The dow is down now 1040 points now live from ep rate locations, youre looking at the worst day for the s p since may 1st. For the dow, it is since april 1st, and you really have to go down about 1200 points to go further than that. Were watching a number of different dynamics at play one is just the reality check that we got from the fed and jay powell, it is the recovery, the covid spike that sarah was juk talking about, and the success in various pockets apple is down, but it is still up more than 7. 5 for the week microsoft is similarly down almost 2 today, but up 5 for the week sam z amazon, google is just up 1. 3 for the week and down today, but you cant just look at one day up or down so we have been up so much, morgan, one wonders how much of a reaction in the market this is going to be. We have been hearing for days and weeks now the idea that the rapid run, off of the lows, for major averages from that march 23rd low that were looking overboulgt or even like they were getting ahead of themes. Perhaps in some ways this is, i dont want to say an execution, but a pull back in is perhaps warranted other everything that were seeing the worries over the fed, the reemergence of the covid cases they have efforts that continue to combat or develop treatments or vaccines to combat covid19 were going to talk about it with roger macnamee. Great to see you great to see you, carl, how are you . Im looking at alltime highs today. Dominoes, docusign it is like were going pack six or eight weeks that is the mood right now, what is driving it . I think market has detached itself from the economy. The fed has been incredibly adom dating if you Pay Attention to the news on a daily basis there is a lot of things to be worried about, but if you Pay Attention to money throws and i will quiddity, it is a good time to be an investor i assume you think that environment is not efemeral, right . That overall envelope of protection will be around for awhile it is but i dont know that the fed has the tools to protect investors against the kind of Economic Issues that were dealing with right now if were going to sustain demand we have to find a way to keep the buying power of all of the people that lost their jobs in the last, you know, ten or 12 weeks, and well have to keep them in pin money nap will require additional stimulus and unemployment points. We have 40 Million People who filed for Unemployment Benefits and that is a significant drag on demand and it is better for the economy eventually there is only so long that i think the fed can keep pumping things up in the absence of getting people back to work. There are signs that were trying to do that. There will be a big spike, i think, it has gun. Infections, and whether or not that slows us down or not remains to be seen i wonder from where you sit, is the start up tech echo system following the money or the marks . I wonder if maybe the investors feel richer because the markets have held up and theyre not pushing as much. Or have the customers dried up so start ups have to tighten the belt the private companies that are not flush with three years worth of cash has to be incredibly careful. We dont know what the funding environment has been Going Forward. I think Venture Investors have backed up very much. What is all of the news going on for the big guys, what will it mean for start ups ibm and amazon announced they will not sell facial Recognition Software the way they were for at least a year. They said theyre no longer going to sell the standard package of facial recognition. If that is a a response to political pressure, and you start to see changes going on, the safe harbor for internet platforms, that will great opportunities for start ups. If i were a venture investor i would Pay Attention to all of that stuff it will tell you where to go. What im wondering, too, is i remember the dotcom bust it was like a bolder running downhill they were taking out jobs with increasing momentum as time went on there was a sent, a rumbling, has that slowed or stopped with the markets behaving the way they have. Maybe people feel like they should tighten the belt, but is that sense of the momentum of disaster slowed down i think the great thing about being a venture investor is that the market is not your daily reality. It does provide you can signals and i think that things have really slowed down what remains to be seen is whether or not the consumer interest, the things that people want to buy is going to change it really feels that things like air bnb. It seems like they will have to adjust to a new reality and things like we work may not have the same Market OpportunityGoing Forward that they had in the past and this will reallocate the capital in Silicon Valley that will create changes, so which i think be good for the Venture Business and to my mind, there is a real bre break. If you looked at section 230 of communications act, that was a third rail that politicians were not going to touch when President Trump comes out and says we need to look at that again, it gives license to a lot of people who are genuinely concerned about the lack of accountability that occurs for things like spreading d disinformation about covid pandemic it will have some impact on the start up market. It is too early to know yet what that impact will be. Every time you get a change that affects the big guys it creates opportunities for the little guys roger, i want to go back to the comment you just made about some of the companies, some of the Newer Industries having to realign and rethink their Business Models in this post covid world. Yeah, morgan, i assume so and i think this is a