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Good wednesday morning im Caro Quintanilla with jon fortt and Julia Boorstin with us dow down 800, worst drop since about june 11th, on covid worries in the europe and United States, lockdown worries in france and germany oil is down about 6 vix getting closer to 40 were monitoring the ceos of twitter, facebook as they testify on section 230 well begin with dominic chu on more on what is driving the downswing. A lot of narrative around the rising covid cases, not just in the United States but europe as well markets may be taking their cues from whats happening in europe. Theyre talking about wider spread lockdowns in germany and france and whats if it happens here in the United States. Thats playing out in the markets right now. For the s p 500 specifically, below the 3300 mark, that is below both the 50day average price and the 100day average price for those indices, so many traders looking for technical or chart pattern levels as they look at trades today the s p 500, this little rollover puts it at some levels where we are almost at the point where we are below some of those kind of september, october lows that we saw over the course of the past couple of months. Thats something to Pay Attention to as well checking a little bit more about the factors that are affecting the market from an investment standpoint, the etfs that track momentum, down about two and threequarters percent and similar tore the low volatility type stocks, down about 2. 5 and the high dividend players, taking even deeper cuts there, down by about 3 right now if you take a look at the overall picture for other parts of the market, we are noticing some certain signs developing within key areas here with Market Movers tied to earnings these are all covid affected in some way mastercard, down about 6. 5 . They cited lower spending patterns and lower travel. Meanwhile, youve got garmin, much more demand for gps and outdoor devices as people socially distance. Masco is behind behr paint and faucets, and the trend will continue into 2021 as well tupper wear, up 31 . A huge revenue beat because more people are cooking at home, storing their foods and leftovers in tupper ware containers carl, very interesting story lines developing, much of which centered around the covid19 outbreaks. Back over to you things that our viewers obviously can relate to, dom thank you for that joining us to talk about the selloff today, guys, good morning, good to see both of you. Thanks. Brian, if i know you, your take is that this is maybe an unreasonable reaction to what were seeing out of europe well, considering the threeheaded negative frenzy that seems to be controlling momentum on the market, no, its not surprising and i know a lot of people have been calling for a correction. Were investors and, yeah, you do know me if you take a look at europe as an asset, its been a declining asset for ten years. And you look at how europe from a fundamental respect relies on emerging markets, i think those two areas should continue to be avoided. If you believe that stocks are higher a year from now, if you believe were going to start to see more fundamental consistency over the next year, you should be a buyer on a nearterm basis clearly the threeheaded negative frenzy of first off, the election, second off, the lack of stimulus and now, third, the increase in covid cases, i think society and investors in general have to cut themselves some slack. I mean, where we are now relative to february, march in terms of the measures that weve all had to learn, much different. Yet the market and investors alike that we talk to all day long want to react like they did in february and march and we think that is a very, very big mistake. Jack, you got any problem with that . And i guess the broader question to brians point is whether we have learned anything, given some of the hospital trends, i will say trends in western and northern parts of the country. Yeah, i mean, obviously the trend, at least on the covid side, is not our friend. Were investors, too, and we did take 7. 5 out of our Growth Strategy at the end of september, not because of covid, not because of the election, really just because we need a 90 success rate in making money over the next seven years and based on where valuations were, we couldnt get to that number without taking some of our equity risk down and moving into what we call noncorrelated strategies, between cash or equity hedged strategies so from that perspective, the markets somewhat expensive still a little early to tiptoe back into some of these out of the way markets like small cap emerging markets should hold up pretty well. Its banking on a biden victory. If we do get more stimulus in the hands of consumers, the emerging market space should do pretty well. China, of course, actually holding up quite well today. Brian, do you agree with jack on emerging markets and what are the other areas that youre watching emerging markets have benefitted from a weaker currency and i dont buy assets because of currency but because of fundamentals. Weve had nearterm macro measures coming out, but, again, i focus more on earnings and sales with respect