good afternoon welcome to "power lunch. glad you could join us on a friday afternoon stocks giving up an early rally. all the major averages in the red even if just by a smidge for the dow industrials. nasdaq leading the declines down more than a percent. the dow and s&p now on track for their worst week since june. the nasdaq, its worst since march. retail wreckage is piling up

everywhere as more and more companies file for bankruptcy. a to analyst says a number of fla names could come out stronger. later, what makes tiktok tick. an inside look that is dominatidominate ing social media as china is saying it would rather shut down the service in the u.s. than succumb to a forced deal we'll tell you about that as "power lunch" starts right now thanks welcome to power lunch let's take a closer look at plarkts right now. you have industrials and materials leading the way higher in fact, materials is the only sector in the green this week. we haven't talked a lot about that as a source of leadership tech that had been the leadership haven't recovered from the steep sell off. the nasdaq still down about 11% from its record high

it's worst for a lot of the individual names docusign down from its 30% high. tesla down 27 from its all time high apple is lower today apple is down about 20% from its high as well apple near a 3% decline. tyler, back to you with can skinny stimulus plan, it's off the table investors fears have started to seep into the market >> fewer than ten working day on capitol hill where lawmakers and white house officials are facing

a september 30th deadline to fund the government. >> i'm going to leave that one the fiscal year ends september 30th i don't want to get engaged. i don't want to negotiate publicly >> reporter: playing coy there kudlow declined to say what executive actions the white house could take but a separate white house official tells me all of those discussions are in the brainstorming phase. there's nothing close to the end of the pipeline just let.

in the cost of government debt they saved about $53 billion in interest when talking about numbers this high, it's really hard to fathom what that even looks like. >> an annual deficit of $3 trillion is anybody talking about a government shutdown? >> reporter: no. both sides of the aisle, both of sides of pennsylvania avenue have all said they are intent on avoiding a government shutdown they know it would make neither party look good. they want to avoid that show down president trump said yesterday he's not going to do anymore government shutdowns for now >> thanks very much. we appreciate it

have a great weekend with the race for the house tightening and speeding up as well, with biden leading in the major national polls and in many of the swing states, it's getting closer no stimulus deal in sight. the uncertainty is starting to weigh on investors to make sense of the risks in washington and whose policies are better for the market, here to help us are ron and libby cantrell she is head of public policy at pemco. i want to go right to the heart of the question and that's the question of politics i'm going to set the skinny stimulus aside and we'll come back to that i want to know whether either of you think that if joe biden were elected president, it would be poison to the markets. libby, you go first. >> good afternoon. no pressure here thanks so much

look, i think that every one was humbled in 2016 in terms of making definitive market predictions around presidential election outcomes. you remember the expectation was the market wouldn't do very well if president trump were to be elected in november of 2016. of course, the market has done very well during that time period, at least up until the start of the pandemic. i think this is risky business biden would be accompanied by a narrowly divided senate. the market would be inclined to sell off with the expectation of higher tax rate, probably more regulation you could see a lot more government spending. you could see more

infrastructure spending and you could see a come prehence ifr testing and contact tracing program under a biden administration and in terms of distribution of a vaccine. in some ways there could be kind of positives here that the market may not kind of look through or initially but reflectively, probably on november 4th, we to do know the outcome of the election and it's a biden accompanied with a democratic congress probably reflects a risk offset of it >> let me make sure i understand you correctly and i'll get ron to respond i think i heard you say that if there's a democratic sweep of biden presidency, a narrow democraticmajority in the senate and the house that the market would be inclined to sell off a bit but not catastrophically so, right >> yeah. that's a good way to summarize if you look at what the risks to

market were under a democratic president and if we were talking about a bernie sanders presidency or elizabeth warren presidency, i think the sell off would have been much more dramatic because of joe biden, who he is, he's more center left, i think that the kind of the room in terms of market movement is going to be lesser than it would be under those alternative scenarios. >> right ron, let me get you to react to what you heard and some people in politics say if joe biden is elected, your 401(k) will go to zero >> yeah. that's very likely to happen i think everybody's 401(k) goes straight to zero and there's no hope to see gains in stock market again that type of hyperbole that people like to now out flies in the face of reality. ro ronald reagan has a bull mark and a crash. bill clinton had a bull market and a crash.

