santelli you handled it though. he tossed it back to you. >> it has been a while, but, yeah >> messes me up. becky, you didn't get the jumble i sent it to you >> no. but i gave up. i was busy doing the show. >> proud of myself i'll spoil it for everyone join us -- make sure you join us "squawk on the street" is next good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber futures are getting back some of monday's record highs amid a truck load of news retail earnings, amazon launching pharmacy, tesla into the s&p, berkshire's 13 and much more retail sales were light, but up 46 the month the road map begins with the amazon drugstore, the retail giant will ship prescriptions to prime members. cvs, walgreens, rite aid, all

take a hit. >> the covid consumer, walmart, home depot and kohl's among retailers reporting earnings today. walmart says e-commerce sales up 79%. and elon musk's billions, tesla getting a spot in the s&p 500. it is among the highest valued companies to ever enter the benchmark index and musk is on top to become number three, that is the third richest person in the world. >> indeed, guys. we'll start with the retail picture this morning, jim, you've been vocal as to the investor response on home depot and walmart. i guess that's related to the news out of amazon. >> look, by the way, those stocks do tend to run up in the quarter and sell off that's nothing new a more aggressive amazon is always something we have to pay attention to i remember when amazon bought pill packs, the drug stores got killed i also point out that walmart's online -- david, that's not

going to go away you can argue someone is going to argue that's the peak i would argue that amazon and walmart have taken so much share in this country, and that you cannot dismiss what walmart's done in terms of permanence. it is not just the pandemic. they have really changed the way people think and i think a lot of people in new york are snobs, don't understand how walmart has integrated itself into about 200 million people's lives. >> there is lots of space that walmart could avail itself in new york city to change people's minds. they could create a super store given how much space there is in terms of retail right now. you set a newly aggressive or more aggressive amazon, jim. >> yeah. >> amazon's never anything but aggressive and i think that shows it today. >> good point. >> i made this point before, put in relentless.com and what do you get? what does it send you to >> really? >> i brought this up before. it sends you to amazon >> we have been waiting for

this, you're right >> there is nothing that amazon -- they just continue to constantly be as aggressive as they possibly can be and this is an opportunity in terms of pharmaceuticals that has been one that people have been focused on for the company for some time. certainly since the announcement of the deal to acquire pill pack, back in june of 2018, they announced that and the licenses we saw them take a lot of them were for medical devices over some period of time, people focused on that saying they're not going to necessarily compete in pharmacy. but then the pill pack acquisition, then yquestions an then cbc.com reporting that they trademarked amazon pharmacy in all sorts of places, international. >> did goodrx beat the grim reaper by coming public? are they decisive enough to go against cvs and walmart?

cvs and -- who else is going to get the -- walgreens, both going to get the vaccine >> the vaccine, right. goodrx is a company you follow closely. we had doug hirsh on friday, down 19%, does it deserve to be? >> let's get him on. i think that walmart seems to be offering a similar service to them, except for more prime members. we don't have to rethink everything or go to the drugstore. look, i think that -- i think you look at amazon, david, the fact is we're all going to evaluate whether we shouldn't be buying our pharmaceuticals there, we have to. that's the way america is. i get so much food -- >> 80% of outpatient prescriptions, $400 billion market are available for mail order. 80% of outpatient prescriptions. carl, you're talking about 84 million people at least. we don't know the number, they never give it to us.

>> carl, i got to tell you, people think of amazon as lowest price, i don't think there is anybody who worries about their privacy with amazon. there was a time where i think people say, i don't want them to have my information. i think that the drugstores have done a disservice, i don't think that their pharmacies are neighborhood pharmacies for the most part. carl, the linkage between the neighborhood pharmacy and the customer i think is broken and this is a good time for amazon. >> well, as you point out, pill pack was a 2018 deal this has been in the ether out there for quite some time, jim depot is the other amazing story. through q3, jim, about $100 billion in revenue, that's not far from the entire year last year of $110 billion and comps up 24, inventory up 2.

average ticket up 10 traffic up 13. it is an amazing set of metrics. >> it is not enough. the stock has run up there is also a definitive housing trade. the housing stocks peaked when pfizer came out with its vaccine. and, david, you know there is a -- there is the prepfizer world, and the post. and as soon as we got the possibility of nationwide vaccine, there are stocks that have been -- people have been running from like you wouldn't believe. and they were the stocks that people got excited about because we didn't think we would have a vaccine anytime soon >> ight. we saw that last week. and we saw it again yesterday and the response to the moderna news about 94.5% effectiveness for their potential vaccine candidate. both of which we could be seeing fairly soon at least, hopfully being actually put into people's arms let's call it by early next

year most vulnerable. but, jim, does it make sense, have we gone too far, one trade to the other or are we not taking account of the economic devastation that is going to be the case for a lot of small businesses over the next couple of months as coronavirus cases -- >> if i can buy walmart under 150 and nice turn from where it was at 154, because there is no stimulus so it is too far the general distribution of the vaccine, david, is too far versus the competition that must go under because the balance sheets of anybody -- this is, like, the restaurants, 40% are going under, the balance sheets can't be sustained against walmart. even grocery stores will have to examine, whether grocery stores, more places like kings that go bankrupt it is really a remarkable time because i think that walmart is the darwinian winner of the brick and mortar and to get rid of that stock right now is to be

very shortsighted. very >> so landscape will simply be walmart, home depot, and virtual -- a costco and -- >> i think in contact with costco >> and then guys on the street delivering your amazon street? >> yes i think that's so. why not? why not? that's the way of the -- that's the way of the future. we can't fight it. carl, costco last night gives $10 to their customers because -- to their owners because the balance sheet is so great. they don't have any problem. >> yeah. >> a special dividend. just put it in my pocket, please and as this is a great time for costco and no samples >> it is the -- it is the fourth special dividend in the past eight years, also the largest and, jim, we talk about it all the time costco investors basically live for two things, membership fee increases and special dividends. >> yeah. costco is a business where all

you got to do is see how many people are signing up and you now how they're doing, because they don't want to necessarily make a lot of money, when i was out in seattle, david, i don't no he if you ever drink wine, but it was well below what the distributor can get it at before they mark it up. >> really? i like to drink what you buy at your parties i don't leave that area when they're pouring it >> i have the special 40 year? >> yes. >> it is a remarkable thing to see the prices, costco they want you as a member. that's how they make their money. they're just -- they are just now going to storm china can you imagine? they're going to storm china >> storm it, really? walmart tried to do it a number of eyre years back. >> they opened their first one and they had to close it midday because there were so many customers. >> that happens. that happened with walmart too, though we'll see.

