tv Power Lunch CNBC July 8, 2020 2:00pm-3:01pm EDT
welcome back, everybody. "power lunch" is under way first, a mixed bad for markets appear the steep sell-off into the close, the nasdaq once again leading the way, just off records highs, but earnings season could be about to rock that boat. plus, facebook feeling the heat as it deals with the fallout. that's with the election just months away. we're going to speak to a former executive, in fact he was head
of security at facebook, about the next big hurdle that the company is facing. as coronaviruses spike, loews' longtime ceo jonathan tisch will talk to us about his belief about the government's role too revive the travel industry, but also all business in the united states "power lunch" is right now it's agreed to see ygreat tl the s&p 500 is lower by about 2% bob pisani has more on all the market moves. >> hello, melissa. we're near the lows for the day. i want to emphasize what melissa was just saying, because the outperformance is truly extraordinary. what you want to focus on is the
nasdaq 100 while up 16, the nasdaq 100, which consists of the top five five, up 21% this is an unusual dispersion. we're also seeing the equal weight down, the average stock on the s&p is down 12% that's a good way to look at it. meantime the russell 2000 small cap is down 16%. to show you the outperformance, remember these numbers these are the top five these five stocks are $6 trillion in market capitalization, almost 20% not quite, but almost 20% of the s&p 500. up 65% for amazon, alphabet also up we've kept the markets in a six budget here. the first one, of course, is whether the reopening is going
well or not. the stimulus, is there more on the way. treatments, but a couple others ones we've seen with movement. the trade war with china, and then the valuation issue regardless of all these other things, i'm going to add a sixth one. that's the election risk we may be facing here meantime, the ipo etfs, rocket mortgages announced they were filing for an ipo. that owns quicken mortgage a lot of the fin tech companies are doing well a basket of about 60 of the most recent ipos, they tech oriented ipos, biotech as well as fin tech have done remarkably well melissa, back to you.
>> thank you, bob. there are now more than 3 million coronavirus cases in the united states. the white house task force taking about plans to reopen the school meg tirrell has the details. >> hey, melissa, states reported more than 52,000 cases across the united states, or if you go by the june hopkins data, more than 60,000. that is a record in terms of the states adding the most, texas surpassing 10,000 daily new cases yesterday, california adding a lot as well as florida in that coronavirus task force briefing that happened just now, dr. deborah birx highlighted what they saw as signs of potentially hope in these states seeing such surges in terms of what dr. birx referred to, and also specifically in areas like arizona, a decline when that
they are seeing, so they are hopeful this means we might getting close to a turn in the curves in those states vice president pence striking a pot tone when looking at those metrics specifically here's what he said. >> we are actually seeing early indications of a percent of positive testing flattening in arizona, florida and texas we believe the takeaway for this is keep doing what you're doing. >> of course, now we hear a lot more concern from people like dr. fauci. back over to you. >> meg, you know, there's been so much debate as to whether or not we'll see a vaccine sooner rather than later. if everybody could have access to a vaccine, but in the meantime, there is a study that could be under way around convalescent plasma and the ability to protect workers on the front line
>> qaconvalescent plasma could potentially be protective and potentially be treatments. regen ron is already in late-stay trials, so we could see that by the end of summer. >> we've all become biology students again, haven't we earnings season will be the next big hurtle. q2 earnings are on track for the biggest decline since 2008 let's bring in a cup the investors, david katz, and dan suzuki, deputy chief investment office with richard bernstein advisers good to see you both dan who are your expectations? will we see any positives comes out of this earnings season? >> it depends on what you're
looking at if you look at the numbers, you won't see any positives. we all know, having like tess other data out there that the second quarter earnings season was probably miserable, but it's a bit backward-looking to look at that numbers, so companies will tell you miserable, but things are on the upswing now. what's less important for me is the numbers that they post, but i'm curious how they balance, you know, the focus on preserves cash and cost cutting and profitability. if you're more focused on the former, i think that's more of a negative as a whole, but if they're more focused on the long term and growth, preserving their employees and spending on growth, i think that's more bullish of a growth signal. >> david, what about you from the value standpoint? what's the theme that you're looking for this earnings
season >> well, we agree with dan we're expecting a fairly miserable earnings season, but it's crillically important to put it in perspective. we think the market will focus less on this quarter's earnings season and more about what companies talk about for the balance of the year, their balance sheet, are they good are they seeing demand pick up then the market will start looking toward 2021, looking for a pretty reasonable stock market so we're not expecting the current quarter to be particularly good or bad in terms of moving the market the actual earnings will be poor, with certain sectors being worse, a few session broadband outliers like consumer staples. >> i they are we're all in agreement that it's the forward guidance, but dan, how confident are you that they can give guidance, particularly towards the third quarter. we're at a critical juncture, the ends of july, stimulus
