalled stimulus plan. should investors prepare for a rocky month of september we have both sides of that story coming up. plus our out of stock segment. deck material as more homeowners are looking to spruce up their yards. we'll see if their demand can

last and look at their expansion plan plus this hour esg is under attack, facebook takes on australia and new york city's debt prices today's markets, more records again, modest gains. dominic chu crunching the numbers for us dom? >> these days it just keeps going higher and higher, bill. as you pointed out, another set of record highs. moderate sector gains, but it doesn't take away from this notion that the markets keep climbing higher. the s&p 500 still above that 3500 mark. look at nasdaq 11,897 we're almost close to putting 12,000 on the nasdaq how is that for covid-19 deals today? better housing and home sales data coming out for the month of july earlier this morning has put a bid to some of these homebuilder stocks

l lennar up 2%, kb home, 2.5%. homebuilders still a tailwind for all. let's look at apple. three and a half gains, another record high, $133. right now this company is worth about $2.28 trillion just to put it into perspective, bill, because i know you like this at the pandemic lows, the market value of apple was around 982 billion, with a b, not 2.8 trillion with a t. to put that into further perspective, it's basically added more than an entire alphab alphabet, google's parent company in value just since the lows i'll send things back over to you. >> i forgot to order a nasdaq 11,000 hat, now it's too late. i'll need a 12,000 hat as we enter this new month, there is a new wall of worry awaiting stocks, the uncertainty

around the future of enhanced unemployment benefits along with eviction moratoriums across the country ending, and of course, the stalemate regarding that new stimulus package in congress but with new all-time highs as you saw for the s&p and the nasdaq and the nasdaq 100. will the potential turn risk these out there. we have tanancy tangel and jack. good to see you both nancy, you had to be very pleased by what the feds said last week, yes >> yes, but as a citizen i'm a little bit concerned that the fed actually thinks they can sort of average and manage inflation on an average basis. but we had written a piece in the middle of july that said why this rally still may have legs,

and it was due to the surge in money supply and the liquidity the fed had pushed into the system i don't think that's a permanent answer to fundamentals, but i do think that in the near term it continues to drive things up >> jack, stand by for a second, because speaking of the fed, we have some fed speak to tell you about, don't we, steve liesman >> yes, bill, thank you very much bra bra bra brainerd speaking at the institute saying the fed has to go from stabilization to accommodation. what we've been doing in the markets is even the markets out, not helping the economy grow anymore. she's really suggesting that she also said the strong pace of job gains has appeared to have slowed and there are certain risks tilted to the downside and that further fiscal support from

congress and the president are key factors, so there she is urging that. she said the current fed policy, really the first fed policy to say this in the wake of the new fed policy could have avoided prior rate hikes she suggested that the fed in the future will pursue opportunistic inflation and try to limit the job shortfalls. bill, i'll send it back to you just saying brainard making a really strong signal saying the fed may cut rates -- things in september. >> do you think they'll cut r rates? >> i don't think rates, but definitely more patient. >> jack, they'll be more patient

about rates in the future, but are your palms sweating? >> i admire the fed and everything they've done recently but we've been saying this for a while now, the fed is making sure an economic crisis doesn't also become a financial crisis this is ultimately not the fed's battle to fight. it can keep rates low, it can keep expanding its balance sheet, it can help risk assets, it can stabilize systems, but the fed is not going to be the thing that keeps retail sales numbers up, it's not going to keep the unemployment rate down. we need things like fiscal stimulus on top of that monetary concern to keep this party going. so the fiscal stimulus right now is a little bit worrisome when it comes to overall outlook for things like sentiment in the back half of this year >> nancy, technology still leading the way. we established the continued rise of the nasdaq and the nasdaq 100 it's a favorite of yours but how much longer? what's going to continue to

power this sector? >> yeah, bill. i think some of the valuations have gotten a little bit kooky i own salesforce i can't explain to you why it was up 26% after reporting earnings >> going into the dow didn't hurt, i guess. >> it was up the previous day on that announcement. but zoom today with revenues up 355% year over year. listen, i think at some point we will transition within the tech sector to some valuations that are more attractive. so we continue our overweight, because if you look at tech cap x versus old industry cap x, it starts to move past that as industrial cap x comes down. you have to be in the sector in the long term, but in the near term i expect to see valuations get adjusted somewhat. >> jack, we talked about the wall woreirier for you

