Transcripts For CNBC Squawk On The Street 20240711

Investors are shrugging that off as stocks look to rally at the open. One name that may not rally is zoom. Shares of zoom are sinking yeah, in the premarket, work from home stock taking a hit from a rising free user base and increasing cloud costs and we have vaccine optimism, moderna and pfizer filing for emergency use and Vice President pence says vaccine rollout expected to begin in two weeks carl all right jim, i guess the question of the morning is whether that rotation, that worked historically well in the month of november, still applies. I think were running out of gas in terms of the oil and gas and focusing on exxon. Stock may not go down, giving the dividend, it says, look, were at wits end and the big Exploration Development period for exxon, market leader, u. S. Leader, is i think now over. We are following were following europe and japan and i think that we forget that you come in today, and you look for all sorts of reasons why were up and up strongly except we dont look at germany, which is doing incredibly well we dont get the ftse, we dont look at japan, these countries are well on a better course than we are, on today, and i think there is strength that beckons to say there is a worldwide rally. David, it is not just here there is a belief a relief rally on the fact that we have a vaccine, but it is also not starting in america. It is starting overseas. It interesting, yeah were the best performers over the month of november and all Energy Related you mentioned exxonmobil briefly, watched the stock maybe up a bit we talked about it, this move in oil as well. Occidental downgrade today. There is devin those moves were incredible. They were off lows that had not been seen for most of the stocks in ages, if ever but on exxon, you know, we talked so often about it, in terms of their capital allocation, in terms of how much theyre spending on exp ining n i think ultimately there were some recount went up again this week. What happens when the rig count goes up is that opec plus then decides, you know what, were not going to make it better for the permian. But i think more than any other energy company, the dividend is a religion at exxon. And theyll do anything to preserve it and thats why when you see the writedowns, you dont get negativity you get a sense that, wow, they threw the kitchen sink at it and were fine when i look at stocks these days, carl, i look at them for income and i look at them because i kind of have given up on the idea that the yield curve is going to move when you hear what chairman powell is saying, you say, im going to keep rates as low as possible. Everybody is look for bitcoin, or Something Like exxon, it seems like the dividend might be safe despite whats going on dividend and bitcoin are the storks. Well, safe and sacrosanct might be the words that exxon would use. Your point about yield is so key. Everybody taking stock of the month of november, best month since 87 for the dow. Best month ever for ge, best month ever for the russell 2000. Tenyear gave back what it got after the initial pfizer news on the 9th. I think that were in a halcyon moment and it shouldnt be and there are a lot of people who are very upset that you could have so many deaths coming the lead story in the New York Times was an opinion piece, an opinion piece about how poorly washington how poorly President Trump handled the pandemic and yet what is the lead story the russell has been incredible. Thats america the dow has been incredible. Thats big industrials so it comes back that, like i had michael dell last night, michael dell is having dell is having an amazing quarter amazing. This big shift from the Central Office to the home and were going to talk about zoom in a second, is driving a lot of what we see and it is i got to tell you, it is like nothing we have ever a wholesale shift in america. Maybe not in other countries, but were seeing the russell is a reflection, the russell i think is largely a reflection of the fact that we have to rebuild where we do our job. And where we study what do you mean when you say rebuild . It is your house. Michael dell said something really incredible. He said you cant have one pc in the house when you have kids and you got to have multiple. Multiple. But thats big. Yeah. Thats why dell could have blowout must bes numbers in a. Why apple is grossly undervalued in a pandemic. Well get to zoom jim, to your point about this sort of i heard this word again, goldilocks, hard to imagine, given what is going on with the virus and the hospitalizations and the deaths that are taking place. But thats the way it is being described right now. You got yellen coming in at treasury powell staying, well hear from him shortly. Dovish fed, clearly, going to be the case some stimulus we would imagine, though again there is debates about where well end up there m a, strong, companies, the old i mean, my god, how many times, but looking for growth. And where are they going to go it would seem to set up for a potentially low volatility, strong stock market. New money coming in you can look at it every morning. And cohort that loves to speculate. They do they love to buy carnival and buy norwegian. Palantir. I watch carnival. Every time it gets to a new level, they do something dilutive that is a term that eludes the younger investors. Im not kidding. Dilutive you and i think, wow, theyre seeing a lot of shares they think, yes, more shares they havent been clued into the earnings per share idea yet. That number goes down, the more shares there are, maybe they need to that needs to be explained. Or maybe they just dont care. Carl theyre saying, hey, all right, i like carnival, people will go on cruises. They think once the things start, who knows where they go look at american airlines, they did an incredible deal, well below, they need more money than than they could they got to get they have to do another Capital Raise rather fast if you listen to phil lebeau and you know what, theyll lap it up. These young buyers say, yeah, thank you. Company is going to be Even Stronger and i dont know, how do we doubt these guys and in the meantime what happens . Micron raises guidance i remember everyone hated micron at 45. Suddenly what happens with micron commodity producer, for heavens sake but the demand is so strong that there is just micron update that is just blowout. How the heck is that you were talking about it positively a week or two ago on mad dash and said it was the key to the market. So good call good call, jim cramer. How do you remember because i remember things every so often most of the stuff gets by me every so often something sticks. The backbone of all technology is the dram. It raised the view theyre talking about adjusted Gross Margins unbelievable, a lot of guys are recommending this is right here, right now, carl you look at the futures, you say why are they up, other than europe and why are they up on japan . A company like micron isnt everything, whether it be automobiles, whether it be any device, internet of things, pcs, cell phones, bingo i rest my case. Your point, jim, all those countries that you mentioned, japan, france, germany, the uk, had pmi beats this morning and well get some of our own later on today, jim. You talk about stock record highs a lot and we will. But one in eight Americans Still say they did not have enough to eight in the prior week. Half of residents and some states are worried about grocery bills in the month to come we got some news about potential Compromise Solutions on stimulus which well talk more about this morning. That is a topic for powell for sure today. This is where secretary mnuchin, i think, could say, you know what, thatman money i want to take back that will go to the most impoverished, lets get together, lets give it to the people closing the restaurants, not their fault. Lets go back and do business interruption, lets work together, can you imagine secretary mnuchin did that, im not saying he would be a musical. There is other treasury secretaries that we say, hey, he may griffith the gbridge the ga thi things i thought paul oneill did great things some will say he and powell helped save in march and april. His last act his last act, taking the money back and continuing to say take the 455 billion in unused funds and use it, okay, great. But it requires action on the part of congress to make that happen i could broker that deal in a nanosecond. I dont think you could and im not underestimating your persuasive powers, but i just dont think so have you ever gone face to face with Mitch Mcconnell not that you would want to, but seriously . I had him on a couple of times on Kudlow Cramer yeah, whoa maybe cant get it done in an hour it will take a little time. My contacts in washington are severely limited by the fact i have no political judgment but i do believe that this is secretary mnuchins chance to seal the approval of im not the one i work with everybody. Wow. Can you imagine . Listen, it is needed. Again, the Congress Goes back and forth or it goes back and forth in terms of what the number might be but it is needed, you know that, without a doubt, to carls point, in terms of people going hungry in this country right now. Enormous amount of money being spent on the local and state level to deal with covid at this point. Just think about in new york, they increase testing in the Public Schools dramatically to try to keep them open or the Elementary Schools that all costs money not sure where it is coming from remember, Goldman Sachs did if we all wore masks it would save a trillion dollars. The president was not pro mask let me tell you, those of you who tell me, there say mask mandate, heres what you do. You bang the people if theyre not wearing them it is like, my daughter went out the door in spain during the lockdown, it was 800 euros if she got caught well, that keeps you inside. It does thats not america well, david thats spain. True. It is not america. But it would be great, but our president hey, dr. Atlas left yeah. That was a guy i call him an outlier. Got that going for us. An outlier. Yeah. Yeah. All right, carl. Sorry. Got a little heated there. Trying to make a deal. Secretary mnuchin, call me, well get this thing done. Get this done. Well talk more about white house staffing as the president elect is expected to introduce his Economic Team shortly after noon east coast time today well get to a lot of the calls that david and jim mentioned as well, the downgrade of oxy moderna, argus, barclays takes fedex to overweight and the treasury secretary and the fed chair at Senate Banking. Well take q and a around 10 30. Features strong. I will send out an army to find you in the middle of the darkest night its true, i will rescue you oh, i will rescue you [whats this . ] oh, are we kicking karly out . We live with at t. It was a lapse in judgment. At t, we called this house meeting because you advertise gigspeed internet, but