Transcripts For CNBC Squawk Box 20240712

Points the s p which is then up five out of the last six weeks and up the last six sessions in a row is up by 5. 5 this morning and then the nasdaq which has been this incredible out performer for months on end is the other performer this morning its down by 13 points but remember nasdaq was only down friday after being up for several sessions in a row. Setting a new high every one of the closes. The s p is less than 1 from its all time high. Its up back in february the treasury markets youll see right now. The treasury yields are where they have been the ten year is at 0. 556 . Melissa. We have an update on the pandemic the United States surpassed covid cases. It took just six weeks for u. S. Covid cases to double. The growth appears to have leveled off at an average of 54,000 per day over the last week in College Sports news over the weekend the mid american conference scrapped its all football season delaying all fall sports until the spring of 2021 the logistics were too complicated and costly and now multiple Media Outlets are reporting the power five conferences held an emergency meeting with the expectation that fall sports will be postponed until next year which would be very disappointing to a lot of fans out there. Yeah. People have been waiting for sports to come back but when you see some of the troubles that the professional leagues have even had even when they have lots of money to be throwing at this when you see those issues and add that to the idea of college kids being in dorms and going back through some of these things i cant say im hugely surprised to hear about some of these set backs at this point given where westand its more understandable and the professional sports here with mixed results seems to be struggling relative to what the european side and sports managers managed to achieve quite quickly relative to a much more delayed start date here every time we do a show wilf has to bring in soccer. I love when you say that. Joe likes that one very much circumventing congress and many, many questions he joins us with more on this. Theres so many questions on this and i was on the phone with producers yesterday. Begging to walk us through this. Even after going through hours of trying to figure out what was happening. Im trying to stay im still confused the president only has limited Authority Without legislation from congress. Hes right up to the edge here and we heard democrats complain over the weekend and was actually over the line lets walk through what he did first lets talk about the reaction. What he did was a serious of executive orders including the payroll tax cause which is going to defer payroll taxes that runs through the end of the year it doesnt look like the law is going to be changed under this congressional layout right now the president is simply hoping here that there will be a new congress he will be reelected and hell be able to pass a law making that permanent but trying to figure that all out, which way do you bet on that is a real open question the president not able to extend it but he is directing his federal agencies to find ways to go out and help renters so well see what the federal government can come up with there then its 400 in bonus unemployment that will replace the 600 a week that people have been getting under the cares act. This is money coming from Homeland Security Disaster Relief fund and the federal government is going to pay 75 of this under the president s plan states will be responsible for 25 . You already heard some complaints from the states that they simply dont have the money to be able to do that. So you heard from democrats over the weekend that this is entirely unworkable. Unfortunately the president s executive orders described in one word could be unworkable, weak and far too narrow. The event at the country club is just what he does. A big show but it doesnt do anything and its what the American People look at the executive orders they dont have close to doing the job. He explained exactly what the president hopes happens here with his payroll tax if they want to challenge us in court and hold up Unemployment Benefits and theyre going to have a lot of explaining to do so becky, essentially a dare from the treasury secretary saying sue us. If you want to be the Political Party thats suing to stop unemployment checks going to Unemployed People ahead of the election go ahead and do that. Lets start theres going to be a lot of questions. I know all three of us want to ask. Lets start with the basics. If the democrats challenge any portion of this does that mean they challenge all of it we could see them saying they want to challenge the idea of a payroll tax holiday or a relief at this point but we dont want to stop the checks from going out. You could there are three different executive memorandum here and executive orders. So you can do a lawsuit that targets specific federal action so you dont have to challenge the whole thing. You can go after bits and pieces the question is politically whats the strategy . You saw nancy pelosi arguing this is both unconstitutional and also too little. If its unconstitutional then the democrats are putting themselves in a position where they sort of morally or righteously would need to sue to block it but also if it does provide any little bit of help they dont want to be in the position of being the ones to take that away. We keep saying its 400 in unemployment its really 300 coming from the federal government and theyre saying the states could pick up an extra 100. But we should probably recharacterize it as 300 coming from the federal government. Its 300 from the federal government and the states would pay 100 and you already heard them saying wait a second. Our budges have been so badly hit that we cant pay for the services that were providing right now, let alone an unemployment benefit were not going to be able to do it states will be able to find a way to do that and well see what governors say this morning as they get into their offices and try to figure this thing out. If the states dont come up with the extra 100 does the 300 go away or will the unemployment checks still be increased by 300 . Thats a good question. I dont know the answer to that. I dont know if the whole thing collapses under this proposal or if theyre able by 300. Aman, i wanted to ask, going back to the sound bite that we heard. If its not just a brilliant political move whether its 300, 400 or the 600 as recently as 2, 3, 4 weeks ago the republicans, some of the republicans suggested they didnt unemployment benefit and thats how the narrative was coming across and with one little signature the president turned that on its head and might well now whether it gets done or not. Being able to claim that he was the one to get the Unemployment Benefits out. Right, look, politically thats the genius of the move over the weekend the president takes action, shows himself as a leader who is taking action trying to help and put the democrats on the defensive. Thats why you saw that dare saying go ahead, sue us if you want to be the ones to block us. Politically this is good politics over the weekend for the president. The question is whether its going to result in actual checks going to actual americans. The potential for this to backfire is if you promise 400 a week you cant deliver it. The mechanics dont workout and people say wait a second the president is leaving us in the lurch here heres the guy that signed the executive order and im not getting any money. They have to figure out the way to make the mechanics of this work thats going to be tricky too. Theres a risk here as well. Over the weekend says the president could wave the states contribution of the 100 and it could be covered by the federal government its almost a stroke of political genius and trump to the rescue once again. Were coming to the rescue. The question is would they review that on a case by case basis. State by state and on what basis would they review that a red state versus blue states kind of a thing . Who is going to make that decision theres a lot we havent been able to sort through and who has the authority to do that i heard a lot of political commentary of people saying this means that the two sides will be forced to come together and come up with a deal but i kind of doubt that on some level it seems to me that this provides cover for the president to get what he has wanted to say heres what i wanted all along it means that Mitch Mcconnell is not going to have to reign in some of the republican senators in his camp that didnt want to go along with anything theres nothing thats going to bring them to the table. It puts the democrats in a much tougher position theyre going to have to table just about anything and go ahead and go the opposite direction and take them to court over this i dont see them pushing things closer to a deal. Yeah, becky thats where i am scratching my head as i stand here this morning trying to figure out the dynamic of this. In the modern era, in the past ten years or so, congress doesnt do anything unless theres a foreseen deadline. Theres something that were about to go over and congress can bring itself to cut a deal but absent that, theres just no incentive for people to cut a deal because everybody can point fingers and we dont see any mechanisms out there theres no big major deadline. They have already blown through the 600 a week deadline Neither Party would want to take the benefits away from americans struggling during the pandemic thats already gone. They blew right through that. In this case you could see a scenario where both sides point their fingers to each other and take it to the voters. The stock market is not giving them any sorry the stock market is as becky mentioned before, about a percent away from record highs so theres nothing from that side of things either. Its not like the situation will be plummeted and congress is forced to takes action theres no force coming from the Financial Markets at this point. Right that could be a real forcing mechanism as well. If they see the bottom fall out of the market and they say were going to have to do something here everybody that i see quoted talks about 1. 5 trillion deal being baked into the market here and so you do wonder what happens if the market comes back today and says well wait a second we thought we were getting 1. 5 trillion and now were getting executive orders and 400 a week and maybe not. And that assumption that the 1. 5 trillion is in there starts to crumble does that have an effect on the markets . You guys would know better than i would. If it did, that would have impact in washington that could be the sort of thing that forces the players back to the table to cut a deal. In the meantime, are we going to see congress go on recess like they were supposed to be doing . Thats a good question also they said they were going to come back and wait for a deal. I think that at this point theyll stick around waiting to see whether theres negotiations happening but what were told over the weekend is that things broke down entirely and theres no conversations happening if theres no conversations happening theres no reason for them to be in town theyre going to have to figure all of that out. Aman, again, thank you for getting up early with us this morning. A lot of questions we have a lot of answers thank you very much. Good to see you. Some answers. Amazon in discussions about using some closed jcpenney and sears stores as Amazon Fulfillment Centers. Thats according to a wall street journal report. It would speed up the crucial last mile of delivery. Its closing 154 stores this summer late last year it was closing 96 or more stores one does expect amazon or other Success Stories this year will find some options to pick up struggling rival companies, all of their assets in a year or so ahead. A new development from tiktok over the weekend planning to sue the Trump Administration as soon as tomorrow according to npr. President trump signed an executive order that would ban transactions with tik toks Parent Company meanwhile they held preliminary talks about a potential deal over the u. S. Operations shares up about 4. 7 this morning. Microsoft confirmed that its in talks to buy the Popular Video sharing app and its share price benefitted this time last week really when it was looking like they are the most likely suitor and lawsuit threats or not this one in the shortterm at least as we approach the election is not likely to see either side turn around and suggest that this isnt the way forward its such a hot button topic and like wise, the legal system will be able to block any sale in the shortterm twitter has a market cap of just under 30 billion and we heard variations on how valuable tik tok operations are when you have people defected to other services in the meantime with the chaos. Questions about what it would mean but it might be a tough one to full off based on its market cap. And were learning that microsoft is open to inviting other parties to invest along side it which is a head scratcher since microsoft does have the money and wherewithal to make such an acquisition on its own. Why would it also invite minority investors whats the strategy behind that. This is a fascinating deal with huge implications in terms of what else the administration can do in terms of forced divestitures with collecting a percentage of every transaction. The other question is well, we saw a big two day pop for facebook last week up about 6 over two sessions off the back of announcing its launch of reels after an already good couple of weeks as well. And one wonders if this continues to drag for the next couple of weeks or months and facebook can start to take from tiktok and decrease the value of microsoft and twitter or whatever else would be trying to buy. Theyre trying to figure out the evaluation because we spoke with him last week and as the biggest shareholder in microsoft, he said hed love to see this deal get done at the right price. I dont know what the right price would be when youre trying to take all of these things into account. And the number of users on it at any given point and this transaction fee thats out there. How do you possibly figure out a fair valuation because thats difficult to do and you have none of the other factors involved i didnt know when to go there. Its really hard, by the way two anchors will have a large gap. My final point was going to be that you wonder where the reyar retaliation is going to be. The big question out there is going to be what this means for apple. But the retaliation is real. One could argue that even without National Security questions over the last couple of decades, the only reason that you have it is because facebook and google and amazon were banded in china initially and in that sense its a fair push back its always a dance when youre doing this with partners. We all have to jump in and try to figure out the timing on this. It is. Do you guys have spy cameras . I can see melissa and i can see wilf even when youre not on camera. I can see the show. I want to get you this app i have to hand it to andrew. He was right with the early call on this. The one thing that i can say is if you have the app and you can see everybody you know who is coming next. Im going to make sure that melissa gets that. It is tricky. Ill take that too. Okay. Anyway. We should discuss this on the break. Well square this away. We will when we come back, warren buffets Berkshire Hathaway buying back a record amount of the company stock. We have a run down of the latest moves by the oracle of omaha next as we take a break, take a look at the price of gold its up this morning after a sell off on friday now at 2,040 an ounce squawk box will be right back. Stock slices. For as little as 5, now anyone can own companies in the s p 500, even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. 