e markets. mean time, let's take a quick final check on the markets this morning on this -- we are on wednesday, right? it's wednesday morning >> thursday. >> wednesday morning or thursday morning? >> i thought it was tuesday. >> dow jones up about 146 points higher, nasdaq off about 38 points and the s&p 500 is off by 2 points make sure you join us tomorrow "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. looking for a second day of gains as a couple of things now are clicking for the bulls, nike earnings, j & j phase three, house kroets on a cr and a good body of upgrades today our roadmap begins with johnson & johnson. i'm investor optimism sending stocks higher as j & j begins phase three of its covid-19 vaccine. >> and we of course are not going to forget nike's blowout quarter, an 82% surge in online

sales and the stock is hitting new highs. >> and finally tesla's tumble, why the street is mixed on what actually came out of the company's battery day event yesterday. j & j, though, jim, going to be the lead and you just called it maybe the best company we have in this country. >> yeah, look, i think that i like triple a balance sheet, i like a company that continues to make the numbers, i like a company that pays a good dividend, has the best pipeline, most robust pipeline in pharmaceuticals and i like a company that's not a hype company. the fact that they are ready to do their vaccine now, full disclosure i am attempting to get into the trial, i think it's everybody's duty to get into the trial they are the only one emphasizing the at-risk people they want people who we view as people who we need to protect. i don't hear that from any of the other companies. i like the fact they are willing to give it to their whole employee base. this is the way i think it should be done and i know people are cynical

about vaccines i think that if you want the world to go back to the way it was we need a successful vaccine and in the interim we need antibodies that make it so a therapeutic in the meantime, david, you know this, there's got to be a bridge from a successful one j & j is not going to be rushed. j & j is not going to be bamboozled into putting something out. i think, david, that these guys have the wherewithal to say no, but they also are just another company that we have to bridge to because a real vaccine needs to be out and about before we can declare it safe. >> out and about meaning what, jim, i'm sorry >> we're not in a hot spot in new york, okay let's say you are on a college campus, i would love everyone -- some of these college campuses you go to the "new york times" you see there's definite hot spots. notre dame right now, they have a very good policy, but i'd like to go there, i'd like to go to any sports -- any sports league where i think we're all worried

about, anybody who is playing football, david, and i think that that's who i want i want at-risk people to take t we are not really at risk as much because we just go -- we don't do anything. we're not in the subway. we are not trying to get to work -- >> no, but i'd like to be. i think we would all like to be in the city of new york and other major urban areas, we'd all like to be back to real levels of activity so you want to get into as many hands as you possibly can as quickly as you can into we want to get out of groundhog day. what are you doing going to work. what ron rivera doing after work, going home. >> sorkin doesn't even know what day. hump day. >> i regard j & j as one of the most foremost companies. it is a company that can stand up to anybody. >> j & j has come a long way in so many ways, but there was a period of time when back in let's call it mid 2000s bill weldon era it was not going particularly well for j & j.

when you talk about it being a great company, it is without a doubt but also had one of the largest health care fraud settlements in u.s. history, sorry to bring it up, but i think sometimes it is -- >> they belong in jail but they're fabulous >> there are different administrations. i happen to think that mr. corbat culp is trying to solve the problem at ge, the previous problems were not his. i think that when we look at home depot -- >> duly noted. >> -- dnd what mr. corbat blake did -- >> and alex gore ski has moved on, they have moved away from that era but it was not a good one for j & j. >> it was a failure. the ris per date of loss problems, the mesh problems were awful. i'm not excusing them. they're not perfect by any means but i think that they have -- when i've dealt -- when you call them they will let you speak to the scientists and the scientists have a real bead on what needs to be done and i've spoken to the scientists, i found the scientists to be

compelling in what they want to do, but more importantly they are not going to be pushed around the big problem in this country, carl, the big problem is we fear these companies are being pushed around i saw the cdc is erratic, i saw secretary czar quoting dr. redfield i don't want any of these people to have anything to do with my health because i think that they all want to win the election sorry, doctors, but i think that you're captured. >> your concerns, jim, are reflected in the pew research numbers which we got yesterday, the percentage of those polled who say they either probably or definitely would get a vaccine if it were available today has gone from 72 back in may to 51 now. that's just an erosion of confidence in public health. >> that's just terrible. we have to get everybody to take these. a vaccine only works if everybody takes the vaccine. okay i mean, now, we have masks, the president hates -- have you ever seen him in a mask he was like twice in a mask. secretary azar was asked

point-blank would you have a mask mandate and he immediately starts talking about the areas that don't need a mask if you can't social distance you need a mask. he said wash hands, wear masks 200,000 people died because we are washing hands and wear masks. we need the vaccine. the 200,000 people, david, should we mention them >> of course. >> they died. >> yes, they did. >> and what did they die from? >> covid. >> and did it go away? >> no. >> and is it going to go away in the fall >> no. >> and are things better than ever >> no. thank you. next witness. >> next witness will tell you that this ensemble trial is going to enroll 60,000 volunteers across three continents so it's an enormous number i think jim shared it with us a couple days ago as well. they are going to be committed to transparency and sharing information related to the phase three study. they even include the study protocol in their press release which you can go to. we did speak, guys, or the "squawk" crew spoke to scott gottlieb, former head of the fda

about concerns around this emergency usage and whether or not it would somehow be approved for emergency use prior to the election we're taking a listen to dr. gottlieb. >> i think the reality is there's not going to be an emergency use authorization before the election just if you look at the timing of when data could be available and the most optimistic scenario and then the fact that it would take the fda at least two to four weeks to turn around an eua an eua for this vaccine isn't going to look like an approval, it's going to look like the continuation of the clinical trials where we make it available for a select group of patients and continue to collect data in a registry. >> you get it into the arms of people who need it, jim, the most early on. but, again, we come back to, what, mid 2021 for when we really can expect more broad inoculation. >> well, you can't -- where are you going to get covid right now? are you going to search for covid? we need to have people have regular lives, half the arms are

the wrong thing anyway, right, in the placebo, don't be in a real hurry to get that but we don't know there are a lot of tests going on and that's good, but of all the things that i've heard, even more than j & j, it was david ricks on "mad money" on monday that you can talking about the therapeutic that when there is an outbreak of covid at a nursing home, remember, 40% of the people who have died of the 200,000 are nursing homes. they bring the rv, they have been giving people medicine and it has seemingly stopped, quelled the outbreak carl, we have to understand that we need to quell the outbreak before we do the vaccine to quell the outbreak eli lilly routinely ignored by people and it's a mistake but it's more important than the vaccine because a good vaccine we won't know about until at least six months i like what lily is doing. lily doesn't get -- lily is not a promoter, okay david ricks is not a promoter, but they did the best in migraine, have an unbelievable

cancer and diabetes franchise. because they are in indiana along with the cold no one is paying attention to them. >> i like the way you're framing it, jim, that there are stepping stones between now and the middle of next year when we might get broad authorization and distribution listen, mnuchin yesterday in the hearing talked about the abbott test, you are talking about antibodies, talking about therapies because it's going to be a wait, it's going to be a long wait, it's going to feel like a long way anyway. >> abbott i was hoping to have millions of their tests. the article today in the paper said that they are not ready yet. i have found that abbott is often misquoted so i'm going to get to the bottom of that. we have gary kelly on today and gary kelly is really at the front line he is the ceo of southwest air where is the problem in this country? people are afraid to travel, afraid to fly. i think gary kelly, i bet you he offers a novel method about how to be sure that if you three on southwest air you feel pretty good. >> well, they need to.