great time to be a buyer in a really rocky time to be a seller. And this is the kind of environment where there will probably be there is no regulatory scrutiny. People will not be able to make transactions for offensive purposes and they are trying to protect themselves and i think that the market, what the market is doing right now is giving the potential buyers more currency to do that with if i was a potential buyer trying to decide is now a better time to buy or a year from now i would do it now. I think that the risk is high and people should make sure they have the Business Base and the liquidity they need to operate and when the fed comes out and says theyre going to hold rates near zero through 2022 i wonder how much tire that adds. Look at yesterday, that announcement did wonders how long it lasted is the real question, right . Theyre saying wow we have a couple more years to go. Again i dont think there is any way that we can say decouple d until we have Government Spending and things that move it forward, i think there will be a lot of uncertainty on the market the Federal Reserve is wrong so often i see the numbers also and do better than they do. We will have a good third quarter. We will soon have a vaccine ander thand er th therapeutics cure, watch i was watching given his lack of an endorse mement how long will take for them to report. In order for that r to happen, we would have to be focusing differently on the way we are. The markets are benefitting there will be a price to pay for that and i dont see how the economy can make a v shaped recovery you cant my any recovery at all until you have done that where is your head right now on a vaccine the president is not wrong fauci himself, yesterday, said he guaranteed we would get one there is 100 drugs in development. Were going to get phase three and that is just in the next couple of quarters i know it is a bianary outcome the thing that i learned from years and years of being partnered with a guy that really understood bio tech is exactly that point you never know until youre finally approved that you have something or not i surely hope that is right. The market is making a bet that that is right. I hope it is correct about that, but i have no clue i dont know that any of this does i think the fact that there are 100 fiinitiatives is really bullish. If we can get something approved then we have to get in and make a lot of it and they have to distribute it. And there are a lot of problems to solve my guess that whatever they have is not available in the quantity that provides herd immunity for at least a year, right but what do i know im just a tech guy looking at a medical thing. As an investor i look at this and i say i would like to believe that is true the mark is telling you they believe that is true, and if it turns out that is not right then were going to have, you know, stock prices make a real change. Problems young lower stock price, that is for sure, roger well check in again with you soon see you soon. Bank of america taking its apple target up to 390 this morning. Analysts behind that joins us on the other side of this break 70ple down 1. 5 and the dow down 10 points right now. Limu emu doug [ siren ] give me your hand i can save you. Lots of money with Liberty Mutual we customize your Car Insurance so you only pay for what you need only pay for what you need. Liberty. Liberty. Liberty. Liberty. music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. Apple is in the blue chips involved in the sell off apple still at 8 for the week wamsey is joining us now on that call im doing good, i hope you are, too i want to told in rumblings of the past few days that they will move to air their own armed based chips. This coming after apple recently bought intels 5g modem business what we have seen, when they focus on vertical integration like that, what does it mean for margins and growth, how much does that play into a call like this for you i think the call that were making today is really focused on the visibilities of cash flows. We have no idea how they will pay out, but here you have a company where 200 million phones, the viz ability of that Free Cash Flow they want to deliver next year is a real number and people having that viz abili visibility is worth a lot at this point most other options thatyou loo out there there is a tremendous amount of uncertainty with regard to how the cashflows will billion play out and they get into questionable territories for many of them i think this is the fundamental call that were making that you have a company where the viz ability is strong. There is a big fish ybeneficiarf all of theinflows. So that will be a tremendous beneficiary. A question on sort of what is going to happen to the margin structure, the sbe addition has been going for a long time they go under pressure or elongated period of time you talk about apples relative stability. We talked about their cash hoard for a long time. The apple consumer has been very consistent i would argue their their ability goes down to making refinement there is as well. Absolutely. I think it is very important to consider you have the ability now to off set gross margin it can come from an increased bill of materials. You might add 30, 40, or 50 billion more, but overtime, once they insource that, they wont be paying any more for that particular business. It will not be an increment table margin that they benefit from it will off set some of the pressure they have or some of the incremental bond cost. So this is universally playing out across all of their devices. Th they are a real power house. The a 14 chip, it is an incredible piece