gradually compress >> okay. henry blodget, good to see you have a good weekend, my friend >> you too. >> quick look at the markets you're looking at the dow up, green arrows across the board. join us next week. have a good weekend. "squawk on the street" begins right now. good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber futures are up as the dow looks to wipe out its september losses at the open. stimulus hopes are still alive new covid cases break above 50k for first time since august. chip m&a, that's where our road map begins a many d repo amd in talks with xilinx. >> and stimulus confusion, now asking for a big deal. speaker pelosi and treasury

secretary mnuchin resuming talks and as carl just said, stocks are set to rally at the open despite ongoing fears, where are the opportunities for investors? we're going to have a look at the sectors and the stocks that could still be poised for growth in this ongoing and still a covid market as we say, carl, with cases at highs in many states >> yeah. indeed though, jim, although there is a lot going on this morning, got to start with the chip story you made the wires by suggesting that xilinx may not be ready to sell. >> i had the ceo on in august, he's so excited about all the new markets that he's going into he's talking about video, live video streaming he's coming into, auto exposure. the problem is every one of those dove tails perfectly with advanced micro i can see the ceo saying all the areas we need to be strong in, xilinx can give it to us

i also see that victor, when he was on, was saying, this is new for us, we're just doing this. this is not like when altera was going to be sold to intel. i think if lisa sue wants to do it, she has to be careful not to overpay because as great as xilinx is, i think xilinx is terrific, they really think they're on the launching pad and, david, you know, when a ceo just now feels like, you know what, it is really coming together, they're usually reluctant when they see the prize to give it up. >> they are. if they really do think that's going to be something that is within their grasp, you're right. it would be potentially cash and stock. i think, jim, it is fair to say. given amd's incredible move in terms of the stock price up 89% this year, it is not a bad time to use your currency i don't have any information in terms of what a mix might look like or what the offer exactly is but, jim to that point, you would have an opportunity as a xilinx share holder to

participate in the benefits of the combination were to include a good amount of stock, which it might. there has been chatter around. i picked it up, that amd was looking. are you surprised that they are looking for potentially a large deal, even if they are unable to complete this one? >> look at -- i have marvel technology on last night and what did they decide to do they pivoted dramatically, decided to be in data center, in cloud, and decided to be in auto and xp last night, preannounces. why? they are going to kill it in auto so you need a live video, which amd doesn't have you need auto, which amd doesn't have they want to get bigger in the cloud. they're already big, but at the same time terrific to team up with xilinx. it fills a lot of holes for what lisa sue has built but at the same time, she is a huge positive steward of her company's stock and money.

so if xi lilinx wants a fortuned they're depressed becauses they switched their model and hurt by chi china, if she has to overpay, she won't. >> we'll see i have no reporting on exactly what price expectations if there are any at xilinx might be there has got to be certainly some concern about regulatory. these deals can take a long time, were it to actually get announced and then move through the process. they need china antitrust approval as well both businesses have a decent amount of revenue. so that is not something that comes easily as we know. and certainly can always inject a good deal of uncertainty into any transaction. >> yeah. i mean, look, i think that she will have to pay more than where xilinx is trading now. the only problem there is that if she doesn't buy it, there is no assurances xilinx will have a great quarter. the last quarter is pretty good. they're not hitting it the way

nxp or marvel is hitting it. they're too nascent in so many of their initiatives they were big 5g and the big defense. mr. peng has not furthered those. he's got numbers that -- cloud automobile, he's really interesting in that high performance computing, hpc, very interested in doing that but he's so nascent, that's why i say, you know, wired and wireless up 27% subsequentially, latest quarter but down 33% year over year, david. it is not like you're buying a perfect company. but then again, perfect, the stock would be at 150. >> right a lot of analysts, i would say, mixed, mixed to somewhat positive, jim. in terms of their take on this potential union or purchase. >> they underestimated lisa su at every turn. >> they have you have not that move in that -- >> i appreciate that. >> you should. i call it like i see it. i tell you when you screw up

this one, you've been dead right for a long time. >> thank you look, lisa is the one who -- dr. su taught me >> funny, we both met her at the same time. she sort of was introducing herself and you somehow just kind of latched on >> she's also from where my wife is -- she's from -- >> she's from where i'm from we had that in common. overall we are -- there seems to be a desire broadly speaking when it comes to mergers and acquisitions for companies, it is funny to yifunny, to get stu before the end of the year it used to be a mantra and fell by the way side. it is a calendar change. this year, conceivably there will be a lot of changes come january. it is possible so there is that also. get stuff announced, if you can in the next couple of months. >> is that because they -- people believe that a biden antitrust, to say, why do we reject everything? >> unclear but, you know, why take the chance

i don't necessarily believe that would be as we discussed so many times over the last few years, there is a high level of unpredictability in terms of antitrust under the trump administration it has been hard to sort of get exact road map even though most people would think on a republican administration there would be more leniency, but that hasn't always been the case. and some of the cases that have been brought have been curious and others haven't i think, yeah, there is a sense there is going to be so many potential changes if in fact there was a change in the occupant at the white house, why not try to get something announced. >> the deals worked. take a look at nxpi. had they gotten qualcomm, gotten nxpi. >> 127.50? >> preannouncement autos are so back. i don't know why people don't understand that autos are back they look at the stock of gm or tesla. look at the parts. they are phenomenal. look at the actual numbers from lithium, group one no one knows lithium my daughter lived in lithia, it

is a town in oakland no one can figure out these things if you are in the market for a used car, you're going to pay more take a look at those prices for the ford 150, 2019 ford 150 with 30,000 miles on it, david, you would never be able to just buy it online. >> i already took care might have used car, carl, thankfully. >> it you use carvana? >> no. i looked because it is -- it is a great way to price compare to make sure you understand. >> you bought something? >> a while ago needed a second car, right >> periodically you buy things this is the bull market and what people don't recognize is that it is -- it does not need stimulus t has l stimulus it has low interest rates and it has people that need a car because they're no longer commuting and why buy a new car.

>> we'll get to the stimulus in a minute, jim. i was looking at the list of upside q3 preannouncements in past few days. you mentioned nxpi but bsaf, ppg, in terms of car and kb home and big lots and pandora and mcdonald's and nordisk. is that setting us up for a good q3 what does that mean for q3 >> people talk about mcdonald's having double digits in september. double digits. oreo mcflurry is good. >> are you in favor of stimulus or not all you've been saying is we need it and then i hear you saying, oh, i don't know. >> there are two markets there is what we trade and then there is the 14 million people who have no job because it is not their fault for companies that were often wiped out by the companies doing well new >> you still do -- you think we

do need aid? >> let me put it this way, if you were in favor of people, living people, of course if you are a heartless capitalist, who doesn't care about anything other than making money, you don't need no stinking stimulus. >> creative destruction? >> there is, what, a group of people who are 50% of our wealth in this country? >> yeah. >> i would keep the stimulus away from them if you want to target people who are about to have restaurants that are too cold to go to, and they work at a restaurant, why not? if we're this close to a vaccine, david, if we're this close it a vaccine and the president took a couple -- took two regeneron and he's back, we can have a bridge to the vaccine. so let's just give those people some stimulus. but then again, david, if you're trading lithia motors or group 1, you're not looking for stimulus those are senator mitch mcconnell stocks i should call them the mcconnell stocks that's what he's looking at.