one of the worries is the trade sector in china, yes >> yes, and the fact we haven't heard about it this year is worrisome. when we came into 2020, we knew there was an election on the horizon in november, but we also assumed trade tensions would continue one of the by-products, i suppose, of the covid pandemic is that trade tensions have come off a little bit we got that phase 1 trade deal with china at the beginning of this year. so far that is still more or less intact. very clearly some combative attitude between the u.s. and china on other things like technology but in terms of trade, by what we saw in 2019, 2018, we haven't seen that manifest just yet or really come back in that sense if it does, i think there are some risks we saw how disruptive the trade war was in 2018 and 2019 germany almost in a recession last year without the virus. this could cause some problems >> we will see jack manley, nancy tengler, good

seeing you both. >> thanks. let's turn to another source that's shaping the market, this year especially. mom and pop trading is at a decade high right now powered by free platforms you know about them, robinhood we got lockdown boredom and a once in a lifetime investment opportunity that's been out there lately among all the trends, covid-19 has accelerated. the retail investing boom is perhaps one of the hardest to measure. what impact has this rise had on the markets? let's drill down on that question nick majuli is chief operating officer. nick, how much is investor behavior up this year? how much does it contribute to the market this year in the united states? >> so retail trading last year was at about 15% of total volume, and this year the first six months they've estimated, i

think bloomberg estimated it was about 20%. some days securities are up 20,000 points, so you're seeing a big increase from last year for sure >> is that good or bad the long-time mantra on wall street was the market hits the top when the public gets in. you know, you have the irrational behavior of the markets. is that where we are right now, do you think is that what you're saying >> i don't think so. i think retail investing, retail investors specifically have been out of the market for a long time, and now they're starting to get back into it, get more interested in it i think it's great that a lot of young people are getting involved in this, and i don't necessarily see signs that this is a bubble behavior like we saw in the late '90s i think that was far, far beyond what we see today. >> we should point out individual investor participation in other markets around the world is much, much higher than it has been here in the united states, right >> yes in asia it's up to, i think, 80

to 85%, shanghai in korea. compared to 29%, that's just night and day. >> but do investors have it too easy right now with the free trading platforms? you don't have commissions you have to pay when they're paid. are they treating it like a video game right now is that the problem? >> i think there is some of that going on right now i'm not going to lie i think one of the big hi hypothesis for this is betting went away. free commissions, i think, are great overall so some people can be abusing it, but i think a lot of people are using it to learn and i think it will be a net benefit regardless of what happens. >> i know i'm sounding like a nervous nellie for bringing up all these issues, but let's recall it was right at the peak of the dot-com boom that we started seeing the rise of the

e-trades, the ameritrades. are we there now >> we had an extra long bullish market because of the coronavirus, but i think it's different now because people are getting involved now, and you're not seeing the same types of valuations you were seeing some companies have that, but i think across the entire market, you're not seeing the same crazy valuations you're seeing in '99. >> all right and i'm sure rate the room is going to appreciate you made your hotel room bed before coming on here today nick majuli. thank you for being here >> thank you coming up, as americans were forced to stay home, many decided it was time to spruce up their back yards and they turned to trex to do so as others are pulling back, they're expanding their business we'll talk to the ceo, next. plus walmart has extended its traditional program going

head to head with amazon but the service is getting more attention for what it will not have than what it will have. facebook takes on an entire continent. "the exchange" is back after this is"tnnouncer: th is he exchange" on cnbc. give you my world ♪