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. Lookentertainmentour experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. 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. Second quarter profit jumped by 87 thats a big holding for Berkshire Hathaway but a 9 million decision and thats its aircraft Manufacturing Business because of the impact of the pandemic and what that has done to the Airline Industry. Berkshire spent 2. 1 billion to buy shares of bank of america. That was already the second largest stock stake after apple. Berkshire owns now 11. 9 of the shares and that came in late july and early august so after that Quarter Ended so the 140 billion they had spent some money after that. And natural gas pipeline and storage. That came after the end of the quarter as well. Its a little bit down from where it is. It was it looked like they were spending money a huge question is going to be what happens with other bank shares we find out around the 18th what the holdings are and get a feel for if he likes bank stocks in general or theres just some that he likes. Totally agree i cant wait for those thats a phrase that you only hear on cnbc but i mean it though. Only from you. Because in q1, of course we learned that he was a seller of banks. He trimmed jp morgan and s synchrony financial. Theres a big question given that he slightly increased his bank of america stake but significant in terms of 2 billion whether this is now a massive change of heart and he is bullish us. Banks in general. Its one of the others at that 10 holding in the company we snow there was a massive amount of volume i was trying to do lots of reporting on it. It needed to be one of the big existing holders of the stock. We dont know who that was but we wont know the answer but of course if you did sell significant amounts of one of the Bank Holdings versus a small pop off in bank of america then it would seem to be a small relative bet on one name. I agree in the overall context of things the bank of america purchase is a drop in this portfolio but it was between july 31st and august 4th, they spent more than 300 million on bank of america shares alone just within that five day span. So its interesting to see what the pattern is in terms of how he got into these bank stocks and in terms of the buy backs, that goes to the core of his investing. He is getting his portfolio at a deep discount and if you think of his portfolio, the Biggest Holding in apple, one of the most valuable companies in the stock market right now, hes getting that at a severe discount so thats buying apple shares along with a lot of others its going to make the point in the Second Quarter a couple of businesses performed very well. Geico was a strong performer saw a profit of 2. 1 million in the Second Quarter thats 393 million a year earlier. A lot of that was because of the premiums werent getting paid out. They are going to be taking a 2. 5 billion write down in reductions this is going to be spread over not much of that payment in the Second Quarter they tied it into if you want to get a discount it comes when you resign with them. When you renew your audio insurance with them. Theyll be taking a write off over a period of time and it was down 15 to 1. 1 billion but the number of shipments were down by 18 . They cut expenses by 26 to offset some of the lower volume and theyre saying it is one of the better run railroads right now in terms of trying to deal with this pandemic. I was going to add final quick points on the bank of america position because its interesting. Hes up on that already which is impressive back in october of last year to go above 10 the fed granted up to 24. 9 they have to notify the market within two days of any purchase or sale of the stock the other company in the financial space that theyre similar to is holding an American Express they also got permission and stopped at around 14 or 15 . That doesnt mean he goes up to 25 holding but still theres a couple more Percentage Points that could go above the 11. 9 at bank of america if the position is similar to American Express and then in terms of the other overall point to take away from this not being critical is whether we should see this and if you did indeed sell out of the whole holding on Goldman Sachs it looks like you did in march time, that wasnt a good time to sell so, you know, his timing on the precise ends and outs in the shortterm, this year, the airlines toward the bottom Goldman Sachs has been one of the best performers. So setting out back then was perhaps not Perfect Timing right coming up, get ready for the trading week ahead we have a run down of the data points we head to break take a look. The premarket gainers and decliners in the s p 500 vo since our beginning, our business has been people. And their financial wellbeing. Its evident in good times, with decisions focused on the longterm. And crucial when circumstances become difficult. That continued emphasis on people our advisors, associates, clients and communities gives us purpose, strength and a way forward. Today. And always. I see a new kitchen with a grill and ask, why not . I really need to start adding less to cart and more to savings. Sitting on this couch so long made me want to make some changes. Starting with this couch. Yeah, i need a house with a different view. And this is the bank that will help you do it all. Because at u. S. Bank, our people are dedicated to turning your new inspiration into your next pursuit. Several data points to watch tomorrow wednesday Consumer Price index a closely watched jobless claims and on friday well get the july read on retail sales as well as the latest productive data on this weeks earnings calendar and after the close well see that its in talks with amazon on wednesday were hearing from sis coe and lyft and on thursday were expecting to hear from tapestry formerly known as coach. Tens of thousands of people are waiting for power to be told as of last night 21,000 people are still without power. 27,000 new york customers were still effected just from talking to people in my town that still dont have cable and internet even though they may have power in some situations, same thing, our producer is working from his friends pool deck this morning because he doesnt have cable or internet so the only way is to workout side and rely on the kindness of strangers. Another friend has been out power for six days so youre talking about massive effects. Longterm effects that have really just shown the power of the storm and how it ripped through the infrastructure. Also shows one of the temporary benefits and you are less reliant on the cables but well have to wait and see when thats really a reality. Still to come here on squawk box, hong kong sorry melissa. Core of u. S. Infrastructure is these are suburbs of new york city were not talking about the middle of nowhere. Theyre less than an hour out of one of the biggest cities of the whole entire world and still dealing with downed power lines. Its amazing. The number of trees that were down on this were crazy. If you didnt have lined buried then youre going to have problems i mean, just everywhere, watching its like driving through huge disruptive scene. Theres still trees down all over the place at least in other places too. It gets back to full speed very soon. The dow futures up about 100 points this morning. Still to come, hong kong making the highest profile arrest yet under chinas new security law there. Well take you live to beijing e xt and hell be on squawk on thstreet well be right back. As business moves forward, were all changing the way things get done. Like how we redefine collaboration. How we come up with new ways to serve our customers. And deliver our products. But no matter how things change, one thing never will. You can rely on the people and the network of at t. To help keep your business connected. Find a stock basedtech. On your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. A developing story out of hong kong. Police arrested a media tycoon in a high profile use of the new National Security law there. Eunice joins us with the latest. Good morning, eunice. Good morning, melissa well, he is one of the citys most prominent democracy advocates. He is a frequent visitor to washington and has been labeled by beijing as a traitor. Well, today he and his sons were arrested for alleged collusion with Foreign Forces and that raised a lot of concerns to the city that it could be losing its freedoms. State media here has said this just shows that hong kong wont be intimidated by u. S. Sanctions on chinese and hong kong officials which happened on friday in fact, today the Chinese Foreign Ministry Said that china is now going to impose sanctions on 11 americans starting today in retaliation so these are several u. S. Politicians who have been fiercely critical of beijing such as tom cotton or also several democracy advocates in the United States. No details on what the sanctions would entail but that hasnt stopped china from really doubling down on the National Security law in hong kong in addition to the arrest of jimmy lai over the weekend china said theyre revising their rules on punishment for the desecration of the chinese flag and also the citys chief in a show of defiance said that she was going to be cancelling her u. S. Visa so theres still a lot of symbolism here instead of impact when it comes to all of these officials having the sanctions imposed on them but at the same time its creating a whole lot of confusion in the Banking Industry because the Hong Kong Monetary authority had a circular over the weekend which said that the u. S. Sanctions dont have any illegal status in the city so a lot of bankers are confused as to how they should comply. Thank you so much for that. Very interesting one to keep watch on hes also a british citizen which elevates the stakes a little bit as well he did get granted bail. Another factor that is relevant. U. S. China tensions have been hitting new levels in the recent weeks partly because of the executive order. And also the ban on tik tok from the u. S. And the crack down on chinese listed stocks. Joining us now, James Mcgregor thank you for joining us james are we at peak u. S. China tensions or is this something to do. The question is where is the bottom these actions back and forth constantly and some of them dont mean anything. Business is stuck in the middle. If youre running an American Business in china today, the market is very important to you and youre seeing laws between china and the u. S. In action that who do you comply with. Meanwhile, chinese officials are going to foreign business and American Business and saying we want you here. How do we help you well, the political relationship is dissolving. So heads are spinning in the board rooms these days talking about china. Where do you think it heads fr precisely. Its getting thrown around a lot. Does it stay on tech does it broaden out and how concerned are you that the u. S. Government official to taiwan could trigger more significant escalations. Its very important because of what happened in hong kong. The eyes are on taiwan will xi jing ping want to take over taiwan. Who knows. But this is also what wehave t look out for and what is happening to journalism. What happened today actually went after journalism also right now the journalists in hong kong, theyre wondering if theyre going to be kicked out the americans because theres this 90 day rule on the chinese journalists in america they expired yesterday and theres been no sign on whether theyre going to be renewed so the american journalists are wondering if theyll get kicked out. Theres so many levels. Tik tok as well do you think its plausible that their u. S. Businesses or more can get carved out to u. S. Companies such that the businesses continue to operate successfully in the u. S. Its 1. 2 billion users and all of these businesses in china use it you cant live without it. Theres no way you could carve that out in anyway tik tok is a very interesting story. The founder thought he had the formula. He thought he had a successful business in china. He created a whole separate business for outside of china, tik tok. It took off. And now being ordered to sell it by the Trump Administration. This is going to give other countries permission and make them sell their operations in that country where could this go. This is a very dangerous game were playing. Thanks for joining us okay. All right when we come back, we will talk about whats working in big tech and whether the nasdaq can continue its record move higher right now as we head to a break lets look at the stocks leading the nasdaq 100 index this morning. Take a look and youll see that expedia is leading the way each of emth up 1. 57 . Squawk box will be right back. You should be mad at forced camaraderie. 