barack obama had a straight up market for the most part and donald trump has had a bull market and a crash trying to base this on the presidency is a fool's errand. the composition of government has been proven to be most measurable when it comes to stock market returns a democrat president and republican congress provide about 10% annual rates of return and any other combination is typically have that. i think basing one stock market view on who the president is given the circumstances that we have today, i think it could go either way i do think that when you look at a biden presidency from a different per spspective with respect to how we deal with allies and trade, maybe a more constructive manner, it could be a net positive for the underlying economy which is disproportionately suffering through the pandemic >> i hasn't thought of it the way you thought of it. you are a market historian reagan had a bull market and

crash. so did bush. so did clinton, so did trump when ever we look at those poll numbers showing biden up 51 to 42 or whatever it is, that's nationwide never, ever forget that what we have in this country is 50 separate state elections for president. libby, what about the possibility of a so called skinny stimulus between now and election day. six states are really important. watching florida, president trump's vix tri really will have to go through florida and vice

versa for biden. in terms of this skinny stimulus, i've been saying for months now that it's a question of when, not if but that when has been much more theyed than i want expecting i think going into the election for these members, both on the house side and vulnerable republicans in the senate without any additional stimulus, it just seems like so much political risk with that said, in negotiations are are at a stand still, the sides aren't talking now i think it is, it doesn't necessarily look for optimistic. with that said, don't underestimate political risk as a motivating factofactor >> how much volatility are we likely to see between now and election day does it continue the way it has be been >> i would assume valuations

you have 50 million people in the united states wobordering on not being able to afford food and you have people on assistance the skinny bill did not have that much in there for people to bank on. you need a broader stimulus bill you also have fiscal year ending for cities and states. they will start cutting services and jobs possibly before the election because there's no money for them coming from the federal government at all. i think that's the biggest political risk as you can see another wave of layoffs and a dip in consumer spending before the election without any further help from the federal government >> thank you have great weekend kelly. >> despite the volatility lately, retail traders are more engaged with the stock market than ever.

robinhood continues to lead the pack we have the latest numbers on how they are doing kate >> retail traders have been logging onto check their portfolios at record levels. j and p securities looked at web traffic. web site visits continued to climb in recent months out pacing levels prior to the pandemic analysts indicate a bit more interest many their financial lives. justice of the peace looked at mobile app down loads. that adviser tends to give bit e flavor

the data doesn't include the past two weeks but based on this recent market action, analyst expects the online traffic to be even higher for september. kelly, tyler, back do you. >> there's so many questions about robinhood's path does it pursue an ipo? tr there's a larger question about their business model if the sec cracks down or if other rivals are able to compete it away like schwab, for instance is robinhood going to have the rug pulled out from it >> i think the regulation question is huge they make the majority of their payment on options if that becomes an issue, you could see robinhood have to adjust and that really is the main way they are making money i think regulators are already paying attention you have consolidation in the industry yet robinhood has seen massive

customer growth. we'll see if that continues through the quarter. coming up, china saying it would rather see bike dance shutter tiktok's u.s. operation than sell. we'll dig into that next while thousands of small businesses are suffering, some big names could actually stand to come out stronger from the p pandemic as shoppers move online 'lreal twel vehose names later after this quick break this is decision tech. find a stock based on your interests or what's trending. get real-time insights in your customized view of the market.

