Transcripts For CNBC Squawk On The Street 20240713

Record that we saw back during the financial crisis of 2000, march of 2009. Jim, stunning though the number is, of course, we also have the stimulus or socalled lets call it more of a recovery act making its way through the congress the house set to act shortly on it were going to be joined by the treasury secretary, Steven Mnuchin, about 15 minutes from now to discuss that. And so many other things in the economy. What is at the fore of your thinking as we get started with trading a half hour frau noum . The gap we have 3. 2 million that file claims obviously, money comes for them, but i want to know date that the check is in the mail how it comes, how you get it, will it make it so that Small Business stays alive medium sized business stays alive, and is it enough to keep them alive for the pandemic . Is it one month, two months . How long does the 2 trillion last because this number is so big, and i dont think its peaking we have to be sure the American People themselves dont have real fear of the economics and just fear of covid, which we sure wish could go away, but we cant. Yeah, i mean, you and i have been talking for the last couple weeks, of course, about just how many people would be losing their jobs in an economy that is led by the service sector. And going through so many of those professions we know well that were just shut down, and that is certainly reflected in this number, jim perhaps, not even perhaps, far higher than anybody had anticipated, though, in some ways its not really about the number at this point its about whats coming and what is being done to obviously deal with the situation in the form of that 2 trillion bill that we do expect the house to vote on, i guess fairly soon look, david, its pretty easy to think there could be as many as 50 million mandated jobs lost in other words, this is not some number where somebody is doing badly. This is a situation where were being told, stop working i know that when we speak to the secretary, it is about Business Interruption insurance without insurance. I dont think we have seen a situation where people want to go to work so pbadly, we had ful employment just three weeks ago, and sorry, were not open for business does this bill make it so were open for business . No, but it says until were open for business, we might be okay thats why we have to flesh out the bill, because the bill is what keeps us from thinking, you know what, we have to sit in our house. This covid is coming and we dont have hope we put hope back in the system with the bill. And then we wait to see the dr. Fauci contingent dr. Fauci being the metaphor at this point in our lives for listen, we can win, but theres a lot of ways we can go wrong if we do it improperly. Well, you know, you say about doing it improperly. I think youre getting to this debate thats out there. I raised this first, i think, late last week i can remember one of the early broadcasts from here, jim, the idea that the concern about a collapse in the economy was overtaking peoples concern about the virus. And that seems to be embodied in a lot of talk recently led by the president , of course, that we have to get the economic socalled back open. At the same time, we have to make sure that the virus does not spread throughout the country and inhibit that ability to actually get the economy open what i like about this bill, and look, theres 1 thon pages its not that bad a read what i like about the bill is that it takes some of the pressure points. Some of the pressure points in the Health Care System there are, i was speaking with joe earlier, there are pressure points its very unusual to pick up the paper, we all know elmhurst and read about elmhurst and think about wuhan. We have got to make it so we have no wuhans in our country. Were a stronger, Richer Country than china but we have a missalication of resources. The army has medical professionals. Im talking about army, marines, air force. Theyre all included in the bill maybe they can help alleviate what looks like despair. We can put people to work if they dont have covid19 or if they have already had it, but we dont have the testing yet we dont have we dont know who has had it and can go back to work. Wouldnt you love it if we knew who had it already and they can. But we dont have the testing to open the economy in every conversation i have, and i bet so many that you have, where i start on obviously business or trying to understand whats going on in the markets, we end up having that conversation or at least that discussion that you just mentioned, which is when are we going to get tests so we can see who has the antibodies so you know you can go back to work, youre in the clear . Because that would seem to be something that could be very positive in terms of at least sort of returning certain people to work, given we just have no idea how many people have actually been exposed to this virus. Thats the bottleneck im fortunate enough to live in a town where we know you can get tested at the High School Parking lot. Some people dont have parking lots next to high schools. I feel whats happened is its patchwork. Should the president just put everybody on lockdown . Should the president just mandate that you have to have a test within the next four days because we keep hearing there are a lot of tests out there, but david, without the testing, people dont want to go out because we look at people and we dont know whos going to give it to us thats we have two fears. Are you going to give it to me am i going to give it to you do i have it and then, can i put food on the table . Its a prong there are two prongs this bill, actually, puts the cart before the horse to some degree youre putting food on the table, but i have to know if youre going to give me covid. If youre going to give me covid, im going to stay in the house. Theres going to be a significantly depressing impact on the economy two kinds of depressing not necessarily in all parts of the country there are certain parts that are not seeing the kind of Community Spread that others are right, but david, do you think thats because theyre late to the game or because we literally have we have areas where theres just so many people, and there are other areas where its so easy to practice social distancing, where they dont have a subway that could be a big incubator. Were not doctors. We have got some fabulous doctors. Were not, and density does come into play here. Although the likes of singapore and hong kong and tokyo and places like that have incredible density as well and have been able to manage through it. Jim, we got the jobless claims number we have the treasury secretary coming up, but we also heard from the fed chairman this morning on the today show who certainly talked openly about the possibility of or in fact whether we are in recession. Take a listen. We may well be in a recession, but i would point to the difference between this and a normal recession this isnt theres nothing fundamentally wrong with our economy. Quite the contrary the economy performed very well right through february we have got 50year low in unemployment for the last couple years. We start in a very strong position this isnt something thats wrong with the economy this is a situation where people are being asked to step pack from Economic Activity thoughts on the chairs discussion on the today show this morning i listened to him closely im going over, parsing it word by word. This is a fed chief who in a very short period of time went from raising rates when they shouldnt be to raising hopes when we can have it. I thought there are so many people who come on air, david, and they say, well, this market is frozen and that market is frozen and this market is frozen i mean, this guy is coming in to the frozen areas with a blowtorch. I wish there would be less complaining. I wish people didnt come on air and say listen, my industry is hey, you have to take some losses rich people are going to do a little sacrificing we had a big, big run. When i listen to what the fed chief says, hes saying look, go about your business. Yes, im very worried. What happens if people stop paying rent. What happens if the big trust that run this Office Building or that Shopping Center get hurt . What happened to common dividends, but what i would like to see and i think the fed chief did is, you know what, if you think this market is frozen, give me a call, ill unfreeze it in return, we need a little sacrifice. He didnt talk about that. I wish he had because theres got to be forbearance. When we come through this, we have to make it so the rich dont clean up, david. I really feel that way, because the fed chief is going to make it so a lot of people who come on our air and do a lot of complaining, theyre going to get their way. And i wish that we could interview people who are at the nail salon and people who are at the dry cleaner, because they better get their way, because thats the base of the country arent you tired of the rich people coming on and belly aching how about the belly aching they didnt do that in world war ii theres a lot of it isnt there i like i got a new concept. Shame. Have some shame. And then take the pledge and keep the people i would like to hear more pledges like im hearing from chuck robbins, the 225 million from cisco. So i really, really want to stop hearing belly aching i want to start hearing optimism, particularly from the rich understood. Chair powell also was kind of pushed on this basic question of how quickly do you reopen the economy, and he continued to come back more to the point of view, i think, of anthony fauci. Sort of lets deal with the virus, then we can get back to growing the economy again, jim yes sort of notiing its a uniqu situation and saying listen to the experts and agreeing with fauci that the virus transmission will dictate the timing of which when we can resume Economic Growth i think we can find fault with people who thought this could pass, they kept schools open too long, had playgrounds open Governor Cuomo saying i wish the five on five basketball games close. You can put a lock on a playground, do a San Francisco shutdown but youre absolutely right. I think that the issue of getting back to work is going to be defined more, the president wants people back to work, who doesnt want people to get back to work . I like dr. Fauci, the interview he gave at regis, the fabulous school he went to, he talked about his biggest fear, and this is a year ago, his biggest fear would be some sort of pandemic where we would have respiratory issues, check that box, and says something that gives me tremendous hope. In the 80s, every patient he had died every one, and thats because he was trying to beat aids. And he did, he beat it can you imagine . They beat aids aids is a lot harder than this was a lot harder and a lot more devastating, certainly. And no unity about trying to help those people. No unity no. You mentioned regis. Theyre doing remote classes theyre making their students actually wear uniforms remoetdly, just so you know. Keeps them in that frame of mind were going to take a quick break. Of course, on the other side, were going to be speaking to treasury secretary Steven Mnuchin. Stay with us squawk on the street is right back life isnt a straight line. And sometimes, you can find yourself heading in a new direction. But when youre with fidelity, a partner who makes sure every step is clear, theres nothing to stop you from moving forward. Joining us now is treasury secretary steve mnuchin. First, mr. Secretary, congratulations on the record time you put this together particularly versus 2007, 2009 when will the checks be in the mail first, thanks for having me back i want to thank the senate for their swift action people literally worked around the clock for five days. And the president and i and oers couldnt be more pleased with the absolute unanimous support on a bipartisan basis to get this done. In regards to the checks, i announced yesterday from the White House Press conference, first of all, most of these will be direct deposit, so we call them checks in the mail, but it will be within three weeks were determined