because we know the struggles that the airlines are having, jim. they continue, of course, to also hope they're going to get some form of new aid from the federal government which remains very much unclear. >> right. >> as does even more so of course broader aid, so to speak, for small businesses and states and municipalities and we can go on and on. >> look, they were doing continuing resolution yesterday. >> yeah. >> they're not focused on what they're focused op tiktok which means by fasterly if they get that, buy walmart. i think the idea of millions of people unemployed, put that on hold >> it does appear that's the case. >> it's on hold. >> it's not -- >> whatever. >> carl, it doesn't seem likely at this point, i mean, easy to say, you never know, things can change quickly but it doesn't appear likely we will get anything out of congress before election. >> certainly not i mean, it was encouraging, though, to get the house vote on the cr and that will go to the senate now it was interesting i thought, jim, that mnuchin did say the

administration does support not just the repurposing of that ppp money but another stimulus payment. i mean, as much of a pipe dream or wind mill as that may seem right now. >> that has to be done look, it is not clear what it takes to get that done, but when it gets cold we are going to have the next group of people fall off the radar screen which are the 14 million people and i'm talking about the family members included who are involved in the restaurant business not everybody can be -- obviously they are going to be ready to roll september 30th, david, we will go there or maybe take our wives, i don't know if that's efficient, but there are very few restaurants that have the means to be able to have -- what's so funny? we have darden report this week and darden can afford to not have people in their restaurant, chipotle can afford. the average italian restaurant in my neighborhood if they don't have people inside and it's 20 degrees out they're not going to sit outside in coats and wait

for the veal parm. >> they're not and it's a huge issue for the small businesses you can see it when you walk around some neighborhoods more than others, those dependent on tourists and or business -- business lunch, business dinners. peeking of changes in behavior, carl, and direct to consumer we do have to get to nike because those numbers were so strong of course, we mentioned it at the top of the show. market share gains across all geographies and they did really benefit as well from direct to consumer, carl, the numbers were nothing short of extraordinary as we see a stock that's going to be up 11.5%. >> what a conference call. what a quarter >> yeah, jim, between that and j & j it's going to help the indices. i see even those who are doubting going in, i think deutsche bank is going today from 107 to 151, so we're seeing a lot of people get religion on it today. >> it's funny, i don't think you could ever have predicted -- i

would argue that they should have preannounced, frankly acceleration in digital 83%, acceleration in digital, that's extraordinary. north american they did $4.2 billion, women gaining share, some of the stuff was not hyperbole. no one can match our pace, i like that one very much. it was a tour de force quarter one of the things i found about nike, it does not need a vaccine. david, there are companies that need a vaccine and the ones that don't need a vaccine they had 6% growth in china, do una couple percent in the united states, but they don't need a vaccine because they have direct to consumer and it's really good macy's picked up 4 million new customers because of the -- no vaccine. we will talk about that later. you need to find out -- what companies need a vaccine and what companies don't and that's going to be the divide that's the grand canyon, david. >> and it has been the divide in the market as well of course, we talk about it all the time and then we also talk about the greater divide which

is sort of the real economy versus what we see reflected on our screens. >> the tesla economy. >> we will talk tesla in a bit. >> this was a fresh bearish pick that went positive this morning. >> i know. >> it doesn't matter 20 million batteries he's going to be able to do in 2030. >> didn't work out so well, battery day. back to niek dwree, everything seems tok working well for them. direct to consumers so robust and the fact that people are staying home and not putting on suits anymore and are wearing casual wear that's also helpful that trend. >> i thought that hurt stitch fix frankly but we can argue that back and forth. >> i always like arguing back and forth. >> we're going to get to nike among the upgrades today in addition to twitter and csx. in addition to what tesla said last night and how the street is split on that this morning futures look good after that bounce on tuesday. back in a moment that's what my dad does. good job, michael! ok, lindsey now tell the class what your mommy does... my mom has super powers. it's like she can see the future.

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tesla is down in the premarket after its much anticipated battery day. at that event elon musk said his big goal was to drive down battery costs but he adds that technology to make that happen will take some time. >> to be clear, it will take us probably a year to 18 months to start realizing these advantages and probably to fully realize the advantages probably it's about three years, thereabouts >> all right so, jim, street is a bit split

today on -- regardless of how much time it takes, the fact that it would happen at all could improve volume in margins, others are saying even though that's a long-term story near term there's not many catalyst toss drive the stock. >> look, i think that you've got this process by which the stock is up really big ahead of battery day and then he delivers, what, i mean, phil lebeau sent me terrific stuff, 56% drop in the cost of battery sales, that matters tremendously, but we were talking about the million mile battery. what a setup that almost nobody could possibly deliver the 20 million vehicles, a lot of people have been talking about the idea that one day he could do 20 million so, therefore, that's more than toyota, therefore, you could justify the valuation. we have analysts, people said it's finally come down you want to be in it. if you liked tesla before, you like tesla after, if you didn't like them before you don't like it after because it's elon musk and you're betting on musk

i wish there were more to it david, musk per share, it's musk per share. >> yeah, but it's funny to listen to him sort of underpromising in a way. >> wasn't that interesting >> yeah, lack of hyperbole. >> the 20 million cars -- >> one of his more interesting things, jim, was his saying that he's confident they can make a compelling $25,000 electric vehicle that is also fully autonomous i mean, that could be a game changer. 25 grand for a fully ev autonomous vehicle in three years. >> phil is talking about how low they can really lower the price of this, but, yes, that would be a real game changer. of course, would also make the skies cleaner, it could do a lot. carl, i think that there is a lot of people still excited that he's a bit like henry ford, okay, he gets the costs down, pays the workers okay and everybody does better. i don't know, i still -- i'm a believer in the guy. this is not nikola, this is not rikola, this is tesla. it's not a truck going down a hill. >> we're talking supply again --

no, but, again, we're talking about supply and you keep referencing the baird bearish pick and they are worried about the consumer in a recessionary environment. how does that play in? >> i think it's a good piece, i think tesla is somewhat recession proof, companies are either recession resistant or recession proof. i like the baird piece because it does represent the negatives and positives. it's a price target boost by the way and i always find, david, when they boost the price target you have to be more positive than negative. david, i'm over here, hi. >> not the only one, jim, goldman 295 to 400. >> yeah. >> deutsch 400 to 500. there is a few that are definitely going up. when we come back southwest gary kelly among the airline ceos who urged congress to provide more covid relief to his industry we will talk to him in a few minutes. don't go anywhere. >> we have a long way to go to

recover, the first c.a.r.e.s. act kept this country out of a depression and i think the only mistake that was made is it just oudn't go far enough and long engh so we're obviously here supporting the airlines and our people as business moves forward, we're all changing the way things get done. like how we redefine collaboration... how we come up with new ways to serve our customers... and deliver our products.