we cant sign up for that here. Yeah, but im just like warming up to those speeds. Youve lived here two years. The personal attacks arent helping, karly. Dont you have like a hot pilates class to get to or something . [ muffled scream ] stop living with at t. Xfinity can deliver gig to the most homes. Europes chief drug regulator says both moderna and Pfizer Biontech applied for respective Covid Vaccine candidates to be approved in the eu after moderna filed for fda emergency authorization in the u. S. If they received enough data, could decide by december the white house is summoning the fda chief to explain why theyre not approving pfizer faster. Well, look, i think that the system is ready. Im not a scientist about knowing what is going to happen, but i think that there is an imperative at the nursing homes, longterm care, imperative i think the president is right in the sense that there is a sense of urgency david, this thing is out of control. It is out of control with dr. Gottlieb says 50 going to get it, that goes back all the way to when this started when there was a series of articles in lancet, which said, look, everybody is going to get it, it is novel, but were all going to catch it. If we can hold it to absurd as this is hold it to 50 . Thats still i dont know, thats still a lot more people were not going to get to 50 , jim, come on thats 160 Million People. I dont think they will either theyre saying that there is the fact that dr. Gottlieb would mention that number. Were in a strange time now we all any that as we watch moderna shares continue to rise dramatically and you were talking about it at the end of squawk box where we have the line of sight to the vaccine coming, very close and in fact dr. Fauci saying something very positive things in terms of in the spring, younger people being able to walk in. Lets listen to dr. Fauci, he echoed in some way the optimism that jim shared yesterday on the vaccine. Take a listen. By the time we get to april, there would likely have taken care of all of the high priority and then the general population of the normal healthy young man or woman, 30 years old who has no underlying conditions can walk into a cvs or walgreens and get vaccinated i would think as we get through april and may that we likely would have the for those who want to get vaccinated, the overwhelming majority of the people that want to get vaccinated can see all the emotion that zuckerberg showed at that exciting news. But theyre making millions of doses. Thats what pencils millions of doses they havent tested on that many people, we know that but millions of doses, i think this is and pfizer is making even more. I think the issue is we got the logistics, lets get it out, i agree with the president that, geez, cvs is ready, were ahead of europe. I think walgreens is ready and i know that the theyre going to give they got some 20,000 different places youre going to be able to get the darn thing. To your point, things are unfortunately we got to get between now and then, we got some dark days ahead yes and you can risk we bring on the hospital administrators and doctors every day on the show. And none of them have a particularly good news to share at this point. Look, there is very concerned about what the coming weeks are going to bring. I want secretary mnuchin to be like secretary morganthou, got to shut the restaurants. Got to shut them you cant wear a mask. The viral load inside a restaurant is too great. The air doesnt circulate unless youre in certain restaurants that you and i both know have spent fortunes, and, look, i wouldnt i have a chance to open my restaurants and have a few customers. I said, no it is too risky. People keep going out. They go to bars. Give me a break. Shouldnt even go to stadiums. They shouldnt i cant argue i cant argue with you but, carl, the good news again, were getting closer and even though zuckerberg may not have been excited about it, i was excited to hear dr. Fauci say those things zuckerberg was not how many times have he interviewed fauci . What is that some sort of man to man i dont know zuckerberg looks like the cardboard figures you see in the stadium. Oh, man in history zuckerberg. Dont go anywhere hes booing the eagles now. Labradoodles, cronuts, skorts. its a skirt. And shorts the world loves a hybrid. So do businesses. So, today theyre going hybrid with ibm. A hybrid cloud approach lets them use watson ai to modernize without rebuilding, and bring all their partners and customers together in one place. Thats why businesses from retail to banking are going with a smarter hybrid cloud using the tools, platform and expertise of ibm. Do you have a Life Insurance policy you no longer need . Now you can sell your policy, even a term policy, for an immediate cash payment. We thought we had planned carefully for our retirement. But we quickly realized that we needed a way to supplement our income. If you have one hundred thousand dollars or more of Life Insurance you may qualify to sell your policy. Dont cancel or let your policy lapse without finding out what its worth. Visit conventrydirect. Com to find out if you policy qualifies. Or call the number on your screen. Coventry direct, redefining insurance. Very nice. Look at this fancy shot we got here why not a mad dash, opening bell in seven minutes from now kohls. This is a selfhelp story kohls today announces a major longterm Strategic Partnership with sephora, okay omni channel partnership, sephora is this is the scale out of jcpenney. Look when this i bring this as a kind of an analog to what happens in this market, micron announces good news, kohls announces good news. Things that would not go up on good news are just going nuts. You have not been a fan of kohls you lumped them in you changed your mind . Michelle gosk came on our network and was very compelling. A very compelling story and this is big news because what has happened is that kohls was in an existential situation but now they got, good they build out their omni channel more, theyll be a survivor. What turned it for them im not following . Is it omni channel, their ability to yeah, but they also had low prices that worked and when the nonessentials were aloud to remember that ridiculous essential nonessential turns out when the nonessential ban was lifted, a lot of customers came back to kohls. And this, though, is, again, news that as you say, the market is responding to news that three months ago might not have at all. This is the sephora partner. Thats right. And kohls announced in the last quarter, one thuing i like, theyll bring back the divide dividends. This is almost like what elon musk talks about 2023 will be some great year, david. I cant wait. What a year thats going to be thats the year that the eagles win the super bowl, the year that the mets take the world series. Yes they got an 2023, i think you could rely on that. Sephora is basically transferring its business, rolling over from jcpenney so, just, whether it be micron, david, whether it be the drug cohort because of how many because pfizer may be saving the world for all we know. For all we know right but one name that isdown an were going to get to around the bell is zoom that is down after strong numbers. But well explain why. We have a lot more for you on squawk on the street. It is going to be a rally big show. Good. Opening bell is coming up next shares of neo this morning, going to approach an all time high wont get there at the open, but november deliveries more than doubled. Goldman today, jim, says we underestimated the breakthroughs in powertrain. The Services Business and the regulatory incentives. Year to date, deliveries also more than doubled. It was a surprising sell to hold this stock has taken off, even though frankly i havent sold that many cars, losing a lot of money, but there is an endless surge for the next tesla and the chinese tesla and i think that when you see anything that even looks like tesla, it is very dangerous to put a sell on it. David, people like ev. They do not stop looking for ev. Ev is say again, they dont what they cant stop looking for ev it is up, you know, 1200 year to date it is up 2125 over the last 12 months and this morning goldman seems determined to make that move up even higher. To the opening bell and then well share some of the mea culpa. Well share some of that report on nio and look at the other ev companies as well, carl because they have been such a feature. Blackberry. Blackberry up as well. Yeah, there say look at the opening bell tesla too, which we now know, jim, will be added in one tranche on the 18th. And will probably be the number six market cap on the s p 500. Look, i would normally say that a lot of people have to sell in order to be able to buy that david, i actually think that there are people in this new cohort will say, you know what, tesla is now in the s p, we got to buy it. Im sure they will. 564 billion market value at tesla, number five or six overall, though remember it is only 80 of the market cap going to the index elon musk is now, dont know, you may be a simulation, jim, but hes really, really i think he gets three reallies the more it goes p, the mor i realize i am a simulation. If i closes his eyes, he disappears. I think they might. This isnt this is about a dinner i had with elon musk where i criticized a view of his and he said i was 50 chance i was a simulation yes and in retrospect, yeah you shouldnt probably have criticized him. Probably a dumb thing i do a series of dumb things and that was high on the list. Well, were talking tesla, look at shares of nio, you were talking about it up 2. 