>> wow wow, mr. negative. >> i'm not being negative. china is an incredibly important market we know companies, we have them on all the time that had success there. such as apple and starbucks. >> yeah. >> and biden, we haven't even talked, carl, about the definitive nature of people who try to say that vice president -- president-elect biden is going to be similar to trump when it comes to china, that's nonsense. biden is going to default to the old way, which is that tpp and let's get all the allies together and not do anything alone and i think people who think, you know, he's not a america firster, he's a one loner to quote wendell wilkie. i believe this is a different time we're about to go into and they're going to -- there was a -- president clinton is saying that there is -- that it is on xi i think that biden is going to be -- he's going to come in peace. going to come in peace enough saber rallying -- he's

not going to tweet i don't think he's going to tweet anything >> yeah. >> hank paulson had thoughts on how biden is going to put china into a framework earlier in the week, interesti ing comments i d notice the journal has a story about chinese companies listed here, according to journal, and looking at s.e.c. plan, need to have auditors overseen by u.s. regulators, which is something you called for, for more than a year now. >> that's why i like alibaba it looks like an american company. it does, even though you could necessarily argue that the communist parties sometimes doesn't like some of the things they got planned there. >> no. that's always a continued question as to whether there is influence in the communist party, that's been the case with tikt tiktok, you hear it all the time, what could they have access to, could they get access to whatever they want. i don't think that's the case. it is a very well run company.

don't forget these are companies also that are developing -- we think of them perhaps in a different way. they're developing ai, for example, whether bytedance or alibaba or ten cent, they're developing a level of artificial intelligence that rivals if not exceeds what we have got going on here. that's a really important development as well as we talk about the competition between china and the united states. >> yeah. indeed, guys so much to get to this morning, including a lot of the 13 fs and berkshire getting back into equities in a big way. tesla joining the s&p. dorsey and zuckerberg in front of senate judiciary later on today. and powell, what might he say about the fed's efforts to supplement the lack of stimulus. futures weak on the dow. back in a minute ♪ you can go your own way

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retail sales in the books, now industrial production. to rick santelli >> yes, we're waiting on october read on industrial production. of course, and we're expecting a number around 1% we're a little light on retail sales, we're coming in as expected, arguably, a bit stronger here. industrial production up 1.1%. expecting 1, we ended up with .1 better ever since the april reads where we were highly negative, we had

four positives in a row, except for last month, which was down .6. so we regained that positive read on this series and if we look at what is going on with regard to utilization rates, they were better than expected 72.8 this is subsequentially follows 71.5 and also we had four ups in these rates and then we took a back step. 71.5 last month was a bit in reverse, it didn't subsequentially follow higher, but this regains that. so both of these reads, industrial production, regain the offense with regard to better than expected numbers subsequentially stronger and giving us a better gauge of exactly what is going on with regard to mining and industrial production and some of those energy numbers, of course, that have such impact on these particular numbers carl, jim, david, back to you. >> all right, rick, yeah, plenty of fed speak to respond to woboh of those data sets later on today. we're watching tesla turnsurginn

the premarket. this is among the highest value companies ever to enter the index and its market cap of 387 billion. that's based on the close, makes it more valuable than 95% of the companies currently in the s&p jim, if you take current trading into account, the market cap is a four handle. >> i think they're baffled i don't think they know how to handle this. what do you do how do you kick -- you can't have the s&p 500, only 497 companies. though i heard people on air sometimes say there are 500 companies in the s&p shocker. i don't know what they would do. they can't -- what do they knock out -- they can't knock out the smalls doesn't do anything. when they balance this, i think it is going to be they almost seem to have to take -- everything smaller how about that >> i guess well, we talked about the influence of these megacap companies on the index itself. for the longest time i always

drew the extinction between the dow and the s&p in part because one is price weighted, one is market weighted. but apple and alphabet and amazon and microsoft and down a little bit, facebook and then tesla, they have enormous impact on the movement of the index itself it is only six, seven companies. >> that'sy think y why i think lot of younger investors say you pick the best of the best. it represents a piece about seven companies and i think the younger people are not fooled, not -- they do like etfs, but they like to buy individual stocks that they think are going to be right. and that's been their pattern, carl younger people are really in to certain stocks they love neo, for instance. you yawned at my analysis. >> i was not on television and it was something i couldn't help >> but you crushed me. >> everybody, he's looking at me even though he's talking and i'm not on tv and, yes, i had a

brief catching my breath i was listening to neo tell me about the young people in neo i want to hear about it. >> i'll get back to you. the younger people, the younger people are transfixed they love to buy simon properties when there is good news about retail sales. anytime someone says i might cruise, if they offer a test from cvs and everyone has to be tested, test, test, test, and they come out in initial release, they will buy norwegian cruise lines they are king of the obvious that's what they like. they like the obvious. tesla goes up, let's buy tesla hydrogen, let's buy hydrogen it is like they are herd animals. they are herd animals. hey, you know what, the steelers are in first place, buy the steelers that's the way they think! they do. >> it is working for them. >> it is -- that's my point. that's my point, the s&p 500 is

old-fashioned to these people. >> it was a number of months back we all thought, well, we'll watch this new cohort drop off, but they haven't >> they're more involved than ever and they're smart and, carl, they're fun. they love it they love individual stocks. even though we think they only love indices, they love stocks and i think it is fantastic. >> we hope it works out for them, guys we'll take a break more to get to with the opening bell in ten minutes. don't go away.

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available on the all-new nissan rogue. about 7 1/2 minutes before we get started with an opening bell let's get to a mad dash, cummins

engine. >> one of the greatest fights playing out right now, this is including among young people, is hydrogen versus electric and cummins this morning, they have a proactive approach to a gradual transition, saying, listen, far out in time, but they're investing right now. why is hydrogen interesting? because musk thinks it is a joke >> he does >> he does he laughs at it. no one thinks it is going to be now. the chinese are making hydrogen buses, hydrogen doesn't basically have -- i'm talking about green hydrogen, the best kind, the best kind. but this is saying that they have to commit now for the future but musk thinks there is no future to hydrogen. >> are they putting real capital behind that? >> david, yes, that's exactly what they're doing they're putting real capital behind it. >> okay. >> how did you -- you always know everything. but what i think is really important is that there is room for both see, that's -- there is room for

ev there is room for hydrogen an you have to be thinking that steve jobs, right before he died, what did he want he wanted a car that ran on water. well, a car that runs on hydrogen could be like that. and, remember, if you're ev, you plug into a coal-based system, 28% coal >> are we still 28%? i thought we were falling below that. >> trying. turbines that ge puts up, how do you pronounce turbine? >> turbine. >> right i'll know larry culp is one of us and ge is a regular company when they start pronouncing it turbine. >> while on hydrogen, i hear the music, does this have any impact on nicola, which is -- >> oh, my, david, you got that so right that was tomorrow -- that was going to be tomorrow's mad dash. by the way, i have lords town tonight. >> lords town? >> lords town. oh, lords town, got it

>> lords town. >> i know them okay. >> look at that, steve burns, he's top work horse, top work horse guy. that's a whole other world i'm involved with. >> it is so -- >> it is like kirby's fourth -- >> your worlds upon worlds upon worlds. >> i'm all these things. >>t yr iisouworld, we're just living in it opening bell coming up next.

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we hit some of the retail numbers today out of walmart and home depot, jim. we didn't touch on kohl's. comps down 13 and change we were looking for down 12 and change but i know it is one of the names you said has been challenged for a long time. >> you guys -- you have michelle goss on, which is really fabulous i'll tell you why. this is considered to be the ultimate nonessential retailer not unlike nordstrom it has been sneaking up. and so my question is, is there room for this company in a world where walmart and target and amazon are so powerful they will say that they have certain brands that people like. but i would come back and say, you know what, if you go to

amazon, you can get pretty much everything so i think you've got to ask -- this is a very much existential issue. david, well, no, you don't shop, carl, when you go to a kohl's, you look around, i can get everything from other places everything better prices. so i need to know why they exist. >> oof. >> have we decided partnership with amazon, pickup delivery points matter or not >> amazon doesn't talk about it. they talked about it, but people go through it and maybe they can say that they buy some things. look, i think kohl's -- i used to shop at kohl's. i used to get my gold-toed socks there. i like their shirts. we get makeup on our shirts. i wear their pants on the weekends, but my problem is, david, that i can't u use amazoo almost everything now. >> you're questioning their reason for being that seems pretty significant.

