Transcripts For CNBC Squawk On The Street 20240712

Three months 9 million jobs added after losing 22 million in march and april. Right my fear is that this may make it so that the negotiators for the package drag things out because things are better than expected so it looks like you could make a case lets be more considerate about this that would be bad because this number does not include a lot of reclosing, the biggest increase line item was bars bars and restaurants and we know that that backfired. So i intend to i think that its really important to keep the fire to the feet of these Congress People because, boy, i just dont think i think this is the last good one bloomberg is going with the headline that says the talks last night were rancorous and really no signs brink of collapse is one of the headlines out of bloomberg. Yeah. You dont think that the strength of jobs number today, jim, gives the democrats any incentive to blink ive been debating that all morning and i think that you heard you heard Speaker Pelosi on our show that was breathtaking how much she just really believes that theyre heartless and they dont care do you really negotiate with heartless people who dont care . I dont think so i just think that she has just is running on the idea that they block the money that would have been yours. And shes not changing where does that leave us, then, jim . If you really think that they cant reach some sort of compromise, as difficult as it is to see that actually happening or even for either side to say that word unfortunately these days, where do we end up i dont know. I do believe that maybe mark meadows, the chief of staff, really made this thing much tougher. It was not like when it was civil with mnuchin remember it was very civil. Right. He must have called the speaker so many times, they had a great dialogue, theres no dialogue and without that dialogue, david, then i think we have to say this is the number that were going to trade and this number as much as everyone is excited about it, i think some of it could be repealed. Retail 258,000 what happened there . They opened up the nonessential retailers, how are they doing . Horribly carl, this is a number that reflects hope. The hope that we had during a period where we were reopening the economy and i think that unless we get numbers down, and i think we can, but get numbers down, the reopening is becoming less relevant because there is a lot of places that have had to close, particularly the bars and we have to put the money in peoples pockets i was shocked that they cant at least get 600, seemed like everybody is in favor of a 600 extension. I dont think its a positive situation at all i just dont well, the sevenday average of cases is coming way down, jim. It is. In fact, tomorrow lee our good friend out with a note this morning looking back at the peak in april and he says back then after that peak it took the epicenter stocks, travel, leisure, all those sectors 20 days to outperform by 3,000 basis points he says the 20day period from this peak would be august 14th so in the next week hes looking for at least a tactical bounce. We have to hope for that. I do know, look, theyre Getting Better and better at treating people but we still dont have antiviral and we still dont have a vaccine until you have those everything thats positive is suspect because i just dont think we have this under control come the fall we may have it under control in a few weeks but there isnt really a person who has come on air of the science background who doesnt expect the fall to be very tough. So thats why i think that they have to make an agreement. They have to on rent, they have to make an agreement on employment and im shocked that they cant come up with something theres so much room for compromise between 3 trillion and 1 trillion lets split the difference cant you split the difference you would. Yeah, i would i thought i heard schumer quoted as saying that they were trying to get there but there wasnt a lot of give on the republican side you would think you would get somewhere. Right. Around 2 trillion. Right but meadows keeps saying carl, i continue to think that meadows must be the hardliner in the room makes sure that Everybody Knows how different, how wide the gap is hes making everyone know that how does that help unless you dont want a deal its been pointed out im sure david agrees, that meadows if he were simply voting in the house for any package he would most likely be a no. Right. Here he is helping shepherd a deal guys, this is our chance to talk about tiktok david, i just wonder what you think the implications of this order is and the possibility of further bans once these 45 days pass. Its of importance and by the way, you know, while we say tiktok because weve been focused on the potential sale of this business in the u. S. To microsoft, something we reported on earlier this week from its owner bytedance a Chinese Company, guys, the wechat part of this, the other executive order involving wechat is probably caught the attention of the market broadly speaking more significantly even because ten cent is an enormous company. We dont talk about it that often because it doesnt trade here unlike alibaba another chinese giant that we do often talk about, but, you know, even though the users of the wechat Communications App in the u. S. Are small, a few Million People most likely based on at least what you can what some of the analysts who follow ten cent believe, it does own a lot of other things, you know, it ride games, a Minority Stake in active game, Universal Music Group which is majority owned by vivendi, warner music. There is a lot of different business that goes on here there is some concern the idea that any transaction that is related to wechat by any person or with respect to any property subject to the jurisdiction of the u. S. With ten cent would be prohibited what does that actually encompass . What does it actually mean and will it continue to expand so, jim, you know, theres only one way to true this you as a talk and i know that of course i would assume applaud this to some extent but it is only exacerbating the current tensions between our two countries in a significant way and of course the commerce that continues to go back and forth between them. Big escalation, again, turning it from a trade war to a cold war are they discussing banning the chinese ipos yes. We know that there is a number of them that are coming. Look, it is so obvious what President Trump wants. He wants to say in the election i stood up to the chinese, it didnt matter that there was a pandemic, i took them on i paid them back for what they did to us. Remember, david, chinese virus of course. He never uses the term covid19. No. Its the chinese virus. And i think that this is all part and parcel with look, does he that they disrupt Campaign Events will be the next thing you hear about i think so, carl, i think that this is the wechat is basically saying, do you know what, we dont believe anything you say and were coming after you for everything because when we do deals with you you demand 50 , you steal everything anyway so were going to confiscate you and its very gutsy. Its an app. Holy cow next is the ipos. Its an enormous app around the world in terms of communications is wechat it does appear to specifically deal with that but the question continues, carl, to be will it expand far beyond that or does it already in some way given the language have something to do with their other businesses and doing business here in the u. S so to jims point it is an escalation without doubt not unexpected in tiktok in some ways, doesnt really move that deadline that much forward anyway given where we were with that and the timeline that they are on in terms of bytedance and microsoft but needs to be watched closely and certainly will have an impact it would seem at least on the market or at least a couple of those names as jim said. Tencent was down as much as 10 overnight. On the other side of the break ubers Ceo Dara Khosrowshahi on that wider than expected loss but revenue ahead, eats up more than two x year on year. Back in a moment introducing stocks by the slice from fidelity. 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A revenue beat considerably, but dropped nearly 30 year over year with gross bookings down over 70 bright spot was food delivery, more than doubling for the quarter when i say that revenue is better thats really the division im focused on. We have an exclusive right now with Dara Khosrowshahi who is the ceo of i think maybe the most Controversial Company in the market other than perhaps tesla. Dara, welcome to squawk on the street. Always good to see you. Thanks for having me. I dont know if i should be proud to have that title, but thank you. I struggle myself, here is why. Because i have a tough time with the ride share business but i have to admit what youre doing in delivery is extraordinary and the idea that you have a barbell where when we have a pandemic delivery is a must and when things get better were going to have a lot more riders so win me over on the idea that you can make that much money in food delivery that i dont have to worry about the losses in just regular ridership. Well, i think the hedge that youre talking about is actually pretty powerful. We cant predict the future, we dont know how long this crisis is going to go and actually the recovery that were seeing all around the world and one of the benefits that we see in our business is we are global is different from country to country. Were seeing when countries come back sooner and we do have countries coming back sooner, so, for example, asiapacific outside of india is coming back very quickly, were seeing recoveries in hong kong and new zealand where weve reached precovid levels at times, seeing that things come back and when a country recovers and cities recover actually people get back on the road thing thing in europe. Europe is down, france, germany, spain are down 35 or less, theyre still down, but its a considerable bounce back versus the lows and even during this period of crisis what were seeing is that the eats business is growing at unprecedented rates. Eats is now at a 30 billion plus run rate, to put that in perspective when i joined uber this is less than three years ago the uber rides business was at 30 billion so we now have an eats business built in