6 what caught my eye from the goldman report this morning, and sort of has a broader ramification is their estimates in terms of what percent of new car sales in china will be ev. The ev penetration rising from 5 this year to 20 by 2025. They had been at 13 they got it at 53 and 35 , had been to 37 and by 2050, 80 of the cars being sold. Their current forecast represents fouryear exc acceleration from the previous estimate, reflecting a series of technological and regulatory and commercial developments in past months we have seen that in the stock prices of the evrelated companies, even though many of them are only at development, theyre not yet have marketable products out there. Look, ive been dealing a lot with hydrogen, which is another one of these fuels that did oh, by the way, this elon musk doesnt regard as a fuel, doesnt think the fuel cells are anything that are at all economic i agree with that. But the chinese command economy, theyre making buses with hydrogen cleanest fuel. These command economies, whether it be with corona, or whether it be with the idea of having clear skies, we cant beat them. We cannot beat a command economy that says hydrogen will be our fuel thats not the way our country works. Well, jim, were going to find out just how influential an administration that backs those kind of renewable initiatives is going to be, right depends what the senate thinks about that. It is such a reversal from the pro coal drilling in the anwar. I was never a big fan of drilling in anwar. David, how do you feel about that yeah. I was very much opposed. You know who else was who every single oil company. You try to get mike worth to say it, he wouldnt. I know. I thought it was an easy layup to say, you know, have their you want to tweet and say, hey do you want a tweet that says worth betrayed america oh, thats what you think youre fraid afraid of. Arent you afraid of . No. One really hopes there is no development there on one of the last pristine wilderness areas in our country. How do you feel about the valdez what was your feeling of valdez . Was that bad i was against it. With dove soap and stuff. I wish it hadnt happened guys, talking about ev, lets get to nikola, getting crushed again today after the failure of that of getting that gm deal to be what it was at least when it was initially announced, of course, instead of what really it is, which is just a cost supply cost plus agreement, supply agreement, gm not taking equity stake. Still well above where it before they announced the deal, but it has been an interesting trip for nikola and concern there as well about the lockup, trevor milton, of course, the founder of the company, not the ceo any longer, 92 million shares, what is he going to do with them . I dont know is the answer there at this point. But you can see there may be some concern about that. You know what stock likes this General Motors mary barra discerning tremendous discerning but did they do any Due Diligence before they announced the first version of the deal initially, suboptimal just there but, carl, i do think that gm has an ev business that is worth the price of the stock they figured it out. Elon musk has a product that people want. I think General Motors have it is for real right i havent taken a look at all our other plays, quantum scape, fisker, arrival. We have so many, charge point. I havent look at all the fun names. I thought fisker, i watched it, my wife says get me a fisker 2023 what a year that 2023, cant wait according to you, mets win the world series and well get started from there. All i can tell you is the future is brighter than the past after this year it has to be. I remember we talked about citis initiation of fisker a week ago today looking for 60 upside, but judging how some of the names are faring, jim, doesnt look that out of the question jim, i wanted to get you on the vix because were going to were close to breaking below 20, which for a long time, im talking since the beginning of the pandemic, was seen as some to be a signal, an all clear, if you get it with the one handle, that would say a lot about the year to come and were awfully close now, down 40 plus percent in november. We dont talk about it enough it is amazing. It is going in the right direction, when it comes to what the s p is doing kind of confirmtory of the s p one thing i think is incredible about the s p is we had an amazing my Favorite Group is the rails, the rails just they are standing, the rails stand for commerce and they dont have a covid problem. Have you seen the rails . No. Tell me. Well i havent okay, well, Union Pacific had a really, really horrible quarter. Yes and the stock has it has one of those patterns you like, the reverse head and shoulders and the stock went down, reported the quarter, which nobody luke liked, hit 174 fedex have you thought about fedex at all . I have. There was a barclays upgrade this morning collaborative future between fedex Transportation Networks could signal the beginning of a multiyear upside multiyear 2023 this stock, carl, when the pandemic hit, people thought that theyre going to be the loser. I dont know why people felt that way because the way that ecommerce worked, it is like airbnb, i remember when brian chesky said he was worried about whether they would be a loser. They were a winner because hotels dont have the cachet of buying somebody elses house i watch the fedex go up, i remember when they hit bottom, even they were despairing on the Conference Calls like, oh, man. Talking about how long hes been ceo and, yeah sorry, carl. Think about ayear ago when the number one topic on our mind was international trade. And limits on it because of tariffs and trade wars thats when not to mention the difficulties in some of the operating models, thats what barclays talks about today, jim, that you got to change the culture before you can get the model changed to where margins improve. Thats what they see happening i love one of the first lines of their note is, yes, we can read charts and we know it is daunting to buy at these levels. There you go. By the way, i had carol thomo on, she runs united parcel, she told me, i dont know how you can think of it, she told me theyre not going to miss the quarter. Theyre not can you imagine a very good executive saying theyre not going to miss the quarter after u. P. S. Missed how many quarters . Quite a few. Quite a few quite a few a lot of up and down if you have a part time job, quiz, a part time job, at u. P. S. , do you get to keep the brown hat or not im going to go with yes. No. Got to give it back. Really . Yeah. There you go. Guys, with we havent mentioned zoom, other than at the top of the show. It is down almost 13 . And it was a great quarter, of course, but you can see the performance of the stock we talked so often about the multiple, forget to earnings, to revenues that the stock trades at and, jim, ill come to you for a quick rundown here they did continue to grow their user base significantly. With customers over ten employees growing 485 year over year but there seems to be some concerns. Yeah. We were talking earlier, on squawk, it is the margins. I think thats not necessarily what the problem is. I think they have not come up with Something Else besides what they are and they are the very oriented, they talk about education, they did not have a customer list that people would want to rave about in full disclosure, my stepson works for zoom, but we dont talk about it because, you know, you dont do that. But i do think that zoom did not deliver a next level of what is going to happen post pandemic. Now, in zooms defense, i had yesterday the ceos of the people who did the Standard Poors deal with ihs market how do they do the deal, david zoom and yet that did not come up if i ran that Conference Call, i would have done that Conference Call quite differently the zoom Conference Call. Yes i would talk about how they are coming for the enterprise. Yes. Theyre working their way up. Yeah. That theyre going to take control of the enterprise because easy to use. And theyre going to be able to obliterate the competition in the same way that what you smiling at i was thinking about who youre talking about, the competition, oh, yeah, obliterate microsoft, obliterate who . Salesforce now, which will own slack at some point, theyre going to obliterate google which by the way, when you now in your google calendar, schedule a zoom meeting, it actual glif ly gives you a googt link thats a pretty tough competitive set theyre going up against. Smart guys. You didnt even mention cisco is gunning for it but, yeah. I forgot about cisco. Sure. It is how people it is easy you click on it. Everybody else is a little more complicated. People like zoom most of the guests who come on, are they on webex . Some are they on google some most are on zoom so why dont you criticize them. It is like, i hate apple and thats why you have to pry my cold dead heads off of this thing. I see you got your phone there. Nobody is going to take that away from you. Guys, were above yesterdays high were 50 points from dow 30k record high s p, record high nasdaq to bob pisani. Hey, bob record highs around the world, carl. Good morning, everybody. 8 to 1 advancing to declining stocks, great start to the month here some positive hopes on vaccine, of course. With we got start of the month here some vague reports on stimulus plans as well floating around out there. A lot of positive factors for the markets. Look at the sectors, december starting out a lot like november performed with bank stocks and Energy Stocks in the lead. There is your value play, if you want to call it that cyclicals like industrials strong this is exact playbook of november Overall Health care lagging, still on the upside this is exactly what happened as i mentioned in november. Energy stocks very amusing to watch Energy Stocks, they have become day trading pingpong balls here generally on the upside, some had 25, 30 moves up in november but in the last few days, this ev been bouncing all over the place as people havebeen tryin to figure out what opec and intentions are and how big this spring reopening travel story is going to be. A lot of movement in the stocks that are refiners r s trying to figure out the demands in the spring jim was talking about a worldwide rally, hes right about this, were hitting new highs and in some cases record highs in asia. Shanghai is about 2 1 2 year high there, nikkei, highest level since 1991 for japan, believe it or not. And elsewhere, korea is sitting right at or near historic high india also sitting right at or near historic highs as well. Jim is right this is a worldwide rally here the reopening story is very real we had huge inflows in november to etfs. Simple flows into s p 500 funds and russell 2000 funds and big flows into energy and industrials, financials. This is people putting their money where their mouth is not just moving on prices, putting money into the businesses and it shows you the power of indexing, how big it is getting. You heard about the tesla news, s p 500 will put tesla in at the close on december 18th all at once here, and were talking about 72 billion, 72 billion here to go in to buy tesla, that means there is going to be 72 billion to sell folks and thats an awful lot of stocks to sell is this going to go smoothly, hopefully it will, remember in theory, shouldnt change prices at all just moving money around, and overall, the value is still staying the same this is the biggest rebalancing ever, nothing has ever come close to this, thats why s p consulted people to see if everyone was comfortable with going ahead and doing it as for tesla, 600 move for the entire year. Guys, back to you. All right, bob, well see you in a little while. Bob pisani not too far away from mnuchin and powell to Rick Santelli hey, rick. Hi, carl. Indeed, but even before we get to mr. Powell and before we get to the charts, lets do the november file on market u. S. Manufacturing pmi. The midmonth read was 56. 7 so take that eraser out and toss it out, because we stick at 56. 7 it is a midmonth read and the final read and it continues to build. We have now had one, two, three, four, five reads in a row above 50 and this is the highest of them all at 56. 