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welcome back so far 2020 has been the year of home improvement, everybody from the amateur do-it-yourselfer to the professional, they're all fixing up their houses and it's causing raw materials to go out of stock, especially for outdoor decks. trex is a deck material manufacturer and it certainly enjoyed the home improvement boom this year from the march lows, trex stock has soared more than 124%. in fact, to keep up with the demand, trex is spending on future production at a time when companies are looking to cut costs. joining us right now in our out of stocks segment today, ceo brian fairbanks. thanks for seeing us today >> thanks for having me on >> how much is business up today, and do you think it's simply because of the covid pandemic >> i don't think it's simply because of the covid pandemic, but coming through the second quarter we saw a growth of 7%, then we got into 13% at the

midpoint through the third quarter of this year with people moving away from the cities, they seem to be looking to have more outdoor living spaces further out in the suburbs and it's definitely driven the demand for composite decking. >> but your stock, and i know ceos don't like to talk about their stock price, but you obviously have seen what happened your stock looks like you've had much greater growth or at least the markets anticipating much greater growth down the road are you? >> we've had great growth. if we look back since 2015, we've grown our revenue at a 14% annual rate. we've also grown our revenue 20%. what's even more exciting, as we look forward, the conversion to wood composite products in the future, today only about 20% of decking is used with trex composite products as we move forward, we see a large conversion opportunity

>> but you have had a problem getting enough production going to meet the demand that's out there. has that capped your growth to some degree? >> we announced a capacity expansion in mid-2019 that we would start to see some of that capacity come in in the middle of 2020. we saw it come on in june. and then early 2021, we'll see the larger amount of that capacity come on at our virginia facility would we like to have more capacity today absolutely but we're well down the road to building more capacity to service that expanded demand >> because you obviously feel like this demand is going to last for a while, and that goes back to my question whether you think it's covid-related or not because people are stuck at home, so they're going foto fixu their house. but when the pandemic finally goes away, do you think demand will continue to grow at that level? >> we do there is an absolute trend towards wanting better quality

and higher aesthetic materials on the outside of your home. we also introduced our enhanced basics and naturals product at the beginning of last year which were designed to directly appeal to that wood buyer we absolutely saw that happen starting in 2019, and that demand has expanded further in 2020 we see that there is more to the consumer than just this current pandemic time frame where people are spending more time at home >> what kind of competition do you have in your niche of the market right now how do you measure that competition that's out there >> to fairly concentrated industries, there are about three companies that make up about 85 to 90% of the overall composite products industry, and trex is about 50% of that marketplace. sdp >> what's your goal? what kind of market share do you want >> our goal is to take market share away from wood 50% is great in the industry we see that we can capture more. but the much larger opportunity

is to take over the decks made out of wood. >> interesting bryan fairbanks, ceo of trex >> thank you people are more apt to rent than buy right now as u.s. debt soars in corporate america, we're going to look at some of the names in the s&p whose balance sheet is loaded up with borrowed cash, coming up.

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welcome back to "the exchange." if you're just joining us, modest gains for the major averages today but enough to keep the s&p and the nasdaq into record territory there following that very stellar month of august, so we're beginning september with some pretty good gains as well. here's some of the movers that we're watching this hour shares of penn national gaming,

they are higher after being initiated with a buy over at craig halland capital. the company is point to go ing o online gaming kapcapital in the u.s. which they hope to grow ten times. deutsche is showing underperformance of 40 poers for the restaurant chain chipotle hit an all-time high. that stock is up 140% just since the march lows [ foreign language ] here's what's happening at this hour, everyone. we begin in washington where attorney general william barr is imposing new restrictions on national security surveillance of candidates for federal office or their staffs. the restrictions are part of

broader changes to the doj's procedures in response to shortcomings in 2016 during the russia investigation covid-19 is increasing in children that's according to a report from the american academy of pediatrics from august 13th to august 27th, more than 70,000 new pediatric cases were reported. that's an increase of 17% over the last two weeks the report also showed that 30 states reported that at least 10% of their cases were children and french warplanes flew in formation over beirut's port today, spraying the smoke colors of the lebanese flag, and this all comes ahead of official talks between the two nations on ways to help relieve lebanon's economic crisis and rebuild after last month's massive blast. you're up to date, bill. good to see you. back to you. >> nice to do you, sue see you later. we have this new report by bank of america revealing that