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plus a free kohler bidet seat with purchase. welcome back reuters reporting that china could rather see tiktok close its operations than face a ban the deadline is fast approaching. president trump saying last night he won't extend it the head of instagram exprezzed concerns over a potential tiktok ban earlier today. >> any short farm benefit would be in terms of stifling a competitor right now is greatly outweighed by the risks of a more fragmented internet we benefit from the ability to operate in countries all around the world. if we move to where countries start to silo within them and we can't operate in that way, i think that is much, much more

proper problematic. >> shares of microsoft, walmart and oracle are trading lower today after that reuters report. sarah, it's good to see you. let's start with this reporting that china may close tiktok down do you think they would follow through on that threat >> yeah. i think they don't want to appear weak to washington, d.c if washington, d.c. says the only way they can exist in the u.s. is through a sale and china thinks that washington would have the upper hand in making that happen, they might follow through with that threat it's 100 million u.s. users for a big tech company, sure bite dance is not one of their biggest tech companies i think china wants leverage over the d.c. market above all else >> it's interesting because tiktok does have a fair amount of political activity on it. this could play a role in the

upcoming elections it's ban would leave a void. >> of course why does donald trump want to ban a app used by 100 approximate people used before the election the answer could be he's petty there's a coalition of users on tiktok that tried to game the tulsa, oklahoma rally he had a few months ago that angered him the trump add mgs seeing this as way to undermine china without impacting too many u.s. jobs it's not like at this point they employ hundreds of thousands of people in the u.s. >> they just launched reals which is their tiktok like thing. it's not america's fault the internet is fragmenting. if he's concerned about that, i'm not sure tiktok will be the

reason we face a lot higher walls for the internet in the future than we face right now. >> no, but it represents this tension for u.s. and china that could impact further trade deals to expand partnerships online. say there was another chinese company like ten cent that wants to buy a 10% stake in spotify or snap chat. >> i wonder how much of this comes down to the u.s. versus china for control of the internet if it's an open forum, one or the other will decide the rules and the alternative it's not a chinese internet and one of rest of world, used in the u.s. netflix ceo said they're not in

chi china. china said their business is globally regardless. should we really believe that instagram wouldn't be able to. >> just depends on the markets are for those products i think the concept of having two internets is very real one of those internets is censored the chinese internet doesn't have the same freedom as the western internet >> exactly final question, the deadline is looming. it's been eerily quiet on a deal front. it looked like it was sewed up a week ago to walmart, microsoft what are you thinking now as the deadline fast approaches >> the question is on bite

dance. we know the walmart and the microsoft party are still very interested in this purchase. expect tiktok to sue if there's no teal. that's good for americans. i wouldn't think that the tiktok app is going to go away quite yet while the legal process bears it out >> interesting it's going to court. thank you very gratulating jp m ordering every one back to the office next week that's not the message the bank delivered to its employees we'll clarify that one fedex up 150% from the march lows we'll tell you how the traders are betting ahead of that report when "power lunch" continues after this eritrade's got that.

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fedex out with earning after the bell on monday the shipping giant could see a wind fall as the pandemic continues to accelerate e-commerce sales it plans to hire 70,000 additional workers for the peak season fedex and u.p.s. out performing the broader market this year fed ex up by more than 50% let's bring in craig johnson and steve. home deliveries are up 25% compared to the same period a year ago i guess that's reflected in

shares of fedex and u.p.s. given the big gains not just over the year but the past three months >> i think the story, ironically much like it was 19 years ago at industry level is one of resiliency and adaptation. the economy has proved to be resilient. we're bouncing back. the recession is over. the recovery is taking hold. we're adapting i think that is both of those. the rise of e-commerce which we expect to continue and the fact the economy has exited recession and is in recovery will fw good for deliveries in general and will be specifically good for the business of both fedex and u.p.s. i think that's a trend that continues. i think the next question is can these companies harness technology in order the droive down costs.

>> which stock would you own here >> i think the reopening trade means that both of these could be winners if i got to pick one, i'm going to pick fedex. the reason being is when you look at chart, i may a ratio chart of fedex divided by u.p.s., you can see that u.p.s. has been lagging fedex and when i look at the chart of u.p.s. it's very extended a lot of the good news is priced in you don't have that with fedex looks like we're setting ourselves up to retest the old highs. playing that trend of the reopening trade specifically for the business of business

>> for more trading nation, head to our website >> i like the fireplace. >> there you go. a little nautical theme on this friday >> have a great weekend. thank you very much. still ahead, the retail etf, the xrt is up more than 44%. why lockdowns had been a good thing for some retailers and the names poised so climb even higher that's next. subleasing space in california surging as some big tech firms keep employees working from home through the end of the year or in some cases, indefinitely. we'll look at the impact auto sector getting hammered by pandemic. moody's sees a steep long recovery the analyst joins us with the company best positioned the take advantage of that, coming up