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And i remember he asked him about the unusual stock activity and the day just before this deal was announced and later we find out that he was also awarded huge stock option grant the day before as well a lot of eyebrows being raised here we watched it run up. And were watching it unwind right now as this comes through. And people were waiting for the sec to do an investigation you knew its going to be coming and now the question is what happens to the contract itself as a result. The only thing that almost makes you think that nothing wrong could have gone on is it would be so unbelievably obvious if it did. If you were involved in trying to front run at this news. You surely would realize youd be exposed because it was a unique Ground Breaking piece of news well have to wait. So the old they cant have been that stupid defense, right . Surely. But, i dont know. Weve seen stupid things before though, guys. Thats true. Well see if the stock reverses that kodak bringing in the shares prior to this whole thing coming public. Web busch out with a new street high target for apple that stock ending the longest winning streak since 2018 on friday dan ives and web bush will break down things as they see apple passing 500 bucks a share. That is next on squawk. Yes it is. Jim, could you uh kick the tires . Oh yes. Can you change the color inside the car . Oh sure. How about blue . Thats more cyan but. Jump in the back seat, jim. Act like my kids. How much longer . Exactly how they sound. Its got massaging seats too, right . Oh yeahhhhh. Oh yeahhhhh. Visit the mercedesbenz summer event or shop online at participating dealers. Get 0 apr financing up to 36 months on select new and certified preowned models. 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. Pampers cruisers 360 fit can too weve just been finding a way to keep on pushing. With a stretchy waistband and adaptive 360 fit so they can move the way they were born to [music] born to be wild pampers cruisers 360 fit out with a new price target for apple. 515 for a share theyre approaching a 2 trillion market cap. Dan ives, managing director of Equity Research at web bush security great to have you with us. This is predicated on the i12 theyre due for an upgrade what assumptions are you making in terms of what percent get upgraded and what the impact of covid could be on those sales . Yeah. No doubt right now i think its almost a once in a decade opportunity for apple in terms of what weve seen in the upgrade cycle. Right now were only looking at 200 million. When we start to look, part of what were seeing is the rerating and stock and its services and its what i believe is a super cycle on the horizon given the pure 3 1 2 years of 350 million have not upgraded the iphones. This is a drumroll not just a 2 trillion stock, we have bold case 600. You say chinas a key ingredient 20 of those iphone upgrades are going to come out of china im wondering, dan, how you factor in a potential ban or the executive order ban on we chat and potentially tiktok in china. I mean, if apple, for instance, is forced to take tiktok and we chat out of the app store, how many ofthose upgrades will actually happen in china or will consumers opt to buy other phones where they can access we chat and tiktok for that matter, but we chat more pointedly because that is such an important app in china yeah, thats a great question about 60 to 70 million iphones are in china in a window of an upgrade. We believe half of those will were you grade china is a source of strength in the last two to threequarters our shows uptick not just in china but globally into iphone 12 orders. You know, but ultimately right now here we do not believe that that that theyll be forced to do that in terms of wechat because thats sold in china the bark is worse than the bite. Thats a source of strength, not weakness despite some of the haters. So basically any sort of aspect of china retaliation, youre basically going to say, you know, we know its out there, but were going to just plow right through and expect 515 a share because we dont think anything is going to happen we factored in some, about 10 to 15 of chinese consumers dont ultimately upgrade their iphones. The last year and a half, ultimately there was a view that they would be burning iphones in the streets in beijing instead they were going in and buying them. Youre in a massive upgrade opportunity this quarter and youre seeing in terms of china, 20 of all upgrades plus with services, thats why i believe this is the stock that still is in the middle innings of a rerating from the street dan, are you in any way concerned by the massive uptick. Do you think there could be some shortterm pain . To what extent has the recent surge in the last two or three weeks been driven by the stock split and perhaps the possibility that people are extrapolating too much from what that might mean . Again, i think its a smart strategic move it was the quarter thats the best quarter relative to this dark back drop that ive seen apple put up in five, six years. You can definitely see choppiness, 350 million, 950 million in iphone worldwide. Combined with services between 7 to 750 billion right now this is sort of a golden age for apple. Look on the other side of the dark valley. Thanks, dan. Dan ives. Thanks for having me. Breaking down the president s pandemic relief orders well talk to chris sununu about the states roll in picking up the tab and senator kevin cramer take a look at futures as we head for break pointing higher for dow and s p. The nasdaq was set to under perform on friday. First negative day of the sdnaaq and its been at negative highs. Well be right back. Apps are used everywhere. Except work. Why is that . Is it because people love filling out forms . Maybe they like checking with their supervisor to see how much Vacation Time they have. Or sending corporate their expense reports. Ill let you in on a little secret. They dont. By empowering employees to manage their own tasks, paycom frees you to focus on the business of business. To learn more, visit paycom. Com stock look to carry the positive momentum into the new week building on a strong performance. Right now the dow is leading the way higher the s p is less than 1 from an alltime high. Investors keeping a close watch on washington after the president decides to go it alone on virus relief signing off on executive orders. And the shift to working to home is leading to a heated debate to states over how to tax workers. That story and other monday Morning Headlines are straight ahead. The second hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc im wilfred frost along with becky quick and melissa lee and joe and andrew have the day off. Pointing up higher up 90 points higher on the dow. Nasdaq just lower as we stand. Friday was negative for the nasdaq, just positive for the s p. Nicely positive for the dow. We had a strong rally for the final couple of hours that took the s p positive just about by fridays close President Trump took the controversial step over the weekend of signing executive orders in an attempt to sign executive orders eamon javers has what this means. Reporter its leading to a little bit of confusion because the president doesnt have the Authority Congress has what hes doing here is as much as he can within his sort of limited set of authorities within the federal government to try to help work jeers and peope across the country and work around the negotiations with democrats. Three highlights of what he did in these executive memoranda and orders one is the payroll tax pause this is an interesting one it doesnt eliminate the payroll talks, it just pauses the collection of it between september 1st and the end of the year thats going to force employers and employees to make some real decisions now about how they move forward with the payroll tax burdens because it could be the case that youll owe it all back at the end of the deferral period, whenever that ends up being. Theres parental help in here. The president not able to do a full eviction but hes telling the federal government to look for ways to help renters 400 of bonus unemployment in the c. A. R. E. S. Act there was a 600 a week bonus payout that became contentious. What the president is doing is going with a 400 figure and hes tapping Homeland Security Disaster Relief funds in order to do that states are going to have to pay a big piece of that, about 25 of the overall payout will come from the states under the president s plan all of that leads to some confusion about whether the states will have the budget to do it. Secretary mnuchin of the treasury was on tv over the weekend explaining why the president did the payroll tax deferral the way he did. The president wanted to do a payroll tax cut. We can do the deferral hes going to the American People and telling them when hes reelected he he will push through legislation to forgive that so in essence it will turn into a payroll tax cut. Reporter so, melissa, what the treasury secretary is saying there theyre going to defer the taxes now and then next year if the president is reelected and if Congress Supports the idea, theyll turn that legislatively through a law passed on capitol hill into a permanent tax cut but for employers and employees right now, you just dont know whether thats going to be the case or not by next year so theres some real uncertainty here as to how all of this will play out and whether the mechanics of all of it will be able to get up and running in time to have any impact short term on the u. S. Economy. Eamon, thank you for watching all of this for us despite a mixed day on friday, the stock posted positive returns dow up 3. 8 . Nasdaq and s p 500 up 200 mike santoli has more on what investors can expect weve gone through most of earnings season, mike. Stimulus talks dont seem to phase the markets at all. Not yet, melissa. The relative performance of the dow outperforming, were through the earnings forecast. 2021 is going higher that might be giving support to cyclical this is month to date. Month to date means last week plus the premarket the qqq, nasdaq 100 is the undisputed leader. It was under performing by a significant amount last week the iyt is transports. Then you have the banks up almost 10 then the russell 2000 small cap. This is a very cyclical picture from growth into cyclicals put it into perspective. Take a look at the same floor on year to date, youll see its premature to necessarily call a real trend change here here is the nasdaq 100 that looks like still a pretty steady up trend. The others are struggling with the june 8th high and have not really taken it out. That was the peak of the optimism of reopening, cyclical comeback i do think theres a lot of rooting interest on wall street for this to take place it feels like it makes more sense in terms of if this is an early cycle, early bull market this is the stock you want to see leading. All of the comebacks have been a little bit fitful and brief. We have to see if that takes hold and the premarket is still holding. Yeah, ive been watching ups and fed ex 52 week highs for both of them because theyre engaging in new aggressive pricing strategy. Thats helping the transports and giving hope that that rotation is actually going to happen, theres going to be follow through on it. Yeah. The shippers as well as truckers have been very strong. So the moving of stuff around the country and around the world is coming back theres obviously a back door online commerce play there, too, but thats one of those groups as airlines still struggle with what the outlook is, that is supporting the transports and giving the more cyclical flavor to the tape right now. Stick around, mike. Our next guest says the decision between stocks and bonds is a no brainer. Investors should be buying stocks the question is how much higher account market go between now and year end joining us is savita, head of u. S. Equity and strategy great to be here. Youre on the side of this rotation you favor the value stocks, cyclical stocks over the big cap tech stocks. Why . I do. I think to mikes point, its not necessarily a whole hearted value rotation, like we might not see the really beaten down brick and mortar retailers crush it over the next few months, but i do think there are reasons to believe that cyclicals and value stocks could outperform. First of all, if you look at every recession weve had over the last century, in 14 out of the last 14 recessions in the recovery weve had value outperform growth over well call it a threemonth period so this is the norm is if you are in the early stages of a cyclical recovery, you want to buy the most beaten down kind of most gdp sensitive names that are likely to spring back the hardest. I think thats reason number one, its the macro. Then i think the other kind of fuel on the fire right now is that weve had such a strong and such a long growth cycle that weve got record levels of crowding and valuation in that growth cohort, in those Tech Companies, in those sort of stay at home tech beneficiaries that have obviously led the market this year up until recent weeks. So i think not only is there a macro case to be made, but theres also this sort of positioning valuation story that supports rotation into cyclical companies. Now i think that all cyclicals are not created equal so i would look for the ones that have like you said, transports have Pricing Power. Its very rare to see Pricing Power in the early stages of an economic recovery, but there are pockets of the cyclical market that look really strong at this point and are at valuations that were probably not going to see for much longer. I think the trick is to be selective when it comes to value. In terms of this rotation, savita, do you think theres another overlay in that if we do get news of a vaccine or positive vaccine data it could spur some sort of selloff or selling pressure in technology which, as you pointed out, is a very crowded trade in that money flows into some of these more value oriented sectors yeah. No, absolutely i think a vaccine would be the ultimate catalyst to sort of push this into play. I mean, anything thats pro economy at this point i think is pro value and pro cyclicals. Thats kind of an obvious statement. I think a vaccine would be the sort of ultimate catalyst for that type of rotation. What i wonder about, you know, weve talked about this before, is how well the s p does in that backdrop as weve all been talking about, the s p has gotten to be very tech and very growth heavy so, you know, one of the reasons that were