tv Squawk on the Street CNBC January 27, 2021 9:00am-11:00am EST
9:00 am
interview with chamath at 12:30 eastern time that is must-see viewing you would think, especially today. futures right now, as you can see down, about 300 points who knows, nothing surprises me anymore. we'll see you tomorrow both of you. andrew, becky, make sure you join us. "squawk on the street" is next good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with david faber, jim cramer has the morning off, dow futures do imply a fifth day down, the longest losing streak in almost a year when we watch gamestop and company, a fed decision this afternoon and q4 earnings from corporate giants and this hour alone, boeing, amd and starbucks ceos will join us and another morning where we will have to start with gme. >> you heard leslie talking
9:01 am
about it don't want to lose sight of the broader market as you just said, carl, given things are looking lower this morning but this has become sort of an overarching story. and frankly, those of white house have been doing this for a very long time, myself included, i know if jim were here we say the same because we've been talking, never seen anything quite like it, not to mention any of the people i've been speaking to. late into the night last night, because people are fascinated by this and horrified by it, but it's unlike anything we've ever really seen. i've made reminisce to the late '90s with yahoo chat boards and things moved slowly in the technology and executing trades and the like and they were comparing ideas what to go long and many of the names were completely speculative and in fact, many of those companies are no longer with us, carl, but in this case, you have concerted or otherwise, these efforts of people to go in particular after
9:02 am
companies that have very large short positions. and so you're seeing some very strange things in the market it's not just gamestop of course, guys look at some of the others amc is perhaps more insane in many ways. this is a company on the edge of bankruptcy so many times, as you well know, carl, given the difficulties it's faced in its core business and by the way, i think this is interesting, people are also confusing amc networks, a coat totally different company, with amc and that stock is up as well and if you look at the spread has widened to the likes that nobody has ever seen, carl and let's get to some of the news this morning, i guess, to start off gamestop doesn't look like they're going to be too many people covering shorts any more. melvin, you know, by the way, we use the term everything wants to thank they're a superstar hedge fund manager and they all get paid like that, and i said many times, and there are hardly more and he has the right i think to actually call himself that, an extraordinarily good allocator
9:03 am
of capital but here he seems to get caught up in something he has been unable to mitigate or manage his risk appropriately and certainly that is an appropriate component as well of being a good hedge fund manager. fundamentally, gamestop who knows what that company is worth, i can guarantee you it is not worth $247 and probably not $200 or 100 and we have had plenty of analysts come on and explain the challenges that company has, and a myriad, and that said, mr. plotkin has not done a good job of managing the risks and flows and he has suffered as a result the news is, he is not going to have to cover anymore. who is, carl, is the question there. how many other people are still short? does it matter anymore i'm hearing of a number of other hedge funds i don't have the name, are in a similar position, because again, this is widespread we keep showing gamestop let's show some of the other names here as well if you were short amc, short
9:04 am
bed, bath and beyond and short, just go on through the names that we've seen, they are actively coming after you, coordinating perhaps, in some way, on the reddit chat room, wall street bets, maybe not, and i mean carl, you know, nobody's going to the movies, i mean if you're adam aaron right now, you're selling all the stock you possibly can, right? >> that was our question to one of the now former gamestop analysts yesterday, can what degree can the companies take advantage of this incredible dislocation. to your point, we are seeing attempts at least to publish fundamental analysis today, it's b of a reiterating gme with an underperform price target 10 but obviously that's like spitting in the wind right now. >> it means nothing now because these efforts are undertaken, they are successful, and they are going after these companies that have very large positions and astronomical valuations that have nothing to do with the
9:05 am
underlying fundamentals with the company and what is the case with amc and any number of others that we will show you throughout the morning as i said, there are a number of other hedge funds that are going to have to get what we call rescue financing, similar to what we saw in the case of melvin when he came to sit schedule because they're not it in a position. prime brokage, i will start checking with them, low cost, express, again, koss, express, and the question become, carl, is there a place for the regulators here to get involved in some way? you know, there's nothing wrong with people conversing in a chat room and exchanging ideas. in fact, there are plenty of dinners involving ten hedge fund managers who manage a collective $100 billion getting together. and exchanging their ideas but to the extent that this is a concerted effort, and by the way, the cheerleading from chamath who will be on later this morning, on with scott wapner and elon musk to a
9:06 am
certain extent to their tweet, they play to this audience chamath has benefitted from the interest of this audience in terms of spending many spacs higher, especially when he has a deal that's done, musk, we know what's happened with tesla, i just, there is an element to this again, i'll just come back to it, i know we got to get to boeing, that is unique unlike anything i've ever seen and by the way, some of the money being spent here on some of these call positions is enormous it does make you wonder whether it is all just retail. and the fact that somebody could list 200 calls on gamestop last night, and actually somebody would buy them is sort of shocking there's so much here and we will continue to watch it closely, carl. >> that's why the comments were relevant on "squawk," and hearing from massachusetts regulators and try not to have it steal all of the oxygen in the room but from corporate earnings, on that topic, phil labeau, has the ceo of boeing.
9:07 am
>> let's bring in dave calhoun, ceo of boeing, which just reported its fourth quarter results this morning, a much wider than expected loss dave, i think people are going to look at this, a loss of 15.25 a share, the expectation was 1.80 a share, i know you have a slew of charges in there, more than $8 billion in charges but what happened in the fourth quarter and how do you regain the narrative to investors that you do have vision in terms of where this company will be headed >> well, phil, first, good to be with you, and i'm sure glad 2020 is in the rearview mirror. and yes, we did have to make some adjustments, largely accounting adjustments, and when i think about entering this year, and those adjustment, i sort of look at it optimistically, not pes misscally. why? well, the one big change was the 777 x program, as you know what's happened with the triple 7 x program, we had to, based on
9:08 am
everything we've learned in the max recertification effort, the procedure, the global regulators, and throughout the world, we put more time into the certification schedule for the triple 7 x and we're determined to meet every compliance requirement from every regulator in the world on day one. which meant that we had to incorporate a few changes, so it will be a little more costly it will take a little longer, ultimately, to certify and then with respect to how you account for the programs, the adjustments we've had to make around demand, due to covid are largely in the early years of production, which speaks to a large portion of the accounting that we use to value program, which means that this kind of adjustment ultimately required, and the good news for that is, that we are determined to continue investing in the triple
9:09 am
7 x, and ultimately, when it moves to satisfy a market of roughly 1500 airplanes out there over the next 20 years, we think it's going to be one of the real money makers for our company so like our predecessors, we have been looking at ultimately performing with this great wide body aircraft. and that was another one, with the tax asset valuation that hit us so those are, i think the unexpected numbers that again, they don't cloud my view of the future and/or the boeing company's view of the future. >> you are taking a $6.5 billion charge on the triple 7 x and putting out expectations for its entry into service from 2022 to late 2023. how confident are you that that wide body market and we're talking about the international market, that it will be back come 2024, 2025, or are you pushing things out further in
9:10 am
terms of your expectations for when the market starts to come back >> no, we really haven't expanded it further, but the early years of the, of our production rate, largely because of covid-related demand reductions, those early years are definitely at lower rates, and we announced and talked about those rates, broadly, so and again, that is sort of what gets calculated inside this mutual accounting quantity that we use for our program, which is why that number is there we will leave that accounting quantity with pretty significant cash margins and ultimately satisfy that long-term demand and yes, i'm as confident as i have ever been in that long-term demand and the application of this wide body airplane. and i think the competitive dynamics of this airplane, relative to what's out there, give it another big advantage that prior wide bodies have not had. we usually have had to compete
9:11 am
with one or two foreign engineered airplanes against one another and this is a large twin engine and differentiate it in every way i can think of. >> dave, let's switch gear and talk about the narrow body market 737 max. eosa this morning, giving its certification, or returning it to service in europe, saying hey, look, if you're an airline in europe, you're good to fly this again how much do you expect that to potentially start to spur some of those european airlines to say okay, what are we looking at in terms of future orders? do we amend it do we add more orders for the max? to a certain extent, are you in a holding pattern because of covid-19 >> well, i would never characterize it as being as a holding pattern but the market is definitely a holding pattern. look, the eosa lifting of the ground order is enormously important to us. the united states, canada, and
9:12 am
now europe, amac, south america, right now, we've got a large part of the global footprint now having lifted the order. most importantly, the early indications of this airplane are everything we hope they would be we've now had 2700 revenue service flights, 5500 flight hours, operating performance of the airplane has been fantastic, all of the efficiency gains, that we're anticipating that's in there, and maybe the most important number in the conversation that's been going on for several years, the load factors on these airplanes are as good, as good as the lode factors of the narrow body fleets in general. so nobody is reticent to want to fly on the max and that's very important. >> the balance sheet for a moment, if i might, phil mentioned of course some of the charges that you're taking this quarter, do you have sufficient liquidity to face whatever may be coming at you
9:13 am