>> it is not like sart. >> you're not questioning tjmaxx, far larger market cap. >> i can get tjx stuff through the price of amazon, particularly underwear >> lower much lower. >> much lower. their underwear prices are to die for. giving it away practically giving it away there is a wall of underwear that comes under -- macy's has got it like four times they do come under amazon when it comes to underwear. amazon has great variety what are you laughing at >> actually i go there too for that >> we used to be downtown, carl, one of my favorite things to do is as soon as the show is over, sneak over to tjx and see what they had so good. >> we haven't seen it in a long time >> yeah. what was it like down there? that was a heavenly tjx. i bought a lot of pants there. >> we'll get back there, guys.

opening bell with some opening declines, walmart, home depot, walgreens, going to drag the dow down 80 points here at the open, jim. speaking of shopping in person, we got new restrictions yesterday out of california, philly, kansas city, chicago, new mexico, washington state, and iowa that's just the ones that were announced yesterday and we're expecting some more this week out of the likes of minnesota. how much of that red screen is -- do you think is because of that >> i think that the lockdown, the -- without the stimulus, is kind of an american tragedy that both parties just let everybody down there isn't any sign of compromise people need money to stay home they had money to stay home last time the number of firings is pretty great. we'll see a spike, i think, in unemployment but i don't know, does the president -- current president, david, i know he won the election, according to his twitter feed, but that's -- he's a minority in that

>> yes, he is. yes, he is he lost. >> you're definitive. >> i am. i'm willing to be definitive on that. >> you're going right against the president. right now, right against the president. >> for a long time, when it comes to making financial decisions, you can't rely on fiction. >> i agree with you. i think what happened is that without stimulus, there is a lot of people who are out of luck. >> yeah. and it doesn't appear we're going to get anything, certainly not between now and january 20th and very much unclear which as we all -- most people believe the senate will remain in republican control, what mitch mcconnell will really be happy to sign off on or willing to, particularly with the vaccine coming in the idea that, hey, the reopening is not that far away so the numbers that nancy pelosi and the house had once hoped for, that's just -- they should have taken the deal when they had the chance, maybe. if there was a chance. if there was people say they should have but it is in the clear what mcconnell would have gone for even with white house on board. >> scrooge isn't delivering a turkey to cratchet on this one

>> a rough couple of months. >> do you think they care? they're so busy fighting each other. carl, it is a disgrace. >> i'm not going to try to get into their heads, jim. that's dangerous territory i will ask you, though, about powell and the notion that the fed feels they need to do something in its place, right? even on duration or on the monthly pace o currently running 80 billion a month. but they could take it to 120. >> that man has a heart and sees exactly what is happening. i really commend him for recognizing the american tragedy that is developing between here and the vaccine because he knows that there are a lot of stores, ai lot of restaurants that cannot sustain this downturn when i look at the darden stock, which is above where it was, before the pandemic, what that says is every other italian place you want to go is falling

apart. versus olive garden, david. >> it is going to be a very, very tough go for any restaurants in the northeast or any area frankly that is going to get cold. i just think it is as simple as that, given all the restrictions you went through, and more to come, obviously the area we know well and the new york area, what they're going to go through, it is -- yeah, without any more ppp money or government aid, it is not going to be good >> carl, we have to watch peloton. peloton is the tale of the tape. >> why >> because if there is a big lockdown, it is going to last -- people will start buying pelotons again that's the way it worked the peloton indicator, like the lipstick indicator of the old days, the peloton indicator. i don't know david costin, i really love, he's very -- he's proprolific. he's saying healthcare is the cheapest it has been since when clinton went to merck and almost

destroyed them and said you're a bunch of jokers in front of the chairman now of regeneron, remember them, take two regeneron and you're better. i think we have to look at healthcare after this decline. i urged people to look at mckesson because mckesson is the company that is distributing the vaccine and going to do a great job. i think that's a nine times earnings now i like the stocks coming down. we can't just give up on everything. >> let's get back to the amazon effect this morning. we saw the red on the real time exchange there is a good amount of it just as a result of amazon's announcing amazon pharmacy, prescription medications delivered from amazon, prime members can access savings on medications and amazon pharmacy when paying without insurance as well and they're talking at over 50,000 other participating pharmacies nationwide. big savings is what they're offering free delivery within two days as well let's go through some of the

names. there you see them rite aid, walgreens, cvs, goodrx, all getting hammered on this move in but also the drug distributors, don't forget them. i don't know if we have cardinal health or mckesson interestingly, amerisource bergen is a -- is pill pack's distributor. but i don't -- i don't know if that necessarily extends to amazon pharmacy. remember, pill pack is going to still be operated as a -- a distinct service for customers who manage their multiple daily medications. >> you're right. look at how little they're down. >> yeah. that's not down as much. cardinal health, mckesson and we saw all the big drug -- i should say drug chains, cvs and wa walgreens. >> cvs bought aetna, now we know why, right how are we doing on getting some

people on to talk about it, carl yeah, because i don't know >> guys -- >> it is like friendly fire there among the drug companies they usually -- these companies love each other, frankly, it is a nice, i don't know, not an oligopoly, but this destroys whatever pricing they have, the umbrella >> yeah, in the meantime, pfizer did pick rhode island, texas, new mexico and tennessee for their vaccine delivery pilot program which is starting to get off the ground they chose those four states because of their different population personalities the other thing, jim, two things, one, masa son is talking about goals for raising cash, worst case scenario, b of a and the fund manager survey, most bullish of the year so far, hartnet says sell the vaccine in coming days and weeks as we think we're close to what

they're calling full bull. >> wow everybody who tried to call a top here in anything has been completely wrong i don't know where that money is going to go. it stays in. does it go to machinery, those stocks are up, does it go to the autos, those stocks are up my experience in this market is that the money doesn't leave it just doesn't leave. it is committed to stocks, there is still a lot of money on the sidelines. we have seen multiple expansion like you wouldn't believe. there is a note -- talking about how capex is down. and that has increased the possibility of the cash flow and the earnings, and maybe that's why the price to earnings multiple hasn't expanded there are companies that are doing remarkable things with their cash flow, and a lot of the -- a lot of the margins expanded in tech do they go back to tech? do they go back to tech? >> don't they owe us >> they always do. >> it always seems like --

>> they love growth. they go back to snowflake. snowflake. >> has snowflake's price revenue multiple come in a lot i haven't even -- >> like 100 times sales. easy come, easy go. >> yeah. 100 years worth of sales we know the sales will go up dramatically. >> it is the flying dutch men, no one has ever defeated sluitman. >> andrew ross sorkin holding his annual conference, did interview masa there was a back and forth that wasn't particularly positive in terms of the near term with the pandemic take a listen. >> well, as i said, the short plan, i'm optimistic it is still increasing the second wave or third wave of the covid-19 around the world and of course, the vaccine is

coming, antibody is coming, but who knows in the next two or three months any disaster could happen. so we are just preparing for the worst case scenario. >> but for the audience, i hate to be pessimistic given your optimism about life usually. what is that worst case scenario look like to you >> well, look, you know, before mass production, distribution of the antibodies, the vaccine comes, some major company could crash, the savior of the -- those, you know, collapse of the domino effect could happen and just one bank made entire, you know, the banking industry shake

up and that made worldwide crash of the stock market. so anything can happen in this kind of situation. i think it is getting better with the news of the vaccine's success, of the test but i still want to be prepared for the worst case scenario. >> listening to masa, given what softbank has had an interesting year, let's call it, they suddenly really changed their strategy in many ways, monetized an enormous amount of assets, brought back an enormous amount of stock we talked about their day trading, their use of enormous options positions, not clear they have done particularly well in that, in some technology companies late in the summer that they were buying. but you heard him, he said he's preparing, wants to be prepared for a worst case scenario, seems unclear, but making illusions to lehman brother and banking