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welcome boack. president trump announcing bay rain bahrain is normalizing ties with israel the white house saying the president helped seal that deal. france reporting another 9400 new covid-19 infections today. that's just short of yesterday's record intensive care units are filling up and some hospitals are reactivating their emergency measures from the height of the pandemic in britain, cases are also surging. households in birmingham,

residents there are being urged to stop socializing with people outside of their households. movie fans will have to wait longer for wonder woman 1984. it was set today back to you in december of last year. hopefully it's worth the wait. that's the news update this hour back to you. >> thank you very much markets right now, let's take a look at where the dow, the s&p and the nasdaq stand the dow eking out a small gain the s&p about an equal percentage rate lower and the nasdaq composite is off about 1% retail bankruptcies are piling up with century 21 the latest of the group to file. dozens more are in the process of liquidating one says there's a silver

lining for more let's bring in senior retail analyst it's good to have you. it's interesting to me you'd feel this way because you're closer to these companies than anyone as a retail analyst you're seeing the pain firsthand. what gives you hope during this transition period in. >> good to be here hope is the right word i think whether it's personal, professional, corporate or not, i think what covid did for every one was bring us all to grinding halt i think that sometimes that can help every rhetoric, every piece of news we have been talking about for the last five years has been the death of retail. that's the path we were going. the reality is that would because a lot of companies were focused on growing for growth's sake and trying to adhere to quarterly expectations now that these company vs to pause and go to zero, they can look at what the right size is i think that's where we sit. you have companies that can look

inward and refashion their businesses for the future. >> let's talk about a a couple of examples like a gap or l brand of victoria secret >> beginning of covid, we upgraded victoria secret on the premise that this was a brand that despite being viewed as a broken brand by many is one of the largest brands in the history of time. they sell more goods than anyone else they don't make money on it. the reality is if you're rae ta - you're are retailer and not making too much moneying you're giving away your product for free sell fewer jeans if you're under armor, sell fewer sweat pants but raise that price on that number and bring in more profits. very hard to do normally when you start from zero and build up

it's lot easier. >> it's great point. >> how much upside do they have and a physical footprint should we expect them to have now >> raising prices 10%, depending on how many units drop could raise the profit for under armor and victoria secret by 100%. >> the reality is these number ks be big. the reason is because we're starting from such a low base. i think they will benefit by

elevating the brand in a way that won't benefit store closures most companies will see a stronger benefit every one should cut stores, it's first and easiest and the most powerful. generally speaking over history, we found most companies that cut stores shrink their businesses rather than shrinking to grow. it's the promotion and the brand elevation that makes it special. >> if i'm understanding you correctly, the idea here is to make more in part by selling less if you're going to do that, they are two ways you do it one is to raise prices which is what you seem to be suggesting here and the other is to cut costs. what makes you think that the consumer will go along with price hikes for what are largely commodity items by under armour. a t-shirt is kind of a t-shirt it depends what the brand or

logo is on it. lingerie is kind of lingerie >> that question is such an important question and another way of framing is why now. you've come on this program so many times talk on the negative side for the same companies. what's changed there's a level of consumers, some amount, if you're selling over $5 billion worth of product, there's some level that would pay more the natural and the hardest part of this pitch is to say what you're asking us to do is watch our revenues go from 5 billion to 3 billion that doesn't sound that fun. in normal environment i would agree. the silver leaning is the revenues have come down. as we start from zero and fully

closed stores, how many consumers will be able, what will we have left. how many pieces of lingerie or sweat pants will sell if you charge $10 more. that's what makes right now this hopefully flash in the pan where the companies can say i'm building up. it's the first time where these retailers get to decide how many stores to open, not home to close. same ideas with these promotions fwl it >> it's fascinating. if they can pull off this turn around, i'm sure the mall landlords would say we would welcome that i want to completely switch gears and ask you about peleton which is name you've been more cautious on. the shares can't hold their gains today but it's been a monst monster. why you expand on whiep you think the opportunities aren't so bright as everybody seems to be making the case >> it's nice of you to use the word cautious. i would say wrong. i think it's a phenomenal