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there's a lot jammed into this wednesday's session we have some faangs red but overall the dow will benefit from nike and johnson & johnson. powell in front of a select house subcommittee on covid reon a sspsendome pmis in 30 minutes. back in a moment

we'll start trading four minutes from now on what jim and i like to call hump day. a little general mills for you today on the mad dash? >> i like the quarter. there are some people who jumped at it initially, took it north of 60. it was a very good quarter two things i really liked is they reduced the debt leverage and then, david, this has always been a company that grows earnings slowly and grows dividends slowly but the dividend grows and there they are, they raised their dividend, they are at 51 cents, 3.5% yield. i want you to think about general mills versus a bond, okay this is a bond with growth, they're back this their old ways of doing things.

you can say, wait a second, it's all stay at home no, they are just taking is that i remember in a lot of different businesses there have been a lot of fear that the -- you have a dog -- that this blue buff which is what we feed our dogs because we are good people -- our dog. >> yeah. >> sorry. >> i shouldn't have said that. >> i know. >> jeff harmon doing a terrific job and i like t lots of different categories taking share. food at home is obviously terrific north american retail plus 14%, cereal up 10% and the dividend growth i just like t i think that general mills is the kind of thing you can recommend to your friends. >> stock has done fine natural health, i mean, organic, are they moving -- continuing to move this that area? is it enough >> not as much people are baking alt home, david, you could argue that baking at home is natural and organic, yes, it is. the ones that are really doing well, cheerios, blue, haggen das, sorry, can't eat that,

pillsbury. pillsbu pillsbury. come on. old el paso. mexican is continuous in terms of growth. repeat rates are good. people fear when you get a vaccine it won't be as strong. snack bar is not good, but general mills is back. i'm putting it in the it's back category. >> all i have to hear is haggen das. i have no will power none. >> i don't know about you, david, but i am guilty for the comp i'm largely guilty for the haggen das comp. no doubt about that. >> maybe anyway, david, i just feel like that when i look at what this market is giving me i will take a food stock i will even take b & g foods, which owns green giant that general mills gave away to them before it realized millennials like the frozen food aisle because it represents a great bargain. we are so far from that, david, that i don't know what to say.

we're so removed from what millennials do and gen x. i don't know what they do at all. >> i don't know what they do. >> play video games. what do they do? are they the tiktokers >> i get confused with them all. i'm so old i have no idea who what is, millennials, g.x, g.z, g.y. >> do they brush their teeth and wear deodorant >> say again. >> do they wear deodorant? >> i think so. >> i don't know. >> good time to transition to the broader market as we get ready for that opening bell. jim, any concern about the banks which continue to have a not particularly good time of it. >> i'm sorry >> the banks >> i hate the banks. >> you do, don't you >> i mean, this he kind of go down every day and they come on, are always talking about people should come back to work how about giving us profit i don't care where you work, i like earnings. this group is obviously so troubled and one of the things i've been doing, david, have you ever looked at the book value of the european banks >> not lately. >> okay, well, it's a joke obviously the european banks

nobody believes the book value and now it's coming home to roost in our country no one believes the book value, if they did the stocks would be substantially higher, wells fargo charlie scharf has his work cut out for him there's no bell for the old exec execs. >> he's getting kicked around a lot today, jim, on this memo regarding the availability of black talent. >> yes, he is. >> in the banking industry there is the opening bell. at the big board it's laird super food, nasdaq digital health care platform good rx celebrating its own ipo, company is ranked 20 on this year's cnbc disrupter list and we will talk to the co-ceo later on this hour to david's point, jim, i did want to check back with you on monday's low of 3230 which was prior support earlier in the year, the geun-hye, 10% off the

recent high and as san toll yes said this morning is that a good working low do you think at this point? >> i thought it was because what happened beyond leaf for me was that everyone discovered, wait a second, we have to start selling faang. apple was down 25% at one point and all these stocks were down dramatically in double digits and i think that i went over -- thank you, gina for this, i went over the stocks of cisco, intel and qualcomm 1998 to march of 2000. not one of them had that kind of decline. remember we were all thinking that 1999 that's the analogy and so, therefore, it's going to be a disaster if you look at those stocks they just were straight up, okay, there was a little bit -- there was one day wherein tell was down a little bit, but this is not 1999 because you did not get that kind of breathtaking quick selloff that i think was the self that refreshes. you can get little stuff, a

couple day or two in 1999 but you never had this kind of wholesale just whack it and i think that actually bodes positively larry williams did his work, he is a great technician, he's saying we could be poised for a major bottom between here and october 20th that's not that far away i think we're going to be side lined to positive after what happened monday and when we were down 900 i was saying this is your chance. i wasn't -- i was okay. >> you were. so the positive refreshes as opposed to something that is impending doom. >> yes yes, david, that is exactly right. the pit and the pendulum kind of. >> okay. >> all right we're not in the pit. >> so -- i mean, nvidia which you've loved for years, buy it here >> well, i mean, i said buy it at 100 so it's difficult to buy it up here if they get the arm deal, yes, but you have to tell me whether the arm deal closes, david, it's in your world.

>> listen, you know the questions there come back to china which we haven't perhaps -- we haven't talked about at all today and whether they will get the necessary approvals they need from china they've navigated that market before, it did take -- >> if they get that deal -- >> very compelling character in jensen gets that the stock goes to 600. >> you think it's a strong deal for them despite these concerns? >> it's not strong, it's fantastic. >> despite concerns about competitors who won't be using them as often because they now will control arm. >> think bigger. >> okay. okay carl >> guys, travel stocks looking pretty good this morning, we do know that the white house did signal yesterday that it would support additional relief for the industry to help it avoid further furloughs and layoffs. with us this morning in a cnbc exclusive is the ceo of southwest airlines, gary kelly gary, great to have you back

good morning. >> great to be with you all. >> so we've heard this a couple of times this week from the white house encouraging pelosi to send a stand-alone package of aid. we watched a tape of you in front of the white house from last week, i think it was. do you feel like that visit is bearing some fruit >> yeah, i was encouraged. i think we pretty much know what you all know, you know, there's an impasse and we're just obviously hoping that a larger covid bill will move with a payroll support aspect, you know, continuing for the airlines there's very broad support to avoid furloughs in the airline industry and extend the payroll support program through the end of march so we're very hopeful that they can come to an agreement and get that passed and help the economy and obviously help the travel industry. >> how do you feel about where we are getting into october

versus what we thought october might look like when that initial package was passed are you disappointed either in the way in which you've been able to conserve cash or the way in which traffic has rebounded or not rebounded at this point >> oh, wow, you know, you can go back to march, april and we just did not know, and, you know, i for one and for many of us we're very hopeful that this would be a very quick recovery and it's proved not to be i think it's very clear that until we get to a vaccine and then we get to herd immunity and then behaviors begin to change back towards normal, we should expect more of what we're seeing right now. our business is down versus a year ago 70% i was concerned about that back in march/april certainly we're doing better today than we did then, but we've been pretty stable in terms of a week to week business for about the past two months.

so there's no reason to believe that things are going to improve anytime soon is that disappointing? i think we're all ready for this to be behind us, but realistically it's not surprising we've got a pandemic and we've got a ways to go on the cash side of this things, i'm very proud of our people, i think they've done a great job in terms of raising money, managing our spending, cutting cost our people are producing a great product and the customer experience is phenomenal we're getting great feedback there. so in terms of the things that are the most important, which is take care of our people and take care of our customers, i gave us an a plus. we've got almost $15 billion of cash in the bank as we speak and the payroll support has basically kept us neutral, if you will, for the past two quarters absent that we would have lost $3 billion in cash if not more

so it would be very helpful going forward over the next six months and hopefully put us in a position where we can get past this. >> gary, it's jim. always good to see. >> you great to see. >> you great to see you smile. you were starting to bum me out with the negativity. you are an upbeat guy, you are a winning coach. i have this thing in my phone called navica it's the abbott id now test and i am hoping -- first of all, i think planes are incredibly safe, much safer than buildings and elevators. i say that and i wish an airline exec would say this. second this navica is going to be able to say that i'm good for the day. you swipe it when you go down the gang flange and you either let me on or not why do we need a vaccine when we can have id now in the next couple of months i'm just trying to do this to cheer you up because you're bumming me out a little. >> well, of course, ultimately no matter what technique we use we need consumer behaviors to change things need to trend back to normal no i'm a huge fan of testing and