checks to consumers, unless another stimulus policy round kicks in there are things still unknown about how it will impact consumer behavior, so there demands, we could have seen that pick up, but we don't know what it will be in august or september. >> exactly if you're going into this earnings season hoping for a lot of visibility and color from company aguidance, that's a bit hopeful. and to your point, a lot of those uncertainties haven't gone away in fact, you know, to what you were saying, there's probably even more uncertainty so i think for that very reason you'll see a number of companies issuing guidance continue to be low until it's very much about what have companies told you about the trends over the last four weeks, and hower they reacting are you going to see wholesale cuts in advertising budgets and
more cuts to cap ex? if that's the case, you know, there's a lot of companies that will get impacted by that. >> let's bring it down from the high al attitude iscussion you mentioned you feel like consumer staples might be attractive at this point anything else? what's on your list? >> we looked at it on a more stock-by-stock basis we like cisco, cvs we have not liked the electrical utilities. they've been poor -- the yields are now pretty attractive, especially relative to zero in a money market and we would be very wary of the meltup in technology now is not the time to jump aboard the fang stocks >> dan, was about you? i would have a barbell i think owning energy and materials and transports for that matter, they're very
leveraged, but i would balance that with a focus on quality and some of the more defensive sectors like healthcare and staples. i think always have gold in a portfolio is just for protection and diversification. >> legitimatgentlemen, good to u both united airlines warnings as many as 36,000 layoffs could be coming on the 1st. phil >> we knew yesterday when they had a town hall meeting saying tens of thousands could likely lose their jobs this was not going to be good news. they outlined the specific jobs that will le cut october 1st, the question is will some take an early buyout or voluntary leave? it breaks do you think like this overall you're talking about 36,000 employees who will have their jobs eliminated come october 1st. that amounts to 45% of the
frontline workers, in other words workers who interact with customers, 45% will be eliminated come october 1st. the layoff notices, as you look at shares of united, they will go out in august they still need to see if they can get early buyouts. and then in august they'll send out the layoff notices the problem is demand. we've talked about this for some time there's not the snap back in recovery that many people were expecting. in fact, if you look at the latest passengers levels e. they're down anywhere from 72 to 75%, and airports around the country add in the covid-19 quarantines in the tristate area as well as massachusetts and chicago, and you've got more people saying, you know what i'm going to hold off booking a trip right now if you look at the airline stocks today, keep in mind that starting next week we'll get the q2 financial results starting first with delta that will happened on tuesday. that's when we'll get a better sense of exactly where the
airlines are on the important metric of cash burn and liquidity. >> phil, which airlines deserves the most cite any? how concerned are analysts about, let's say united versus american >> analysts will say american is the one they are most concerned about because of its debt level. the cash burn is higher than southwest, the daily cash burn so that's why it gets more scrutiny perhaps right now >> phil lebeau, thanks. coming up, facebook says it will not bow to the current pressure to the advertiser we'll talk to alex stamos, he used to be the chief security officer. plus the travel industry trying to get back on its family
that they, quote, watched the company make painful decisions, the decisions that are serious setbacks for civil rights and saying facebook has not devoted enough resourcesto this issues and the algorithms fuel extreme and polarizing content, warning that facebook could be weaponized to suppress voting. auditors say facebook should bring in civil rights experts to and should be consistenty the policies sheryl sandberg responding, quote -- as hard as it's been to have our shortcomings exposed, it's undoubtedly been an important process for our company. the auditors echo the criticisms of the -- nearly 1,000 ties e advertisers, calling their meeting yesterday dis
appointing shares of twitter is up based on rumor of of a subscription service. the ceo jack dorsey has said in the past he ade kicked around an idea snap shares are up more than 5%, increase from bank the america getting back to facebook at home, for those at home keeping track of the head winds facing -- that is separate, those two issues are separate from the issues every section 230 of the communications decency act facebook has been engaging civil rights groups for years now. they had issues regarding targeting ad on descriptions fo
things like real estate advertisements when they made the changes to the targeting criteria, they said le will undergo this two-year-long audit led by civil rights leaders the fact that those results come out today echo the complaints of the boycotts and the nearly 1,000 advertisers that are participating seems like facebook has certain issues to address. stick around, julia. worries are growing on how quick the social media giant handles the election issues. alex, great to have you with us. what is the greatest challenge facing the company we touched on a few of them just now with julia.