to the denominator of an valuation and were not quite seeing that. I think jack is spot on with respect to trying to be too early and smart into buying small cap or value we continue to think of the stock market as a market of stocks look at the sector you cover, communication services, the quintessential bar bell sector where you have defense on one side and growth on the other you would be balanced there and thats also a sector that offers Dividend Income that we think is going to be exceedingly important in a zero Interest Rate environment for several years to come. Jack, microsoft is down nearly 4 after earnings, apple is down nearly 4 ahead of earnings, and i guess in a way thats not a surprise, given what weve been talking about, the lack of stimulus, just uncertainty in general before election i understand traders watch every single move, but for investors out there, has anything fundamentally happened, given how far up weve been over the past few months, that should give them pause . Well, yeah. I think investors were buying into microsoft and other big tech names because of the defensive nature, high Balance Sheet quality, insulated businesses and now one of those legs has kind of, you know, chipped away a little bit as they fell short in revenues. The fact is that microsoft sells two businesses and were seeing boeing and others laying off workers and pairing back somewhat, thats not great news for the b 2 b sector i do think quality is important. Microsoft didnt fall short in revenues. Their guide on revenues was a little light which might be conservative because of xbox, but given how poorly sap did and given the damage we saw in enterprise and government and intel. Microsoft actually held up well enough that one could argue that the hedge that investors were using it for actually held up. Well, i think they are diversified and they do have a decent footprint in the Consumer Sector that Companies Like oracle and sap really dont enjoy, but i think what we need to continue to watch is, you know, how high up will this deterioration get. Obviously, you know, entry level workers, we see that pretty easily, but now will some of this pare back go upstream as we race against time with this vaccine and treatments and, jack, as you look at some of the sectors that have really suffered as a result of covid and were seeing those stocks again down today in terms of movie theatre stocks, anything involving gathering large groups of people, theme parks, concerts, et cetera, what is your timeframe for seeing an opportunity in some of these selloffs or thinking that its going to be a lot longer than anyone anticipates before those industries can come back yeah, so good question, julia. I view those types of names not like equities, but more like bonds. Do they have the wherewithal to bunt through cash flow wise, raising capital or generating enough cash flow to sustain themselves to the other side because once we have a vaccine and we have adequate treatments, im not sure happy days are here again at disney world. I hope so, as a florida resident, it would be great. But i think americans will still be reticent to pack into theme parks and theatres. One last thing, does your appetite for value extend into energy or are even you thinking about longerterm trends, about consumption weakening that go well beyond pandemicrelated dynamics its a great question, carl and we would throw energy into the realm of other areas, quite frankly, that on a fundamental basis were suffering prior to covid, prior to the lockdown, and then even coming out of covid. Remember, energy in the s p hit below 3 for the First Time Ever the contrary in me wants to jump all over that, but from a fundamental perspective, given consumption, given supply, we make Canadian Energy a lot better because of how those companies are managed in terms of cash flow but u. S. Energy companies are more dependent on a higher oil price. And given where things are going with respect to that area, we just think that is not a value area we can get cyclical growth out of traditional value areas like morgan stanley, goldman sachs, bank of america, j. P. Morgan, a lot better than we can i think thats way, way, way too early. Wow, fascinating, guys. Its quite a day we really appreciate you helping us kick off the 11 00. Jack, brian, thanks. Thank you. We mentioned a a moment ago and lets take a look at microsoft a day after its earnings report. The stock is down nearly 4 , but thats not because the news was bad. Despite the enterprise and Government Spending that we saw reflected in reports, microsoftmicrosoft microsofts azure growth was solid and office 365 and gaming also strong. Its worth noting that pc strength also seems to translate into strength in microsofts Consumer Office offering the raw subscriber numbers there have been the best in five years over the past two quarters now, guidance was muted, revenue was light of consensus that can be conservatism because of the Enterprise Spending issue or it could be uncertainty over how the big xbox launch is going to go. Either way, investors digesting that this morning. Microsoft down slightly more, about a point more percentagewise than the broader market, about