it just needs to be something that can be commercialized and can be put into production and i think you have a great idea there in the meantime you have to wear a mask, you have to socially distance your point about airplane cabins is accurate. the air in the cabin is very, very clean and with a hepa filtering system in particular and all the cleans protocols that we use. so, yeah, there is a way to manage through this pandemic that does not mean that consumer behaviors will change. so we will continue to offer a great product and look for those kinds of opportunities, but we need to -- we need to break the back of the pandemic, ultimately that's what is going to get us all back to normal. >> this may be a thin read but there is an article in the journal about how some airlines have been able to make things up with freight has the e-commerce just deluge helped southwest at all? >> yes, but -- and no airline

has had the drop in passenger revenues offset by cargo it doesn't remotely come close again, our business is down 70% year over year and our cargo business has held pretty steady, it's off somewhat from a year ago, but, yeah, it's a nice bit of business, but overall it's about 1% to 2% normally. so those folks do a great job, our cargo customers love southwest, but we can only do so much with that so it's been a nice offset, but we need the passengers to come back and that's our focus. >> gary, on that note, and it's david, by the way, you know, hearing you say down 70%, you stabilized it down 70% is a pretty stark reminder of just what's going on in this business. >> right. >> i just wonder how much more do you need to cut in terms of capacity if you don't get additional aid from the federal government given -- we don't know when normal comes back. i can't tell you if it's three

months from now, six months from now or a year from now how are you looking at the future in that way if you don't get additional funds >> there is no easy path for any airline to go back to what amounts to 1970s levels of traffic. believe it or not, that's basically where the industry is domestically 1970s. so it's very difficult to radically restructure the airline to reduce capacity that much effectively we can reduce capacity by 50%, but that doesn't mean that we will reduce our overall cost by 50%. and i pick 50 relative to the business being down 70 because at a point if we cut our flights too much, then we cut a lot of itineraries and the revenue loss accelerates much faster than the cost cuts do so we have to strike the right balance there. right now our rule of thumb is to cut our capacity about 40% to

45% and then the network that remains is still very robust we are the largest airline in the country, we have the most seats to the most places and we still have very good itineraries. they may not all be nonstop but we can get you from point a to point c in a reasonable time. >> the prospect of further cuts does get the attention of congress people and senators particularly in areas that may not be that well served by other carriers is that enough to sort of move the balance of power in your favor in terms of getting an aid package? >> you know, the -- i think everyone is concerned about that i think everybody believes that the airlines are essential and i say that with all humility because i think that all sectors are essential and all the jobs are important. it's just my job to take care of southwest airlines and so i concede that but, yes, people want service and i think we all -- we all

know that an important component of the recovery is being able to have air service for future travel business travel has really been significantly cut and i think it's going to take a long time for it to return so in the meantime we're more dependent upon the consumer than ever and they want to fly, they want to travel and if we don't have the flights they won't -- they won't have any way to get there. so it's a catch-22 right now because the demand doesn't match the supply but, yeah, i think everybody is concerned about losing service to communities we have not cut any routes off of our network in the domestic system as you know, there's been international cities where service has been suspended for a variety of reasons, but we're determined not to do that, but, yes, if we -- if we continue to face quarterly losses like we

would have had without the payroll support, then we will have to continue to be creative and try to find ways to mitigate those losses and, yes, that could include cutting service. right now we're doing the opposite, as you know, we've announced service to miami, we've announced service to palm springs and our theory there is we may not be able to get a lot of depth in individual city parra markets that we currently serve because the traffic is off so much, but if we can add new destinations we can pick up new customers or take our existing customers to new places and thereby generate more revenue and more cash. as long as we're covering the cash costs of those flights, that's a wise move and we think that we can do that. >> one last thing, gary. you know, i know someone who is flying southwest today, denver/new york, and they are going through st. louis on the way here and nashville on the way home do you see that being a nonstop a year from now?

>> oh, gosh, the network has radically changed versus a year ago. it's been down close to 60% at times, i mentioned our rule of thumb right now is to have it down about 40% and when we do that there are a lot of nonstop flights that have been eliminated and replaced by one-stop itineraries as you suggested. the short answer is absolutely we want to get back to that point. we are a specialist, we are a point to point network and we have nonstop flights between more destinations than our competitors do we don't hub and spoke so we look forward to getting back to that point but the traffic levels need to be sufficient to support having a nonstop flight right now we are having multiple itineraries over these individual segments in order to support those flights. so it's extraordinary times, we

have taken extraordinary measures and still been able to keep our family together and serve our customers well and we will survive this and we're going to get on the other side and then we will thrive again. so we just have to get from here to there the psp extension would be very helpful. >> creative you have been, gary. thanks so much gary kelly. >> thanks for having us. >> southwest airlines. >> great to be with you all. >> pmi is now on the tape. let's get to rick santelli >> yes, our preliminary september read for market pmi, on the manufacturing side 53.5, exactly what's expected. and if we go to services, 54.6 also darn close to expectations. and when you mold them together for the composite it's at 54.4 54.4 is, well, it's as good as the last read, our final august was 54.6 so you can see how that fits in. and the low read on the

composite was 27 and that was back in april. remember this series is officially three years old today, it started in september of 2017. so it really gives us a very good view. 27 was the low in april, the all time high was 56.6 and that was in march -- may, excuse me, of 2018 now let's get to some data points and, remember, we have supply today we have a five-year note auction of record supply of $53 billion, a whole package is of record supply if you look at a two day of tens you can see it's been mostly lateral, right in the mid to upper 60s. early august we are closing in somewhat on the middle to top of the range, unlike bund yields as you see on the same time frame early august where it's dipping away, the differential difference between our tens and europe's tens getting a bit wider. a lot of exchange, foreign exchange volatility, look at the euro versus the dollar, dollar

at a two-month high, euro versus yen is at is two month low, euro having weakness even against the chinese currency back to you. >> thanks for that rick santelli with the pmis. we will keep our eye on good rx, talk to the k.'s co-ceo later on this morning s&p as expected meeting some resistance at 3320 back in a moment s&p as expectede resistance at 3320 back in a moment

when we return the co-ceo and co-founder of good rx as the company goes public today. s&p trying to hold on to some weesy.on this dnda don't go anywhere. don't go anywhere. ♪ ♪ ♪ with the icon that does the same. the rx, crafted by lexus. lease the 2020 rx 350 for $409 a month for 36 months. experience amazing at your lexus dealer.

