tv Squawk on the Street CNBC October 22, 2020 9:00am-11:00am EDT
numbers, 787,000 initial jobless claims for the last week that's down from last quarter, last week, when it was 898,000 and below the estimate too of 875,000. that does for us today joe, andrew, we'll all see you back here tomorrow right now, time for "squawk on the street." good thursday morning. welcome to "squawk on the street" i'm carl quintanilla with jim cramer and david faber. futures coming off their overnight lows as it is really a banner day for q3. tesla, coke, at&t airlines, dow, we'll get to all of that the final presidential debate tonight. pelosi on stimulus and claims better than expected road map begins with the earnin earnings >> kwiby is calling it quits six months after its debut why this streaming service struggled to fine customers. >> and stimulus and election
uncertainty, stocks poised for what is called a muted open so far. of course it is 29 minutes away. carl >> all right, jim, we're going start with tesla you've been talking about it all night long and the debate continues once again, five quarters of profitability, but, again, the bears keep bringing up these regulatory credit sales. >> well, i thought that this was a really fantastic quarter couple of reasons. one is that if you look at the financials of tesla, they are as clean as can be. and i can argue that this company is doing incredibly well, the conference call was a conference call that reminds me of people who just want to tell the truth, straight as can be. elon musk, i'm not saying he's restrained or in a straight jacket, but what a terrific conference call. it is very hard to think negatively about this company. i know that there are people who talk valuation, but there are a
couple of upgrades today and they can't fight it. the reason why they can't fight it is because when everything works, it is very difficult to argue what the price should be because right now, this company is doing incredibly well and they make as many cars as they say, what you're going to say is, you know what, i know that it sells at a gigantic price to earnings. but when i read through the tesla notes, what i read are analysts who are saying i can't fight it anymore i have to like it. >> yeah, i did notice one of those factionalably late baird upgrading to outperform. look at the move in that stock i'm not sure you want to weigh in and say you're upgrading now. that's embarrassing. when you get to the metrics you're looking at to try to determine what a price should be, granted if the company is operating extraordinarily well, i still wonder what is an
appropriate multiple, they still largely are, again, you argue they're a technology company >> that's what i -- you have to. this morning there are two price target bumps for ford. i happen to think ford doing extremely well they decided not to lose as much money as they used to. talking about jpmorgan going from 7 to 9, barclays, 8 to 9. david, these are companies that are bound by the conventional four walls of the spreadsheet. people are not going to give ford any of the credit because they don't like this whole model. i had mr. fister on last night what those guys do is make a car. okay and it sells because it is great looking. and that's what i feel about elon musk, he makes cars but he's fully integrated. the cars -- whatever he sells, whatever he makes, he's going to tell no dealer network and now starting to say the same thing in china what you see is a frictionless model. you have the analysts who don't know what to do.
they really don't. they have been wrong they have been so wrong that it is better to say, you know what, i never understood the valling with a, but i think the company is a good company. that's where the people are coming down. it is amazing. i can't think of another place and time i've ever seen it >> no, really? >> no. a company where -- where a ceo is masterful, where a company has done amazing things, and the financials no longer seem -- remember the short sellers would say, the financials are falling, look at the news, i know the credits matter, but what really matters with tesla, it is flawless flawless execution, even in the time of covid, they did everything right and, carl, i just read it and think, if this were a tech company, it deserves to sell exactly where it is selling. >> when you say the credits matter, they're selling 100% margin, selling cars at a loss,
and cutting prices, so when do the credits stop mattering >> i struggle. i don't know look, it is still cheaper than what we -- yesterday, phil, does phil ever sleep? he had a piece yesterday about the hummer, the ev hummer for $110,000 elon musk's goal is to make the cars cheaper and cheaper every year and the battery go down i think they're lowering the prices very henry ford-like without the ideology he's going to make the car cheaper. i feel like it is -- people are trading in stocks before there were commissions and then traded even more had they got rid of commissions. i think tesla -- if they could make a million cars, they would sell a million cars with or without that credit. that's how strongly people feel about this car bitcoin is the only other asset i've every seen that is like tesla. people just -- who own it, they just will not let you say aed
bad wo bad word about it. fister worked at one point with elon, but another great designer, i went to the lamborghini factory. they made five lamborghinis the day i was there, full day. tesla, lamborghini, fisker, those are the ones that people say, flawless. flawless when i hear flawless, i say how i do value that as if it were just gm? i can't. it is unfair to gm but i can't. >> yeah. you guys are right about the latecomers on the street j & p and baird to outperform today. >> it was painful. >> i think it was baird who said it is not too late for us to join the party >> yeah. >> that's some -- what a party, man. >> you can say that, but i'm not sure that's -- >> he comes in with a lamp shade, david lamp shade on head >> quite a party it has been quite a party.
