Transcripts For CNBC Squawk On The Street 20240712

Say the least after a bit of a rebound the other day when i was on with you, yesterday i was not here for what was a decline overall in all the markets. I think we are in a new era of volatility. Every single time we get an up opening people say, okay, i guess that selloff is over and when we get the printed selloff people say this selloff is going to go on for ages. I urge people to step back and recognize we are in a period where theres a lot of vacuum, a lot of people trying to buy when its going up, a lot of people trying to sell when its going down and just interpret that as just being enthusiasm, greed and then fear and accept it that its here to stay because its really the undercurrent behind these moves. Okay. And what does that mean in terms of this socalled playbook that you often offer people who listen to what you have to say sure. It means that if you think that it is going to bounce today because it was down hard yesterday, dont make the first move wait to see whether the people who are smart enough to buy at the bottom yesterday flipped the stock, if they flipped the stock particularly on a friday you might get a better price i feel like the news itself and people care very positive, kroger was amazing, a good interview with peloton, oracle was really good, no one is talking about it, they should be, because it was an exceptional quarter. So youve got the backdrop of good earnings, backdrop of okay macro, but what i am most concerned about is just people i know im going to call them newbies not having any experience with the market going down and they are accelerants on the way down instead of picking at things that might be attractive so that does change the coloration of this market. David costa out with an incredible note about how if you think that youre diversified youre not because of this concentration. Really thoughtful note, got it at about 10 00 last night and Second Quarter of the game and it is very, very thoughtful. You know, he is a thoughtful analyst at goldman because we really are lacking in diversification. Weve got two markets, we have tech and we have Everything Else and tech is too big versus Everything Else. It is shocking sometimes. And its a point weve made many times over these last few months as well just in terms of the lack of diversification even in the s p 500, jim and i know many of thepeople w have on air have also made the same point of so many of the stocks that have been down and down substantially and yet you look at the index because it is so heavily weighted towards five or six enormously capitalized names and its moved a lot higher or a decent amount higher not like the nasdaq. We have a fulcrum moment, david. We have jamie dimon saying come back to work will it work i have encino, it makes Banking Software for the cloud and theyre saying, do you know what, they may think that jamie dimon has the sway here, but jamie is giving you that little could end up being big hole that if you are with your kids or if you are part of a protected class you dont have to come, but what i think is happening is, david, its not going to go back that way. Yes, they are training people who have to come in, but when you see the software that people have to work at home, when you see the productivity, when you see how little time is spent versus an hour and a half on the tube going to canary wharf, you know that as much as jamie might want people back, work at home is the driver of tech and its not going away no its not youre referring of course to the story in the journal and we can confirm that as well, but, you know, when you are on a trading floor, when you still gain a benefit from knowing what your colleagues know in a realtime way, by yelling at them, or being able to walk over them, there is a benefit to that, jim. By the way, theres a benefit to being in person with your colleagues generally, particularly if you are somebody who is younger, trying to get a culture at a particular company or corporation and trying to get ahead. I mean, i think we havent accounted for all those things, although as weve said many times there is going to be a percentage long after this that chooses to stay home and the bosses are not going to have a problem with that. Youre right. Look, i was a teacher at goldman, i would teach on friday night, i particularly liked to teach friday night 8 00 to 11 00 p. M. And then gave a quiz at the end of 11 00 and published the names of the people who finished bottom five on monday because that was the way i like to handle things, that was pre jimmy choo there is no way you can know anybody on your team unless youre there you can hide behind zoom you can be reading the sports pages. So i agree with you, its important to come back, but, david, the subway, they just discovered the concept of the mask i think there are a lot of people who are readjusting their lives. Do you think Michael Corbat resigned yesterday solely because it was the day to name ms. Fraser the ceo i think theres a lot of soul searching going on and we are not supposed to be soul searchers. He is 60 years old, mike i think people kelly cramer, the fabulous cfo at cisco, leaving. Why . Well, its time. David, theyre soul searching, people who we thought were soulless and theyre not and that also means no one wants to die getting to work. Look, i love the idea that weve suppressed numbers, but how many times do i have to hear cold and flu season i dont want to get in the subway cold and flu season to get back to work which may mean that were not going to be at the New York Stock Exchange for some time unless we figure out a different way to get there. Thats where im going. Although we can, i think, imagine all being together fairly soon in the studio as you and i have been of course and will be more and more often in the days to come i mean, it is a slow but potentially steady return, though, in some way. You know, i will be curious to see what percentage of the workforce does really return when asked to. How many people say, well, i just dont feel comfortable with that and how the Companies Respond over time or are we just really going to all have to wait until there truly is a vaccine i have an analog here look at peloton. The numbers from peloton are unbelievable the ceo was on earlier when you look at it he looks to measure it hes got some very good metrics he likes to measure it by the number the number of actual workouts, which is extraordinary. They do have the flywheel going, 76. 8 million workouts, 332 year over year. Why do i mention peloton because when people stay in their home, this is what they do. Yes. And, david, the gyms and the restaurants, they just may be things of the past i mean, they dont work without a vaccine. It is a hard enough day as it is, jim, without having to listen to you tell me that restaurants may be a thing of the past come on. I look at the p l. Come on they are not. I look at the p l. I know. I know, but the day is going to come when this is over and people are going to want to eat out more than ever in fact, im eating out all the time outdoors. Well, and hopefully there will be nice big heaters and maybe we can keep going. Try to get heaters. Dont say that. Did you . Yeah. My p l is such that ive got to be Stan Druckenmiller or dave tepper honestly. Of course i understand its got to be incredibly frustrating to be the owner of one of these establishments and it is a lifethreatening so to speak situation for your business including i would assume yours. Yes i dont want to take peoples temperature when they go in. I own a bar. Youre not supposed to sit at the bar. Well, okay, what do i do hi, i have i had 17 tables, now ive got three tables. But my costs are the exact same. I mean, what kind of business is that yeah. And, look, i have the luxury of making it so its a labor of love there are millions who dont have that and those are the people who want this bill passed or want something from washington. Right. And, david, washington is a loss. We seem to get closer and closer to nothing. The skinny offering made by mcconnell didnt even get out of the senate. No. You know, it just here we are, its weeks later. Its weeks now since we had mnuchin on and pelosi on that day, remember, jim obviously you remember, we were together on that day. Sure. Nowhere i dont know, the chief of staff seemed to, as he called himself what did he call him the skunk at the party he scuttled a deal, i think. Who knows. Who benefits from it i dont like politics. I do like the idea that unemployment keeps going down because thats the strength of what can happen. And i wait for, david, yesterday while you were away we had the convoluted story about astrazeneca which had been in pole position where in what i regarded as somewhat disgraceful disclosure at a jpmorgan conference that maybe it works, maybe it doesnt, maybe someone is sick, maybe not david, the vaccine i think when you find what happened, the recruitment i bet took a stunning decline when we heard about what was naturally going to be something that went wrong when you have hundreds of thousands of people trialing. Yes, but you have to find out and we have to find out whether or not that patient in particular was positive with covid and whether perhaps what they had was caused by the virus not by the vaccine or whether it was related to the spike protein