or he did mouth he needed some stimulus, but there are people called unemployed and their numbers are staggering and you can find them, you can find them first of the month, find them on thursday. it is a staggering number of people who don't have jobs. >> 840,000 the other day, right? >> that doesn't mean you can't go buy norfolk southern. >> right. >> you think there is probably more people riding on top of norfolk southern trying to get to a market where they can find a job. >> doesn't mean you can't buy shares of microsoft, which i point out because, carl, there are reports that they're telling employees they don't have to come back to the office ever which, by the way, go backs to what we're talking about, jim, the restaurants that service office workers, just think about all the different industries that rely on people going to buildings. >> so if you have double digit gains, for mcdonald's, in the month of september, do we just presume that everyone who ever went to -- everyone decided they like blueberry muffins or the

local designer is closed. >> i think that's exactly the point, jim i mean, the breakfast trends at mcdonald's used to be a macro economic tell. the number of people on their way to work who need to get something to eat, but now it is a share shift. and that is a -- it is not at all indicative of what employment may be in terms of going to an office >> i had domino's pizza on last night. they're growing double digit well, is that just because the whole country decided they like that new cheeseburger pizza? and changing wings no it is because your local pizza parlor cannot deliver in 20 minutes, cannot use contactless, does not put it on a pedestal when it comes and still needs millennials to talk to them. and millennials have no desire to speak they hate speaking and gen-x, it is all artificial intelligence, just -- >> they don't text each other. they don't use text.

they snap or they do other stuff. >> they snap >> yeah. >> anyway, carl, you're looking at domino's pizza, you should be thinking about the pizza parlor wiped out, it is not going to get any help because the two parts of -- the republicans and democrats are so angry at each other that the person that delivers pizza is out. casualty of the times, carl. casualty >> yeah. >> not the stock market. >> we got a lot of calls to get to today on axp and amazon and nvidia, way fair and others. and we'll get to what politico is taking about stimulus talks that the white house is set on a deal and is willing to work all next week. what does that mean for mcconnell and thsete 'lta authat after the break. tax-smart investing, what's new? -audrey's expecting... -twins! ♪ we'd be closer to the twins. change in plans. at fidelity, a change in plans is always part of the plan.

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gilead up releasing data from remdesivir, shows the drug did cut recovery time by five days, compared to patients who got the placebo. earlier this morning on "squawk "squawk," they talked to meg tirrell about the study and how it showed a reduction in deaths. >> very importantly it reduced the number of people who died by 70% and the largest subgroup of patients, those receiving oxygen this is important information for doctors, for patients, that are stricken with this disease >> and as scott gottlieb made the point, jim, this morning on "squawk," gilead does not have some supply constraints that

regeneron or lilly have. >> this is a great reminder of everything about this, because it is a novel illness. you'll hear something. it is not peer review. it fell because then we heard that it wasn't that good, and the peer review indicated it only saved a day further studies and the longer term study, more accurate, gives a much more positive picture so we have to be very careful, whether we talk about whether tennessee titan test positive and they don't test and then test positive again, whether gilead's really working, whether regeneron is as strong as it is versus the whole -- that they're presenting we have to remember when we report on these things, meg tirrell does a good job and so does scott gottlieb, you report these things, first blush is almost always wrong. it is just the way it is because nobody knows anything about how the things work. the same thing the first blush

of don't wear mafb masks, it cae transmitted if you're asymptomatic, you know this, the misinformation, but it is not really any intentional about everything with this disease has been incredible. >> right but to your point, it is novel and we always have been learning and thankfully think of what we just -- in so many ways what we thought six, serven months ago and what we feel now, the way to treat it, to prevent it from spreading and so many different things, we come back to it remdesivir is something that seems effective in keeping people from dying once they get to a not great place it is worth pointing out the president, of course, is probably the only person who actually had the monoclonal antibody from -- >> you think he got special treatment because he's president? >> and remdesivir which he took early and the steroids and it seems to have worked very well. >> i think, carl, one thing that i think people should recognize at home is regeneron has already agreed to be compensated for

the -- for 200,000 so the idea that people take -- i like regeneron for other drugs, but the idea to buy the stock of regeneron for something already paid for and giving away beyond that, it is -- it is just not that -- it is ill advised. and that's what happened to gilead, gilead wasn't making any money initially. let's be careful buy regeneron it has other drugs making a lot of money. buy eli lilly, other drugs that are making a lot of money. that's why you buy a drug stock. not because of anything involving this disease, because these companies are trying not to make a lot of money on this they want to do what's right or they take warped speed money and the republic is wrong about this >> as we, again, as we head very closely to the election, drug prices have always been an issue, do you think that the performance of our drug companies and the innovation they have been able to show in combatting this virus is going to help them in sort of the public battle in terms of drug

prices and whatever might come their way? have they at least sort of showed their value in some fashion? >> universally thinking that their stocks will be much higher for an election year because of so many things they're doing, they're very suspect they're very defensive you get them offline, they're, like what more do we have to do? we're proving we have never done this before, we're pulling our resources, we're pulling from all sorts of programs, and people do not give us credit because in the end, people fear that if biden gets in, he will negotiate much more tough, the president, there is a wild card, he also says the drug prices is too high it is not unlike, remember, when president clinton stood in front of merck, in new jersey, and belittled that company, saying that prices have to come down, it was shocking because the doctor, works at regeneron, overseas, but it was an amazing

moment in history that he went in front of merck. pri >> prices have never come down >> speaking of reality, jim, pfizer today faced three trial on a breast cancer treatment, failed to meet the end point we're not drawing conclusions about covid, but that's a reminder that phase threes don't always work out. they justdon't. >> absolutely, carl. that's a good -- i think you could ascribe a lot of people bought lilly yesterday because of their one not cocktail but one antibody but this is much better. this is why you buy lilly. but people -- it is also why you buy seattle genetics people are so infatuated with taking a couple of regeneron i'm being -- the president was taking regeneron he made it sound like aspirin. it is the name of the company. it is easier than saying i had a

cocktail, i had a couple of cocktails. that sounds really bad. >> call me in the morning. had an upset stomach, take a regeneron. let's give him credit he didn't say he took a couple of cocktails. >> s&p not far behind. we're back after a couple of moments. 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. it's smarter trading technology for smarter trading decisions. fidelity.

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let's get in a mad dash. we're one day out from when ibm said it is splitting itself up we don't know the name of new co. yesterdt, but it is worth t another look at it. >> i prefer to look at what katy huberty has to say, step in the right direction. that's the theme from the analysts i speak to. step in the right direction because they're divesting a declining business so you'll have one business that is growing, it could grow 15, could grow stronger than that, it represents a way to connect the hybrid cloud to what you do. now, hybrid cloud means you're not just using ibm's cloud, use amazon's cloud, it is -- that's the whitehurst business, that's red hat. so you'll be buying red hat, basically, and some other things, but arvind krishna wants that, that's the fast grower they offload this global technical services, managed infrastructure services, that's not been doing well.