7. As for what is going on in the markets, well, like stocks, Interest Rates are up. And they are getting close to levels, well, the highest yield levels we have seen since we put in the low on august 4th, the lowest yield the lowest ten year yield closed at 50 basis points look at intraday of 10s. You see rates are zoom, zoom, zooming, right along with stocks and if you look at twoday, were well above yesterdays highs. And if you go back to midnovember, you can clearly see 91 is the high yield close that we had since we settled at 50 it is very significant, of course, to see the pairing going on between equities and the fixed income markets, and we know that mr. Powells speaking as carl pointed out and lots of potential for stimulus and that should also not only propel stocks, but propel rates there is one u. S. Market, though that isnt going up. It is going down pretty aggressively and that is the dollar index look at april chart starting in 2018, and you can clearly see these are 31 month lows. And the beneficiary, of course, of that weakness is the Euro Currency carl, jim, david, back to you. Rick, well talk to you later as well. Rick santelli. Well keep our eye out for the beginning of the hearing coming up later on today, john fords exclusive with andy jassy, part of squawk alleys cloud week dont go anywhere. Ok, just keep coloring there. And sweetie can you just be. Gentle with the pens. Okey. Okey. I know. Gentle. Gentle new projects means new project managers. You need to hire. I need indeed. Indeed you do. The moment you sponsor a job on indeed you get a short list of quality candidates from our resume database so you can start hiring right away. Claim your seventy five dollar credit, when you post your first job at indeed. Com home. Its another setback to the nfl due to the covid outbreak. After three postponers, steelers ravens rescheduled for tomorrow, 3 40 in the afternoon eastern time and the reason for that afternoon start is that nbc, which is airing the game, wanted to honor its commitment to broadcast the Rockefeller Christmas Tree Lighting on wednesday night. Jim, you got steelers ravens, you got the 49ers looking for a home, broncos play a game without a qb i mean, the nfl infrastructure has been really hit. Yes, i looked to adam schefter, he said the game is going to happen. They are going to play that game and whats incredible is that the product is beginning to get hurt, and i think that all of us who are watching some of these games, where theres a lot of covid are shocked the nfl would allow a product to be this week but the show must go on is what people say thats how they feel test every day wow. Incredible i mean this is dr. Gottlieb, who talks about it all the time. Theres a lot of people asymptomatic you have a locker room with some people get it, some people dont, but they cant postpone they cant do a doubleheader and theyre going to have the season, adams been damant about it and dead right. Amazing. Its incredible. So you dont really see super bowl certainly in jeopardy at this point nope. And i was hoping that the plan was to make it so that you could test everyone, you could have people go to it. I dont know if they can still do that. I mean, theres just, theres too much of it theres too much covid theres just too much covid. Wow. Guys, well see how wha kind of impact that has on the season which is holding together, to jims point. In the meantime holding on to elevated levels as we kick off december dont go away. I felt like. I was just fighting an uphill battle in my career. So when i heard about the applied Digital Skills courses, im thinking i can become more marketable. You dont need to be a computer expert to be great at this. These are skills lots of people can learn. I feel hopeful about the future now. The teams been working around the clock. Wire, weve had to rethink our whole approach. Were going to give togetherness. Logistically, its been a nightmare. Im not sure its going to work. Itll work. I didnt know you were listening. Setting up for the hearing with the fed chair and the treasury secretary on the wires saying for the First Time Since october, he will speak to Speaker Pelosi about covid relief later on today. Markets holding out hope some compromise is reached with the dow up 332 dont go awhe. Nyer its time for jim and sto trading. The uber post eats, forms that give restaurants and other merchants a bigger seat at the table to try to figure out how they can help. This is obviously really important, given the fact that right now, so many restaurants are going under. The solution is uber the solution you need them. You got to send them you got to get the food to people and this postmates deal is good for them so i think that we should be looking for them and dont forget, doordash which is recommended today by davison, before it becomes public i like this group because its really Just Two Companies now and when i finish getting this deal done, between Speaker Pelosi and secretary mnuchin for the restaurants, youll all laugh at me right now but its going to be like John Travolta with the bucket of blood on saysy spacey, theyll laugh at me tonight i have a big guest trying to get it done before there. Let us know your time line. The one guy youd like to have right now tonight i got him. Who well who would you say is going to be merging and all that other stuff . I dont know. Benioff nice oh, yeah i thought he was going to come on with me because were such close friends. I got that locked up, david maybe ill give you Stuart Butterfield tomorrow, maybe not. Yeah, well well see when we get the deal after the close today. You know, carl, its part of an annex that ive got you know its time to go youve been crushing it this week, jim. Dell, s p, benioff see you at 6 00, mad money with jim cramer 6 00 p. M. Eastern time welcome to squawk on the street. Im Carl Quintanilla with david faber and sara eisen the treasury secretary set to testify in moments well take you there as q a begins ism manufacturing in the meantime, Construction Spending, lets get to Rick Santelli yes, our november read on ism, well, it comes in a smidge light, 57. 5. Were expecting 58 lets go through it quickly. This is the sixth number in expansion mode, meaning above 50, and of course, its the highest since last month which stands unrevised at 59. 3 new orders, 65. 1, thats down from 67. 9, in prices paid. Well, its basically a lateral move from 65. 5 to 65. 4 seems like inflations left the conversation, at least for the moment and finally, ism employment especially important today considering where we are and when the next employment report is, this went under 50 in contraction mode at 48. 4 on Construction Spending this is an october number now the fifth positive read in a row, up 1. 3, almost double expectations, but i have to take all that back, the revision just popped up, last months positive 0. 3 becomes negative 0. 5 , so this read looks strong but we do break that streak of positive months in a row. Sara, back to you. Rick, thank you lets get to Steve Liesman with a look at what we can expect to hear on the economy from powell and mnuchin this hour steve . On the economy, and also well be watching today to see if the dispute between the fed chair and the treasury secretary over emergency lending programs breaks out into the open also be listening for what we can learn from the chance for any new relief from Congress Last week, you remember treasury secretary mnuchin declined to extend five fed programs beyond this month, that was over the feds public objections. So in the prepared testimony Powell States marteroffactly the decision was the secretarys to make and that the fed will return the unused money to the treasury, but he goes on to note that fed actions have unlocked 2 trillion of funding to businesses state and local governments and nonprofits he adds that demand for main street loans, one of the facilities being closed down may increase with the spread of the pandemic on the economy, powell is saying its continuing to recover, but the pace has moderated and the outlook is extraordinarily uncertain. All of those are kind of hints for the need for continuing relief from Powells Point of view looking at what mnuchin will say for his part, americans are getting back to work and an accomplishment 50 of workers who lost their jobs in the pandemic have now come back to work he sharply criticizes government shutdowns saying they continue to impair remarkable progress and cause great harm to american businesses and workers. Mnuchin rnlgz Congress Take the money from the fed on the other unused money thats 455 billion in unused funds from the c. A. R. E. S. Act and make a targeted fiscal package. Treasury saying a package should target Small Businesses and workers, doesnt mention state and local governments. Thats a priority for democrats and carl, i dont like the employment number inside the ism. Makes me nervous about friday but conversation for another day. Yep, back below 50, steve, which is getting some notice, even as we speak well come back to you later on. Steve liesman, thank you sure. Lets bring in mike wilson, talk about the economy and the markets. Of course Morgan Stanleys chief Investment Officer mike, great to have you back thanks for helping us kick off the hour thanks, carl, great to be here im thinking back to a note you wrote november 9th, we recommend investors keep their head on a swivel as the market has a few more cheap shots in it before yearend. A lot has transpired since that call but how much of that is still relevant i think its still a little bit relevant the bottom line is we have had a ton of great news here in the last 30 days, mostly on the vaccine front, which has gotten obviously animal spirits going again and that was in line with our call going into the election, we thought the market was set up very well to have a nice rally we didnt expect it to come back this far this furiously. Were trying to manage our risk reward in the short term versus the longer term 12 months out we remain bullish. New economic cycle, new bull market, want to be physically geared, small caps, all the calls youve been making but the yearend is a tricky process, carl, its about positioning flows, retail has gotten heavily involved, speculative activity again, changes in the s p constituencies, playing with the indices, so thats all were seeing, just being aware this is a time of year when things can whip around a bit. We had a record month of performance. This is not the time to be incrementally getting bullish. So is that more of a rebalancing story as we go into yearend or is that a real decision that some of these lockdowns might not be as surgical as investors hope what it really means is a lot of good news has been priced we have the vaccine news, we have an election thats, you know, gone in a good direction from the standpoint we have a divided congress, which was the best outcome potentially, people were worried about that and the case counts are still going to be going up here as we go into the end of the year, but the