three years all organically at a 30 billion run rate its top line gross bookings are growing 113 year on year, and were also profitable in a number of countries including our top two international including two of our Top Five International countries. So this Home Delivery is moving and its moving right now. If thats the case i have to believe that postmates your big acquisition must have been very profitable is that possible postmates we think will be profitable and, again, the eats business for us, the delivery business, isnt making money right now but its because we are investing behind this unbelievable wave of growth. And i think postmates is doing the same thing whats really interesting with postmates, too, is postmates has been an innovator in advancing and expanding the category so eats and postmates are not just going to be about delivering food, but theyre going to be about delivering grocery, convenience, pharmacy as well. We think there is a huge market. Anything that you want from your local business or from your local market sent to your home inside of 30 minutes, thats an enormous business and youre seeing signs now that its very early signs of a huge market ahead of us. One of the things that does concern me, you have a page in your deck which says leveraging our unique assets, talking about leading technology, brand recognition, product expertise, but and a really famous quote, matt maloney from grubhub said its promiscuous, the customer is promiscuous, they will go anywhere, there is no loyalty. There is an operator who sold, matt maloney, saying, look, its just not possible to be proprietary. How do we deal with what maloney is saying versus the unique assets that you think you have well, i think that i listen to are the numbers and our monthly active eaters are up our monthly orders per eater are up our basket size the average order amount is up, our eater retention is up year on year, quarter on quarter, in the u. S. And internationally. So every single metric is up we think a big part of this is the satisfaction that our our customers get from a delivery. We think we lead in terms of average delivery times and experience of getting hot food or grocery within 30 minutes it is an amazing delightful experience and more and more people are experiencing it now we dont see customers who are promiscuous, we see customers who are increasingly loyal. Back to the ride business itself, dara its david, by the way what are your what is your sense in terms of the ramp back to sort of not even neutral but at least back to some level that was at least reflective of the past is it going to be extraordinarily bumpy or are we starting to see more of a Straight Line up we think the direction is up, but it is going to be bumpy. For perspective, our rides business was down 70 year on year for the quarter, but in july we ran at minus 50 obviously thats not you want to be much better than that, but it is a consistent improvement but its a consistent improvement over the portfolio and on average what we see is we see increases and then sometimes there is a little bounce back its a bumpy ride but th direction is unquestionably up outside the u. S. Were seeing a recovery that is more consistent and a stronger recovery. The u. S. , though, is lagging, especially west coast cities when it comes to the rest of the world are you happy with the markets that youre in right now and your investment plans in those markets . By the way, im talking here across both businesses or are we going to hear from you yet again in terms of some changes when it comes to sort of how youre focused in certain markets and others that you perhaps may decide not to compete as aggressively in . Change is constant at uber, i would be uncomfortable if there werent change but i will tell you we like our portfolio now and its a portfolio where we got two businesses essentially that hedge each other out, if this crisis goes on for longer our eats business is just going to grow for longer and its bigger right now today than our mobility business and weve got a hedge portfolio in terms of the global scope so weve got exposure essentially to the u. S. Which we think is going to come back but then weve got considerable exposure outside of the u. S. And these markets are big, the margins are very, very strong and we like what we see as far as our geographical profile goes we will continue to expand the categories that we deliver in. So this is not just going to be about food, its going to be about essentials, groceries, everything sent to your home. Dara, a quick diversion to sort of a question given your long time spent at the center of technology lets just say it broadly here you compete with a Chinese Company in certain markets but im curious to get your thoughts about whats going on right though between our country and china, particularly given this executive order yesterday in terms of banning tiktok and wechat here in the u. S how do you view that broadly speaking as somebody who has been this this business, meaning technology for a long time i think its unfortunate how it is happening and id say the speed with which its happening and the process is not the kind of process that you want to run, but i do think that this is a part of a pattern of there being two different inter nets, China Internet and a nonChina Internet china has been to some extent a large extent a protected market in certain Strategic Industries and i think the west has to make a decision as to whether were going to be consistent that way outside of china as well im not surprised that this is happening and these are important discussions to be had, but i think the dialogue can improve. Dara, you know, it seems like all we do lately is talk about urban flight, people leaving cities and even those remaining near cities buying their own cars at least when it comes to rides in the International Markets that you mentioned that have recovered, are you seeing that isnt that sort of a structural liability that wont be easily reversed were not seeing signs of that yet again, were seeing these markets return and some of these markets in asia, for example, return to postcovid highs, europe is coming back as well. Actually what were seeing is that our ridership is recovering faster, for example, than transit ridership. So there may be mixes in terms of the overall market size the thing about our business is were going to be where we are if you are in a big city or medium city or small city youre going to have uber, youre going to be moving around your town. So were fairly neutral as to where you live, obviously big cities are a bigger part of our business but if that evens out were going to follow economic local activity one way or the other and there could be a mix of that, i think, mass transit right now is having some difficulty and actually we are investing in Services Like a recent acquisition we made with route match that is designed to help mass transit. Its taking our technology, routing technology, scheduling technology, its helping mass transit with particularly difficult and expensive parts of their business such as paratransit so we want to lean in and help cities and mass transit recover as well. Every quarter we hear more and more complaints about pro forma results, adjusted ebitda profit will there be an effort overcoming quarters to divorce yourselves from i will call them crutches like that you know, i wouldnt call them crutches. I object to that its a view of the business that we think is an accurate view of the business and it removes some of the accounting that doesnt necessarily reflect core trends of the business. So we disclose gap results and we disclose nongap results and we leave it up to our investors to decide which they want to invest based on and we think giving more information is a good thing. I know you mentioned monthly active platform consumers so i struggle about what you could put through there. I come up with, one, maybe its driverless because that is coming and the other is why cant you create a scaleable ad platform on top of eats and sell search terms as a restaurateur i want that . Jim, you will be happy. We are we are building an ad business on top of eats as well it will allow restaurateurs to essentially sell ad terms or get promotion, push their restaurant more aggressively on the platform, just like amazon has built a big product search business. Or google. Or google, building a big ad business we are building. We have built an advertising business on eats we are rolling it out now live in a number of cities and expect to see more of that over the next year. So you will get your chance to buy some search terms on eats. Absolutely. Thats a darn Good Business i know the Gross Margins for you would be amazing, maybe for us Dara Khosrowshahi thank you for coming on mad im sorry, on squawk on the street and good luck to you and i think were going to keep i like a lot of the stuff involved with postmates, i think its working. Ceo of uber. Thank you. Thank you. We will take a break here on this friday morning. A lot of names to get to when we come back on the other side of the bell including zillow, theres drop box, multiyear izreement between gilead and pfer, futures back down. Back in a minute derek, seems like your team is operating just fine remotely. Yeah, everything is running smoothly with the now platform. bling see, incident resolved. How did you. Gotta enjoy the small wins. You keep being you, derek. Keep being you. Announcer the opening bell is brought to you by nuveen. A leader in income, alternatives and responsible investing. Two and a half minutes before we get started with the last trading session of the week and a lot of news to take into account for the market, but you want to talk a little zillow on the mad dash. Yes, david, because theres big implications from the zillow upside surprise which you will see the stock probably up more than any other today the dawning of the age of the aquarius. Yes. Rich barton is kaung this the dawn of the great reshuffling and that means covid and work from home policies are inspiring people to rethink their homes and consider moving. Yes. People are moving at record rates and that is fantastic for zillow so when you start thinking about how do i play this deurbanization, how do i play this with housing . Instead of buying who will brothers or lennar, people are buying zillow. And you think that makes