not as bullish on the s p right now is its not really a value or cyclical benchmark, its really more kind of skewed towards quality and growth and in an environment where you get this sort of unleashed pent up economic recovery, that benchmark may lag others as weve seen, you know, the nasdaq lags it, the dow i think that stat rotation might not be as beneficial for the s p as it would be for other benchmarks like small caps and other regions of the world i mean, mike, just on friday, the top Ten Companies topped 8 trillion those are Tech Companies obviously. We did see outperformance of the r russell. While its early days, maybe that speaks to investors being a little more selective how theyre exposed and through what index. Also just trying to back away from the trades that have done so well. I think one of the Big Questions to the dynamics savita talked about to what degree is it a zero sum game or something different. In other words, can you just have the large cap Growth Stocks zplekt tech as broadly defined if you want to define internet and 40 of the s p 500 can they correct, take everything down, you dont have anything to pick up the slack . On the other hand, maybe they can hold together as people get more confidence in the strength of this recovery and you have incremental dollars as they enter the market go more towards cyclicals. Thats the big question right here, especially as we get to challenging the old s p peak which seems like its been destiny for a couple of weeks to make a run at it the market got so close. What happens there then you have a so what moment because the value stocks arent outright objectively cheap necessarily because they never did get completely trounced unless youre looking relative to other stocks or relative to bonds right now. All right savita, great to speak with you. Savita subramanian and mike santoli. When we come back, teachers, students, faculty and parents are all getting ready for School Reopening across america some have actually already reopened and concerns have been growing amid the pandemic. We will discuss School Safety right after this before we head to the break, lets get a check on the markets. Dows up but off the highs of the session. We were up by over 100 points earlier but now futures up by 66 points s p Futures Holding on a point higher and the nasdaq is indicated down by close to 16 points squawk box will be right back. You say the customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g, everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad. Your wireless. Your rules. Only with Xfinity Mobile. Now thats simple, easy, awesome. Switch and save up to 400 a year on your wireless bill. Plus, get 400 off when you preorder the new Samsung Galaxy note20 ultra 5g. Welcome back, everybody. As summer nears an end, schools are trying to figure out if its safe to send students back to the classroom. The last two weeks of july more than 97,000 children in the United States tested positive for covid19 and the majority of the infections came from states across the south and the west. Joining us right now is Annette Anderson assistant professor at Johns Hopkins school of education. Shes Deputy Director of safe and healthy schools. Annette, what can you tell us about where things stand i realize this is not a nationwide answer potentially for everybody out there, but how safe is it for kids to be going back to school what should parents be considering . Well, i think that weve seen such a varied response across the country to how to reopen schools that theres just not consistency right now. Its really a great disruption if you will consider that some districts are going back fully remote, you have some districts that have tried to open up in a facetoface version and others are still talking about hybrid versions districts are pushing back dates to reopen in the fall and were seeing all over the map different approaches to households planning to reopen. Its probably not a surprise given that every elected official and every Government Agency seems to be kicking the can down the road and it lands squarely on the head of each individual School District and the superintendent to figure this out from a mess of conflicting advice that theyve been given. I agree it has just been all over the place so as a result what youre seeing is that parents are driving a lot of the innovation in terms of responding to these concerns weve had so many different reports from just the federal, the state, the local level that parents are starting to think about things like unschooling, micro schooling and weve heard a lot lately about pandemic pods as a way for parents to think about how to provide the education that they want for their children so theres a lot of different parental insight into what they think schools should be doing right now. Schools also should be innovating but i think that, you know, theres a lot of conversation about how parents are driving all of the Decision Making and theyre voting with their feet you know, annette, i go through this as somebody who is looking to send my kids back to school and trying to figure out whats happening i dont envy any of these superintendents who are trying to make these decisions. You have the facts on the ground changing pretty rapidly. You have advice and directives from the state and local level changing constantly. How are schools supposed to be prepared its hard enough to be prepared coming back from the summer anyway how do you handle on top of this what could we be doing from the state, local, and also from a National Level to be assisting the schools a little more to make sure they have what they need thank you i think first of all weve got to get these Community Transmission rates under control. We saw a just released report that said 97,000 children across the country have been inflicted with covid in the last two weeks in july. Thats a great concern for people in education as they think about putting children back in physical buildings we know there is some inequity as you talk about how were going to provide Internet Access for all and we think we need to expand federal erate for families at home so they can get Internet Access in their homes and not just in their schools and libraries where it has been a strong benefit we know schools are both buildings and experiences so we want our children to be able to use the services of our School Buildings while not necessarily having to go back into unsafe situations like we saw in georgia last week. Are there going to be any longterm benefits from going through the experience of getting kids much more set up to be able to do some part of the school at home and with technology could that be a great improvement by 2022, say, in the quality of education because of that im hopeful im very hopeful that there will be youre seeing, as i said earlier, this is the great disruption i dont believe well ever go back to school as normal so i think what youre starting to see is some innovation there are some schools, some districts that have thought creatively about how to approach schools. There are some thinking about building outside classrooms, thinking about using the environment as a source of education for students i think as schools and districts continue to evolve and theyre big about how to be creative, we are seeing what they have called for, change. Change in education. Change in how our students are going to be educated for the 21st century economy make no mistake about it, we have to invest we need to continue to make our greatest investment in children because they are our economic engine. I want to thank you for your time today thank you still to come, how Small Businesses feel about the state of the economy the results from a new survey by survey monkey and cnbc 7 30 allianz chief Economic Advisor Mohamed El Erian will join us to discuss markets and whats next. The ambiguity. This moment calls for more. And Northern Trust delivers more. With specialized expertise. Proven strategies rooted in data and analytics. And insights borne from over 130 years of successfully navigating economic turbulence. Giving you new clarity. Inspiring confidence. And helping you uncover new paths forward. Northern trust. Wealth management. Change is certain every single day. Even in the pandemic, ive learned a lot about myself as a business owner. You know, pulling yourself out of the tough times and pushing through things. Its so exhausting, but if you really want it, you can have it. You just gotta sacrifice, you know . Off 8 points from where we were to start this year the number of businesses that say their Current Conditions are good has doubled from may to august at 36 with more businesses reopening and moving forward in varying ways. 23 describe conditions as bad which is more than triple the amount that felt this way at the beginning of the year. When it comes to hiring, their head count has decreased one in eight say theyve had to furlough some or all of their employees due to the covid19 outbreak a similar number have had to layoff their employees of those who have had to make layoffs or furloughs, 24 have hired all of them back and 34 have hired some of them back theyre watching whats going on in washington. As we all know the ppp did expire on saturday i think theres an appetite for more aid back to you. To that end, kate, what are Small Businesses banking on in terms of the ppp so ppp and a potential opportunity to go back for a second draw ppp loan is something thats of interest to Small Business owners. Theres been a lot of talk about the revenue test working with the 50 drop in revenue, bringing it down to 35 is something they were interested in also the opportunity for longer term, low interest loans different options with less rigidity around how they can use the money is something ive heard from a lot of Small Business owners they would be looking out for. Kate, thanks. Kate rogers. And a special programming note cnbc Small Business playbook Virtual Summit will gather the most trusted and inspirational voices including sharyl sandberg, kevin oleary and others it all takes place august 12th visit cnbcevents. Com smallbusinessplay book to register Mohamed El Erian on the markets and President Trump signing several executive orders aimed at extending Coronavirus Relief over the weekend. A look at the economic move. Squawk box is coming right back very strong taltechnicals. That allows the market to shrug off fundamentals am i surprised no in terms of the risks out there to the market, one is the lack of this deal in the short term the eother is escalating issues in china what has spooked the markets so significantly . It doesnt seem to be the case anymore. What do you make of that markets have been conditioned to ignore all of that, and for good reason. That is because they are confident that theres reliably ample liquidity. I think, wilfred, what derails this market isnt more china u. S. Tension, isnt more political differences, it would be if we get them large scale bankruptcies otherwise you have a very strong technical supporting this marketplace. Has slightly plateauing or improving data as it relates to the virus make you feel like those bankruptcies may be held off or not no, unfortunately not i think the damage done to the economy is large i dont think the simply leveling off in gdp growth is going to make us avoid a couple of things that im really worried about, longterm unemployment and on the other hand a series of corporate impairments, bankruptcies. We need to get back to the notion of v as opposed to a square root where we come up and level off. Mohamed, what is the greatest fear about the rising number of bankruptcies is it the joblessness that the bankruptcies will spur or is it the credit defaults that bankruptcies could eventually trigger . Well, you know, everybody wants to avoid shortterm and reversible problems becoming longterm problems that are structurally embedded in the economy. Bankruptcies go from shortterm liquidity problems to longterm solvency problems. If you get that, unemployment becomes more problematic you get capital impairment believe me, if theres one thing Federal Reserve money cannot help markets through is capital impairment events. Keep focus on this risk of nonpayments because thats the only thing i think at this point that derails a market that has such strong technicals. So in that sense, mohamed, even if we do see a more sustained rotation out of the tech outperformers into cyclic calls, would you want to avoid the banks . Clearly theyre very much exposed to potential bankruptcies yeah. The banks is a tricky one, wilfred. Their evaluations havent come back like other sectors. Plus, the stronger banks are taking massive Loan Loss Provisions and im saying massive. In general, i think theres two types of investors out there there are those that say technicals are both necessary and sufficient for me to be involved in this market regardless of valuations and fundamentals those have done really well. Theres a second group of investors who say favorable technicals are necessary for me not to show this market but not enough for me not to be involved i want fundamentals to validate the market i think youre seeing both play out. Thats why you continue to see stock prices go up in a very unloved fashion. To your point about technicals, mohamed, what do you make of golds recent run and the fact that its broken to new highs in a nominal way does that open up the potential for this to double in the next couple of years given the Balance Sheet expansion youre seeing from Central Banks . What youre seeing in gold is being supported by both technical and structural demand. The reason why is very simple, its that if you look at what risk mitigating assets are out there, very little is attractive at this point. Gold is starting to attract people who are worried about all sorts of things, worried about inflation, worried about armageddon risks, worried about the dollar i think what youre going to see is gold demand being under pinned by something very new, which is gold capturing a much bigger place in peoples what they call model portfolio, their longterm portfolio. So i expect gold prices to remain strong from here. You mentioned the weak dollar, mohamed. Is that something that you are concerned about . Do you think the weak dollar is evidence that there is deteriorating confidence in Central Banks, particularly the fed . I think what the weak dollar reflects is first that