crisis of 11, 12 years ago. >> what is it based on? his view, do you think his view >> yeah. >> but i find it troubling that he could be as bullish as he was on the most extended part of the market and then talk about how he's not good in your term unless the calls run out >> i don't know about where they stand in their options position, which has been fairly large. but masa had another come from -- near death experience, wework and the bank -- everything going against him, and then kind of really turning it around and realizing a lot of what had been undervalued assets at softbank for some time started to realize the value of it, not to mention the arm transactions, and so many different things, yeah >> you know what, you've got -- good segue to warren buffett, buffett blew out of his bank stocks, after really sticking by them for ages. he blew out of them. and is buying pharma, a la

costin's once in a lifetime cheap as they have been. but when i was chilled by the fact that warren buffett blew out of the banks i guess he still has a lot of bank of america. he blew out of jpmorgan like another tomorrow. >> yeah. >> and jamie dimon is on andrew's thing tomorrow. maybe andrew asks him directly. >> yeah, along with ruth porat tomorrow you're right, raise the stakes in bank of america, lower the stake in jpm and liquidated costco. that was interesting too >> yeah. liquidated costco. i thought that is a mistake. well, it is a mistake. it is just nothing but up since he sold it up since it became public. >> up pretty well with that apple position >> yes >> by far the largest -- >> that's because he saw people with this at the dairy queen >> there you go. >> haven't gotten any calls at all. david gets a lot of calls.

i'll take a picture of david. >> i do get a lot of calls. >> that's good i'm going to post that. >> all sectors are red got the vix back above 23. to bob pisani. hey, bob. >> a stay at home day for the stock market, carl good morning, everybody. happy tuesday. 4 to 1 declining to advancing stocks, seeing the reversal here of that vaccine, hopes you could say, today, energy, banks, leaders yesterday, laggards today. industrials also laggards. tech down a little bit here. consumer discretionary is doing a little bit better because that's because consumer discretionary is where a lot of stay-at-home stocks are today. if you look at the few stocks that are are on the upside, most in the discretionary group, amazon is trading up 1%. ebay, domino's, put up some of those there, domino's flattish, etsy, best buy, all those stocks, stay-at-home stocks dng doing a little bit better. money is coming into the stock

market one reason i pay close attention to the etfs is you can watch the money flows, you can watch, because there are shares created and redeemed depending on the demand for it. there has been a lot of money in the last several weeks going into the equity market, particularly large inflows into large and small cap equities, plain vanilla, s&p 500 index funds, russell 2000 index funds, big inflows into those in the last several weeks, generally there have been outflows from treasury etfs, finally, and even some outflows from the biggest gold etf, the gld, that's interesting as well. by the way, the etf business now passed $5 trillion in assets under management, a new record, we're going to see an all time record for inflows this year and a lot of it as i mentioned in the last few weeks speaking of money coming off the sidelines, did you see this -- the fund flows here from the bank of america, global fund manager survey, these guys are really bullish right now i was surprised at these numbers

here cash levels 4.1% that is a very, very low number. it hasn't been below 4% since 2013 it is not below it yet, but you get the idea they're taking money and putting it into the markets. 84% believe that global profits will be improving in 2021. and that might seem like not a lot, that's the highest level since 2002, the most bullish they have been on global profits improving in 18 years. and, of course, not surprisingly, the most crowded trade is long tech people have been doing that for a while, seeing money coming out of that. as far as tesla going into the s&p 500, this is a very good teaching moment to remind people about the power of the indexers and the power of passive investing. so there is about $30 trillion in assets under management at the s&p 500. that's about 80% of the market value of the entire united states stock market. passive investors own about 25%, the indexers that's why when tesla goes to the s&p, the passive investors

have to buy it this is why we pay attention. as for what it might do to the s&p it very interesting because tesla is going to be in the consumer discretionary section and right now amazon is the big dog in the consumer discretionary section. if you put that up, it is 40% amazon of the s&p consumer discretionary group right now. if you put tesla in, it is 35% so it is going to be 4%, 5% lower than it was before tesla will be about 10% of the consumer discretionary group and about 1% of the s&p 500 and, carl, here is something important, tesla is not going in at 100% of the market cap, only at 80% of market cap because 20% isn't publicly available tesla will probably be about number 14 or number 15, somewhere in the s&p 500, somewhere right around nvidia's market cap and home depot's market cap maybe, you know, 386 yesterday,

a a little less than that. big day for tesla. back to you, carl. >> yes, better late than never, bob, thanks. i know santelli is watching yields and yuan and euro to rick santelli rick >> absolutely. i'm watching all of those. let's start out with interest rates. a lot of data points today a bit light on retail sales, industrial production, though, surprise with some strength. look at intraday chart we traded down to 86 basis points if you look at two-day chart, below yesterday's 87 basis point low. that's important so now sit down four basis points we still have data points left but the important part is that you look at a month to date chart, we're losing a little momentum it is going to be very important to keep a close eye on stocks today. because stocks is the magic elixir that could give the extra kick to push the rates back up if you look to the month to date chart, what should jump out is last wednesday was the high water mark close going all the way back to pre-covid, march,

where we settle at 98 basis points now, let's switch gears and look at when what's going on with th chinese yuan and the dollar. the dollar is at a 29-month low, back to june of 2018 and the euro currency is at a 6-month low, sitting at the same place it was november 2nd. we need to pay close attention because we have a good look at what's going on with chinese economy looking at its currency. carl, jim, david, back to you. >> all right, rick, thank you very much. so obviously unwinding some of yesterday's gains, back to essentially friday's levels. the number of green dow components dwindled to salesforce and merck we're back in a moment

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>> take two. >> you got to fight the futures but seeing some traditional one, zoom up a little bit roku, those are the ones to watch. i think that there is -- i mentioned peloton is a great tell but i think, look, the numbers are terrible about -- and a lot of people will stay home and this is the tale of the tape again geez, we're really reverting to where we were. it's rather amazing. david, the numbers are so horrendous and there's no congressional -- what are they doing down there taking a break a little thanksgiving. >> carl, yeah, you know, we keep saying it but it's important to point out given everything else we're not going in the right direction when it comes to covid cases and hospitalizations >> in the meantime, the white house not really handing the baton to the president-elect's

transition team, absolutely. >> you posted a giuliani tweet just now, very important ♪ ♪

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>> tickets arrive the. fresh off their analysts meeting, i can't wait to talk to steve burns. >> jim, we can't wait either see you at 6:00. "mad money" 6:00 p.m. eastern time jim, good hour good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with kayla tausche. stocks giving back some gains as we pay attention in the meantime, business inventories are out, rick santelli has that. rick >> yes this, is the end of the third quarter. numbers in september jumped. september business inventories jumped up 0.7% that is the strongest jump since january of 2018. and we know we need to build wage it? s if we'll have a good holiday shopping season. aim east and go to diana olick for our november read for the

national association of home sentiment. a good number? >> reporter: rick, it is another blow-out number from the home builders sentiment in november soared to 90 on the national association of home builders wells fargo housing market index, the third record high in as many months anything above 50 is considered positive last november it was at 71 and at the start of the pandemic it plummeted to 30. but buyer gey demand has been incredibly strong since then as consumers want more indoor and outdoor space in the suburbs sales expectations in the next six months up 1.89 and buyer traffic up 3 points to 77. one note, nhb said 69% of the responses for this were received before the presidential election was called by the media on november 7th mortgage rates have popped up slightly since then. now regionally on a three-month average builders sentiment up everywhere but strongest in the south and west and october's read on housing starts tomorrow