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goodrx is valued at about $13 billion. before you get excited that maybe we're getting overexuberant, we have doug hirsch he's the ceo he's co-ceo and to founder and

joins us ahead of the opening trade. it's always great to see you i want people to understand from the get-go your company is growing profits like a weed. >> thank you you're an inspiration for so much of what we do it's great to connect. >> one thing i want people to understand is you're a company that brings down the price of drugs. i happen to have an experience how i know doug, i was paying $5,000 a month for a drug i had to have. i found goodrx and they cut it to $1,000 a month. they do it with scientists and algorithms can you explain how you save someone 4$,000 a month on a drug that was generic but had a casing that made it proprietary? >> it's just insane. right? the health care system in this country is broken. why should any american have to pay $1,000 or $6,000 or 2 million for a drug we try to get americans the care

they need at a price they can afford we've been doing that for over a decade it turns out our health care system needs so much help and we're happy to drive savings and give people the information they need so they can be informed consumers. >> let's talk about the idea of your app the most downloaded health care app. it's fantastic this is something that a lot of people who have expensive drugs know to download >> yeah. it's super easy. consumers come together. they download the app and type in the name of their drug. we show them prices at pharmacies nearby. the prices vary. if there's a discount that works, show it to the pharmacy we do telemedicine we provide it so you can get a prescription sent to your house. it's so easy that's what we're all about, really >> and a lot of people felt it's too good to be true. you get a coupon you go to cvs, they honor the

coupon, but they do. >> that's the goal, to have a business that works right and helps people save. that's our focus my greatest pleasure working is we're a patient-first organization we've always been that way we want to reward our shareholders but we're focussed on what's best for the american patient who really needs help. >> i think it's important in an era of cynicism that because of your patient focus, the same marc benioff has at sales force and because you use it as the greatest platform for health care, you can make a lot of money being good >> it's incredible the better we do as a business, that means we're helping more people we help over 18 million people a month -- they have found savings and filled a prescription they couldn't have otherwise afforded we do over 1,000 telemedicine visits a day these are real people making hard decisions about rent or health care, and it's been an

honor to be able to work at a place where we can help people and have a successful business doing it i want to mention one of the things we're doing as part of the ipo is launching a new goodrx health. we've taking over a million shares and dedicating it to the neediest, people not finding savings and we're going to have a very big focus on trying to help people who can't find help they need working with clinics across the country >> are there people who don't understand that they may be overpaying who should right now go to goodrx and realize that perhaps they can get considerable savings as i did? >> so many people ask about competition. competition is people who think the insurance card in their pocket is all they need. it turns out it's not. look, insurance is paying for less and less, and prices are going up for everything. we're here to give people the resources they need to be smart consumers. we saved americans over $20 billion since inception.

this is the blessing i get to work here with incredible people and we want to help more people get the help they made at a price they can afford. >> i took my bill from 60,000 to 12,000 it was a live or die sort of drug you're the co-founder. the type of thing doug is doing, giving shares away, this is the way he does things i couldn't believe how much i was paying for something not worth it doug changed the entire health care system for those whobothe to take a look at his app. thank you so much, doug. good to see you, congratulations. >> appreciate it >> jim, we'll see if this opening bounce can hold as the s&p slips into the red don't go anywhere. the unmistakable lexus is. get zero percent financing on the 2020 is 300. experience amazing

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jim, what's on mad tonight >> another one of the software service companies that's working. great to see you guys. >> see you tonight good wednesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with david faber and leslie picker. resistance around 3320 we'll see if it holds. >> that's right. our road map this hour begins with the race for a vaccine. johnson & johnson the fourth company to enter late stage trials >> nike, we're breaking down the quarter. and what really came out of

tesla's battery day yesterday and where does the stock go from here we'll have a bull and a bear next as we said, nike all-time high going back to the ipo in 1980 for more on the quarter we'll turn to our sara eisen who has forgotten more about this company than i'll ever know. >> good morning, carl. nike's comeback from the depths of the pandemic is fast and strong it's a swoosh-shaped recovery as analysts called it in a note this morning highlights of the quarter that drove the better bottom and top lines. digital sales. that was the most impressive number 82%. it was faster than last quarter when the world was locked down and stores were closed it's key because digital is about a third of all of nike's sales. it was a goal they set to reach in two and a half years from now. they got there early it's now set to be half of overall sales in the coming years and it's a good offset for

the wholesale weakness from retailers. major countries back to growth, china, germany, uk, japan, south korea, costs were down big double digits as events and sports are cancelled around the world. that's a big savings for nike and drove the bottom line up traffic is down at stores but that was partially offset by people spending more on fewer visits and the forecast was bright. nike on the conference call cfo said it expects sales to be high single digits to low double digits from a year earlier why is nike an outlier in retail it chalks it up to a strong brand and cultural resonance through marketing and innovation that's the key executives emphasizing the point that it did not slow down at all during the pandemic. examples they launched a new yoga collection and for the first time ever this quarter launched a maternity line. executives call that big growth opportunities in the women's business and kids in particular saying they are growing share

there. but nike is not immune to the pandemic if you look at the overall sales picture, they were down 1% from a year ago north america still down 2% from a year ago but those numbers were much better than the analysts expected by the way, the analysts were off the mark last quarter but in the other direction, and importantly, the numbers were better than nearly every single retailer right now >> sara, one line that jumped out to me was despite a majority of stores open in the quarter, we continue to experience year on year declines in physical retail traffic what is the example of aura that once was niketown? >> well, niketown is an example of them going direct to consumer which is where the growth is this quarter, but it is online and nike was ahead of the game and it's why they were able to have a third of the overall business coming from online. and why that's a grow to 50%

it's why they have more of an online presence than other retailers. now, interestingly, an analyst has done work on them trimming down relationships with key wholesaler stores. wholesale business used to be the thing. now they've totally shifted to direct to consumer and many of that is online and also in niketown and that's really helped prove to be a winning move during the pandemic it's set them up well because if you look at the commentary from the department stores and wholesalers, even foot lockers that had a good quarter, it's not where the growth is. it sets nike apart retail traffic, they say they're getting higher conversion rates, people going in with a strong purchasing intent and buying more even though they're going to the store fewer times because of the safety precautions. >> yeah. not to mention staying at home and everybody wearing casual wear that probably helps. sara, thank you. >> thank you >> let's move onto tesla

shares under pressure a day after the company's first-ever battery day event. phil has the highlights for us >> we've seen a couple analysts who raised their price target for tesla, but most analysts are saying battery day failed to deliver. here are some of the comments. one said battery day disappointed elevated expectations brian johnson at barclays, put us in the skeptical camp and then there's adam jonas from morgan stanley saying largely lived up to the hype but clearly didn't exceed it tesla's target they want to bring down their battery cell costs by 56% but it may take up to three years to achieve it. here is elon musk talking at the event yesterday. >> we're not getting into the business for the hell of it. it's the constraint. it's the limiting factor for rapid growth >> and that's the key.

they're going to be making their own battery cells. they explained a lot of the technology yesterday and it's in order to accelerate deliveries they did give some guidance yesterday in terms of what they expect full-year deliveries to be they said based on percentages, they may be able to hit the 500,000 target, but the low end was 480,000 vehicles q3 deliveries are next week. then we'll get a better sense of what they need to do in the fourth quarter to hit the impiebds they gave at the beginning of the year of delivering at least 500,000 vehicles this year >> phil, thank you let's continue to delve into this joining us is emanuel rosner you say you think it's a risky move that is the battery plans,

with steep execution and operational challenges give me a sense as to what you're talking act when you reference the challenges >> yeah. there are significant challenges of producing battery sales internally one of the main issues is yield. the yields on the battery cells have to be 80%, 90%. if one or two battery cells is defect ive, the entire string is defective so the battery pack is useless. and there's a linear relationship between battery packs and car production for every battery pack that's produced, one car is produced. so the battery pack is defective because of the sale that's defective. then you have to throw those battery packs out. that's -- there's a lot of challenge on the yield issue there's a lot of challenges potentially on the manufacturing cycle time the cycle times are extremely high and then also if you look at the competitive landscape, more and

more ev companies are starting to narrow the gap on the advantage that tesla has, particularly around the thermal cooling systems and the materials they use so more ev companies are using more nickel as opposed to cobalt nickel has a high energy per usage. competitors are narrowing the gap on the material side they're also narrowing the gap on the cooling system side by using certain sales. so to produce sales internally and basically bring in the battery supply chain internally, it's a lot of risk and it should not just be kind of discounted that this is going to be an easy process. >> you have a different view, emanuel. i'm curious if you want to rebut the concerns in terms of operational and execution challenges they have on the battery front. >> yeah. certainly. as you mentioned, we upgraded tesla overnight.