sense . I would assume. Yes, i do i think rich barton makes a very good case, they also of course, this buying and selling of homes that i think that the shear volume of moves in this country rather extraordinary. Whats on the other side of this what do i want to short or stay away from as a result of this trend if it really sustains itself you want to short manhattan real estate not unlike what you have and you want to buy beach houses not unlike what i have. Perfect great. Okay so you and i just need to switch places, i guess. But you have so much real estate. True. I would assume at any one moment some of your portfolio, your vast portfolio, is suffering while other parts of it are going up. You mean like the parts where the tenants stop paying . Where the tenants stop paying or you cant go because you are not allowed in the country. That hurt me substantially in two different countries. The real estate portfolio is not performing as well as i would like i cant own individual stocks or else i would buy sfwlil low as a hedge to my portfolio. David, you got me there and right back to when i said that your apartment is losing money. It is, but to your point well, whatever high class problems. Thank you for saying that. We have a lot of people in this country dealing with things that are much more immediate and we dont ever want to make light of that in any way. My wife who does real estate, she works for corcoran journal with a piece this morning, guys, that foreign purchases of u. S. Homes is at a sevenyear low for obvious reasons as david just alluded to there is the opening bell on this friday. David, some names that are right in your wheelhouse like timo and dish. Yeah, they are and we can start off im looking for my timo notes because it was as you point out just from saying it was a strong quarter, i want to see how the stock is reacting this morning they are now number two theyre saying, which is just incredible. Isnt that amazing. It really is. It is up over 5 you see it right there 1. 245 million total net additions, thats the best in the industry 1. 112 post paid, best in the industry they had a long time to think about how they wanted to integrate sprint given how long it took for that deal to actually close from the time it was announced. We are talking, what, almost two full years, but, jim, they hit the ground running, no doubt about that, john ledger no longer associated with the company but he has certainly put them on the right footing and mike severt seems to be moving right off of where he had taken them we are talking about an extraordinarily competitive third competitor in the wireless market this this country that is, again, now theyre saying number two and keeps coming with the spectrum position that by the way is the entry of the other two to come extent. And also the deals. The deals are incredible when you see these numbers they obviously ledger had a low cost operation because they are well undercutting everybody and they are still making a huge amount of money. So they have the scale, they have a Great Network that was something, remember, when ledger took over the network was very lets say sketchy. Yes. So this combination i heard this Conference Call, i urge people to listen to it, this integration was so seamless and yet i thought it was going to produce shear hell. David, this must be i dont know severt, you do. I know him a bit. Unfortunately he tends to go on with earnings later in the day than cnbc. We dont get graced by his presence here, we hope that will change i know him a bit but not as well as i might like. Give me his cell, i will take care of that over the weekend. Carl, this tmobile the whole time verizon has been bouncing between 53 and 59 and att goes down this thing has been a growth stock, kind of like tesla in that tesla is the growth auto, this was the growth tell co, it was rather amazing and its not done. I think its a good stock. I had Hans Vestberg on, thats a good yielder but doesnt have this kind of growth. I tried to get him to buy tiktok he wouldnt do it. He wouldnt go there. Yeah. How did you know that . I looked at the transcript. Where he said were not interested in that, its not part of our strategy you tried. Carl, david has always been a stickler, always demanded facts and it really ruins the whole darn narrative. It was fun while it lasted. I liked hearing it i was shocked jim, it does give us a chance to get your take on the crazy intraday action on apple yesterday as it approaches 2 trillion in market cap you know, all these worries about price pressures on 5g phones, delay this september on some models, gross margin pressure on services, all the reasons that b of a took it off their focus list doesnt team to be borgt the market much. Hes trading it not owning it they do the sound, theyll never mention the word apple, they would call it orange, they would call it banana, once i tried to get them to use the term apple and it was torture, but they had good numbers and i was surprised b of a did what he did knowing sirius wouldnt have good numbers until apple is ready and ready right now, i think its a mugs game to sell the stock. Facebook had the same thing, there was nothing happening at facebook that that stock should go up 15. Its almost like someone is buy a faang box again. Someone has put together an etf and moves these stocks because Nothing Happened at them carl, i have to tell you its the type of thing as if they were going down, its mystifying to people obviously, there are a lot of people howho think oopg you came in in march stocks just go up. David, will you just stop looking bored . Im trying to do some hearing. Her when we used to sit next to each other. What are you wearing war and peace. I was looking at my phone or some of the research never mind. Theres things going on im looking at you come on. What did you want to tell me no. What did you want to tell me . Come on. O i dont even remember where we were. Your point on facebook is good theres been a lot of in us this week on facebook, Mark Zuckerberg is now a sent a billionaire worth 100 billion as the market cap has increased. I dont know if you saw the tweet from tiktok today, retweeting the tweet from instagram on instagram reels and tiktok said this books familiar. We are going to see another example of facebook trying to take out a rival by essentially copying their style. But we like that because its china. I called probably half a dozen people at facebook im proud to say i have some sources there and everyone wanted to know whats going on, jim . As if i knew it. And thats why i default to etf buying because literally the only thing that happened, what, there was a team meeting that mark spoke at and thats it. Isnt it conceivable as carl alluded to that given the potential shutdown of tiktok and not being clear whether its going to be bought by microsoft that facebook would benefit enormously. Absolutely. Youre right youre right, david. Facebook is adamant that it wont be bad if microsoft gets it i think that, yes, facebook is a winner david, this instagram Small Business initiative. Yes. I had etsy on last night. The companies that are really pushing, its etsy, its square, i may have to come up with a new acronym. Im looking right at david, i dont mean to ignore the camera. Its etsy, its square, its Facebooks Instagram and its really theres shopify of course thats it. I was going to say wix but they had a disappointing quarter. Etsy is so strong. So this one. Its a Small Business play they have 9 million advertisers. That entire boycott or those who are suspending didnt seem to make a bit of difference. They will be back. In terms of their quarter its a percentage overall. We did make this point, it was a fairly low percentage when you are talking about the top 100 brands or top 100 advertisers in the country. They never did that well with the cpg. Its not insignificant but to your point it is about the small and mediumsized businesses. On the tiktok front, guys, again, the market trying to digest the executive order in terms of, well, not letting you do business with bytedance which essentially means shutting down tiktok here in the u. S. And the wechat as well there they are on the threat posed by tiktok, thats the executive order that was put out yesterday by the administration and tiktok responding with its own statement, but, listen, back to the microsoft talks, there is a lot of difficulty thats got to surround those. I told you about the year they would have to recreate the code here in the u. S. , but, jim, thats algorithms are constantly reiterated at facebook they tweak them every day practically, its still not completely clear as you read the white house executive order or tiktoks statement saying theyre shocked by it, issued without think due process and risks undermining Global Business trust in the u. S. Right. And the rule of law, all the things that you might anticipate that they would say in response to that. You know, there is this question, though, in terms of just the basic idea of microsoft even owning the business how would it communicate with the other tiktoks . It wouldnt necessarily. What about when they make changes to the algorithm and china will, obviously that would not be the case here, who you will that service evolve on its own independently and what about all the changes that are made almost every day during the process of them moving the code . Theres so many different questions. Look, you know that the hawks in the white house are going to say, look, there can be no remaining connection whatsoever to bytedance in china. Right. If you are satya thats a nightmare. Yeah. How do you transition it . How many days do you have . 365 days to transition the code by the way, that is now, you know, when i reported it people come back, thats hard that is not an easy undertaking at all that is a lot of manhours and a lot of sophisticated engineers who are going to do it this is a company who has 10,000 engineers, bytedance, 10,000 of this em. 10,000 . Yeah, and millions and millions of lines of ai code which is what makes tiktok work. Thats a lot to find guys carl, you have to go there is a bidding war for those people out west. I always tell kids who come to me, they say, listen, i want a job in journalism i say go get a Computer Science degree because its all about keyboard and trying to get placement. China has a lot more of them than we do at that point. They have 1. 