we don't know the balance sheet. we don't know where the debt is. and therefore it is very hard to model, so i think a lot of the analysts want to really get behind this, but they need to know more and you're absolutely right, you say it is a 2022. it is not -- i was a little -- a little curious they called it new co., they hadn't thought enough to name it. >> leadership. i think i agree. i wondered if it was rushed, is there a reason why they -- i don't know made some people curious as to why that was not part of sort of the plan and whether it was -- an activist there, i doubt it but you never know. >> i did think it was -- i agree with the analyst, a step in the right direction. but if you don't have more, carl, you can't make a decision about it, but it is cheap. it is cheap stock. especially if they have this kind of red hat-like business which i love whitehurst is there doing a

great job. >> all right guys, a few moments away from the opening bell here, final one of the week, of course, bond market will get a long weekend for columbus day on monday and we'll see if some of these gains can hold, jim, we mentioned the political piece this morning that the white house is set on continuing talks all through next week if necessary. axios last night reporting that the president was spooked by the market drop when he tweeted calls -- that talks were called off. i don't know, it still leads you to the same place what can the senate pass? >> look, the senate is very much the kind of bull markets that are they're watching the bull markets i talked about last night, i say bull markets, i mean, hey, listen, if housing is great and housing has a lot of derivatives including retail and autos are coming back and strength in the chemicals, we got strength in the -- they don't get that granular, but there -- there is a lot of strength among public companies,

it is very easy if you're a senator from florida, and two republican senators to say, what the heck, we have got commerce is coming back, small business is coming back, that's something we learned from paychecks and i've seen -- there is not enough to warrant it, i say, well, the stock market is a terrible tell for what is happening in hospitality, leisure, look at the airline numbers. people are still not flying, i was looking at an airline, a delta, and they were very excited that 30%, now 30%. my daughter flew to spain, on a giant plane, one of the -- the handful of people, most people don't want to go to madrid, you know that, madrid is not -- madrid is making a comeback. >> state of emergency on monday. >> numbers were surging again in europe, right? >> what do you make of that? >> what do i make of it? >> i'm asking -- is that -- >> it is not good. it is not good now to be fair, the numbers are

still far below what we're putting up, but that are a lot worse than they had been >> i wouldn't go to france right now. france is pretty explosive. >> where would you go, jim >> mexico, where there is absolutely -- we now have no quarantine, getting much, much better. >> canada. >> canada, if they take us but the borders of canada are filled with cities that have almost no covid, that are adjoined to states where covid is exploding so, carl -- >> they don't take us? we can't still -- i don't know where we are in terms of where we're allowed to go. >> where can you go if you're from new york. nobody knows anything. we need papers we need papers, carl let me see your papers >> right, right. just like sam neill in "red october" no papers. we got field hospitals getting set up in wisconsin. you got hospitalizations, you got to go back to early september to see hospitalization numbers. florida, most new cases in a

month. doesn't seem like that calculus is being incorporated. texas going to 50% on bars. >> bars are where you get it sitting around, talking and drinking, you're very close, you're having a great time operation covid. really that's where you get it. and, by the way, if you talk to the people who run wynn, you know he's done more, he's done more to analyze the situation than anyone in the whole country, but because we're so fragmented, whatever happens in nevada stays in nevada it really is -- we're kind of a nutty country. like if nebraska declared war against japan, oklahoma is going against germany. we have 50 different plans because the president loves that kind of -- like apprentice thing, i was a judge, hey, you know what, nebraska is -- no, they're out. >> what is it that lincoln said about a house divided. >> a house divided is dynamite for an election. isn't that what he said? >> that is what he said.

dynamite >> dynamite. yeah huge >> going to work every time. >> it is huge. you know, you speak to wynn, you speak to maddox, we brought in johns hopkins, johns hopkins cannot be bought david, you can't buy johns hopkins. >> no. >> bloomberg tried >> no, yeah. brought in georgetown, this guy has come up, he has figured out air ventilation better than anyone the other guys haven't figured out anything wisconsin was the first place, they opened, on twitter, people said, jim, if you want to know how a bar works, you come to our bars and there were lines to get into bars. well, you know what happens when you line up, what happens when you have 62,000 yahoos going to miami dolphin game not only will they see the dolphins lose, but they could get covid. >> although i have to imagine you were happy with foles over brady last night, even though brady wouldn't shake hands >> brady going for the fifth down odd -- looking for the fifth

down there brady was very disoriented, i thought. and foles was very super bowl-like. foles is not, you know, foles is -- he doesn't win anything with his feet. he's just a steady guy what the heck was with gronk he disappeared gronk. >> all right, back to stocks >> gronk is a -- >> i know who he is, yeah. >> you do not. >> great tight end we're showing the video now. >> titans and bills tuesday, right, jim >> that's all about bioreference labs if they clear that game, they're going. you don't understand, there are -- you need -- you do this pcr stuff, they're now testing seven days because the nfl figured it out, we don't have a bubble like the nba, but if we test them constantly, they won't be so stupid like the titans do in that little kind of -- during the week >> a lot of titans who are tested positive. >> forget the titans >> okay. >> that's an illusion to a

movie. >> i know. "remember the titans". >> that was the joke >> i got it. i got it carl, you mentioned ge earlier, we should mense the stotion the up on the goldman sachs -- >> did you read that, david? >> industrials reinstate, they reinstate ge to buy, safe to go to 10. >> you know what is crucial about that piece >> what? >> the vaccine you have the vaccine, carl you have the vaccine. >> levered story in industrials. >> airline traffic, health, some sort of power, self-help power larry culp doing much better did a reorganization, looks look a lot of people are gone the problem there is they -- they need areao space to come back >> and speaking, and right in that lane, jim, axp is

downgraded by susquehanna on the same very dynamic. lines, lodging, retail. >> travel and leisure, people using their debit card more than their credit card. look at the stock it barely down why? people understand that the ceo, he's just -- he's very good. and he can pivot he can make this thing happen. by the way, i mean, everyone my age still has an american express card but youth, they had a youth movement there. >> the youths. >> the youth, they like american express. >> they do >> i know. that was a movie reference too "my cousin vinny" i was mentioning ge, it seems look you're always best off as a buyer of a ge business they sold at danaher if you look at dhr -- >> i can't my travel trust sold it. >> you sold danaher? 60 billion in market value,

that's more than ge's market value since they bought the business. >> they didn't pants ge because you know where larry culp is from >> they didn't they didn't. >> larry culp, the ceo of ge, who i think doing a remarkable job does. >> look at the move in that stock. danaher, thermofisher, those are the two companies that make so much of the equipment that we need for biotech thermofisher makes pcr, pcr is the equipment, have a little company on tonight that has a handheld pcr machine prc machines the size of a sofa. >> i didn't know that. >> of a sofa. >> they reduced it down. >> it is one and done. you can -- i would say 53 players on the football team, you can have them all tested at the exact same time. no machine that can do that. so it will come in, sunday morning, everybody will get tested, they throw away the machine after and we will find out whether people are titans or whether they are every other

team the nfl, i think the next thing you should forfeit you got another one, you forf t forfeit. >> is that three strikes yeah >> it is a $5 billion business >> it is a huge business >> bigger than u.s. steel. >> it is not hard to be bigger than u.s. steel. >> u.s. steel still trading? >> it is not that hard to be bigger than exxonmobil that is the subject of today's faber report. >> faber report on exxonmobil? up 1.80 yesterday. >> it was up a lot look at the performance. look at the performance of the stock this week, exxonmobil, you'll see it moved up sharply that's just this week. yesterday as jim points up, up over 4%. a lot of chatter about activism and exxonmobil that's what i want to talk about here whether or not we'll see an activist emerge there, i think it remains unclear i do know that, you know, a number of people in that industry in terms of, well, both firms and then who you hire in terms of lawyers, when you look at things, you want to make sure you review all sorts of things in terms of the company's bylaws