which would be included in many of the vaccines. There are a lot of questions there still, jim, and certainly gave some people pause i do want to come back to i do want to come back to earnings and to the stay at home economy. Sure. You were talking about pell to be and then we kind of went off track for a moment or talked about some other things, but the ceo was on squawk box earlier and talking specifically about the companys prospects postcovid and here is what he had to say we believe whats happening here is a secular move from working out at a different location into the home when you have a choice of working out at home with fantastic instructors, with a very supportive community, with the incredible gimified and Network Software and best hardware in the world why would you travel we think that postcovid this is still an incredible growth story. I assume zoom would tell you the same thing in a different realm but similar. Yes zoom, by the way, integral to the exciting story last night and oracle that we will get to Planet Fitness down 22 . Planet fitness is probably the one that will be the survivor, most of these companies are thinly capitalized, lots of mom and pop gyms stay at home kroger last night kroger this morning reported a good quarter. Its not good enough because they only did same store sales of plus 14 when Rodney Mcmillen comes on later this morning i think people will be quite excited about the kroger story right now not running enough and there are people who say im sorry, hes coming on oh, sara has a close relationship with rodney, thats fantastic, sara eisen. Yes. We had kroger that was good, oracle that was really good, chewy that may not be good enough, peloton that just im crazy about, even as my wife uses it as a clothes rack. Then we have good stories. Dominos, good chorts chipotle we are filled with positive research and positive earnings today on a slow friday that does color things quite a bit the skunk in the party to use meadows term is nikola and we have to do more work on nikola because we can talk a bit about that later. Lets get to oracle, though, because i usually do have a good read on that, its a company that youve followed pretty closely, jim and it was a seemingly strong quarter, safra catz on the call saying any number of things and Larry Ellison as well about their unique position in the cloud market, the only cloud vendor that competes in both the Enterprise Applications market saas and infrastructure as a market as well. They just make a lot of money. 4. 2 billion operating number up 8 , margins 45 up 300 basis points means tremendous the oracle cloud. Lets talk about that. Obviously ellison is very proud about it but hes talking about going up and doing well against amazon, microsoft and Google Hardware was a positive this time, that was an acquisition. License is up 8 versus a consensus of an actual decline revenueacceleration to plus 2. People were thinking it might be down 4 this is the congratulations quarter that many people had been hoping that safra and larry would deliver. I urge people to listen to it. You need to know what ellison is like ellison is old school. Frank slutman from snowflake old school i like the quarter and i think the stock can go higher. Maybe theres room for everybody. Ive been saying that oracle has been a donor, a share donor to salesforce and sap i dont feel like that after last night another interesting thing just to note as well with safra catz was talking about shareholder value in a broad sense and how much stock they bought back. They bought back 40 of the company in shares over the past ten years. Spent 19. 2 billion to buy 361 million shares over the last 12 months thats a heck of a capture right there. 40 over ten years i know some politicians may have a hard time with that. You do wonder, jim, whether that i mean, i know they would say, listen, we have plenty of cash and were using it to benefit shareholders is there other ways they could have put that to work to generate a higher growth rate or do you think their Capital Allocation has been superb. I dont think so at all i look at the mule soft acquisition, the tab low acquisition that salesforce did. People think they paid a lot but look at salesforce market cap. Larry ellison is close with marc benioff and i just say, do you know what, you had to pay up in order to be able to grow salesforce is the modern day oracle, lets call it that, of course, because theyre cloud native and salesforce is 225 billion started well after oracle and oracle with all for all that stock they bought its 175 billion. David, i think that if you could grow to grow, thats the way to do it. I know every acquisition that marc benioff made including some that he came on our show to talk about has been ridiculed, but look at that look at the run that stock has had. Right. And those acquisitions have been integral to building a sweeter product that has made it so its an unassailable choice with amazing numbers oracle has low singledigit growth numbers, mid single digit. Were talking about 20s for salesforce. I know. This is a market to your point that rewards growth more than anything else. Indeed. Great to shrink the numbers shares outstanding and get your eps up but may be better off generating a higher top line to your point as you well know, jim, it is a somber day, its the 19th hard to imagine 19th anniversary of 9 11 today. And its a day of remembrance, of course, ceremonies under way here in new york, at the pentagon, as well as in shanksville, pennsylvania, this morning. Sden we return the nyc and naaq will both observe a moment of silence. Stay with us even shells represented value. Then currency came along. They made it out of copper, gold, silver, wampum. Soon people decided to put all that value into a piece of paper, then proceeded to wave goodbye to value, printing unlimited amounts of money as they passed the buck to the future. Thats why its time for Digital Currency and your investment in the grayscale funds. Go digital. Go grayscale. That selling carsarvana, 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. The big events are back. Xfinity is your home for the return of live sports. Sack nagy. Conaghi. Both the New York Stock Exchange and nasdaq about to have a moment of silence to honor the victims of the 9 11 attacks. This very moment, jim, a moment and day that we will never forget, those of us, of course, who were there so many different things, you can think about, sometimes, though, i always remember those 343 firefighters who were lost firefighters from all over new york city, everywhere. The furthest reaches of the city rushing to get into a building that was burning and unfortunately would fall to the ground, both of them, jim. Amazing, its been 19 years. The recovery of course is something youve reported on very, very closely lets now take a moment to remember [ moment of silence john j. Corcoran iii carlos corte Kevin Cosgrove Dolores Marie cost les new offer on iphone 11 pro is even better on our most powerful signal. Switch and get two new lines of unlimited for only 90 and 2 iphone 11 pros on us. Only at tmobile. 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. Final trading session of the week coming up and it looks like we are going to open at least with positive. You can see the s p looking up almost 16 points we have jims mad dash coming up right after this our Retirement Plan with voya gives us confidence. We can spend a bit now, knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Im good at my condo. Well planned, well invested, well protected. Voya. Be confident to and through retirement. With the icon that does the same. The rx, crafted by lexus. Lease the 2020 rx 350 for 409 a month for 36 months. Experience amazing at your lexus dealer. That helps you master your backhand. Then you should be able to get a bank account that helps you master your budget. Virtual wallet® for Digital Banking from pnc. Its time to get more from your bank. Announcer the opening bell is brought to you by nuveen. A leader in income, alternatives and responsible investing. Welcome back dominos is on the menu for the mad dash jim . David, when you have a stock thats up 32 you better be real, real, lets say evidence if you are going to go from hold to buy right here. Cohen has it cohens piece has the now digital 75 of 2020 sales are digital. That means you can do it by your cell phone, you can do it by your apple watch here is what i think is important to put into context what im saying and what mnuchin should be listening to and what pelosi should be listening to. They expect share gains 51 of the quick serve that is made up of regionals and independents. They do not have the ability to spend on technology. They are dinosaurs dominos is not. Dominos will crush them in the same way that wing stop is crushing companies in the same way that brink are turning into wings is crushing companies. You cant compete with Dominos Pizza even if you get because its 9 26 i have to do it, say a 9. 