u.s. corporations now have a record $10.5 trillion in debt, either through bonds or outright loans. the amount is a stunning 30-fold increase from 50 years ago so who is sitting on lots of borrowed cash right now? this is a look at some of the names in the s&p with the highest debt-to-equity ratio h and r block is one of the top companies with a debt to equity ratio of 420 that stock is down 48% this year despite reporting better than expected earnings in july. also on the list, wynn resorts the casino operator has a debt-to equity ratio, still off by more than 40% for the year. finally, o'reilly auto it's up only 6% for the year but a whopping 86% since its 52-week

low. there you are. coming up, zoom's zooming revenues walmart's pitch against prime, and facebook's fight down under. all that and mo -- much more in today's "rapid fire" when "the exchange" returns in just two minutes. -- fire" when "the exchange" returns in just two minutes.

let's catch you up on a few of the stories that should be on your radar you know what that means it's time for "rapid fire. here with their take on all of this, dom chu is with us, mike

sandoli and julia boorstin good to see you all. we begin with the aptly named zoom video surging revenue growth surged 355% in the second quarter that gain beat zoom's total 2019 income and the number of customers with ten or more employees grew by nearly 500%. zoom also grew its revenue forecast by 30%. shares are climbing more than 30% today and they've gained more than 550% this year this is 2020 now, mike santoli, not 1999, but boy, these numbers look like that, huh? >> amazing how they piled on the market value, and clearly the market seeing this is going to become, in the market's estimation, the next kind of indispensab indispensable, inescapable platform it's not like they'll go back to work and stop paying for their

zoom prescription. implicitly, the market is saying all those people will stick around, many more companies will come on, but they'll probably also displace other services and applications that are already out there whether it is messaging or something else. right now with the newly projected earnings for 2022, it's 150 times earnings for three years from now >> dom, i love this. some of the houses are jumping in raising their price targets, they're raising their buy ratings and everything goldman sachs had a sell rating on this stock, and they've been dragged kicking and screaming now to a neutral rating on this. talk about being behind the curve on this one, huh >> that's pretty much their way of saying my bad in this process. our clients have lost to a huge opportunity on the upside. to the same thing we're talking about here, this notion that the companies are the future, they are pricing in so much more of an expectation that they will become ubiquitous in all forms of communication that's what you're seeing in the

stock price today. the market value of the company is already staggering. we can call it a mega cap, if you will, now. it's $120 billion in size, and i know this isn't a fair comparison, but from a market value perspective, it is now the same size, pretty much, as lowe's, the second biggest home retailer in america. when you think there could be a bubble in these markets, zoom is pricing a lot of growth, but i'm not sure a lot of people can grasp the concept of how big it's gotten in such a short amount of time >> let's move to our next story. walmart taking on amazon prime, even though they say they are not, announcing new details of this membership program to be called walmart plus. the subscription price will be $98 a year and will include free shipping of minimum orders of $35 and discounts of up to 5 cents a gallon on gasoline, which is big in california it is set to launch september 14th

can anyone really take on amazon, though, julia? and i wonder, are people really getting a lot for this $98 a year they already have low prices and great service atw walmart, don' they >> i would say they're not directly taking on amazon. maybe this is for customers who have not made the jump to amazon yet. i'm an amazon subscriber i get so many packages a week i don't even want to admit it, but this is for amazon shoppers who still go to the stores this is addressing people with the understanding that they're going to be shopping in store and online these are not people who moved all their purchasing to online like i have right now. so i think this is really much more for a hybrid customer and for people who are those core walmart customers who want to have the additional functionality. maybe they've been experiencing how to shop online during covid, but this would give them everything they need and extra

discounts when they do shop in the store. >> mike, i was interested. the customer officer said they're not going for new customers, they're trying to mine more dollars out of existing customers right now >> kind of a souped-up rewards program. you could kind of think of it as costco obviously you have to pay the membership fee to costco just to go there in the first place, but trying to re-up with the $98 a year just to get those benefits. i do think it's definitely exploiting the store base. you talk about discounts on gasoline amazon is not going to offer that >> dom, we have to admit walmart has not had a great track record with some of these programs they've had in the past, that they've started and abandoned quickly. >> what they're doing now, they're not trying to go after the new customer, as you said. when i first saw the press release, i thought this is like the fast pass at disney world, right? you're already going after the target customers that were going