>> the j & p is notable. must tip his hand as if he hasn't missed the last ten years, talking about the future, which is great you used to make fun of people like this, now you're on to bigger things. is that that it is >> is that what it is? i don't know i rely on you. you're going to be my biographer. >> the favorite chronicles, starts out by saying the world is lousy, people are terrible and i don't like to shop. >> we have so many earnings to get to this morning before we get to our parade of ceos as well i want to hit at&t that will take us into some of the news about -- >> you're going to be positive >> it is interesting, so many people want to focus on the performance of warner business the company continues to be hurt by the fact that movie theaters are not open in key areas or if they are, few people are coming. production started up again. i spoke to the cfo john stevens on the phone about an hour or so ago. and he said, listen, things are
starting to get going in terms of production. they're not fully there. but they are starting to operate, starting to make movies again. when there is nobody to show up to watch them, it hurts your business that part of the business, warner we're watching, 38 million hbo max subs, ahead of what they forecast even for the end of this year. or for, yeah, they also had an increase in activations, more than doubling in the quarter to 8.6 million from last quarter and again 38 million, that exceeds what was their end of year target of 36 million. but it is the wireless business that is shining this morning for at&t and the reason the stock is looking up almost 5% because it was quite strong. they added more postpaid subs than did verizon, for example, they had their best ever postpaid phone churn, .69% i asked stevens about whether this environment we're in now is going to be one that is
characterized as significant price cutting, subsidies, promotions, given the introduction of the iphone 12, with 5g capability he says, no, proportionally it will be what it normally is in terms of a new phone, similar to what we heard yesterday from hans vestberg, who joins us, the ceo of verizon he said, listen, we're going to have a friendly upgrade cycle for our customers. the people who we know are paying us and we know have been great customers, we're not going to be going to the market trying to get a customer we don't know, we're simply going to troy to keep the ones we have, make this what is the first of a couple of upgrade cycles and be an important one and do well by them, our existing base. .69 churn is what you want the balance sheet, $148 billion in debt. that is down significantly 2.66 times ebitda right now. they sold 50 to 60 billion in debt just over the last 120
days average term around 20 years, average yield about 3.5% they are borrowing extraordinarily cheaply. overall, all in, they're about 17 years in terms of the term of their debt at 4.9% interest rate, pretax, of course. and they continue to sell assets jim, the dividend you're questioning to some except yesterday seems to be quite safe there at roughly in the 50s, low 50s of free cash flow. >> i did not count on the churn. i didn't count on anything with wireless being that good they did a great job and i wonder whether -- do you think the elliott people played any role or do you think this was just theirs? >> i don't know. i don't -- that's not clear to me that that would be the case. >> look, i see a good quarter, i don't try to find a hole in it, this is a good quarter and it made me feel better about the dividend if you didn't feel better about the divdividend, you hate the company. >> the stock has been nothing
short of horrific. >> horrific. >> they're going up, they're going down they have been hit by covid. >> they sold all those assets, david, that's a great story. >> and they continue to. no -- nothing would be shared with me in terms of directv when i ask the questions about where things stand, but we can tell you they continue to move forward with that and perhaps other asset sales as well. another 3 billion or so they're closing in sales that they sort of did bring into
the last quarter. coming up -- >> congratulations to them. >> earnings, the pandemic and the economy. big morning on tap the ceos of dow, southwest, whirlpool, coca-cola, and we're not even done there. then lance fritz, union pacific ceo. and jeffrey katzenberg and meg whitman will join us to talk about why they're shutting down the streaming service six months after it started don't go anywhere. hey, dad!
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senate judiciary voted to a advance judge barrett's nomination to the florida. >> reporter: the senate judiciary committee has voted in favor of amy coney barrett to fill that vacancy on the supreme court, sending her nomination to the senate floor for final confirmation the vote tally was 12-0 as democrats boycotted this meeting over complaints that republicans are ramming through her nomination too close to the election
democrats know there is little they can do to stop this process. guys, her final confirmation vote is expected to be taken up by the senate on monday. david? >> thank you shares of dow are rising this morning, this after third quarter earnings rebounded from the impact of the coronavirus on business but there is still an uneven recovery for the near term across markets joining us is dow's chairman and ceo jim fitter ling. let's get to the global outlook if we can, you give us a pretty good one, you said on that outlook you're quoted as saying, you know, though the third quarter rebound was significant, recovery has been uneven across markets, expect this will continue in the near term. give us a little more sense as to why you're saying that. >> good morning, david we saw good demand in the third quarter, it improved subsequentially from second
quarter. but we still see some markets that are not back to precovid levels if you look at areas like packaging, food and specialty packa packaging, industrial consumer packaging, if you look at things like health and hygiene markets, electronics, durable goods, automotive, all strong, all making a comeback, construction making a comeback, i would say packaging this year has been up every month, year over year, in volume so that's a very strong number and while appliances have come back, they have also come back to almost precovid levels. automotive is up, but it isn't back to precovid levels, it may take a year or two for them to get back to precovid construction levels. it is looking good, it is looking good around the world. brazil was particularly strong in the third quarter that was probably unexpected for us to see them come out that strong and i would say across almost all markets in china, we're back to precovid levels. >> all right >> still some room to go in some
markets here in the u.s. >> concern about the resurgence of the virus, not just here in this country, never has sort of not surged but in europe as well are you concerned about potential, not necessarily lockdowns, but simply diminution of economic activity as we see it surge in some key markets >> i think you have to be on the watch for what is going to happen and you have to adjust, you know, so our view is, you know, wash your hands, wear a mask, watch your distance with people if we do those things and if everybody does those things, we should be able to keep the economies open and keep people going back to work and back to school but if people start to deviate from that, you're going to see cases rising and see spikes. and that's when governments feel like they need to step in some times and shut things down we have been doing relatively well, but we can't keep our eye off the ball, we're going to have to be in this kind of operation for the next year or
so >> jim, jim cramer, always good to see you >> nice to see you, jim. >> okay, so, reduced debt, dramatic amount. 1.8 billion, which i think is incredible remember one time people were worried about your dividend. with this debt reduction, is that sustainable because you are really reliquefying this balance sheet. >> well, the team did a fantastic job of price volume management, and operating the assets to really capture the demand growth we saw in the third quarter. we did a great job in second quarter of reducing rates to match demand and we managed cash and liquidity in the second quarter. and we did a super job of ramping back up in the third quarter and really capturing it on the top line and the bottom line this is a cash generating machine. we generated 1.5 billion in free cash flow from operations, which is flat with the year ago period