the same that apple is down ahead of its earnings, julia, tomorrow. Thats right, john. Its going to be a busy couple days now, with the Market Selling off, is there more that the Federal Reserve can be doing or is its limited ability to respond part of the reason for the selloff joining us now is steve liesman. What do you got . Julia, i think the answer to both questions is kind of yes. Yes, there is more the fed can do, but yes, its limited ability to do so is something that no longer really underpins the market the fed can do quantitative easing, its been basically buying treasuries out there and other fixed income instruments as a way to really smooth market functioning, not really to boost the economy. The fed has sort of in its tool kit, in its back pocket the ability to come in and increase quantitative easing, and the effect that would have, i think theres some questions about, in part because Interest Rates are already low. I guess they could bring them down some more the other sort of main thing in the feds tool kit are all the money thats been allocated from the c. A. R. E. S. Act over to the Federal Reserve and thats only getting out into the economy in a limited way. But thats going to probably take an act of congress, julia carl, theres been a reason the fed has been strongly advocating for fiscal stimulus. Two reasons. One, the market has not correctly priced in the risk of additional coronavirus spreading around the country, and the second reason is because it feels its limited in its ability to respond to this particular crisis. Steve, fascinating profile of jay powell in new York Magazine this week. Part of the argument theyve made is that hes been so effective because hes established such great relationships on the hill. And i guess the question that follows is why that didnt or hasnt yet paid off in Convincing Congress to do something on fiscal. You know, all powells sources and men couldnt make congress adopt additional stimulus i couldnt come up with a rhyme on the fly here. Theres only so many powell can do i think he convinced a lot of folks getting past the political roadblocks there, one important aspect of it, i think powell did agree, and a lot of the members of this fed, that pelosi and the democrats were very strong on, which was the need for state and municipal and local aid that the republicans did not want to have the fed knows well now in the last downturn, carl, the cutbacks at the local and state level made the recession go on longer and made the job market worse than it otherwise could have been without that kind of aid. So thats one thing. I also think that the fed is limited, certainly publicly, in its ability to pressure or Lobby Congress when it comes to these issues steve, thanks as we see an interday look here at the dow as we go to break by the way, great statistic today, s p down about 2. 8 if it stays there between now and noon, just the third day this year that it was down 2. 5 plus at noon the only other times back in rbarc wee ck in a minute rests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save up to 400 a year on your wireless bill. With the carrier rated 1 in customer satisfaction. Call, click, or visit your local xfinity store today. Twitter all testifying in front of the senate this morning with all of the stocks trading down significantly. Facebook, twitter shares now down nearly 4 , alphabet down 4. 5 shares of snap, which doesnt face the scrutiny, that company is in the green. Whats going on on capitol hill right now . Reporter well, julia, the executives are all defending the political knew ralt neutrality and theyre also warning lawmakers about the potential consequences ofchanging sectio 230. Let me be clear, we approach our work without political bias. To do otherwise would be contrary to both our business interests and our mission, which come pels us to make information accessible to every type of person, no matter where they live or what they believe. Reporter now, republicans did try to bring up specific examples that they said directly convicted those assertions they said president trumps tweets have been flagged, but posts from other adversarial foreign governments have not, including the Chinese Communist party and the ayatollah of iran. We believe its important for everyone to hear from Global Leaders and we have policies around World Leaders we want to make sure that we are respecting their right to speak and to publish what they need, but if theres a violation of our terms of service, we want to label it reporter now, just a few minutes ago democrats began questioning google ceo pichai, democratic senator Amy Klobuchar saying he has been defiant to the law and the response to the dojs lawsuit has been unsat factory. Its interesting to me to listen to the different approaches and dorsey very much on the defense about this double standard, trying to explain that they dont have a rule against misinformation and zuckerberg saying that they want to work together, he wants to work with the government in creating new laws have you gotten any sense of some changes that might come out of this . It seems like a lot of the questions have been about whether or not these decisions