or at least what you expect for the rest of this year? >>, yeah, david, i think we do. first of all, it is our metric of choice, between the beginning of covid and recovery, we're nowhere near recovery yet, so that is metrics all of us are focused on, to make sure we have the liquidity we need to continue to invest in our future, and to take these lower production rates in hand so far, so good. in fact, i would suggest that we would probably feel better than we have over the course of last year, and things are beginning to remedy, and the 737 max is now being delivered, we have too big of an inventory in the 87 world and that will begin to deliver over the course of the year, so cash flows improve and we will be in the market and it will mostly be with respect to maturities of refinancing, as opposed to additional liquidity needed so we feel pretty good and we continueto write very
9:14 am
conservatively. >> and when it comes to the value this morning, i know a number of the major airlines are looking at the middle of the third quarter this year perhaps for significant increases in traffic, at least they're hoping and who knows given the course of the virus and the vaccine administration, but what you are expecting when it comes to particularly the second half of 2021, dave >> that guess is probably in line, in fact, is in line with my thinking. i think all of us were hoping that the vaccine distribution might go a little smoother, a little more smoothly, penetration a little longer, and we'd be down the other side of the epidemiology curve at this moment and then therefore, be ready for an early summer of traffic i'm not sure that is going to happen i think the airlines are hedging their bets on that front i think they're right to do that mid second half and midsummer, and we think the penetration of the vaccine is where it needs to be, i think it will come back and said it all along, there will be robust demand when the
9:15 am
time comes, pent-up demand in personal and business travel so i think that's the way it will play out and it will be all pretty much all of these domestic routes here in the united states, of course china, which is ahead of all of us, india, and then the regional market, in europe, it will be the next thing to sort of begin to break open, but they have the additional complication of border protocols that they will have to come up with a consistent response for. but i do believe the recovery will be robust but i also believe it's now sort of mid to latter summer, and unfortunately, beginning of summer >> one final question for you. what about china what's your sense in terms of when they might unground the 737 max, and then broader, longer term, do you sense that perhaps this year, boeing lands a significant commercial airline order from china because i think it was back to 2018 when you had a significant order from that country. >> phil, it's a great question
9:16 am
it's very important to our medium and long-term future. china as a market matters a lot to us. we are confident that we are progressing with the caac, the recertification of the ungrounding of max, just like other regulators they have their own approach and requirements that the other regulators might not have and we have been progressing, prosgressing quite well and we are at the moment trying to schedule test flights and covid has made that a little tougher than you might think but we will i believe get all of that done and the airplane will fly again. i'm optimistic i'm optimistic that, you know, we get constructive with china, there's no question there are important training issues that have to be wrestled with around intellectual property and other things, but then there is also a mutual dependence on our countries around trade itself, and some of those areas that aren't so sensitive. and we think airplanes is
9:17 am
actually one of those areas and china has a way of constructing all the airlines and we've listening and stayed with them throughout the whole process so yes, i'm optimistic at the fact that we can reconstruct and do trade and get orders out of the china market we've been getting them but they've been smaller and multi-focused. and passenger market is what we need to focus on. >> a lot to watch for 2021 dave, thank you very much for joining us this morning on "squawk on the street. guys, carl, i'll send it back to you. watch shares of boeing under pressure right now after reporting that wider than expected loss. let's see how this progresses throughout the day >> good stuff, phil. we appreciate. that our phil labeau can dave calhoun of boeing. and speaking of pressure, amd is down in the pre-market coming off of all-time highs despite seeing quarterly revenue top 3 billion for the first time ever. we will check in with lisa su on those results next after this
9:18 am
quick break. don't go away. competition beat us, again. how? they have a better finance system than we do. i feel like they might have a better finance system than we do. workday. how do they make better decisions faster? workday. got to do something. workday! i think i got something. work... hey, rob, you're on mute. hello. [all] hey... there he is. workday, the finance, hr, and planning system
9:20 am
. record revenues and earnings that were above expectations not enough to keep shares of amd in the green this morning ahead of the bell. although they have been in the green plenty of days previously. with us now on those results and cnbc's exclusive is the company's ceo lisa su. lisa, always great to have you
9:21 am
you had a very strong quarter, we're watching the stock go down perhaps a few percent. let's start with the data center, which is obviously a very important part of your end market you're talking about no digestion there. sort of how the analysts put it at least the strong cpu demand that you saw seems to be continuing throughout this year is that a correct assumption >> good morning, david great to be with you guys again this morning thanks for having me look, you know, i think overall, david, 2020 was really a fantastic year, you know, sort of an inflection point for the company. we did revenue of a record in our 51-year history. when you look across the market segments that we're in, you know, data centers, pcs and gaming, we've seen robust demand across all of those segments, and you know, to your specific question on data center, we did see the data center strengthen, as we went through the end of last year, and into 2021, we see very strong demand, driven by, you know, some of the trends that we talk about, all the
9:22 am
time, and the importance of the cloud, and you know, all of the buildout there, and just the strength of our product portfolio, and our focus on the data center, so yes, we're excited, about the prospects and the data center, 2021, as well as the other markets, that we're in. >> you have a number of new products as well, coming this year, don't you, that are going to obviously be targeted towards that demand that you're talking about. >> yes, absolutely so as, you know, as we always talk, david, we're all about the product, and these products have been in development for many years, coming to market here, in 2021, and it is the best product portfolio that we've had in the history of the company, and just at ces, a few weeks ago, we launched our new probable products, that are, mobile products that are going into high end notebooks for gaming and commercial and premium of consumer skus, we're very excited about an uncoming launch for us with our new data center
9:23 am
processors, our third generation of data center processors that again take performance to the next level and i think we all see that technology is just so important, under this backdrop. so we're very excited about the new products >> that backdrop, lisa is, exactly what i wanted to talk to you about, there's a growing view that tech spending, because of the pandemic, went into sort of what they're now calling i guess defensive mode last year, where you're investing in remote work and things like that, and that will switch to more offensive spending on things like data analytics in the year ahead. does that make sense to you? how do you think the nature of tech spending, at least in your area, changes in 2021? >> i think that's a great point. i think one of the things that's really been sort of the backdrop of the pandemic has shown, is that tech is so important. and so no question in 2020, the work from home, school from home trend, people actually had different relationship, and
9:24 am
wanted more, out of their technology, and so there was an upgrade cycle around that. and i think as we go into 2021, i think many of those trends continue and you know, really, it's about the modernization of the technology infrastructure. so i think people need the newest generation technology, i think, you know, our goals are to help our customers and partners through that transition, and that's part of the reason we had a very strong outlook for 2021, you know, how 2021 looks like our outlook will grow, 37%, which is, again, off of a very strong 2020, it is because of those tech trend, as well as the strength of some of our new product launches >> bust always says never talk about father -- buffet always says never talk about father on mother's day but i do want to ask about competition, and without naming name, it is clear they have had to pivot to some degree in response to the strength you have demonstrated do you feel you also now have to move, given some of the areas of
9:25 am
change that you're seeing on your biggest rivals? >> well, again, what i would say is in the semiconductor business, you really have to make your decision three to five years out and we're planning on road maps now, for 2023, and beyond so it's all about execution, and ensuring that we execute well. we always assume that it's going to be a very competitive environment. and i have always, you know, believed that. but we also believe that when you really think long term, about maybe technology road maps, really deep customer relationships, and thinking about where the market is going, we can really, you know, drive a tremendous amount of innovation, and change, in the performance market, and that's what we've been doing >> lisa, your computer graphic segment was up about 18% year over year. that's obviously quite strong. but we all know last year featured people buying an awful lot of pcs for the work at home
9:26 am
environment for example. what are your expectations for that market for this year? i would assume demand may slow and are you seeing some loss of market share because some analysts at least are pointing to your losses of some market share in the low to mid end range of those markets >> david, so the context i would say is the pc market was unusually strong in 2020, so as a market, the market grew, let's call it maybe around 13% or so, so we sold, as part of 300 million units, for the first time since 2014. that being said, amd's pc business grew over 50% so we gained share in 2020 and as we go into 2021, we expect to gain share and it really is, as you look across the market, there are a number of sub-segments, so you know, if you look at gaming, notebooks, or you know, commercial, which is very important, for the fortune 1,000 thou companies, or you know, high end consumer, i think we
9:27 am
gained a ton of market share there are places though, when you look at education, for example, they're not enough notebooks for some of the education markets and we're continuing to build and continuing to ensure that there's a good environment for that so overall, i think pcs are exciting, and we continue to believe that it will be a growth year for the market, and we believe amd will grow ahead of the market in the future. >> and finally, and with yet another segment which is gaming, ps-5, x box series x, things ramp quite quickly through the fourth quarter and you seem to expect there is a good amount of momentum headed into this year, lisa, for that market as well, don't you. >> that'sabsolutely right, david. i think we're really, really pleased with the launch with our partner, both microsoft and sony, i think the consoles are fantastic products and people are raving about them. very strong demand in the second half of 2020 that's continuing into 2021.