to get money in peoples pocket immediately. That will be within three weeks. No issues with the house . We dont have to worry about that can they hold it up . I would hope that the house passes this unanimously. I have already reached out to the speaker and to Kevin Mccarthy on the sense of urgency. The American Workers and American Public and American Business, they need the money now. So this is not the time to debate a bill that passed with every single vote other than the few people who couldnt be there in person. You know, mr. Secretary, when i go through the bill, what i keep finding, and it struck me, is that you told us at the very beginning, this is going to be like Business Interruption insurance. This is going to be about small and medium sized business. I tried very hard to try to discredit that and i couldnt. Its really true theres very little about corporations, very much about the small and medium size. And you added the 1099, which i know is the new economy, the gig economy. Can you find all these people to give them the money, because this is a very complicated task, to give all these people the money . Because you delivered, it goes to the people, not to the companies. Well, jim, youre right the majority of this bill is all about Small Business and American Workers we wanted to include in the definition of Small Businesses, as you said, the new gig economy, sole proprietorships. Between the Small Business retention loans, again, which is about 50 of the payroll for companies that dont qualify that, theres retention tax credits that they get for retaining people and then hopefully, for the small number of people that are laid off, there is enhanced Unemployment Insurance again, this is something that we hope only lasts a short period of time, but the president wants to make sure that all American Workers are protected. They did nothing wrong this was an act of the government for medical reasons to shut down parts of the economy. And as the fed chair said, we had a very, very healthy economy. We will have a healthy economy we will win this war, as the president says, against this virus. Page 640 has some excellent stuff about finally get this, the department of Defense Military some nice allocations to them. When i read whats happening in elmhurst, which is new york for people all over the country, to me, it says you have defense procurement, youre going to get protection gear. How quickly can you operate on the parts of this bill that are about making the country safe, not just paychecks, which i think is marvelous, but using all this money with the Defense Department to make it so that we match up the areas that are in trouble with the help they need . Jim, the president has made clear to every single cabinet secretary that has a responsibility, this is about in capital words, fast. That getting money or getting action three or four months from now doesnt do anybody any good. I can assure you the president and the Vice President s task force will be working to make sure every cabinet moves fast on whatever provisions they have in this bill. David secretary mnuchin, we knew the jobless claims number was not going to be a good one, but im curious what your thoughts were when you saw that 3. 832 million number this morning . To be honest, i think these numbers right now arent relevant whether theyre bigger or smaller in the short term, obviously, there people who have jobless claims, and the good thing about the bill is the president is protecting those people so now with these plans, Small Businesses hopefully will be able to hire back a lot of those people last week, they didnt know if they had protections they didnt have any cash. They had no choice now with this bill passed by congress, there are protections. And as i said, hopefully, those workers will be rehired, but between these three programs, it protects all of American Workers. And by the way, you know, lots of Big Companies do continue to hire, for obviously Grocery Stores, pharmacies, you know, delivery services. These companies are on overtime. So i know theyre hiring people as fast as they can. Yeah. The fed is obviously a very important part of this overall plan, mr. Secretary. Chair powell was on the today show this morning talking about his views of the economy how closely are you working with him, and what are your expectations in terms of the fed taking that, what is it, 500 billion, and turning it into perhaps as much as 4 trillion in direct lending . How is that going to work . Well, i think you know for the last few years, the fed chair and i speak on a regular basis. Eve in normal times, we would always make sure we met once a week and many times we would speak multiple times a week. Theres not a day that goes by now that he and i dont speak. Sometimes its five times. Sometimes its 30 times. But he and i are coordinating very closely, the way the 133 program works, the fed makes a request to me as secretary of treasury i have approved every single one of those requests. I can assure you that the fed and treasury will Work Together very, very closely, and we both have the same objectives, to protect American Workers and protect American Companies and i must say, i applaud the fed, even outside the 133 program and their swift action supporting the mortgagebacked securities market. This is about ordinary americans getting mortgages. I also applaud fhfa, lifted certain provisions for fannie may and freddie mac to buy mortgages. This is an entire government plan to kill this virus. The president said, this is a war, and were going to win it quickly. 30 times a day, secretary mnuchin . That has to be a pretty bad day, doesnt it what in the world are you talking about 30 times in one day . Not a bad day at all. It just shows there could be times when were coordinating. I have consulted, when wewere going through the negotiations on issues that impacted 133, i consulted with the fed chair constantly to make sure he was aware of the language and we were both onboard. So some of these were just technical situations a lot of times, it could be just exchanging Market Information and what were both seeing in the market and again, these are the times when, you know, the fed and treasury, we each have different responsibilities, but we coordinate and act together. Mr. Secretary, Economic Stabilization assistance to severely distressed sectors in the economy, page 515 to 540, is the live or die part, where you get to choose where the money goes not more than 25 billion for Passenger Air carriers what is the philosophy youre going to have about what industries really need protection, what industries you may have to give equity to, and finally, what industries are going to make it so it isnt just when the smoke clears that we have an economy run by walmart, costco, home depot, amazon, and paeb lowes and target, because im worried about when we get through this, that some live, some die, and i got to be sure that you got the right priorities because the worlds looking to you well, jim, let me make a couple points. First of all, both the republicans and democrats supported full transparency in what were doing so when we do take actions, either through our direct program or throughout programs with the fed, there will be disclosures to the American Public much faster than they would normally occur so we very much support, this is a lot of money, and we support full transparency. I would also say there are two different programs theres a program that where we can do things direct out of treasury that is focused on the airlines and companies that have National Security interests so one of the things the president wanted to make sure, if there are Certain Companies that do pose National Security interests to the United States, we have flexibility on that. And then the 133 programs with the fed are broadbased programs everything from the fed announced a corporate bond, both primary and secondary, that we put up capital already through capital we had with the Exchange Stabilization fund even before this bill was passed. As well as they have already announced well be working with them on a main Street Lending program. So there will be transparency and this will be broadbased for many businesses to be able to participate. Curious to know, when i look at the bill in its entirety, what it says to me is one thing thats missing that i know you can provide because this is an incredible bipartisan act. Can you challenge American Business to keep people on the payroll . Particularly the larger Public Companies . Make them give a pledge, a pledge to the country that they will do everything they can to keep as many people on, like cisco that just did it yesterday, salesforce that did it we need that optimism, and you can provide it jim, you know we dont believe in mandating and regulating certain big businesses we did put restrictions on where Companies Take transactions, there will be restrictions on share buybacks and equity comp and dividends, but i can tell you i have been on the phone constantly, the president has had multiple conversations with all the Different Industries and i can tell you, all the Big Companies i hear from are doing everything they can to support their employees, their commitment i would even tell you, you know, although the bill we passed last week on protecting people who need to have sick leave for Small Businesses, mostly all of the existing Big Companies have already come out and said they will either participate on that basis or more generous terms so i think the Big Companies are doing everything they can and understand the commitment to the american worker. I think thats terrific one thing that was hard for me in the bill to understand is what is the actual forbearance is there forbearance for landlords, for people who live in a studio, who live in a onebedroom with five kids in there . Is there forbearance for the cheesecake just yesterday, just use that as a metaphor, they cant pay their bill, their rent bills. Forbearance, what does it mean, and what does it mean for all the Mortgage Securities out there that are so difficult to understand that we have to unravel . Can people stay in their homes if they cant pay their rent jim, i want to commend Mark Calabria who oversees the fhfa which is the primary regulator for fannie mae and freddie mac, and also secretary carson who oversees hud and fha prior to the bill being passed they both put out guidance allowing for forbearance and putting a temporary hold on mortgage foreclosures, evictions. So what this bill does is basically just write into law what those two people had already announced. And again, i want to commend them they didnt wait for congress to act. They came out last week and they already made these protections for american homeowners. We understand that, again, during this short period of time, homeowners need relief and thats what those two individuals had already provided mr. Secretary, i know you have to go i want to thank you. This is a real good bill and its a great start and i wish you the best of luck. And so does the country. Thank you for joining us thanks, jim appreciate it. Absolutely. David what did you think, jim did you hear what you wanted i feel like the small and medium sized businesses are protected. I like the Business Interruption i think they got through it, and they got t obviously, david, i think the issue is how long, and thats not up to secretary mnuchin, but can you believe the bipartisanship here . I mean, that they got together compare that to 2007 and 2009. Someone lit a fire under these people theres a lot here they didnt save the cruise lines. Theyre trying to save aerospace. I think the numbers are too small. But i dont know they got together. I think that the speaker cant get this thing through in two days, it would be very disappointing. I think that would be the case its funny, obviously, he had to go i did want to get some information or more on how he thinks the Airline Bailout will go right jim, in terms of whatever, about 60 billion, but how it actually will work, who will take it, and what the governments role will be as a potential equity participant if you check in there, theres a lot on that particular area, which is the Economic Stabilization. And david, it is a little contrary and confusing because the money is meant for the workers. You dont know exactly what it means for the air carriers we cant figure out, i know boeing is struggling, is it 17 billion for boeing, is it 25 billion . David, there you have page 513 to page 540 is just impossible its impossible. Someone knows something. I know i dont yeah, i know. Speaking of boeing, of course, that move in that stock has been nothing short of extraordinary over the last few sessions, jim, as it crept back to a 90 billion market value to your point, there are still so many things here that were going to try to struggle to fully understand in terms of the implementation of this bill. Still waiting for the house to vote on it jim, were opening were going to get started with an opening bell here, of course, coming off the jobless claims number, the likes of which we have never seen. In fact, it was multiples of the record we set back in 2009 at 2. 