even though our earnings are down and we did it because we controlled our capex, we controlled our spending, and we did all the things that you need to do manage cash and liquidity. we have paid down $1.8 billion in debti year to date, that was in line with the target we wanted to do we also have been able to manage our capex and keep the plants running reliably if we can continue this space, we can start to open up capex a little bit with discipline, and with a gradual ramp as we see the demand continue to improve >> let's just talk esg for a second, speaking to james quincey and james is a ceo of coca-cola. he sees tremendous progress when it comes to bottles, he said single use -- they use the example of shampoo bottles are in less developed countries, not being recycled what can you do sciencewise to make it so that those kinds of
plastics can just be boiled down somehow. i know you care passionately about the environment, i know this is an important issue for you. is there science coming out of dow that can advance the ball when it comes to recycling >> there is science in several ways, jim, that can move us forward. one is advanced recycling, which is really taking the plastics back to a feed stock level that can go back into a plastics plant. it is more expensive than mechanical recycling mechanical recycling today cleans it, chops it up and melts it back into plastic that can be done very cost effectively for a lot of materials. but when you get into some single use materials or some materials that might be more contaminated, it is probably better to go through in advanced recycling process and take it back the other way is to look at renewable materials that can be used as feed stock
so take something like a wood byproduct, like tall oil, convert that into a feed stock that can go into a plastics facility and that makes the original product more renewable and the recycled product more renewable. we're doing projects right now, ourselves, together with people like closed loop partners, the recycling partnership, circulate capital, as well as the alliance and plastic waste. we have 11 projects in asia operating right now, trying to demonstrate different avenues on a scaleable basis. i'm talking about 100,000 tons kind of basis to be able to scale those and then replicate those. >> jim, you said within 15 years you want to close the loop to have 100% of your product sole into packaging applications that could be re-useable or recyclable what has to happen over the next 15 years to allow that to happen >> well, about 80% of what we
make to today can be recycled today. and 20%, which goes into things like flexible food packaging and some of those single use applications need some work. it needs work on polymer morphology you might need four or five or nine layers of different materials, that makes that product hard to recycle. if i can come up with a catalyst that can be able to make one polymer that can have all of those properties,that makes that completely repsychoabsicyc we have done with kellogg, that pouch is one polymer that can be completely recycled. that takes a little bit of time. i think science will help us to get there. the other thing then that has to happen is you got to get the infrastructure right it is more expensive today to recycle and james knows this, because you got to bring product back in. that cost of distributing, taking waste and bringing it back into a facility and
recycling it is most of the cost it isn't the physical cost of transforming it. it is the transportation cost of getting it back in and that's where we're going to have to have policies and practices to help us close that loop >> well, it is a subject we'll always be entertaining and discussing with you in the interviews you do with us, jim always appreciate it thank you. >> thank you nice to see both of you. stay healthy. >> and you jim fitter ling from dow carl >> later on in the hour, david, the ceo of southwest airlines gary kelly on the smaller than expected loss, improving cash burn and talks with boeing on the order book th'somg at cinup before money, people traded goods. tools, cattle, grain, even shells represented value. then currency came along.
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today has been pretty positive better cash burn trends, traffic trends, only outlier here is american airlines which is now looking to issue up to a billion in new shares, first time they have done that since june. we'll talk about a lot of this with gary kelly of southwest later on in the hour aomt.t"s ckhe stree iba in men at fidelity, you get personalized wealth planning
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it has been a very busy morning for senate judiciary, first advancing the nomination of judge barrett to the senate floor, and now, jim and david, authorizing subpoenas for facebook's mark zuckerberg and twitter's jack dorsey, something that lindsey graham said he would work on last week. now official we'll see how that plays out in the days to come, guys. >> these guys just love this subpoena, zuckerberg and dorsey. nothing will come of it. i'm just going to say right now. nothing will come of it. and, you know, everyone will be called in front of the senate, but, david, sorry, they can do all the subpoenaing they want.
nothing. nothing. >> what are we listening to? nothing what >> about the subpoenas, zuckerberg and -- >> got it. the opening bell at the nyse biotech company biomax celebrating its listing anniversary. we're going to speak with the ceo of that cybersecurity firm >> i thought that could be very, very high. >> once owned by intel >> it didn't -- people said it was an early kind of bomb, i thought that be wiwould be a hot thing. security follow that one. >> mcafee. >> yeah. >> still going with the name >> they should go with something else. >> think they would want to change that name already. >> the vault, something good vault charger. >> yeah. >> i don't know. >> secret keeper. >> i like that >> you missed your calling >> csx is better than union
pacific. i never thought i would see this day. they boost so much coal, but amazing comps. at one point, it was so good, at one point on csx they were asked about esg. they said are people liking your stock because you use far less fuel than trucks and jim foot, who is just a great guy, he said, actually they like us now because we're competiti competitive. we weren't competitive now we're good we were bad. david, how did it happen to get a hold of this industry that really sucked. >> certainly, jim, the additional 5 billion in buybacks doesn't hurt. >> no. i mean, csx had a -- like the old days, such a good quarter and union pacific which i like so much, holy cow. people said, lance fritz, the number did not go up to expectations it was -- the market -- i'm not
going to say the market is wrong than union pacific csx has all the coal i know the president is realry pro coal coal did not make a resurgence under this man's first term. >> no, coal -- the market is speaking on coal we know that it is unfortunate for those who are in that industry and many of them knee need to potentially be retrained in some fashion. coal, we never had less electricity, well electronic has been years since the advent of coal represented such a small percentage in terms of what is fuel. >> all the 40 year plans, jimmy carter said we were the saudi arabia of coal put up a lot of plants >> we did. they're closing them new york times did a very interesting piece a couple of weeks ago, big piece, on all the closures, focused on arizona, i forget, some enormous plants that close closed, despite the attempts of the administration to keep them going it is more expensive and not as -- not good for the
environment. versus natural gas, which all those people can talk about anti-fracking all they want. we get natural gas, which is a cheaper and more efficient and cleaner way to -- >> are you saying the president -- the environmental president, he should run on being the environmental president. >> he has been horrible for the environment. >> oh, okay. carl, back to you. >> thanks, guys. we'll talk to you later. david, i know we're going to talk quibi we're going to talk quibi later on this morning. so many questions today about what role the pandemic played, was $1.8 billion a enough on a day where at&t, hbo max goes to almost 29 million subs >> yeah. hbo max, 38 million. where they are right now and it is interesting, you're going to have an opportunity to talk to them, carl, to jeffrey
katzenberg and meg whitman who are coming on and facing it and saying, listen, we would rather give money back right now, it didn't work. and many people had their questions about the service to begin with, whether there really was a desire, need for the short form sort of high end content. and yet when you look at katzenberg and whitman, you're, like, if two people potentially figure this out, it would be those two. we did speak to meg whitman when the service began and was only six months ago and despite the pandemic, she was sounding a very positive note >> david -- >> it is one of the most successful launches of a completely new brand and a completely new app and interestingly, we did see that people are watching quibi, some during their in between moments. he h we thought the in between moments would be out and about commuting, et cetera we're delighted by the launch.