9:28 am
and you know, we're very excited to be partnering with some of the most important products for this cycle >> lisa, we always appreciate your updates and you're joining us we'll keep an eye on the stock as well. thank you. >> great thanks, david. thanks, carl >> thanks, lisa. good to see you. the president's going to sign a number of executive actions on climate today we have some of them rye now with ylan mui. >> these executive actions will have, on the the industry, with oil and gas leases on federal land and this is part of the moratorium in effect in the first day of office and also directing the department of the interior to review all existing leasing and permitting practices and look for ways to double production from offshore wind by 2030 in addition to the executive actions will elevate climate change, to a national security priority it also sets a goal of
9:29 am
conserving roughly 30% of all federal land and water by 2030, and it creates a white house office of domestic climate policy, led by a national climate adviser. now, together, these actions amount to an unwinding of the trump administration's stance on energy, but guys, the biden administration is also framing this as a way for him to shape, what the clean energy economy of the future will look like. carl >> it's been a busy week for the president after some of the buy america news earlier in the week and of course the vaccine news yesterday. we know you'll keep us honest on that thank you for joining us today david, it kind of reminds me what b of a said today, the biden white house quote is focused on reinvigorating the economy. rather than bolsters asset returns, and as a result, leadership is going to look a lot different, they say, in 2021, they say by discount over luxury, buy discount over lumpy because of the minimum wage push, buy gdp sensitive things and buy the e and the s, in esg,
9:30 am
to her point. >> that is interesting and esg, we talked about it a good deal over the last 12 months and boy will we be talking about it, referencing larry the other day, even more of a focus, as we hear that opening bell this morning. one thing they didn't mention though is just why don't you buy stocks that have a huge short position or have a business on the brink of bankruptcy. because that apparently seems to be what's really working, carl >> as you were, as we were getting ready for the opening bell, and there is the new york stock exchange, and nasdaq and s&p, and the amc did get back to a 300% pre-market gain, david. >> that's good to hear you can imagine their business is in great shape, after all, everybody's going to the movies. sorry. >> you're getting frustrated by some of this >> well, carl, i mean you know, we've never really seen anything quite like. >> this the across the board
9:31 am
nature of this, you know, i say coordinated, and i don't know, i don't know that you could argue they are, but certainly they feel coordinated, and there does feel as though there is not just retail here, it's not just retail somehow taking revenge against the big bad hedge funds, but it's working i mean gamestop, by the way, is over $300. so there it is $302 up 100%. amc, you can see koss, express, bed bath and beyond really a lagger ard here but somewhat of a focus given the large short position there are lists going around and there is great amount of enthusiasm amongst groups of people who congregate in some of these reddit chat rooms to talk, i guess, carl, is the best way to put, it but i continue to wonder what role if any the regulators will have and i don't know what you have been hearing and you mentioned massachusetts earlier, it would seem as though this is not necessarily good for
9:32 am
the capital markets long term. and regardless of cheerleading from well known people such as chamath or elon musk, this is not good >> well, melvin of massachusetts, told barons yesterday, that the options look systematically wrong, the mechanics of the options market, at least as it pertains to gamestop not more specific than that. and freedman said this morning that they're looking to match up buying and selling activity with chatter on social media, and not sure exactly how that work, or whether regulators are even interested in how they're doing that but yes, it is unprecedented and as we said, if you noticed axios this morning, pointed out that gamestop, yesterday, was searched on google more than biden or tesla which by the way does report tonight. >> and tesla actually is down. it is not necessarily a beneficiary of this. of course, even though it has, through occasions had very large
9:33 am
short positions and $822 billion market value, and by the way, its performance now for the year is right at, if not a little bit better than gm's, and just trailing ford's of course, given the enthusiasm overall for ev. but as you said, this is sort of unprecedented. it's reminiscent in some ways of certain things that we may have seen during other speculative phases where we saw parts of the market act very strangely, but it is, in other ways, unprecedented, and we'll just keep watching. at some point, there is no longer any stock to cover. and so the buying demand has to actually be true buying demand i don't know where that price is many would have never anticipated game stop could have gotten to this price and certainly as we've said many times there is no way to argue based on the fundamentals, i mean you can't even have the conversation carl, i can also add, you're going to see a number of hedge funds in serious trouble and anybody who is short a variety of names this may change the approach to short selling overall. i mean given the new risks that
9:34 am
we're now finding for those who would conceivably short stocks at hedge funds you know, you're going to obviously always want to keep it quiet, but to the extent that people are aware of large positions, this may change the approach maybe you simply won't see as much carl, i did want to get to a few stocks this morning that have nothing to do with this crazy market phenomenon we're going to be talking a great deal about, i did speak to john stevens, the cfo of at&t this morning, and the company reporting earnings of course, conference call as well, and wanted to take a look at at&t. i mean it's widely held. up about 1.77% so far this year. but down this morning, very strong yield, listen, his view of course, free cash flow at $8 billion, and customer accounts growing quickly. that's what they want people to focus on they did add $800,000 posts paid, and their churn was 0.76 so they're doing quite well there, adding true new customers. not just people who convert from preto post and they're added
9:35 am
it's actually new customers. 5g and broadband seeing significant growth at this point. they did write down the value of direct tv. not unexpected that process continues he had nothing to say about that he had nothing to add about the c-band option. which we should be getting some details about, perhaps in the next month or two. of course, a key question for many investors out there, is just how much was spent, we kind of know, but by whom that's the question. which companies really stepped up for the big amounts of spec from there and what's that going to mean. but overall, what they want to point out to is hey we produced strong cash flow, the balance sheet is in decent shape they say and given us guidance of 1% revenue growth and none which seems at this point enough to move the stock higher. and hbo, hbo max, had 7 million subs added, a record for it and now at 41 million. although i don't think you can get wonder woman on there, anymore. i think the 31 days is up.