morning so that should show a nice pop as well kayla. >> diana olick in d.c., thanks so much. staying in the district, mark zuckerberg, jack dorsey set to testify before the senate judiciary committee expected later this must. elon moi has more. >> reporter: this is their second time testifying in just a matter of weeks and the focus today will be on political content, false claims and misinformation now, the companies will try to highlight how they helped to secure the election. facebook saying it displayed warning labels on 150 million pieces of content that helped to register 4.5 million people to vote and helped sign up more than 100,000 poll workers. meanwhile, dorsey will directly address the controversy over that new york post story about hunter biden say that the company's response underscores the complexities of content

moderation he'll acknowledge that there is mistakes that will be made but that he'll also argue that the company has an easy and clear appeals process. he says, our twitter rules are base not on ideology or a particular set of beliefs. we believe strongly in being impartial. but republicans will challenge him on that. senator josh holly of missouri said he heard from a facebook whistle-blower who claims the companies coordinate to censor content. democrats are opening a new line of attack with senator chris coons of delaware, close ally of president-elect joe biden launching a new push to encourage the platforms to be more aggressive in taking down anti-muslim content. especially when it included armed protesters or intimidation so we will see if getting past the election helps take down the temperature of the hearing at all. >> we'll be watching thank you. another tech giant making headline, well, it is amazon, bertha coombs has more on the

company, very important jump into an online pharmacy business big one at that. >> something we've all been sort of anticipating for awhile amazon launching a full online pharmacy building on its acquisition of pill pack two years ago, the pharmacy is in that work of major insurers and medicare and patients can pay for prescriptions with funds from health savings account or flexible spendings account and can talk with pharmacists online or over the phone. now, one of the other things, prime members get free two-day shipping patients who need meds right away can get a card and go to a physical pharmacy for that but in addition they get a prime prescription savings comparison, at checkout that shows them scoupes if they don't use insurance like with a high deductible when it comes to personal health data, t.j. parker tells cnbc

that the experience inside the pharmacy is separate and distinct from amazon.com and that data will be stored in compliance with health privacy rules and not used for migrating unless you opt in. it has hit the drugstore chains hard, in part anticipating it they've been building up their pharmacists' in-store role and added more medical services critical during the covid pandemic and pbms offer mail order but good rx taking a hit the best known of the discount cash price companies and amazon integrating discounts for uninsured and high dedoubleable customers could be a threat. walmart also a big player in pharmacy and not surprisingly this morning ceo doug mcmillan reacting to the amazon news told analysts he thinks what customers want, an omni channel approach to health and wellness just as they do in the rest of their retail experience and that includes in-store services as

well as mail order back to you >> bertha, thank you for that it's obviously the story of the morning, mike santelli joins us to talk more about it. mike, among the reasons for some of the pressure on retail name, there's the retail sales number which was a miss there's obviously these names which run up between prints and then there's the amazon news which do you think is the biggest culprit today. >> when it came to walmart and home depot mostly just the fact that they've been such covid beneficiaries and numbers do not seem replicable. the government retail sales number has had a dampening effect a sign of, okay, we see the consumer not quite being as strong last month, we've been waiting for this moment perhaps where the stimulus had run out and they've kind of cut through savings.

i don't think it's an alarming number but definitely shifted the focus back toward downside risks in terms of consumers' capacity to spend. walmart's quarter is pretty unavailable. you would go right down the list and say in terms of free cash flow and comps and online exposure, everything was great but the stock came into it rat an all-time high and pretty full valuation, i would say, so i think those are -- i don't think the amazon news is really bearing on the broad scale retailers but, yes, i mean just very profound impact on the pure play drugstores for obvious reasons because they've run up tremendously this month. >> yeah, it's interesting. we spent the past decade really more than that, mike, talking about amazon killer categories where they come in and take the sand out of the sandbox but have seen progress among e-commerce getting their ducks in a row i wonder if you think that's as powerful as it was three, four years ago?

>> i think people have become conditioned to look at this as an opportunity for an overreaction in the stocks, in other words, it's not necessarily on day one amazon comes in and owns a category one bit of sensitivity, though, i do think in terms of pharmaceutical distribution is there's a general sense out there that the middleman, there's a lot of nontransparent friction in that business and if amazon does take aim at it, there's probably a way that it kind of makes the whole industry more efficient and maybe less profitable but this one-day reaction in cvs, rite aid and walgreens seems mostly about a little bit of hot money in the stocks because they were definitely on the vaccine trade. that's being unwound then you wait and see they are also in all the value indexes which everybody was buying hand over the fist the last couple of weeks, as well. >> it's david, which takes me actually to exactly what i wanted to ask you. we talked about for year, growth versus value trade value has suddenly come into favor very briefly but i wonder we've watched it so long,

inevitably it seems a return to growth any tell, signs that you look for to see whether, in fact this, move to value that happened since we got these vaccine announcements can be sustained. >> i think, david, if you look at the last couple months, not just since the pfizer announcement you have seen traction building in the cyclical area, i would draw a distinction between more cyclical type stocks and, yes, many of them also have value but not purely cheap but those exposed to a stronger economy. yes, you have seen a little more progress on a relative basis in that direction but the biggest case for value honestly and has been for awhile it's been down and out so long and so far stretched below growth on a very long-term basis that just your standard mean revision move becomes a much better prospect for value, so it's a little bit of a leap of faith you have to take to say the old rule as ply and these things can't stay out of whack that long or go that

far so you've seen only hauling signs this is an enduring trend, when the market is at a high to say there's going to be this seamless handing of the baton to a totally different style and happens in a pullback or bear market >> mike, you covered throughout the month of october the money that was on the sidelines as people waited for the election there was a certain pause, because they didn't know exactly which way the market was going to go but i wonder now that we've seen a few monster rallies on the back of this vaccine news if the flows are telling us that most of that money has come back into the market now. >> yeah, kayla, i wouldn't say most but you've had an aggressive move back into equ y equities this. happens around elections there is a bit of a lull in terms of inflows and people wait and see and they almost always come in and buy the market higher than they could have around the election but be that as it may you definitely have seen fun flows surge and bullish

sentiment go up and merrill lynch fund manager survey saying folks are all in especially on the cyclical trade so i think this could go on for awhile and doesn't mean because we've had three weeks of people getting excited that it's over now in a mode of having to watch for people getting a little too overexcited and overconfident and maybe the market gets stretched and has to bend a little bit and soften up in the short term just to kind of, you know, take measure of all that aggressive flow. >> mike, thanks. we'll talk to new a bit. our mike santoli michele gass. mcconnell on the tape saying he hopes we can reach bipartisan agreement on government funding by the end of the week we will see. >> yeah, he keeps pushing for a lame duck stimulus the vice president-elect says they want something in the $3

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president-elect joe biden meeting with labor and business leaders for the first time yesterday speaking out on the need for a relief package. >> i would pass the here rose ac

-- he.e.r.o.e.s. act. now, not tomorrow. now. and the idea the president is still playing golf and not doing anything about it is beyond my comprehension. >> jared bernstein, senior fellow joins us and former chief economist to biden when he was vice president good to see you. >> you, as well. >> so the plan that you just heard the president-elect lay out to pass the h.e.r.o.e.s. act has been a nonstarter in the senate and since the house passed the h.e.r.o.e.s. act back in may the democratic majority shrunk and republicans are still in charge of the senate for now so where is the middle ground? >> i think the middle ground is seen when you consider the kinds of economic challenges that we face right now both in terms of the surging virus and the slowing economy. so instead of thinking sort of top down and which, you know,

which number of trillions is the right one, think bottom up think about controlling the virus and the agenda that the president-elect has laid out he has consistently said and others have -- look, there's just no robust economic recovery out there without a serious play to control the virus then you think about unemployment insurance. we know that over 20 million claims are filed weekly and we know that many of those claims expire at the end of this year we also know that the increase in long-term unemployment from 1.6 to 3.6 million over the past two months is the largest increase on record so clearly there are significant needs out there. i haven't even yet talked about state and local budgets and small business i think the bottom up way is a good way to think about this >> well, i think republican was agree with that, jared certainly there has been support for additional unemployment assistance and to reup some of those small business programs.