>> well, i think the biggest challenge is facebook has put itself into the position of being arbiter of was acceptable speech, and they were placed in a situation where powerful sourc sources, people who are currently in government as well are on very different sides and because there's no legal framework here, it's up to facebook it seems in a bitof a happen hazard manner. >> had there been anything done since the past election for allowing election interference >> to be clear, i don't think there's another company dealing with more.
people have been working on a dedicated team the approximate is where you have people at that level building these teams, building these processes, looking for and trying to ferret out groups trying to interfere in the election. that's overshadowed by the big political decisions being made at the top level of the company. whatever the team does to try to improve their enforcement, it doesn't really matter if you're in a situation where it looks like the largest impact on votes disinformation might come from the position itself. what has happened is facebook has effectively exempted facebook leaders from some of the rules being applied. that's the core of a lot of this controversy. so i think it's hard for them to get out, just doing better by having a bigger team and better
contact, isn't going to do much for them, as long as mark zuckerberg is dealing in his hee heels. >> speaking of that digging in his heels, as chief security officer, you worked closely with mark zuckerberg, you know him. i'm curious your thoughts on his motivation right now he's resisting change being discussed by this audit that came out he's resisting change that the advertisers are demanding right now, what is his motivation? what does he care most about the brand or the bottom line >> it's hard to get into mark's head on some of these things i think he feels like he's probably taking a principled position here around what kind of control facebook should have over political speech. to be honest, this is actually a hard problem there is a reason why in our country we don't have laws around this, because we have
decided that more political speech is generally better, and that it's very dangerous to allow centralized powerful organizations to control that speech we're not talking about whether people speak or now, but about amplification, that's the mistake that mark keeps making, which is he is considering only whether or not the speech exists or not and whether or not facebook should be seen as censors, in? cases democratically elected leaders, when it should be about what kind of ability, does facebook have well beyond what would have been possible five, ten years ago before everyone was on social media. if he changed his view on that and applied more of a subtle kind of model to this, i think he would do a lot better the company that mass done well is twitter twitter has decided it's very difficult for them to de-platform of united states, if they can -- if there's a situation where an elected
politician comes out, they will label it as such, use their first amendment right to say we -- and they will limit the spread of that message, so they have found a middle way. that's the middle way, if market had adopted a couple months ago, facebook would be in way better shape. >> it's a middle way, but then you fall into the category of being the arbiter of truth, which is exactly what mark zuckerberg does not want to be, because then you played a role of publisher >> but then there's another issue and another thing that just came out today, is that facebook not wanting to be the arbiter of truth itself, has created this council to be sort of like a supreme court for content on facebook. that was established about a year ago now we're hearing it's not going to launch until later in year, until fall this is an organization they need to sort of instantaneously to be making these calls in real time, and if they're saying that
organization is not going to be up and uning until after the election, that's a long time between now and then where they'll be making these calls on their own. i think zuckerberg wants to make sure he's not jensors people, but at the same time you need the organization to make some role in making the decisions. >> great conversation, thanks, guys and still ahead, tesla near the report high, as the rally takes a bit of a breather, but a top tesla analyst says bears beware he'll explain why he thinking that stock do surge in the next two weeks. gold has crossed $1800 is. and one trader thinking there's more room to run ow, it's made m, ow, it's made m, i'm closer to my retirement days than i am my college days. hm. i'm thinking... will i have enough? should i change something? well, you're asking the right questions. i just want to know, am i gonna be okay?