3 billion. They have a lot more people, yes, obviously. There you go. Thats why its so big for nike. They have a lot more of everything, the only thing we have a lot more of is covid. Bring us down. Jim, to the degree that there are further restrictions on u. S. Companies selling ads on chinese platforms or selling them Cloud Services or putting apps on their stors in china, why is that not a liability for the six huge names that make up half the ndx . We know that some just have had nothing to do with china facebook and alphabet. Obviously youre going for apple and i just think that apple has walked the tightrope incredibly well netflix shut down, they were about to go into china they were absolutely shut down a lot of ways people feel that faang is much less exposed than the semiconducting companies. By the way, nike and even lululemon, the sainted lululemon. I think that all of those theyre waiting theyre checking lets put it this way, theyre checking twitter every minute they must have a person on twitter. Every one of those companies has a person on twitter to be able to be ready because the rule of law is i dont think that wechat is all that far apart with that, david, the rule of law. Wait. What do you mean what the rule of law. Yes. They are not that offbase there. Its the same way that the president might want to sign an executive order this weekend to put a package together for employment. Right. Thats doings is supposed to do that. Yes, it is. The president that balance of powers thing. Yes. Either didnt take the course or thinks the Founding Fathers were just really not that good at what they did. Definitely hasnt read the constitution. Hes seen hamilton. Yeah. Yeah there you go. The Vice President did. Did he he didnt see hamilton . I dont know. I dont know carl, you asked about tmobile and you also asked about dish. Let me finish my part here, just get to dish because it is up this morning we all will await charlie ergens Conference Call that will be later and always interesting and a focus will be on the wireless business you talk about tmobile and what it is being able to accomplish in the United States, well, of course remember a key part of why the deal was allowed to proceed was not just boost, but a lot of other assets going to dish, to allow it to really create a fourth competitor in 5g nationwide thats going to take some time but we are all going to be listening closely to the call to see if there is any choice given at all to where they stand on that, whether theres anybody they will be bringing this to help write a huge equity check for the buildout or anything of that nature. As for sub losses dish didnt have that many, theyre focused on rural mark. The numbers were only down 40,000 in the Second Quarter sling tv they lost 56,000. Not bad. You can see a positive response in the marketplace but really for this company in the future its all about the wireless play and the questions there. We have many of them yet to be answered all right guys, lets get to Rick Santelli this morning as we look at stocks reaction to the jobs number and yields as well. Hey, rick. Yes, and yields their first blush was what we all thought when we saw the data, could have been worse, may be better than expected for most and obviously a long way to go because the economy isnt fully reopened look at an intraday of tens, yes, that spike where rates were at their highest today that was right at 8 30 eastern and they have given up some since as a matter of fact, if you look at a oneweek chart were going back down and we all know that a bit under 51 basis points is the all time low yield close and pretty much its the intraday lows of this week as well. So we want to pay close attention. Now, if you look at the dollar index and this is very interesting, right now where its trading its up on the week, its up on the week because it closed last week at 9335 why is this important . Put a june 1st chart up. For the last six weeks starting on friday, june 19th, every week has closed lower if we close under 93. 35 this would be the seventh week but it certainly looks like the bounce is ensuing here and we are bouncing off of levels that we havent seen in 27 months. Now, if we flip this around and look at a one week of the euro versus the dollar, 57 of the dollar index, we could see exactly the opposite it moved up higher, it stuck its nose above 119 briefly, a 27month high and its backing down a bit one of the main drivers of the euro strength we talked about this in january, we talked about this in february, the motion of actually getting a shared debt deal done and a stencil for many more deals like that is a hugely bullish story for the Euro Currency carl, jim, david, back to you. All right we will talk to you later on, Rick Santelli. So a bit of a mixed bag to start this friday session. Youve got banks and energy down, exxon and chevron are the dow lag guards guards, home depot the top performer at the moment back just a moment. This has been. Its unexplainable. These last three months, i have been wondering about the future in many ways. Im not the only one going through this. Some of my dearest friends, their businesses are still closed. Theres always peaks and valleys. Even through this pandemic, were all in a valley at this moment. But the one thing you can always know is that theres a peak on the way. Is that theres a peak on the way. Tmobile and sprint have merged. Now that sprint is a part of tmobile, we have more towers, more engineers, and more coverage than ever before. And now you can get an Awesome Network at an amazing price. Get four lines of unlimited for just 25 bucks a line with 5g access included. Thats right. Unlimited and nationwide 5g for just 25 dollars per line only at tmobile. Its unfortunate how it is happening and id say the speed with which its happening and the process is not the kind of process that you want to run, but i do think that this is a part of a pattern of there being two different inter nets, China Internet and a nonChina Internet china has been to some extent a large extent a protected market in certain Strategic Industries and i think the west has to make a decision as to whether were going to be consistent that way outside of china as well so im not surprised that this is happening and these are important discussions to be had, but i think the dialogue can improve. Thats Dara Khosrowshahi of uber a few moments ago talking about the withering relations between the u. S. And china, jim, which weve seen through the lens of the trade reps, the state department, executive orders and it sounds like you think the sec would be the next chapter. Yeah. Id like to know whats going to happen with the kodak deal thats questioning that one is not so good. Thats that deal that would create a lot of jobs and we have to make our pills here its incredible how even since wuhan the percent of pills we get from china has grown i mean, thats insane. But thats whats been going on. I know that there is a need to have our own we have to have our own pill shops i dont know maybe that the fellows the kodak fellows they were more you know moderna they were selling very quickly. The kodak guys were buying they quickly. David, you have to admit that if you got that call that you might be doing the building for the government, i dont think you would rewrite your option deal. You would hope not. Listen, it was a week ago that i went through all the collapartir on the kodak deal, with he saw George Garfunkel reduce his stake in the company, donated 3 million shares as well, gets the Tax Deduction for that. Right. Now the sec investigation it was one week ago, remember this fund that actually was changed by executive order, been a lot of them on may 14th i believe it was that allows it to invest in supply chains in the u. S. And to help the covid in terms of covid a fund that wast be used in investing in developing countries theres so many Different Things there involving that transaction. They continue to be questioned well see where it ends up how did they find those guys . I dont know. Im going to put this in the ill advised category it was. But id love to come back to china broadly speaking and obviously the kodak deal is part of that as they try to bring back the supply chain in terms of drug ingredients to the United States, but jim, we keep going down this road things continue to get worse were banning certain things to carls question earlier to you, at what point do the chinese respond by starting to ban things in their country . The president is running for president. There is no love lost. I think the president wants things not so great so he can say even in the midst of a pandemic, did we as america back down no we were even up thor than anybody, and im the toughest guy. He likes that. I think its engineered. By the way, carl, i dont think the chinese had any idea who they were dealing with i think they felt you know what . The president is going to be a supplicant now that their country is unravelled by a pandemic jim, if we get to the point, something youve i think endorsed previously which is not allowing them to axis our Capital Markets and theres the possibility of delisting Certain Companies that dont adhere to our accounting rules which may make sense to some extent, and there would be a period of time. I dont know, you see it create two completely separate systems. A. M. Financials is one of the largest ipos 50 of it sold domestically and globally its not going to list here. Do you think thats a good thing . Henry fernandez runs the Morgan Stanley Index Company where you index foreign. Thats where if you dont buy it here, buy it somewhere else i think that the chinese recognize were part of the indices now. As soon as people underestimate what it was like to get in the indices, because theres so much money being invested by rogue in foreign, and youre buying these companies. So its look, there can be some hawks in the white house, but the fact is america is buying these companies wherever they are because theyre in the index. Somehow that happened. I dont think i would have done it but it happened. And thats a huge trillions of dollars go to china. But to davids point, jim, if were entering a new world war with china, that is not fraught with misles but with money, the Collateral Damage, youre not going to have to be near a missile site to be near Collateral Damage. Were all going to be Collateral Damage because were all investors. I think the Collateral Damage could last to the election i dont know if it wont be more pieceable after the election if they go to taiwan and thumb their noses at the prc, that is going to be thats south china sea, aircraft carriers, all that stuff its a cold war. They want to undo the pingpong diplomacy, the nixon to china. Thats what they want. Now, is that good for business its terrible for business are they thinking about that at all . No, they are not thinking about that they are thinking they have to stand up to the china, to the country that gave us the virus thats not my view david, its not my view. Im not buying the virus thing i like it, but i want to be tough in trade, but the cold war, we dont want to go back to what we had when mau was in charge or joe in lie who is a tough guy and a chain smoker a break here. Later this morning well check in with jan hatzius. His number was almost exactly on the nose thats coming up apps are used everywhere. Except work. Why is that . 