around censorship have been partisan has there been anything solutionoriented, in terms of the questions or the answers reporter well, we are very close to an election, julia. Right now everything is going to be highly politically charged. However, one of the sort of ideas that zuckerberg has been talking about is that they need help from the government in defining what types of harmful content might be so what exactly counts as misinformation, what exactly counts as hate speech. And its going to be up to the regulators to define that. There is a bipartisan bill out there that would create a sort of standards body that would help define some of those terms that includes both Industry Leaders as well as the government, as well as regulatory agencies. So there are there is some discussion on capitol hill about bipartisan ways to proceed but in the moment that were in now, none of those discussions are going very far were just seeing the political theatre thats being laid out today. Lets listen in on whats going on in that testimony right now. President trump and the republicans have a plan which involves disinformation and misinformation the russians have a plan i want to know whether you have a plan, facebook, twitter, google, a plan if the president uses your platforms to say on the day of the election that there is rigging or fraud without any basis in evidence, or attempts to say that the election is over and the counting of votes must stop, either on november 4th or some day subsequent and i would like, as to this question about whether you have a plan, a yes or no. Senator, i can start. We do. We have policies related to all of the areas that you just mentioned. Candidates or campaigns trying to delegitimize methods of voting or the election, candidates trying to prematurely declare victory, and candidates trying to spread Voter Suppression material that is misleading about how, when or where to vote. So weve taken a number of steps on that front. Perhaps we can take mr. Pichai next and then mr. Dorsey senator, yes, we definitely are robustly weve been planning for awhile and we rely on new sources for moments like that and weve closely partnered with the Associated Press to make sure we can provide users the most Accurate Information possible yes, we also have a plan. So our plan and our enforcement around these issues is pointing to more information than specifically state election officials, and we want to give the people using the service as much information as possible thank you, senator blumenthal senator cruz chairman, i want to thank you, mr. Chairman, for holding this hearing the three witnesses we have before this committee today collectively pose, i believe, the single greatest threat to free speech in america and the greatest threat we have to free and Fair Elections we know that facebook is, at the minimum, at least trying to make some efforts in the direction of defending free speech. I appreciate their doing so. Google, i agree with the concerns that senator klobuchar raised i think google has more power than any company on the face of the planet and the antitrust concerns are real, the impact of google is profound, and i expect we will have continued and ongoing discussions about googles abuse of that power and its willingness to manipulate search outcomes to influence and change Election Results but today i want to focus my questioning on mr. Dorsey and on twitter, because of the three players before us, i think twitters conduct has, by far, been the most egregious. Mr. Dorsey, does twitter have the ability to influence elections . No. You dont believe twitter has any ability to influence elections . No, we are one part of a spectrum of Communication Channels that people have. So youre testifying to this committee right now that twitter, when it silences people and censors people, that has no impact on election people have choice of other Communication Channels. Not if they dont hear information. If you dont think you have the power to influence elections, why do you block anything . Well, we have policies that are focused on making sure that more voices on the platform are possible we see a lot of abuse and harassment, which ends up silencing people and having them leave from the platform. Mr. Dorsey, i find your opening answers absurd on their face lets talk about the last two weeks in particular. As you know, i have long been concerned about twitters pattern of censoring and silencing individual americans with whom twitter disagrees. But two weeks ago twitter and to a lesser extent facebook, crossed on threshold that is fundamental in our country two weeks ago twitter made the unilateral decision to censor the New York Post in a series of two blockbuster articles, both alleging evidence of corruption against joe biden the first concerning ukraine, the second concerning communist china. And twitter made the decision, number one, to prevent users, any user, from sharing those stories, and number two, you went even further and blocked the New York Post from sharing on twitter its own reporting why did twitter make the decision to censor the New York Post . We had a hack materials policy. When was that policy adopted . In 2018, i