doesn't mean they're going to show up. doesn't mean anybody will show up here. there has been rumblings about it for some time now i do know at least a couple of firms that have been looking at it, doesn't mean they'll make their move why? any number of reasons why you wouldn't make the move, what would be the argument for doing it, jim? we have been talking about it a bit lately you got a dividend yield that is 10%. a question there as to whether or not you could do things that would improve free cash flow, by cutting capex and in some fashion or cutting things from maintenance. paying down debt and protecting the dividend really what it does come back to is the idea it underperformed, chevron, which is your favorite to the extent you have a favorite, you said it is uninvestable, and you can take a look at exxonmobil versus chevron over time. chevron has greatly outperformed, both have underperformed the s&p over any given period of time there it is. exxonmobil down 45%, chevron down 10%

that's over ten years. look at the performance and the s&p. you can understand where there may be frustration a lot of this has do with the movement in the underlying commodity. that's the key risk for any activist that would take a shot at this, not just the size, not just the tenacity of exxon and its executives who operated in some of the most dangerous parts of the world and probably aren't particularly afraid of any said activist, but also you can get it right on all the capital allocation fronts. so to speak, and still get it wrong on the commodity and end up a loser what would you do if you wanted to do this you would probably short chevron and go long exxon and be arguing exxon will start to thactually inflate up because it will be rewarded by the market for doing more things properly. >> you short the company with growth and vision and a great -- >> that's how you hedge yourself from the underlying commodity going down a lot and getting crushed. >> you cut back the exxon

exploration, the whole problem is exxon doesn't grow to begin with. >> right >> so why would you do it -- that is -- that's a nonstarter >> and, you know, it may be this ends up being a nonstarter there has been a lot of rumblings. we'll see if somebody actually emerges. that will be a tough fight it is still a large market cap company, nowhere near it once was. you could actually take a fairly substantial stake and you might have a lot of shareholders who got on board with you. but i don't know, jim. i did want to mention it particularly in light of what you saw yesterday, which was that big move up, which may have just been chatter. i'm not sure it was actual buying by some shareholder activist, but the chatter has been -- >> rex was a king. >> rex tillerson, former secretary of state. >> talk about not being afraid he was not that happy with president trump. >> he wasn't no, he wasn't. he was an early -- we only had two secretaries of state, though, right? tillerson and pompeo.

>> i got to tell you that rex was -- under rex's watch, the balance sheet was solid, the buyback was good and the growth was good and he did a very good job, even though he had his disputes with me. >> only other question, jim, do they get some other source of capital, something unexpected? is there an interest -- >> does berkshire have interest, does warren have any interest in doing a preferred. i don't know. >> senator warren of more interest than warren. >> warren buffett. senator warren would do it if they become a solar company. >> they once -- they owned viaduct. they got into office equipment sorry. carl, back to you. >> all right, guys s&p 3466, holding on to levels best since september 4th to bob pisani. >> we had good opens this week, carl again today, almost 5 to 1 advancing to declining stocks. that's very good considering fairly modest open up about 18 on the s&p 500 look at the sectors, once again,

this modest cyclical rally very evident. energy was up at the open, but nose-dived quickly we got the hurricane in the gulf, oil is down today. but banks, materials, industrials, particularly industrials really the stars, tech has been lagging all week the semis are up this morning on the amd and xilinx chatter if you look at the industrials, the big story is this plethora of new highs we have been hitting throughout the week and again today. six, seven, eight of them, illinois tool works, eat on, caterpillar, deere, fedex, all big names here, not a phenomenon that is two or three days, this has a little bit of legs rallies tended to fail in the cyclicals this year. if you look at the industrials in september, with the s&p up 3%, fedex up 8%, american airlines, nice moves on all the airlines up 6%, 7% on the month, these are more than double the performance of the s&p, deere,

honeywell, eaton, we're getting a modest rally in the bank stocks nobody believes it but actually it has got more than two days behind it. this is onera rallies we have seen in banks. these are the super regional banks, like regions and comerica and key corp. and u.s. bancorp, jpmorganen will kick us off on tuesday on earnings. up half of what the regional banks are up more than double the outperformance of the s&p 500. the same with the material stocks, there has been hope for some post election stimulus out there around infrastructure. the steel stocks are up big. the copper stocks, like free port are up big. even dupont is up big. so you can see this has got a little bit of legs, this cyclical rally i can't emphasize how confused everybody is on stimulus is it a pre-election stimulus, post election stimulus, comprehensive package that we're going to see, is it a stand

alone deal nobody knows and there is a lot of confusion a lot of people are on the sidelines. volume is light on the up days and heavier on the down days not a lot of buyer enthusiasm and the pain trade is higher because people are on the sidelines, market drifts up, people have to get in. the thing that makes me enthusiastic about the fourth quarter is what i'm seeing about the third quarter numbers so far, and the fourth quarter. we had 22 companies reporting. and 20 have beaten so far. the average beat is 25%. that is enormous way, way above the normal beat of 3% to 5% and it is a result many of those companies, the majority are seeing the fourth quarter numbers increase so if you want to be bullish on the fourth quarter, this is the main reason to be bullish. the problem is here, guys, you're hostage to the vaccine and reopening story and potentially to elections, concerns about any kind of disputed election is now a little bit lower than it was a couple of weeks ago. guys, back to you.

>> all right, a lot could change we'll see you soon, bob pisani to rick santelli for a friday check on yields ahead of the long weekend hey, rick. >> hi, carl. if we look at the markets, let's-like at two week of 10s. right now 10s at 77 are down 2 on the day, up 7 on the week you can see that over two weeks we have risen and we are sticking last three days pretty sideways now, if you add in bunds to those two weeks, something interesting happens. big divergence with our recent uptick in yields, downtick in price, bunds have not kept up with that. despite the fact that their currency is near a one-month high if you take the difference between 10s minus bunds, it is the wildest it has been in seven months now, we know that china, of course, is an economic powerhouse, and we know we're all in some respects trying to handicap whose reopening is going more smoothly n chiin chis

case they have been on holiday currency is jumping. we're at 18 month lows on the dollar versus the chinese yuan as you see on the chart going back to april of 2019. the euro currency at three-month lo lows going back to july. and i want to underscore that we need to keep an eye on this, because at the moment there is more questions regarding our reopening than some of the reopenings outside of the u.s. back to you. >> all right, rick, thanks so much rick santelli. later on this morning, we'll talk to nfl and covid with nfl super agent drew rosenhaus it is the best week for the s&p in more than three months.

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we have come off a bit, despite the headline out of reuters that mcconnell says we do need another covid aid package. we don't have much more than that doesn't say how large that package should be, but directionally it is a whole lot better than saying my caucus won't support it. >> that's big. and that makes me feel that you are -- you are stepping closer to a deal. i think if they stop, the republicans and democrats, stop the name calling it would help and the people need this and this stock market doesn't show it, but the people absolutely need it and i think that there is isn't a republican or democrat that doesn't know someone laid off or about to be laid off i think it is the about to be laid off people that are really front and center. >> didn't get to the wall street journal today, or yesterday, late yesterday, reporting on warner media's plans of thousands of job cuts and restructuring. yet another sign of impending layoffs. >> where are those people going to go? >> say again. >> go hammer nails for lennar?

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dow gainers for the week, ibm, sales force, travelers and chevron, mcconnell says that although a package is needed, unlikely in the next three weeks. and with that, the dow has come a uch, back in a home.