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It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Pricing at 18. It was a soft open but Rocket Company is making a show of it on the second day dan gilbert is now worth 41 billion. The 17th richest person in the United States. Dow is down 80 lets get to jim and stop trading. What happens when a red hot stock makes things better than the microsoft spread sheet look at ayx with revenues that went well, the estimate of how fast revenues were going to go was reduced and by the way, head winds, challenging, words that are not supposed to happen when you sell at a huge multiple to sales. I like the company very much, but this is what happens when you get churn and slowing for these high multiple stocks and thats ugly, and thats a good company jim, have a great weekend all right i think kodak is interesting you were right to spend so many minutes on that. Thank you i want everybody to have a great, safe weekend. Dont lose your resolve. People are going out to dinner and doing silly things stop it. Your advocacy and masks has been a good thing. Well see you later. Good morning. Welcome to squawk on the street. Lets get to Rick Santelli on wholesale trade. Hi, carl. Yes, wholesale inventory and trade. On the inventories an advance number came out mid month, minus 2 . The final number is minus 1. 4 minus 1. 4 is better than expected and it follows the final read of may and that was minus 1. 2 . Now, if we switch gears and look at the sales side which doesnt have an advance were looking for a number in the 5 camp. Much better, 8. 8 on sales. Thats a nice jump and in the rearview mirror, last month was upgraded from 5. 4 to 5. 7 historic jump coming off the historic drop we had in april of minus 16. 4 carl, back to you. All right rick, thank you very much. It has been a bit of a muted reaction this morning to the jobs number. 1. 8 million showing the recovery in jobs is intact. Maybe a slower pace, but kayla, its being held and enthusiasm has been held in check by the fact that theres no deal on the hill and now we have an executive order on tiktok and wechat it was the pair of executive orders that moved stocks sharply lower in asia overnight. Its been the leading indicator for what weve seen here this morning. The white house out late last night with two separate orders this one for each company, the Parent Company of tiktok and also wechat the white house essentially saying that these apps soak up vast quantities of user data but also track the action of chinese nationals outside the country and for that reason, the president says he is using his Emergency Powers to direct the secretary of commerce to ban transactions in this country by those two companies beginning in 45 days or on september 20th this is a new action for wechat. It sent shares of wechats Parent Company sharply lower overnight. For tiktok it codified the mid september deadline for microsoft to consummate a deal when he threw out the date, it was unclear whether that was going to be a hard and fast deadline, but this executive order makes it clear he wants that deal done by september 20th david, what remains unclear is what exactly is going to get banned what will the Commerce Department decide falls under this order whats actually legal for them to do . Is it just commercial transactions by these companies or is it usage of the apps by consumers . Thats the detail that were waiting for and well see if we get it later today kayla, you anticipated my question to you. It was specifically that as you know, so many investors trying to understand. My understanding is the term transactionrelated to the Parent Company is not clear he defined which you referenced is it only wechat which is a Small Business for the company in the United States, or does it mean they cant do business in the u. S. That would have much larger implications we need clarity on that c but youll note wechat is a popular payment app. Its a place where Chinese Americans do a lot of different communication and transacting. And we dont know exactly what is going to get banned under this order were still trying to seek a little bit more detail theres also a question of whats legal tiktok said its going to challenge this in court and so how the administration tries to thread the legal needle here will be important, too yep were going to get to the other side of that from beijing right now. Lets go to unibeijing. As you were talking about tiktok and the chinese parent, they said they were shocked by this order by President Trump and said they would be willing to take legal action and take the case to u. S. Courts if theyre not treated fairly we j. Wechats owner said it was reviewing the order to get a full understanding as you were discussing for tencent this order looks like its targeting one small part of the business for International Markets. Though its really, really important for the Chinese Market this is the goto app that everybody here in china uses for their daily life they have 1. 2 billion monthly active users, and people use it to pretty much do everything pay for your taxi ride, for example, your movie tickets or to just message all of your friends. So from a business perspective, for u. S. Businesses, its also seen as special. Thats because a lot of companies outside of the country communicate with their suppliers this way also chinese use this service in order to pay for a lot of American Goods and services here in china and then finally, a lot of u. S. Companies use wechat in order to try to reach out to new customers or to retain their customers. Its a great way to do marketing. So this is another big question that a lot of people have, but as you were talking about, the stock price for tencent dramatically fell in hong kong and a lot of that is because of the lack of clarity about what a transaction really is, and also here in china people are wondering whether or not the order is only going to effect wechat or eventually lead to a broader limitation on tencents business overseas. Yeah. Again, thats the key question its funny you mention that. I know a number of Hedge Fund Managers to w. H. O. Use wechat to chat with their overseas investors. Some of them in china. What is your expectation as we go week to week with both sides upping the ante. What would be a response from the chinese to the executive orders its difficult to say the Chinese Government has consistently said theyre going to retaliate they said this is just more evidence of the u. S. s attempts. Theres always a lot of anger in terms of the war of words, but also whats interesting is there isnt a realization and you could even see it in the state press, that if china were to say, for example, go after apple or go after some Big Tech Company here, that there would be a Ripple Effect that would be negative for them economically so theyre really in a very difficult situation where they dont want to have the negative impact of Foreign Investors potentially leaving this market. And finally, i mean, what alternatives do people in china or people in the u. S. Have if they want to move off wechat with so many of these u. S. Platforms banned in the country . That is a very good question. Wechat is everywhere in terms of Payment Systems you have the ability to use another payment system, but when it comes to messaging, wechat is pretty much the only way if you dont have wechat in china, youre out of the loop. The clock is ticking. Our thanks to you from beijing the u. S. Adding 1. 7 million jobs in july that tops the 1. 4 million consensus. Unemployment also falling to 10. 2 . And were joined now to discuss that with david kelley and diane swonk. Diane, what are the bright spots in this report to you . Well, the bright spots were the more than 500,000 restaurant and bar workers that were called back to work off of temporary unemployment during the month that we saw was hiring in states that were reopening more than offset some of the states that had to reverse course in response to the covid infections we also saw a comeback in the Health Care Sector outside of longterm care facilities where people actually pulled many of their loved ones out of those facilities because of the risk of infection elective surgeries did pick up along with the backlog we had to go through in terms of the delayed, dental appointments to doctor appointments. We saw a pickup there. The mischaracterization was the Public Sector and state and local level. That was a quirk in the seasonal adjustment 300,000 jobs due to that alone that will be reversed in august, especially given the number of large School Districts that decided to try to do hybrid of online and in person schooling that will suppress those numbers as we move into august david, you have 4 million workers working parttime who dont want to work parttime 7 Million People on temporary layoffs than in february how do you size up the temporary phenomenon of todays labor market from what could potentially turn into permanent fissur fissures the temporary problem is temporary after the pandemic is over but the vshaped recovery is wilting here i mean, this is good progress. You can see 1. 7 million jobs added. I wouldnt pay much attention to consensus expectations we didnt know how to forecast this number. There are so many distortions in the data the big picture is we lost 22. 