believe. In 2018 go ahead what was the policy . So the policy is around limiting the spread of materials that are hacked. We didnt want twitter to be a distributor for hacked materials. We found that the New York Post, because it showed the direct materials, screen shots of the direct materials, it was unclear how those were obtained, that it fell under this policy so in your view if its unclear the source of a document, and in this instance the New York Post documented what it said the source was, which it said it was a laptop owned by huptnter biden that ha been turned into a repair store. So they werent hiding what they claimed to be the source is it your position at twitter when you cant tell the source, blocks press stories no, not at all. Our team made a fast decision. The enforcement action, however, of blocking urls, both in tweets and in dm, direct messages, we believe was incorrect and we changed it. Today, right now the New York Post is still blocked from tweeting two weeks later yes, they have to log into their account, which they can do at this minute, delete the original tweet, which fell under our original enforcement actions, and they can tweet the exact same material, the exact same article and it would go through. So you have the power to force a media outlet and lets be clear, the New York Post isnt just some random guy tweeting the New York Post has the fourth highest circulation of any newspaper in america, its 200 years ol, the New York Post was founded by alexander hamilton, and your position is that you can sit in Silicon Valley and demand of the media that you can tell them what stories they can publish and you can tell the American People what reporting they can hear, is that right no, this was you know, every person, every account, every organization that signs up to twitter agrees to terms of service. Terms of service is the Media Outlets must obey your dictates if they wish to be able to communicate with readers, is that right no, not at all. We recognized an error in this policy and specifically the enforcement. Youre still blocking their post youre still blocking their post, right now today youre blocking their post. Were not blocking the post anyone can tweet. Can the New York Post post on their twitter account if they go into their account no is your answer to that unless they agree with your dictates let me ask you something, you claimed it was because of hacked materials policy i find that facially highly dubious and clearly employed in a deeply partial way did twitter block the distribution of the New York Times story a few weeks ago that purported to be based on copies of president trumps tax returns . We didnt find that a violation of our terms of service and this policy in particular, because it was reporting about the material it wasnt distributing the material. Okay, well, thats actually not true they posted what they purported to be original source materials and federal law, federal statute makes it a crime, a federal felony to distribute someones tax returns against their knowledge. So that material was based on something that was distributed in violation of federal law, and yet twitter gleefully allowed people to circulate that, but when the article was critical of joe biden, twitter engaged in rampant censorship and silencing. , again, we recognized errors on that policy and we changed it within 24 hours. Youre still blocking the New York Post. You havent changed it we have changed it. They can log into their account, delete the original tweet. You forced a politico reporter to take down his post about the New York Post as well, is that correct . Within that 24hour period, yes. But as the policy has changed, anyone can tweet so you take the view you can censor the New York Post, politico, the New York Times or any other media outlet. Mr. Dorsey, who the hell elected you and put you in charge of what the media are allowed to report and what the American People are allowed to hear and why do you persist in behaving as a democratic super pac, silencing news to the contrary of your political beliefs . Lets give mr. Dorsey a few seconds to answer that and then well have to conclude this segment. Were not doing that and this is why i opened this hearing with calls for more transparency we realize we need to earn trust more we realize that more accountability is needed to show our intentions and show the outcome. Thank you, senator. So i hear the concerns and acknowledge them, but we want to fix it with more transparency. Thank you, senator cruz the Ranking Member has deferred to senator schotts who joins us remotely. Thank you, mr. Chairman this is an unusual hearing at an unusual time i have never seen a hearing so close to an election on any topic, let alone we were just watching senator ted cruz questioning jack dorsey of twitter, focusing a lot toward the end there, carl, on that New York Post story that we talked quite a bit about as well and twitters decision initially to block distribution of it because they said the original materials were being distributed in tweets and it appeared that those materials might be hacked. They did make some alterations to that policy within 24 hours, but senator cruz, quite