>> making that decision now to say, enough, let's return what we have got left, raised a great deal of money. >> it is interesting because at&t spent about $100 billion trying to do stuff to diversify in content and, no, and this company went through a lot of money, but gave up david, i thought they would be able to keep -- everybody is getting money. can't they do spacs? >> there was a thought that -- this was a long time in the making, don't forget just because they started in april, they had started well before that in terms of raising money and katzenberg outlining the idea, he really embraced it. there was a desire for people while commuting to watch, again, high end content in seven or ten minute clips we'll hear more from them, when they join you and julia boorstin
later on and "squawk alley." >> yeah, we look forward to it as we said earlier, airlines remain a pretty good story today. southwest with big loss, but narrower than expected gary kelly skroins joins us th morning. great to see you. >> great to be with you. >> i guess most we can say is that directionally going into november, october trends look correcti directionally positive is that fair to say? >> it is fair to say i heard several comments that the worst is behind us there is substantial evidence that that's true we had a rough july/august because of the spike in covid cases that impacted the demand, but really since then, i think we have done a really good job of matching the supply of seats to the demand, demands continue to improve, we had a good september, we had a better october, it is all relative during the pandemic, but every
reason to believe that november will be better yet again than october. so the outlook for the fourth quarter is improved. better revenues, lower costs, and obviously i'm hopeful the trends continue into next year. >> i noticed you're going to start putting folks back in middle seats beginning december 1. i can only assume that means you feel the public is coming around to the idea that transmission on a plane is extremely rare. >> we are going to do that and it is based on a lot of thought and a lot of research and dependent upon a lot of expertise in the scientific community. but, you know, the other thing as a reference point to your question about consumer perception, we're one of four airlines in the world, in the world, that isn't booking airplanes full so i think that's ample evidence
that people are more than willing to fly, but the facts support this the facts are that it is a very safe environment and with all of the filtering techniques with air, wearing masks, facing forward, is a very healthy environment and now the science supports that. and we're obviously interested to move forward. it will be a better customer experience in terms of our scheduling so that will be more stable because right now we're having to make adjustments when demand exceeds the artificial caps that we're putting on the airplanes so all the way around i think it will be better for our customers and the good news is that people are wanting to travel and they're returning and they can do that in a very safe way >> gary, jim i was hoping you would mention masks. one of the reasons -- >> i did mentioned masks. >> emphasizing that it is the safest thing, in part because you guys were really the first you said you had to wear them,
congratulations, there has been 19 instances of covid on airplanes since this pandemic. 19 there are whole buildings that have that on a single floor. you're the safest place to be and i just think you guys should be a little more aggressive about that >> you know what, that is sound advice and we'll take it to heart. and i'll bet you those 19 cases were before the masks were required on airplanes. >> exactly >> so, you know, you're right, it is very important and we will definitely continue to make that a centerpiece of our safety message. >> good, because my kids are flying around, i don't want them to think it is -- i tell them it is the safest place on earth the one thing phil lebeau says this morning, i know you love him, he said american airlines ceo, we need business travelers to return in order to bounce back my stepson works at zoom i got to tell you, gary. this thing is real a lot of the executives are
discovering that they save a lot of money if they all do zoom, no one is going to jump in and do the personal is -- are we in a situation where this happens, zoom will not go away and business travelers that are just saying, you know what, i'm not traveling, i'm zooming >> well, there is -- to me, jim, there is two aspects in terms of answering your question. one is, i'm always loathe to be a prognosticator or predictor. i guess my opinion is that this too shall pass like 9/11, everybody said the world is going to change, people aren't going to fly, they were wrong. and so i do think that there is a need for business travelers -- business people to travel and i think that that will get back to, quote, normal at some point. i bet you it is a-long ti long o now, but that's my opinion we have to assume that we have got to manage this risk.
and so we have to assume that we will be more dependent on consumers in terms of our demand in the future. that means we need to keep our costs low need to keep our fare low, need to have a route system that supports consumer interests and demand, and you see the new cities that we're adding, they're very much oriented towards leisure destinations, and consumer desires and if that were proved to be wrong and business travel comes back stronger, fine. that's just more upside, we'll buy more airplanes we'll be happy but in the meantime, we have to assume that business travel will be lighter and for a long time and you remember that in a normal recession, business travel is cut very sharply and it takes five years for it to return before it starts expanding again. five years that was the case in 2008. it was the case 2001, the case in 1991. and you got to believe that that
will be at least the case now. i've said it maybe ten years before business travel recovers. i don't know but we're going to be prepared to be more dependent upon consumer travel and we will do well in that environment >> finally, gary, one of the takeaways from the quarter has been your talks on boeing on the order books, on the max. i wonder your thoughts on adding it to miami, new york? have you named a route or a date which you might return the max to service as well >> no. because we don't know when the airplane is going to be ungrounded and it will -- it will then have to feather it into our cadence in terms oftraining. and we have been -- as you all know, we have been down this road for going on almost two years now. so at this point, we're in the pressed for additional lift. and i want us to be as efrficien
as we can and minimize the cost impact of introducing the max. we vice presidehaven't picked a. it will take us months after that >> gary, thanks so much as always for helping investors -- our viewers understand the quarter. good to see you. we'll see you next time. >> great to be with you all. and thanks for having us >> gary kelly of southwest as we said earlier, yesterday, the news was big, that quibi, not sure why we're looking at whirlpool, we'll talk about whirlpool as well, as the ceo is coming up, and then, of course, quibi, jeffrey katzenberg and meg whitman later on in the hour that's at 11:00 a.m. eastern time don't go away.