2 from one bite which is another operation by the incredible david portnoy. Yes. You cant because you cant compete with tech dominos is a tech amen that sells pizza and the pizza is much better. They have to get the wings better, rich allison promises because they are awful this is the problem with america right now when it comes to unemployment dominos, chipotle, big number bump they can spend on tech the most that restaurants can spend on tech is bring square in lets watch it because this is where unemployment hits the rubber hits the road in the fact that dominos is going to take look at that a gigantic amount of share its just happening now. Whats going to be left on our city streets we wont have our local pizza place. No. We wont have any retailers i guess we will have amazon Mini Warehouses taking over the city blocks so they can deliver to us more quickly. Chip omt lay. Digital everything. Yes, thats the reason why starbucks is going to do so well, they will take advantage of a lot of open spots and negotiate hard deals with the Real Estate Investment trust that unfortunately own way too much real estate, you missed a lot going on there with Simon Properties and brookfield. David, here is what i think happens, you have to go back in time to when you and i were younger when there were a couple restaurants, i worked at the block and cleaver which we called the block and cleavage and it was a terrible restaurant, mr. Fox was never really liked him, one time my father has a run in with mr. Fox, it was terrible, i was a dishwasher at 1 00 a. M. My father said he is not a dishwasher, he is a busboy these were the places that will survive, institutions, but do you know what, what happened yesterday, david, century 21. 21, yeah. Where we first got our shirts, where we first got our belts. Gone century 21, an institution and thats what america has to be thinking about. So what do we have to go it was years ago they took out mo ginsburg, but century 21, thats what you did when you started work. It was right near us at the exchange, i would still stop by there looking for some burring ans, they had good shoes of course. I had a fight over a shirt there. They gave me 25 gift card when they heard about it. But this is a very important thing because these are the companies that cant make it you can look at retail and say century 21 had a pretty good franchise, but thats an independent company. Anytime i was in there you would notice how many people were tourists and of course we know whats going on in cities like new york where there are no tourists right now. This is just a tough time we have a mayor, by the way, who is antibusiness and antipolice, thats not exactly a good setup its very difficult time for new york while we will come back, its not going to be without a good deal of hardship between now and then. David, i have to comment i have to comment that oracle is really for the first time oracle is having a sustained move, its going look at that, its an alltime high. This is much more of a bellwether for tech than people realize. We looked at the realtime exchange there of course, saw that it was almost all green as we do get an open here to your point oracle up over 6 and when we talk through some of it earlier they were talking about the fact that a zoom even has become huge customer. Becoming a much bigger customer, yeah. No, it was a great call of course we have to mark did a great job, got a lot of customers, but Larry Ellison is so back and hes ferocious as always, competitive as always. I mentioned him, i mentioned slootman from snowflake. You have a couple belichicks and most of the people are like, hey, go along, get along, but his company is driving a lot of the tech move today and then we see the financials up, that will last, what, david, until 9 47 . Yes usually that is a shortlived move that you refer to in the financials by the way, i think your buddy slootman will be a billionaire, so is the cfo so the snowflake ipo. Usually you dont get that duo, both becoming billionaires on day one. He took service now where it has to go. He is a remarkable man they should google things he has written and understand that you make a bargain with him, you go to work for him and you become a multimillionaire. I always love that hes a guy who has a cot in his room. I remember when he retired he came on my show announced his retirement and basically said i took it where it has to go, on to the next. Hes great, of course, marc benioff big investor in the company. Berkshire hathaway big investor. Its interesting its going to be the next big thing we will be talking about if you go to try to understand it everything is very, very difficult to understand snowflake because it takes 45 minutes per thing that they have on their website and the chat bot is not that helpful, sorry, frank, unless you are a customer not palantir theres way so much discussion about palantir not nearly enough about snowflake. Cloudbased company that once again, this is what everyone is going to the cloud and frank has figured it out again boy, i like him. At some point youre going to have to explain to me what snowflake does, then we will reserve that for another time, i guess, jim, it may take a buy. David, biotech is rousing its rousing from its slumber. Look at that biotech, david, stands much more for antibody than cure, vaccine. Weve stopped talking about biotech. Well take it we should be still talking about antivira antivirals, should be talking about the antibodies particularly given the varying estimates of what we can get a safe and effective vaccine into as many hands or arms as possible. You want to get it last it is funny that it is so hard to to get everyone to enroll and right now Len Schleifer is doing his best to get everyone who is sick or knows someone who is sick in the regeneron trial and i think that is such an important thing, but it is mono cloenl antibody. If you know somebody who has gotten it this is the one to go to its lost in the shuffle, david. Theres so many and they need a lot of arms. It shouldnt be again, i will come back to merck as well, ken frazier and what theyre do there and pearl mudder with their antiviral, expanding phase two, in phase three and rolling. These things are rolling ahead and they may end up being as important if not more than the vaccine. They will be much more important. If you have an oral antiviral thats available, if you get sick, first of all, you will be sick so you will be inclined to take it as opposed to a vaccine that some people may have some resistance to, we hope not these are going to be very important and it does deserve us continuing to pay close attention, jim, and get updates. In fact, id like to get more of an update on the mark effort. I do think that the market will fade here again because the people who bought at the bell are flipping and then you take a hard look at it. Remember september with a very tough month. A lot of it is election oriented, you know, hate him or like him, trump is out there saying good things about the economy and the market and Vice President biden really doesnt address it other than more taxes. We have an audience obviously thats very geared toward making money in the market so it could be that the Vice President is an a nat ma, at the same time i think there are a lot of us that are concerned that somebody has to pay we just spent a lot of money. Weve spent a lot of money and we have a widening continuing widening gap between the wealthy and not. The pandemic seems to have only exacerbated that unfortunately. I felt that last night, Restoration Hardware, rh, Gary Friedman with numbers that were extraordinary, stock it up 80 his stuff is not inexpensive, its for second home and its to turn someone who moves from the urban to the suburb and who is typically very wealthy to be able to redo their place and i think that Restoration Hardware now rh is very much a tell of what is going on in this country which is a rich richer we are not im not lennon, although sometimes i do look like him, but its important to note. You do, yeah. Well, listen, your point is well taken and its one weve been talking about and its only gotten worse and it may be reflective of our politics these days which dont seem to be much about unity in any way jim, you mentioned the financials, theyre starting to already turn around. It is interesting to look at a wells fargo, 98 billion market cap, i think they have 266,000 employees. Paypals market cap is what . Oh, man, 200 something billion. Yes. 23,000 employees. Kind of speaks to what were talking about doesnt it in terms of digital 223 billion is the market cap. It does seem that they have to build the culture up. Look, Charlie Scharf can be a miracle worker, the ceo of wells fargo, but miracles must occur ubs raises it to neutral, but, you know, david, its not great. Its not great no. No jim, i want to go to the pentagon now, of course, as we pointed out as people know 19 years since the 9 11 attacks on our country including of course at 9 37 a. M. That morning when Flight American Airlines flight number 77 hit the pentagon present arms. [ playing taps ] ladies and gentlemen, this concludes todays observance thank you for joining us this morning. Always a difficult day, of course you know, we recognize some of these transitions can be somewhat jarring as well as we watch the pentagon there and remember those at the building and of course on that flight jim, we are going to get back now to talking stocks. You know, a few things weve been following here as well, of course, over the last few days, the fight over tiffany which has gotten very ugly very quickly, although it was brewing under the surface for quite some time. Not that much new. We saw the news yesterday, lvmh also