to go there originally and you're giving them more perks to do so. i don't know if i have to pay the $98 a year just to get the free shipping from walmart i think as long as i spend a certain amount of money, i don't have to be a member and i still get free shipping on walmart this is going after those core walmart customers. if this is to work, i don't think it's really taking on amazon prime i use walmart sporadically when they have better prices online i use them in store quite a bit. this will maybe encourage me to use it more online >> those trips to the store. i know about you, yes. let's move on. facebook threatening to block users in australia from sharing news on its platform this is a proposed law that would force a company to pay for their content. it's a move that facebook says is unfair and could lead to price gouging from media companies. julia, when i first saw the headline i thought, oh, boy, they're trying to stop fake news but no, this is all about money, isn't it >> yeah, this is about the real news, bill

this is about the real news that is shared from news outlets on facebook in the facebook news feed in australia. i think the key thing here is that a lot of people would say that facebook and google have really crippled the publishing business, the traditional news business, the kind of news you want shared on facebook an google because they're allowing people to read little snippets and share articles without necessarily being compensated. this bill, facebook says, would be really damaging because it would allow the government to mandate certain minimum prices and it would let publishers ultimately decide how much they want to get paid without having a proper negotiation with facebook so this continues and builds on an antitrust suit that the australian government is already having with both facebook and google, and this is something that's been pushed by newscorp but i would say some other publishers say they would rather negotiate directly with facebook without having the government involved it will really be an interesting one to watch, bill, not only how this turns out but to see other

countries jump on the same bandwagon. >> that's the thing, mike. facebook is sort of leading the charge here to see how the sharing of news, which goes on on all social media platforms, essentially, now somebody is going to have to pay for that at some point >> yeah, at some point along the chain, presumably someone has to pay for it, but it definitely shows where the power lies, i think. facebook saying, fine, we won't just carry all these news links and the news publishers would probably be the bigger losers out of that as opposed to facebook suffering or the users suffering, because the volume of everything else on the platform is so much greater next topic, a sign of the times. a growing number of companies are opting to rent equipment instead of buying it tooutrighta economic uncertainty drags on. the proof is in the tape check out shares of united rentals. a 30% gain in the past three

months seema mody, this is your story you're stepping in to tell us more about this. it's a growing trend right now, isn't it >> it really is, bill. it's not just airbnb that's benefiting from people looking to rent versus buy contractors that work in construction and engineering are increasingly renting large-scale equipment because they simply don't have the foresight as to what demand will look like in the long term. think about how many companies slash their guidance in the second quarter so without that certainty as to what demand will be like, it makes more economic sense to rent a lot of this equipment in case you were wondering, bill, a bulldozer can cost anywhere between 40 and $160,000, then you have to pay for insurance, a place to house it, sometimes you have to hire a mechanic to service it so it can be very cost toly to some of this equipment, and that's why you're seeing a lot of people in the industrial world renting instead of buying. it's a result of the financial crisis as well

>> i'm going to write that down. i think i'll get two more bids on that bull dozer >> if you have some had he ever i li -- heavy lifting in your backyard, whatever it may be >> i'm in the market for a backhoe, guys, just so you know. >> as you build your own golf green, i'm sure. mike, we mentioned rentals how big is this market overall for rental stuff >> i don't know specifically how big it is, but i do know that united rentals has always been one of the best plays on a recovery in the construction industrial economies it's proving that way again. i think it also says something about the corporate desire priority for financial flexibility in this period they basically drew down all their bank lines back in the spring, didn't know what was coming next, took on a lot of debt if they could and now it's deciding whether or not you want in fact to do capital investments. >> dom, i think back to january

and february as we were all thinking, okay, so what's this pandemic going to mean to the stock market who are the winners and losers going to be? this is not one, i think, was on many people's radar screens. >> no, but it plays to the theme that the pandemic has really accelerated or exacerbated existing trends. the fact you didn't want to have capital on your book and increase it over time. a rental fee, you can pretty much dispense it right away. there are certain tax gains for renting as opposed to owning it. the whole idea of the rental market is maintaining, like you said, that flexibility out there. if you don't know what's going to happen in the future, why not just pay by the hour and do it that way for united rentals, there's going to be other ones out there, so this equipment finance is probably going to be a big one, especially if rental prices stay very low. >> julia, i can tell you have a burning thought before we move on >> i do. bill, this is a trend we've seen across so many different parts