the u. S. Has loosened Monetary Policy visavis the world in terms of changes and, b, were doing less well on both the health and economic emergencies than the rest of the world. I am not a buyer that this is the beginning of a longterm dollar decline i am not a buyer that this is a solution to our economic problems its not it may help at the margin but it will be minimal. Ill not a buyer that say thats the end of the reverse terminology. Weve seen the move of the curve here and it has been completely different with Interest Rate differentials and with Economic Performance differentials. Hey, mohamed, i think weve all been thinking that theres going to be a Silver Bullet when we finally get back seeing that that will save us and let us get back to life as normal a couple of things over the weekend have me concerned on that front the first was Anthony Fauci doing an interview last week on friday at Brown University and saying what were really looking for in terms of effectiveness would be 50 effectiveness, 60, 75 . A vaccine would have to be 50 effective. The flu vaccine is only 50 effective. He doesnt think its likely we get one anywhere near 98 or 93 like the measles shot is and that made me start thinking, if its only 50 effective and if only a certain number of people get that, 40 or 50 like get the flu shot, then this morning scott gottleib, we didnt have him on this morning, im hoping to talk to him, he has an op ed in the wall street journal that says this is something we have to live with for years to come we have to get smart to deal with it and find new drugs to ease the impact when you do get coronavirus. It has altered my thinking a little bit where would that fit in in terms of what the economy and markets consider if thats the case . So i agree with you that we shouldnt think of this Silver Bullet available any time soon, even if we get an effective vaccine. Let me give the scientists working so hard on this the best possible outcome even if we get it, becky, by the end of the year, we have to produce it we have to distribute it we have to come up with how were going to distribute it and then youve got to reach a level of heard or cumulatiommunumulat or community immune at this time at this. It is not post covid, it is living with covid. Can we live better with covid . That is the key issue. And thats something that the market really isnt focusing on because the market is dominated by technicals. But we as individuals have to focus on this. How we behave in terms of masks, in terms of social distancing, in terms of hygiene is really critical to making sure that we can live better with covid governments also have to i agree with you we have to get out of the mind set that theres a Silver Bullet thats going come at the end of the year we have to realize this is the period to reconcile health and economic issue when we live with covid. Thats our reality for a while. A pleasure talking with you thanks for joining us. Thank you coming up, the force is better for ticktock. As Many Americans working from home and not heading to the office across state lines, theres a battle growing over taxes and who should collect them well hear from New Hampshire governor chris sununu on the new border war well be right back. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start trading Commission Free today. Dont get mad get e trade and start trading 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. [ engines revving ] its amazing to see them in the wild like th shhh. For those who were born to ride, theres progressive. New developments from tiktok over the weekend the company is reportedly planning to sue the Trump Administration President Trump signed an order that would ban activities with bytedance. Twitter has held preliminary talks with the u. S. Operations microsoft is talking with them as well. Twitter has 8 billion in cash on hand which is far less than the valuation of ticktock. Not to mention it used to own vine and closed that down three or four years ago. Theres so many Different Levels to which it seems like an odd move or already a missed opportunity. On the microsoft point as weve been discussing, its that question, i think, at the moment, can you really carve out just one region and make it effective and do that in time . But for perhaps some of these other rivals start to take share and facebooks share price reacted very strongly last week to the two days after it launched reels. The other question is with tiktok going ahead and suing the u. S. Government, we heard about this last week, that was what the companys ceo said that it would be doing i just wonder how that adds to any additional confusion in terms of trying to work out a purchase between now and september 15th very short amount of time. Lots of other questions that are already out there. If that lawsuit moves forward, how would that have an impact on any deal you may have put together this just seems like a particularly slippery deal to try and get your arms around trying to figure out what a fair price would be and to have lots of moving metrics. Its tough enough to do that, i think, any time you have a purchase with a company thats going through, its tough enough to do that in normal times to do that in the midst of the pandemic with the Trump Administration changing its mind and changing the rules of the game on a regular basis with the administration saying theyd like to get a cut from whatever the deal is, their Investment Banking cut from what happens with this, just seems like theres so much potential for back and forth people leaving the service unless the game plan is basically to get a stay on this executive order. Wait until after the elections banking on the possibility that trump wont be in office to enforce that executive order. If thats the case, again, i think microsoft or anybody else that may be talking to them, if youre microsoft, i dont know how you do anything other than just kind of walk away at that point and put it on hold. Right if youre looking to play it out in the courts, it makes it really tough to try to figure out if theres a deal to be had skbl who knows what the political environment will be after the election clearly things are overly politicized this year in the run up to the election National Security concerns as it relates to china and over reach from certain Tech Companies is a fairly bipartisan issue. Sure, maybe specifics of executive orders would go away, but i dont think bytedance will be thinking 2021 will be plain sailing for us if we can get through this election . Right. Either way, its a tough set of cards for them. Absolutely. Coming up, the shift to working from home is leaving a very heated debate on how to tax workers. Robert frank has the story lets take a look at the future we are off the highs of the premarket session. We are looking at a higher open to the dow stay tuned, youre watching squawk box. Im pro athlete stylist Calyann Barnett and im here with nicole and miles and were out to find the top looks for day one back to school at Dicks Sporting Goods and so we want to find something thats going to grab everyones attention the variety and selection is crazy bucket hat bucket hat this would be a fire first day fit. Definitely making a statement with that. Go dicks. Whether youre going back to School Online or inperson, get the brands that make a statement. Day one starts here. Inpersputs its customers tha wiin charge . Riert. 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. The shift to working from home is leading to a heated debate its pitting New Hampshire against massachusetts. Robert franks joins us now on that hi, robert. Reporter good morning, wilf. New hampshires attorney general launching a review whether unstates are unfairly taxing its residents during covid the probe is aimed largely on massachusetts. It passed a measure saying it would only continue to tax out of state residents who used to commute but are working from home during the pandemic over 80,000 New Hampshire residents commuted to massachusetts. Since New Hampshire has no broad based income tax, it says residents who now live in the state and work in New Hampshire shouldnt have to pay taxes to massachusetts. Massachusetts saying this makes it easier for Companies Since they wont have to change their payroll system this is a battle about to rage throughout the country as revenue strapped states are trying to hang onto the revenues they used to collect from commuters. More than 2 dozen states say they will impose the rules new york collects more than 1 5 of its income taxes or 700 million a month from those out of staters and says basically if you used to work in new york, no matter what youre doing now, youre still going to pay those taxes. Guys, this is likely to be decided ultimately by the courts back to you. Did they actually in massachusetts robert, did they actually in massachusetts try to use the excuse that, hey, were just trying to make it easier on the businesses so we can continue to take in the 6 reporter well, look, thats the reason theyre giving. They havent said its because of revenue, but basically they passed this in march basically saying if you used to commute to massachusetts, were going to continue to tax you as if you work here. Everyone at the time thought it would be a shortterm measure. Now what theyve done is said were going to continue this through the pandemic or the end of the year or whatever happens first. Thats what upset New Hampshire and New Hampshires governor. Taking that new york example you mentioned, if this was a potentially temporary and very recent 2020 phenomenon and we were two, three years ahead, if you are working for a new yorkbased company and do so remotely and dont travel into new york more than, you know, for the occasional meeting, say, once a month, who would collect your income tax . Reporter right now new york. New york has a rule that basically called the convenience of employer rule that says if youre staying home out of convenience rather than necessity, i. E. , Something Like covid, then theyre saying they have a right to tax you. Wilf, its an important point. I think this is going to lead a lot of companies to decide to perhaps relocate their offices to low tax or no tax states because more workers will be remote and because those states will have a claim on those office, even if very few people go to that office. On a corporate level this has huge ramifications on where they locate their offices it could have ramifications on states like new york. For more on this, lets welcome governor chris sununu of New Hampshire. He is the man whos behind a lot of this. Govern governor, i know the department of justice is investigating this you have to have an opinion. Im guessing you think this is pretty unfair . Of course when it looks like how to tax the workers, the answer is you dont. Whether youre a state like new york or massachusetts, you want to come and worried about revenues and all of that stuff, theyre coming after our citizens were going to put up a fight for it covid has changed the dynamic in so many ways, whether its families, businesses moving into New Hampshire, people understanding they can work remotely with the good quality of life, no income tax, safe state, all of that great stuff Everyone Wants to be in the northeast in the right way right now. The live free or die state has a lot of those opportunities they want to try to pull every dollar we can. We want to stand up for our citizens and do the right thing. Have you spoken to the governor of massachusetts on this, Charlie Baker . Oh, yeah. I called him on the phone. I want to let you know, weve got to look into this. Seems to be this emergency rule that was passed in march, it flew under the radar for a little bit now this idea theyre going to extend it because i think people realize that working remotely is possible you can have all of that connectivity in a place like New Hampshire and not be in the dire straits of new york city, boston, seattle, San Francisco they can stay with their business anywhere in the country and be here in tax free New Hampshire. Lower population in vermont. Im guessing the same is true in New Hampshire just based on what youre saying. How many people have come there and decided theyre going to be working from there maybe a second home or booming in the state completely . Were booming theyre coming from all across the country. Especially in the northeast. Youre in new york you have a mayor who doesnt know what hes doing you have years of terrible policy out of albany people have terrible choices 2020 is driving them to those decisions. Its like they put a big sign on the Brooklyn Bridge that said, last one out, turn off the lights were coming up to New Hampshire, maine, vermont. We can have that connectivity, great quality of life, schools and safety safety is a big issue. Young families if you want to be in the heart of the city but where theres riots, covid, whatever it might be, young families are realizing why pay all of that money for that way of life but be connected and be in a place like New Hampshire where theyre in p not hitting us with taxes and not in our way. Governor, youre lucky enough to have a state where there are no taxes but your citizens are deriving a lot of economic benefit from boston and massachusetts. What is the right way Going Forward after covid to tax people who live in New Hampshire, dont go to massachusetts much but derive a lot of benefit from the companies there . How would you structure that after covid . So let me clarify something we are not lucky for having taxes. We have fought hard to create a New Hampshire advantage. Democrats try to put income taxes on my desk all the time. The New Hampshire advantage is real weve structured a model that works. When it comes to taxes, the key isnt revenue problem. We dont have a revenue problem. Regardless of what the costs are, you can always manage within the revenue that you have it takes some intervention youre deriving a benefit from massachusetts how do you structure that if youre massachusetts who i do i structure that if im massachusetts . Let them figure that out you dont come start taxing people across the boarder. You dont create new rules and gym min gimmicks thats why theyre flooding over here theyre putting their headquarters here. Theyre moving here, working remotely here. My problem is my job isnt to worry about how massachusetts taxes. Theyve created a structure where theyve become dependent on