a few broadsides toward jack dorsey, accusing him of being a dictator who is determining what the American People and people around the globe can read. Though i would point out, twitter does not have dominant market share even in social media, much less in Media Distribution overall so in a way its a strange flattery to suggest that twitter can influence what anybody reads. Yep, yep, i think the phrase was, mr. Dorsey, who the hell elected you. We knew that his fire would be reserved for twitter, julia, and not facebook, which obviously has much different trends in terms of what gets highest engagement its interesting ted cruz four years ago was decrying what he called new york values, today praising the New York Post as something founded by alexander hamilton. Its interesting, because cruz actually said that of those three companies, he thinks facebook is the one that is at least making an effort around free speech. But he did warn, ted cruz warned that he was going to be going after twitter in a tweet he tweeted about the fact that this was going to be a showdown between him and jack dorsey and it did not disappoint in terms of his specific attacks on dorsey for being partisan in the types of content it pulled down. Whats been interesting interest this is despite all of the other issues going on, i think twitter has been more in the cross hairs and i think it has really come down to that New York Post article about hunter biden and the question about which types of content twitter decides to flag and the content they choose not to flag. Absolutely. Well see to what degree the other two executives sort of take in that kind of fire that jack dorsey just did as well meantime, as the market goes, the selloff is kind of in place for now. S p down about 99 points, germ germ german dax is seeing its worst since march. Seema mody has more. Reporter todays weakness being led by a notable decline in europe. European stocks trading at their lowest level since april were seeing weakness across germany, france and spain as we wait for the detailed lockdown proposals to curve the second wave of the pandemic merkel is said to be considering a partial lockdown, closing bars, studios, restaurants, but keeping schools open and allowing citizens to go out with members of their own household and one other. Macron is considering a onemonth lockdown, further travel restrictions and earlier curfews. Thats according to cnbc and reuters. From a markets perspective, germany has fallen the most this week by more than 8 thats the worst week since march that we saw back just a couple of months ago despite decent numbers from Deutsche Bank and hsbc, the banks trading lower by as much as 3 to 4 , as are the travel stocks ges ceo said hes watching the departure rate air france down about 7 , the Hotel Operators down by more than 3 . Europes occupancy rate continues to trend lower, now in the low 30 , compared to the 50 rate that we are averaging in the u. S. So that certainly tells you that citizens are responding to these new restrictions and the rising covid cases by delaying those travel plans. Thank you lets bring in ed yardeni. Ed, you say weve been in a vshape recovery today whats happening in the market seems to me to be a bit disconnected from some of the fundamentals weve seen out of companies in earnings, some of these Strong Companies are bucking this enterprise and Government Spending slowdown trend and still performing well. What should we Pay Attention to, those fundamentals or what investors are doing today . Well, i think both. You cant really ignore the fundamentals and you cant ignore what sentiment is and the reality is that we made a record high on september 2nd and weve been consolidating the gains since march 23rd, and rightly so we need to bide some time for earnings to catch up and i think they will. I think once we get past the elections, which has been another issue for the market, well probably get a stimulus package, no matter who wins. But the big unknown here is clearly the virus and when were going to get a vaccine but were getting close to a period here when all these final trials on at least two or three of these vaccines are going to happen im optimistic at least one of them will work. Kirk, how big a factor are these rising virus numbers and the Market Action were seeing today . Well, i think the fed in the previous surveysgot it right that the economic recovery was very much a function of the vaccine. I think the more uncertainty we have around the virus and the vaccine, the more uncertainties youre going to have in the market and i agree with ed. I think that uncertainty up until the election is to be expected and no matter who wins, i think that youre going to get some kind of stimulus package, which will help the markets. Ed, as you look ahead at the election and these covid trends, are there any safe havens that youre focused on right now . Well, i think the market is creating some good opportunities here theyre selling everything off, not just the pandemic challenged services companies, but a lot of these Technology Companies i think since september 2nd weve had sort of a panic attack correction that is correcting the overvaluation that