382 million americans, and the expectation that will continue, but the hope, as you heard from the secretary, of course, is that the bill passed by the senate on its way to the house for hopefully what will be quick approval, he says, will do a lot to get people back to work and or at least give them the sustenance they need during the interregnum once they do get back to work jim, you may have gotten more information from us. I know its fluid. I love to bring the secretary back, because we had so many other questions for him. I know. He just called me to say its not a government bailout of the Airline Industry i apologize to the people who watch. I mean, the situation is so fluid, and the Health Care Plus the economy, but the secretary, when he corrects me, i have to come right back. I want to make sure that Everybody Knows this is not a bailout for them and i thank the secretary for making it clearer than i certainly made it well, listen, theres so many different components here of these things again, well, as you said, about a 1,000page bill in terms of going through it lets talk a bit about the markets, given were open now. The s p does look to be advancing up as much as 1. 8, almost 2 right now. Whats your feel on the market what do you see as sort of some of the keys youre watching here as we try to sustain whats been a recent rally i dont want to be too granular because then i think what we end up in the weeds, and we could talk about caterpillar withdrawing its guidance or whether oil can come back, but lets just use something that i found optimistic last night, micron reported. And micron, david, micron talked about tremendous demand for laptops. Tremendous demand for data center work. Obviously, theres problems that are related to covid slowing down, but theres a move going on in this country that is requiring a big, big wave of technology, which is the stayathome move. We werent ready for it. You need a lot of semiconductors for it, both flash and regular drams i heard the same thing from Western Digital last night david, there is some demand in the economy, and its coming from the amazons of the world, someone cut numbers for amazon today. I thought that was going to prove to be an illadvised position i like the fact that when we get companies reporting, theyre not filled with despair. Theyre actually filled with people who are actually getting business done, kind of surprising, david. Kind of surprising how strong the current economy is in light of the fact we have 3. 2 million unemployed this morning. Yeah, well, you know, the secretary also pointed out people being hired by the likes of Grocery Stores and, you know, obviously, businesses that are responding to the current condition, jim i would argue thats the same thing youre talking about i mean, i went to look for a pc a couple weeks ago when we knew we were potentially going to be working from home a lot more they were sold out businesses obviously doing that in order to have the latest version of whatever you need to be able to video conference. Thats kind of a onetime bump, though, isnt it i think that the data center side isnt we know we had Data Center Spending had slowed down, but the companies that are involved with data center, theyre not companies that live hand to mouth. They have billions, and theyre putting it to work to meet the demand, whether it be streaming, saw some numbers for roku that are very good. Or whether it be trying to get the zoom network working at home so that does put an infusion in that is not the government meanwhile, i think a lot of people are really reading some things into the bill that i didnt see theyre taking boeing up i think boeing, is boeing saved, so to speak . We just got from the treasury secretary, theres no becameout for the industry it may be premature to love the airlines so to speak, because they need customers. And as much as the bill does some possibly does things for them, its not going to put people in the seats. And so i think thats misplaced optimism i wouldnt be buying those stocks i would not be buying the oil stocks, the russia, saudi russia is supposed to be cutting back on their plant, thats not happening, particularly because theres not enough demand for oil. There are sectors where the buying is very, very misplaced those are sectors where demand is going to play a role in five, six weeks where youre not going to be able to say, you know what, im taking a rip, becaus youre not going to take a trip. Youre just not. So there are areas that i think the small and medium sized business did a lot better than big business and jim, you know, and Goldman Sachs has a report out on this, though they dont name names. There are going to be many, many businesses, obviously, airlines amongst the leaders there, that are going from positive to negative cash flow very quickly, given the enormous decline in their revenues obviously, hospitality, travel and leisure, also Media Companies cited as well, even though viewership levels are higher, we were making this point yesterday, ad sales are coming down dramatically the question is how these Companies Deal with it that gets you to the high yield market, concerns there, although things have been healthier lately in the high yield market as well. Its not as though this bill just solves all those issues it doesnt no, i mean, we have Union Pacific today, talking about soft car loads, remains likely to worsen. You know the transports are a really good example of what could happen the best business fedex has are individual very caring individuals who are literally going to china with fedex and bringing back the respirators, bringing back the equipment that is needed, now that the chinese have really, really been able to make it so the thing is under control. But youre right, david. Did i hear anything with just says, you know, the retailer you deal with, theyre going to be open no, the retailer is going to be closed while walmart is open its closed while costco is open david, there is a chance when we come out of this that the that the companies that have been winners because of their great Balance Sheets are going to dominate, and this may be a moment in time where we discover that we really dont have about five retailers in the company that can withstand this. You know what, i think you made that point, and it is possible certainly, were going to be in a point when we get towards the other side of this, jim, where my old focus, m a, is going to come back into focus, because you are going to have an opportunity for those companies to continue to further consolidate, in part because youre going to have other participants in particular industries that are very much hobbled. Youre so right, david. There are companies that have not enough cash on hand. Why . Well, because they didnt foresee, like most people about covid19 the companies without cash hoond with good franchises, david, theyre going to be cherry picked youre right youre going to have more business than you believe because the franchises are intact, but the cash flow wasnt there momentarily. And they can be snapped up because theres nothing in this bill that bails out big business this bails out the dry cleaner to tide them over until dr. Fauci and company win. Thats the greatness of this bill and i noted 960, because people know that the base of this country is the nail salon and the dry cleaner, the base is the bar. We are a Service Economy but this did not bail out big business and if you dont bail out big business, you have to be careful because that means walmart prevails i like walmart theyre hiring i like cvs, theyre hiring i had lowes on last night just a tremendous hiring story but those are all the big guys the big guys, they dont need the bailout. Marvin ellison doesnt need a bailout. He just raised a huge amount of money for lowes they can tap the bond markets. The ones who can tap the bond market are the winners but what are you hearing about being able to tap the bond market if youre a marginal buyer . No, no. You just cant no, no listen, im sorry, Investment Grade. Theres been issuance. We know that, and Many Companies were smart to get out there even though they are paying more. Theyre still in historical terms not paying a great deal, but paying more than they would have been and spreads have widened, but theyre willing to do that. But if youre in the high yield land right now, youre not getting anything, you know, not getting anything done or not much done. Lets keep an eye on that, though, by the way because that certainly would be a sign im sorry who ford motor. Ford motor, right . Ford motor didnt need the bailout in 2007, 2009. Thats a credit we have to watch. Because boy, a lot of people work for ford. Yeah, jim, its interesting we talked about these triplebs, the bottom of Investment Grade coming down into high yield. And Investment Grade is such a larger pool of capital than is high yield, right . Oh, yeah. Thats the concern there. Not to mention, you still have people pulling money out overall. Investors pulling money out. So that does become an issue, who is going to got to know whether we can put more money in 401 k we have to find out about that we have to bring the secretary on pretty much every day given all the questions we have, jim. Lets get to bob pisani for a look at the Broader Market as well this morning with the s p up 2. 25 good morning, bob. Good morning, david quite a powerful rally, and i think very importantly, when that number came out, the employment claims number, at 8 30, market rallied i know 3. 