. to jim and stock trading. >> maybe a winner for pfizer, lilly, keytruda with merck, they got a deal with a company that was known in seattle until the last day, it is now called cgen. they are a winner, they have very good breast cancer and other cancer drugs, so they decided to go worldwide by getting rid of the name seattle. thought it was interesting right? people may not know they're -- they can run >> yeah. jim what do we got tonight >> oh, my, okay, i have cramer's

favorite okta, cybersecurity and it is unbelievable todd mckinnon, he's in his 50s, looks like he's 25 and visby, handheld pcr, we will all use handheld pcrs, that's the test with the almost 100% accuracy and but they have to ramp up. they can't make them fast enough we'll have them on they have done some testing for the -- >> we're looking forward to that day, jim, as we got word just this morning that broadway is shut until may of next year. so -- >> have you been by those blocks those are some of the most frightening areas of the city. there is nobody there. it is very apocalyptic the day the world stood still. >> we'll see you tonight. >> yes "mad money" 6:00 p.m. eastern. good friday morning. welcome to "squawk on the street." markets a little chop here as we get more clarity from the majority leader on the potential

for further stimulus we'll get to that in a moment. wholesale trade is out rick santelli has that rick >> trade in inventories are super important. we all know that replenishing inventory is a big part of gdp later in the year. on the inventory side, a final number, so the .5 midmonth gets re placed with up .4 and even though that is one tenth less it still the best level since february of 2019 now when we switch to sales, carl, this really goes off the charts 1.4, 1.4, this is much better than expected. granted it follows 4.8, but it is still a better number than we were expecting many numbers had the big negative covid response and reversed as we see a couple of weeks with regard to third quarter gdp. these numbers are pretty much on line in inventory, better on sales and this is a sector we want to pay very close attention to sara, back to you?

>> thank you rick santelli. senate majority leader mitch mcconnell on the tape saying we do need another covid-19 aid package. to elon mui for the latest. >> reporter: the treasury secretary had told house speaker nancy pelosi the president is interested in an imminent agreement on another comprehensive deal the question now though is what exactly is imminent as mcconnell was also saying to reporters in kentucky that a deal is unlikely to happen within the next three weeks. now, we do know that the treasury secretary and pelosi are still in contact almost every day, they spoke on the phone twice yesterday, and mnuchin spoke with congresswoman maxine waters and nydia velazquez about how to help small businesses this comes as the white house is changing its tune on another relief package, telling reporters the president is now willing to do something bigger, beyond just ppp, direct checks, and aid to the airlines.

as mcconnell indicated yesterday, the democrats $2.2 trillion price tag is still a nonstarter for republicans >> yeah, i think the -- i think we're still talking. and trying to see if we can narrow our differences but i do think there is bipartisan agreement, that we need another package but the amount of money is not irrelevant >> now, on cnbc this morning, gop senator ted cruz said that he has talked to the president and that trump is eager to make a deal but cruz blamed democrats for stone walling. in a letter today to her caucus, nancy pelosi said the president was not wanting to crush the virus and that when he walked away from the negotiations, he was showing his content for the public so while we do not have a teal just yet, and it is unclear exactly when and if we will get one, what we do have is a lot of finger pointing. back over to you

>> and just -- everybody wants a deal, everyone is on the record now saying they want a deal, ylan what is currently being discussed? is it those skinny airline deals and stimulus checks and ppp or are we talking about state and local government relief, extending the unemployment benefits, bump, do we know what is in there right now? >> we don't, sara. i think part of the problem is that the two sides are talking about two different things i think it is very clear as pelosi said yesterday that state and local funding has got to be a part of this, that has been a huge roadblock for the administration so, you know, what are the terms of the deal what is the scope of a deal, that is what the negotiations had been about. and that is what they are trying to figure out right now. >> guess it is all about the amount thanks keep us updated. joining us now to talk about some of the market implikcation

here, elizabeth burton welcome, elizabeth, it is good to have you. >> good to be here thanks for having me. >> are you adding to your equity exposure as many investors appear to be doing this week in the hopes that we'll get a stimulus deal no matter what >> no, we are not. i would say we're pretty neutral right now. we're not underweight, we're not overweight, we're staying where we are we are getting slightly, which sounds a little contrarian, more conservative in our approach we have pretty heavy options, but we're looking to convert some of that into convertibles and a couple other things with the portfolio. >> what have your returns been like and how much exposure do you have to stocks at this point? >> so asset allocation is a little bit different than everybody else's we don't separate things into equities and fixed income. we separate things by the

primary riskdrivers. if you look at one of our buckets, it would have multiple asset classes in it. i this i monk more constructive arrange from a .5 data but that doesn't negate the fact that at the end of the day our biggest risk like everybody else is growth risk. >> growth risk how is hawaii doing? we were just talking about state and local government relief being part of this bill. i imagine the state has been hit very hard by lack of tourism >> sure, i think we're not alone in other states that depend very heavily on tourism it has been a tough time for all of us. i think we made some strides in the virus. i'm hoping we can get things open back up shortly but for sure i think that we're not alone in that, it has been very tough for the local economy in hawaii. >> elizabeth, i wonder what your take is on the upcoming earnings season we start to get the banks next week there have been some pretty

decent number of upside preannouncements, but also a decent number of layoff announcements. is operating leverage do you think going to be the story of the quarter? >> you know, i'm not really sure and pretty much everything i expected out of the equity markets this year has led me to some sort of surprise and i'm certainly not going to trade on the upcoming announcements here. so we'll see what happens. but, you know, i think there is a lot to go here in the equity story. we're at very early innings for what this all means. there is more to play out and even with the upcoming election, i think we have to think more about the medium term. a lot of this is short-term signaling. any data we get now is sort of meaningless in my opinion. >> elizabeth, i don't know if you watch our air, but if you do, you probably have seen a parade of administration officials who when they talk about potential aid or stimulus also say, but we're not going to do it to bail out ailing pension funds in a lot of these states

because that's their own mismanagement. curious what you think when you hear that, given you run a pension fund. >> run the investment side of the pension fund i don't run the benefits and administration side of the pension fund i wasn't, you know, part of the pension fund for a long time when a number of decisions were made so i cannot judge on that. i would say that investing in your pension fund right now is very critically important. we contribute a lot, the dollars paid out to retirees and we want to make sure we have the best people in the seats to be able to do that i understand governments are struggling a lot now i can think paying out pension benefits is the number one priority of the state, but i'm not managing the health dealt and the education department there is deficafive ise ive defw and they have to make tough choices and i don't envy them that position. >> at the outset, you mentioned you're changing your allocation a bit, getting more conservative why are you doing that

>> in certain cases where we can take some money off the table, we're peeling back a little bit. i think because i don't want to make a binary bet on the upcoming election. you know, that didn't work out for people in brexit, that didn't work out for people in 2016 i think there is a big risk of a contested election i'm not so concerned about who wins the actual presidential election i'm very concerned about what happens in the equity markets. i get that some people think it is a short-term blip and it probably is. the equity market is probably going to have some sort of short-term reaction to whoever the candidate is, and to be totally honest, i'm not sure if i really am that concerned about the presidential election. i'm more concerned about what happens in the local government elections. i think that's key this time around that's very difficult to predict outcomes for the overall economy when you have to think about that is happening on the little local levels and what that really means for, you know, the markets going forward. >> elizabeth, thank you for joining us today

good to get your thoughts. elizabeth burton from hawaii david? >> amd reportedly in advanced talks to buy xilinx, josh lipto has more for us. josh >> so, david, this news caught amd investors by surprise. but some argue that ceo lisa su deserves the benefit of the doubt here after all, under her watch, amd stock has now surged nearly 2500%. company's market cap is nearly $100 billion company's chips are used in pcs and gaming consoles, which we know are in high demand due to the pandemic and in data centers helping power remote work. now, dr. su is reportedly pursuing xilinx for $30 billion in a deal that could apparently close as soon as next week so why would amd want to buy xilinx most simply it expands the company's product portfolio.