let's get to rick santelli this morning good morning, rick >> good morning, carl. obviously we had better than expected initial claims and even though the markets did a very slow burn, look at the intraday, we established the low yields on the number at 8:30 and we moved higher once the equity markets open at 9:30 eastern, boy, did everything change. look at two-day, this is important. whether it is 83 1/2 the high yield yesterday in 10s or 165 in 30s, open the chart up to a five-day, what you'll find is since retail sales friday, we built upon the high yields every successive session watch those two levels carefully. finally, let's look at the dollar index going back to april of 2018, we could see that at the end of august they established what was at that time a 27-month low.
we're getting close to revisiting the bottom range. here is two commodities. week back to december 14, agricultural commodity prices going up, up, up carl, jim, david, back to you. >> i'm watching it it is impacting the stocks, i think. something that is not soggy is whirlpool. shares are rising this morning company posted the beat in both earnings and revenues driven by solid industry demand across the globe. joining us now is whirlpool corporation ceo mark fisker. thank you for coming on the show great that you're here >> thanks for having me. >> mark, i feel this is not to denigrate your predecessors, this is a new whirlpool. it was flawless execution, your cfo said, you're taking share, you have better machines than you ever had and i don't even see, i think literally, if it weren't for supply problems you would have a bigger quarter. >> yeah, so, jim, to your point,
we're very, very proud of what we have achieved in q 3 and outstanding quarter. we beat our previous all time high by more than 50%, it is a tremendous quarter what is more important even, we also guided for fourth quarter, equally strong we feel good where we are from a business, not just because we're seeing some tailwind, but i think we structured a change of our bousiness model and demonstrating we can perform at different levels. >> one thing i thought was interesting was most companies have suspended guidance and many companies are cutting div dens that's not the case here you actually raised the dividend you're that confident. >> yeah, so, jim, as everybody experienced, visibility from covid, almost a week or two weeks only so we couldn't give guidance it was a month, now we see a quarter, and we feel very confident about the businesses and we felt we can reinstate
guidance more important, you know, you mense e mentioned the earnings, cash flow has been exceptionally strong we pay down all covid related dead so i'm strong earnings, strong cash position, yes, that gives us the confidence and right >> frankly, our brazilian team is a well-oiled machine. rising incredibly fast
we are grateful. >> mark, this is your time you've got to give us the highest end. higher than garland, higher than victory. higher than the best refrigerators. we are ready for a braun when you are giving us lamb bro ginni. >> don't go there to buy a refrigerator we start seeing a shift in consumer demand. eventually, it was lower ticket items. now, we are starting with higher ticket items we are encouraged. very disposable income
consumers are vesting in the home is it has been an out come of covid-19 you've mentioned briefly, at least. are there problems getting hold of some parts. what is going on >> covid brings severe supply constraints. social distancing where you have to slow down assembly lines. similar challenges that are out to reach kpoen nants a high level of these will show high constraints our team can work better and better frankly, right now, we have
significant order backlog. it is good >> it is a high, class problem you mention social distancing. what percentage of social distancing are you at to make sure you are keeping your worker's safe? >> first of all, even if you go back to q 2, we never shut down our factories. remember the talk. we never shut them down. i appreciate our employees showing up to work every day the fundamental issue is the restraints where you fought before capacity. you now have 80 to 85% we typically run 80, 85. we are run right now at the cap
and have the balance between supply and demand but not able to catch up to what we missed out on the covid crisis. >> i know you are very exacting. i know that boss strategy is always a good one. go to the highest end. i don't want to mention anyone you can buy. why don't you buy sub zero >> you put me on thin eye, jim our balance sheet is a strong one. coming in to this year, no one could foresee the corona crisis. we took extra cash that is extra strong we pay down the short-term debt. it gives us multiple opportunities and confidence for all forms of capital allocation.
>> one of the things you've done, you've made machines millennials buy. it is what they buy when they first buy a house. what went right? >> work over many years. we invested a lot of time and money understanding the digital purchasing to cap purr the pre-buy and be more in tune kitchen aid is one of the fuel old brands trusted in the space. it gives us confidence with what we can do this this brand. >> you have changed whirlpool.