taxes, dependent on abusing citizens and businesses, dependent on a system that puts government first and not the individual thats where New Hampshire succeeds we believe government is there to enhance the individual. Lets create a path for you and get the heck out of your way when you do that, you can create massive efficiencies locals are making the decision when you do have taxes at a localized level, you as an individual have a lot more say in terms of how those dollars are spent and creates a massively more efficient system. You know, when it comes to the new yorks, massachusetts, californias trying to pick the pockets of people in New Hampshire, were going to stand up them. Pick the pockets. Thats a good term you mentioned the influx of new residents. Have you seen an influx of corporations looking to relocate headquarters without a doubt. From where . I get phone calls every day the interesting is all over the country. Seattle, San Francisco a lot of folks coming over from massachusetts. New york is a really big one a lot of folks coming out of new york city. Banks. Financial institutions are very good with high tech manufacturing and where manufacturing is grinding to a halt second and third term manufacturing in the northwest a lot of them looking to open up here we are a Perfect Place for high tech manufacturing whether youre large or small. People have always known about that advantage that New Hampshire has. 2020 given all the term things of 2020, i think we can all agree we have to get out of this year people are being driven its time to make a decision for my business, my family. Its a world game. Were competing not just against massachusetts but were competing against portugal, russia, china, other states. It is a world economy. People are deciding to come right here because you can have that connectivity without all of the hassle. Governor, very quickly. Were out of time, but what do you think the odds of success are here in terms of fighting this when New Hampshire has fought for things like this in the past, when new jersey has done it from new york, they tend to lose just because of the argument that these cities couldnt exist without it. What do you think happens . Look, i think the laws are very clear they created a special rule to kind of thwart the existing law. If people are living in New Hampshire, residents of New Hampshire, working here, living here six months and a day the majority of their time, they should be taxed if they are here and they are here. These special rules, they never seem to go very far in the Supreme Court. We will watch very closely. A lot of states are going to be following and copying what youre doing, governor thanks for your time its good to see you thank you coming up on squawk box, the telast on whats happening senator kevin cramer from north dakota will join us. You might say, against the paper dollar. Thats why i bought gold. Its not for my insurance but its for my daughters and the grandchildrens insurance that i felt like that generational aspect of passing down gold is securing them a future. Of course nothing is without risk, and that being said, i feel that by diversifying with Precious Metals that i am covering my bases. Its a hard asset. 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With nearly two decades in business, over a billion dollars in transactions and more than a half a million clients worldwide, u. S. Money reserve is one of the most dependable gold distributors in america. The nasdaq 600 congress executiveorders. An aid agreement twitter is now reportedly in the moment. Good morning, everybody. Welcome to squawk box here on cnbc im becky quick along with wilfred frost and melissa lee. Joe and andrew are off today the dow has been higher through the entire morning session right now its indicated up by 86 points. S p futures are up by 2 points the nasdaq has been the outperformer for months. Nasdaq futures down by two points we saw seven sessions in a row that the nasdaq closed higher. Only friday did it close lower every one of those seven higher closes was setting a new record for the nasdaq s p by the way is only about 1 , less than 1 away from its all time high. Take a look at whats been happening in the treasury market weve been watching the ten year right around where it has been this morning sitting at 0. 556 . Here are some of todays top stories. The u. S. Is hitting five million cases in total over the weekend. By far the most of any country in the world and a quarter of the total case count John Hopkins University says it took about six weeks for the number of cases in the u. S. To double and the school says more than 162,000 people have died here cases on the rise in about 20 u. S. States. Police in hong kong have arrested media tycoon jimmy lye. Hes one of the most controversial advocates. Republican senators ted cruz, marco rubio, tom cotton, josh hawley and pat toomey are the ones facing sorry, should have been a break there. Same Quarter Results after a short time ago from marriott the Company Reported its First Quarterly earning. Marriotts adjusted loss of 64 Cents Per Share was also wider than analysts had expected President Trump over the weekend signing several executive orders aimed at extending Coronavirus Relief for americans. Among other things the orders renew Unemployment Benefits and provide a payroll tax holiday. Steve liesman joins us with a look at the economic events from the moves. Good morning, steve. Good morning, melissa economists factoring in President Trumps executive orders when it comes to jobless claims there were questions about when it would start if states could implement it and contradictions in white house statements about who is eligible. Here ease what we know its a 300 benefit from the federal government it appears to require 100 from states to be used. Then the president kind of walked some of that back last night. It excludes those receiving a 100 benefit or less and theres also a payroll tax deferral. The pot of money used could provide benefits for up to six weeks depending how many states make it up some states have already allocated that money that the president says should be used for the benefits and, meanwhile, Andrew Stetner Century Foundation writes the plan is setting up to be another administrative nightmare for a beleaguered unemployment system just catching up to record numbers of new claims. The economic impact, well, thats kind of simple. Its less than whats being paid before and its more than nothing which is what was going on at the time on friday the j. P. Morgan chase showed without the benefit consumption would decline more than it fell during the 09 Great Recession with the amount in the executive order it will fall somewhat less but still be a pretty meaningful hit to consumer spending. 2 1 2 numbers for july on friday most forecasts have built in the decline in benefits. Theyve also built in some aid to states. That is not folks in the executive order. Melissa . Thank you, steve. For more on the state of stimulus talks in washington, right now we welcome senator kevin cramer of north dakota who is, by the way, a member of the Budget Committee senator, thanks for joining us thanks for the opportunity. Good morning good morning. You know, this is a big move and something a lot of people are watching very closely. I just want to ask you first off watching executive orders first being used by president obama and now by President Trump, they have certainly ratcheted up over time do you think what the president did was legal with the executive orders. I think what he did is legal and thats been demonstrated by the fact that the predecessor did it so early and the Supreme Court particularly as it relates to deferral of Enforcement Actions, the Supreme Court has held up that authority that president obama, you know, instituted when he was president. I think thats pretty clear. I think from a political stand point he certainly snared democrats in his own trap and flipped the leverage which i think was probably as important as anything. Yeah. Politically it was certainly a smart move i do come back to this question of what it means for congress and for the senate to have so many executive orders, again, through both president obama and President Trump that seemed to weaken the powers of congress. What do you think about it well, i think its concerning because obviously our founders created three coequal branches with an emphasis on coequal for a reason they made things difficult to do for a reason this drift towards more executive orders and more power for the executive branch, its sort of natural anyway the executive branch while its coequal, its made up of one policy maker theres an efficiency. It plays itself out in situations like this, a crisis, an emergency where the Emergency Powers of the president along with deferral of Enforcement Actions gives him a great deal of unilateral power and authority but at the end of the day even that is limited as weve seen in these four executive orders, while theyre very targeted and very appropriate, they sort of reward the entire economic spectrum to do the really big things they need to do, they appropriate, tax, that still requires congress but as we get through this, i do think we have to take a hard look at the three coequal branches. The article on powers of congress and try to restore some of that. So lets get to where we stand right now when it comes to the stimulus and the relief plan do you think that we need a broader agreement and does this change the political lens make it more or less likely that there is an agreement between the two parties . Yeah, its a great point because as i mentioned up front, the political leverage has really flipped here. For the last couple of months Speaker Pelosi has been rather proud of being able to proclaim that i have all of the leverage. She has the proxy of every democrat in congress, both house and senate that is what kept us from really coming up with any type of bipartisan deal. That and along with the fact that republican senators couldnt agree on any one particular plan but all of that was flipped. So i think it makes it more likely i think that now that the democrats can sort of fume about what the president s done but they cant really argue with the policies behind it because theyre mostly policies that they supported and wanted in a package. Perhaps it brings them back to the table. The question is even all of that necessary . For many of us, weve been concerned us, republican senators, weve been concerned with the fact that weve spend 3 trillion taxpayer dollars, almost half of which has already been spent and the impacts are unknown. Some people are going to look and go, oh, my gosh, weve got to get to the negotiating table and fix this others say theres no need to get back to the negotiating table because the president has largely fixed it. Thats my point with this it sounds like youre not necessarily feeling theres a real rush to get back to negotiation and maybe what the president has done has taken care of the bulk of what you were concerned about anyway. I think he has particularly with the Unemployment Insurance making it more modest, fully funding it largely through two federal programs, giving states and governors the opportunity to opt in or opt out and then, of course, with the deferral of payroll taxes, as a policy matter we can have an argument all day long, but for the short term what hes done is given every working man and woman in america that may come around a 7. 5 payroll increase. Hes taken care of unemployment and those that are employed which i think is something we were missing in the c. A. R. E. S. Act that created too much of a disincentive for people to not work i think hes equalized that. Obviously providing this muchneeded relief for renters and for people with large student loan debt, it allows them to either pay it off at 0 or defer it until later depending on their circumstance. Theres certainly more that can be done particularly as it relates to getting back to School Safely and as it relates to the disease itself. While theres still some Funds Available and the cdc and other Health Care Organizations continue to work, we need to make sure that our local hospitals and Health Care Providers are properly equipped for the task at hand i mean, theres so much here. Lets just start with the payroll tax deferral i mean, that seems so complicated. A, for businesses to decide whether theyre going to continue to deduct it out of an employees paycheck. B, if theyre going to figure out how to go back and recapture that at the end of the year if the law is not changed how do we deal with this i cant imagine what businesses are going to go through on this . Remember, the businesses were already dealing with the complicated, you know, bureaucracy that was being added to things in the c. A. R. E. S. Act, and building an airplane while we were flying it. When it comes to payroll taxes and deductions, businesses are set up to do that. Youre right, the rules are fuzzy as it relates to which fund the dollars come out of, but i would hope that by and large employers could work with federal government to find a way and to allow this relief for their employees making under 100,000 a year. But its going require the agencies to step up and clarify that, which, by the way, i think theyve done a marvelous job of in the last five, six months through the c. A. R. E. S. Act theyre probably better prepared to answer some of these questions than they would have been a year ago. But, senator, you understand the problem. If its not actual forgiveness, if its really just money that youre letting them hold on to for now, that could create bigger problems at the end of the year when you tell me i owe you x amount of dollars, its not going to be taken slowly out of my paycheck, i owe it to you in one lump sum. Therein lies why congress has to put the meat on the bones we are coming up with this at september 30th, end of the fiscal year. We have to have some sort of appropriation and see this followed by other appropriation negotiation. Congress, i dont believe, would let that happen. Worst Case Scenario where the businesses themselves have to drive off of a cliff, the deferral is important but appropriations requires congress and thats, again, why i think what the president has done is is hes forced congresss hand and congress has to step up to that plate. Do you know if congress is going to be going on out to recess