we had at that point in time. And buying us some time for the fundamentals to actually look like they justify moving forward from here. And i think they will. Kirk, you know, if you can agree on the magnitude of the recovery over time, but maybe not the timing of it i mean, these phase three trials moving along more slowly than some thought, obviously stimulus is disappointing is q4 at risk from a gdp standpoint, are we not going to get the 4 or 5 that we were thinking in the summer well, i think youre having corona winter effects and i think we all know that the winter is probably going to be a tough period so the market clearly has to look through to the full year 2021, but clearly at these levels the market expects that 2021 would be pretty robust. But the longer that the hiem horizon is moved out, the more volatility youll have in the market. What does this mean for the Holiday Season recent projections are showing that online buying and that activity is going to be at unprecedented levels if consumers indeed do spend, some companies and some portions of the economy might be doing just fine, right absolutely. And, look, the data shows a vshape recovery on thursday were going to get a 35 increase in real gdp in the Third Quarter, but thats looking backwards. Thats from april to october all the indicators have been remarkably strong. I think its an important thing to recognize, theyve been remarkably strong, despite all the problems we have and i think theres an underlying resilience in the economy are people have learned to live with this virus. Its nasty, i think were all watching the the case count go up and we also have a lot of therapeutics that increase the chance of surviving this thing and i think a lot of people do want to get on with their lives. I do think that Wearing Masks does give favorable outcomes and i think were going to see that the economy, where theres this latest wave, as long as we dont lock the whole thing down, which i dont think we will. Kirk, ed just said he thinks the economy is going to weather this, but theres no doubt that Certain Companies and certain sectors, stayathome stocks, have performed far better. Do you think were going to see continued acceleration of these trends where these stayathome names are just more resilient Going Forward . Is that the area that you would focus on, considering these lingering concerns about how long covid will last well, i think you have to do both i continue to Like Technology stocks theres a reason theyre doing well theyre Long Duration stocks and theyre going to continue to do well i think the big question were waiting for is when do the value stocks return, and thats the big question value stocks were closing the gap, but any time youve got the risk on trade and the flight to treasuries, youre going to have the stocks trade off so that in my mind is the big question but in an economic recovery, value stocks will come back. Kirk, ed, thank you, and with the major indices all down icbrk. 3 , were going to take a quk eawell be right back. Nasdaq down almost 3 . Hard to get very far without faang, and obviously the components of that basket down anywhere from 2. 5 to almost 5 . Netflix is the one outlier there. Only takeaway on bonds is that the yields havent really given up too much, and some discussion that perhaps bonds are not buying at the selloff were back in a minute new and e. Across muticloud, apps, data and security, we focus on solving the business problems of our customers with technology we are a type of company the market has not seen before. Going public will further invigorate our mission to embrace technology, empower customers, and deliver the future. Lets get an update on where we stand in the Senate Hearing as mark zuckerberg, jack dorsey and pichai are testifying. A verbal lashing, indeed. Were nearly two hours into the hearing and probably the most contentious contentious back and forth so far taking place between senator ted cruz and dorsey, which we did show a chunk to the audience senator cruz accusing the company of having the power to influence the election and raising twitters determination of spreading the New York Post hunter biden post dorsey had to explain why twitters policy had to change and why it wasnt explained well in the first place that highlights the difficulties that the platforms are criticized too slow and allowing misinformation to spread and move too quickly, theyre accused of censorship. Mr. Zuckerberg, are you the ref . Senator, i certainly think not. I do not want us to have that role mr. Dorsey, are you the ref no. Mr. Pichai, are you the ref we make decisions but we really believe in support maximizing freedom of expression twitter and facebook are taking the most heat, but they have been most aggressive when it comes to content moderation youtube has taken a somewhat less firm stance, short of banning groups entirely. Most questions to mr. Pichai. Are we any cleser to what changes could be made to section 230 . Certainly not. Deirdre bosa on that Senate Hearing. Keeping an eye on a big outperformer today, General Electric is the best performer in the s p after posting an unexpected profit and positive cash flow thanks to cost cuts and improvement in its power and Renewble Energy business take a look at that stock, up uawk alley in just a minute hi, my name is sam davis and im going to tell you about exciting plans available to anyone with medicare. Many plans provide broad coverage and still may save you money on monthly premiums and Prescription Drugs. 