9:36 am
>> is that true? it slipped by me but always leave me wanting more, as the streaming environment continues to evolve. but a lot to unpack on at&t. by the way, worst day now for the dow, since the fourth of january, which was the first trading day of the year, and that's true for the dow, the s&p and i think the nasdaq, just joined the party and starbucks is lower, in early trading, and this morning, as u.s. comps are down five in the first quarter, and following some tighter covid restrictions, joining us this morning, first on cnbc, we're always pleased to welcome starbucks ceo kevin johnson. kj, welcome back good to see you. >> good morning, how are you guys this morning? >> we're trying to hang in there. it is a pleasure to talk to you about the quarter. down five is certainly better than down nine prior is there a sense that it could have been even better if maybe the january restrictions hadn't popped up again? >> well, certainly, it's another quarter of sequential progress and i'd say the overall recovery sun folding as we hit forecast china posted a positive 5% comp
9:37 am
in the quarter the u.s. showed sequential improvement going from minus 9 in the previous quarter to minus 5% and certainly, that could have been even better carl, as you point out, given the fact that we had this resurgence of the spread of covid late in the quarter and we had to eliminate a lot of the limited seating, indoor seating in our stores, and so that had an impact, but you know, we have this operationalized where we can monitor the data store by store to whatever is unfolding and i think as we disclosed yesterday, january in the u.s. is looking like it's coming in at a minus 2% comp so this recovery is not linear week by week but quarter by quarter you know, we're tracking to the recovery that we had forecasted several months ago >> we've talked to you for a long time about traffic and it's not endemic just to starbucks, but quick service in general how do you get traffic back up
9:38 am
transactions down 21 even though average ticket was way up is there a sense that transactions are bottoming at these levels >> well, you know, what's happening right now, carl, is customers are looking for experiences that are safe, familiar and convenient. and so when it comes to starbucks, you know, many ways, they're placing group orders, they're buying multiple beverages, multiple food items, and that's because, you know, they're buying either for their family, or for the work colleagues, you know, and it's driving ticket up, and transactions down. and as we get through this pandemic, and you know, the vaccination process starts to unfold, we're going to see that normalize a bit more you know, transactions are going to start to go back up, once we get back into more normal routine, and you know, ticket will come down, but we still think ticket work is going to have some positive long-term unside, as we look to the future, but -- upside, as we look to the future, and what we're seeing is customers
9:39 am
continue to group order, and we increased through-put at drive through and curbside and mobile order and that's working >> you did point out, last night, the year on year reduction in operating margin, attributable to covid, but also you said growth in wages and benefits would a $15 federal minimum wage be truly painful for the company? >> well, you know, look, we're on the record, you know, a couple of years ago, that we supported an increase in federal minimum wage and we started on a journey, and investing, we continue to invest on our partner, and in fact, just the start of this fiscal year, we made an investment in wage in the u.s., and it fundamentally takes roughly a third of our hourly partners to be at or above $15, and this is our plan, over the next two or three years that we think that 100% of our retail work force, hourly work force, our partners will be at or above $15 an hour
9:40 am
>> kevin, it's david i want to talk about china as we often do, of course, you had a 5% comparable store sales growth there a year ago is when you started to close locations due to the virus obviously, it's a very different situation now. you're even opening new stores are you expecting china to continue along this growth rate that you're now back to sort of achieving? >> well, you know, david, we highlighted yesterday, that we, the number of new store openings has accelerated. would very surpassed 4,800 stores in china. and you know, the net new store growth was 13% year on year. and that even accounted for a slowdown in store development, you know, mid-year, as we were dealing with covid-19 in china so our team in china continues to do a great job. we entered 13 new cities in china and the stores performing in those cities are doing phenomenal so we're very pleased with that. you know, certainly, china has seen some provinces have a
9:41 am
recent outbreak of the virus, and you know, in china, they basically, when that happens, they shut down the city, they test everyone, and they address, it and then they reopen. so we'll see a little bit of that, as that unfolds in this quarter. but you know, we're very optimistic about our long-term future in china and our team in china has done a phenomenal job navigating this virus. >> i wanted to ask about an executive departure. your shares may be down a bit, because rossboro is leaving, i can tell you for sure that walgreen's shares are up 10%, because she is joining that company as ceo, something we have yet to say, have you replaced her and give us a sense there as to whether anybody there should be concerned about that departure. >> first of all, i want to congratulate roz, she has been a great partner to me the last three years and she contributed a lot to starbucks and we celebrate her stepping into the role of ceo of walgreen's, so grateful to reflex oz and we celebrate, this is an aspiration she had, and we were part of
9:42 am
helping her achieve that that said, what basically, i basically eliminated that layer, or flattened the organization, if you will, and you know, we've got roxanne williams who runs our north american business, she will be reporting directly to me she is a long-term starbucks partner, with 16 years brady brewer, our chief marketing officer will report to me so we've got a deep bench of talent in the company and we've got, you know, stability in that talent and we won't miss a beat. in fact, here's an interesting statistic. there's me and nine others, there's ten of us on the leadership team, and if you add up the total number of years of experience at starbucks, it's 150 years of starbucks experience on this leadership team so i've got great confidence in these leaders. and we celebrate roz, but we're going to continue to stay focused on our strategy and executing against this business recovery, as we've done. >> speaking of roz, on the
9:43 am
conference call, she talked to kj about the future of your real estate, and talked about the benefits of drive-through. is that sort of where we're going to see you guys focus when it comes to expansion in the u.s., over the course of the next few years >> well, look, you know, david, the way i think about this, right now, the name of the game is providing safe, familiar, convenient experiences for our customers. so we've dramatically improved the through-put in all of those channels thrive-through, mobile order -- drive-through, mobile order, curbside and that's what customers are looking for now. and as we look to this recovery and as the vaccination program accelerates, we're going to see what we call the great human reconnection you know, look, we've all been, you know, working at home, schooling from home, and as vaccinations become accelerated, in the country, we're going to see people want to connect they're going to be want to be a part of their community again. so that third place experience that we create in our stores, it was built for this moment. it was built to bring customers
9:44 am
together, to help them heal, help us reconnect, and help us move forward, past this pandemic and so that is the future of where we're going with our store formats, so right now, we're balancing what we're doing around safe familiar, convenient, but we're gearing up for this great human reconnection >> i think that's interesting. because so much of the coverage lately, about qsr has been about the reinvention of the drive through to david's point and the emphasis on walkup service but you think the third place thesis will remain intact over the longer term. >> no question in my mind. it is all about the human experience, carl as humans, we were meant to connect with one another we want to be part of the community. it's how, you know, it's how we, it's how we share our successes, it's how we overcome our challenges, and adversity. humanity is about connecting with one another and that's what the third place is about i have no doubt in my mind >> kevin, it's always good to
9:45 am
have you you really helped usunderstand the quarter in full. thanks very much see you soon >> thanks, guys. >> kevin johnson, starbucks ceo. >> thanks, carl. as we head to break, it is time for the bond report let's take a look at how it is fairing this morning the 10-year note yield clinging to 1%. this of course ahead of today's fed decision and chairman jerome powell's newsconference. over in europe, where it is a mixed picture, yields rising in germany. and in france. but as you see, actually, across the board. let's finish with a look at the dollar index which has been, well, weak longer, but recently, a bit stronger weak longer. you know what i mean right? you follow me. a lot more "squawk on the street" straight ahead stay with us
9:48 am
9:49 am
peers, valuation is good, and we'll see how long that holds though, in a situation that is obviously tough. "squawk on the street" is back in just a moment i feel like they might have a better finance system than we do. workday. how do they make better decisions faster? workday. got to do something. workday! i think i got something. work... hey, rob, you're on mute. hello. [all] hey... there he is. workday, the finance, hr, and planning system for a changing world. ♪ch-ch-changes♪
9:52 am
markets. namely, we are calling it the reddit trade for lack of a better firm. use of positions in certain stocks and the decision to then go long to force those that are short to cover, squeezing them ever higher. this continues this morning in a crazy way, bob, i want to bring you in i wonder as well as we watch in s&p now that's down 2% as i continue to hear from people i am speaking to of hedge funds being short some of these names, and there are a lot of them now and having to potentially sell their longs i don't know to what extent you think, bob, this is having on the broader market it might be hard to imagine that might not be the case. >> certainly hedge funds have positions. they're not just short stocks. they're long a book and they're short a book when you get the position out of whack here, they have to maintain certain levels of longs and shorts and they have to adjust their portfolios.