as originally planned this week . Is everybody staying there trying to hammer out the rest of this deal . Well, i believe the senate will be in session this week, thats the plan. Were in session this week it will be a bit of a skinny session. There wont be any big votes or small votes unless theres some sort of unanimous issues the senate is in session should we need to be called back for a vote of some sort. I think thats important its important for the country to see its important for the democrats to know we are in session and continue to have a desire to negotiate but as for now, youre not going to see 100 senators in washington, d. C. , unless theres a vote called. One of the big sticking points for the democrats has been the idea that they want to see additional money set aside for states and local municipalities that have been hit hard by covid. Where do you come down on that would you be willing to give up money for that so this is probably the area thats the biggest disagreement among republicans themselves i happen to think that with the existing the balance that many states still have in the c. A. R. E. S. Act funding, that they ought to be given more flexibility. Certainly there ought to be some guardrail so states cant, for example, take whatever they have not yet disbursed whether its to municipalities, communities that they cant take it to bail out their Public Employee pension plans, however, i do think providing them the opportunity to use more flexibility than the Treasury Department has given them, theyve given them quite a bit theyve done all they can within the law to allow governors some wiggle room. Id prefer to see us give them even more flexibility, give governors that flexibility the problem, becky, is a lot of our members and i would have to say it goes from larger, more populated states, im more concerned about the municipalities than they are the states expecting that money to sort of trickle down is a little bit complicated when you have a city, say, of 450,000 or even 1 Million People and they dont have the direct access to that money. The mayors and their City Councils dont have the type of flexibility that a governor has. Youre sort of running the gamut there. Id say lets give them the flexibility to use the balance of the c. A. R. E. S. Act that they see as helpful and we can address it as we get closer to the end of those funds. Senator, do you think at the end of the week well have a deal thats hammered out between the two parties . I always like to quote my friend speaker john boehner. Congress is a place where things move slowly before they move very fast. I as an Eternal Optimist would love to say i think we will, but were not sure well have to see how today plays out. Its early in the new week well see what the powers to be say about getting to back to the negotiating table. Thats clearly what the president wants. He stated it in his announcement, the executive orders intended to provide relief where relief is needed and call the bluff on democrats in congress hopefully we get back to the table this week, but i cant say with great certainty that im confident that will happen before the end of the week. Thank you for your time, senator cramer pleasure to talk to you. My pleasure, thanks for the opportunity. Dont miss treasury secretary Steven Mnuchin coming up on squawk on the street at 9 a. M. Eastern time. That is an interview you do not want to miss. Still to come, why another Airline Bailout wont benefit the Airline Stocks in your portfolio. Could that be a bet to happen between twitter and ticktock the two Companies Reportedly to being about a combination. As we head to break, lets show shares of Royal Caribbean reporting a wilder than expected loss shares down 1. 7 . Back in a minute shares down 1. Back in a minute 7 back in a minute what happens when a wireless carrier puts its customers in charge . 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 box. Looking at a positive open now across the board it does look like apple will have a big advance at the open it is indicated to open higher about 1. 2 wilf the Airline Industry is looking to get support from the Administration Reporter last week we did see the Airlines Stock move higher on the belief that there will be another 25 billion that could be extended to them. Heres where things stand on another round of aid for airlines again, this would be for guaranteeing jobs. It would be for 25 billion. 70 would be direct aid, money the airlines would not have to pay back 30 would come in the form of treasury loans and it would guarantee all Airline Employee jobs through the end of march. Theyre guaranteed through september. This would be through the end of march. You saw the Airlines Stocks get a little bit of momentum because of the belief in the growing numbers of democrats and republicans on capitol hill as well as support or at least the indication of support from President Trump, the belief is this will go through where theres a strong likelihood this will happen when an ultimate stimulus package is passed when you look at the number of passengers flying, were 72 to 75 down from the same time last year this is the high season if you will it is going to fall off or expected to fall off once we get into september or october. As you take a look at the Airlines Stocks, keep in mind they have the liquidity in the next few months. Its not the case where they will fall into bankruptcy. However, they are not looking to make big gains in terms of revenue at least for the next six or seven months unless something changes, theres a vaccine break through, et cetera as a result, if youre an investor, a lot of people, analysts are looking at this saying, yeah, theres a floor built in theres not a whole lot of momentum to the up side. Guy guys. It seems like most people would accept the first round of airline stimulus took too short of a time in when they had to keep people in their jobs, september, very quickly after they received those funds a few months ago started to get these announcements by october theyd have to be making x thousand of layoffs. It seems the shape of this bailout is putting a relatively short time limit, march, next year, on when they have to keep people employed by again, you look at this and you weigh it up versus other sectors and ask the question, why are the Airlines Getting such generous support without restrictions on the other side when loads and loads of other sectors arent, perhaps theres not even money for people who have lost their jobs and the airlines do seem to be getting unbelievably generous special treatment. A couple of things to keep in mind here, wilf. Youve got all of these members of congress, especially in the house of representatives, who want to ensure that they keep Airlines Service for their district, and thats what a new stimulus package aid bill would include. A guarantee that these airlines do not stop service, especially since smaller cities and markets around the country thats factor number one the other factor is there is a hope in washington that if there is a break through in vaccine news, lets say in december, january, february, that people will say, aha, im ready to get out on the road again. Im ready to fly again they want the Airline Industry to be able to spool up, if you will, to add flights and to have pilots and flight attendants, mechanics, everybody ready to go they want that in place. Those are the two factors keeping the airlines aid talks, if you will, keeping it looking like its going to happen. Basically, phil, what this aid bill would do would be to prevent the airlines from going through with the layoffs that were planned for the fall and from an analysts perspective, from an investor perspective, investors were looking towards the day that airlines would right size their business and this is sort of adding a layer in which airlines wont actually do that until there is no more aid and they have to make those cuts. Correct. You dont get a sense of what the Airlines Business is. Correct and, remember, they have taken on billions, billions in debt since march. Now it doesnt mean that every airline is in dire situations and cant handle it. Some are in better shape than others that said, melissa, what youre getting to is one reason why a number of analysts are looking at airlines saying, a, they havent right sized and, b, we have no sense of when this revenue is going to improve for these guys there is no way you can look out and say, we think its going to be x, y, z for the First Quarter. The First Quarter is the weakest time of the year for the airlines industry. You have a floor built in but theres no sense of where it goes from here in terms of an up side phil, thank you very much this is obviously a story that well continue to follow we appreciate your updates on this. When we come back, who on wall street could actually see their bonuses rise this year and why . A new report just out in the last few minutes we will bring you those details. Ahead of the opening bell, check out the current level of the small cap russell 2000 index it gained 6 last week thats its best move in two months stay tuned quk xilbeig bk. Sawbo wl rhtac check out warren buffets Berkshire Hathaway they reported a 10 drop in operating profit it took a 10 billion writedown for precision cast parts thats tied to the airline indust industry as we were discussing, that industry is seeing incredible lows overall profit at Berkshire Hathaway jumped 86 . Paper gains that theyve said. And buffet himself is saying he should pay more attention to the operating profit or loss of the company. Check out shares of amazon and Simon Property group the wall street journal says the two companies should turn Department Store space into Amazon Fulfillment Centers its going to focus on spaces occupied by sears and jcpenney which have both gone bankrupt. Simon property reports after the close. Coming up, the top tech stories this week and what they mean for your portfolio. Well tell you about a new potential suitor as we head to break, check out shares of apple. Friday was the stocks first negative day still ended the week up nearly 5 it is indicated up premarket 3 ay tuned youre watching squawk box on cnbc i had saved up some money and then found the home of my dreams. But my home of my dreams needed some work sofi was the first lender that even offered a personal loan. I didnt even know that was an option. The personal loan let us renovate our Single Family house into a multiunit home. And i get to live in this Beautiful House with this beautiful kitchen and its all thanks to sofi. Welcome back to squawk box on cnbc. Heres some stories investors already talking about today. Shares of marriott edging lower. Theyve improved over the last half hour. The Hotel Operator reported a wider than expected loss in the Second Quarter it was the first time they had reported a quarterly loss in nine years shares are down by a percent u. S. Stock funds gaining an average of 5. 1 . That that is according to data by refinitive. One of this mornings big winners, cannabis producer canopy growth. Revenue is well above forecast the companys results were helped by cost cuts and a boost in demand forced problems in the pandemic. A new report out this hour reports on wall street bonuses and shows there are going to be some clearcut winners and some clearcut losers leslie picker joins us now she has all the details. Good morning, becky most wall street employees will see their bonuses decline this year but there are a few exceptions retail an commercial banking with bonuses down as much as 30 . Thats due to substantial credit loss provisions or defaults that are projected toarise from the pandemic bankers is a bit more of a mix with those on the incentive. Even though larger firms pledged not to lay anyone off. They said layoffs in the smaller firms will accelerate in the second half of 2020. Back to you. Leslie, i think its going to be fascinating as we get into january, february of next year across all sectors not just the banks. A 1 bonus. To your point, towards the end of that script, its interesting. They have pledged no layoffs this year. If that continues, its hard to argue for large bonuses strong years no layoffs even when those are met. Its going to be politically unpalatable. You cant really argue with a big bonus. Right i think whats really interesting about 2020 those that work at morgan stanley, bank of america, they have pledged no layoffs and they, according to this report, could see better bonuses those who work at kind of the second tier private equity firms, hedge funds, just overall commercial banks could take a larger hit with their bonuses. I think that speaks to the economies of scale, the bigger wall street firms have been able to benefit from in 2020 particularly. Competition to buy tiktok looks like its heating up wall street journal has had preliminary talks to combine with the popular social media app. This is after microsoft has determined to buy the app and hoping to buy it by september 15th the Trump Administration wraps up joining us now, jean muenster and the managing partner, founder of Big Technology and cnbc contributor good morning good morning to you both good morning. Start with you, if i may. We can see a deal for tiktoks u. S. Business carved out in time absolutely. You could see microsoft decide to pull out and bill gates himself said the deal is a poison chalice microsoft says maybe this is not something you want to get involved with. Then theres a follow through company like twitter they already had vine and that didnt go very well for twitter. They dont have a lot of date for the company and do anything productive with it if they do buy it do you think something could happen here . How much do they need to have. Steal a significant amount of facebooks market share . I think that theres the case that nothing really happens here, that ultimately tiktok is getting shut down and the acquisition phase is a little bit of a complicated growth. Just to lay it out, were talking about were really fracturing a business. Tiktok is global and the same brand, two different entities running that m a is complicated but when you layer on that piece and separately what makes social networks so magical is the Network Effect my view is when you hear some things like whats going on with bill gates and with the other big Tech Companies that would not have any, facebook is not going to have an interest. Highly unlikely that apple would