2 million was worse than generally was expected, but what this is telling us is the whisper number was much worse. So we rallied here we were 2410 in the s p futures. Now were at the highs, essentially, for the early part of the morning so i think thats very important in terms of the way that wall street is looking at things. In terms of sectors, this is a broad rally. When you see industrials and health care and banks and tech all leading, thats really broad. Were 41 advancing to declining stocks right now of course, Many Companies are slowly withdrawing guidance. We have been keeping track of all of them. We saw ember air today, a big plane maker, latin america, signet, whirlpool, about 20 of them youre going to see more of them as we start getting into earnings season, and the s. E. C. Has issued guidance in the last few days about the ability to actually have a reporting extension here so theyre granting under certain conditions 45day extension deadlines to filing quarterly reports. Those are the 10qs, for reports between march 1st and july 1st youll see a number of companies not only declining to provide guidance but also delaying their reports for the 45 days. Again, the s. E. C. Is issuing guidance, but expect to hear that and jim mentioned this, definitely providing guidance was micron, they talked about better than expected numbers, and of course, were hearing a lot about the shift to homebased work due to coronavirus outbreak micron trading to the up side. They were upgraded over at bank of america a concern about the vix. I keep getting questions its the most discussed topic amongst some of the traders about why cant we get the vix down why are we still at 62, 63 on the cash contract . If you look further out, you see its quieter, april, 53. May, 45. June, 40 these were 10, 12 points higher a few days ago, but it reflects the fact the realized volatility has been titanic, 4 or 5 moves on a daily basis that implies an 80 vix essentially. Theres a reason why its hard to get the vix down. What we have seen in the last few weeks gives everybody a little bit of pause. A lot of people are hopeful we might see some rebalancing there has been a lot of talk pension Fund Rebalancing is difficult to get your head around, but there are quarterly rebalancing. Market moves have likely thrown many portfolios below their benchmark weights. For long term investors significant value has been recreated we favor rebalancing toward bench mark weights to regain an overall neutral stance theyre talking about the 60 40 rebalancing. They prefer u. S. Equities. Pension funds are going to be rebalancing. On the quarter to date, were down 20 or so on equities, were up somewhat on bonds, depending on what bond index you use. Theres going to be some kind of rebalancing. How much of an impact this has when theres a lot of sellers is not clear, but selling seems to have abated. The volume is lower. Wall street is working from home i spent the afternoon yesterday calling trading desks and asking about it two concerns with everybody working at home. One, is the Technology Going to work is broadband going to work at home for data intensive, that the trading desks need by and large, yes. Im not hearing of dramatic breakdowns as far as communication with the clients and amongst the trading desks, they have webex, zoom, squawk boxes are now portable. You can have a skwaux box on your phone that communicates with your entire trading desk and people can yell at each other on their phone at home Client Communications are doing well wall street seems to be coping with tading at home right now. You want more on this, tradertalk. Cnbc. Com, i have examples of people setting up systems at home on their trading desks. Just like us here at cnbc, guys, were trading, wall street traders are coping with staying at home. Guys, back to you. Thanks, bob yeah, its interesting times, of course, and as you point out, seems to be working fairly well at this point. Augering for or at least questioning what the future will look like in terms of peoples willingness to stay at home. This morning, we did get a jobless claims number the likes of which we have never seen, not unexpected, though the number itself was jawdropping. 3. 283 million. By the way, there may be many more people who lost their job over the last couple weeks who are not really even familiar with filing a claim. So the actual number may be far larger than that we did ask treasury secretary Steven Mnuchin what his thought was when he saw the number this morning. I just think these numbers right now are not relevant and you know, whether theyre bigger or smaller in the short term, you know, i mean, obviously, there are people who have jobless claims. And again, the good thing about this bill is the president is protecting those people. So you know, now with these plans, Small Businesses hopefully will be able to hire back a lot of those people last week, they didnt know if they had protections they didnt have any cash. They had no choice now, with this bill passed by congress, there are protections. So he says the protections are going to be there, jim, and its enough time that we can actually get things started again in the economy to where these people will have jobs once again. You believe that will be the case i dont know, theres still so many stupid things. Now im reting about a vote, cnn, 70 of people experiencing flulike symptoms heading to florida. The irresponsibility of some companies is just incredible i think theres this misallocation of resources i was dealing with my doctor up in vermont they dont have the masks. Theyre putting these doctors in harms way this is america. Its not china i mean, i dont understand we have to get rid of the wuhan of america we have to make it so that the national guard, the army, whatever, makes it so that we dont have the pictures which just have doctors getting sick or 10 of the police in the city, david, are sick. Its very difficult to be able to get the country moving when the people who are the first responders, the Public Health people, doctors on the line, are risking their lives. And thats not america so i mean, lets get testing, all the testing we need. All the equipment. We have to solve that before we can in tandem with the checks in the mail. Sometimes i cant believe that, i dont know, 45 minutes from here, there are doctors, they make it sound like if we had cameras inside the hospital, we would see the same situation as we saw in wuhan. I mean, communist dictatorship that we know where they have no civil liberties. Were america. So i think thats got to be solved new york city has to be solved before we can feel like we have able to open up the shop and go to a restaurant or a club. We solve that, we get the testing done, we get the equipment, the masks, and it feels like its the private sector thats getting the masks to doctors the private sector is not big enough i want to know, david, whats 3m doing exactly . The ceo, is he getting every mask to doctors in the country he is, as you know, we had him on you know, they have diverted almost all of their supply or their manufacturing capacity, to the doctors. Yes, they are. But they can only make so many they can only make as much as they can the president talking about 9. 5 Million Masks saying its a big number, its not a big number. We know that one hospital system, a handful can go through 70,000 in a day at the height of the epidemic, is what columbia presbyterian was saying you and i both know mike roman is a terrific guy. If its a bottsalneck, look, you and i are not the army corps of engineers, but maybe, they build hospitals tyndays in china maybe what we have to do is commandeer whoever can make these things, yeah, the National Defense production, just commandeer make the economy be on war time footing for the next 30 days so we do not have to have doctors who get sick because we dont have the equipment for them. That is the to me, thats the disconnect between this bill that i really like and whats going on in this country, because doctors doctors getting sick, thats what happened there we cant have that happen here right right. Okay, so what if this continues . What if we arent going to get it completely under control, or the return to work, so to speak, actually spreads it . Do you see that having a depressive effect on the economy longer term, jim and then the possibility that were going to have to come back to congress for even more money . I think if we dont get the testing, it comes back to its equipment in hospitals and testing. I think there are a lot of people, david, who are actually well who dont know theyre well, and have the antibodies. Wouldnt you love to know they have them . Those are going to be the thats the cadre we dont know who cadre is thats up to the federal government yep, youre right nationwide, being able to actually identify people with antibodies as quickly as possible and return them to work is key we pointed that out a couple times already in the last hour lets get to Rick Santelli now, check in on the bond market and things of that nature as well. Good morning, rick good morning, david of course, everybody is still talking about 3. 283 million on initial claims interesting way to look at it is, you know, you have a deficit for the budget every year. And every year, whatever that is, a trillion dollars, after the year is over, it gets thrown into the national debt, which is the accumulation of all those. Same with initial claim. So 3. 283 million this week next week, we start from zero again, and all that goes to continuing claims, which brings me claims which brings me to my point that goes back to 1975 to give context, the high i have going back 75 is 6. 63 million in may of 2009. As we keep adding those initial claims for the most part, theyll go into the continuing claims, always in arrears of that initial shock value look at a twoday of twoyear. Today we traded down as low as 28 the current low close from the 20th of march is 31. That will give you an idea were guns hot in the short end. If we look at tenyear, lets look at five sessions. If you take a line and draw it across, 80 comes up about every day. Thats your High Frequency area. You want to Pay Attention to that which side we close the week on in deference to eighty is key. Dollar index, this is a couple of days of the dollar index. Ive said we keep hitting this 101 area and holding not anymore. We went through it like a hot knife through butter opened it up to six sessions on the zoom with the dollar index moving lower and stimulus packages in the u. S. And beyond, relief packages, the dollar index coming down is a good sign the barometer of anxiety is also coming down. David, back to you thank you, rick Rick Santelli. Were going to take a quick break. When we come back, well get jims stop trading stay with us you should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. But when allergies attack,f any the excitement fades. Allegra helps you say yes with the fastest nondrowsy allergy relief and turning a half hearted yes, into an all in yes. Allegra. Live your life, not your allergies. Should they downsize . Nesters now. Probably. Will they . Not as long as thanksgiving is a holiday. Planning for the future is about more than just money. Let equitable be your guide. At t has connected us every day for over 100 years. And were here for you especially now, doing Everything Possible to keep you connected. Through the resilience of our network and people. We can keep learning, keep sharing, keep watching, and most of all, keep together. Its the job weve always done. It is the job we will always do. Welcome back lets do a stop trading. Jim, i mentioned boeing. It is up 9 . What are your thoughts well, this is a threeday rally. It is led by boeing. Theres a piece in jpmorgan. The difficulty is that i dont think anyone understands exactly what the bill does for boeing. Boeing, theres 2 Million People who are working on the supply chain. 17,000 companies and even boeing cant figure out exactly what it does, but the people have decided that boeing is going to make it and do well. Thats been the fuel for the rally. All the boeing suppliers are moving today so i think theres a sense that this is an industry that has been designated as to be saved a lot of jobs. And i think the easiest one basically to ensure because the chain is so clear. But if i were boeings ceo right now, i would be calling secretary mnuchin and say this was hard what did we get and what didnt we et . We need it the stock is clearly saying the phone call was made by mr. Calhoun and hes going to get what he wants. Yeah, and im trying to fully understand, and it was my next question to mnuchin before he had to go. How he envisions the airline aid, lets call it, working out. What airlines are going to want money . T going to come in the form of an equity stake or preferred im a little confused, jim 25 billion in loans and guarantees another 25 billion in direct grants you should be confused. Because its confusing i mean, if you go to page 526 theres a cant buy back stock contract obligation. It says if you give up buying back stock, well help you, airlines, but then it says the airlines are not going to be helped as much as the employees, and the airlines may not want the money given all the restrictions so david, youre confused because they wrote it badly. We dont know ourselves. Well, listen, when youre rushing like they have been, of course, that is often the case, in fact, some of the language becomes confusing and then an interpretation of it is more important than anything else exactly jim, were going to take a quick break. I know youre staying with us for the first half hour of quk t see wch is coming right back. Life isnt a straight line. 