9:53 am
that can have rip him affects on the market yes, i think it does i think there are some broader things not that related. i think there are obviously concerns earnings are good. if you look at microsoft, it's not going to get better than microsoft, their numbers are fantastic. it's up 1% it's moved up hugegoing into earnings so we got a problem with stocks moving up in expectations. we're getting them i think there is a little of that as well as for the short story and there you see microsoft, down here today, but remember, 117, what, a week ago in anticipation of earnings it goes to 132 a few days ago. so it's up there here is those heavily shorted stocks it's not just gamestop look at tanger outlet and irobot and companies like that. here's the question, what's different from the 1990s chat rooms. we spent a lot of time day and
9:54 am
night in the chat rooms watching that there are some things very different from the 1990s the information flow is very different. the ease of which you get information and get access to it, including on your cell phone is different the zero commissions are certainly different and may be a factor the overall gamification of trading is different that you can trade stocks like you do sports betting, which also didn't exist to this extent in the 1990 you have to know there is a difference then there are things that are not difficult. that's important to point out, the old fashioned sense of greed. the whole herd behavior. there were a group of economics terms we had to learn after the dot-com crash. we got familiar with herd behavior, we will all move together confirmation byes bias. and they look for reasons to confirm that the gambler's fallacys, that the
9:55 am
wins will go on and you never will lose and also loss aversion, the great win of concern for losses, the concern for the weight of losses is much greater than for market gains. we'll see if loss aversion becomes an issue in this story it could well be i think, david, the question here is, is there something really different here? >> no, i mean in the sense of you know you referenced that period of time that we all remember quite well and we've made certainly aleutians to the late '90s, i don't quite recall the focus on companies that had large short positions, certainly not larger cap companies that we are seeing now you had a lot of small caps that would move typically, it's on the bye side. i'm not sure we've seen anything quite like this. by the way, the sums of money are quite significant. we talked about retail there are people sting up for large purse who have to put up a decent amount of capital not to mention the 200 calls on
9:56 am
gamestop that's listed now we've made a fortune on them there are things here that are unique. >> yes the one-two punch of the oaks of liquidity provided by the federal reserve combined with that gamification of trading, combined with this strategy of buying out of the money calls has proven very effective. i'm talking about a broader philosophical issue, david i am talking about the idea which is, if you want to believe that gamestop is going to be $200 six months from now, you have to basically believe that fundamental analysis doesn't really matter. that even technical analysis may not matter do you really believe that so fundamental analysis based on the idea there is an intrinsic value in stock of course, as of now, this doesn't matter at all. we know this cannot matter for short periods of time. i think it's highly debatable whether suddenly we have discovered a fundamental analysis, not technical, not
9:57 am
quantitative, flow analysis, whatever you want to call it, is there some new analysis that we have discovered some new principle that the forces of gravity have been repealed upon us i don't think so i doubt that i think it's wonderful that people are participating in the market that happened before, david. you know what i am getting at? >> no, i do, there will be a lot of hedge funds executives that will need traditional analysis, charm, after this is all said and done, bob, thank you. >> >> indeed, as we see other names get swept up in that, we will talk about that in a moment. we will take a break here. the do you down, just slightly off the session lows we will talk to chamath palihapitiya don't go anywhere.
10:00 am
10:01 am
our road map begins with retail investors continuing the raid on hedge fund shorts. gamestop and now amc >> plus, covid and the states, tweel speak with the governor of connecticut on how that state is handling the crisis and the need for federal stimulus. and canada stock is 100% live just this year. >> david, we were spending the past hour talking about amc. obviously, corporate earnings are a bigger piece of the pie. we got results from amc and starbucks, tonight, apple, tesla and facebook the short squeeze is crowding out the conversation we would ordinarily have. that would be about corporate results that are pretty solid. vaccine headlines and pharma headlines that are net optimistic and, of course, hopes for stimulus which may be a tougher sled on the hill, david, still a priority for the administration.
10:02 am
>> yeah. and potentially the growth that will come as a result of that. you know, it's funny, we really, bob mentioned it briefly we haven't gotten to microsoft, of course, one of the largest market cap companies out there, reporting strong numbers the stock having turned around ever so slightly they had a very strong quarter, sort of that second wave of digital transformation is a number of the analysts that follow it are talking about. azure 50% year over year, morgan, in terms of the growth rate so much growth there the markets have come from their efforts in the cloud. >> yeah. >> it continues unabated >> efforts in the cloud for commercial customers and those government customers, which, is of course, why i continue to keep my eye on some of these industrial names reporting, particularly some of the defense contractors. we have another round this morning. i know you talked to boeing, steve calhoun this morning a lot of that conversation focused around, rightly so, where investors focus a lot of attention on this company.
10:03 am
but the commercial side of the business keeping an eye on the defense space and security side as well, which had basically been a buoy as it's gone through the 737 max and covid during the year plus they did take another tanker charge there has been if you sort of go under the hood in the defense piece of that business there have been some hiccups and some issues over the past year or so. also general dynamics which is trading higher today despite the fact those numbers were for the most part disappointing. i think the big story there for general dynamics and textron is for business jets and we are seeing recovery in that business jet market that has been hard hit for quite some time. textron, in particular, issuing guidance saying they are expecting 15% growth in aviation sales this year, which is pretty notable. i think given the fact that we
10:04 am
have been having conversations about what the second half of the year could look like as vaccines rollout for hard-hit industries, like, for example, aviation to see business jet strength or at least stability, i should say, kind of speaks to where we're seeing those emerging signs, those green shoots of recovery, david. >> of course, we spoke to dave calhoun, thanks, no phil lebeau who talked to us about that second half of the year, morgan, being key for the airlines and for the company that makes the airplanes as well, things will start to get moving in that third quarter is a key question. a story we have been following, of course, for you all morning throughout and will continue to, is this story of the head funds that are getting hit very hard right now as traders typically on reddit use that to, that platform to, well, essentially, communicate and take the opposite side of what are large short positions in certain stocks oftentimes, retail based
10:05 am
whether it be a retailer, or whether it even will be a mall reit, for example, macerich shares were up as much as 25%. i want to bring in leslie picker as well on this story. i am sure you have been hearing it i have throughout the morning. if are you a hedge fund that had a lot of short positions in retail, you are getting crushed. you are potentially having to sell longs you may be looking for rescue financing and your prime broker is going, hey, you got to get some more money and quickly. that's what's going on out there right now. i assume are you hearing the same. >> i am hearing the same that is partially responsible as hedge funds look to short their liquidity and sell other positions in order to ensure they can cover the shorts that they have found themselves on the wrong side of that trade i have also spent some time looking at these reddit forums it is clear the gamestop has two main priorities. number one, profit, of course,
10:06 am
secondary to that is this idea that a lot of people on those forums really want to proceed up hedge funds and profit from their demise the controversy has quickly formed on the one hand, you have those were long and encouraging other investors to buy this. it has been personified by retail investors populating these sub reddit threads, urging day traders to build in. billionaires, the vinklevoss twins, elon music cheering them on on the other side, hedge funds get actually paid to have short exposure the bearishness towards names like gamestop, amc and their losses are stratosphereic. melvin capital with gamestop and gsx and bed bath&beyond. they have closed bearish positioning and gamestop, in particular, not without some deep wound and andrew left said
10:07 am
he covered most of his short on gamestop at a loss in between, of course, are the quantity funds riding momentum higher david, as you mentioned, melvin is the first case. it won't be the last case. i heard the same thing, gamestop short sellers were down $5 billion in paper losses for the year according to s3 that's more than the entire market cap earlier this week and many retail traders found success in the squeeze, they've made multiples of their money in days, in what to them seems almost like an arbitrage trade they will see experience in that same phenomenon now. the hashtag save amc is trending on twitter, it's anyone's guess, what the shock dejure will be tomorrow. >> if you want to say you are out and you want to do it, try to hit the market with an offering right now. >> right. >> we certainly know they need the money, obviously struggling, given the fact theaters are not
10:08 am
opened let alone there are none to actually be viewed at least. the underlying fundamentals have nothing to do with this. it's funny, i was talking earlier about gabe plotkin i don't know him well. he gets extraordinarily high marks and by the way, his returns have been quite, quite strong >> yes. >> yet, you don't get a free pass for not getting the flows right and not managing your risk properly nobody, programs, could have seen this coming but that's where they stand right now. an extraordinarily good performer on the hedge fund area there are plenty seemingly watching his fund on the precipice of disaster of fought getting this right >> so that's what's remarkable about this whole story is gabe is an under the radar trader he worked at .72 under steve cohen who invested in his fund, who was a part of that financing earlier this week. but he is under the radar. what's remarkable is there was
10:09 am
someone who found a list of his put positions from his 13-f filing back in, based at the end of september, posted that on the thread and said this guy is bearish on these companies and because of that, because of that disclosure, it started this kind of momentum circling those trades as a way to squeeze not just those stocks, but him, in particular, felt very personal on the reddit threads, which was surprising, as you mentioned, he is very under the radar. he is not one of those hedge fund managers that really puts himself out there. it was at sewn a few years ago and made some comments how he talked about his short book had been successful when a lot of hedge fund managers actually haven't been >> leslie, thank you a story that we will be watching very closely. and by the way, it's a good place to start with our next guest.