it's safe that what tesla is essentially planning to deliver is really what matters for deliveries for electric vehicle adoption, it's battery cost and performance. remember that tesla has been partnering with panasonic in a jv they have been producing their own cells for a while in ree no, and now they're taking it to the next level by incorporating their own manufacturing. it's a bold move it targets talking about not something that we have heard from many of the competitors certainly not the auto makers but definitely not the battery suppliers either i think they attract the best talent what's important is that this unlocks tremendously different economics for electric vehicles. this prompts mass adoption they're literally cutting the costs of batteries in half >> and also the promise that

musk made to make a 25,000 full self-driving car within three years. we've heard promises from musk before how legitimate do you think this one is >> i think you have to take everything musk says with a grain of salt. he has a historical track record of overpromising, underdelivering, missing targets. it's ambitious to get to a $25,000 vehicle. i take wit a grain of salt i think the issue in terms of sale cost is that this is according to elon musk, something that's going to happen over three years what i'm concerned about is the gross margins today, and what are the gross margins going to be like in the next three or four quarters. if you look at the recent quarter, gross margins declined, and on a year own year basis, most of the improvement was driven by the selling of ev credits, 100% margin we have not seen gross margin

improvement on the automotive side for several quarters, and if this is going to happen in three years, although it's an ambitious plan and interesting, the stock is already moving so fast and has discounted a lot of this potential good news my concern really is the gross margins over the next year or so, what are the steps to improve the margins and the valuation? >> emanuel, rauj continues to stalk about the manufacturing challenges do you believe tesla will be able to maintain the advantage, so to speak, over others in terms of all the things, whether it's lower cost vehicles and/or battery technology >> absolutely. i think the move was announced yesterday and is a reinvention of the battery manufacturing process. it's a move in-house it's unique for an you ah toe maker. and it's designed at maintaining

a two to three year lead i think withis will reboost them we haven't heard from competitors, and not this kind of ambitious cost plan i think the $25,000 car is something that is enable bid the lower cost of batteries if they're able to deliver that, then the lower cost of battery, this would be a car they can literally sell hundreds of thousands of millions of them. the economics will make more sense than a engine car. i believe what was announced yesterday is essentially a reboot of that competitive advantage and giving you another two or three years ahead of the competition. >> we'll see when it comes to autonomous there are promises years ago we would be there, and we still seem to be far from it thanks to you both, appreciate it >> thank you >> thank you wells fargo shares not moving necessarily there's a remarkable statement

from charlie scharf. >> the ceo said apologizing for what he says were quote, unquote, insensitive comments in a zoom meeting earlier this season it was reported during the meeting he said the bank had not met its diversity goals due to the quote, unquote, lack of qualified talent now, scharf now says his remarks reflected his own unconscious bias and that wells fargo has not done enough to improve inclusive initiatives. he said he's focussed on meeting the diversity goals. it's a big point here. wells fargo is one of the, if not the biggest bank employer in the country right now. a big statement coming from a ceo trying to put context around his comments >> fascinating stuff it also comes amid citi being the first to name a woman as ceo with jane frazier taking the

helm there after the break, johnson & johnson the fourth company to reach late stage trial status in the race for a vaccine more details after the break stay with us

big news j&j starts dosing the first phase three participants today meg has more >> carl, j&j saying it's starting the massive phase 3 trial after seeing positive data

from the earlier trial, a phase one, two trial we haven't seen the results. they're supposed to be posted. saying the safety and immune response supported further development. 60,000 participants in the trial across three continents enrolled in the study from age 18 and up. they say it's going to be so large in order to ensure diversity and a significant representation of people over the age of 60. now, really importantly, what differentiates this trial from the three others that have started from pfizer, moderna and astrazeneca is they're testing a single dose. the other vaccines right now are being tested in two-dose regimens we talked with a chief scientific officer this morning about how they came to the conclusion that one dose could be enough. here's what he told us >> we learned that the single dose of the vaccine could give protection very quickly within 15 days and with that, could be very useful in the emergency

use. we did a phase one study where we studied this since mid july, and we confirmed that we have a very good safety but also a very good immune response >> now, guys, they are also going to test a two-dose regimen with the uk. and they told us that's because they can go faster with a one-dose regimen and it looks to be helpful in this emergency phase when we're in a pandemic and this could help us now over a longer period of time, they want to understand the dosing best for providing long-term protection so guys, they are the fourth to get into this key trial, phase three following pfizer and moderna, and astrazeneca is on pause in the united states however, because they are just testing one dose, they're not necessarily that far behind, and they say if all goes well, they could get an emergency use authorization in early 2021 and

they will have batches of the vaccine ready at that point. >> yeah. i was going to ask you about that, meg. as far as j&j goes, single dose, larger trial, arguably easier to transport and store. how should investors think about that given the fact that pfizer usually ends up at the top of the wall street lists we see and often gets special shoutouts from the president >> pfizer is moving the fastest. they anticipate getting results from their phase 3 trial potentially by the end of october if all goes well in the study. but who gets there first doesn't necessarily matter because there are going to be limited supplies of the vaccine, and pfizer's vaccine does need to be kept at ultra cold temperatures that's going to present some challenges for distributing the vaccine. johnson & johnson emphasizing its vaccine can use existing

vaccine infrastructure it doesn't have to be kept freezing cold. that will make it easier the idea is there's limited supply of all of these for the first few months we need all of these, as many as possible to work to try to start getting everybody vaccinated who wants to be. >> and meg, it's david i mean, imagine best case scenario, i guess, but the fda will be running regulatory approvals for a number of different entrants is that a possibility? >> absolutely. they're going to convene most likely outside of a committee of advisers to meet to discuss whenever they have data and try to provide transparency and external advice to the fda about the vaccines once we see the results of the trials. they are expected to move quickly on the emergency use authorizations at the same time, of course we got that word from the washington post yesterday that this guidance on what will be

needed to give emergency use authorization might be a longer time period than some were expecting. two months worth of safety data and at least five severe infections to show how the vaccines work. that could push this into december potentially >> all right we'll keep an eye on that. you can see johnson & johnson shares up more than 1% on today's news thank you, meg now time for the etf spotlight. ticker xlp one i always remember because of my initials. barely higher despite consumers stocking up at home during the pandemic one name in the group making headlines today, general mills that is up about a quarter of a percent after posting better than expected quarterly results as demand for at-home packaged foods remain strong. the company announces a 4% hike in the quarterly dividend raising it to $0.51 per share.

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billionaire, investor ronald permen is slimming down. and we're not talking about his figure we're talking about his empire a lot of things being sold brings up to date on what's going on here. >> david, well, as you know he is one of the original corporate raiders using debt and leverage to build this huge empire.

right now ronald pearlman is a seller raising questions about how large the debt and leverage might be his net worth has fallen by half, 12 billion to 6 billion in three years. his holders company is selling many of its stakes in portfolio companies including the maker of humvees, flavors holdings and retailmenot. on the personal side he's quietly shopping one of his private jets, his yacht and parts of his massive art collection now valued at over $1 billion. auctioning off one for $1 million and one about to come up for sale for $18 million bankers say he has a series of loans from citi group and jpm and other banks. shares of revlon have fallen by

over 70% just this year. and the company has about $3 billion in debt. now, pearlman is saying this is all a planned downsizing in response to covid-19 in what he calls an unprecedented economic environment. he said i have been public about my intention to reduce leverage and convert to cash in order to seek new investment opportunities. him saying here this isn't just about getting rid of stuff to pay pack debt. this is also about building up cash to look for opportunities in this market back to you. >> yeah. but it's gotten people's attention. i was looking back at one of my notebooks here from quite a while ago, earlier this summer i have he's liquidating everything, home, art, yacht i didn't follow up on it is it more than what he's saying but is it just being prudent

>> there's nothing to believe this is beyond just being prudent. he's the ultimate financial street fighter as you know from covering deals it's creative about leverage and uses of capital. he says during the co-vid time he's learned to focus on what's important to him like many of us and he wants to clean house and downsize i think that's a lot of it but debt maturities are coming due in october and november. then we'll start to see how much debt he has and how he's going to make the payments. >> homes, not quite a priority during this co-vid era robert, thank you for staying on the story. after the break, wynn, las vegas sands and mgm resorts, a few getting crushed this year. down more than 30% we'll get reaction from a gaming eagnet on the back of this brk. back in two minutes. what do you look for when you trade?

