From facebook. Julia boorstin has been following the story. Its two reactive and slow about the hate speech. Auditors saying they watched the company make painful decisions that are serious setbacks and has not devoted enough assets to address these issues this report advocating they bring in more civil rights experts to the country, take steps to address concerns dedispute that post violating facebooks broader policies. Sheryl sandberg responding to the findings as hard as its been to expos o they echo the criticisms by the civil rights a groups behind the boycott that met with facebook management yesterday. They called the meeting disappointing. Now, facebook has said it would not fall not fold for pressure, but it does seem they could be compelled to take some of the recommendations. Julia, thank you. Lets get to steve weiss steve, it looks like facebook is under a lot of pressure when it comes to the issues of up civil rights and hate speech. It is im sticking with it ultimately i have to believe that Mark Zuckerberg is more intelligence and a Better Business person than he is arrogant right now the arrogance seems to be taking hold. Then how does he go into a meeting yesterday with civil rights leaders, who have already outlined their grievances, called successfully for a boycott which many big advertisers have joined, and not be able to appease them in any way . You think one of two ways he should be the president or he should be less arrogant. Thats what i mean hes having a standdown with his standoff, rather, ultimately the advertisers will win, because its picking up steam. I would expect the arrogance said i can convince them were on the right past, but he cant. Hell come to get the facts are against him and hell turn when he pivots, youll see the stock go higher again. Thats what the stock is telling you. I mean, so the markets believe in that, i believe in it as well. There is a small window, joe terranova. You would think on the Company Conference call, they will be pressed on what sorts of frameworks they will have in place to address all of these concerns and what is the revenue impacts, which was originally called for simply the month of june, but many advertiser have gone above and beyond that, saying they will suspend advertising through the end of the year theres a matter of weeks between today and when we have that conference call, when youve got to believe the analysts will be asking those questions. The analysts will be asking those questions, and facebook with a high degree of arrogance will be answering those questions. Because it relation to the stock price. As it relation candidly to all of the Megacap Technology names, they get a free pass, because the the excessive liquidity is in place, and the only place you can find any growth in this market right now is the asset light component of the economy the asset light component has been unable to pull forward the asset heavy part of the imply, which found its top on june 8th. I think the question becomes, at what price point does that asset heavy part of the economy kind of drawing down the assetlight Technology Part of the economy for all these technological giants, they get a free pass, because they are the performance in the market. Theres an overconcentration in terms of allocation, the conversation is overemphasized. The president in his tweets doesnt talk about the dow anymore. He talks about the nasdaq. I think for all of the megacap technologies, their behavior will not be punitive as long as the stock price moves higher, and obviously i think thats wrong. So, liz, even if you dont like what facebook is doing, and you dont like the arrogance as steve used, you hold your nose and buy a name like facebook, because thats where the momentum in the market is . I think in this particular environment, thats all we we have seen, is the market hasnt penalized the market yet i do expect summer to be a bit weaker for a lot of sectors, but if the market starts to penalize them, theyll have to listen up. To some of the points earlier made if they start to shift their narrative and they become more strict about this you know, jim, i start to wonder with this favoritism facebook is giving the where everything wants to be and nobody is distinguishing a stock from another i think there are times when the fang breaks down as a group, meaning parts of it do well and other parts dont. Years ago facebook was in the doldrums while the rest of the fangs were taking on the floor i think last year amazon sputtered while the rest of the group to take off. Its not unheard of for one or two names in that group to sputter. I think if you give up that Earnings Growth if they start saying, you know what, facebook could very well be left behind while the rest of those names in the qqqs do very well. Our next guest is trimming her facebook position. Tiffany mcgee joins us live. Great to have you with us. How long have you been in facebook, and when did you start trimming weve been in overall we were just rebalancing but you know, in listens to the conversations right before me, number one, liz is exactly right. The market has really not penalized facebook yet our clients are foundations and endocuments. These are missiondriven organizations. Many of them have adopted things, and so we believe, you know, in looking at the situation in totality, yes, the market has not penalized facebook, but all americans are not investors, but all americans are consumers. You know, theyre thinking about we believe theyre thinking about the big brands that have come in and they are no longer spending money with facebook, at least for the month of july, like starbucks. Were thinking about who is going to be the first one back in if, by chance, facebook does not come to some kind of agreement, it cant be a brand lie starbucks. So you think eventually facebook will be forced to do something . Thats what it sounds like. Yeah. Theres other he opportunities foe advertising, but we think that facebook is going to have to get their act together, really for the sake of their larger advertisers. You mentioned pensions and endowments, and