going to file a lawsuit in delaware tiffany is seeking an expedited ruling so they can get moving on a trial very quickly but so much of it will come down to that letter from the french government and whether or not its an actual order is it a real order or is it simply a request you know, it has to be an actual order if its going to be anything it must be final, binding, nonappealable order. And then theyre out theyre out of the merger agreement. Barring that, it could be very interesting to see if this thing actually does get to a trial and whether Bernard Arnault would actually take the stand and what discovery will find. But certainly no shortage of drama there, jim, as i know youve been focused on the underlying business and have questions about the sustainability. Gary friedman the ceo was talking about lvmh and how brilliant they are and arnault and how brilliant he is and how much money you should be making if you are in luxe i ri which does call into question is tiffany too regional, too new york how have they not exploited their brand . Why arent they making more money . Thats what i thought lvmh would be able to do. If we just focus on tiffany for a moment we have to ask what are they doing wrong because, boy, the one area that has really held up is luxury spending they should be making more money, david they are just not. It is coming back and they will be profitable in the current quarter, i think theyve said that of course and they are going to show decent year over year i think, jim, to their defense. That said, they are in malls, as you pointed out, no at good place to be. Not a good place to be. And yet they still lvmh they have a great brand and, man, are they ticked off about paying the dividend, but they are allowed to pay the dividend, that was in the merger, they are allowed to do that but, man tiffany how about Simon Properties yeah, what about it taubman. Yeah. Were in michigan there in court, yeah, i think we will be there in november i believe it is sometimes i forget the dates well see. Not a strong lawsuit not a strong lawsuit at all. People make fun of that complaint all the time, but you never know when you get to court. The worst thing that can happen is they actually have to buy taubman. Its funny, i get royal caribbean, you get norweigian, you get carnival and you get simon. This is a package of robin hood traders. Simon properties trades very, very early every single morning and its almost as if the younger investors have said this is this is the bell cow for this market which is Simon Properties i think its so funny because mr. Simon is not of the robin hood ilk no. He is not. He is not. Hes an ornery fellow sometimes. Ornery. Ornery ornery, yeah. What were you going to go with i memean. Maybe that, too ive sat next to him, perfectly pleasant how are you doing he goes 33 billion. I said im saying hi he says thats how much weve given. Thats how much you i said, well, i just wanted to meet you he goes, 33 billion put my hand out, you know. That was, by the way, prepandemic i used to do this thing, david, its wild, i would take my hand and i would reach out and someone would shake it and give me every single illness they have weve learned better dont even talk about it. Yes, we have yes, we have jim, on m a i did want to hit navistar they wanted to buy what they didnt already own 16 . They did make this has been reported but i can confirm a 43 offer. Im told by people close to navistar its not going to do it but its a starting point and its a live matter and maybe they get there over the next month or so is the hope. Those who are holding out for 50, i dont know, but, again, they are at least theyre confirming 43 and saying its a starting point theres a phenomenal bull market in things like struck engines. People dont talk about it because its so boring look at cummings, look at this cummings stock, its up 16 , wont be z scaler but its a real company, 19 times earnings, what a fantastic Company Caterpillar no one knows why its going up. Wait a second. We just had positive rail traffic. Intermodal is so strong, david, intermodal by the way, fedex just went up 60 points, United Parcel going up 40 points, does anybody care there is a bull market in trucks and transport and a lot of it is because of dotcom. There is some underlying strength i had david berman on talking about 9. 2 , 9. 6 year over year sales growth and the detailed numbers he goes through. The bigger are only the biggest are getting even bigger and the department stores, mallbased as we know not doing well, but the numbers, jim, are going up and rather rather dramatically. Look, i think that people who think the whole thing is a bubble, i urge them to look at a stock like deere i mean, deere has great orders, okay, so it sells at 22 times earnings, maybe thats expensive, 213, stock up 13 , whats the matter with owning deere . Does everything have to be crowd strike does everything have to be ring central . David, you can make money and not be in ring central okay. If you say so, i believe you jim, really quickly, i did want to follow up on a story that i gave some time to last week, remember, altese u. S. A. And Rodgers Communications make an unslis dated bid for a family called cogeco. Altice owning subs in the u. S. They said our shares are not for sale and let me be clear our refusal is not a negotiating position it is definitive so what are they going to do i just wanted to come back to this very briefly because it was something we asked the ceo of altice u. S. A. About. Unclear. Rodgers is a large owner here, this he do seem very frustrated and i continue to hear its not over, but im not quite sure what the next move may be. I just wanted to mention that, jim, because we didnt really do a follow on, what was this rare strange unsolicited offer for a company that was family controlled with the votes and the family said, not interested. Go away. This is part of the stay at home one of the things that hasunnerved me and i dont wan to be like the late don eye mass but i had someone wait a full day to get the dish, full day, they gave me three different time slots and they ever showed and they confessed to me that i cant get the dish until october. Last day of september or october. This is what people want because they want football and i have not seen the numbers yet, david, from last night, but you stay at home, you want the dish. Dish is so poorly run, directv i mean, they are im sure they will reach out to me today. Dont bother call my mother. We will see what happens in terms of directv and whether or not it has a different owner or is not owned by at t any longer. Even perhaps we get an announcement by the end of the year Altice Europe patrick drahe making a bid to acquire what he doesnt already own. Wants to make it private frustrated with Altice Europe. He controls that, also altice u. S. A. But theyre separate companies. Lets get to Rick Santelli now, check in on the fixed income markets rick, which you havent had a chance to talk about this morning. Hi, david yes, good morning. Well, we had that cpi and it definitely was hotter than expected as a matter of fact, if you look at some of the components within, for example, core cpi up 1. 7 year over year, these are big numbers. If you just look at the various aspects that propelled core numbers up both headline and year over year, one of the biggies was used cars and trucks up the most in more than 50 years. And if you called it and you had the right position looking for yields to move higher you didnt make any money lets look at an intraday of ten year notes, the minute the data came out the yields basically nose divided my question is much of that were traders positioning for some hotter than expected cpi data. There has been a spat of higher inflation data and a lot of stories written about how we may see some higher inflation data down the road, but it has not been a profitable trade. As a matter of fact, lets look at a longer term tenyear note chart. Lets start out in august and notice that the yield, all time low yield in early august was 50 basis points, lets zoom it out a little bit more to june and see what the recent high has been on a closing basis it was 90 basis points, the midpoint there is 70. This is the point. 70 basis points has been a stopper. Every time we get a little bit above it yields seem to always break back down to the down side, prices rally and that is something we want to pay close attention to finally, the dollar index. Here is one week of the dollar, on the week its actually up a half a cent. Its holding from some trade under 92 which was a rarity. Still down on the day. In the grand scheme of things its still down about 9 from its highs in early march david, jim, back to you, and have a safe and good weekend thank you, Rick Santelli. With the bond report of course markets are up and, by the way, were 49 minutes into this show and we havent mentioned apple or tesla both of them are higher after rough weeks. Were back right after this. 