have an interest potentially twitter and they have a deal that will happen, especially the best case where it gets shut down and fancier second part, what does this mean for reels, what youre seeing is the main content developers. Theyre starting to shift their weight to other platforms in anticipation of something negative happening to tiktok i suspect that if its shut down temporarily, which i think it would be, that they could quickly come back to simply hedge their bet. So this is the pretty dynamic situation. One thing thats difficult to predict, whether its acquired, nonacquired, shut down, one thing i do believe that tiktok is going to be around in the next 12 months maybe its a stand alone, maybe its part of something else, but its here to stay. Alex, should we expect more significant chinese retaliation, potentially directly at a company like apple i think you can see chinese retaliation. We know chinas blocked a handful of big u. S. Tech companies here i agree with what Mark Zuckerberg said to his employees this past week, which is not just china but its countries around the world that can see this as a precedent and ask themselves, hey, is facebook net positive or net negative across our country and think about shutting facebook down inside their country. Its not as much china versus the u. S. , two visions of very different internets starting to emerge around the world. Can the United States tech countries see blow back in countries outside of china i think that is likely. Gene, do you think apples run up too much in the short term not at all. One of our predictions for 2020 is this is the best performing faang stock. The scorecard is not good. Amazon is up 71 apple is up 52 . Pretty wide gap here im confident that gap does get closed ultimately investors as they anchor themselves and put a five year transfer. Five year multiple upgrade cycle. All the a. R. , potentially something in autonomy. All of these pieces that have been well framed in, i think if they ultimately the key question is why doesnt apple why is it treated with a fair multiple the reason is it has a hardware business i believe that investors will increasingly view this on par with some of the other tech giants you put it at 27 multiple, which is kind of consistent on 22 earnings which is probably two or three years out, you get to 600 i still believe the street is largely missing this i know its hard to fathom these 2 trillion plus market caps, but its hard to fathom equally as difficult to understand how much of an impact and how fundamental it becomes the fabric of our lives. Gene, it is interesting when you say the discount in apple is because of the hardware business analysts are coming around embracing this idea of the super cycle. The 600 bull case price serve on apple i want to ask you in regards to apple, if they were required to take down wechat from the app store in china, are you concerned that that could dent iphone sales in part of that super cycle thesis in china . Some of the predictions are that that could impact their China Business by as much as 30 . Its an estimate its a guess ultimately what we see is that if there is some sort of greater friction between china and the u. S. , we can go back and look at what happened with the trade war and ultimately weve paid special attention to social media, which is curated by the government in china. It was talking about apple during that period and what we noticed was a surprisingly supportive tone in social media despite the friction between the two governments. What that tells me, melissa, is that if there is some friction related to wechat, i suspect that the message and the broader message is going to still be relatively supportive to china and apple for all the reasons why apple is good for china. So its something that is noise around the headlines but ultimately i dont think its going change the reality that ive watched this for a long time and usually there are cycles and cycles usually last a year 5 g is going to be a two or threeyear cycle i dont think any sort of fluctuations in wechat is going to change that core irection. James, quickly, are there any big cap tech stocks that have run up too aggressively in your eyes this year i think some of the stay at home ones. Its hard to get my head around some of the valuations the zoom and especially zoon. Maybe peloton, but those would be my two quick takes. Stick to ones with sustainable tail winds thats the most obvious one, apple. Thank you for joining us. Thank you coming up, much more on the markets as we make our way towards the opening bell on this monday morning taking a check on futures, we are looking at higher open for the dow and the s p 500. The dow is up 4 last week s p 500 up 2 . We are looking to extend those gains. Stay tuned youre watching squawk box here on cnbc dont forget to subscribe to our podcast. Ais youll get interviews, behindthescenes access look for us on apple podcasts or on your favorite podcast app and subscribe to squawk pod toy. Da we made usaa insurance for veterans like liz and mike. When their growing family meant growing expenses, our agents helped make saving on insurance easy usaa. What youre made of, were made for. Usaa pi point youre looking at green in all three major indices its now indicated up. S p has been up all morning and its indicated up by 3 points. Nasdaq up by hey, wait, wilf. You got ants in your pants where did you go no, it wasnt that. David faber is getting ready for the big 9 00 kickoff and i was willing to vacate earlier for the big man. Jim cramer is getting ready as well after the break well be hearing from jim this was an unexpected bill not covered by my health insurance. And this is the aflac duck who helped me cover it. Aflac. These are all the cab rides to my physical therapy. And aflac paid me directly to help. Aflac. What he said. And this unexpected bill is from. The twothousanddollar specialist. Thanks. Aflac. When youre sick or injured, aflac is there. We can help with Expenses Health insurance doesnt cover. Get to know us at aflac dot com. Lets get to cnbc headquarters and jim cramer is standing by and, jim, this interview you have this morning with treasury secretary Steven Mnuchin is incredibly important. Im waiting to hear everything he has to say. One of the Big Questions has to be, is this something that puts addition aal leverage for the t sides to come together or the republican senator who was in the deal before have less reason to come to the table and say, okay, well get a deal together . Thats how i felt listening to my namesake, an inert view that basically said it was over. He was a reasonable man and i think that reasonable has become something that is extinct and we have sects going against us. I dont think that is the case with secretary mnuchin i think the hardened position is more posturing and im expecting a more optimistic secretary mnuchin than we got even this sunday just because i know the interest that he has that transcend blue and red and i think there are interests that nancy pelosi has the speaker has. So maybe im a fool to be optimistic, but ive gone that way. Im so eager to hear where there would be more room for negotiation because, look, the president himself said that this doesnt take care of things like the states and municipalities or schools and you have to see Congress Come in and step in on those issues, in particular. In Congress Pretty hard to say, well go along with these executive orders even if its giving you what you want its an admission that congress is just less powerful and has been for a number of years the goal of the resolution with president johnson declaring the war against vietnam when there were no votes that were real i mean, this is a war. Right. Its always inest therteresting. No discussion of the pandemic but just blue and red. Just a discussion about whether we should punish certain municipalities and its a pandemic its not like theres congressmen geez, were at war but the war seems to be set aside and it just seems like a war between the administration and nancy pelosi when its really a war against a really incredible disease that nobody hashad good luck with. Unemployment benefit is one thing, but what if we dont get a full deal that extends mortgage forbearance and renters protection and so on and so forth. How bad for the banks if we then see bankruptcies and the like pick up because of it. I think there was expectation that perhaps by friday there would be a deal but the answer, i have to tell you the answer is that the charges that theyve taken are way too low. You know this group better than anyone wells fargo does not have the right charges if we went down this path. Charlie sharp revised and Brian Moynihan and thats why these stocks are so precarious i think the dividends are certainly in doubt if you follow along with this path but, obviously, the president is not doing that or neither is the secretary. As an investor, you have to. Hey, jim, not to throw one more thing on your plate i have time but how do you weigh in on this question of states kind of battling it out . Who should get the money if you live, lets say, in new jersey, you work in new york but you havent set foot in new york in five months at this point. This isbattling out all over the place. We had the governor of New Hampshire on today where hes trying to say you cant tax people who live in New Hampshire if they used to work in massachusetts. How do you weigh down on that . How do you think thiss a big d lot of municipalities. My tax rate is 63 . What happened is the two states had to come together to figure out how to do it and theyve done it very equitably they split it. Thats what states do if you work in one state and live in another. People say its a massachusetts problem, but thats not responsive to the union. A lot of things that are in play here like the union. This is different youre working in both places. Youre working in both places. I live in new jersey, i work in new jersey now i havent set foot in new york forever. Why should new york get a piece of that revenue . They shouldnt. If they sue you for the revenue, you could sue. I know its ridiculous, but you have to fight them i felt like i had to an added fact, becky, that your company is headquartered. I feel like the states should figure this out. Unfortunately, its legal the irs, by the way, youre guilty until proven innocent not in the state courts. Its unfortunate you have to fight it i feel like this is going to be the states have to determine this and come to some sort of agreement and the work from home thing in the pandemic has changed entirely well see how this kind of weighs out its a great point. They have to reconfigure everything just like everyone else in america. They just have to catch up i think until then, you have until what new york and new jersey did to me youre resident of this and resident of that and tough luck and i think its a great precedent to look at what they did. I mean, i was spending i dont have a house in new york i was working 30 hours a week in new jersey and 40 hours in new york they tried to figure out what was the right ratio and i came to the conclusion i was working too hard i agree youre up too early every day, my friend. Jim, were looking forward to that interview with mnuchin. You had a fabulous show and phil answered a lot of questions. But senator kramer really made me realize, lets blow this to kingdom i know he is a good guy but really 1859 and we dont need the compromise of 1850 to make this worse. It is unfortunate to have to resort to historical analogies yeah, weve spoken with several of those senators over the last week and i think theres more than 1 out of 100 and thats the big question. How many of them are there you want to blow up the u. S. Economy, be my guest you wont be elected or reelected people see this stuff. You can fuool a lot of people bu not all voters well see you in a few minutes. Now, lets get more on the markets ahead of the opening bell with the s p 500 sitting 1 below the alltime high lets bring in cio at Citi Private Bank gdp growth globally for 2020 and 2021 and 2022 and a rebound in corporate profits. What sectors do you like in light of that . Well, right now were looking at a lot of the cyclical sectors and things that have not yet recovered. Obviously the worst of those in leisure, retail and entertainment, you know, and health care. But on the interim basis when you take a look at small and medi Mediumsized Companies in particular along all of our industrial sector in the economy both u. S. And global, you can see lots of recovery potential there because right now consumers are spending more than producers are producing. And these stock prices for Small Medium Sized Companies are now 30 below their alltime highs and these companies are not yet producing the kind of earnings they will in 2021 and 2022 we think a lot of potential for people to rotate from the Growth Stocks a lot of the Technology Stock into these industrials and cyclicals that we think can make a fair amount of money for them. Not just inequities but highyield credit in the u. S. And euro zone. Thats exactly right. And we think there is some substantial value in both of those places we have to be pretietty selectie and where a lot of highyield bonds are. When we look at the Medium Industrial Companies these that are rated triple b and double b because as the earnings can improve, their credit can improve, as well there are value traps out there. You mention energy, for one. Yes, there are some, of course i think that youre absolutely right. You have to be very careful now. A lot of industries and some of them i touched upon retail being a prime example where theyre not going to come back where digital will really have replaced some of the traditional brick and mortar, for example, in that Area Technology itself is actually going to take parts of telecom and parts of media and just place those, as well we think there are some value traps out there. Youre exactly right david, great to speak with you. Thanks for your thoughts thank you. David bailin, Citi Private Bank. Great to be with you, beck make sure you join us tomorrow thats right. Well see you back here tomorrow see you later on today. Thanks, guys. Good morning and welcome to squawk on the street im jim fab. Another week here in august you can see were set up for what appears to be a higher open no shortage, jim, of topics to discuss and related to secretary mnuchin is where do thgs