of delivery they are dining it in house, and when you think about property aggression, the cadence. The ability to integrate there is critical. It will not be super meaningful to margins, the volume is not as high, but at the same time it is just yet another lever for them to allow gross margin stability. I get that Services Growth is accelerating right now, it is a bigger and bigger part of the story, but how important to the story through the rest of the year will be the new iphone cycle as well. I think it is a twopronged approach here. If you think about the first element of it that you brought up, the situation is creating some acceleration and services, the Services Growth is accelerating now, well beyond 40 growth it is impressive in and of itself, so the near term data points are very, very positive when you flip over to the hardware side, it matters, iphone matters, 50 of revenue is still iphone and when you think of something important like 5g coming through, that drives multiple expanse in the stock. So you usually see the expansion even more. And i think that were moving away from a cycle by cycle by cycle. It becomes less about the cycle. We think it will be about 200 million ones per year. We believe that stability itself is also a multiple enhancer for the stock. What is your most extreme case for apples exposure to china and the punitive issues. I put the china risk fairly low. I think i put margin pressure, deceleration, and regulatory risks ahead of the china risk. Dont think they want to just play tit for tat i think they are more focused on what will get our president s attention. What will it take for us to change, and apple is not necessarily the first target for that theyre a huge employer in china. And if anything is done on the services side, i think it is immaterial you have to calibrate it through the lens of how much is it really going to impact how the u. S. Policy response is going to be and i dont think that apple is the first target for that i put it fairly low on the policy risk side it is an interesting and important take a couple names are bucking the trend. 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Here is your cnbc update at this our. Officials are criticizing the International Criminal court after President Trump secretary of state mike pom pay owe called the icc a Kangaroo Court while attorney barr accused them of financial corruption ford is recalling vehicles because of problems with door latches and brake fluid leaks. And amazonwants to give regulators more time to implement guidelines for more go to cnbc. Com. Japanese officials are working to avoid collisions with space junk by equipping a satellite with a laser youre up to date, squawk alley continues next. You turn 40 and everything goes. Tell me about it. You know, its made me think, im closer to my retirement days than i am my college days. Hm. Im thinking. Will i have enough . Should i change something . Well, youre asking the right questions. I just want to know, am i gonna be okay . I know people who specialize in am i going to be okay. I like that. You may need glasses though. Yeah. Guidance to help you stay on track, no matter what comes next. Welcome back to squawk in the alley. The do you w is down 3. 8 rightw welcome to you both. Ill start with you. We started this hour having a conversation about the fact that this market was looking, given the tremendous move off of the march lows, looking overbought i want to get your thoughts on the pull back that were seeing today. Whether you think it has further to go or if you would be buying at these levels. We have been seeing the market as overbought shortterm. Longer term especially if you take your time horizon out of it, it is 12 to 24 months. Shortterm this week we saw a call ratio that was the lowest in ten years there was not a lot of protection out there so we have been expecting, and from my perspective im a little relieved to see some profit taking coming off of the table were in a higher volatility regime i expect these moves to be larger some consolidation is necessary. Were still slightly under weight two equities, but we are looking for a little bit of a more rational market to reenter with more aggressive positioning. Were expecting this to continue in a little bit. I want to get your thoughts as well especially that the nasdaq is lower today. Were coming off of record highs for that index that is fuelled by what has been an incredible run in tech stocks i think aagree with megaen. It would be a great pull back. I think were not that lucky i think we have seen 200 to 400 basis point pull backs looking at tech specifically, they said they will remain extremely accommodating for a long time, and you know it things get messier as far as the market goes trump will come out and be vichirpl chirpleing, andy chases fame blindly today or tomorrow probably not, but you look for attractive stories selective names, there is Great Stories that i think you really have to be careble about buying the names that retail has been powering in for the last two months were just above the levels we were last tuesday when we were still talking about how much the market had run. I dont know how excited we can really get about the dip that were seeing today how far down would it have to go before you think okay, now were talking. Now it is a chapter. Are we talking a standard correction or more than that yeah, i cant put a specific number for shortterm movements in the market. I think if we came down 10 or so we would be more comfortable. As i said at the outset i think we need a longer term view in this particular market, but i think when you look a