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. Makes it beautiful. Stateoftheart Technology Makes it brilliant. The visionary lexus nx. Lease the 2020 nx 300 for 339 a month for 36 months. Experience amazing at your lexus dealer. Tiktok is moving along and it will ooet ber soeither be clr sold, and no, i am not extending the deadlines. There is no extension of the tiktok deadline. Tiktok, man, and it is coming close, jim, as the deadline. The degree of difficulty, and you know in the olympics and the gymnastics and the degree of difficulty and the score is based on that and, man, the degree of difficulty to get this deal done between the chinese and the export, and the ai and the taking the code in and taking a snapshot of it and a year of updates and not clear you can get and what is the value it is not an easy thing. Not an easy thing at all. And everybody is trying to get the undercurrent of all of the oracle call is whether they will be involved. It is a little bit of a farce. Microsoft has the ability with the code writers, but this fire sale of the asset, because it is spiked is causing the rumblings, and walmart wants it, david. But jim, if this thing is going away on the 15th, theya t are going to be a lot of teenaged girls and they are going to be upset. I dont know what platform they are going to go. Oh, no, they may have to read books. This is a crisis, david. It is terrible, and tolstoy, and who is going to help them . Hemingway. Does tolstoy have a website spotify. Got it. Quick commercial break, and stay with us, because we have to go, says the producers, but we are coming right back. When it comes to parenting, youre a pro. You know your kid doesnt step around puddles. And you know cheap leaky diapers are an amateur move. You need luvs prolevel protection. Luvs. Parent like a pro. Lets look at the weeks best per for foformerperformers and oracle is ghrit up there with tapestry. Get zero percent financing on the 2020 is 300. Experience amazing at your lexus dealer. Experience amazing im a verizon engineer. And im part of the team building. A powerful 5g experience for america. Its 5g ultra wideband, and its already available in parts of select cities. Like los angeles. And in new york city. And its rolling out in cities around the country. With massive capacity. Its like an eightlane highway compared to a twolane dirt road. 25x faster than todays 4g networks. In fact, its the fastest 5g in the world. From the network more people rely on. This is 5g built right. Only on verizon. Every curve, every innovation, every feeling. A product of mastery. Lease the 2020 es 350 for 359 a month for 36 months. Experience amazing at your lexus dealer. Time for stop trading and ring central. Yes, this is of course, work at home and the whole deal, but, david, last night, and i know you like to look at this, but they raised 600 offering a convertible note due 2026, and david, if you want to know the bubble, it is that kind of offering, and i will concede and accept that is a bubblilicious offer. You had a low Conversion Rate well, it is 52 conversion premium. David, who buys that other than somebody who wants to be short ring central and have protection i mean, oh, my, can you borrow money cheaply if you have the mojo and that is a technical temperature, mojo. Mojo. Understood. What do you have on the mojo mad money tonight . We are going deep into the twosided argument of the short seller who admits he is short, and hindenberg, and it did not work out. Good point. And we will take the other side, too, and a discuss how much fun he is, and maybe we will end up with allen hurst, i dont know. Well, that is really interesting and controversial. Jim, have a great weekend. You, too, buddy. I hope your son got off well. So far, so good. Thank you. All right. Jim. Jim cramer, and good friday morning to all of you and welcome to another hour of squawk on the street. And kyle and morgan are both off this morning. And remembrance ceremonies are under way in new york, and at the pentagon and shanksville, pennsylvania, and it is the anniversary of the 9 11 attacks. The president and the first lady are at the flight 93 memorial in pennsylvania we will bring you that moment of silence as well as we have already done the other ones this morning when that begins. But lets start with the markets. We have the dow, and the s p and the nasdaq all on pace for second straight negative week, and joining us now is the chief economist and global head of economists at morgan stanley, and also, the head of Capital Economics atciti private bank, and so kristen, what do you see . Well, there is going to be a little pull back, but nothing more than that. So does that mean that there is nothing more for the investor to do than to not react to it . Ell, we have been telling the investors that in june and july, we have broken it down into the covid defensive stocks, and those that have received a tail wind from the pandemic and the work at home and stay at home, and the other covid are the industries that are the most impacted. We have been doing the hedging on the covid defensive stocks given the massie momentve surgee have seen, and not to totally take off the chips, but to lock in the gains, and then to rotate into some of the areas of covid cyclicals to see an attractive entry point looking out 12 months. So, jutan, and to kristens point, most of the pullback is not in economically cyclical move and in the bond markets to indicate a macro stress environment, but you are looking for the strong Global Recovery and the vshaped and what is confidence that it is in fact under way. Well, you know, looking at the data and the margin of the status that things are going on much faster than we have studied earlier, so we were expecting the Global Economy to come out precovid levels by the Fourth Quarter this year, and with the recent upgrade, we think it is going to be possible to achieve it in the early Fourth Quarter of the year. And for the u. S. , we thought that it would be Fourth Quarter of next year, but even now, we are looking at the Second Quarter of next year. And look, i think that the most important change that we are observing is that we are able to take the Economic Activities to a much higher level and even with the wires with us, and what is interesting is that for the u. S. Consumer in the month of august, that we had all of these employment schemes ending, and then a decent recovery in the spending. And the chief economist is expecting a month over month increase in retail sale, and this is telling us that things are on top. And so, you know, some would say that the easy part of the recovery has already happened. So as we need to see the Services Come back, the tougher road is ahead, and there is risk ahead, and so is that recovery continuation without a stimulus, and that certain, and what should the investors do given the risk events for the rest of the year well, we believe that yes, there are risks, and we have to watch out for the covid infections in the winter, but, look, as of now, what is interesting is that the covid Sensitive Services are also improving at the margin. Yes, International Travel and tourism is the one that is going to be the last to come out after the vaccine is available. But Indoor Dining for example looking at the open table data, it was down 60 on the year over year basis, and the sitdown diner situation, and that is a 35 decline just in the last six weeks. So you have seen a significant improvement in the segment while the virus is helping us to learn how to get by, and we are seeing the selfsustaining recovery now, and we are seeing that it is showing up in the jobs data for leisure activity, and we are seeing a wage growth, and so, one important number that i would like to highlight on that front on the point of some kind of selfsustaining recovery is that if we are looking at the personal income for the consumers in month of august, it will be a little bit of precovid levels, and so, that is the most important driver to the extent of which the consumers have that about the covid levels without the support of unemployment benefits, and that is what is giving the consumer in a better position now than what it was before. Kristen, do you agree with jutans optimistic view that this recovery could be selfsustaining even if we dont see any more stimulus for a while . There is one look of volatility going into the end of the year, and this is elections, and it is not the election result, but it is whether there are delayed results or a contested election so you can break it down into the short term, and the longer term. And the shorter term, we aare keeping a look at the volatility, and making sure that the portfolio is going to withstand the volatility, and looking at the u. S. Consumer, and the fact that the u. S. Consumer was strong coming into the crisis, and so when we are looking at the fact that we do see the improvements in the data, and the fact that there are opportunities to build the position within the covid cyclicals, those are the areas that we want to be positioned to add the diversification to the portfolios, and one more thing that is important is that when you are looking at the opportunities to put the capital to work, and just remember, if it has not sold off, then there is not an opportunity to bounce back and recovery, and we tend to have a very home bias when we are thinking about building the exposure, and allocating the portfolios, and so we are encouraging the clients to look at global diversification as a way to benefit from the subsequent recovery. Kristen, to tie it up, how are you looking at the longer term expected returns for the investors, because we have factors that are looking a like they are in the beginning of the recovery cycle, the valuationings may not match that. Yes, in terms of the overall positioning, what we are doing is to pulling some of the exposure out of the covid defenses, and allocating to the cyclicals, and allocating on the international basis. And for example, we are putting the capital to work in latin america, and the region that we like the best there is brazil. The reason why is that when you are looking will at the numbers and the potential for your point, they sold off 50 in terms of equities and fx and the exposure to commoditiessh and only recovered a little bit from those depths, so brazil is a region up 30 , but they have the ninth largest economy in the world. It actually has the government doing similar stimulus and Monetary Policy in terms of the rate cuts and the stimulus similar to the gdp, and that is where we see the potential of the strong returns going out 12 months. Great conversation for both of you. Thank you very much this morning. Thank you. Thank you. A foreclosure crisis may be in the future, and we heard some optimism, but clearly some ways to go for the homeowners. Yes, after improving substantially last week, the number of borrowers in covid mortgage programs dropped this week signaling that we have a long way to go to help recover from the pandemic ills. 7. 