how long does facebook get the free pass how long does it get to right the ship, so to speak, before some of the investors start saying, you know what . Theyre not ticking that social box in esg. They dont have very long this is not a sixmonth situation. We saw they were meeting with civil rights leaders yesterday, and nothing came out of that theyre i dont think they have long. You get the sense that they say, you know what, the governance box may be in question even from the start because of the structure, they dont wait a quarter i mean, this could be in weeks that they start selling shares so, it really depends on who youre dealing with. Most of our clients are foundations and endowments, pensions are different, but a lot of foundations and endowm t endowments, and more to their allocation of doing things, managing investments through an esg lens the that means theyre not just checking a box for a low carbon emission, theyre asking a lot of questions of the strategies they own, and theyre asking about governance, how many Diverse People do you have in year csuite is how many Diverse People do you have on your board so a lot of this movement is also driven by Investment Consultants like myself. If you have a consultant thats really paying attention to esg, thats going to fueling the fire thats going to really prop those conversations, but again, i still dont think that facebook has two more quarters to kind of figure it out all right, the clock is ticking. Tiffany, great to speak with you. Steve, i go to you weve talked about esg many times recently its a huge wave of money, a lot of millennial investors are on board, investors in general like the style of investing its in vogue. Could that be a pressure on facebook, in your view you know, look, youve done an inordinate amount of work on esg you cant be an esg investor if you own a dualclass stock you pointed that out correctly i dont want to hear about an esg investor is going to pressure facebook. Either you believe in the governance or you dont. Now, right now, its politically correct and morally correct to be concerned about pushing hatred, which is what facebook does as i said, they will come to grips with it, and ultimately theyll realize the pocketbook controls if you do break up these companies, if thats the end game, i would tell you theyre worth more broken up as they are as one entity. Joe, if you are a believer that you dont want to be in facebook because of the pressures they may face, if not facebook, then what . Social media its clearly microsoft, when youre talking about esg investing. Microsoft is in 55 of the esg funds that, by far, is the largest contribution from a singleequity name so to me its microsoft that checks the boxes across the board in terms of quality, in terms of technology, in terms of growth, and in terms of esg. Thats where im allocated. Lets move on and Talk Technology more broadly. The question here is, do you continue to Chase Technology at this oint . Amazon and apple hit alltime highs. Liz, we want at the beginning, this is where people want to be in the market valuationwise do you agree, though im still a growth bull i still think theres room for text stocks to grown here, as long longterm rates stay low and stay pressured, growth will continue to have a runway. The question really is if, youre already in it, do you stay in it yes. If youre not in it at all, this is and i think the second half of this year will see a theme of companies that either can thrive or theyre just trying to survive in this environment. Thats why it will be a good time to pick stocks, good time to have active managers looking at that Technology Space and trying to decide, is this worth what were going to pay for it, and what are the prospects Going Forward over the next 12 to 24 months. Joe, you actually sold amazon recently, why . I sold it a few weeks back at 25. 55, a bad sale at my part im okay with it i was just ringing the register on the profits looking back, that was the wrong move, but i think youre coming into a seasonally weak period. I subjected bev were building an overconcentration as it relation to Megacap Technology we have to pay heed to the fact that a june 8th, not only did you see a tenyear treasury find its peak at 95 basis points, but the assetheavy part of the economy, the energy, the airlines, the hols hotels of brickandmortar retail, thats where they found their peak. Theyve been unyou cant to pull higher along with technology i think its fair to give consideration that, while, yes, you want to remain allocated towards technology as i am via apple and microsoft, its fair to give consideration. Ultimately the assetheavy component that is not participating in stock appreciation pull down and moderate some of the outsized gains were seeing here from Megacap Technology. Jim, your an valuation kind of guy at what point do you say this is getting to be too much is that point now . I think you have to use a finetoothed comb. Earnings multiples of 25 to 30 times in a low Interest Rate environment are not crazy. For what theyre worth, though. Im sorry, what for what theyre worth, in terms of a p. E. Number for some companies we dont have a good sense of the e part. Thank you very much, melissa. I was going to draw a comparison so, say, a frosty area of a market like a tesla. How do you put a multiple you dont even know what the e is there, to use your term. I think theres elements of mania going on in tesla. I think theres pockets of the economy that are undervalued, and they are asset heavy but the thing you have to do is take a bit of both the growth names, the solid companies, the largetech cap and you have to pare that with some of the undervalued names in the socalled old economy. Like . Okay. Well, you know, take a look at the financials as an example its not just earnings there, but pricetobook that you want to look at the industrials, which frankly have been getting some love recently, so the caterpillars of the world. The honeywells of the world, the fedexs of the world. I think those are two areas that you can look at and feel comfortable at the