market wants to look through that, and so its priced a lot of good news once again, the sentiment measures are about as high as weve ever seen. Were not calling for a big correction like we were in the fall were just saying this is the time where the risk reward is not nearly as good as it was 30 days ago and then, mike, the longer term view remains bullish, buy the small caps and the cyclical stops. How much is predicated on the vaccine and people taking it in large enough numbers that we can get back to normal and eliminate this covid19 pan demme ick . A lot of it is. A lot of it is predicated on us reopening the economy more fully next year. Our base Case Assumption is that the vaccine will be distributed by the springtime, and that by say may, or june, we should be really looking quite normal at that point, because at that point, between natural herd immunity plus the vaccination, you should have enough immunity that people can get back to normal lives, and thats really the story. I dont think thats unknown by the market at this point, but that does need to play out still, right, the fundamental factors need to happen for the market to have the upside over the next 12 months that we envision what about stimulus either extra monetary stimulus, look for clues from powell today or fiscal stimulus from the new administration, and the new congress how much are those things predicated on that bullish view . The monetary side were convinced, the fed is sxhited. Theyve been committed all along and this summer they made another level of commitment by saying theyre going to keep the front end lower for longer, average inflation target so long theyre in and willing to help fund the spending the government wants to do. Now it relies on fiscal. The fiscal lever is the choke point if they cant get something done and also the lever to help us propel the economy into a better outcome if they get something done. Our assumption they will get fiscal stimulus passed in january, we were using a number of roughly 750 billion and that should be enough to get a robust economy domestic recovery next year right now were forecasting real gdp growth of around 5 for the u. S. Economy, which would be spectacular. Mike, last month you did say you cant rule out a rise in the tenyear yield, 100 basispoint rise in the near future. It didnt pan out in november, but is this a case where a watched pot never boils . I think thats fair, carl this has been probably the biggest fly in the ointment for our view this year i have been surprised at how slow the bond market has been to kind of accept the facts which are the economy is recovering at a faster pace than anybody expected, even us and weve been bullish and these markets have a way of resetting quickly so i wouldnt rule out that that 100 basis point move is out there. It may require more evidence that the second wave is peaking, that we have fiscal stimulus happening and that the economy has got real near side visibility on fully reopening so i appreciate it hasnt happened yet but i dont have any lower conviction that rates are still the most mispriced asset in the world, based on the economic outcome that were seeing. Mike, great stuff always good to have you. Thanks so much mike wilson, morgan stanley. See you later. Thank you lets get to john forte, sat down with Amazon Web Services ceo. We hear a bit more on squawk alley but i spoke with aws ceo andy jassey as amazon and aws kick off their annual reinvent conference today, the number two to head of jeff bay zoez cloud player, double the market share of the next largest competitor we talked about a lot of stuff, most of which you can see on squawk alley and talked about acquisitions and potential acquisitio acquisitions, a facebook buying kikt because amazon, sorry, facebook buying customer, amazon has amazon connect a Customer Service and call service and technology and talked about nvidia buying a. R. M. Because amazon works on custom chips in the cloud. He said hes hopeful nvidia would treat the way a. R. M. Operated in the past and allow the rich ecosystem likely the news of the day salesforce and acquisition of slack, two companies that rely on aws for their business. Take a listen. He both slack and salesforce are really significant, important Strategic Partners for aws and we have strong relationships with both of those companies who predominantly run on top of us and weve built a number of things where we worked together to embed each Others Services in one another. If you look at our Video Conferencing service which is amazon chime, that is embedded in slack and in salesforce we have an agreement with salesforce, we sell connect together alongside their Customer Service software so those are important significant longterm Strategic Partners where we will look to build products alongside them to continue to grow the business for both of us part of the message and theme here, which youre going to hear more of coming up on squawk alley aws is a big ecosystem where lots of people can play even if we punch them every once in a while we talked about snowflake, listen for that and talked about apple. David . Thanks, john. Its interesting, well learn later today about the details of the deal, more or less reporting stays the same from yesterday in terms of slack and crm, but when two customers use the same platform and they get together, typically it does reduce the amount that they use and both are now growing and one would expect that will offset it to a certain extent but when you have the same vendor and you get together, you do look for opportunities to potentially create efficiencies. Yes, but david, its interesting. This is an incredibly rich space, call centers and Customer Service in the cloud applying ai to that. Weve got other companies, i talked to a startup rep. Ly cant working on Ai Technology that works on Customer Service. Amazon hoping to ride all of that and get its share and it hopes more of that for the Cloud Business for helping the services run jon, thanks cant wait to hear more about that in the 11 00 a. M. Hour of squawk alley. Keeping our eye on the Senate Banking Committee Hearing. Steve mnuchin and jerome powell, well take you there live as soon as q a begins well get clarity as pelosi and mnuchin will speak at 1 00 on covid relief dont go away. [ whispering ] whats this . Oh, are we kicking karly out . We live with at t. It was a lapse in judgment. At t, we called this house meeting because you advertise gigspeed internet, but we cant sign up for that here. Yeah, but im just like warming up to those speeds. Youve lived here two years. The personal attacks arent helping, karly. Dont you have like a hot pilates class to get to or something . [ muffled scream ] stop living with at t. Xfinity can deliver gig to the most homes. By the time we get to april, there would likely have taken care of all the priority and then the general population of the normal healthy, young man or woman, 30 years old, who has got no jund lying conditions can walk in to a cvs or walgreens and get vaccinated i would think as we get through april and may that we likely would have for those who want to get vaccinated the overwhelming majority of the people that want to get vaccinated. That was dr. Fauci of course last night with Facebook Ceo Mark Zuckerberg discussing the timeline for broad access to a covid19 vaccine joining us is steven marcmarcov ceo of ohio health eugene, what are your expectations for when youre going to start to receive a vaccine, and start using it . Were excited were entering a new and hopeful phase of the pandemic we anticipate that the Vaccine Distribution is a few weeks away nothing is going to mean more to me personally than sewing my front line workers who are literally exhausted at this point receive the first doses of vaccine. It will be the highlight not just of the year but the decade but we are locked and loaded and ready to fight this virus. We have refrigeration units that can store on day one 300,000 vials and Training Staff as we speak so as soon as the protocols get released by the cdc, theyre meeting today, well be ready to go dr. Markovic, do you feel prepared as well in ohio gene set it up nicely were ready and anxious at ohio health, across the state of ohio there will be ten free setup places that are set up to distribute and ohio health has two of those were working on the protocols and the triaging of people, and its going to be an exciting time its really hopefully going to be the beginning of the end. It wont be easy its not going to be fast. It will be complicated, but i really think its going to be a very exciting time yes, dr. Markovich, the end of the end is proven to be difficult. What are you seeing on the ground in terms of new cases and hospitalizations in your area . Unfortunately, in ohio yesterday for hospitalized patients, we tripped 5,000 that is a 200 growth in hospitalized cases since the 1st of november. So its a big challenge for all the Health Care Systems across the state. Right now, there are 700 people on ventilators across the state. In my own system, weve got nearly 400 people in the hospital with covid, and another 350 who are being ruled out for covid. So we have to treat them as though they have covid so literally, ive got 25 of the bed capacity in our system thats consumed with covid, and all the protocols and preparation and ppe that gets consumed in caring for those patients so were doing the best we can to manage our capacity on a hospitalbyhospital basis we have deferred elective surgeries and procedures in order to create capacity and best optimize the use of our staff. People are tired i wouldnt say theyre anxious i think they feel supported but theyre mentally and physically pretty darned exhausted, and we really need to once the vaccine gets out, we need to push on the population to get as many people vaccinated as possible mr. Woods, there was some reporting this week about people who are in the hospital sick from covid who not only doubt the severity of covid across the country, but believe that hospitals have a financial incentive to classify patients as covid in the name of profit, which was something that the president even said on the campaign trail what do you tell those people . Its really unfortunate i think were in the hole several Million Dollars, several hundred Million Dollars as we fight the Biggest Health care battle of our lives and taken a huge financial hit i can tell you theres no physician or nurse or caregiver that i know that is doing this for financial reasons. Were all doing it because we want to be here for the community and the patients and were still engaged in fighting this, so i think the reality is that were having to make sure that we have enough resources to really continue this fight were seeing the same thing in north carolina, as seen throughout the rest of the country, with High Water Mark levels of hospitalizations, so right now, were focused and we know theres some conversations today in