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good morning, everybody. here's your cnbc news update at this hour. j justice ruth bader ginsburg returned to the supreme court for a final time her casket was carried up the steps. a private service is underway. the public viewing of the casket will begin in about 30 minutes in houston the rain is stopping but flooding from a tropical storm remains a danger. local officials are urging people to stay off the roads until the waters recede. the nfl handing out more fines for coaches not wearing masks during a game. the las vegas raiders, new orleans saints and their head coaches have been fined a total of 7 $00,000 in australia, hundreds of stranded whales as another group of about 200 beached whales has been found

many are believed to be dead rescuers have freed 25 whales since monday those efforts continue you're up to date. that's the news update this hour >> wow those pictures, and the numbers. only 25 saved? >> it's because they are so large, and they apparently -- we don't know why they are beaching themselves, but as soon as they get into open waters, they turn again and go toward the sand bars so it's a very difficult story it really is >> gosh, well, thank you thanks for sharing that with us. moving on, a rare interview, real estate developer casino owner neil bloom joins us in a cnbc interactive his company going live via spac. thank you for joining us we've talked a lot about the spac route versus the strategic acquisition route. why did you choose the spac

route to become a public company? >> we thought it would give us quicker access with less things we had to worry about. we hoped to get public later this year which we couldn't have done as fast otherwise if we had just done an initial ipo >> and quicker access, why was that necessary is it the capital, the competition with draft kings when you saw what they were doing with the reverse merger? >> part of it is the cap can tall so let me explain. we started our rsi seven years ago. we developed regional casinos. we were a leading developer of that that business was very good until co-vid arrived we opened up recently but were closed down for a long time.

but the best opportunity we saw seven years ago was internet gaming internet gaming involves two different features, sport betting you hear about that all the time then the online casino where you offer slots, table games, blackjack on the internet. this may surprise you, but the predictions are that the online casino market will ultimately be almost 50% bigger than sport betting. and we have the number one market share for online casino revenue in the united states most states started with sport betting but are considering online casinos because the states need more revenue, and they realize the growth of

online entertainment at home also states that allow both have found so far that the casino revenue far exceeds the sport betting revenue. also the customers are different. sport betting appeals largely to males. online casino is 50% female. we're currently operating online in five states pennsylvania has online casino new york which is only retail. so we're not online yet. illinois which is just sport betting and new jersey which is both we expect -- >> apologies you bring up a really important point which is the fact that amid this crisis, states are becoming increasingly strapped for revenue.

turning more toward new sources potentially opening the door for online gaming, online sports betting. what are you hearing on the regulatory front you're operating in five states. what's the future look like with regard to improving the regulatory picture for interactive amid the rest of the country in. >> well, we're seeing it -- we're seeing many states that had not considered online casino, but are only allowing sport betting to start thinking about permitting online casino and some of the new states coming on are allowing -- are likely to allow online casino. michigan should be legalized by the end of the year or early next year is going to allow both online casino and online sport betting. pennsylvania allows both, and new jersey allows both

>> when it comes to what is now your significant market share in this online gaming area, i wonder what keeps competitors from coming at you what sort of is your, so to speak, mote, if you have one at all? >> well, look, we have competitors coming after us. we come after them that's a very competitive field. but number one, we think that our platform is well designed which we build ourselves to penetrate strongly into the online casino side remember, we have been building and operating casinos which didn't allow sport betting for many years and most importantly is that we appeal to women and half of our customers are women, and as you know, the women represent slightly more than half of the people, and they control a lot of wealth, so we think we're well positioned to grow rapidly

in a better business than the sport betting because people spend more time on online casino than they do on sport betting. >> yeah. and even when we have a return to normalcy and people can feel more comfortable going in person to do these things, do you believe that you will continue to see this level of activity or a greater level of activity? >> well, i think it's going to continue to grow obviously there will be less need to necessarily do something on the internet when you can go on site, but the casinos have opened for the last two or three months, and people have that option and business has been pretty good at the casinos as i mentioned. relatively speaking. not as good as last year but over the long-term, i think the internet is going to grow. let me give you an example we have been in the retail real estate business. that's how i got started and we did -- we ran one of the

most successful reits in shopping centers with high sales per foot in 2000 we decided to sell that company because we were nervous about the internet for the first few years we thought maybe we made a mistake. even though our shareholders had a very high return after a few years we realized we made a right decision. the internet is powerful and having internet casinos and sport betting, i think, is a great growth industry, and we're enthusiastic about it. our revenue is growing enormously fast. >> one area the internet cannot replace is hospitality and tourism. you own the ritz-carlton in chicago. the ritz operating at about a 25% capacity four seasons shut down what do you see the outlook for

the hospitality industry when do you see tourism coming back to levels we saw last year? >> well, we're going to have to have a vaccine, and people are going to feel comfortable to start flying and traveling now, the hospitality industry is getting crushed now, but i think the first properties it will do better will be the resorts because people will want to travel and have fun again, and everybody is looking forward to that the business hotels will be slower to come back because you have a real question of whether you have to travel as much in business as opposed to doing things on the internet but long-term, it will come back today the industry is in enormous distress, and there may well be some opportunities over the next year or two >> so are you putting money to work, then >> we haven't yet, but we will

start to we are developing some major office buildings and that market has held up much better there's a very interesting dynamic. do you think there's going to be more demand for office buildings because the tenants bought more space or do you think there will be less because they won't need as much space because some of the employees will be working from home? i think it will be a bit of both, but the good office buildings are doing good but the ones with weaker tenants are suffering because the tenants going bust or not paying their rent or even moving out. but we have buildings in century city we're planning on building a new one, and we're at 98% occupancy and our ten nants are all paying, but those are mainly major companies so they're very financially strong >> yeah. i wonder on that front, can you really expect there to be growth and a need for space you just said the debate we don't know what percentage of

a company's employees will remain remote when things get back to normal because they see the productivity and the ability to save some money coupled with maybe people want to be further away where do you come down on that >> well, it depends on the market the market i mentioned century city is very tight so we think that we will find new tem nanants. we signed a lease for a new building we're developing in atlanta for 300,000 feet the company is in the tech business and expanding rapidly, and they needed to move because they needed more space and a new building so we're building a 45,000 square foot building and have a financially strong tenant for over 300,000 feet. again, not every market and not every building is the same

but real estate is not a fad, and long-term it will be a good business, but it's going through bumpy difficult times now. >> outside of real estate and online gaming circlings, you're well-known as a donor to the democratic party you've supported barack obama, joe biden. as we look ahead over the next couple weeks, what would you think a biden presidency might mean for real estate, for online gaming? what are you looking for in november? >> let me start out by saying i'm a great believer in america. i never sell america short whoever the president is, long-term, i think this country will prosper i think the biden presidency will be more moderate than some people think because he has been a moderate he will raise some taxes, but i don't think it will be excessive. and i think that the country

will prosper with joe biden as the president. >> all right we will see what happens just weeks away now neil, thank you so much for joining us in a rare interview nice to hear from you. >> thank you as we go to break, lithium companies getting hit hard after tesla announced plans to extract its own lithium for batteries. one of the worst performers on the s&p today. other players in the space showing some declines. speaking of declines, the dow session high was plus 176. that's gone. as the s&p is trying to hang onto 3300. that's what my dad does.