stock goes higher. good to see you. >> thank you >> what's on mad tonight >> i'm going to go over the tesla phenomenon and nucor, which is the last great manufacturer of this country. they were not defeated by the chinese and still making great things i am so proud of them to be on i can't wait to talk to them >> we'll see you tonight at 6:00 more "sqwawk on the street" continues in a moment. ♪ you can go your own way
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part of that we have a big morning. earnings interviews continue in a few minutes, we'll talk to coke you a cola ceo. then we'll talk to lance fritz and asking what is going on with the economy. railway is a good gauge in terms of what is moving. very true. >> the housing market just continues to break records existing home sales spiked a larger than expected 9.5 percent to rate of 6.4 million units sales up 20.9% year over year. highest pace since may 2006. the street was looking for about 3.67 units
the supply of homes for sale, another record broken. down to 1.4 million. down 19.2% to just 2.7 month supply since they began tracking this in 1982 that pushed prices ever higher. the median price in september, $311,800, up 14.8% dating back to 1968. sales strongest in the northeast at 16% and in the west up 9% also homes selling faster than before average record on market just seven days first-time buyer dropped back. the high end of the market is seeing huge sales homes over $1 million doubled year over year
the lowest end of the market not down there because of tight supply and higher prices realtors are seeing vacation home sales in september, not usually the time of year but then again, because of the pandemic, people can live or work or do school wherever they want other record breaking month. >> the housing world is upside down in so many ways thank you, diana >> our september read on leading indicators look to be coming out around .6. better than expected at .7 fifth positive number in a row in a data series mostly sprinkling negative numbers over the last year or so. if you look at revision of last month, can you see what i'm
nervous about. we had five positives. 3.1, 3.1, 2.0. now 4.7 that's what traders are concentrating on now back to you. >> outside advisors to the fda to discuss potential covid-19 vaccines meg tirrell has that >> this is a very closely watched meeting. this outside team of advisors are not even discussing specific vaccine candidates they are adjusting all the information they'll need to make recommendations to the fda when the time comes this outside meeting has started at 10:00 a.m. and will run until 6:30 discussing what the path looks like unless authorizing or approving. they'll discuss what kind of postmark eting studies will be necessary to continue to discuss
as well as input this is a unique situation in the pandemic and talking about the emergency use authorization for a potential vaccine. explaining what they'll be discussing >> authorities have never been used with very few exceptions for vaccines as we know in working in emergencies and exploring, there are always issues that surfaced that were not really considered in time because they are difficult to predict >> guys, we are expecting potential data within the next few weeks. we also learned from moderna
minutes ago that they have reached full enrollment of the phase 3 trial. they say they'll decide after two months safety follow up on how to file probably at the end of november. sara >> meg tirrell, unusual with less than two weeks to go before the election >> coca-cola earnings topping estimates after strong results despite demand remaining low joining us now is coca-cola ceo. good to have you as always >> good to see you >> so clearly, the stock is reacting to the fact that you saw improvement across the board. volume, sales and earnings and talk about how that has carried over >> clearly, the third quarter was much better than the second
quarter. april was the low point. not only was the third quarter better than second, it was getting better through the end of september to october. we'd be able to adapt. away from home channels are not yet back we'll be able to adapt better and pivot away to really drive at home sales and help the away from home get back to a less negative position that has helped us come in with a better top-line result. better management and equity income which is a factor of those also doing better and those results flowing back into the numbers. the strong step forward to emerge stronger and be a better company and better system post the crisis >> and yet, you are still reluctant to provide guidance. why don't you have confidence to
see into the future yet making me more confident in the low to medium term a lot of what we've done has made it clear. that will work and drive us into the top range of the long term growth having said that, our next few quarters are very hard to read whether it is because the macros have improved. it is too hard to read those quarters beg agile and fast
we'll do it all under the idea that remains stronger where we continue to come back and get back to growth in 2021 >> pepsi did grow, coke did not. why is that? a much bigger away from home whether u.s. or globally we have a strong position in all the away from home channels where the brand equity pulls
through. what we are focused on is look, those schanls will come back we'll go out and mix and they will come back if they want to set ourselves up to be in a stronger position and focus on the winnings share. we'll get a big step forward we have been winning a winning share in the at home channels that will set us up for emerging stronger and being in a better position even though we lose share. >> taking about that away from home business. you mention that is quite lumpy. how do you think about any permanent or long lasting impact
as a result of this pandemic >> i'm very much a believer that away from home will come back. we want to mix and mingle and have those experiences some will be in a different form there will be more contactless everything those are more digital and more dri drive-thru and those with more apps are doingbetter >> i think cashless, contactless is a big part. coming back as big travel will be at the back end of the
recovery we'll see an adaptation and recovery is that rep indicated somehow in the u.s. or not? >> i think we are seeing the response by governments. an adapted response. in wave one in april and may, there were very strict lockdowns. now what we are seeing is much more targeted and focused. we are seeing many more cases and yes, seeing more level and thankfully not the same level of mortality although people are still dying.
what we are expecting to see is as the northern hemisphere goes into the winter, the normal amount that will try and contain so that the health systems don't get overwhelmed. we had always anticipated that the winter would be the toughest season we are ready for that. that is built into our thinking. we have learned to adapt we learned what worked in phase one and quarter two. we've been supplied in q 3 and done better. even if there are more lockdowns, we believe the adaptation will get a better result >> speaking about those rising cases in the u.s.nd high numbers as well.