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And just to put that in perspective, two weeks ago that number was 211,000 this new number is four times the record amount that we saw back in 1982 the market taking it well. Digesting the numbers and perhaps because the stimulus is set to pass, Steven Mnuchin joining jim and david in the last hour and saying at the heart of this relief package is the american worker. Listen the president wants to make sure all American Workers are protected. They did nothing wrong this was an act of the government for medical reasons to shut down parts of the economy. And as the fed chair said, we had a healthy economy. We will have a healthy economy we will win this war, as the president says, against this virus. Did your conversation with the treasurer secretary and as you read through the hundreds of pages of this bill, give you hope this will help ease the pain were starting to see in a deep and fast way . I know its important to see how quickly the house passes three weeks is a long time in the world of people trying to put food on the table. You have to sort that. I would love it if it went through the payroll process. That would be immediate. When i look at the complexion of whats going up today, its sin rony and capital one and discover those are the three companies i regard as who Small Business and medium size business rely on they are companies that i think may have been reluctant to lend, but now feel like theres collateral in the form of u. S. Government money going to small and medium size businesses maybe job well done. I think companies wouldnt be getting the nod from the investors if the money wasnt going to go very quickly to the small and medium sized businesses that are really hurting. A twoweek high here. David, just wanted to bring up other threads in the market which continue to point to easing of some of the stresses out there. Really important to watch the u. S. Dollar. Pause this was at the center of the pain in the last few weeks and it is weakening pretty substantially. Which shows some of that pressure of funding that was getting built into the system has been relieved. And if you look at the bond market, bonds are strong, and that has been correlated lately with strong stocks a sign that the bond market is working. These extraordinary measures by the Federal Reserve that they put in place over the last few sessions is starting to thaw some of those tensions that were really bubbling up and giving Equity Investors some pain, and fed chair powell, i think, speaking on the today show this morning, which is a statement in itself, saying basically, weve got Unlimited Power here, and unlimited ammunition i think it helps build further confidence in those sort of markets which have been really stressed the confidence level i got from reading chairman powells, the opposite of a year and a half ago and sara, youre right the bonds, the dollars, there are things saying we get the health care side of this done, were going to have a nice bounceback i had not been as optimistic, because i was worried that there would be bickering i didnt expect 940 in the senate i felt there is the usual divisions hate him or like him, President Trump, is he a lightning rod . Is it working . I mean, youve got to Say Something is working we now have three straight up days yesterday the rally was killed by a tweet by senator sanders that made me feel the rally was not, did not have substance. When i go through the bill, it feels like the bill is about the base, not President Trumps base, but the base of the country. If we could get the General Hospital in elm hurs off the front page of the New York Times because of the equipment its the equipment we cant have doctors get sick in this. Were not some developed developing economy thats the imbalance id like to see the army who gets a good chunk of money saying we have your back the defense production act not being used correctly, i think. I want to be constructive, but the only outfit thats big enough to handle whats going on with the Public Health care is the army, and that requires the state and locals give up some control, some cities did not handle this well i want to get past the blame side, but the bill does give the army, navy, air force, marines some fire power. The president has to instruct them today to say when we see a hospital where there are medical professionals faltering, dont worry. Theres 125,000 medical professionals in the armed forces theyre yours. That has to happen, otherwise, i dont think we feel safe yeah. Until we feel safe, as you pointed out, jim, Economic Activity is going to be severely depressed, i would guess as evidence by the jobless claims number we saw this morning and potentially whats still cocom despite the relief efforts of the bill itself. The extraordinary efforts of the fed, we heard from chair powell this morning in the Corporate Credit markets its having an impact its stabilized things a bit you also had an interesting dynamic. A number of banks that obviously have extended credit, particularly in high yield in the likes of that area also cover or hedge those loans if you want to call it that, by in the credit markets with hedges, credit hedges, those as you might imagine went up dramatically, and now theyre being sold thats Something Else that we want to keep in mind but high yield which weve been keeping a very close eye on because its an important component overall, particularly of the companies most in distress, those levered or those in businesses really impacted by the downturn has stabilized a bit. Another hopeful sign, at least in the near term obviously we still cant in any way understand exactly what is yet to come in the weeks ahead no. No question liquidity is back into the Investment Grade new issue market, and of course, were going to watch the high yield market just looking, jim, at the stock market, and what its telling you, a noted Hedge Fund Manager was on squawk box this morning. I thought he was compelling. He said that the market will peak when the virus peaks. And we just dont know exactly what that is we watched the News Conference every day from the task force. We listen to dr. Anthony fauci and the former fda commissioner. He indicated that weve got a few more weeks of this and the question for investors is what do you do . Do you start buying at these levels, or are the last three days just month and quarterend rebalancing . Look, i think dr. Faucis in charge that special last night was great, and you saw really a kind of a spectrum of optimism and realism and the optimists when they crossed to realist feels pretty good. Yeah i dont think were not there yet. But whats finally going up is the banks. And it is really just important that the banks are playing a role im just getting a message from Mark Zuckerberg Mark Zuckerberg. They pivoted a bunch of teams to focus on enabling people to start businesses from home their tools are optimized for people starting Small Businesses from scratch this is the home theory. I mentioned it mark everyone is doing their part i mention it does because what he is saying is what i heard last night businesses at home are here to stay theyre getting support from outfits like facebook. Theyre getting support from outfits like sysco micron is saying theres a worldwide shift providing a spur theres that was the most optimistic thing from corporate that i heard and one of the things thats just tough david, im sure youre doing the same thing how many times have you tried to get jamie to Say Something jamie diamond . We know that david, i swear even if he told us fortress Balance Sheet, wouldnt you feel better without a doubt during these periods, given he is the only remaining ceo through the financial crisis gordon took over after, and the other names. Yeah, we want to hear from him hes the leading voice in the Financial Services industry and the business world, and given his recent significant illness, he is on the end, hes going to be fine from everything we hear, but certainly, thats a voice thats missing as has been mr. Buffetts. Yet another day without hearing from him what is that about . Theres a cartoon that was there. The airlines are really at the epicenter of the bill, and i think a lot of people are sensitive to the idea that we dont want to bail out warren buffett. There is no bailout here that was made clear. I think there is a sense that the small and medium sized businesses are protected for as long as, i dont know, as long as we believe that we can get to that april 12th date i dont know the april 12th date i think is a dr. Fauci versus trump i hate to see that you dont want dr. Fauci versus trump. Thats a bad call. You want dr. Fauci and steph kerry. That steph curry. Thats happening right now on instagram. Two of my favorite people. Jim, i think the one of the questions that investors everywhere are trying to grapple with this morning as you see a shocking 3. 3 Million People filing for unemployment claims last week is what kind of snapback can we get once this peaks, once the economy goes from lockdown to restart mode, what happens to those restaurants and those mall stores and those salons and those dentist offices . Can you just turn them back on can americans go back to work . How many of these people have been furloughed and then can come back . And that question of what the recovery looks like. I think its critical to try to figure out some investment thesis i think a lot of strategists and economists i talk to are struggling with a u or a w or they dont have models for this. Youre right. And we know that the industries that are most at risk here are the well, the number one industry is bar and restaurant were an entertainment country, and those do they get restarted or do only the big dogs restart one of the things that i think i tried to get out of the secretary is forbearance the landlords are right now at the cusp of a lot of Different Things cheesecake factory, using that again as a paradigm. If they have a problem paying their rent, what happens is therefore baerns at the mall level or the Office Building level . What happens to the Mortgage Real Estate Investment trusts that are there theyre not getting any sort of bailout. I think weve got to hear the treasury secretary was interesting talking about forbearance for an individual at an apartment, but its predicated upon people paying the rent we dont know about commercial enterprises paying the rent. I think thats going to be important to the election leg. Commercial enterprises, can they open their door big and small . They can keep their employees on for a little bit because they have loans that are recourse you can write off. You can walk away from i dont know why there isnt a reason to keep people on you have that. But you have other costs that are hard to meet when you have no cash flow dont know what will happen. Right so the numbers are going to continue to look bleak some economists saying the numbers will mean 2 extra on the Unemployment Rate just alone. Though new york, actually, didnt do as poorly in terms of unemployment claims as states like pennsylvania, california, and ohio we have to talk about the hospital situation in this country and move on. Because weve all been reading the reports and following the social media of er doctors the coronavirus is hitting the state of new york especially hard we have the skrceo of the larget provider here. His company is teaming up with regeneron and others as it looks to provide treatment for coronavirus cases. Joining us is president and ceo of northwell health. Welcome back its so good to have you, michael. Give us an update on how your hospitals in the new york area are fairing with the influx of critical patients. Thank you right now were doing relatively well were managing were in control we have seen a dramatic increase, however, in the last week and our system alone, for example, weve gone from a week ago 100 covid cases in the hospital to today over 1200 in the hospital these are coronavirus patients confirmed. We have more than 1,000 other patients in the hospital waiting for the results of tests the hospitals are busy but its very important for people to understand that were in control of the situation. It is somewhat stressful at the front lines, obviously, what you would