1 million jobs. We gained 42 of them back the pace of recovery is slowing, and until we can control the pandemic, its going to slow further. So its really sort after a recovery interrupted here. What we need to do obviously is try to dampen down the pandemic and adapt to a more normal situation to try to get the economy back on track. And then also we have to continue to support workers in sectors which are just shut down or mostly shut down because the pandemic i dont think we can get away from it. We cant get back to normal until we control the pandemic. Back to washington then, because you referenced it a bit. Its possible we will not get anything out of the congress in terms of i dont want to call it stimulus, but something to sustain to what you said what does your outlook look like if we get nothing new from washington well, i would be very surprised to see that. I think in the end both sides are playing a tough year, but nobody wants to sort of adjourn to their conventions and go to the november election having done nothing so i think there will be an agreement. Theyre going to play it tough and then say the other side didnt do enough so i think there will be an agreement, but if there wasnt, it will be devastating because the problem is that the low wage workers who got laid off, i understand 600 in additional benefits more than what they made on the job, but zero is a lot less if you take the lowest wages in america and cut them in half and call them Unemployment Benefits, you cant do that. Its going to be tremendously painful. In addition, well have state and local layoffs. I agree with the characterization in education jobs at the local level, but the state and local governments cannot keep the payrolls intact unless they get further aid. We need to do something or this recession is going to be even more painful its not about stimulating its about supporting the people until the pandemic is over you trying to get through this with as little pain as possible. Its a trillion dollar difference between the house and the senate or in terms of that money for the states that you were referencing earlier, but same kind of question to you what if we just dont get anything what will it mean for the possibility of any recovery in the fall i think we have a risk of falling into a double dip. Not only because of reopening colleges and bars and congreg e congregating we see it spreading in young people and they bring it home. We need to close the bars to open the schools this is really important im very worried about after what were set up for some kind of an increase in the third quarter, but we could slip back again easily in the fourth quarter, especially going into the Holiday Season and many schools, colleges, that hope to have students back by on campus throughthanksgiving may not find they can even keep them there until halloween. I think that would be devastating during the height of what usually are our celebrations and going out to restaurants and bars so another hit there also going on davids point, you know, this issue of losing 18 billion a week right now because of the lapsed Unemployment Benefits and the debate about what level they should be. Theres no evidence they deterred workers during the pandemic which is really pretty stunning and theres been enormous amount of research on that. So its one ideology more than evidence but the Food Insecurity and homelessness in the week and months to come even in the cuts and benefits and subsidies is going to be large. We were talking about the largest Food Insecurity and homeless problem since the Great Depression a third of all workers in the recent survey by the census were worried about making august rent and with the suspension and lapse in benefits, that makes it even harder. Even if they get an executive order to extent the moratorium on evictions, you have more evictions out there. This is a humanitarian crisis thats avoidable if we provide support for those households, because as david says, things will pick up once we get a vaccine, but thats an eternity from now until then for a family trying to feed their kids. Yeah. I think everybody understands that on the other hand, what do you say to the fiscal hawks who are making mcconnells job more difficult . What do you say the fitch who has us on negative watch do the arguments hold any water . Yes what you have to do is theres a time for everything. This is why i was against the big tax cut not being paid for in 2017. When the times are good, you dont expand the deficit unnecessarily. But now times are bad. You have to run a big deficit but also have to commit to fed independence and doing something about the deficit once the economy recovered after a vaccine. Its going to be more urgent than ever to try to get the fiscal house in order in 2022 and 2023 because of the huge runup in red ink over the course of the pandemic. But theres a time and a season for everything this is a time for fiscal generosi generosity 2022 and 2023 will be a time for fiscal prudence. That doesnt sound like fun either a difficult debate given the hardships that diane pointed to. Thanks, guys have a good weekend. Thank you as we said earlier, market having trouble getting out of the gate dow down about 80. Well talk to jan hatzius in a moment experience the joy of a bigger world and a highly connected lexus vehicle at the golden opportunity sales event, lease the 2020 es 350 for 359 a month for 36 months. Experience amazing at your lexus dealer. Come on in, were open. All we do is hand you the bag. Simple. Done. We adapt and we change. You know, you just figure it out. Weve just been finding a way to keep on pushing. Weputs its customersng a way ta wiin charge . Rier well, the good news gets shared. And it gets rated 1 for customer satisfaction. But dont just take our word for it. Take theirs. Its your wireless. Your rules. Only with xfinity mobile. Call, click or visit a store today. Welcome back to squawk on the street. Time for our etf spotlight looking at the etf ticker away down over 20 since the start of the year its not getting any help from one of the Larger Holdings this morning, that is uber. That stock falling in todays trade. Revenue and bookings both seeing massive declines year over year. Food deliveries did double but you can see shares of uber down around 5 this morning and well hear a little bit more from the ceo a little bit later this hour from that exclusive interview that happened in the 9 00 hour. That will be up on squawk alley. Stay with us the direction is up, but it is going to be bumpy for perspective, our rides business was down 70 year on year for the quarter, but in july we ran a minus 50 . Obviously you want to be much better than that, but it is a consistent improvement, but its a consistent improvement over the portfolio and on average what we see is we see increases and then sometimes theres a bounceback its a bumpy ride. But the direction is unquestionably up. When we started carvana, they told us that selling cars 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. Good morning, everybody. Heres your cnbc news update at this hour. Flood warnings in Central Virginia as heavy rains have fallen for a Third Straight day. Some roads are shut near richmond emergency teams have had to rescue several residents and parts of Virginia Beach got 7 inches of rain submerging roads and stranding cars in fort worth, texas police are still searching for a gunman who opened fire on cars while driving along a highway. Police say security video shows the suspect Anthony Scott gordon firing his gun from the roadside after he crashed his car and before he allegedly stole a womans pickup truck no injuries have been reported and in beirut, multinational teams of rescuers are optimisting they can find survivors from tuesdays explosion. Dozens of people are still missing. The death toll has risen to 149. You can go to cnbc. Com for more on the search efforts. You are up to date thats the news update this uaur sqwk alley squawk, actually, returns after a quick break. If that does not work, the president has instructed secretary mnuchin and myself to be willing to enter into a narrower deal that addresses some of the most pressing needs that are before us as a nation and if those two things do not work, then hes prepared to take executive action on his own. That was the white house chief of staff and the treasury secretary speaking to reporters last night after more than three hours meeting with their democratic counterparts again in a standoff over the next round of relief coming from washington the treasury secretary said that there remains significant differences on certain policy areas both on the substance of the policy and the dollar figure attached specifically on state and local funding. And the chief of staff there said if they continue to not be able to reach an agreement that the president has instructed them to reach a narrower deal. Mitch the president said his priorities are unemployment, a payroll tax suspension and the eviction protections david, significant to note that it does not appear that if they pursue this limited deal there will be anything for state and local governments youve been focussed on as part of this. Yeah. It has caught my attention as you say. And its not just its across the country as you well know, kayla. Certainly in this part of the country there has been economic devastation. But the house bill was a trillion dollars theres been a lot of back and forth. I asked leader mcconnell about it yesterday he says while theres a lot of money that was appropriated to the states for other things that they may allow them wider latitude on, but you heard diane and david earlier in the show emotional about the devastation that would occur if we dont get something out of washington and soon and the richmond fed president also mentioned that yesterday, that it could sustain a downturn if the sectors are excluded from any future aid i also want to bring you to another scene in washington where there is a live stream of the first hearing of the Congressional Oversight Commission even as we discuss this new round of stimulus, there is still watchdog activity on the cares act the prior round of stimulus and exactly where that money has gone youre looking right now at a former economiced adviser to Elizabeth Warren in his opening remarks he criticized how little the Federal Reserve in particular had actually dispersed as part of the main Street Program he says only 18 loans have been underwritten for 104 million he says thats. 