right now amd sells what are known as cpus and gpus with xilinx fpgas, microchips that are used in a range of different end markets, autos, aerospace, 5g infrastructure and data centers ultimately this could mean more competition for intel because it is the other big player in the fpga market. amd is taking shares from servers, this could put them on a stronger competitive footing with bob swan's company. what about regulatory risk in theory, there shouldn't be much risk, but, remember welcome he kn we know u.s./china tensions are running very high. back to you. >> thank you for that. josh lipton. still to come after the break, the nfl pushing back more gains. titans and bills will now be tuesday as the league tries to contain that covid outbreak.

s something we'll talk with super agent drew rosenhaus as "squawk on the street" continues on this friday ♪ ♪ ♪ ♪ "hmm's and ahh's" heard in-call. ♪ don't settle for silver #1 for diabetic dry skin* #1 for psoriasis symptom relief*

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. yesterday on "mad money, jim cramer, among the apparel sector, he sees these stocks in particular as opportunities. lululemon, nike, levi, american eagle, and gap they all have been doing fairly well lauren thomas who covers retail

joins us now with the closer look at the apparel sector, lauren, now that economies are starting to reopen, you can really see which brands are cool and which ones are coming back faster than others of these names in particular, which one stands out to you as doing a good job >> sure, thanks, sara. i think you're right in an apparel sector that is obviously hit pretty hard by the pandemic, there are some names that analyst investors are really rallying behind, these being some of them, shares of nike, lululemon, and gap up double digits year to date american eagle is up as well i think one important thing to call out among all of these stocks is just how favorable they are among teenagers, we saw the piper sandler survey, the biannual survey come out this week and nike held on to the number one spot as the favorite apparel brand among teenagers, which has been in that place for ten years now. lululemon also moved up on that

list and american eagle was actually in second place. gap in particular i think analysts are really betting on a rebound as retailer begins to trend some of its unprofitable locations. and also you got gap partnering with the singer kanye west, we're all waiting to see how that is going to pan out when their first collaboration drops. and now i know levi's is the underperformer on that list. looking at its stock year to date, but i did speak with the ceo earlier this week when they reported earnings. and he said they're actually winning market share specifically in women's, and i think that really stems from the bankruptcies that we have seen shake out in that space in the apparel space this year. is really providing opportunity for some of these names to swoop in and capture market share. >> i agree i think kanye west gap collaboration is a huge driver of the stock if it issing anything like adi, it turned the whole u.s.

business around. american eagle and levi both jeans. which is interesting because lulu and nike are leggings and athleisure are jeans back for back to school even though back to school is a hybrid of virtual and actual in person learning? >> yeah, you mackke a great poit a huge part of their business is dependent on denim you look at some npd data showing the denim category hasn't really fallen off that much despite a lot of us aren't really wearing jeans during this pandemic we're turning to sweat pants but i think you have seen brands, like american eagle, it owns aerie known for launch wear and sweat pants and pajamas that provided a big growth opportunity for them during this pandemic and levis as well, they have gotten pretty creative on the design side and chip said the

ceo said that denim shorts sold actually really well for them over the summer months >> lauren, we're coming up on prime day and all of the prime day echo days from other retailers. i'm wondering what the sense is now on how seasonality plays out, if black friday is going to be a thing or if holiday is just getting extended on the front end as we -- quite a ways out still from christmas >> yeah, no, it is -- we're just getting into october, and i think the holiday season is really kicking off next week when i speak to even ceos of some of the companies and mark trenton the ceo of bed, bath and beyond and he said the holiday season kicks off next week with prime day. then delaying that event from july and then into october has really kind of caused everyone to rethink their strategy and now you got target, walmart, best buy, a number of companies kind of holding events to

compete. so i think you're going to see the season start sooner. and that's in part because retailers want to convince consumers shop now, so there is not that, like, last minute rush to stores and that stress on their supply chains, you think of e-commerce sales and how those are anticipated to really grow throughout the season and it is really going to put a strain on companies to get packages from their warehouses to your doorstep in time for the holidays, i think the message right now is shop early, if you can, and just in hopes of getting everything you need in time >> lauren thomas, good to check in with you. >> thanks so much. >> appreciate it, on retail. time for our etf spotlight the biotech sector ticker ibb, up almost 10% from a month ago currently trading higher, just fractionally this morning. one name in the group that is helping the cause is gilead, releasing today final data from

the study of remdesivir, showing the drug actually cut recovery time by five days compared to patients who received a placebo. the stock down double digits in the last three months, but some hopeful data there from gilead's remdesivir on top of what it has already shown. remember, it was part of the president's treatment plan we're going to take a quick ayonhehere on "squawk t stetst with us ♪ ♪ ♪ ♪

flnfl facing another threato the season as some more tennessee titans test positive now espn's adam schefter says the jets team and coaches have been sent home after a presumptive positive covid test. something to talk about with nfl super agent drew rosenhaus who joins us this morning. welcome back good to see you. >> good morning. >> can you add anything to schefter's scoop >> i talked to my clients on the jets and they have been sent home it is apparently one positive

test that is being checked out to verify it in an abundance of caution. they sent everyone in the organization home from the facility they have a game on sunday against the cardinals. that's still on for now. hopefully this san isolated case and they can play the game on sunday there is already enough games that have been postponed and rescheduled. >> so ex-titans now, we know the protocols taken over there, do you see this as a sign that things are working in terms of the restrictions the league put in and the fact we're catching these things early or that things are breaking down >> i actually think things are working. we're just in a pandemic and this is brutal pandemic. this country has been fighting and the nfl is not immune. in fact, you can do everything right and still have an outbreak i'm not sure that -- i don't know what protocols the titans

have broken other than allegedly having some unauthorized workouts, but quite frankly this is just something we're going to have to live with and the nfl has done a heck of a job today we did get some very good news, the titans had no positive tests. so hopefully it will be able to play their game against the bills on tuesday that's, right, you heard me say tuesday. first time in a long time the nfl is playing on a tuesday. and that set off the chain reaction now new england, which obviously has been affected by covid, they are playing on a monday night against the broncos. and not a sunday game. the titans game has affected the bills as well and now the chiefs are affected, the chiefs had a thursday night game against the bills, that's now been postponed until next sunday. so no thursday night game, if you're confused, i am too. the nfl is battling and so far

no games have been canceled. so, you know, i think the nfl is going to have to add two weeks at the end of the regular season, push back the post season, in order to get all 16 games in for a team. there is just no way in my opinion that with everything that is going on, they're going to find a way to play the games within a 16, 17 week window. >> yeah. check your local listings, that's for sure. so, all right, you said it, you know, are you having any conversations? have you heard anything from league officials in terms of these kinds of plans to potentially extend the season, drew to deal with what would seem to be from here sort of these -- this ongoing cases that we're going to be dealing with >> i don't think the nfl or the nfl pa is surprised in the least bit that we're going through this right now and it is affected a number of teams, obviously, with the jets being the latest in new england