10:10 am
gamestop's vulnerability to a short squeeze, likely to cause u.s. regulators. the next guest, tom goreman joins us now tom, give me your take on what you are at least aware of and whether there is a place for the regulators to potentially step in >> good morning. thanks for having me i am sure the regulators have already stepped into this situation. these are the kinds of places where the sec and the exchanges come together quickly to watch this and watch it very carefully, because there is so much speculation there is so much up and down in pricing that there is huge potential for people to get hurt so you can be assured they are doing that as we speak >> tom, how do they approach sort of the open nature of this? this is not people leveraging
10:11 am
their influence or their connections? it's simply leveraging social media. do you think there are existing laws in place that will help regulators put a reference around these locations >> absolutely. they have put a ring around this kind of behavior before of one time this is not the first time you seen a speculative bubble. this is just the latest time you have seen this you got a huge short interest here you got what is sort of unusual here, you seen they have a lot of popular interests from people who are interested in gamestop but there are guardrails that the regulators have put in place. there is the broad stachtd statutes, if you are not doing the truth. if you do something manipulative, they'll step in. there are other rules that stop the trading, so that everything keeps up to date so everybody's trades are getting registered but what they don't do, they don't stop the speculation that's been a subject of conversation in the securities
10:12 am
mark, the fraud market, the futures markets, for years but speculators give liquidity to these markets when it gets out of control like this it can be very disruptive and a lot of people can get hurt, while hedge funds have been dealing out of their position here, a lot will have problems covering their short positions that will cause regulators heartburn. there is a clear set of regulations here, a clear guardrails, that the regulators are watching and be assured they're looking at those guardrails they are also looking at social media to tie that up to the trades and the sec, in particular, is very good at doing that >> yeah, tom, just to dig into that a little more in terms of the uardrails, you can talk about market manipulation or sclurks when we look at reddit right now, at least from first glance is what one trader sort of put it to me is crowd source activists investing right now.
10:13 am
if it's just people talking and trading and talking about their trades on social media, how is that really that different than say one of these hedge funds investors coming on and talking on cnbc? how do you build that case when so many are involved in that conversation in those threads? >> you have to do this very carefully. the sec has been doing this for years. they're very good at doing this. and they seem to go trade by trade by trade you take those trade, they match them up to what they are seeing on social media. they match them up to what you are saying they make sure you are staying within the guardrails of what you are doing. so if you talk about your trades, it better be that you are telling the true story it better be that you are telling the whole story, you are putting stuff out there just to move the price if they came on your show, for example, just to hype the price, then they're going to be able to figure that out. will you see it from things like they put out a big position, a big short position, a big long
10:14 am
position just before they go on your show they come in and talk it up. then it moves. you can bet that they're going to be hauled in with a subpoena by the sec and ask them what they thought they were doing there. that looks manipulative. >> i wonder what you think of the infrastructure that's in place right now. we have been getting reports the trading surge is tied to the activity that we're talking about in some of these stocks and the retail investor surge is straining online brokerages right now and that there has been temporary outages on some of those platforms how much of a concern is that, especially if this continues to i guess take more oxygen out of the room if you will, where the broader markets are concerned? >> that is a concern that's why they put in circuit breakers after the last market prices they have circuit breakers in place that stop the trading and you saw, you seen a lot of the stock stop trading on, on gamestop the point is it allows to market
10:15 am
to catch its breast and to make sure everything is getting adjusted correctly and it athousands them to make sure the pricing is done correctly without harming the stock. they just slop out a trading stocking for example thanks can hurt the stock permanently so they don't want to do that. regulators are not here to tell you what to buy or not to buy. they're not here to tell you, don't speculate on this stuff. you can speculate. speculation, as i said, liquidity in these markets, what they want to make sure is that everybody gets a fair shake and, so far, there has been no indication that the regulators have found anything other than everybody's getting a fair shake. albeit, this is really a messy penetrating where the stock is bouncing around, but you can see it that's very different from a marketing manipulation, say a
10:16 am
case where somebody has it after partial and people start buying it and they did it for tomorrow. >> right tom, i wonder how you think about the way in which the shorts, as a group, an aggregate, with exhibit from being sort of seen as this outside group offinin o aggrava it's funny, the former chief of staff of mitch mcconnell tweeted welcome to our world, wall street, basically pointing out the parallels between political populism and now financial populism. >> that's an interesting what i to look at this. you move over to twitter and take a look at what people do on twitter, will you see similar kind of actions all the time somebody puts out a statement on twitter, you get 5,000, 10 uchlt
10:17 am
pe 10 10,000 people commenting twitter is figuring out the road the stockmarket has the same kind of problems now we have new things in the stockmarket, you have a spat a spat is what we used to call a blank check company. people went, whoa, you can't buy a blank check company. who knows what that is now we have those. you have new innovation stuff coming in here you see that worked out, shorts are flipping over. traditionally, people don't talk much about the shorts. they think they're not doing the right thing. they're legitimate trades. they add legitimacy to the markets. as long as you keep them in the guardrails, you are good >> speaking of politics, we know on social platforms, foreign actors influenced the discussions at the very least. if there were any foreign influence here, if there was any bots or anything like that, that was sort of a part of this
10:18 am
would the sec have the wherewithal all to actually figure that out? >> i this i they do. this is one of the areas where the sec is probably the best in government analyzing the stock trades and getting in there and looking at the data and figuring out exactly where this came from and tracing it back. it takes a little bit of time. but they are very good at it so i'm confident that they can do this. >> tom, we really appreciate your guidance on this. everybody is kind of feeling their way right now. i appreciate it very much. >> it is thank you, appreciate it. well, it's a sea of ledred the markets. the dow is down 1.4% the nasdaq is down a little over 1% every sector in the s&p is in the red. bitcoin dropping to below 30k. plus the uk voifd, covid, we are
10:19 am
keeping our eye on that. governor ned lamont joins us next ♪ ♪ - [narrator] if you're thinking about going to school online, southern new hampshire university is where you belong. we've been online for more than 25 years and have helped thousands of students reach their goals. as a nonprofit university, we believe access to high quality education should be available to everyone. that's why we offer some of the lowest tuition rates in the nation, and haven't raised tuition in nearly a decade. so no matter where you want to go, snhu can help you get there. visit snhu.edu today.