3 million borrowers are in forbearance, and that is about 7 of all mortgages according to black knight. These plans are going to allow borrowers to delay payments for three months to a year. More than three forbearance borrows are going to be coming out to start diana, sorry, sorry to interrupt. We will get back to you in a moment. We want to take the view toers a moment of silence in pennsylvania to honor the victims of the plane that crashed there on the way to d. C. To honor the families of flight 93. Please join on stage today, his wife nancy and his cousin lorraine grace who was a senior flight attendance on flight 93. Those who are closest to ed know of the personal passion for sharing the history of the American Civil War as both an author and diana, sorry about that interruption, because we have a number of moments of silence on this solemn day, and now you can fill us in on the report. Yeah, of course. We were talking about the number of borrowers in the mortgage bailout and forbearance programs, and the vast majorities are in renewals and they have extended the plans by another three months, because they are not able to make the mortgage payments. 48,000 borrowers started the first forbearance this month. That is the lowest, but it is showing that people needed help for the first time on the loans. So with the forecast for foreclosures, they are deteriorating, and the number of seriously delinquent mortgages have more than doubled from may to june, and hitting the highest level since june. And core logic is saying that serious delinquencies could double again in 2022 which could hurt home prices and equity, and the home filings are historically low, but they have jumped 11 from july to august as several moratoria continues, you can expect to see more. And as the peloton is reporting more numbers, it is not as up as it was indicated in the prior session and opening of the trading. We will ok alot the stock in depth next. Stay with us. That does the same. The rx, crafted by lexus. Lease the 2020 rx 350 for 409 a month for 36 months. Experience amazing at your lexus dealer. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. Peloton shares are higher after reporting a beat on the top and the bottom line as david mentioned before the break. Far from that indicated range, the shares were up as much as 12 pretrade. The sales jumped 172 from the same time last year. The ceo john foley spoke about the companys growth earlier on squawk box. We believe what is happening here is a secular move from working out at a different location into the home. When you have a choice of working out at home with fantastic instructors and supportive community, and a incredible gameified and best instructors, and this is still post covid, an incredible growth story. And joining us is james blair and jonathan, let me start with you. What are you making of the early moves and the stock was up 12 , and this is not one of the quarter that it is not good enough, because some of the results of the other stay at home name, and peloton blew the highest expectations out of the water here, and is this more indications that the valuation of the stay at home stocks are too frothy well, it is a good question, deird deirdre, and thank you for having me. It is a stock that has tripled year to date, and really as you are highlighting and the blowout quarter, and the combination of the results, and power based and reporting twice with the probability, and what is expected by the street. Plus, at the very bullish outwork of more than doubling the Revenue Growth expect fod or the year ahead, and planning to expand the profitability further, and the standing engagement, and signs they can be addressable market, and we will give you more on that, and also what supports the investment thesis here. Bernie, you have heard from ceo john foley, and he says that the software and the hardware is enabling them to succeed in the post covid world, and do you agree with that and does that coexist with the brick and mortar gyms . Yes, and we wholeheartedly agree that the way that people are working out is changing, and it is a high quality User Experience that is cheaper, and also more convenient, and also as the gyms reopen, peloton is going to be able to drive engagement and users. And so, in addition to what we are looking at, too, because of the focus on the affordability, peloton and other home fitness is going to be used as a complement to the gym rather than a turnkey solution like it is right now. Bernie, what do you they market valuation is in terms of the valuation down there. And i know that you have a 3030 market for the peloton, and is that what you are looking at right now . Well, the big thing that the market is looking at is the makeshift revenue going on, and so we are going from the private to mostly subscription over time. The subscription is recurring and higher margin, to inflate the margin, and so we are looking at the company in some businesses that is the revenue on one side, and 25 times on the subscription side and looking at the sideco coms. We will get an update on to ipo, and so the 11 million estimate is going to be increasingly conservative this time next week. And jonathan, how much of the market is left to peloton, and the question is how much of a head start that the company has, and whether or not it has a defensible franchise here in the whole category it is a great point, mike, and looking at the concept of at home fitness, it is not new. Peloton is bringing the whole platform together, and that is why you will see the perform of word of mouth, and it is very high, and so they are doing something right, and the userinstalled base, and inflection growth of top and bottom line, and so today, they are clearly the leader it is hard to catch up, and we will see several winners in the vertical market overtime, and we will be confident that peloton is that leader. Bernie, dig into competition, because john foley this morning, he seemed to throw some shade on another connected fitness app or the hardware mirror which is of course acquired by lululemon, and he said tbd if there is a market for them, so who are the winners in the space, and is it big tech such as apple to jump into the ring at some point . Well, the comments were interesting from john this morning to say it is smart by them to take cash and get out of the market. Other competitors are apple, and that is a big one. We have been hearing of them since we launched earlier in the year. We are expecting them to get the Apple Fitness app with the next ios update in october, and what that is going to include, and maybe some outdoor running or the yogaer to boot camp or Something Like that, but the key is that it is not going to be free. Articles are mentioning that it is a part of the paid bundle service, and not going to but a brief competition. And also, they have given up thousands, and thousands of hours of the library that gives a advantage that is real, and they have created a fly wheel which is driving the word of mouth which is positive. Right. And the great instructors, too, and it is a fly wheel. Jonathan, one of the metrics they found interesting is that users are working out 25 times a month on average, and what is that telling you about the addressable market. I cannot imagine that Planet Fitness subscribers are working out that much . Is there a place for this to coexist after the covid crisis well, i can say that they are looking forward to have User Engagement to work out more than 25 or closing in on 25 a month which is double than what it was last year, and two things. Each cohort who buys a peloton is working out more, and that is speaking to the vessel and more popular. And also, peloton said that 2 1 2 people are using subscription, so the more people in the household that are engaged, the better the proposition is, and the stickier it is, and from the financial perspective, and the more valuable that subscriber becomes. Positive trend, and i know that john foley likes that as the leading indicator for the business and it is very difficult to argue with that and the trend has been favorable. Jonathan, i did not mean to say that they are taking customers away from Planet Fitness, but my point is that at the elevated valuations, does peloton need to go more mass market, and instead of pricing the treadmill and the bike lower . Well, there is a good position for it, and you have seen it in the market this year, and the model is with the scale to lower the price and bring in the accessibility. If you are looking at the gym number market, the number of members who paid 25 to 49 a month is roughly the same size as the number of members who pay more than 50 a month for the gym membership, and bringing that down, they are open up a large market, and still aiming higher than the value price of Planet Fitness and that is clearly the direction they are moving. Jonathan and bernie, thank you for joining us, and peloton shares are up about 4. 