what's your sense of how badly we need another stimulus package? >> in the u.s., i think we'll see more attempts by the government to stimulate the economy. there are a lot of sectors the nature of unemployment are largely moved to the line and being exploited by the government in europe, there are furlough schemes. there is an economic consequences to these lockdowns and the pandemic governments will have to act and businesses to take us through it the exact nature of any government action will clearly depend on their particular situations this is not just going to be over when we get through the winter season and there are less cases. there will be an ongoing need to
refocus the economy. >> can't let you go without asking about tab a lot of loyalists there i know it is part of your plan to retire older brands, zico coconut water and others tell us why and whether you are done with this process >> the ongoing revitalization of portfolio or skus is always a work in prog rose. we've very much taken the view brought into sharp focus in the second quarter of the covid-19 crisis we've done a good job of removing zombie flavor packages. we have half our portfolio generating baut 5% and yet it is taking up much more shelf space
than employees are thinking. those brands are not going to drum up the growth for the future we can more effectively redistribute those people to drive the brother. that will be a transition exercise and that will rehelp the space. is that for more brands. yes, that will be for the result for driving the more effective and productive leader brands >> you'll have to make room on the shelves in atlanta in the coke museum and archives i'm sure there is a ton around
fifth quarterly profit the stock as we've pointed out up 413% so far this year former board member with us. phil, you've covered this company through the ups and downs. give me a quick take on this quarter and what we've been seeing lately from tesla >> they are more consistent of turning a profit from the zero emission credit from other companies that they can offset their carbon emission standards that they could meet in the u.s. or whatever. that doesn't matter. that's part of the game. you shouldn't hold that against tesla. they talk about this they'll be ramping up production giga berlin and giga texas those
are the plants coming. they'll start production over the next year, two years to three years where you'll see big ramp up of production. >> there will be a big ramp up of production? >> they think there will be. you remember, there will be the tesla semi many want to see that come out of giga texas the cyber truck. countries are mandating electric vehicles you'll see that take off >> i've got to know what your take it. four quarters in a row they would not have seen profit without them >> i guess the thing i come back
to is that is pat of the game here in the auto industry. spending extra credits so they don't get dings for sales in europe it is never on the other end i understand strictly looking at the operations they would not have turned the profit they are continuing to grow sales and gross profits improved substantially. to the certain extent, it is a bit overplayed by those turning a profit >> you've been a believer in the tesla story for some time. >> this has been incredible. from here, steve, do you really think there is more even given success of the company or do you believe tesla is more than a car
company? >> a couple of points here, first, you have to stop and acknowledge that tesla has killed it. there on track to 500,000 vehicles when elon musk said they were. it sounded like a pipe dream now they are doing it. $8.7 billion that's a 40% up tick cyber truck in the wings over 600 thour orders and a $25,000 car that could be two, two and a half years out that is when you see tesla being the number one sold car in the country electric or not. you take' breath and say $430 a
share and $405 billion market cap. i love tesla that means they are as high as volkswagen, daimler, bmw, honda all put together. as far as the credits, the fact is this, tesla is eating the competitor's lunch and making them pay for it. that's a pretty cool trick >> why do you say there are difficult times coming >> amazon and prices people don't talk about it much the multiple 1.2 x revenues. tesla is being valued at 12 x revenues if we were to come down to 6 x,
it would still be overvalued something more than an auto company. bidding an energy company, a battery company, a software company? i happen to believe he is. i'm a big believer in the company but is it worth the $400 billion valuation? investors need to be careful about that >> to keep energy so to speak and store it >> absolutely. that's the thing when they came and went what came out between the lines is not now but over the next two years, it looks like through a new form, tesla believes they can take the price down another
35 to 45%. if they do that and become the low cost provider, they will not only challenge them, they'll take the cost of vehicles down that's the point at which the entire world begins this in europe, last year, 3% of all vehicles sold were electric. mr. musk succeeds to take the cost of car batteries down, expect that to go through the ceiling. >> thank you for that. >> thank you >> time for our etf spotlight. we are looking at the etf mg ticker hat underperforming up 2.5% right now.
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supreme court nomination on monday after committee republicans unanimously endorsed her this morning democrats boycotted the vote also today, a panel set to vote one week to authorize subpoenas for facebook's mark zuckerberg and twitter's jack dorsey. republicans are unhappy the social media platforms made it more difficult to share a problematic new york post sortie about joe biden and his son. >> a judge dismissed charges against chafe enthe officer charged in the death of george floyd. in germany, a up tick in coronavirus cases that country's health minister is in
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stimulus and the larger vaccine the larger view treating it as binary event >> viewing it like someone is switching on a light and we'll be getting back to restaurants and bars and movie theaters. i'm not certain that is the case we have the flu vaccine which is not exactly the same thing its efficacy is not great and varies from year to year the other thing is that along with it, the market could justify the prices we are
looking at would need better treatment. something to leave the virus a lot less lethal. it would also be as good as the vaccine and a combination of the two would be helpful the markets are overestimating the effects of the vaccine >> i share your concerns the reason, the markets seem to believe that if you look at the earnings estimates, that's only a quarter away, the numbers are reflecting the belief there will be a major reopening starting in the first quarter and second quarters where we are seeing 15% of the first quarter of 2021. 45% in the second quarter. that's a sign the market believes the reopening will happen in a very big way around
vaccine. this gets dragged out into the back end of 2021, 2022 it seems these optimistic earnings numbers will be revised and the markets reset. am i right >> i think so and as i said a few minutes ago, the idea that this is somehow turning on a light and suddenly the room is bright and you can go about business as it used to be. secondly, you've had very capable paul tutor johns was earlier talking about what will happen if you begin to change the capital gains tax and how that will begin to compress a variety of market metrics. the caution flag should be up and plying at the very least
i agree with you on that >> talking about earnings season, we are one fourth of the way through the earnings season. the numbers have been excellent. it has held up there we have 83% beating. these numbers are way above expectations topping out the day before earnings even numbers like coke. is this stimulus and headlines pushing up before that why aren't we getting any juice ahead of these numbers >> we are beating some dubious expectations there has been very little
guidance since the spring when the pandemic really broke out. so there wasn't a lot of guidance you are beating numbers that weren't too effective to begin with like the stimulus form where are we going to go we've been priming the pump again and again. you had the fed all out behind you. we need more stimulus from government. >> earnings are not usually effective as they have been. look for things like stimulus. looking to the market, come in
this morning, hoping hear something on stimulus. so far nothing not even negative news you are starting to see the polls pull away and the dow ease down >> agree witha totally on earnings estimates at least with coke they had very little to work with the company didn't provide more guidance as far as your overall more cautious stance, the flip side, a vaccine, eastbound if it is not 100% effective is not going to be like a light switch will provide a huge boost of confidence to this economy desperately needed to help out some of the service sectors. better treatments that are coming will provide additional confidence if we can produce them the fed is all in and says we'll do more if necessary there is political will from
>> we'll speak more on that. >> for a few days, we've been hearing from a lot of wall street strategists because of the apparent margin in the polls, a contested election would be less likely and that would comfort. we've seen some betting markets tighten biten versus trump what do you think trader mentality is right now regarding the prospect of a contested result in the next coming weeks. >> it is turning a bit more cautious you are spot on. if you look back, the lead that biden has, hillary clinton had almost twice that lead going into 2016. now the polls have changed people are a lot more cautious they were burned badly so biden is not going to get the run away numbers hillary had
even that, these numbers lead for question they still haven't decided whether the republicans can or cannot hold the senate that will make a major change here yes. is hope out there. so far nothing doing to sara's point. there is a lot of stuff in the pot but we are not out of the s stew yet >> finally, talking about covid and deaths have not turned up. hospitalizations are tight how much comfort is that giving the market the idea that lockdowns and europe is in a pickle, north america won't be like that. >> two things, the election is coming up. if it is biden, what will his
posture be will he move more towards lockdowns. when the president went in with his infection and he was treated with a cocktail mix of various things, the market perked up on the assumption maybe he could be rep indicated. no one but bill gates saying they may have a formula. that's why they have a rather jumpy everyious market in front of us. >> yes it is a strange time when you say the earnings we normally put front and center just can't compete with some of these larger unknowns. look forward to talking again soon, art. as always. >> thank you >> always good to hear from him.