company. i think it's an amazing product that i use all the time. at the end of the day, i think it has to be worth something i think it's important to conte contextualize. it's important for us to acknowledge this is an amazing company that generated less than 500,000 incremental users during covid. during a period with minimal competition and the most organic opportunity. that's a gret number from what it came from if we think about the context of the market size that we're trying to reach. if we think about netflix doing 25 million new members, you have to ask yourself how big is that opportunity. the end of the day, what is the market size to be the most optimal time period. ultimately, i think it's an amazing company. i think we think about it from a stock perspective, it feels like it's stretched the member count number, the fact it was the smallest beat the company has reported against the expectation sincepublic, th

important take i'm looking for the sign this addressable market will be pushed up. i expect we'll get that next week from the company. you have to ask yourself what causes that acceleration to become millions upon millions if it wasn't covid. >> that's fascinating. kind of helps explain the caution we're seeing and the lower price moves they are making a pleasure thank you, sir >> see you guys. >> ty. >> really good conversation there. the bond market. how about we take a look at that with rick who is tracking the action hi, rick fwl there's a lot of strange geo curve trading going on all maturities are down for the week if you look at intraday of fives, you can see it's well pe low where it closed. if you go to longest maturity, a different scenario

if we continue to monitor wast going on if foreign exchange, the dollar index isn't having a bad month. you could see it's firmed up for month of september it's up on the day slightly. up on the week the chart of the day, the euro versus the pound boris johnson didn't like the eu ultimat ultimatum. kelly, back to you thank you. still ahead, a storm of shorts hitting nikola responding to fraud claims another well known short seller is joining the fray. big tech fleeing california. why more companies are subleasing out their offices in the ldgoen state power lunch will be right back

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welcome back, everybody. it's time for today's power movers shares of crocs are soaring today after the company expected the current quarter to grow 10% from a year ago. crocs is on pace for its best day since may. next, it's game over for david and busters. that stock tanking after the company's revenue fell below wall street expectations dave and busters didn't provide any guidance for the rest of 2020 tough road for that company. we end with one of biggest dog offense the day. that would be chewy. investors were not bow wowed by the company's net sales per

active customer. kelly. >> i see that you came up with that yourself. >> i did next, more and more tech companies are subleasing off space in california as the work from home trend continues. could this be the beginning of a tech tech-xodus. we're back in two. for skin that never holds you back don't settle for silver #1 for diabetic dry skin* #1 for psoriasis symptom relief* and #1 for eczema symptom relief* gold bond champion your skin

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in firms are subleasing out their office spaces. it could have an impact on california's market. >> reporter: just this week twitter announced its seeking to

sublease more than 100,000 square feet of off space attached to its main headquarters in san francisco. air bnb also subleasing office space in the city due to the company's employees working from home yelp and uber reportedly listed properties they have done so prior to the pandemic. sublease activity can be an indicator of a softening the commercial real estate market commercial real estate firm new mark reporting thatcalifornia is seeing a 50% increase this year in the amount of available sublease space that outpaces the national uncrease u increase since the pandemic. half of all of the commercial property vacancies are subleases, the highest proportion in the country. and commercial rents went down nearly 5% from q-1 to q-2 in san francisco. that is the highest quarterly

decrease nationwide. industry watchers say we may see more price declunz ovines over next year. >> good point. i wonder if it there are any spots holding up relatively well >> interestingly enough, i'm told that buildings that have, you know, low rise, have a lot of natural light anticipate 5 0 access to outdoors and parking and private bathrooms, they're holding value a bit better people are really staying away from the high-rise buildings for obvious reasons. >> yeah. appreciate it. ty >> kelly, thank you. global car sales have been hit hard by the pandemic the one top firm says the auto market's recovery could take longer than any major down turn that has come before don't forget, of course, you can always watch or listen to us live on the go, on the app, cnbc app.