5 . Yes, the etf perspective is the skyy, and it is up more than 25 year to date, and clearly up more than half a percent, and 10 below the recent highs, and down with the tech group. This is getting a boost from one of the largest moldings, and oracle, and focusing on the cloudbased products and services as people are working remotely. Oracle is up double digits and down Single Digits for the year. We will take a quick break. Makes it beautiful. Stateoftheart Technology Makes it brilliant. The visionary lexus nx. Lease the 2020 nx 300 for 339 a month for 36 months. Experience amazing at your lexus dealer. Exbefore money, people tools, cattle, grain, even shells represented value. Then currency came along. They made it out of copper, gold, silver, wampum. Soon people decided to put all that value into a piece of paper, then proceeded to wave goodbye to value, printing unlimited amounts of money as they passed the buck to the future. Thats why its time for Digital Currency and your investment in the grayscale funds. Go digital. Go grayscale. Its got all my favorite shows turn oright there. Boom, i wish my Trading Platform worked like that. Well have you tried thinkorswim . This is totally customizable, so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. Welcome back, everybody. Im sue herera, and here is the cnbc newshour. At least 70 people are missing in the complex fire, and the winds have eased to help slow the blaze and helping the firefighters to make some progress against it. And now, more than half ha Million People have been ordered to evacuate which is more than 10 of the states entire population. Portugal is joining other nations to tighten Health Restrictions to battle covid outbreaks. Switzerland and austria are announcing other restrictions. And this could have been a tragedy for a family if it werent for an 18yearold who came to their rescue. This 18yearold fought off smoke and flames to help a mother and her children. A hero indeed. More squawk on the street after a quick break. Overdid it maybe . You overdid what . Well planned, well invested, well protected. Voya. Be confident to and through retirement. Everything we have, weve earned. The unmistakable lexus is. Get zero percent financing on the 2020 is 300. Experience amazing at your lexus dealer. The countrys largest Supermarket Chain kroger is out with earnings. Sara eisen is here to break them down. Good morning, mike. And eating at home is very much a thing across the country, and that is message from kroger, the largest Supermarket Chain in the u. S. Rodmy mcmullen the ceo is just now speaking on the Conference Call to investors and talking about the change of the habits of the consumer. He says that he believes more meals will be continued to eaten at home for the foreseeable future, and this is a direct quote. He says that they are seeing a lot of firsttime customers ordering online and a majority are telling kroger they will continue to do so even as the economy is opening up. As far as in the store, they are seeing fewer people inside of the store, but bigger basket sizes, and in other words, people are stocking up more. So that is still propelling kroger, and explains why sales came in better than analysts explained. And this is sales excluding fuel for Stores Opened for at least 15 months were up 14. 6 , and that is better than expected and digital is the driver. That is on par for the numbers that we have been seeing from the competitors like target or albersons which posted larger digital growth. But for kroger, the highlight is the outlook. They expect the second half of the year to continue to look strong, and stronger than wall street is expecting with the Comp Store Sales expecting to increase 13 . As far as covid costs, that is another discussion on the call, to cost them 15 million in the quarter, and lot of talk about the associate appreciation and how they had to spend on the cleaning and the safety to keep the associates in the store, and the Digital Investments which is another major talking point. They say they can reach 98 of customers online. There is a scrutiny on the strategy, and compared to amazon and walmart who are hefley spending and the digital, but the message today is that they, too, have been and kroger has more than 2,000 locations for the pickup and delivery within the store, and thati, they hav been work on this for years. And so, with the food pricing and the inflation, and we have the cpi numbers today, and how is that bearing on krogers results . Well, it is helpful that the food prices are elevated. So they were not as elevated for food at home this august as they have been in prior months ark and part of it is the moderation in the prices and the things like meat and poultry, and in covid19 and the pandemic, a huge squeeze of supply on the meat because of the workers getting the covid and the plants having to shutdown. That is easing through the system, and they are opening, and the meat is getting back on track. So restaurant prices away from food is starting to tick up as the demand is coming back, but they are moderating and it is going to speak to the fact that it is not a persistent trend to have higher food price, and it is helping krogers food margins, and the other groceries as the wholesale inflation prices for food is lower than the consumer level of food. What is most notable about the Inflation Numbers is that it is speaking to where the demand is. Used cars is up with more than 5 rise there, and the overall number is higher than expected and the little bit higher is that we will watch with the capacity constraints has moderated for the last month. The biggest question is what happens when the stimulus effect has worn off, because it is working through the system. Sarah, are the changes sustainable or as the peloton ceo is arguing they are with their business model, but in the case of kroger, is it in terms the of here to stay as far as people ordering from home for delivery yes, they are here to stay, because it is the firsttime customers and what we have heard an neck tot dote anecdotally that they are hearing from the customers, and they do plan to continue to do so. As far as eating at home, there are capacity restraints with restaurants, and still issues with the pandemic very much with us, and that is keeping the people cooking at home, and buying more groceries, and eating more home and changing the habits, like breakfast, which is a huge one that i have heard from all of the companies consumed at home like coffee, oatmeals, and cereals, and a lot of the trends will stay with us, and the pandemic is with us, the consumers may change their habits, but the more permanent that the changes will become. So the message of kroger like peloton, this is a real permanent change that they are repairing for, and that gave them the confidence to raise the outlook. We will talk to it laterb and get with an interview with the ceo . Yes, exclusively rodney mullen, ceo, 3 00 p. M. Closing bell. See you then. Yes, you will. And now, since going public in july, the largest producer of pasteurized eggs in the United States is seeing Revenue Growth of 85 , and this is the consumers continuing to cook at home, and joining us is the vital farms ceo russell vie yz, and thank you for joining us. You put out a guy dance for the macro factors and the stay at home trends, and how confident are you that the stay at home trends will continue into the next year . Well, thank you for having me. I appreciate the opportunity. We continue to see the tail winds of the products that we offer through quarter two that ended in june. I dont have a crystal ball of what is going to happen next year, but with recertainly enjoying the higher demand and the increased trial and we will do our best to retain the new customers and the consumers who are joining us. You did indicate on the call that the potential headwind may be higher on the employment or the headwind, and so you are not that comfortable with the guidance with the uncertainty, and how concerned are you about the weakening economics and the inability perhaps of the people to step up to pay here for this produc product . The uncertainty in the economy, and the kshaped recovery, and the Different Levels of the economy is distressing for all of us. That said, i think that people at many income levels and many parts tof country are increasingly looking for food from brands they trust and from the robust supply chains that live the values and focus on things like Animal