and obviously tennessee in particular with over 20 personnel coming down with covid-19 with all of that being said, the nfl's kicking around a lot of ideas, i certainly think adding bye weeks starting the regular season makes a lot of sense. and extending the regular season if the games are canceled, nobody gets paid, not sure how you figure out who is going to be in the playoffs, for example, the bills and tennessee are two playoff teams. if they don't play that game, that's going to shake up the post season already and we're only four games in the season now. this is we can number five the nfl is prepared, i'm sure they're going to have an alternative plan in case games are are canceled during this regular season. >> drew, as the nba wraps up its season and we wonder when they start the next season, i wonder how do you think about all the sports, when they are going to

start and whether to your point that you kind of made, whether we're going to see some changes stay with us this flexibility or maybe season starting in -- at times of the year we wouldn't typically expect >> of course absolutely i'm not an expert, but i think everyone would agree that this pandemic isn't going away anytime soon and this is what i shared with all my clients in the nfl, and in the other sports. and we represent players in major league baseball and the nba and the bottom line is that all these professional leagues are going to have to be vigilant moving forward, unfortunately covid-19 and professional sports, college sports, it is not going anywhere it is going to continue to affect us. we have to learn to live with this justify as we have. and obviously sports has done a fantastic job of battling through this pandemic and i'm confident that the teams across sports, collegiately and

professionally will continue to be flexible, adjust, and fight through this >> drew, earlier you said that the nfl is doing a good job and that even if they did everything right, you know, we would still have cases, we're still in the pandemic it is not really true. look what the nba did. they went in a bubble. last time i brought up whether the nfl should be in an nba-style bubble, i got a ton of hate mail and criticized on social media, the season is too long, the rosters are too big, doesn't make any sense, but if you look at the outbreaks and what is happening and the delays, should the nfl be in a bubble >> not at this point, sara i do think it is a valid point, but the bubble is going to be very difficult for the nfl to pull off because of the extended season, we're talking about at least another 12, 13, 14, 15 weeks potentially and then the post season there are a lot of teams in the

post season this year. they have expanded the post season and we're dealing with the 53-man roster, 16 people on a practice squad, injured reserve, coaches and administrators, i mean, there is so many people to put in a bubble and 32 teams, it is just not practical right now. maybe if this system doesn't work, and let's face it, so far three, four weeks, right now they're still getting the games in and if they can continue to get the games in, rescheduling, et cetera, i think that will work, but the bubble is the last opportunity or the last option i should say >> yeah. so short of that, drew, you know, wall street is crunching all kinds of numbers, looking at case growth. and it is happening a lot in the colder states like minnesota, like wisconsin, i wonder if you think the league is trying to focus on potential weakness on protocol, more, you know,

packers and vikings than say dolphins or saints >> well, i know, for example, the packers are very concerned because they had fans at the games and now they have decided not to have fans at the game because of all of the outbreaks that are taking place there. and then this governor of florida said the dolphins could have a capacity stadium, but the dolphins have, i think, correctly decided to keep their fan base at a limited 13,000 there is no doubt the nfl is going to be very sensitive to the timing right now we're in october, the cold and flu season is going to be starting up, potentially could lead to a lot more cases there is no doubt that everyone in the nfl is being vigilant towards that, taking that into account, and that's why the nfl is very aggressively going after any instances of violations. they fine teams like $2 million already for not wearing masks on the sidelines, i don't know what

the fine is going to look like for tennessee if any but they're taking this seriously. they fine players on the raiders for going it a charity event without masks, i mean, the nfl and the nflpa are really working hard to get through this season obviously. >> yeah. yeah drew, i miss -- we all miss the days where you come on and we talk ratings and talk offense and defense. but this is the story this year and we're grateful to you as always thanks, man. >> my pleasure have a good day and nice weekend. >> drew rosenhaus. let's get to a news update bertha coombs has that for us. bertha >> i'm bertha coombs, here is your cnbc news update at this hour this year's nobel peace prize has gone to the world food program for its efforts to combat hunger amid the pandemic. the nobel committee also thanking the organization for making food security an

instrument of peace last year. the u.n. agency provided help to nearly 100 million people in 88 countries. back here in new york city, theater fans will have to wait longer to see a show broadway theaters have extended their shutdown again this time until the end of may ticket refunds are being offered. in minnesota, a protest overnight following the release on bail of former minneapolis police officer derek chauvin a few dozen people marched outside the state capitol where state police stood guard. in spain, the national government has declared a state of emergency in madrid after local officials refused to impose new travel restrictions to slow the spread of the coronavirus. the soft lockdown will last at least two weeks. that's your cnbc news update for this hour. back over to you, sara. >> bertha, thank you. as we head to break, check out the cruise stocks, poised to

finish the week higher vice president mike pence is set to hold a call with the cruise industry today at 2:00 p.m they're supposed to have a meeting last week. that got delayed because of the coronavirus outbreak after president trump was diagnosed. we talked to the ceo of carnival cruises yesterday. he is hopeful that they are go to be able to set sail before the end of the year. says there is a ton of pent-up demand we'll bring you headlines from that call this afternoon "squawk on the street" is back in two ♪ ♪

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big banks set to report earnings next week ahead of the results economic activity indicator shows the economy bouncing back this week, according to kbw's restoration index. tom micheaux join sus to talk about all those things

everybody has brom terz arometef reopening. kbw says we're getting back close to 80% of precovid numbers. >> we wanted to use the real time data available to us this crisis that wasn't there previous because a lot of the government indicators come out and really lengthy periods so we're able to track and produce weekly an index. this index started at 100 before the pandemic went down to about 50 in mid-april. and it is now grinding its way higher and improving about a percent a week and just this week hit 80. and if you were to project it from here, lynn yainearly, it is really been basically a slow grind as of late >> but a positive one. >> i guess the question is, yeah, very positive, the question though is what is the lag in terms of incorporating

what we're seeing at this moment regarding cases, or maybe the case load doesn't feed into further closures at least that's what the market is counting on. >> yeah. i mean, i think also too, look, this is a statistical tool we use, that is a little bit more real time than tools we used previously that's why we developed it but it is -- it is very factual based, like, for example, it doesn't include stimulus spending and unless businesses are ramping because they think it is coming anything that happens from a big mac r macare macro perspective can change the trajectory this is a factually-based index and it is closer to being real time than some of the other indices out there. >> on days when -- sorry, didn't mean to cut you off. even on days when the market is very hopeful about stimulus and the cyclical stocks rally, it is

materials and even energy sometimes outperforming the banks. even if we get some good earnings next week, that continues to show the resilience in the face of the recession and crisis, is that going to help the stocks >> if you go back to late september to today, the s&p is up about 5%. the key regional and key big bank indexes is up 15% that's starting to change. on a year to day basis, it has been brutal in the stocks. in my opinion, the market is overdiscounting the valuations of the companies and that the uncertainty gap is just too wide and i think in this quarter, the third quarter, we're going to start to get more information and results that is going to make investors i think feel petter abopet petter better about the banking companies. there is going to be an earnings challenge ahead of us because there is negative operating leverage due to rates, but in the near term we expect

deferrells to be cut in half we expect the big banks to have an over50% decline in loan loss provisions we think 98% of the banks we follow will earn the dividend this quarter wasn't that long ago we were worried about dividend cuts across the industry. a lot of the -- i think the stability pieces of the industry are going to kick in, doesn't mean we don't have an earnings challenge, but we have to deal with all the digital engagement that happened during this period and what that's going to mean. i think that the worst case scenario gets further away from the stocks and the valuation gap is too big, and there is room for this industry to continue to keep doing better in terms of a stock price performance. >> what about potential risks from the outcome of the election vice president biden pledged he's going to raise corporate taxes, and there could be more regulations coming he could put people in positions that the federal reserve or treasury tougher on banks.