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welcome back to "squawk on the street." stocks have lost some of their steam this morning the dow was up about 176 points at the high of the session most are in negative territory led by declines in energy. right now the worst performing sector off 1.5%. among the relative outperformers on the day, a recently beaten up sector, financials a welcome change for that sector under pressure for several weeks at this point, pretty much all year within that group it's the regional banks showing strength. one of those etfs attracts the names that ticker kre, is poised for the first positive day in five

it's also worth noting the broader banking etf, kbe is up 1% an industry we'll keep an eye on erth key financial moves the's more "squawk on the street" after the break. keep it right here yeah, that's half the fun of a new house. seeing what people left behind in the attic. well, saving on homeowners insurance with geico's help was pretty fun too. ahhhh, it's a tiny dancer.

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geico could help you save ♪ you can go your own way ♪ go your own way your wireless. your rules. only xfinity mobile lets you choose shared data, unlimited or a mix of each. and switch anytime so you only pay for the data you need. switch and save up to $400 a year on your wireless bill. with the carrier rated #1 in customer satisfaction. call, click, or visit your local xfinity store today. business round table publishing the quarterly ceo economic outlook survey. we have the details. >> yeah. david, that's right. we're getting an early peek at the economic outlook survey released in the next hour or so. it shows the k-shaped recovery people have been talking about look at expectations for the

virus recovery according to business round table poll of ceos you see 24% of ceos said their business never declined or will recover by the end of this year. a big group in the middle, 40% say conditions for them will recover in 2021 and then there's the group that's been the hardest hit, 36% say business conditions will recover in 2022 or later now, there's some optimism on sales expectations with about 57% of ceos expecting an increase, 22% expecting no change and 21% seeing a decrease over the next six months in terms of the sales expectation a softer picture on capital spending with 32% expecting increase 45% seeing no change and 23% expecting a decrease in capital spending similarly, it's a soft picture on hiring with 31% expecting to increase hiring. 34% expecting no change. and 34% expecting a decrease in

hiring so, overall, not a great picture on some of those areas where companies spend money, but companies are expecting to bring in a little bit more money in terms of the sales picture leslie, back over to you. >> we'll take that overall little more optimistic even if just incrementally at this point. thank you. turning back over to nike speaking of consumer spending the company seeing online sales grow by a massive 82%. let's break down the numbers with brian neighle and john kernen guys, thanks for joining us. so digital is a big part of this story, brian how much of this boost is id owe sin cattic to nike versus just this big overall digital push across retailers and exercise in particular >> well, look, i think that's a great question i think it's a combination what i would be telling our clients is what really encourages me here with nike, a company over the past several years has made significant

investment to boost their digital capability covid crisis happened and nike is able to with stand these head winds extraordinarily well because of the investments they made clearly we're seeing this dynamic elsewhere in the consumer economy but look, i think this is a testament to the improved digital capabilities that nike and how they can better connect with their core consumers. >> john, pretty recently the fall of last year nike came out and said they were no longer going to sell their products on amazon in particular so is this an example of direct to consumer play that works in internet or with regard to consumer internet? how do you think this example can be extrapolated to other retailers that are looking to make the same pivot? >> yeah, sure. i think ecom up 83% shows you the digital transformation here is taking hold

the digital gross margin from their direct business is 10 percentage points higher than that of their wholesale partners like amazon where they sell to them on a wholesale basis. they're calling on differentiated retail partners those partners are being in call of favor of key strategic differentiated partners. but the focus is nike's digital directly operated business the economics of that business and as they go more direct and digital becomes 50% of sales versus 30% of sales now, you're going to get a massive inflection in sales and profit >> brian, you know, with nike i always think to shoe dog, the great memoir by phil knight asked a long time about the appeal of china as a market. and his answer was, well, there are 2 billion feet, basically you do the math. how much of that still makes sense if or when u.s./china relations truly break down, if that ever does happen? how much insulation is there

>> well, look, i think china is clearly a big focus for them look at the result of the report last night, china was a bright spot for nike given the overall relatively strong sales growth i think what nike has done really well here and we have seen evidence of this for a while is that nike has built in china what appears to be a local brand. so again, we'll see. obviously it's extraordinarily fluid situation, the u.s. and china relations broadly, but in periods where relations were not as good in recent periods, nike outperformed or performed better than other american consumer brands in the market so again, i think the real key here is nike created in china what seems to be like a local brand or perform like a local brand. >> john, sarahizen was on earlier in the hour and she said in this quarter analysts undershot estimates. the prior quarter analysts may have overshot. what are you expecting for the

fourth quarter in terms of nike earnings, especially as it relates to some of the inconsistencies this year? >> yeah. i wouldn't really call them inconsistencies. i think something that caught analysts by surprise in the quarter that they reported last night is nike's sgna came down the new ceo is making it clear there's overhead coming out of this business that's going to make the long-term margin structure of the business higher and i think when you look at the guidance they gave for sg & a dollars to be flat year over year that's incredible given the acceleration they have in sales in their second and third and fourth quarter which captures holiday season so i think look for very disciplinary management and sales and surprise the upside in gross margin on the back half of the year. >> brian, you have a price target of the 125, stock at 126.81 you plan to update that? >> well, i will answer is i look

at all -- i'm constantly reviewing all of our recommendations. we've been recommending -- we have an outperformed rating of buy. nike is labeled top pick within our oppenheim infrastructure the price something we'll be reviewing. > we'll keep an eye out for that brian, john, thank you both for joining us. >> thank you. >> thank you ♪ as we said a few moments ago, the dow did lose pretty nice bounce at the open of 175 points s&p has managed to see some chop between say 32.95 and 33.20. somewhere the middle right now as beginning to get some headlines from powell day two on the hill. coming up on "squawk alley" chief designer of tesla roadster battery will tell us what we got wee ckstda 'rba in two minutes. makes it beautiful. state-of-the-art technology makes it brilliant. the visionary lexus nx. lease the 2020 nx 300 for $339 a month for 36 months.

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good morning it's 8:00 a.m. at tesla headquarters in freemont, california 11:00 a.m. on wall street and "squawk alley" slooif. ♪ ♪ ♪ hey, good wednesday morning, everybody. welcome to "squawk alley" i'm carl quintanilla with deirdra

bosa a ton of news which we'll try to handle during the course of the hour we'll start with tesla as the stock is under pressure following battery day yesterday as elon musk attended yesterday to perhaps under promise early tesla investor ib ram joins us to process the news we did get and maybe to some degree the stock's reaction on the near-term news and the prospect of longer-term news. what was your take away? >> good morning, carl. good to be back. so, yeah, it was an underwhelming announcement a lot of expectation for the stock and the technology they were going to announce and really if you boil it down what the announcement was, it was that there's a promising technological breakthrough that may or may not happen between now and the next three years if all these 19 stars align and i think the market was expecting something immediate and something transformative and i so appreciat