Welfare and impact on the environment. And so we are confident that the growth that we have seen is the reflection of the people choosing the brands that we have, and will continue to choose our product regardless of the environment. This is sarah, russell, and kroger is confident in terms of the groceries are here to stay, and the journal with the piece of the whole foods with john mckee, and many will not go back to shopping in person, and so i am wondering if you have a Digital Strategy or considering Something Like direct to consumers such as meal kits or franchises or what are you considering there . Well, there is a number to unpack there. And many of the retail customers have meaningful online presence, and what they are experiencing as kroger reported for the increased demand of the Online Shopping is flowing through from the consumers of the products, and reversing that trend as well, and we are focused on meeting that consumer where they are. There is a lot to do with the confidence to attract the brand and expand the market share. Where we are going to increase online, we will continue to allocate resources, and we are aware to make sure that the consumer is ready to hear from us. In terms of the sorry no, go ahead. That is my question. Go ahead. In terms of the direct to consumer, i hesitate to say that we are actively working on the direct to consumer model. Frankly, the retail partnerships seem to be working well, and we are enjoying great transparent relationships with the retailers and they have been ter refk to wo terrific to work with, and at this point, it is effective and maybe something that we look at. But as you said, you want to meet the consumers where they are, and we have seen the resurgence in the things like the meal kits, so is it something that you would look at in the future and are you thinking of a Digital Strategy already . Well, we are and have been for years the exclusive egg of blue apron, and so we have a presence in meal kits, and we love that partnership, a tand are great to work with, and as they are seeing the upstick of t the uptick of demand, we are enjoying that growth as well. Russell, it is something that esg investors would enjoy as well given your focus of common investors, and do you have a focus of the folks that are a shareholder base, and then stick with you as shareholders well, you will see that at the ipo, and maybe you are updated quarterly, when you are reporting the holding. I cannot say that i have a current pulse of that, but many investors have that as a focus and really hungry, no pun intended for the opportunity to invest in companies that are really delivering on those kinds of the commitments to the stakeholders. Russell, thank you for joining us, and congrats on that First Quarter as Public Holding company. Thank you, and take care. You, too, and the shares of nicola is down with the shares and they are refuting the allegations from an extensive report of a short seller who is going by the name of hindenberg, and it is interesting reading to say the least. Wl rhtack. Stay with us. Every curve, every innovation, every feeling. A product of mastery. Lease the 2020 es 350 for 359 a month for 36 months. Experience amazing at your lexus dealer. With the icon that does the same. The rx, crafted by lexus. Lease the 2020 rx 350 for 409 a month for 36 months. Experience amazing at your lexus dealer. A i mid the recent sell off of the travel form, and we will have the latest on trading destinations. More squawk on the street coming up. 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. And Michael Corbat is saying that he is going to be succeeded and leslie picker is looking at the implications around it. This is a move that is a long time coming, and wall street was looking at only men at the top, and this exchange in april in washington. I know it is difficult to go on the record sometimes, but the record has to be made. All white men and none of you, not one appears to believe that your successor will be a female or a person of color. He asked the ceos to raise their hands if they plan to appoint a female or minority successor and not one hand was raised but citigroup can raise their ceremonial hand by naming jane fraser as a ceo of a Major Global Bank and is it a coincidence that citi is the first . Well, the board may be a clue, because it is comprised of 47 of women, and that is well above of the rest of the firms with their boards made up of women, but do diverse boards begat csuites well, they do. And they say that the inverse is true that women in leadership positions have double the number of board seats held by women. Globally the correlation is not as clear. Several reports have found that regions for quotas of insuring women on boards mainly in scandinavia had no more representation in the classes than areas without quotas than say north america, but if Board Diversity is a ind kay icator o csuite diversity, well it is still only 5 in north america. Well, leslie, it is going to be interesting to see when we have a woman leading the company. Thank you for that. And now, stocks under pressure despite a larger than loss beat, and customers in the first half of 2020, and the shares are down nearly 6 , but remember, it is a on a tear this year up more than 90 . Stay with us, and we are back in a moment introducing stocks by the slice from fidelity. Now you can trade stocks and etfs for any amount you choose instead of buying by the share. All with no commissions. 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Tome says her top three priorities are customer and staff safety, adjusting the network to deal with the increased volume she added more on Capital Allocation she said we inattetend to have a laser focus on reversing the downward trend the first use of capital will be investments and business as well as operating efficiencies in our company. The second use of capital will be to pay our dividend the third will be to increase the balance sheet. In august we saw allocations, she spent millions on freezer farms to prepare for the possible distribution of the vaccine. Frank, thank you, quite a consequence sco consequential time taking over a Delivery Company we got no free pass. Everything we have, weve earned. The unmistakable lexus is. Get zero percent financing on the 2020 is 300. Experience amazing at your lexus dealer. You should be mad they gave this guy a promotion. Experience amazing you should be mad at forced camaraderie. And you should be mad at tech that makes things worse. 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We worked over the last five months in the covid closure period to develop a comprehensive program to take our high standards that are widely recognized to creating another level and creating a safe environment for our employees. About 95 of them have come back across the country it shows the commitment that our employees have it excites and inspires our members every day. 90 said theyre very satisfied with their standards recently positive feed back across the board new york can be a tough market is with tougher standards from our community, and theyre positive that most of which meet, and exceed in new york state. The big question is just exactly how many people were working at clubs will return we have been talking about the inhome sentence movement. Theyre ensuring that it will be trend. We were thinking about this precovid, and we see the physical and the digital come together we have had Great Success over the years. Not playing for the moment, but playing for the future and we want today provide a digital compliment to our physical offering. What we have seen so far is since opening new york our membership sales are 150 of where they were in a couple of basis for the first ten days of september. There is some people that also want a digital climate overtime we think that is the future of what the Consumers Want and were going to be very well positioned to do that we do that with our equinox programming which is a streaming platform, pure yoga, and the feed back there will be very strong as well as the reception to our athome sales as well i dont know where theyre going, but i think they have to be squeezed given the coapacity restraints is st your strategy to ride this out throughout a nonprofitable period, or can you still make money and hopefully everyone gets back to normal. No secret here, this has been a long haul, six months of zero revenue. Were at one of the hard eest h categories so when you have zero revenue and when you have 20,000 employees youre taking care of, the mask speaks for etc. With that said, the revenue is coming pack and we have done a great job of controlling our expensioe expens expenses we will be winners on the other side, so handling government regulation and it varies by local ordinance, and we can manage the relationship, and it will yield to a profitable process, but this is a long term play and were very bullish on where this is going to go. You mentioned peloton, they also demonstrate the demand for fitness accelerates. Unfortunately there will be some that wont survive physically. But ultimately the physical and digital coming together on the other side will be very profitable congratulations, and good luck with the reopening efforts. Thank you, it is good morning, it is 8 00 a. M. At oracle, 11 00 a. M. On wall street and squawk alley is live