congress, but were focused on ensuring that we get the next level of support for hospitals, because we really need to be here for the communities in the next several months as we continue to battle this and the vaccines get distributed more broadly clearly the numbers are going up on hospitalizations, dr. Markovich. What about the mortality rates what can you tell us as far as what therapeutics youre using, what is working and whether you guys feel equipped this time versus a few months ago to handle this and whether thats making a big difference on the deaths in this country and on your system in ohio. Well, i think compared to the first wave earlier in the year, its a different story weve learned a lot about the disease. Were able to manage more people in the outpatient space. Were much better prepared from a ppe perspective, so the people that are in the hospital now have a higher acuity we are seeing acuity numbers that weve not seen ever before across the system. So the beds are very, very full. As i mentioned earlier, youve got about, if youre hospitalized with covid, youre pretty darned sick youve got a good chance, probably 15 chance of being in the icu, and people that are coming in the icu, we had nursing home patients and elderly with comorbidities in the first couple of waves. Were seeing much younger patients in the icu, and some of those folks are actually succumbing to the disease. So people really need to take this seriously they really should respect the virus. Well leave it on that message. Thank you both for joining us. Really informative thank you thank you lets get to our etf spotlight for this morning well look at the first choice dow jones internet index, the ticker is fdn, under some pressure today, still up almost 50 , as you see year to date one name not helping the cause, zoom video their shares are down 12. 5 after reporting better than expected results but you know, given the stock is up, well, over 300someodd percent for the year, you might imagine investors are taking another look still amongst the biggest gainers on the nasdaq 100. Moderna and tesla are the leaders when it comes to that and by the way, 515 is actually the yeartodate gain for zoom video. Sara incredible. Q a set to begin at any moment on capitol hill well take you live to Senate Banking as soon as it begins hear from mnuchin and powell two big interviews on closing bell underwarmer patrik frisk and first ever tv interview for sonia syngal, the gaps ceo, how shes turning around that company. E re. Ith us here on squawk on thstet its been a tough year. And now with q4 wrapping up, the north pole has to be feeling the heat. Its okay santa, lets workflow it. Workflow it. . Just picture it. With the now platform, well have the company you always imagined. Efficient, productive, seamless. Ok, im in whatever your business is facing. Lets workflow it. Servicenow. New projects means you need to hire. Gers. I need indeed. Indeed you do. The moment you sponsor a job on indeed you get a short list of quality candidates from our resume database. Claim your seventy five dollar credit, when you post your first job at indeed. Com home. Were committed to making college more accessibley, by making it more affordable, thats why were keeping our tuition the same through the year 2021. I knew snhu was the place for me when i saw how affordable it was. I ran to my husband with my computer and i said, look, we can do this. [narrator] take advantage of some of the lowest online tuition rates in the nation. Find your degree at snhu. Edu. At Senate Banking, the q a has just begun now, when we have terminated these funds as required by the law, so that we can utilize them more effectively in the next act, the criticism is this fund should not have been terminated. I just find that kind of confusing. Thats also confusing in the context of the fact that we have tried to get the very kind of relief and followup legislation that weve now been criticized for not doing, just a few months ago extending the Paycheck Protection Program that helps the restaurant workers senator brown mentioned extending and improving it, redirecting some funds so we get to those industries and sectors of our economy that have not yet been reached by the facilities and need to have a different kind of direct support system put into place for them adding rental assistance that we need to have, in my opinion, and which ive been working very hard on, to try to get, and as we tried to get these things, they were rejected by the other side, and so its just confusing to me, or a little bit surprising to see these kinds of attacks leveled today in this hearing, and so secretary mnuchin, could you just help make a little sense from your point of view as to why the decision to make the return of these funds away from the 133 facilities at this time is the best thing and what the intent that you had was in making that determination. Thank you, mr. Chairman let me first say, i want to thank the senate for passing the c. A. R. E. S. Act, which was 960 in an unprecedented response, and as you know, i lived in the lbj room for over two weeks, so im very familiar. I personally negotiated many of these provisions as a matter of fact, i brought the c. A. R. E. S. Act with me, because i reference it and keep it next to my desk, and mr. Chairman, i would just ask you to recall, you and i were sitting outside senator Schumers Office with his staff, it was after 1 00 a. M. In the morning on the night that we finally finished this, and i asked you to come to sign off on behalf of the leader and others, the final red lines. We went through this very carefully so i would direct to you section 4029 which is very clear, which says, except as provided in subsection b on december 31, 2020, the authority provided under this subtitle shall terminate. It was very clear. So my decision first of all, i want to thank chair powell because he has been a tricerrif partner in everything weve done and i really want to thank him and the people at the fed. He and i have been speaking constantly in deference to him, i did extend four of the facilities that used nonc. A. R. E. S. Money my decision not to extend these facilities was not an economic decision im surprised to hear senator brown use words like sabotage, no relit mat justification, delusional, malpractice, time for action id be more than happy, senator brown, to come see your staff and walk you through the legal analysis this is perfectly clear. The senate provided Unprecedented Authority to the secretary of the treasury in giving me 500 billion the statute was very clear as a matter of fact, i find it implausible that any member of this committee believe that in voting for the c. A. R. E. S. Act, you are authorizing me to invest 500 billion to make loans in perpetuity, so if you dont read this as an expiration, you must read this, that there was a loophole in the law that i could invest the 500 billion forever, had i permitted it up front, and i dont believe that was the intent i would also just conclude, i echo what senator brown said about restaurants. The president and i believe that restaurants have been unfairly targeted, and id urge congress to support another 300 billion for ppp. This would have a real impact. These restaurants need grants. They dont need loans. Thank you. Thank you, and as you can tell by the bell, chairman powell, i dont have time to ask you my questions but i will have you respond to them either later in the hearing or else ill send them to you in writing senator brown . Thank you, mr. Chairman secretary mnuchin, i see by your testimony today, you really dont understand whats happening in families across our country. Almost celebrating your marvelous work of you and the president that the country so decisively rejected, one of my favorite Abraham Lincoln quotes is he used to talk about going out and getting his Public Opinion bath its pretty clear, i appreciate what you said about restaurants, but its pretty clear that you have left behind the administrations left behind, the president is only concerned about seeing something thats not there, fraud in our election, as so Many Republican judges and a few, a few, a few courageous Republican Office holders have spoken out against about. On our last hearing, i asked you and secretary powell to read a piece by pro publica about a Small Business owner in cleveland who business couldnt get help while the giant corporation occupying the same building has gotten tax support. Im hoping you would have read it and made a more serious effort to understand whats happening in places like cleveland, and mansfield and shelby and springs field, ohio, millions of American Workers are still struggling millions more are out of work. All the numbers are going in the wrong direction. You wouldnt have you wouldnt determine that from your comments today. Its clear you were never serious about fighting i sat in that room, too, in the lbj room its clear you were never serious about fighting for the real people who make this country work, instead of making a deal that would have done more to help them you pushed to make life just a little bit easier for the nations biggest banks now youve killed the c. A. R. E. S. Act loans that were supposed to be a tool to help smaller businesses and their workers and buried the money looks like you and the president and others in the Current Administration are trying to spend your final days in office preemptively, ill use that word again sabotaging the next administrations efforts to clean up your mess but you still work for the american people, even though i dont think youre acting like it, secretary ma miu chin i wish you and your administration would stop crowing about the stock market and stop passing the buck instead of doing the hard work president elect biden and your successor will have to fix the mess youre leaving behind my question is for chairman powell you were arou wi you will be around the next administration and cleanup crew and i appreciate the conversations weve had, where you made clear that Congress Needs to do more fiscal support. Youve also committed recently that even if we take bold action, were not going back to the same economy and that it will be more difficult for workers going forward. So my question is this weve seen how the fed and treasury action supported the stock market and benefited the wealthiest people in this country. What can the fed do, chair powell, to make sure that workers dont get left behind again . Thank you, senator brown. I would say this we have provided and will continue to provide very strong support for the economy, and for workers in particular through the use of our tools, and we remain committed to using all of our tools to their fullest extent for as long as is necessary to get us through this difficult period weve thought about this collective effort, this governmentwide effort as one that involves getting the people and the businesses that constitute the economy across the