valuations, your downed side is limited. By the way, well have more on tesla and the banks later on. In the meantime were following another stock on the move right now. Lets get to phil lebeau with a news alert on united airlines. United under pressure today, announcing its sending off warn layoff notices those are required to be sent out 60 days ahead of a potential layo layoff it says theyll be cutting about flight attendants will take the biggest impact, more than half of the jobs with the Union Airport operations there, maintenance, the pilots 2,250. So heres how it works theyre trying to finish negotiating buyout packages with the unions almost all of these workers are in one of the major unions they should have it finalized by next week. Then by the middle of august, they will notify the remaining number of people who may be losing their jobs, yes, you are actually being laid off come october 1st. Thats when the job cuts take effect, october 1st. We knew this was coming, melissa. Youre going to see this from the other airlines as well theyll all by dramatically smaller come october 1st. The degree to to which it came, phil, is that a surprise is does that reflect the ratcheteddown expectations of the second half . I would say the Biggest Surprise is that remember when the quarantines were put into effect in the tristate areas, and i was on this show, i saiding this the worst thing for the airlines it makes people say im not going to take a trip and then come back and quarantine for two weeks. Its just not going to happen. We knew there would be an impact and were definitely seeing it now. Demand is pulse back ive heard a couple executives saying were going back to may and april numbers in terms of bookings the degree of the job cuts is a bit more severe than people were expecting. Thats a reflection were not seeing the continuation of bookings they really have pulled back in the last week and a half. Joe terranova, where are you in the airlines . I took a shot to buy delta at about 33 somewhere in late march, quickly took my loss and swore off buying the airlines thereafter they did have a moment where they rallied from the end of may into early june, but they found their peak, theyve been unable to recover they are important to the economic recovery that we are trying to extrapolate from a lot of the recent numbers, but to date for the overall market, it has not seemed to matter what it has done is driven more money into the megacap and other technology names, and where is the end to that . Im not necessarily sure that very many can give you a solid answer to that jim, you actually have a new trade on airlines. What is it yeah, well for a while melissa i have owned Alaska Airlines it has a clean Balance Sheet its reduced the cash burn the problem is, it gets dragged down with the rest of the name i said to buy puts on American American has a big problem in light of what phil said about getting smaller. Theyre probably going to end this year with about 40 billion in debt, and not cheap debt. Mid teens in interest. Thats 4, 4. 5 billion in interest their taxes were about 3. 9 billion last year. They cant afford to be smaller. Im not saying theyre going out of business tomorrow thats not what im saying, about you if youre an equities shareholder, you have to ask yourself, what profits will come to you when so much is going to the everincreasing debt class for that Company United and delta, they dont have Balance Sheets that look that great, either they cant afford to get smaller. Weiss, you always have puts on united im wonders, from your perspective, is there a connect the dots kind of trade if people dont want to get on planes because of the quarantine orders, thats less demand for flights going to florida, you have to wonder who will go to disney if they have to take a planned and they might get stuck in florida im not afraid of owning companies that have, say, disadvantaged Balance Sheets i actually owned american. Last time they went into bankruptcy, i owned it when they went in and came out the difference is every asset they had was not collateralized. You didnt have pandemic keeping traffic off. Their costs were just out of control. Now i question whether Equity Investors will have anything left, because everything is collateralized, the gates, the planes, everything the rewards programs. Theyre collateralized literally exactly exactly. So investors have nothing there to hang on to, so i think the stocks, as the ceo of boeing said, theres going to be a bankruptcy here, and i think it may be more than one its terrible to see people lose their jobs, but they would be better off when they come out and theyre protected and pensions are protected rather than whats going on now. Actually an Airline Analyst said the exact same thing months ago. Phil, we also have two bullish calls in the auto space in the hot, nichy sector. Lets talk about nikola jamb morgan is essential upgrading the stock, because its pulled back so much remember, i want to say it was being a month ago, the stock was trading up about 69, 70 a share. Now jpmorgan has said, hey, this is a good buying opportunities including the bank that the eu is likely to come out with new rules regarding clean hike roe gen, adding into the fact that the badger pickup truck that theyre designing sometime soon, we dont know when, theyre likely to announce which automaker theyll be working with so there are some catalysts on the horizon. Thats why jpmorgan made this call all right. Steve, on nikola, you own puts youre negative, why yes, i am i owned the stock when 2 came as a spec, and i did well lets talk about governance. Two lines from the cfos employment agreement that was signed in 2017 you tell me if you would own this stock the first for every 50 million you help raise for the company you would be entitled to 250,000 bonus upon the closing of the fund raise. Then it goes and says you will also be entitled toen a award of an additional 2. 5 interest once you assist in raising 50 million for the country. Do you want a cfo who is advertised to raising capital, or is tied to the performance of the compan