10:21 am
10:22 am
down thank you for being with uss here today. >> good morning, morgan. let's start with the fact that you have found eight cases you know of, of this variant right now. how are you approaching that we've seen some places i think about europe i think of the uk, for example, where restrictions have been put in place a much more aggressive way in light of some of these variants. are you considering those types of actions right now are you looking to basically keep things as is, in terms of the connecticut economy? >> keep things as is regarding the connecticut economy. look, we are following that like a hawk you said your markets are all red. at least here in northeast, i think across the country, there some blue sky on the covid front. our infection rate continues to trend down we have good past in our hospitals. so we're continuing to open up cautiously you are right, the one thing we have is the highly infectious
10:23 am
strain we see how it's hitting europe hard, so we're watching that >> in terms of the vaccine rollout. give us an update, especially as we heard president biden say that he is looking to give states such as yours a longer lead time in terms of supplies, three weeks instead of one >> yeah, the coordinator comes out of business. he knows what we need. you know, for the last month, we have been getting our vaccines for operation warp speed on sort of a regular basis, but we'd love to have a little window we'd love to see what it looks like for the next week, three weeks. so we know who to hire and how many mass vaccination centers we can support. i think most governors have caught up at this point. we can supply a lot more vaccines, get a lot more people vaccinated what we need to know is the supply next week is good. we will get almost 10,000 additional doses, so the trend
10:24 am
is positive. >> yeah, the dosage, the supply forecasts are more encouraging, governor, more discussion about supplying directly to pharmacies and retail, walmart is out this morning. they say, look, we got 5,000 wal-marts and sam's clubs that are operationally and politically ready to administer vaccines do you see the points of access getting much brighter in the coming weeks >> i do. those retail outlets will greatly expand like i said, we got football stadiums and other mass drive-through facilities we have to work on to make sure those under served populations can't be booked by internet. maybe you done having a says to a car. we got to get to those populations and make sure they get their vaccine as well. >> well, governor, your state was lauded initially, at least, in terms of the success of your rollout of the vaccine when do you see getting from those who are over 75 or over 65 down sort of into people are not as high risk
10:25 am
>> yeah. we have over a third of our 75-year-olds and above have been vaccinated all of our nursing homes have been vaccinated. so that's helping in our hospitals, for example so my guess is it will probably take another couple of weeks or so before we open up to the next group, which is 65 and above again that age group, they're the ones most likely to suffer complications. >> governor, let's talk about budget and budget forecasts. it looks like you are forecasting a budget deficit that is dramatically narrower than i think had originally been expected talk us through what you are seeing in terms of that and what that means in terms of what you are looking for from the federal government for additional stimulus >> yeah, morgan. so, we had a small surplus at the end of the last fiscal year. we will have a bigger surplus coming forward june 30 of this
quote
10:26 am
year let's face it, the outgoing years, revenues are up or what we want them to be ngsz so that will depend how the stimulus helps the economy in general i think it will be lousy you don't want the states to lay people off or raise taxes. i think the next year or so, what you want is stability that allows that to get back going again. >> how are you thinking of additional revenue streams i ask as your neighbor to the west new york is looking into sports betting or online gambling, i should say, in a more substantial way. how are you thinking of some of these potential additional revenue streams. there it is, something like sports betting or cannabis or other areas that have become much more popular across the country in a state-by-state basis? >> well, first of all, the good news for connecticut, we will not need broad-based tax increases. we won't need them now or for
10:27 am
the foreseeable future we have a rainy-day fund well over $3 billion. but are you right. i mean, one thing we have learned in covid, we got to see what's going on across the borders and we see sports betting, you see igaming and you see marijuana. marijuana is legal up in massachusetts. legal in new jersey. soon to be legal in new york so i don't want to surrender that market, a, to out of state and even worse, i don't want to surrender it to the underground market, which is so dangerous. so that's something i will ask the legislature to look at seriously in this upcoming session. >> all right governor lamont, thank you for joining s. >> nice to see you >> time for etf spotlight. we are looking atticer sos, up nearly 60% this year two of the top holdings under some pressure this morning, despite both beating on q4
10:28 am
10:29 am
cutting edge made user friendly. in other words, we want a hybrid. and so do retailers. which is why they're going hybrid, with ibm. a hybrid cloud approach with watson ai helps manage supply chains while predicting demands with ease. from retail to healthcare, businesses are going with a smarter hybrid cloud, using the tools, platform and expertise of ibm. we're carvana, the company who invented car vending machines and buying a car 100% online. now we've created a brand-new way for you to sell your car. whether it's a year old or a few years old. we wanna buy your car. so go to carvana and enter your license plate answer a few questions. and our techno wizardry calculates your car's value and gives you a real offer in seconds. when you're ready, we'll come to you, pay you on the spot and pick up your car, that's it. so ditch the old way of selling your car, and say hello to the new way at carvana.
10:30 am
with so many new pet owners, your groomers can't keep up. you need to hire. i need indeed. indeed you do. the moment you sponsor a job on indeed you get a shortlist of quality candidates from a resume data base. so, you can start hiring right away. claim your seventy-five-dollar credit when you post your first job at indeed.com/groomer
10:31 am
well come back, everybody. i'm sue herrera, here's your cnbc update. even as the case counts remained under 200,000 for an 11th-straight day, they spiked to almost 4100, the fourth biggest toll of the pandemic total u.s. deaths are now above $425,000. a bomb disposal robot has been brought in this morning to a plant in north wales, making the oxford astrazeneca vaccine after it received what is called a suspicious package the building was partially evacuated as a precaution. as it tries to slow the spread of new covid variants,
10:32 am
great britain is making it harder to leave or entering the country. many arrivals will be required to quarantine in a hotel. and on nbc's "today" show this morning, dr. anthony fauci said the current vaccines can mostly protect against the variants but -- >> the thing that is of concern, is that as these viruses continue to evolve that they will then accumulate even more mutations, which would all of a sudden make the vaccine not able to protect against it. >> and dr. fauci will be joining other officials at a white house covid briefing about 30 minutes from now we'll be mon to haveing that for you. david, i'll sunday it back to you. >> sue, thank you. well, before we head to break, keep an eye on amc, of course. this is the almost bankrupt -- but not, but almost -- of course, movie theater chain, it still has significant ownership
10:33 am
by the chinese as well you can see the stock up 232%. it's not alone, though, as we know, of course, the rates continue here on reddit. people looking at that chat room take a look at shake shack you can take a look at that at home up 17% on this same phenomenon we'll have a lot on it we'll be right back.
10:34 am
10:35 am
delegating? oh, good one. move your xfinity services without breaking a sweat. now that's simple, easy, awesome. xfinity makes moving easy. go online to transfer your services in about a minute. get started today. well, it continues to be the season for spats we have yet another new well-known name. chairman of iconic clauss kleinfeld on acquisition corps going public clauss, it's good to have you. >> good morning. >> i'd like to say everybody's got a spac and a dream what is your dream and how will you go about realizing it? >> well, we formed a team around this i mean, i have been observing the spac space for a while
10:36 am
i think it has developed into a really nice set of instruments that kind of fitting the profile that i like as profiler. which which is basically, we formed a team, we looked into potential companies. our focus was trans-atlantic that's one of the the different. we feel central europe is very, very attractive with germany, switzerland, austria, a lot of interesting privately-held companies. we started building a pipeline, it started about a year ago. and around november last month, we said we are comfortable to go ahead. meantime, we have built a team existing of people with deal-making experience and industrial background and knowledge and able to bring them to the party and a huge network. >> right, of course, given how
10:37 am
much money raised by spacs so far, there is a concern, eligible candidates for them are going to, well be bit off at the very least, do you feel like looking beyond the u.s., looking at the geographies that you just discussed, you will perhaps find more worthy candidates. >> we are pretty comfortable we would not have been today and launch it if we haven't reached that point as i said, we looked into potential targets talking about a year ago we have a pretty deep target pipeline obviously, we have not been allowed to talk to anybody the pipeline is having about two-thirds of companies in europe and one-third in the u.s. to your point, this is a function of what you have been saying the other thing that we believe as we want to set ourselves apart. i mane, by basically bringing something to the party that's more than just a blank check
10:38 am
company and that comes to a team that has inexperience, industrial know-how. that has capabilities to strengthen the team and develop the company. we are looking at companies that we feel can create, and kind of like a pro-business model and an injection point where we see a lot of growth and we can help people also in europe to reach out to investors here in the u.s. and also benefit from the evaluation that exists in the u.s. >> clauss, it's morgan good to see you. just to dig into that a little bit more, in terms of an esg focus, what are the parameters you are putting up around that, how are you defining that? given the fact that you have these deep industrial roots, is that the sector you are most focused on >> i am fine with the second one, the spec, i mean, originally we started looking at, do we exclude certain industries partially we did it through the esg folks. trying to address that
10:39 am
interestingly, i've worked over my lifetime. i have worked withmany, many different industries and an opportunity to look into even more it's relatively broad. we are looking at those drivers where we feel like i mean like online, you know, like what happens in the supply chain. what happens around data, around software there are huge technology changes and covid has accelerated this change. for us, we believe that one should not invest in anything that doesn't qualify under basically all of the esg components being on the vurmtal as well as a social as well as the government side. so this is for us ideal material we didn't allow anything that didn't farth wtarget with that >> you have this experience in manufacturing. i know you have advised governments and leaders on this as well.