expect in a situation like this, but were managing well. How do you protect your Health Care Workers . I mean, weve heard so many devastating articles from italy and now starting in this country about the risks ahead for the nurses and for the doctors and for the hospital administrators. What can you do . Do you have what you need . For right now we have what we need, and some of the production manufacturing entities including those in china have begun to reopen and produce and so for the foreseeable future, were in pretty good shape. Gowns, masks, et cetera. You know, we use up a lot of these each and every day and one of our key priorities, obviously, is the safety of employees, because if you dont have safe employees and if they dont feel safe, remember, employees are under the same have the same concerns as everybody else, they have their families and their kids. So youve got to make sure thats a priority. For right now, were in good shape in regard to supplies. Were continuing to source all over the world to increase our inventory. Because as Everybody Knows, the supply chain got dramatically interrupted over the last number of months but right now were okay and we continue to build up the inventory. Sir, what are you hearing about the various tests that are going on right now a lot of people have hope for different antivirals but were not hearing a thing. A lot of places are doing treatment trials its taking drugs in the market for other illnesses and seeing if it makes any difference with the covid19 at northwell were testing a number of drugs in partnership with regeneron, and with gilead. Those trials started a week ago. We have quite a number of people enrolled we dont have definitive results yet. It will take another little while to see if any of these make a real difference i am pretty certain that within the next week or two, were going to find out that one or more of these drugs do make a difference, and that will obviously change the landscape when that happens. But weve got to make sure were right about this before we make pronouncements we have to make sure it works. Thats important. The president endorsed a drug dr. Fauci seemed to walk that back a study in france saying its good to go i have not been able to get a single doctor in the United States say this is the magic bullet yeah. That is true youve got to get science dictate here you cant get politics dictate or what people would like to see happen dictate let the science dictate. If we dont, youll do damage to people, even sometimes could even be worse than the coronavirus itself so this is where you have to be very careful and astute and calm, very reasoned, and hope and be optimisticthat somethin will happen, but youve got to wait until you can prove that it does last time we talked to you, michael, it feels like a year ago. It was two weeks or so you were talking act how for the first time you were trying to get tests out in more scale. More people tested is that happening . It still feels like just like when we talk to people, that they only are getting tested if they have more serious symptoms. Or if theyre being admitted is that the right approach and can you do more . I believe that is still the right approach that you test those that are sick and those in the hospital example right now as i mentioned earlier, we have over 1,000 people taking up beds, and theyre all isolated in the hospital we have to test those to make sure we know who is positive and who is not until we know that, we cant figure out how to deploy staff the right way in the hospital. We are in our lab at the moment doing 1600 tests a day so the testing is ramping up which of course is the reason youre seeing a lot more positives. But the worst thing to happen here would be to say go out and test everybody then youre not going to be deploying your resources in the most efficient way i agree in the moment with the way its being applied i think we stick with that until we decide its not appropriate you know, you sound a little more positive than Governor Cuomo who every day comes on and gives a matter of fact view of the world in new york state. But sort of tilts toward this crisis is still coming we havent peaked. We may not be able to handle it. We dont have enough ventilators or equipment we may not have enough doctors im hearing a little more positive view from you am i wrong my view is youve got to be calm and give a sense of hospital michl we are going to beat this. This is important not only for the public but also for the staff. We do not know yet, and this is where the the governor may be correct. We do not know yet when this will peak. Is it another week two weeks . Three weeks . That is where were planning for a situation that could get dramatically worse if it dramatically increases, then obviously we will be stretched to deal with especially with the ventilators, the fact that we have to scrounge around on a continue use basis to get more ventilators in a situation like this is not a good situation to be in. We should have supplies of these ventilators and this is a lesson for the future, is to have our warehouses have and the family government and the state government, have an abundance of ventilators. Yes, that could be a shortage of ventilators and there would be a shortage of other supplies if this increases at a dramatic rate, and if it goes on for multiple more weeks. I, however, am looking at whats going on today, and what i think will be happening over the next couple of days, and i like to assure people that yes, we will beat this. This is not going to take the Health Care System down. This is not going to destroy us. I agree with the governor on the fact that we have to plan for the ultimate potential situation. But weve got to be prepared and weve got to take it day by day. Ive heard from some physicians, i want to see if youre seeing it, a concern that other critical patients, people with heart attacks or strokes that need attention and that need care are avoiding hospitals because theyre worried about the outbreak of covid19 worried about infecting the disease, and, therefore, we could see some sort of scary unintended consequences and side effects here is that something that you guys are seeing in your hospitals yeah. Weve heard people complain have a concern about this. Yes. And its something to take seriously. We can still even though we cancelled a lot of surgery, we still will do surgery in cases that if necessary, have the preservation of the individual or preventing fatality of a dramatic outcome, and thats up to the individual physician. We continually emphasize the physicians if a patient is out there that needs this surgery, absolutely needs it, then we have to do it. Whats going on a surgery thats not elective and i would say to people who are listening, that if youre out there in one of those situations, you shouldnt be nervous about coming to the hospital and what would your physician, work with your surgeon to decide whether or not and determine if the procedure is absolutely necessary. If it is, then we should do it we cant on the one hand cause a problem by preventing surgery they need because of this crisis were getting some of those concerns were addressing it. I hope people heed your call. Thank you for joining us and keep us posted thank you bye bye thank you, sara, for bringing us that as well i want to change things a bit. Were not taking breaks here somewhat abrupt moves. I want to talk a bit about the environment for mergers and acquisitions its a conversation we have almost quarterly with mark shafer, citis global head of merger and acquisition but a different conversation this morning, mark, given the Current Conditions clearly one would expect very few deals are going to occur in this environment a, do you agree with that, and b, should we expect that once we get through this, were going to see a torrent of potential consolidation . I think the key thing is for everybody to stay healthy. At citi our focus on employees, and the general public our markets, it has slowed pretty dramatically. Thats to be expected. The previous two shocks, financial crisis, and the dot com bust, we saw it. Here people are focussed on announced transactions, a lot of looking at what ones rights are and material average change clauses and operating covenants to see if there are ways to get out or potentially thats one aspect of it i think were also seeing interest in the fence area you know, we spent ten years basically a lot of the corporate defenses and now rights are being put in short duration. Obviously more shareholder friendly thats to be expected because of times like this, a massive Market Correction and some companies being really badly beat up. There is concern about an por tunistic offers. In terms of when it comes back, this is different because of the ramifications of the real economy. Its really difficult to predict. Youve got to expect theres going to be a period of time where weve got to get the volatility down and the equity markets. Weve got to see whether this is really what the reset in valuation really means before people you have to understand what the forecast of the businesses, whether it be out a year or be longrange plans, what it means in terms of assets thats what were seeing now yeah. I want to come back to the idea of people looking through the contract obligation in a given deal and or the financing. Is citi financing the deals. Are there going to be deals that fall apart even though it would appear in a contract they should remain on track . Like anything else, right, thats a better question for corporate lawyers, but look, i think the extent that there are contract commitments, one would expect people to observe the commitments. In terms of deals falling apart, deals can be pulled apart by both sides you know, i dont really anticipate a lot of what we saw in 08 where a lot of these were very heavily leveraged sponsored transactions i dont expect anything like that this time i wouldnt see that, but like anything else, people are looking. Theyre thinking about what to do the spreads blew out they come back in in terms of announced transactions but i think more importantly people are looking at how do i ramifications, how do i think about what happens Going Forward . Its very difficult. Because while we know this is temporal its difficult to say because im just listening to some of your previous commentator, we dont have any idea when this is going to start to tail off, and it will cross containment. How do you factor your economic ramifications and then think about the micro world, doing deals in that context . Its tough mark, i know this is not necessarily your bailiwick, but when you see a company like citi thats telling almost, jeez, 30 below the tangible scrubbed back value, you have to start thinking well, wait a second are the nonperforming assets going to spike so badly . Otherwise it looks like the stocks are very, very mismarked. And what do you think . Is the market missing something . Not allowed to do buybacks or everyone expects nonforming assets are going to spike badly and therefore, the back value has to come down jim, youre asking a question better asked to i know. Come on. Look, i mean, i think the banks are in better shape than 12 years ago and we are. Im not really in the position to go much beyond that, but were very focussed on take karg of our customers and doing the right thing, and taking care of the communities we operate in. I feel, jim, pretty i mean, i think all of us at citi feel proud of where we are and what were trying to accomplish and were going to do our part, for sure there are, mark, some activists who are in situations where theyre watching the positions that they have significant ones down 30 , 20 , 40 . You mention companies putting this poison pills to make sure nobody takes advantage of the dislocation. Whats the activist play look like especially people saying buybacks are a thing of the past and its irresponsible when we know the risk by not having enough on your Balance Sheet it takes it to the arsenal theyve employed we get a lot of questions about how much money is there really available . A lot of positions are really under water at this point. We