of the economy the shift from ownership to access weaver se we've seen it in the consumer economy, airbnb, the runway. and i think what's really interesting is in a lot of ways, we've seen these rental companies enable both consumers and corporations to get access to a higher level of service maybe the people who are renting bulldozer bulldozers are able to get a better bulldozer than if they have to think about buying one themselves, and i think we've seen an increase in the economy in terms of sharing a rental and that doesn't require a higher quality service or product if you're only paying for a piece of it. >> i just hope mrs. chu has her videotape going when dom is out there working that backhoe >> we're taking her to dig g diggerland >> if this works out, this will

hurt caterpillar they're already seeing less revenue, so if people rent more it's ag, deere and cat that could really get hurt. >> good point. thank you, seema see you later. finally tesla, you probably heard, said it will sell up to $500 in stock. the new shares will be sold from time to time and at market prices and it will issue to banks on when to sell those shares despi shares despite dipping lower today, tesla is up 500. when stock prices are high, you issue more stock >> yep the market has been begging and daring tesla to do this. it took this much of a gain for them to just issue, by the way, only about 1% of its market value. $5 billion is a little over 1% of the market value.

it is an interesting test for one reason there is a general presumption that tesla at its size, it's just a matter of time until it gets inducted into the s&p 500 they thought the company would do a share offering which would ease the way for them to get their allocations without having to share this is an interesting test, $5 billion took a little bit of froth off the top of this stock. what would a bigger offering do in the index >> have to move, folks thank you, all good to see you, dom chu, mike santoli and julia boorstin with this edition of "rapid fire. there is an ongoing discussion about the viability of new york in a post-pandemic world > we're going to look at some clues in the municipal bond market, coming up. but esgs under attack for

voting on certain issues we have that and more coming up.

my name is joe. i'm a sustainability science researcher at amazon. climate change is the fight of our generation. the biggest obstacle right now is that we're running out of time. amazon now has a goal to be net zero carbon by 2040. we don't really know exactly how we are going to get there. it's going to be pretty hard. but one way or another we're going to reduce our carbon footprint to net zero. i want my son to know that i tried my hardest to make things better for his generation.

welcome back the labor department is proposing two new rules that could limit so-called esg investments in 401(k)s, and some of the world's largest asset managers are pushing back on that bob pisani joins us with detail on that. hi, robert >> hi, bill. it would limit how managers can vote on proxies. they're often dominated at these meetings for sustaining energy or be cognizant of climate change, things like that the drl is proposing a rules change that would not let proposals be voted on, and it's things like sustainable energy would not be beneficial to the plan's participants. the second is a broader attack on esg in general.

the oil industry, for example, has looked askance on esg because it tilts away from fossil fuels and toward stabilized energy. there is another rule that would require fiduciaries to put economic interests ahead of pecuniary deals like environmental and social issues. the investment industry is pushing back on these proposals. in a july interview, blackrock's larry fink said our job is to maximize returns for clients more and more clients believe client risk is investment risk fidelity investments is also pushing back they said d of l's proposal is wrong to assume that esg investment strategies sacrifice retur returns, increase risks and promote goals unrelated to financial performance. so they're having their

interests affected by that >> i'm missing something why is it up to the department of labor to propose this why not the fcc, for example >> because they're talking about financial retirement plans here. so under arisso, the rules that govern how these fiduciaries can act within these retirement plans, there's certain rules and regulations. that's how the department of labor got involved they're in charge of the whole arissa issue >> now i understand. good to see you, bob bob pisani coming up, he's one of the men who helped save new york city from going bankrupt in the 1970s. former lieutenant governor richard ravich joins us with what's got him concerned about the big apple this time around he's in the mix again. to a reminder you can always listen to us live or on the go on the cnbc app "the exchange" is back in two minutes. traded goods.

tools, cattle, grain, even shells represented value. then currency came along. they made it out of copper, gold, silver, wampum. soon people decided to put all that value into a piece of paper, then proceeded to wave goodbye to value, printing unlimited amounts of money as they passed the buck to the future. that's why it's time for digital currency and your investment in the grayscale funds. go digital. go grayscale.