the problems lie when you start adding the state and local funding and other stuff on top of that and when we look at what's coming up in the next few weeks, i mean the only piece of legislation that has any sense of urgency is the bill to fund the government where discussions are under way, so do you think that there should be support from democrats for adding a few of these programs to that bill if that's the only way to secure the votes? >> i'm going to echo what the president-elect said yesterday you have to zero in on what i think are the most important words vis-a-vis this topic in his talk and that's now. he said, you know, this should happen now, not tomorrow and so, you know, whatever vehicle that is available in the lame duck should be in play in this regard. you know, a lot of times president-elects want to wait until they get into office to start moving policies with their fingerprints on them here you have the president-elect and by the way

his chief of staff ron klain said the same thing on the news shows over the weekend, yeah, there are lots of things that can wait this is not one of them and, by the way, i think there's a lot of bipartisan energy behind this you know, there are a lot of red state governors and mayors who want to see and need to see state and local help certainly the surging virus in places requires this kind of intervention and it reminds me of biden saying, you know, i'm not president of red or blue america. i'm president of all america and all america needs this help. we actually saw a hint of it in the retail sales report this morning that came in below expectations >> jared, it's david it still seems highly unlikely you'll see any action between now and when president-elect biden takes office i mean you can say all you want about local leaders and certainly they see what's happening on the ground but there's no sense right now from senate leadership that they're going to move on anything and

the president, president trump certainly doesn't seem interested in the slightest. >> well, you know, you may be right. i hope you're not but -- you're certainly describing a lack of action and urgency i too have observed but it's not going to keep me from essentially having my hair on fire about this because that's how i feel. i mean, i think that the economy is at a much more precarious place than that lack of urgency would suggest and i think the president-elect's comments yesterday reflect that and he is particularly tuned into this relationship between the turning virus and impact on commerce and again if you look at today's retail sales report you can start to see perhaps i'll interpret one report that in-person services look like they got dinged and i suspect if we were able to dig down into that geographically we would see a connect between the virus. politics can surprise you and things that look impossible today can look kind of inevitable a few days from now so i'll continue to hammer on

this and i'm sure the president-elect will as well >> jared, it feels like coverage of household finances is going to be bipolar in the next couple of months because the wealthy obviously have a lot of savings on the sidelines but a lot of benefits and protections, moratoriums expire in january. i'm reading a piece that says it's going to be a k-shaped christmas. i wonder if you'll go along with that. >> totally i am really appreciating you brought it up. i usually start with this. now, somebody pointed out yesterday you've got, you know, the stock market going up and you've got lines at food banks that are, you know, through the roof and so you've got this very much k-shaped dynamic. i'm always compelled when people cite the stock market as president trump has done as some sort of metric as to how americans are doing, the bottom half own less 1% of the value of the stock market

less than 1% so, yes, this is critically important and if you look at the kinds of relief measures that, you know, we've been emphasizing whether it's unemployment insurance, help for small businesses that can pick up the phone and get the kind of loans out there, if you look at as you mentioned eviction potential and the difficulty meeting nutritional needs, all of those measures are in the very h.e.r.o.e.s. act that the president was citing so it's not just about the size of the stimulus it's about its targeting to the bottom leg of the "k." >> jared, basically all of this rests on the relationship of the president-elect and leader mcconnell. they worked together for decades but haven't spoken briefly before we go how would you describe their relationship? >> the vice president -- i'm sorry, the president-elect, got to get used to that has a very long history of reaching across the aisle and at moments

precisely like this emphasizing the goal here is not about red or blue, the goal is to help the country and i know his deep skills, intentions, motivations in that area and i think america is going to start seeing some of that >> mcconnell is saying now that the next few days will show whether any sort of bipartisan compromise is possible we will see. jared bernstein, always appreciate your perspective. >> thank you very much >> let's get to our etf spotlight looking at the banks, kbe. they're under some pressure coming off what is a second positive session in a row. the group down roughly 20%, though, as you see, 18. %. most of the financials in the red. that includes pnc by the way one day after that huge deal, 11.6 billion in which it is spending to acquire the u.s. operations of another company. we are moments away from the start that have q&a of that

senate hearing that includes mark zuckerberg of facebook and jack dorsey of twitter don't go anywhere. ♪ >> announcer: etf spotlight by invesco. let's invest in greater possibilities together ♪ ♪

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shares of tesla are riding high up 10% plus on this news it will be added to the s&p 500 next month holding on to about a one-month high phil lebeau has more on how this will work. good morning, phil. >> we don't know the exact mechanics. we do know it joins the index december 21st. when you look at the stock what's interesting a lot of people said, look, when it joins the s&p 500, hey, it's not going to be a huge change in the stock because everybody knows it's eventually going to happen oh, no, it's up more than 10% today. wet bush securities, longtime tesla bull saying we believe the sustained profitability trajectory as evidenced in the september quarter was the final straw that got musk & company into the s&p 500 this time around despite all the noise about tax credits on the street

and there is plenty of that. plenty saying they're only getting to profitability when you factor in the zev tax credits. look at tesla over the last year versus the s&p 500 no compareson at all interesting to see when you look at shares of tesla over the last ten years keep in mind that its volatility much higher than a lot of other stocks in the s&p 500 in terms of daily volatility, somewhere in the range of about 2.59% is how much that stock is moving around so the impact of this. we'll see what it does after it is factored in on december 21st. remember, as you mentioned, carl, when it actually happens, the question that is being discussed right now is do they do it all at one time and how much weight it will have or two tranches, once half on december 14 th and the other half at a later date >> phil, i'm so glad you are showing that ten-year chart.

it's staggering. the last five quarters of profitability we've been talking about. extraordinary run. up next on "squawk on the street," connecticut -- yes, exactly, connecticut governor ned lamont joins us. covid cases rising in his state. "squawk on the street" back in two.

welcome back, everybody. i'm sue he rear r your cnbc news update democrats expressing outrage after georgia's republican secretary of state brad raffensperger said senator lindsey graham suggested he

throw out legally cast votes graham says his comments were misinterpretty representative ilhan omar said graham's move was, quote, insane and illegal end quote. in bangkok pro-democracy protesters breaking through barricades around the thy parliament many wore protective gear in anticipation of the water cannons police use to drive they will back. legislators are debating constitutional amendments some of which would roll back changes made three years ago during military rule. and check out these images this volcano blowing its top in italy. these time-lapsed shots so the stromboli volcano erupting with the thermal images highlighting lava flowing 3,000 feet down to the sea. just north of sicily amazing. that's the news update carl, i'll see you back in an hour >> all right, sue, thank you very much. take a hook at this trading session. the s&p right back at 3600 today. s&p just south of 29.7

forecast for q4 gdp growth in flux with the new covid restrictions we're seeing in states and municipalities along with the impact of other news. steve liesman is looking at where the consumer is headed in the current quarter. hey, steve. >> hey, and the market, carl, never has the market's optimism been so tested by a grim present, a vaccine and a return to normal sometime next spring expected only after a surge in cases, a large rise in deaths and further weakness coming in the economy. as a result of the outbreak goldman sachs one example recently had estimates for growth in the first quarter next year from 7% down to 3 1/2 chief economist yan hatsi says it's to the down side but goldman adds back three points because of the positive effects of the vaccine jason on "squawk box" said the