welcome back to "power lunch. i'm seema mody gold topping $1800 for the first time since september 2011. one of our next guests sees another goalpost our trading team today is here boris, what do you tie gold's recent yoism performance two ed fed low inflation? >> i think it's all those things i wrote today that gold is the real bitcoin a little snarkily this morning it's making the bet that inflation is starting to pick itself back up of course, is the balance sheets have ballooned because of the covid crisis, but what's different now, from the time of
2008, 2012 when we had the qe, all of that balance sheet that is gone to surreptitiously gone to finance the fiscal expansion rather than the bank reserves. that means the money will -- that's likely going to drive inflation higher of course, you can have higher inflation. the banking will still have to keep rates very, very low, because their first and foremost priority is to maintain a momentum, maintain expansion as much as possible they'll suppress interest rates, a and, of course, gold loves nothing more than interest rates going lower and lower. that's why i think it has a chance to test the 1921, which is the all-time high, as we move along. lastly the rally for gold hag orderly and steady
we haven't seen this kind of parabolic rise, robin hood investors going in there, so i think there's a way for it to go >> craig, you're tracking the stock. what is the next level to watch? >> how do youing in the stimulus and not expect to get in inflation in the future? as i look at the chart, this has been a ten-year base in the making as we're moving above this level, there's zero question in my mind we'll trade up about 6%. but when you see bases these big, i've always been told the bigger the base, the bigger the move you could have a substantial higher price in gold as you start to break out even above that 1912 level.
thank you both melissa and bill, back to you. we'll be joined by jonathan tisch to see how his business is handling this pandemic and shutdowns. one analyst is telling his fellow bears to stay in their caves. stay tuned now the latest from tradingnation.cnbc.com and a world from our sponsor stock slices.
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coalition of labor unions and social justice organizations staging a massive workout from next month organizers are asking workers to walk off the job for about eight minutes on july 20th oprah winfrey, lionsgate and "new york times" are teaming up to produce movies and tvmt shows based on the paper's 1619 project. in richmond, virginia, the soldiers and sailors statue has been taken down. it's made out of 13 blocks to represent all original 13 states. and at least 58 people have deed and more than 3.8 million people have been advised to evaluate that's the news update this hour i will send it back to you, bill clearly the pandemic has hit the travel and hospitality
industry head-on hotel occupancy nationwide averaged 44% last month. while that's actually an improvement, it is still way below the 84% occupancy we saw this time last year. that progress is being threatened, of course, by the reopening rollbacks in some states that have become hot spots. last week tilman fertitta called for federal guidelines to give more guidance to industries. >> let's not have experts in every city, state and county, let's get the smartest people in the united states into the oval office, and let's come up with a system and a plan and give everybody clarity and do everything by percentages. if you're a small city or big city, small state or big state, we all play by the same rules.