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over the future of new york city financially but if you want to get a better picture of where things stand right now, take a look at the debt market. robert frank joins us with this part of the story. hey, robert. >> hey, bill great to see you. new york city sold over a billion dollars in long term bonds. the interest rate was 1.45%. that's pretty low. if do you look deeper, there are signs that investors are getting nervous about new york the important number in the muni bond market is the spread. that's the difference between the interest rate and the rates for atriple a bonds the spread was 72-basis points

that's more than double the spread pre-covid investors see twice as much risk investing in new york city than they did pre-pandemic. it means that new york's borrowing cost could become a drag on the economy. it has $38 billion in outstanding debt obligations now. the city is asking the state for permission for another 5 billion dollar that would be a huge new supply for investors who hold a lot of new york city debt if new york has to spend more to service that debt, that means less capital spends, possible layoffs and that downward spiral that we kind of saw in the 1970s. we're not even close to that at 1.457% some signs of anxiety and concern by investors, bill >> speaking of the 170 1970s, w have a gentleman who was there in the mid-'70s.

richard ravage is former governor of new york former governor of the metropolitan transportation authority. he's now a director. he's a new member of this new panel that mayor de blasio put together to figure out how new york city can recover. good to see you. thank you for joining us today >> pleased to be with you. >> you were around this the mid '70s you helped revive new york city's efforts to get back on its feet compare the two crisis this one right now to what you had to go through in 1975. are there comparisons? is one worse than the other? >> totally different circumstances. '75, the problem was that because governor rockerfeller had difficulty distinguishing borrowed money and appropriated

money, he believed the city a necessity of raising taxes to budget expenditures of changing the law so the city could borrow any amount of money the mayor estimated he needed to balance his budget over the period of time between 1966 and 1975, the banks under wrote about close to $7 billion of bonds, the proceeds of which we use to cover holds in the operating budget and city. >> right >> the state was prepared to let this public entity go into bankruptcy rather than take money to pay its debts, the banks got scared and they met

with governor kerry on may 2nds, 1975 and said they would no longer underwrite the bonds of the city of new york yaeted a new entipty called the municipal assistance cooperation by legislating the sales tax away from the city of new york and made it payable to the municipal assistance cooperation. >> is any of what you did in 1975 applicable today? can you use any of the techniques you used last time? >> absolutely not. totally different circumstances. it's irrelevant. the mayor's task force no longer

exists >> if you were asked to come up with a solution. what would that be you're not a big fan of them issuing more municipal bonds, are you? >> i'm not i would say borrowing was prohibited by the laws we enacted following the summer of '75 and that is not a solution now. there's only one solution. there should be others we need a control board again. we need outside people evaluate the city budget. >> asyou know, any aid to cities and states is stall ed te

house passed a bill several months ago it stalled in the senate and mitch mcconnell said maybe it's cities should think about filing for bankruptcy this time around. >> he said the states should file for bankruptcy. mr. mcconnell does not know anything about the constitution. the states are not permitted to file bankruptcy. only 30 out of 50 states have authorized their municipalities to file. s >> you think some big wigs from wall street should go to washington and make the case to get some state aid for new york city is that the idea >> they gave a lot of money.

some short term aid for the federal government for our mass transit system we're willing to have an oversight mechanism that measures the reasonableness and thety bud tcity budge et cetera >> it's an important topic thanks for joining us today. appreciate it. >> my pleasure thank you. that does it for the exchange coming up on "power lunch," it's tilman tuesday his business had the best week since the pandemic i bet he's still ticked off. he'll explain why he doesn't think the rebound will last. power lunch is up after this quick break. when we started carvana, they told us

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welcome, everybody to "power lunch. glad you could join us the bulls getting ready to kick off the month of september they have already done that as you see by the green numbers there. nasdaq, s&p hitting an all time high after record breaking august led by the tech giants.