first quarter could be worse than the estimate as a result of potential lockdowns. >> there is a not insignificant chance that you have negative gdp in the first quarter and very unlikely for the fourth but it is possible in the first quarter given again the fact that we're locking big parts of the economy down and given the fact that you're not going to get the fiscal stimulus. fiscal stimulus was critical in the rebound. >> health experts add the surge in the vaccine are closely related. the worst the situation before the vaccine is deploy the less help the vaccine provides to the broader nation and to the recovery dr. bruce y. lee at cuny says if the virus goes unchecked we'll be so deep in the pandemic that the vaccine alone will not be good enough to return us immediately to normal so the more people infected going in, the more cases these models predicts even after the vaccine

is deployed so the news the next several months, carl, will test the mettle of the market's optimists. >> thank you well, covid cases and hospitalizations continue to rise across the country. connecticut, new york and a handful of other northeast governors held an emergency meting to discuss how their states can avoid another lockdown joining us connecticut's governor ned lamont seeing 6% of cases resulting in hospitalizations that is up sharply from what had been 1% in mid-october governor, thank you for joining us i spent a good amount of time in your state i've gone to restaurants to pick up food or eat outdoors when weather permitted but have to admit to being surprised as to how crowded inside many of these restaurants were or are. even with rising cases, is that a concern to you and are you focused on indoor dining perhaps as something you may start to restrict >> you know, we certainly, carl, thank you for having me on -- >> david, sorry.

>> talked to all the regional governors on this in terms of what would be next steps we felt very strongly in terms of people coming back to our state from college campuses, one thought the test was very important and trying to keep our local schools open, especially k through 8. restaurant, we scaled them back. they can't be open after 9:30. that's last call we want them to close and doing everything we can to keep the indoor dining open at no more than 50% capacity. but if you're telling me you're seeing crowding beyond that, give us a call we'll enforce it >> 50% is different than 00% of the tables i think we've all learned that it's the capacity that's allowed in a given area but you point out, of course, the key give and take which is you don't want them to suffer any more than they have. you don't want to go to the lockdown situation where you're going to deal terrible economic blow to so much of those small

and medium size businesses so what are you looking at to sort of make these decisions in terms of metrics as to how far you do need to go >> the cost benefit and want to do things that work. let's face it when, it comes to restrictions that make a difference, we've already put in place like i said the curfews at 9:30, 10:00 at night and look at indoor dining and maybe gyms going forward, things much better done in association with our neighbors. but nothing imminent at this point. >> governor, it's, of course, hard for any state to make a decision to dial back business when there's no federal backtop to compensate for the business that is lost so tell us about where connecticut's budget is. what money do you have in reserve if any to help some of these businesses out if, in fact, it is your office that disallows them from being open and getting revenue? >> you're right. i mean last time in the spring

when we had a closedown of some of them we had the ppp loans and other support. germany has closed them down but have federal support to make sure they don't go out of business and can keep powering through. it's impossible for the states to do this by themselves so we do look to the feds for some support but thankfully connecticut does have a rainy day fund so if it takes the feds a little long story make up their mind we can be there in the supporting role. >> governor, speaking of that and just the delicate balance that this is between the safety and the money, i wonder has there been a restriction in which you have said, we can't do that, we'd like to but we can't implement the restriction because of the harm that would be caused to the business and the fact that the back stop is not there either on the state or a federal level. >> not so much i mean, you got to lead with

public health if you're a governor and our infection rate has gone from 1% the lowest in the country up approaching 6% right now so we see that trend i see the dark infection clouds coming over from the upper midwest, western pennsylvania, western new york, here we go so we've got to be ready but i want to make sure that whatever restrictions we had to put in place actually make a difference you know, i'm not sure that, for example, closing retail establishments makes a difference if people keep their distance and wear the masks. last time around we kept construction open. especially outdoor construction, what a difference that made. >> yeah. you know, we mentioned, of course, kids will be coming back from colleges around the country for thanksgiving in your region as well and testing is going to be important. there's a lot of parents probably going to be like get that kid tested before they come in the house is adequate testing available without having to wait a long period of time or are we still lagging? >> well, we do more testing than

just about any state in the country. we have 200 sites all around the state. people can get that done for free but i'll tell you, in the last few weeks there have begun to be lines. people are being made aware again of the scope of this pandemic but when it comes to the kids who are going into the schools, we got the binax test and can tell in realtime ten minutes whether that's the flu or covid and whether we have to quarantine or whether that school can stay open when it comes to colleges we want them tested before they come back to connecticut. >> yeah. finally, governor, i mean you mentioned the spring, of course. when the entire area really went into lockdown but we knew so little then, it would seem, in terms of the virus and where it was most easily communicated how much more have we learned which then informs the decisions you'll be making in the current period >> we have learned that there really wasn't much of a national stockpile in washington so we have all the ppe we need for the

near term and so do our hospitals. last time around we were doing maybe 100 tests a day, now we're doing closer to 20,000 tests a day. we have a lot more hospital capacity we know how fast we can get that ready to go. my worry is going to be hospital personnel. that's something we don't have as much control over and last time we could borrow from states that had low infection rates today there are no states with low infection rates. >> yeah, we've had a number of health care professionals say the same sort of up to them it's not like the cavalry is coming governor, appreciate you taking time thank you. >> thank you, guys >> the q&a has begun with mark zuckerberg and jack dorsey of facebook and twitter take a listen. >> well, i think you pointed out that we are facing something that feels impossible. we are -- we are required to help increase the health of the

conversation while at the same time ensuring that as many people as possible can participate. and in order to do so we need to make policies so that people feel safe and they feel free to express themselves, to minimize harassment, abuse, of organized campaigns to artificially amplify or influence a particular conversation, and that policy creation, that enforcement is challenging, but also it is more or less opaque to the public and that's where i think we have a get. we have transparency around our policies, we do not have transparency around how we operate content moderation, the rationale behind it, the reasoning and as we look forward, we have more and more of our decisions of our operations moving to algorithms

which are -- have a difficult time explaining why they make decisions bringing transparency around those decisions and that is why we believe that we should have more choice in how these algorithms are applied to our content, whether we use them at all so we can turn them on or off and have clarity around the outcomes that they are projecting and how they affect our experience >> thank you mr. zuckerberg, very quickly, please what did you hear? >> senator, i heard that there are issues around content moderation as well as other areas and frankly i'm optimistic from the statements that we may be able to move forward and hopefully update some of the rules for the internet around these areas. i've been encouraging and hoping that we would do this for a couple of years and from your opening statements it sounds like there may be now enough

common ground on views that real progress can be made here. >> so, from my point of view the question for us is when it comes time to flag content as being reliable or not reliable, do either one of you believe that the government should do that? is that a solution where the government sets a regulatory scheme that talks about what should be up and what should be down >> i don't believe so. i think that would be very challenging. >> okay. do you agree with that, mr. zuckerberg >> senator, for certain types of illegal content i think it may be appropriate for there to be clear rules around that. but i would side -- clear harms like child exploitation and areas like that, terrorism, i would agree with your sentiment that that's not something that governments should be deciding

on a piece of content by piece of content basis. >> if we take the government out of the picture at least in noncriminal areas, should we leave it up to the industry to come up with best business practices? in terms of how to moderate content? >> i think that's best i think we need a line around the problem that we're trying to solve and there are many solutions to solving those problems but i think we also have to focus our efforts on what is going to have the greatest impact and we believe that the greatest impact is going to be found in how we deal with algorithms and use those algorithms because they are responsible for showing us what we see or what we don't see and they need to be -- there needs to be more choice in their use >> do you agree with that, mr. zuckerberg >> senator, i think that -- that