did see a number of monetizations from bigger firms. What i would anticipate is in places where theres conviction around the quality of the company, maybe average cost down im in jims world here. And do some of that. I think that its very difficult right now to figure out where the bottom is and with this kind of volatility, but activism is not going away, neither is tech disruption we have a temporal problem right now. I think activism is here to stay clearly with this kind of value, people are going to be looking at what kind of bargains are out there. When you look at the industries, energy, for example, and others as well where there really have been significant ammunitions in revenues, are there going to be the haves and have notes and haves are going to wipe out or consolidate up the rest of the industry, if its allowed well, one of the things we havent talked about is the antitrust and regulatory. You saw the suspension of hsr early termination. So the antitrust clock which is in stuff thats been close to the line has lengthened. I mean, there is an issue there. I think well see bifurcation into the has and have notes. Thats going to present interesting opportunities for the haves. Its important to defend either refecting and offer or seeking more but i do think that bifurcation will occur its occurred in past shocks like this, and we should expect it here. Now, the one thing we may see a little earlier than the cash deals just given the magnitude of the crop or stock for stock transactions its about relative value. Again, i think that is something that could come earlier. Because if youre down 30 and the other guy is down 35, you could talk about putting the companies together on a stock basis, whats the relative value and perhaps we can look for a better day as opposed to cashing out the public in a cash transaction at this point. So there are some things out there that could come a little earlier, but i dont disagree with you at all that well have a have and have nots situation here yeah, and antitrust will play an Important Role there as well. Mark, thanks for the update. Stay safe. Look forward to talking to you again when we have a more normalized m a market. You know, david, i have to jim i get great about that. When you say why . I love ray from school. Because it sounded like somewhat business as usual. I mean, thats kind of i mean, he wasnt hiding david, everyone has been saying to me, any bankers saying anything well, theres a banker hes saying something. Sounds like listen, bank is going to do some things. Its not the end of the world. Dont you like the not end of worlders arent they fun . Yeah. Without a doubt. I prefer hearing that. I prefer hearing that. And i tend to agree with it. All right but weve still got to get through this whats on mad tonight . Were worried about young people i have viva, the best acting cloud stock and pureitan they make the swabs. Everyone in the country should be tested by the end of the week i want to thank everybody for letting me crash their show. Can i leave you with another optimist please do that was negative. Cut me cut her off. Come on. Anyway we lost sara again. Man, sara youre going to leave us with something optimistic look, maybe its to be continued, david good, something to look forward to shes been having some wifi issues there, apparently shell get those worked out, im sure jim, well see you later certainly by mad money i have a feeling probably before then given the torrent events coming at us david, good shirt tie combo today. Thank you i can only do it once a week because i only have one tie. Soon enough ill deal with that. All right. Lets get to frank and get an update on where things stand with the virus good morning the global death toll has risen above 22,000 as lockdown restrictions in many nations are enforced spain is reporting 655 deaths since yesterday. Thats a decrease from wednesday but enough to take spain above the 4,000 total dead mark. In the u. S. The death toll is more than 1,000. Global cases have sur passed 487,000. 69,000 are in the u. S. Iran, the hashdest hit country in the u. S. Urge people to stay home 157 more people died in the country since yesterday and nearly 24 00 more cases of infection have been confirmed. An olympics organizers are trying to nail down a date they want to give sports and athletes as much time to plan. Some point to july with finishing in august. Olympics Officials Say they want to depllay the games by no more than a year. And a new jersey nurse heard a knock on the window of the emergency room she looked outside and saw a tearful man holding a cardboard sign it read, thank you all in emergency for saving my wifes life i love you all we posted this picture on her twitter feed saying i love my job and this is why we do it thanks to our colleagues at wnbc for sharing this touching moment as always for more coronavirus coverage head to cnbc. Com. Frank, thank you good morning welcome back im kelly evans with david faber and sara eisen will join us as soon as the wifi allows about an hour into todays trading session and weve seen the markets all over the place in the last 24 hours but a strong rally with the dow up 944 points 4. 5 . Were at session highs pretty much yeah. The s p as you point out up over 4 extending a rally yesterday as you know, kelly, you were on air during this, i think, in part we had a fairly strong day going after that historic day on lets see, on tuesday. But then some comments and tweets from Bernie Sanders seemed to temper things. We got the bill through the senate the vote was 94 in favor none opposed, i believe. Right . And now we wait on the house of representatives which could act as quickly as tomorrow is from at least what were hearing at this point right following that progress closely, of course, and david a lot of people were surprised that we were down so much this morning we get the horrendous jobless claims number, and maybe it beats expectations maybe its Something Else going on with the rally. Yeah. I mean, that number didnt beat anybodys expectations as you know but the treasury secretary when we spoke to him said he doesnt think its relevant. Now, many may disagree in terms of whether or not its relevant. Particularly because it does shed light on just how many people lost their jobs and kelly, not to mention there are plenty of people who may not even have yet filed or were unfamiliar with the process for filing so the number may have been higher but it points to the possibility of a bigger number next week as well now, treasury secretary ma mnuchin telling us listen, were passing this bill to most likely through the house tomorrow and were going to get the money to people within two or three weeks. He believes that is going to change the trajectory of this huge disruption in Economic Activity that weve seen i know jim has been laser focussed on how quickly and the method by which people are going to get the money, both the consumers and businesses well continue to press everybody on that. I agree that was maybe good news he said three weeks from today, although, we need the thing passed we did get the big jobless claims figure out this morning lets get to Steve Liesman for more context on what weve just heard. Yeah. Im getting three reactions from economists on this one is theyre obviously shocked by the size of the number. They are applauding the Unemployment Insurance bill thats out there that senator Chuck Schumer called unemployment on steroids this shows the need for it and theyre warning it could so higher i got off the phone, and they were saying Something Like 14 Million People by june could be getting some form of unemployment look at the number in context. More than what do you want to call it, four times, five times the previous record, 3. 2 million previous record was 695,000 back in 1982. Lets go inside the number its not everything in there the first thing it shows is the number of people who lost their jobs in the first wave of firing thats going out its also the ability of state payrolls to process the claims theyre going to be under the same duress as everybody else, worrying about the virus, trying to get their work done, processing a huge influx, and its offset by the efforts of some employees to hold onto workers and maybe try to hold on until some of the assistance comes. Thats one side. The other side is Jerome Powell was on the today show today talking about where we are right now, and he says its probably a recession. We may well be in a recession, but again, i would point to the difference between this and a normal recession. This isnt theres nothing fundamentally wrong with our economy. Quite the contrary the economy pmped very well right through february we have a 50year low in unemployment we started in a strong position. This isnt something thats wrong with the economy this is a situation where people are being asked to step back from Economic Activity heres what else powell said. He said theyre not out of am situatiin addition they can lend to any place where credit is not flowing and three, there can be a good rebound on the other side i disagree the claims number doesnt tell us anything it tells us the amount of pain out there right now. Also tells us the number of people getting aid we want this number to climb Unemployment Insurance is the first line of defense. Its the first piece of the safety net before the checks come from the treasury q before they extend the Unemployment Insurance. You want this to happen and you want it to happen early. You dont want anybody to lose their jobs, but if they do, you want them to get the unemployment claims. Ill take it, steve good, sara. We just have to get to rick who can dive into this a little bit further. But Steve Liesman, well talk to you many times about this shocking 3. 3 million unemployment number. Rick santelli over in chicago with a special guest on more on the economic picture here. Rick thanks, sayre are good to see you again. Id like to welcome former chairman of the president s council of economic advisers under george w. Bush ed, thank you for joining me lets get into it. Lets look at this from a different vantage point. We have roughly a 22 trillion economy. According to larry, and we all know larry very well, he said that if you look at the congressional package passed at what the fed is doing and think leverage, altogether were looking at anywhere from 6 to 10 trillion of leverage that can be put in the economy, a 22 trillion economy maybe we stand in place for a month. I dont know im looking at bananas to apples, but it seems like that should be a good amount. Well, its certainly a good amount its not so much the stimulus. You know, i think what we really need right now is liquidity and im very encouraged, because i think the nature of the legislation pretty much Everything Congress is doing and fortunately the administration is doing as well, is to provide liquidity during this shortrun period so its not so much the magnitude whether were talking about 6 trillion, 10 trillion. What we care about most well, it is if were going to stand in place, youve said standing in place is what we need to do. I couldnt agree with you more the fed cant make the virus go away congress cant but a 22 trillion economy with 6 to 10 trillion to stand in place. If it lasts four two six weeks, it seems common sense that that number should really help. Well, it certainly is going to help. Thats the key thing what we need to do is to keep these businesses going during that period of time. The question on whats the right number, we may find that the number that we have right now is not enough we may have to go back and go get something later, but the important point is that the legislation addressed the key parts of the economy that need the help one, Small Businesses. Most important Small Businesses, because Small Businesses dont have the kind of access to liquidity that the larger businesses have. So thats key. We want those businesses back up and running as soon as this thing lets up. Second is the unemployment compensation, the help for individuals who we really need to keep all the individuals going during this period we cant let that sink as well and then