017 of what the fed is supposed to be doing. There are not Many Companies getting access to this money its part of the difficulty in crafting these things on the fly, whether its fiscal support or Monetary Policy support for the fed or through congress. We end up passing these things in a hurry, and then have to circle back and either correct inefficiencies or mistakes or trim down on the ability for fraud. And in some cases just up the ante in terms of what is being taken. And the officials are very clear about this experience being unprecedented, needing to create the bespoke programs and essentially learning on the go and adjusting to where demand is and what borrowers need. David, its different from the financial crisis and the price tag is a lot different by the end of this year well probably get ten times what the u. S. Government spent in 2008 to bail out the banks the numbers are staggering and the feds expanded Balance Sheet as well. And david brought up we were running significant budget deficits this year as a result of the tax cuts of 2017. Tax cuts of secretary mnuchin many times said would pay for themselves certainly hadnt as yet. Theres going to be a lot of discussion as new aid is needed and well see where these discussions go on capitol hill i also want to bring you news just out from the Treasury Department you probably saw that the u. S. Treasury has placed the chief executive of hong kong as one of the individuals listed in the office of foreign asset controls adds targeted by sanctions from the u. S. Treasury. A press release just out says the actions were taken pursuant to an executive order on this. And it specifically deals with these individuals involvement in undermining hong kongs autonomy and restricting the freedom of expression or assembly you remember the president did sign that executive order just a few weeks ago and it remained unclear exactly when the sanctions could come and whom they would target. But carrie lamb is in the cross hairs as so far the highest ranking and most publicly known of these individuals to be listed on this list. And certainly it comes as a time as relations with china are deteriorating, and with the tiktok news and whatsapp news as we await more news from china an how theyll potentially retaliate, there are a lot of line items for them to potentially address here yeah. We were talking earlier this morning about the multiple fronts that the administration has used against china whether its through trade, the state department, visa restrictions, removing hong kongs special status and its on top of where the trade reps get together to assess where we are on phase one. What do you make of arguments that all of this recent activity is meant to build up leverage in front of that . Well, weve seen this before, carl that the u. S. Wants to set the table with some very difficult discussion topics to up the ante ahead of these negotiations. We should note this is not a new meeting. That was scheduled because of recent activities. Its something that was built into the phase one trade deal for high level dialogue to take place every six months so if youre going to have ministers and vice ministers and the treasury secretary getting together to discuss things you might as well have the most serious issues to discuss and to try to create as much leverage as possible as you are trying to fundamentally change the relationship and get china to make good on that phase one trade deal all right thats going to be one of the key events of next week. Thats a lot of news, kayla in the last few minutes all thanks to you kayla who is joining us for the hour today meantime the economy j the jobs number in july nearly 1. 8 million new jobs added well talk about that with january hatzius whose number was pretty much in line. Certainly given some of the alternative data and adp and the ism employment component which gave some pause. We thought it was going to be weaker than the basically because of the weaker alternative numbers, the High Frequency indicators, the claims numbers really until yesterday happened to be really disappointing. So that was pointing to a slowdown i think todays number is encouraging overall. Relative to the expectations, but, of course, we also have to see this is a somewhat dated dated number, and well see in the august report how well job growth is holding up in the face of the removed restrictions on activity if you look at the share of states that are opening versus restricting activity, thats obviously been a sizable shift, and thats probably going to be visible in the august number as well all right is it too simplistic to argue that the seeds of reemployment, meaning the places that people could potentially have a job to go back to are still intact and thats the most encouraging take away from a number like todays . Yeah. I think that is the most encouraging way to look at it, and i point out that the share of unemployed workers that are on temporary layoff is still close to 60 which means that there is still room for employment to grow if the Health Situation allows, and that does suggest that we have not yet seen the sort of skouerring effects, the way in which unemployment can become permanent, that we always have to worry about when you get a huge shock like this one so far that hasnt really been the case the increase and permanent layoffs that weve seen on net since february and march has been pretty limited, and, in fact, permanent workers on permanent layoff were basically flat between june and july so i think that is an important point that means we have the ability with rapid output growth if we can get back to that, and thats obviously going to be driven first and foremost by the Health Situation to bring these people back into employment. This survey was taken july 12th through 18th in your view does this present a complete picture of unemployment in july or do you think the data in the back half of the month makes you adjust your views a little bit i think it is somewhat stale, because it is more of an early july view. And i think there is concern that weve seen some additional indicators since the second week of july that suggests the august number may be weaker than this and i would say that even more strongly if it wasnt for at least this one week of better jobless claims numbers, i dont want to overstate the importance of one weekly number, but yesterdays numbers were a bit more encouraging well see how things develop over the next few weeks, but yeah, right now i would certainly expect that august is also likely to be a slower pace of job growth at a minimum relative to the really outsized gain you saw back in june. And a lot of that, again, is related to the Health Situation. While the new cases have come down and the percent positive testing rate has come down somewhat as well, were still at very high levels of new infections, and that is that means constrained on activity. All right you made an early argument in favor of the use of masks. At a well read report actually when colorado passed their own mask mandate, they included your report in the eo if were now subject to Public Health trajectories, i wonder if you are feeling now that the country has gotten religion on mask and thats why majority of states are seeing their 14 day averages decline i think that is one reason why things are looking a bit better at the margin in terms of confirmed infections about 80 of the United States is now operating under a state or local mask mandate, and thats up from about 40 back in june so while we havent obviously gotten the National Mask mandate, state and local governments have moved pretty far in that direction. Weve also seen increases in the share of people that say they always wear a face mask, and so were moving in the right direction. Id like to see the numbers rise even more but that and the restrictions on some of the highest risk activities basically Mass Gatherings and Indoor Dining and bars, i think at the margin that is helping. Yeah. Finally, there was a report out of goldman, some of your associates look at timing getting approval by december and arguing that approval of a vaccine if its effective enough, is going to challenge the markets assumptions about the persistence of negative real rates. Is that your view as well . Do you think that if we get some news an vaccines, rates and inflations and other things as well are going to surprise people i mean, i think well be in a low rate environment and a low inflation environment even with a relatively optimistic view of the economic recovery partly on the back of a vaccine. Were clearly above consensus when it comes to the growth rates in terms of the real economy, but the truth is we also have an enormous amount of room to make up, so even if we get back to the precovid level of real gdp in, say, the middle of 2021, thats still going to leave a significant output gap its going to leave a significant employment gap, and so this in that environment, i think the fed is going to continue to be very dovish we do not expect any rate hikes for a very long time in our current estimate for us is 2025 for the first move we think that they are probably going to continue to buy assets for most of that period. So i think you can combine when you are coming from such a depressed level of activity, you can combine a fairly strong economic recovery in terms of output and employment growth with a lengthy period during which rates and inflation are depressed. Thats our view. All right right. Great clarity, at least given the information we have at this moment we appreciate it so much every month on jobs friday have a good weekend. Thank you very much jan hatzius. Next hour, do not miss an exclusive interview with the drop box ceo the stock is plummeting after the Earnings Release dont go anywhere. Tilbek on the stree wl become in two. Hope it doesnt cost too much. I hope my insurance pays for it. Can you tell me how much this will be . [cashier] 67. Sorry. Wait, have you heard about goodrx . Goodrx finds free coupons to help you save up to 80 on your prescriptions. Wow, i had no idea. [announcer] goodrx, stop paying too much for your prescriptions. A sharp decline in the u. S. Dollar has raised concerns as to whether the currency could lose the reserve status find out what that could mean for your money on trading nation more squawk on the street coming up. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. All Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. Schwab. Pampers the 1 pediatrician recommended brand, helps keep baby skin dry healthy so every touch is as comforting as the first pampers. The 1 pediatrician recommended brand Global Real Estate firm believes the u. S. Office market will fully recover in 12 to 18 months after u. S. Gdp returns to precovid levels after seeing a 45 leasing decrease joining us is the ceo, brett white. Good morning. Good to see you. So 12 to 18 months after we get back to precovid gdp. It sounds like maybe a two and a half year phenomenon i think thats about right. Were forecasting that we should see the Office Market recover sometime in the next two or three years. And that will as you mention occur post gdp recovery, we think is 18 months to two years. In the nearer term, people have dire predictions about commercial real estate, at least in urban centers in the next 6 to 12 months is it your sense were going to have to endure worse pain before we get to an area thats better . No doubt. As we talked about before, its different by asset class lets talk about u. S. Office i think thats where most of the attention is were forecasting that u. S. Office vacancies could go as high as 15 to 18 over the next two and a half years. That would imply a rent decline of something in the 5 to 15 range which is painful and that rent decline, those vacancies increasing that forecast right now is what has created the bid ask spread on the trading of the properties until sellers, theres a consensus view among sellers thats where the market is heading. Were going to have a spread that slows down, transaction activity, but yeah, were going to feel pain before things get better manhattan the largest market. Previous conversations about elevator traffic and how they do that hasnt materialized because people are not going back. Even though the Office Buildings are open in manhattan, most businesses are saying dont bother until theres a vaccine it feels like is that what you expect . Its not what we expected six weeks ago we talked about the elevator keys and problems in the buildings there are no problems in the building because people arent going back you look around the country, most businesses are open in one form or another. Most Office Businesses are open in one form or another most of them have said well take back 20 , 30 of our employees. And yet you walk into the office and theres half a dozen people there. I think that what were seeing is our employees, your employees, everyones employees are voting with their feet they dont feel safe and they also dont feel its worth the hassle because theyre not required to go to work its not worth the hassle to go back to the office right now that being said, there is no doubt that as things improve with the pandemic, people are pining to get back to work our surveys we talked about before, david, 90 of people we survey across 100 companies around the world say they want to get back to the office. Brad, id love to get your broader take on how many people will be working remotely we have two separate things from facebook on the Conference Call Mark Zuckerberg said he could see as many of 50 of his employees working remotely in five to ten years. And they signed a lease for over 700,000 square feet not far from midtown. What do you think the new world looks like when we talk about how many people will never come back to the office right and again, weve all talked about this before. Id get through the rhetoric a little bit, and watch how people actually act and so certainly there are a small number of firms that are publicly saying were not sending people back ever those are going to be far, far outliers what most firms are doing, the vast majority of firms are doing is they are rotating back to the office slowly. My guess is any reference, my guess is were not going to see real amounts of people back in the office until at least past labor day. For Many Companies not until after the holidays but once we get through then, youre going to see Companies Say to their employees, look, the building is safe weve got our protocols set up we need you back in the office and employees i think are going to say as long as we feel safe, were going back to the office our estimate is if right now roughly 5 of the work force is permanently at home right now, precovid, we think it will double we think it could be as much as 10 , 11 of the work force could be at home permanently, but 10 is a lot less than 90 and 90 are going to be in offices in one form or another how much do you think schools are going to act as a fulcrum or Employee Decisions to return Chicago Schools going online, same thing in miami, same thing in d. C i mean, the employer may say were ready for your return, but if your kids arent going back, the incentive is not as high youre exactly right. And so i would think about it this way theres a checklist of requirements someone is going to have to fulfill to be able to go back to the office one is during the pandemic, no preconditions. Good health. Another is going to be that you have child care, and if you dont have child care, youre not going to be asked to generally speaking, youre not going to be asked to go back to the office and this is a huge issue until we have our schools open again, this is a major constraint to back to back and i would say this one thing thats interesting to me right now is that we are seeing a direct correlation between revenue production in businesses and those geographies that are open open with offices those with not the high productivity at home, thats changing. So i think everyone is going to feel this need to try and solve these issues youre right without schools being open and children being taken care of, its going to be very difficult to get a large group of this workforce back well know more in just a matter of weeks at least in the near term. Appreciate it very much. Obviously we lean on you for longterm visibility have a good weekend. Good to see you as well thank you. This coming wednesday dont miss the Small Business playbook summit taking place virtually this year. It has guests like facebooks cheryl sandburg. Head over to cnbcevents. Com to register back after this. Come on in, were open. All we do is hand you the bag. Simple. Done. We adapt and we change. You know, you just figure it out. Weve just been finding a way to keep on pushing. Welcome back to squawk on the street. Stocks hovering below the flat line in early training on this friday rising u. S. china tensions offsetting that better than expected jobs report from this morning and right now were seeing a relatively even split in terms of sectors. Lets drill down into one underperforming group and thats energy so far today. Resurgent demand are pushing crude oil prices down putting pressure on the Energy Sector across the board that will be a group to watch heading into the afternoon street squawk on the street continues right after this quick commercial break air lease out this morning with a Global Customer base that includes china southern. The Company Facing headwinds in the relationship between the u. S. And china lets start with the u. S. Airline business give us a sense in terms of your thoughts of how it is right now and how you look at it i know you watch it very closely. You were asked in your Conference Call about it you focus on credit metrics and liquidity and your ability to obtain additional liquidity. So given your conservative outlook, so to speak, what kind of health is it in right now well, i think first its important to note that the u. S. Is only about 2 of our business noefr nevertheless, we do watch it closely. Weve been seeing a relatively good recovery in the u. S. But that recovery has been muted by the resurgence of the virus. We are seeing stronger recovery in asia and china and in europe. Now we have the u. S. Airlines going for a second round, of course, of Financial Aid from the u. S. Government so well see how that goes. I would say overall the situation remains strained and its restricted due to virus travel issues, et cetera, et cetera its only about 2 of our Business Travel around the world is down sharply in part because people here cant go anywhere else and many cant come here. Give me the Global Outlook at this point given 98 of your business is focused on outside the u. S. Big picture, you know, we had about twothirds of the global feet as of mid or so april that was sidelined, in part now about twothirds of the fleet is actually up and flying. So, again, china domestically a big market for aviation. Again, globally about twothirds of the aircraft are now flying so were still on a recovery mode, but its very, very slow i would say asia is doing relatively better and europe is doing relatively better. A month ago europe relaxed their travel restrictions across the country so thats helping them john, ill let you get to that emanuil after this intervi is over. I want to ask about discussions happening in washington. More than a dozen senators have backed not only another bailout for the Airline Industry but also airline adjacent businesses im wondering when you look at the ecosystem, what parts of it do you think need help from washington look, i think the supply chain needs a lot of help. It is a huge source of employment for the United States also globally. So the supply chain feeding boeing and airbus, theres a lot of common companies. I would say that supply chain needs a lot of help. John, were tight on time today. Apologize for that appreciate you spending a bit of your time with us. Your stock is up 5 . Thank you. Well see you later. Good friday morning. Welcome to squawk alley. Jobs number came in better than expected lack of progress on d. C. Stimulus talks and increasing china tensions which in this case have tik tok in their sights that raised tensions but the executive order targets we chat because it would bring on a new set of problems. Tencent and wechat are intertwined and american businesses here and in china wechat is a popular messaging app for many in the u. S. Chinese americans who rely on it to communicate with friends and family overseas. I, myself, have family here and abroad who use it exclusively. They dont use any other messaging apps and that limited contact would be cut off for