there is a role for regulation and the process even if not defining on piece of content by piece of content basis and one areas i advocated for is regulation around transparency that goes beyond just about what the policies are and what the process is, but also goes towards results and as an example of this, every quarter facebook releases a community standards enforcement report basically a transparency report that breaks down each category of harm, potentially harmful content that we track from terrorism to child exploitation content to incitement of violence to pornography to -- >> yes, if i may, i don't mean to interrupt who sets those community standards? how are those set by the company? >> senator, we have a policy team that consults with a number

of different stakeholders and outside groups to make sure that we're getting feedback from a broad swath of -- >> is that publicly known? >> senator, i believe so and our head of content policy has testified publicly multiple times. >> okay. so when it comes to fact checking, would you give us a list of the people used to fact check? >> senator, yes. we work with a number of independent organizations that are accredited by the pointer institute and they include reuters, the associated press, "usa today," factcheck.org, science feedback, politifact, check your fact, lead stories and the dispatch in the united states >> i think it's important for the public to know who sets community standards, how they're set, who does the fact checking,

who you rely upon to do that i think that would go a long way to people having a better understanding of the decisions you make mr. zuckerberg, do you believe your product can be addictive? >> senator, we certainly do not design the product in that way we design the product to be as useful and meaningful -- >> that's not my question. my question is there seems to be an ample body of growing medical evidence that social media sites have an addictive nature to them do you agree with that >> senator, i don't think the research has been conclusive but it is an area that we care about and study. we certainly do not want our products to be addictive we want people to use them because they are meaningful. and we take steps to make sure that this is the case so, for example, you know, we don't give

the team that's running newsfeed a goal around how much time people spend on our products which goes counter to a lot of memes and misiones information out there around how we operate but my goal is to help people connect and find content and interaction that is are going to be meaningful to them on our service and our view is that if that's what we deliver over the long term and people find the services useful then they'll use them more. but i don't think that company should be optimizing to just encourage people to spend as much time as possible on them. >> time is about up. have you seen the movie "social dilemma" >> senator, i'm familiar with it >> okay. have you seen it, mr. dorsey >> i think zuckerberg and dorsey both said they had not seen that picture. that's chairman graham of senate judiciary on this discussion of content moderation of facebook and twitter. david, not a lot of actual news out of it although dorsey did

say that the week of october 27th he labeled that -- twitter labeled 300,000 tweets, about 0.2% of all u.s. election-related tweets and he's been pretty consistent in saying it's not the policy that's the problem. it's how twitter is communicating that to investor and americans. >> and continues to say improvement also continue. yeah, carl, i mean i thought zuckerberg's -- this interchange we had between senator graham and zuckerberg was interesting on the addictive quality of facebook or for that matter twitter and could have been asked to jack dorsey saying he doesn't believe that is the case although he is aware others say otherwise. it's not as though we'll have these conversations for years to come given the power of the platfors to shape public opinion. >> the power of these platforms, david, the wide-ranging nature of these conversations, this is a hearing about perceived political interference in

content that is hosted on these platforms but you saw chairman graham take an opportunity there just to ask a general question about whether these are platforms that are dangerous for people so certainly a wide-ranging conversation there and one that's essentially a no win for the executives because political nature if they say that they police too many posts, then that's going to anger one side of the aisle. if they say that they police not enough, it's going to anger the other. but an important conversation at a high level to have nonetheless. carl >> we'll keep an eye on the shares reaction to news out of that hearing in the meantime, the nba, as you know by now, wrapped up a historic season from that walt disney world bubble with zero positive covid-19 tests. joining us day before the nba draft is the nba commissioner and chief operating officer mark tatum. great to have you this morning thanks for joining us.

>> carl, thank you good to see you again. >> congratulations on the season we tried to make our way through summer we mentioned the discipline that league and the teams had in the bubble, what is the biggest lesson you learned >> putting the health and safety of all the participants first. and we consulted with public health experts we consulted with infectious disease specialists. and local government authorities to put in place the set of protocols that was designed to keep everybody healthy and safe. and the most important thing is that the players, the coaches, the teams, they all actually adhere to the protocols of social distancing, of wearing masks, of washing their hands. just good general hygiene. and that kept everybody safe and enormous sacrifice many of the players and coaches

and staff that were down there spent months down there. some of them away from their families and friends but that was what made this thing successful is that setting up of the protocols and the adherence to the protocols by everybody involved >> right now hopefully come next year, seasons will not be as firm about p borders. because vaccine will be working its way through the population but even aside from the vaccine deployment, let's say it's late, do you think next season and with other leagues as well the walls are going to be a little more pourous does the bubble model have to be the only one >> it doesn't. as you have seen in other sports that are operating to day, we have announced that we're going to start our season december 22nd we came to an agreement with the players association on that. and then we would go until july. ending right before the olympics and, again, i think it's dealing with the public health experts

and our infectious disease specialists to create a set of protocols that in this environment is designed to keep everybody healthy and safe >> nearly a year to the day that china first uncovered what we now know to be covid-19, the country claims that it has nearly fully extinguished the virus in that country. the nba had a high profile with china last year. but at the time, when you sort of made amends earlier this year, there was a suggestion that maybe some preseason games could be played there. is that still under discussion >> we have a long history of doing business in china for 40 years and bringing games to china. including at the beginning of last season. and so exporting our games to places like china, to india, to africa, to mexico, these are all places where we actually brought nba games and the live game experience and we would

anticipate doing that going forward once it becomes safe to be able to do that >> mr. tatum, is this a concern for the league >> it's not. if you look across allof sports, including this weekend's masters, you know, we're seeing record declines across the board in all of sports and there is a lot of reasons for that obviously, with the calendar the way that it is, we're playing during a time that people are aren't accustom to watching the nba. the households watching tv during the summer time which is when we were playing the bulk of our games in august, they're just fewer people watching tv during that time period. we still very much on all the games, the final that's we played, we were winning the nights in key demographics for advertisers adult 18 to 49

audience so that's not a concern. and the engagement around the nba product through social and digi digital immediamedia, we have to billion likes and followers. so no major concern. but i will tell you, we're looking forward to getting back on our normal cadence and our normal schedule of playing -- starting the season in october which is why this season we wanted to get started, start in december and july so that we can get back on our normal cadence >> yeah. your point about masters ratings is a good one. numbers just coming across this morning. lowest rated masters since 1957. which is pretty stunning one last thing, mark we talk about college sports getting interrupted and their seasons are in some cases chaotic and games not happening. leagues not happening. what does that do to the nba pipeline since we're so right in front of the draft

>> we're fortunate that we have a ton of talent that is getting ready to enter into the nba tomorrow night players like ball and anthony edwards from georgia although they didn't get the opportunity to display what they can do during the march madness tournament, they've been well known to our nba teams and to passiona passionate basketball fans around the world tomorrow night is going to be the night where dreams come true so many of the young players that have worked so hard for that night to get their name called one thing that we're doing in the new virtual world is we're going to be able to have 58 prospect participate in the night and try to re-create for them that experience that they would have otherwise had at the barclay's center live and in person.

they're getting draft cap and they're getting a draft basketball and they're getting beats head sets and speakers so they'll be able to participate in that night as they would on a normal night in the barclay's center >> that's fantastic. mark, thank you. we'll be watching. by the way, nba's first ever virtual draft does kick off tomorrow night on espn at 8:00 p.m. eastern time. "squawk alley" is back after the break.

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