third, the issue of specific industries right now we know its travel, its leisure and hospitality and retailing. Those industries are hurt. All the thingsaddressed are actually quite encouraging you know, and the other notion is that we most likely when the coronavirus exits, were not going to be many dont think we can come back as quickly as the demand crash caused the downside. I disagree i think whether you look at post prohibition, all the things that americans were forced to hold in place, once they end seems like demand surges. Listen, im not trying to be overly optimistic. I could certainly see a demand returning picture that would soak up all the lost demand plus more because of the quotient of holding back for so long i agree with you. This is america we like to get out and do things all right i agree with you, rick im an optimist. And ill tell you the way i think about it is this the next quarter is a terrible quarter, we know that. It has to be simply because if you look at retail, leisure and hospitali hospitality, transportation, thats already good 20, 25 of the economy. Theyre going to get killed. The issue is what happens during this quarter we could see a collapse of gdp by 10 to 20 , but i think im with you in terms of the recovery rate. As long as things stabilize and it depends on not just the progression of the disease much of it has to do with the progression of our ability to test people, because getting people back to work depends more than anything on having tests up and running. Thats the protocol we need. Lets say we get that. Then what will happen is second quarter, two quarters from now, we ought to have zero growth we should suffer most of the decline in this quarter and then flatten out and then i would expect recovery to start three quarters out, possibly getting close to where we are now within four or five squaerquarters fro. Im with you i think this is going to be a pretty sharp v i think were going to come back theres no fundamental reason we cant. Its tough to be optimistics in these times, but im with you on that you know, i understand you always have to overprepare and worry about the human factor i get all that, but in the final analysis, call me crazy, i think all the equity indices will be in positive territory by the end of the year. Ed, thank you vefor joining me sara, back to you. Bullish to hear as many parts of the economy are shut down. The Grocery Store is not i want to bring in an update on how theyre keeping people stocked on groceries mark, tell us a little bit about what demand has been like across the country for your products. Jif Peanut Butter, smuckers jam and Everything Else you make sara, thank you for having me i guess i would just take a step back first and say this is obviously a very big humanitarian crisis. And as you guys were just talking earlier a few minutes ago, we are optimistic that the human spirit can prevail and is going to get through this crisis i mean, at the end of the day, we are a company of purpose. And we view this as a humbling, an incredible opportunity, and a responsibility to really support our customers, our consumers, and really even our communities where we work. I mean, we have not only are we focussed on meeting demand and making sure that we can make and ship all the products necessary that the Consumers Want whether thats pet food or Peanut Butter or coffee, but we also have a responsibility to our communities in supporting food bangs and make food banks and making sure the hungry are also fed as well. How difficult has that been to keep the supply chain running . Have you had to increase production and are you having trouble getting it all transported into the stores i would say for the most part our supply chain is working very well we have about 25 plants across north america and all of them are running essentially at full capacity we have had no issues from a health standpoint, and we have obviously had to work very hard to make sure our incredible employees are engaged and are able to come to work and that they feel comfortable coming to work so its really if you think about the Health Care Workers across the nation, all of those all the industries that have to come to work, when you think about our employees, about twothirds of them actually have to come to work. So making sure that theyre safe first and foremost, that they can continue to do their job in a safe environment, and then, obviously, continue to make and ship and so far we have had no hiccups. Obviously were talking to our customers every day to make sure that we are allocating the right products to the right parts of the country, and canada as well. But it has been the need for us to be extremely agile, adapt, and really manage this thing on a daytoday basis has been critical weve been able to do that with a lot of success so far. Mark, some of the other Food Companies ive talked to, some of the other executives have said they try to keep the lines of communication open with the governors, because its so important when you have these economies, largely shut down, places like california which was such a key agricultural source for this country, they need to make sure that those lines stay open what would your message be to the governors . How can they better help you get the food that we need on the shelves . Well, absolutely. Actually, we have had multiple dialogues with governors obviously in ohio and some of the other states where we operate, it has been very important. I would say the Consumer Brands association as well which is the Industry Association has been a strong advocate for the had a t of success, when you think state by state, being able to work through some of the issues, making sure that our products continue to be classified as essential products, we have had a lot of success and i would say overall the various state and local governments have been very cooperative. You know, unemployment is a big topic for us today we obviously saw that shocking 3. 3 million americans filing for unemployment claims last week. What are we going to see in the Food Industry . Sounds like you are keeping all your workers there and, in fact, paying them more how long can that last well, you know, in the scheme of things, we dont have a lot of employees that cant do their job if theyre not in the location there are a few. But we have worked very hard to try to avoid doing any furloughs or layoffs thats why weve actually provided those workers who cant do their job from home but have to be at home 12 weeks, up to 12 weeks of additional pay. We are really, you know, obviously weve given about twothirds of you aour employeet have to come to work, additional compensation, and making sure those other workers have up to 12 weeks of pay continuing is very important mark, whenever we have crises like this, thinking 9 11, it changes us, it changes consumer behavior, it changes the way we live how do you think about the sort of longterm structural impact of this for the u. S. Consumer . Yeah. I would give a couple examples, pet food, our largest business, were leaders in pet snacks, five pet plants all operating at full capacity one of the consumer behaviors weve seen is a shift, an acceleration, particularly in pet and also in coffee to buying these products online. They have been accelerating over the last year or so, but in the last even couple weeks, we have seen an uptick and a shift online and that is a behavior that likely will become sticky and, you know, there are other areas we could point to as well, but that shift or the being accustomed to buy certain brands, whether its milk bone or nine lives or rachel ray new nutric, a lot are starting to shift their purchases online. The other thing i would point to as well, jiff is a number one Peanut Butter, the demand for Peanut Butter and shelly sandwiches or what not, weve had to ensure as were making our jiff products those items in the highest demand were making more creamy Peanut Butter than crunchy. In the hands of our or our online retailers. If you think about jiff and some of the brands like folgers and the brands, consumers are coming back to these brands that maybe in the past had not been acquiring or buying them, and we think that there is some of that may stick, also be sticky. Its both a return to some of these mainstream brands that we had seen maybe a shift previously and then also the shift back to more Online Shopping i always preferred crunchy over creamy, mark. Thank you for joining us really appreciate it. Thank you its really nice to be here. Thank you for having me. Mark smucker of smuckers now that im back online, i wanted to share that point of optimism and i thought jim would appreciate this as well, which is henry shine, makes medical equipment, but also dental equipment, out with a news release they have been working on a finger pinprick test for antibodies of covid19 where they can actually in 15 minutes tell your immunity i think that is a really key step and shows what the private sector is doing here, how fast its innovating on tests, especially related to immunity, because that is going to be the key to what gets america back to work. No doubt. Its funny because i got 9 18 or earlier i think we saw that same news, sara, when jim and i brought that up. It would appear to be a key in terms of releasing people back into the worker force who conceivably are or have a level of immunity once their antibodies are tested and found to have had it having dealt with it and pass through. Can only hope they get those out there as quickly as possible to everybody as quickly as possible as can be achieved, right. Absolutely. And at mass scale and especially to those younger folks i still think, you know, President Trump talking about that april 12th date, its optimistic and the president has said well wait to see what our doctors say about it, but just talking about it has given i think American Business and investors something to look to on the other side and so we wait, of course, for the science and the treatments and the vaccines and the tests and its all going to be very important, but certainly that glimmer of hope is evident in this threeday rally that were seeing on wall street. We just have to watch those cases. Yeah. The s p off of its highs, but still up a healthy 3. 4 right now, sara, as you point out. Man, shares of boeing, what a move that stock has made recently, up another 14 this morning. Its market cap once again eclipsing 100 billion lets get to eric chemi, i think back at hq i dont have the ability to even see you. Im guessing youre there and have a sector for us. I am here at headquarters the s p 500 on pace for its Third Straight day of gains all 11 sectors as you can see are up so far this morning. Lets highlight real estate up today but notice weakness in several mall and Shopping Center names as more people stay home and more nonessential businesses are closed there are growing reports about major tenants possibly unable to pay rent including cheesecake factory, h and m and subway. Thats adding pressure with names like sl green, Simon Property and Regency Centers off their lows of the day, but still understand performing the Broader Market ill send it back to you guys. All right eric, thank you. Stay with us in the breaking News Coverage on cnbc. The dow up 800 points. S p up 3. 2 . Hows the it department liking the now platform . Every time it takes care of something for us, we celebrate. How often does that. Got it. Servicenow the smarter way to workflow. In nearly 100 years serving the military community, weve seen you go through tough times and every time, youve shown us, youre much tougher your heart, courage and commitment has always inspired us and now its no different so, were here with financial strength, stability and experience you can depend on and the online tools you need because you have always set the highest standard and reaching that standard is what were made for good thursday morning. Im Morgan Brennan with jon fortt and kelly evans coming to you live from separate locations as we put social distancing into practice here at cnbc as a precaution taking a look at the markets, major averages are higher, trying for their Third Straight day of