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welcome back shares of nikola motor plunging 15% after two short sellers have accused the electric vehicle maker of fraud and deceit. dohm chu is here with their response to the allegations. sfwh big soap opera. nikola says the reported allegations of fraud are without merit and that they untend to seek legal recourse for a "hit job for short sale profit driven by greed." nikola founder made fraudulent statements about the technology and capabilities earlier today, citron research came out in support of hindenburg tweeting con congratulations for exposing fraud and covering half of the legal expense that's he could rack up in a battle with nikola.

they say the securities and exchange commission should look into each other. they went there the spac earlier this summer. that subsequent $2 billion investment trading partnership for them for future electric vehicle production nikola retained a law firm to represent it and just in the last couple of moments here, trevor milton has taken to instagram to say that he is in fact about contacted the sec they didn't call him it's a whole drama remundz me, elon musk likes twitter and trevor milton likes instagram. >> do you think there is anything to the idea that he is trying to say, no, i reached out to the sec as opposed to they're looking at us. >> this is all about optics. who hung up first? this is going to be howit play

out in the markets right now the only interesting part about the whole discussion is we're talking about it's not the exact same but it rhymes with what happened with tesla just a couple years back. elon musk under allegations of investigation. is this the same situation as tesla? no but two big personalities threatening each other, it could be a big soap opera. >> thank you for the latest. ty >> all right dohm, kelly, despite the negative head monica lewinsky surrounding nikola, global sales of electric vehicles held up well during the pandemic and moody's latest report points however to a slow recovery for the overall auto industry warning that auto shipments won't recover to prepandemic levels until the middle of the decade for more on the road to recovery, let's bring in bruce clark. welcome. you just heard the story about nikola, what do you think about this soap opera that seems to be

swirling around the company? and what do you think of the deal to sell part of itself to general motors >> okay. first, we can comment on the controversy there. that is not really our wheel house. but in terms of the fundamentals of the transaction with gm, we think it makes sense they approached in a diligent manner so we think it makes sense. >> so it makes sense for gm? it also makes sense for nikola what will the proof point be >> i think it's going to take some time. this evolution of the electric vehicle market is going to happen relatively long, relatively long time i think what we'll look for initially is the pace at which they can bring out this vehicle

and the initial market acceptance but whether or not it's going to be a hit or miss, it's going to take time to tell. as we said, the transactions are very consistent with the transactions that gm played out. consistent with the kind of diligent allocation they have and they don't have unlimited amount of capital. they have to spend it wisely >> all right let's broaden out and talk about the auto industry. who do you think the oners and sinners will be over the necht few years. you point out that the decline in sales in 2020 was even steeper in percentage terms than during the 2008-09 and 10 financial crisis how long is it going to be before we're back to those prepandemic sales levels or maybe even into the sales levels of a couple years ago which were in the upper teen millions

domestically >> okay. if we're talking about the united states, we think it's going to take a decade a couple of important points, we're not expecting the kind of government support that the industry had the previous down turn also, this down turn is not caused by weakness in the financial markets. it's the real economy. we're seeing many, many people being laid off we think ut can be a relatively protracted upturn. nevertheless, we have to stabilize and the conditions with better than they were things are going to take a long time for the industry to come back at the same time, we still have negative outlooks on 19 of the 22 car companies so industry stabilized, you're

seeing ford and gm report better than expected performance. it's going take a while. >> which ones do you have positive outlooks on, bruce? >> i don't think we have any positive outlooks. we have a number of stable outlooks positives. quite a few negative outlooks. >> all right swrechlt to lea we have to leave it there, bruce. have a great weekend, sir. bruce clark of moody's, we appreciate it. >> that said it all. >> we appreciate you as well >> and you, and you, and you we appreciate you all watching >> and you >> "closing bell" starts right now. >> you too as well welcome, everyone, to "closing bell," inl sa'm sara eisen. stocks are making a big swing lower. trading in the red this afternoon after a big rally at the open look at what is driving the action one hour left of trade. technology has reversed and is now leading the decluns ines byi