let's find out what our next guest thinking about that. we welcome back jonathan tisch, co-owner of my beloved new york giants always good to see you thanks for joining us. >> thank you so much for having me today you famously were one of the owners to try to revive the tourism industry to bring people back to the big apple. this time around, do you use the same strategy? what do you do, and what role do you think the federal government should play? >> there are some opportunities, there are some similarities to think back to 9/11, where we really put aside our individual concerns and work together towards the greater good our industry was once thought of as disparate entities --
restaurants, broadway as our case in new york, travel companies, the credit card companies, they all did their own thing. today we've come to understand that by speaking together, speaking with one voice, telling the story about travel and tourism, we can be much more effective. we do it through our industry association, the american hotel and lodging association, travel association. they are very effective at helping us tell the story. the story as it relates to rebuilding tourism today is a bit more challenged than t9/11, but on september 12th we came together to come up with a simple message new york city at the time was open for business. that message can be used today, as we look at the national travel and tourism industry and the opportunities. our industry is open for
business now, granted it's going to take some time. we are facing enormous challenges that none of us have ever seen before, but by working together, in partnerships, and to your second part of the question, there can be a partnership with government. there is a role for government to help us have a consistent message, to help us say that certain marks are open granted, we have to abide by certain regulations, state regulations, and it changes rapidly. i know this past weekend we were looking forward to a pretty robust couple days july 4th weekend in miami, then they closed the beaches, and then the curfews and they closed the restaurants. we can work with government, we can be effective we need to spread the message that our entities are open for business, and please travel, understanding that we take your safety at the most paramount responsibility we have is to
ensure the safety of our team members and our guests. >> you know, those rollbacks must make it virtually impossible to plan ahead what's your vision for the rest of the year if things change to rapidly what are you planning for. >> i think it's looking at this in pretty digestible pieces. right now we enjoying summer drive usiness. it's transient very beneficial for florida, for texas, for california
hopefully after labor day, there will be a bit of a bounce back in corporate that depends on several factors if you work for a large corporation, the ceo has to feel comfortable to let their men and women back on the road, and that's lends itself to hopefully when we might have a vaccine to need to feel comfortable, our ballrooms are so big that if you want a socially distanced meeting, we can do that. we can make sure you are safe and secure international traveler is really important. what is the sale pitch, though, jonathan, to a business to say, you should let your employees
travel and stay at our properties when people have so seamlessly adapted to having zoom meetings and zoom conferences, and microsoft teams meets, et cetera 42% of your business was group business, so this is a very important component, but if i'm going to have an event, i'm going to be six feet apart from other people in a giant ballroom that doesn't sound like much fun. i'm old enough to remember this, we had a saying that you can't fax a handshake. we don't use fax machines anymore and not allowed to have handshakes, so we have to come up with a new marketing line we can use. people want to travel, yes, technology is having a huge impact on our industry currently, but there is pent-up demand there's nothing that can replace being in person, having a conversation we're hearing that also on the other side of, do we still go back to our offices?
i want to be near my men and women. i want to hear my -- a socially distanced meeting might be different, but we'll get there we're having some weddings right now. we're doing okay we know that we will provide enough to socially distance a wedding people want to travel, they want to -- and business travel will return. >> before we let you go, jon, i'm dying to ask an owner of the nfl,ings will there be a football season this year? what are you guys talking about? >> bill, certainly everything is working towards have 32 team most train camps start in three weeks, i think in the past few
months we were able to keep in touch with our fabs through virtual ways of community indicating we hope to be able to put a product on the field their medical experience, their cdc, but once again the safety of our players, the safety of our fans, that will dictate the answer to your question. >> as driv. fauci likes to say, the virus dictates always good to see you, jon. >> thank you so much you bet. coming up, the incredible ride for tesla, the to be up more that 500% we'll talk to a scared bear, coming up. - [narrator] at southern new hampshire university,
we have some breaking news julia? >> that's right, melissa cnbc announcing that former fox news anchor shepard smith will be joining cnbc to host a one-hour evening program monday through friday the newscast will be called the news with shepard smith will launch in the fall he will be cnbc's chief general news anchor and chief breaking news general anchor spent 23 years at fox news channel. now, smith left fox abruptly in october 2019 after standing out on the network for his criticism of president trump, who had repeatedly criticized smith.
cnbc's chairman saying, quote, we're thrilled that shep will continue his pursuit of it's truth. smith saying i'm honors to continue to pursue the truth for those who have been following my reporting for decades in good times and in bad now, my boss is saying that smith's program will go beyond the financial markets to stories across the entire landscape of global news. shep will join us here on cnbc tomorrow on mosquito"squawk on e street" at 10:00 a.m. >> speaking personally, we have close mutual friends i'm thrilled he'll be joining us here certainly a well-respected journalist we welcome him aboard here to cnbc julia, thank you very much coming up, the impact of the coronavirus and the social
compared to the same time last year through june 42 departures, compare to 23 during the same time period in 2019 and the finding from outplacement firm is really interesting when you consider this the same part of the economy, the bars, the restaurants and hotels that were the most impacted by covid lockdowns. the report suggesting the employees may have worked its way to the c suite top sector for ceos, government, that does tend to top the list that's followed by health care and the service industry guys, there were also at least three departures due to race and racism senior vice president saying in the report black lives matter movement may lead to #metoo reckoning for executives but executive teams overall as workers begin to demand equity in hiring practices. >> so sounds like the fallout is
to come from the social justice movements. >> it certainly does maybe people aren't protesting on the streets as much anymore but there is certainly cause for racial inequality all over america. that may be for quarters to come. >> thank you rahel. >> thank you, rahel. take a look at shares of tesla, above $1300. up next, we're talking to an analyst whose price target is $300 minus the one in front there his warning to fellow tesla bears is coming up next. don't forget, you can always watch or listen to us live, on the go, on the cnbc app. back after this. introducing stocks by the slice from fidelity.