chasm created by, you know, by the pandemic, getting them safely to the other side, to the postpandemic economy, and i think frankly that the fiscal policy particularly the c. A. R. E. S. Act deserves the lions share of the credit in creating that bridge so far. It may be that we need more on that front, but from the standpoint of the fed, you can be sure that well continue to use our tools, and by the way, those tools would include section 133 facility which remain available to us under the law and as the secretary pointed out in his letter, they can be backed up by Exchange Stabilization funds, should the legal requirements for such funds be met chair powell, does the fed have an obligation to address the problems of inequality that many argue fed actions especially in addressing inequality in communities of color . [ bell sounds ]. Inequality say very important and ever more broadly understood problem in our economy, these persistent disparities along racial and gender and other lines, really hold our economy back i think that the fed has a contribution to make there it is not the principal contribution i think fiscal policy and congress in the private sector, too, have very important roles there. What we can do is a lot what have were doing which is to focus on maximum employment which is your order to us, thats the goal youve set forth for us and to take that idea seriously. I think youve seen with the most recent modifications to our operating framework that we are taking it seriously and focusing on these issues more as holding the whole economy back thank you, mr. Chairman thank you before we go to senator toomey, i have to say secretary mnuchin, youve been accused of killing the c. A. R. E. S. Act loans for Small Businesses i think thats mostly the ppp program, which we tried to reenergize, and extend on the floor of the senate, only to have it killed by the other side, when we were trying to do that, but well continue to have these debates back and forth turn next to senator toomey. Thank you very much, mr. Chairman, and mr. Chairman, this might be the last Banking Committee hearing of your chairmanship, i do want to thank you for your leadership and the really hard work and outstanding work youve done thank you its been a pleasure working with you what i want to do is first of all, i want to applaud secretary mnuchin for closing the 133 facilities by yearend, exactly as the law requires and as congress clearly intended. I want to thank chairman powell for returning the unused c. A. R. E. S. Funds back to the treasury the fact is, congress entrusted both of you with some extremely powerful, unprecedented emergency and yet temporary tools, and i commend you for working together to deploy those tools for their intended purposes, and then putting them away, now that that specific purpose has been achieved. And i think its important to review what was happening, and why we designed the c. A. R. E. S. Act as we did. The fact is, in march, we had unprecedented turmoil in our capital markets, threatening the ability of businesses, municipalities, states to Access Capital and Credit Credit markets were on the verge of completely freezing up. There was a mass investor flight to cash, and many cases there were no buyers in sight. Private credit wasnt flowing to any institutions that needed it, and this freezing of our Financial System was a very serious threat that it could precipitate a fullblown depression that would last for who knows how long the associate director for Financial Stability at the fed noted in testimony, i want to quote because he said the conditions that prevailed in march were unprecedented, far worse than during the onset of the financial crisis in late 2008, or even in the days after 9 11, when the Municipal Market was briefly closed Interest Rates soared, Mutual Fund Investors pulled over 41 billion of assets out of the market in less than three weeks and market functioning deteriorated to the point that buyers and sellers had difficulty determining prices, ultimately this meant that state and local governments were effectively unable to borrow with most new issues canceled for lack of investor demand, end quote. Mr. Chairman, that was the problem that congress was seeking to address to solve by providing the c. A. R. E. S. Act funding for temporary emergency facilities Congress Intent was clear, the facilities were designed to create a liquidity back stop until the crisis passed, and then ceased operations no later than the end of 2020, in any case last week, i would point out that every republican on this committee signed a letter sent to secretary mnuchin and chairman powell affirming that this is, in fact, our interpretation of the law, and the intent of congress i also think its important to underscore how remarkably successful these facilities were in achieving that intended purpose of stabilizing credit markets and restoring the flow of private credit. In fact, they work better than i think most of us thought even possible markets didnt just improve. They didnt just restore liquidity, but we reached record volumes of debt issuance, we did so at low spreads, low yields, affordable Interest Rates, regional banks extended credit to their customers and according to business surveys, unmet demand for credit among credit worthy borrowers is almost nonexiste nonexistent. So let me go through some of the arguments that weve heard for why we should not have closed down the facilities because i think theyre mistaken one was that the viability of the credit markets depends on these backstop facilities. Well, thats clearly been disproven by the fact that the announcement of their end brought absolutely no disruption to any Financial Markets that i can tell at all. The second suggestion by some is that well, we need to keep these facilities around because, you know, some bad thing might happen someday in the future well its always been the case that you could imagine some bad thing happening in the future if some terrible thing happened that threatened the viability of the markets the treasury and the fed should come back to congress and ask for appropriate facilities at that time. Others point out there are whole industries that are in big, big trouble. [ bell rings ] wh that is a true fact with hospitality and travel its up to congress to decide what to do about that. It is not up to the fed to lend money to what are probably insolvent companies so lets be clear. These facilities were designed for a very specific purpose, they achieved that purpose more successfully than we could have reasonably hoped and we should not use them to morph into some other purpose, like as a supplement and or compliment to fiscal policy. I want to thank the chairman and treasury secretary for the outstanding work they did helping to ensure the viability of our Financial Markets and avoid a prolonged depression thank you, senator toomey senator reed thank you, mr. Chairman let me thank secretary mnuchin and chairman powell for being here today chairman powell, in your november 5th press conference, you said the fiscal policy actions taken thus far made a critical difference to families, businesses and communities across the country even though the current economic downturn is the most is he rear in our life time it will take a while to get back to the levels of Economic Activity and to prevail at the beginning of this year maintains monetary and fiscal policy to achieve that. Chairman powell, how long will it take us to get back to precovid levels of Economic Activity and employment without any further Fiscal Relief this Year Congress . It would be difficult to say how that would play out in terms of the time. I will say, though, that first of all, the economy has performed better than expected, more to spikes in cases and nonetheless we had a recovery faster than most forecasters have expected so far nonetheless, we have a long way to go. We have on the order of 10 Million People who lost their jobs because of the pandemic and for reference, thats more than lost their jobs during the Global Financial crisis in the United States so its a lot of people so theres a long way to go, and i think we can both acknowledge the progress and also point out just how far we have left to go. As i said earlier the lions share of the credit should go to fiscal policy and of course timing and the scope and the size and the components of that are entirely up to you i just point out well use our tools until the danger is well and truly passed, and that it may require help from other parts of government as well, including congress thank you, chairman powell. Also in your november 5th press conference, you pointed out to the collective to keeping this episode short as it can be, and avoiding unnecessary business bankruptcies, unnecessary household bankruptcies, unnecessary longterm stay s of unemployment were doing everything we can to minimize them. Were beginning to see that right now. Several of my colleagues alluded to the fact as these eviction and foreclosure moratoriums expire, there could be thousands and thousands of people thrown out of their homes, which will affect i think the Financial Markets and in that case it might be good to have a facility backed by the c. A. R. E. S. Act some of these issues arent hypothetical theyre not sort of a crisis of the future that we dont see theyre very real, in fact, theyre coming unless we take appropriate action that would be fiscal action. Do you think these threats are just sort of substantial as i mentioned in my testimony, senator, i think theres a real distinction between the nearterm and the mediumterm. In the nearterm, we see the spread of the disease and what were hearing from businesses and from, we met with a group of Community Bankers that we regularly meet with a week or so ago, what were earing, there are Small Businesses at risk of going out of business during this winter, which could be a tough few months at the same time, were getting this news about the vaccines which are more effective and come sooner, so there really is in the medium term upside risk here and the other thing ill say is that the fact that the economy was in very good shape at the beginning of the pandemic, that may be one of the reasons why it has recovered faster than we thought and continued to defy expectations of problems. So i do think those are real risks. The risk of Small Businesses going out of business, the risk of people at the lower end of the income spectrum, where the bottom quartile rate is 20 . These are not people with a lot of savings, resources or opportunities right now, and so i think that there are parts of the economy that really will need help or might need help to get that last span of the bridge in place to get to the other side of the pandemic [ bell rings ] i think one of the points youre making is that the impact of this crisis, economically, is not shared equally by all americans. There are groups that are impoverished now and on the edge