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Omar, able to hold 3285 is there a sense in the very short term that markets can maybe live with some of these onemonth lockdowns were hearing reports about in germany, for example well, yeah, it is it is clearly a riskoff related to, you know, people extrapolating what these may look like the strength of the recovery we got so far, obviously the markets did have a very strong recovery, but the consequences to the economy, it is what the market seems to be rapling up today. The lack of fiscal stimulus in the u. S. And its consequences are obviously not helping, you know, the situation going into election week next week. Omar, were seeing some of these stocks still in the green. Netflix, peloton, draftkings, these are some stayathome plays. Where do you see the opportunity now . Well, you know, i think the key component in all this is the cycle we get coming out of the recession. If you think about the historical views of recovery through the recession, they usually tend to be valuedriven. They tend to be areas where you normally see spreads in valuation being attractive the big difference this time around is that were not out of the recession because the source of the recession in these particular case was the Health Crisis what we see in the market focusing on today, it is continued to be on the number of cases and the potential issues these have down the road now, the interesting thing about the companies you mentioned, as well as the majority of the companies that have led this market is that they are the ones that continue its growth and continues to have prosperous and good outlooks and free cash flows that will continue into next year. Those opportunities are not going away, even though they have actually done well. Its not surprising that companies that can generate cash flow and have sustainability of earnings will continue to lead i would actually say that it will take us some time to rotate to value until we get a good sense of where the virus is going. Brian, welcome. You make the argument that the markets seem to be paying attention to the election only to the extent that the size and timing of fiscal stimulus comes into play and that a blue wave actually means bigger stimulus so, my question is, is a blue wave priced in at this point or is divided government priced in . And how should investors play it depending on which we end up getting next week . I dont think either outcome is 100 priced in. I think investors probably learned or maybe even overlearned the lessons of 2016 which delivered a genuinely surprising outcome if you look at the polls or betting markets. You look at the betting markets, its 65. 35 some polling models have this as 95. 05. Theres a big gap that they are not surprising in a blue wave. You would see a weaker dollar, somewhat wider inflation breakevens. Its absolutely correct that the election has taken on new importance in the mind of the market because the stimulus package now hinges on the outcome, both the timing and the size if we had gotten a stimulus package earlier in the current kind of alignment of government, i dont think we would be seen as big a deal and you would see markets paying more attention to, say, the biden agenda. In this case, the hopes for a fiscal still lushgs a large fiscal stimulus are probably best in the First Quarter and could be in that 2 to 2. 5 trillion range would help in terms of Fiscal Relief but not until the second or Third Quarter next year thats interesting. We know the election is policy but now you have to worry about the policy ramifications, the contested nature of maybe a close election and now stimulus post postelection stimulus hanging on that as well. Thank you for that appreciate it very much. John, will continue to monitor the questioning of the tech executives some complaints from cruzs office about why, for example, jack dorsey isnt trending in fact, jack dorsey is the number four trend on twitter right now. Yeah, wasnt this supposed to be about section 230 as usual, im learning more about the senators and their capacity for these atrics than actual policy but all three ceos playing pretty good defense. Well learn more about what zuckerberg and pichai have not been fielding the heat as much as dorsey, carl. Lets get to the judge. Welcome to the halftime report. We will, as carl said, continue to monitor the section 230 hearing on capitol hill. We do want to get right to the market where stocks have been under significant pressure concerns over covid front and Center Europe moving closer to tightening restrictions and cases here in the United States continuing to skyrocket. Ive got the Investment Committee here with me now joe along with steve weiss, Jenny Harrington is back from gillman hill asset management. The virus the big story,

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