here as q 3 results do miss revenue fall short of expectations lance fritz always a great quest. going over what we've seen the past few months. good to see you. >> thank you >> lance, we got jitters about revenue, about volumes, about mix. is there smomething the street s not getting? to what degree does the quarter bring cause for concern? >> i think as our analysts and owners unpack the quarter, they'll see that it was really quite strong given the circumstances. so volume was down revenue was down our costs were down more and we were ultimately able to generate a better operating ratio. and that's through the very hard work of men and women in union pacific who through very difficult circumstances and unprecedented snap back of volume kept our network fluid
and delivered really a very good service product to our customers. so i look at the quarter and think it was a pretty darn good quarter given the circumstances we faced >> and how does that carry through to q-4 both on a volume sort of momentum element and then on a cost cutting element how much more is left to cut >> yeah, carl, when we look into the fourth quarter and then into next year, we see continued momentum in a couple of areas. one is premium which is domestic intermodal, international intermodal the domestic is very strong, particularly parcel driven by e- commerce grain is very strong as china is in the market for beans and corn we see good strength in fertilizer the housing market is starting to pick up a little bit. we still have continued weakness in the industrial economy. but it is improving from the bottom that we experienced in
may. as we look into the fourth quarter, i'm confident that we're going to see some more growth we're going to continue to be efficient. our service product is very strong right now so i'm anticipating while mix might be another bit of a story for us, i'm anticipating another really good quarter. >> so, lance, just to be clear, all three of them, the sectors that you describe, bulk, industrial, and premium were down in terms of revenues. how far are we from what a normal economy looks like? and how long do you think it will take to get back there? >> yeah. from my perspective, we're approaching precovid-19 in the retail world so consumer consumption switched dramatically as many guests talked about in terms of going from brick-and-mortar to e- commerce we saw five or ten years of that kind of migration happen in about three or four months the industrial side of the economy still feels a little
soft and that shows up for us in metals and in industrial chemicals, plastics to a degree, the automotive sector. i think that continues to show improvement as consumers get a little bit more confident. i heard the previous guest talking about the elements like making sure vaccine is available. making sure that the covid-19 pandemic feels like it's under control. or if you get sick, it's not nearly as scary as it was two or three or four months ago >> that sort of what i wanted to ask you. how you factor in these potentially game changing things happening with regard to covid-19, like a vaccine, like a miraculous treatment even another stimulus package. there are so many unknowns the so how you factor that into the forecast for next year >> yeah, what it does for us is it really opens up the april tour on the scenarios that we're developing it's hard to pick a path for next year and build a lot of confidence in it because i can
tell a story that's pretty pessimistic and i can also tell a story that is pretty optimistic with grounding in both so what we're focused on is the agility of being able to adjust to whatever does occur being thoughtful about the probabilities, you know, given different market segments for us so, for instance, i think it will be unusual if all of a sudden retail sales really tanked and our intermodal products suffered as a result. it looks like there is some grounding there. i wouldn't estimate right now that the industrial economy is going to boom. first we need to see the underpinnings for. that we need to have trade get back to being normalized global growth needs to support that an infrastructure package is helpful and consumer confidence overall to start making underlying purchasing of some of the larger goods makes
sense. so sara, what we're doing is building next year around scenarios and making sure that we've thought through the what ifs so we're not surprised if they were to occur >> yeah. that's the thing i think that's true at a corporate and household level, lance. we're all trying to build in contingencies. we've seen how wide the spectrum can be one thing we've been asking ceos this earnings season is are there practices the business had had pre-covid-19 that went away because of the pandemic that you don't see coming back? is there a good example of that? >> yeah, to a degree so i'll focus in on we used to travel and be present at the drop of a hat. we interpreted that as service and i think with the use of technology that we're all experiencing, we can touch and not have to take the productivity hit of travel quite
so much. now i know we're going to snap back to certain levels of travel i just think it's probably going to be a little subdued i also think that pre-covid-19, you know, we were less supportive of work from home in our office environments. that's about 15% of our workforce. and in the post-covid world, i see productivity benefit, mental health benefit we need to be together because of mentoring and just human support but likewise, sometimes it's really effective to work from home. and our minds have opened up more broadly about that for sure >> yeah. certainly not alone on that front either, lance. we appreciate it good seeing you again. hope to see you next quarter as well lance fritz, of course, with unp. later on this morning, 11:30 a.m. eastern time, it's meg whitman and jeff ckaenrgatte
it is 8:00 a.m. at quibi headquarters in los angeles, california it's 11:00 a.m. on wall street and "squawk alley" is live ♪ hey i'm not giving up today ♪ ♪ nothing is getting in my way good thursday morning. welcome to "squawk alley." i'm carl quintanilla with jon fortt and julia boorstin for the hour a big story this hour is quibit as we talk about the shutdown six months after the launch. julia, w