of even worse disasters unless we act if we dont act well have two separate but unequal groups of americans and thats not a recipe for a country that can move forward thank you very much. Thank you, senator reed before we move to senator scott, i would indicate that we are moving in a few minutes into a series of votes on the senate floor. Im going to leave right now to vote early on the first vote, and then return as quickly as i can and asked senator tillis, who is present here in the hearing room, to chair for me while i am gone. Senator scott. Thank you, mr. Chairman before you leave, id like to say to you, thank you for your leadership on our committee. You have done a fantastic job. You listened to both sides youve led in a bipartisan fashion, a nation desperate to see their congress and Senate Working well and working together and frankly, disagreeing is a part what have we signed up for but looking for opportunities to bring the committee together and bring this nation together i think you have been a shining example of that, mike, and i want to say thank you for your leadership, and to chairman powell as well as secretary mnuchin, you both have done a pretty good job under incredibly negative circumstances and the situation continues to change. Certainly, thank you chair powell for your leadership,for our nation, under these challenging times and secretary mnuchin, youve stepped up to the plate and have provided programs and resources in a way that weve never seen in the history of the country, from my perspective and thank you for your strong leadership one of the things that ive noticed as we worked our way through this pandemic, Small Businesses have been struggling and frankly, as a former Small Business owner myself, i understand the pain and the misery of being in Small Business i also remember the thrill of victory more than i do the ago kn ny of defeat i remember the blessing of employing members from my neighborhood growing up and having folks join the team as customers and seeing the revenues increase and the opportunities for my employees increase, and one of the things that is often missed, missing talking to Small Business owners is the important ingredient that for most of us, our Small Business employees are an extenlgs ex extension of our family. When you Start Talking about the Small Business environment and Small Businesses being decimated by this pandemic, youre actually talking about the fragile nature of Small Business and the absolute implosion of the foundation for so many employees around the country i think weve sometimes dismissed the fact that when youre talking about Small Business, youre actually talking about employees who work at the Small Businesses more than you are the Small Business owner. To that end, secretary mnuchin, you have watched as i have, and you, chair powell, as well, that 20 of all that number is even higher for hispanic Business Owners theyre in the 30s that is devastating to the community and to the employees of those Small Businesses who now no longer have a job to go to and, frankly, in the africanamerican community, that Small Business number is in the 40s. My question to the secretary is minority owned businesses have been the hardest hit in this covid19 economic slowdown do you agree with the assessment that direct assistance, tailored assistance for those in similar situated businesses would have a wide rippling benefit to the economy . I do, senator absolutely and, you know, i would say despite the success of project work speed and the fact that we will have vaccines distributed in large mass, the problem is now, as you said, these Small Businesses cant wait two or three months so i would urge congress again to reallocate unused money and more money to ppp. Do a set aside as we did last time, particularly for the underserved areas. I know that you and senator warner and others have worked on a possibility of 10 billion to be invested into cdfis which could lend 100 billion into underserved communities. So i think there is a lot that can be done and should be done very quickly thank you, secretary mnuchin. In addition to what weve done and can do, if im correct what youre referring to is that the Paycheck Protection Program still has unused resources sitting there, over 100 billion that could be available for Small Businesses right now if congress would get their act together, our act together and make those Funds Available to the market that could have a significant positive impact on the employees of these Small Businesses who today simply cannot find a way forward. With my last few seconds, i think another opportunity that we have before us is to look at the Paycheck Protection Program forgiveness, making it simple and it may take congressional action for us to simplify the process. Do you see any ability in from the administrations p perspective to simplify the process for banks and therefore making it easier for Small Businesses to find a little comfort knowing their Small Business loan that was to be a grant is going to become a grant . Ill be quite brief in responding i would say we created three separate forms so we have done everything we can on administrative action including a separate form for 50,000 and less i urge congress to make changes to the legislation to allow for simpler and again, i would urge congress to reallocated 140 billion that is sitting there and can have an immediate impact. Thank you we can do that today if we decide to do so. Im supportive of that concept thank you so much. Senator menendez . Yeah, thank you very much secretary mnuchin, according to the National Bureau of economic research, at least 3. 3 million Small Businesses have closed 441,000 of which are black owned Small Businesses and 657,000 which are latinoowned businesses. 1. 1 million state and local employees lost their jobs according to the bureau of labor statistics you dont dispute those figures, do you i have no reason to dispute them i assume youre quoting them accurately so how many more Small Businesses do you project will permanently shudder after you end the c. A. R. E. S. Act lending facilities how many more will be laid off as a result of your decision again, let me be clear, my decision is a legal decision, not an economic decision congress can reauthorize this money if you want to extend it i think the Small Businesses need grants. They dont need loans. They cant qualify for main street thats why main street did only 10 billion. And they need ppp money. Let me just say you cited earlier in response to i believe the chairmans questions section 4029 of the c. A. R. E. S. Act as the reason you had to close down these facilities what is wrong with that recitation is that this provision applies to Treasury Authority, Treasury Authority to invest in new facilities and not at built of those facilities to make loans to companies in the real economy. So while im agreeing with you on grants in the interim, we need to use every tool we have no one will be better off after you end the cares act facilities as we enter a third wave and this is not by law its important as an economic backstop it will have real and harmful consequences on our recovery, on our businesses, on American Workers. And, you know, during your previous appearances before the committee, not a single member, we went through the records, even suggested that you should close the facilities in fact, most of us on both sides of the aisle, chairman brown, myself and others have been urging you to make changes to the facilities so that they could provide more relief to businesses and state and local governments. As a matter of fact, in october in response to questions from the Congressional Oversight Commission, you didnt say that the c. A. R. E. S. Act legally required you to end the facilities just said you didnt think they were needed. I ask the Treasury Departments responses to the Congressional Oversight Commission dated be entered into the record. Without objection so there is a choice here and unfortunately the choice youre making is really consequential to businesses, to people, to our recovery. Mr. Secretary, last tuesday a Treasury Department spokesperson said that you planned to put the 429 billion youre withdrawing from the feds lending facilities into the treasurys general fund is that a correct statement . If it applied there is a loophole and noint point of hag the date i was never asked about the december 31st date if congress wanted to extend that, they can now in regards to the proceeds, let me direct you section 4003 which talks about the deposits of proceeds, again it is my intent to completely follow the law and the law requires the amounts transferred to go to the financing account and then to repay any money went to treasury. So, again, well completely follow the law this is not discretionary. Again, i urge congress, if you want to extend this, bring back legislation which would authorize me to do it. You can keep putting the onus on congress when in fact you have the ability let me read section 4027 that provides treasury with the appropriation of the funds on to january 31st, 2026. It doesnt say by or no later than january 1st, 2026 so the funds being moved ultimately undermines i hope, chairman powell youve been listening to the Senate Banking Committee Hearing with the treasury secretary and the fed chair. Definitely one of the more fiery hearings weve h potentially the last for the treasury secretary as senator ptomby said they say its a legal decision not an economic or political one. The fed chair talking about the need for more fiscal stimulus. We do have markets largely unchanged although the widest curve in about three weeks as the market looks for something market getting what they want from fed chair powell. Powell said the fed will continue to provide strong support. And something that investors already knew but its always reassuring and soothing to hear powell say that. Obviously, on the other point, carl, there is a partisan fight breaking out and secretary mnuchin is taking a lot of heat to discontinue the programs something powell is against. You havent seen that interaction between powell and mnuchin on that. Theyve been very friendly saying theyve been supportive of each other and working together we know theyre split on that issue. Theyre turning it back around on congress. If you want to keep the programs going, bring back legislation to do that. So that is where the fireworks are. But as far as investors are concerned, they heard what they wanted from the fed. There is more work to be done on the recovery and were going to be there to do it. Yeah. We know that the treasury secretary is going to talk to Speaker Pelosi later this afternoon. He said a little while ago well see if the bipartisan effort by a by cammeral group of legislators can get anywhere on capitol hill meantime, well monitor the hearing. It is 8 00 a. M. At Amazon Headquarters in seattle. Its 11 00 a. M. On wall street and squawk alley is live