do any of those things represent a big threat >> you got the list, sara. let's talk about that. i'll tell you what we think about it we think that if vice president biden becomes president, we think that you will certainly have a change over time, it will take a couple of years in the regulators and depending upon who he picks, that can have a change from where we have been if the biden tax plan were changed today, we have written a lot about that, and if the corporate tax rate went to 28%, you take 7% off the earnings per share of the banking industry, and our return on intangibles will go down 1%. that's math. we have done the math. that's it. i think that plan is out in front of everybody and we know that is something that could happen lastly, i don't know if you saw that report that the congress, the house came out with, the democratic controlled house in the last week, that i think made it pretty clear that technology industry is going to be right in the headlights here for what is

going to be focused on first we really don't believe that a major piece of banking legislation will happen in the next congress. that's the call we have been making we'll get changes like i described but won't be something like a big banking bill happens given what our read is on the situation. i'm sorry. >> right, right. you mentioned the number 80 on your restoration index the other place where 80 has been an interesting number is the ten-year yield didn't get there this week but we got closer. i wonder if you think that's indicative of anything macro and more tellingly for what the banks may be able to post next week >> it is really -- it is fascinating to watch because the bank stock rally has also happened with that increase in the ten year yield and it is not only the increase in the yield, it is also a little bit of the steepness in the curve

and so that's better for bank earnings, albeit it is still low and challenging. the balance sheets catch up with market rates and you kind of have a good idea where it is headed net interest margins are going to continue to be under pressure, there is really no loan growth in the industry now. so you will see net interest income pressure which is that revenue pressure that is going to happen and while what you just said, carl, is better and if you see a strong stimulus, a lot of infrastructure spending and ends up changing the shape of the yield curve and causes rates to go higher, the reality is that would be good for the banking industry going forward, but i don't think a lot of that has been priced in yet but that could be a positive surprise in the future if that does happen. >> yeah. we're all bracing for next week, always one of the most interesting weeks of the season. tom, thanks, as always have a good weekend.

>> carl, everyone else, thank you. have a great weekend >> as we head to break, hook at shares of fastly they have been on a tear up another 10.8% now matching all time highs. and if that's not enough, it is the best performing name in the wisdom tree cloud computing etf over the past month. up a whopping 50% in just four week reha30 or the past year more "squawk on the street" in a moment rey's expecting... -twins! ♪ we'd be closer to the twins. change in plans. at fidelity, a change in plans is always part of the plan.

a surprising corner of the market is rallying, the small caps, traders discuss whether the names still tied to the u.s. economy can produce big gains by the end of this year that's on tradingnation.cnbc.com more "squawk on the street" coming up. stock slices. for as little as $5, now anyone can own companies in the s&p 500, even if their shares cost more. at $5 a slice, you could own ten companies for $50 instead of paying thousands.

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robert >> good morning, david there are now 16,000 unrented empty apartments in manhattan, that as you mentioned is an all time record and three times the number of just a year ago. all that growing supply and lack of demand brought the vacancy rate to nearly 6%. now that may sound low, but it is more than twice the average for manhattan. rents are coming down, that's the good news for effective rates down 11% landlords are now offering an average of two months free rent to lure tenants back to new york the risk is that we have a chain reaction from all of this lost rental income, that's because rentals account for two-thirds of all manhattan real estate large number of manhattan landlords, 40%, are small businesses that's families that own a few buildings. they don't have the deep pockets and access to capital like the big corporate guys if those small people lose income, the companies and people that they support lose income.

about a third of landlord expenses go to banks or lenders. another third to pay property taxes and the rest to pay labor and maintenance and property costs. property taxes, and this is important, are now the largest source of revenue for new york city the next big payments due in january. with a $9 billion budget hole and no stimulus on the horizon, that tax revenue is critical to new york and we'll see what comes in in january. back to you. >> yeah, as you're talking, robert, i'm looking at a story here talking to some moving companies in brooklyn who have seen an uptick of people coming back in recent weeks are you seeing any data points that would even lead you in that direction? >> brooklyn is doing well. the outer boroughs are actually picking up and they have seen strength a lot of people -- some people move from manhattan to those boroughs for more space. but manhattan is literally an island of weakness, even within new york city. and there is just no sign of a

turn around. >> yeah. midtown not getting good news from broadway either today, robert thank you. robert frank this morning on manhattan. when we come back, we'll talk more about the state of real estate and restaurants with the great daniel balud in a moment when i was in high school, this was the theater i came to quite often. the support we've had over the last few months has been amazing. it's not just a work environment. everyone here is family. if you are ready to open your heart and your home, check us out. we thought for sure that we were done. and this town said: not today. ♪

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it's been more than a week since the resumption of indoor dining in new york city. queens and brooklyn are worried about roll backs and safety of employees. joining us is a restaurant owner. chef, always nice to have you with us. how has it been going? are people willing to and happy to be eat indoors or is outdoors still more popular at this point? >> well, i think it's a good balance. i think some people are happy to come indoor. it has been good of course, 25% is not sustainable for any business but outdoor, we're taking initiative to heat up outdoor as winter is coming for example, we're building

bungalows right on the front edge of the streets. we hope that will help us save some business outdoors and it is really a dire situation in new york city with the restaurant business. >> it's been very nice what are predictions when the weather gets colder even with heat lamps and the like. st are you going to be able to keep it going? you will because you're so well known. but what about so many of the other restaurants out there? >> i know. and i think it's not evident to try to keep the outdoor warm and comfortable as well. and also operating on most of restaurant outdoor from an indoor kitchen and indoor management side. it's very difficult.

and, i mean, we for sure, we -- the importance is to bring more staff. and if in a city like new york, if they don't bring us to 50% any toime soon, it may be difficult for restaurants to survive. at the same time, we want to play to safety so without the outdoor, for example, this restaurant here will never have outdoor before only this year and because of the outdoor and no indoor, we save a little business and staff once we bring indoor, we brought more staff but it is so difficult to figure it out and balance exactly what kind of pressure we need as amount of staff we can bring in order to provide for the buzz we're goi business we're going to do and it's not about trying to make any money or profit or anything it's about survival right now. and it's about bringing back

more staff, more jobs. and the balance of that has been very, very tricky for everyone and unless the government come up with a great new stimulus plan or an extension of the ppp or forgiveness of sort for our business and for businesses who are affected like us, like hotel and airline industry and so many business who make other business work as well tourism is number one. >> i was going to ask you, chef, about the stimulus we've been following every twist and turn it sounds like parties, both parties want to do more. at least on the ppp extension. and potentially broader than that can you wait until the election? can the new york restaurant industry wait until after the election when it comes to getting more potential government aid >> it's not only new york city, if anything about atlanta is getting colder and bet on

outdoor all sum eastern save their business and now have to deal with indoor and that's very difficult. so, of course in, new york city it is even more dire than that but i think a lot of small business will suffer so much i was in brooklyn yesterday with my friend. there is a pizzeria. and they have the pizzeria there in brooklyn. they were telling me how hard it's been despite the fact that they're doing okay with the volume it has been very hard. everything got so destabilized and the frame and the structure of a business. >> yeah. chef, we're thinking of you. wishing you the best, obviously. talking restaurants and real estate >> i appreciate it >> we'll take a break here ♪ ♪

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good morning, it's 8:00 a.m. in california and 11:00 a.m. on wall street and "squaw