now you can trade stocks and etfs for any amount you choose instead of buying by the share. all with no commissions. stocks by the slice from fidelity. get your slice today. tesla shares lower after a strong run but playing catchup goldman sachs upping price target to $1300 and barclay out with a note telling bears to stay in their caves, nothing to
stop the run despite its own overweight rating. brian, great to have you with us. >> good afternoon, melissa. >> on a fundamental basis, you have been a longtime bear. yet it sounds like you're sort of acknowledging there's this lift to the company because of the possibility that they could be included in the s&p 500 now. >> yeah. this is our second quarter, we had one first quarter when we were above on deliveries and following that on earnings this quarter we're also looking for positive cap earnings, which would qualify for s&p. despite differences on calculation, especially in a market like we have today with tech stops, that's hard momentum to fight so. hence, day in your caves. >> what are the fundamental bear caves you have, brian. i'm wondering because so many of the bear points have faded the worry about cash, ability to
access capital, that seems to have largely disappeared and that has always been a major tenet of the bear caves. >> yeah. it's really what do you value a company that's primarily, despite some of its other business, an automaker what kind of margins can it make four or five years at what kind of volumes and discount that back. >> okay. so how do your forecasts in terms of volumes different from what they are forecasting. they have been able to hit most of their targets at least for the past few quarters. >> we think in our valuation, we're using about 700,000 units at a little bit better than industry average margins to get to where the stock is you'd have to assume it could be several million units at margins two to three times the mass market industry and even above what luxury carmakers have gone where we disagree with other we
don't think there's a big business for tesla, we're skeptical of the energy business yet in terms of where the momentum can go, short-term data points off of what i would say would be lowered expectations are, in fact, beatable. >> brian, one wild card you haven't brought up is the company founder. there are plenty of investors, i'm sure, quote, unquote, betting the joke they are investing in tesla because of elon musk, not necessarily the business itself. that's a pretty powerful motivation for a lot of people, isn't it >> yeah. it's again why we're not fighting it short-term at all. we think the reckoning, if there is going to be one, could be more when we get to second half and fourth quarter if this were a real growth start we'd be talking about things like same country, same model sales. if you back out china from this quarter, back it out from a year
ago quarter, the rest of the world shrunk 28% of course there's covid, of course there's challenges. that isn't so different from legacy automakers that sum them all together and barely get the market cap for many of them. >> why fight this, brian i understand you have a model, you're a fundamental analyst you do acknowledge there are other forces at work here and perhaps even another force could be the scarcity value. there aren't too many value propositions for somebody that wants to invest in the ev space. >> we're seeing value propositions come to market. you've got some specs out there. since i'm a veteran of '99, i don't think scarcity around a hot theme is enough. in the past i've compared this to cisco and qualcomm. both absolutely great companies. i would argue with less of the key person risk that you have with the tesla founder, both of whom have struggled over the decade to get back to their '99,
2000 levels. >> right okay brip, thank you. interesting note, brian johnson with barclays. >> it's a momentum play once again. it was for years, then it wasn't, now it is again clearly. >> it's a favorite of traders. that's for sure, bill. >> for sure. thanks for melissa thanks for watching "power lunch. "closing bell" starts right now. >> thank you, bill and melissa welcome, everyone, to "closing bell." i'm sara eisen with wilfred frost as always. s&p 500 drifting along the flat line now but nasdaq is surging again. it's up almost a full percent, back near record highs, 59% of trading. let's look what's driving the action 3 million cases in the united states with concentrated surges threatening reopening across the country. that has reopening trade weakening. airline stocks are sinking as united airlines warns thousands