10:40 am
i wonder if you think this is actual will i the year we get an infrastructure deal with the biden administration and i guess even more than that, how to sort of balance that out when we are seeing things like pipelines, construction projects, which are infrastructureing in their own rights being cancelled >> morgan. i am not been in the u.s. for more than 20 years so i do believe, i really do believe that it is a great investment, a great mid-term investment to invest in our infrastructure i have spoken to all administrations and have i think a good voice there i think i have that as a result, so, because everybody has put a little bit in, but infrastructure has to really move the needle, have you as to put something more substantially in there i really believe that that's something where we can make the funds and we can make a difference on the side
10:41 am
so, but am i optimistic on that end to i am more than optimism on that end. >> well, clauss, we appreciate you joining us we will be watching closely and perhaps you will join us again when you actually find a company for your spac as well. >> my pleasure always good seeing you thank you very much for having me >> you are welcome the surge in trading volume creating challenges for the brokerages hey, dave. >> hey, charm. i want to see the brokerage firms are seeing major advantages we have vanguard, td ameritrades and robinhood as well as schkwab. td ameritrade saying they are seeing unprecedented trading volumes, mobile apps, specifically, they will consider using websites or there are other platforms. vanguard also seeing that they are seeing unprecedented volume and people are having difficulty
10:42 am
accessing their accounts online. as far as we have seen more attitudes on their cryptoofferings and their systems appear to be back online all of this due to untrading volumes and you mentioned gamestop, a lot of retail traders getting in on the action today. carl, back to you. >> all right kate you will keep us onnest on that i know speaking of gamestop, it's awfully difficult to take your name off the interday price action the session high 354 currently around 288 or so we will watch that with some of the other names, including shake shack dasavid mentioned tootsie roll and media and staples. back in a minute
10:44 am
10:46 am
. welcome back to "squawk on the street". i am domenic chu stocks are under pressure this morning but are off the low with every s&p 500 sector you can see behind me trading lower today. materials is the worst performer by a pretty wide margin, now in the negative territory for 2021 on a year-to-day basis within that sector, we are watching mining companies, like mosaic, freeport and newport mining all among the worst performers as we see declines in precious metals, silver and copper as well several performing under sector, watch those particular stocks. they were beneficiaries over the last six months. >> dom chu thank you. i'll see you later as well, after the break, pot stocks doing well, still rating far ab above the rest we will tell you when the ceo joins us. we are off the lows of the session. the dow still down 333 points,
10:47 am
the worst day since late october. similar story for the s&p which is down 1.1% we are back in two sales are down from last quarter but we are hoping things will pick up by q3. yeah...uh... doug? sorry about that. umm... what...its...um... you alright? [sigh] [ding] never settle with power e*trade. it has powerful, easy-to-use tools to help you find opportunities, 24/7 support when you need answers plus some of the lowest options and futures contract prices around. don't get mad. get e*trade and start trading today.
10:50 am
what a week it has been for pot stocks got a new white house, got a new senate got news out of mexico they will move to legalize just yesterday, france announced it medical products shares down today alongside the broader market just up a nickel or so joining us this morning is tilray ceo brendan kennedy welcome back it's good to see you again congratulations. >> thank you so much thanks for having me yesterday we were excited to announce we would be one of the suppliers to france. >> you have so many pots boiling, the interior minister of mexico, france, obviously hopes for more things in north america. can you prioritize those things? what do you think will move first? >> well, with yesterday's announcement we now have the two largest economies in the eu. germany with roughly 83 million people and france with 66
10:51 am
million people that have implemented medical cannabis regulations and we expect to see other european countries implement medical cannabis programs over the coming years many have. but we think france's announcement will accelerate that which is why we built the facility in portugal so when i look at the short to mid-term opportunities out there, the eu is the inevitable one. it's the one that's the most predictable. you mentioned mexico the regulations in mexico, the legislation is coming soon it's been delayed a number of times. we're very excited about the opportunities. i do think it's very likely that the united states will be in a unique situation where our neighbors to the north and canada and to the south in
10:52 am
mexico will both have legalized medical cannabis and adult-use cannabis in those countries. while individual u.s. states have, i expect that pressure from the north and south will lead the u.s. to implement a federal program here at some point in the next, my guess is, the next 18 to 24 months >> interesting i was going to ask you what at some point means, but you think federal, the needle moves on federal within the next two years. it seems to be a state-driven initiative motivated by budgets but is that because you think -- is it a leader schumer dynamic is that what happened? >> i think it's a number of different things, we saw seven state ballot measures in fairly conservative states. south dakota, montana,
10:53 am
mississippi, arizona in november all seven passed i think we'll see next november and the november thereafter a number of republican red states pass adult use medical programs. both president biden and vice president harris have shown support, really changing their position from their historical position, have shown support for cannabis legalization. in the past few days senate majority leader schumer has announced that he intends to bring cannabis measures to the floor of the senate. and so i think all of those dynamics are leading me to predict that we'll see federal change here in the united states in the next year and a half to two years. >> yes, brendan. we've heard that from some of the other folks in this space as well, similar time lines we just spoke to the connecticut governor who talked about the
10:54 am
possibility of cannabis in that state in a bigger way. i am curious, though, when you talk about potential hurdles to more widespread growth what do you see as the biggest risk? is it the black market is it poorly written regulations? is it something else >> the biggest risk is time. i've been in the industry for 11 years. i predicted all of this was going to happen. we knew what was going to happen we just didn't know when all of these things take longer than we think. we've seen changes rapidly in countries around the world i do expect change in mexico very soon. i do expect change in the u.s. very soon and half a dozen eu countries we're seeing move very quickly based on what's happening in germany and france. i think over the long term we do
10:55 am
need changes at the u.n. and that just takes time i don't see public opinion changing 94% believe medical cannabis should be legal. 68% believe it should be legal for adult use. there are a lot of things they unite behind these days but opinions on medical cannabis seem to be a bipartisan issue these days >> brendan, finally, your thoughts we've been talking about today, this gamestop phenomenon, a populous move at least in part by retail investors and epic short squeeze that's playing out in the stock right now. only a couple years ago we saw something similar. maybe not the same or as public as the reddit threads but a similar play in tilray stock what would you say to, say, the ceos of gamestop right now >> i've had a little bit of ptsd
10:56 am
over the last few days i remember getting five different calls from the nasdaq in a single day about our stock being halted because the short sellers were beings squeezed i think the short sellers lost something like $600 million on that particular day, september 19, 2018 which actually pales in comparison to what i've been reading about about gamestop my advice to those ceos would be that at times like this, your company is not your stock and your stock is not your company to keep it all in perspective. as these very unusual market dynamics are taking place. >> yeah, you went from 20 to 300 in basically two months looking back at that chart
10:57 am
you definitely knew how some of this feels brendan, again, congratulations on france, and we look forward to talking to you more as cannabis evolves thanks very much >> thanks for having me. >> carl, before we wrap up "squawk on the street. we wanted to come back to gamestop $350 a share talking about a market value approaching $25 billion. not sure what else to say. there is a populous nature to what's going on and this idea of giving game stop a second chance and fighting against the hedge funds and, by the way, they are taking their retribution, those on the reddit chatrooms and the like, who are carrying that flag it's not just about them making money but about extracting significant losses and that is the case, carl we have to keep a close eye on that because it could spread into the broader market. it could have an effect on
10:58 am
qua quantitative driven funds. gamestop is extraordinary to say the least. few people would have anticipated a level like this even knowing what they did a couple of days ago >> another curveball david, we'll seeou y later "squawk alley" starts in a minute ll i'm an existing customr and i'd like your best new smartphone deal. oh do ya? actually it's for both new and existing customers. i feel silly. but i do want the fastest 5g network. oh i want the fastest 5g network. are we actually doing this again? it's not complicated. only at&t gives everyone the same great deal. like the samsung galaxy s21 5g for free when you trade in.
487 Views
IN COLLECTIONS
CNBC Television Archive Television Archive News Search ServiceUploaded by TV Archive on