Transcripts For CNBC Squawk Alley 20240713

In the early part of the session, not just the yield curve that dom mentioned but suspensions of dividends from very large european banks this morning as well. And you have the great interview with michael as well talking about that bank and everything hes seeing through that lens, too the other thing in focus, real estate, worst performing sector in the s p today in what is a down day across the board for the major averages coming off the worst First Quarter for the dow and s p ever the other thing im looking at is crude were seeing crude prices come off again after not only the worst month but the worst quarter ever in terms of price fall for crude, lost more than 66 if in the first three months of the year prp you also had the industrial numbers, manufacturing numbers out of europe that didnt look good either john, what are you watching today . Its hard to find good news among tech stocks this morning so much is down. I think its worth having a broader conversation about where we go from here. On that note, markets are down today after the dow closed the worst quarter ever earlier today, Steve Mnuchin explained what programs may lie ahead. Take a listen. One of the things i heard is the Small Business program is going to be so popular were going to run out of our 350 billion. If thats the case i can assure you that will be the list to go back to congress on, it has huge bipartisan support and we want to protect Small Business. Also coming out with a main Street Lending program with the fed. Well be looking at programs for state and local governments. Weve had programs for large companies, for money markets to support money markets. So i can assure you, jay powell and i are working around the clock at providing liquidity into this economy. It seems to be the worst of the day every day, liquidity joining us is joseph amato thanks for being with us it seems theres two different camps, the camp that sees a lot of pain right now, expects a v shaped recovery and i guess we saw in the First Quarter that we could see a rebound start to materialize there sooner rather than later and then theres the camp that thinks theres more pain and volatility to come and a potential recovery could take a lot longer how do you see it and why. Good to be with you we see it more in the latter camp we think this is far from over, we think the crisis in multiple respects is unfolding, the Health Crisis itself is ju unfolding and theres a lot of pain to come so while there was a rally off the lows of, you know, within the last couple of weeks, we think theres a likelihood youll retest the lows as the extent of the comicccomiccon d the earnings digests over the coming months. You have earning season set to unfold in the next couple of weeks here what are you forecasting in terms of a decline in earnings and where do you think that takes us in the s p in terms of of a possible bottom as it relates to First Quarter earnings i think the number is not going to matter. I think what companies print is not the issue, its what sort of guidance they provide and how they elaborate on what their run rate is, the run rate in march is different than january and february so i think the market is going to ignore what january and february was and to the extent companies expand on march, that will be some basis to conclude what the run rate is as you move into april the range of estimates for the year are quite wide p. E with eve seen numbers as low as 100 a share for the s p, 140, 50 a share so were in the lower end of that range over the course of this year. And i think the width of that range tells you people dont have a handle on it. So the extent companies are willing to talk about guidance in the First Quarter earning season i think is going to be critical. Joseph, i wonder and youre partly hitting on this, can the markets rebound without main street im talking even beyond the stimulustype measures beyond unemployment and that assistance, but getting those folks back to work, back on their feet in some cases, im still seeing, you know, new information about friends, people losing their jobs, dont we have to get through some of that cycle before we really Start Talking about the shape of this recovery . Agree 1070 thats going to be important this is a different recession than weve seen in the past. Its going to be devastating on Small Businesses and the comments from secretary Steve Mnuchin today were important i think the policy makers have moved aggressively and quickly to respond to that but it doesnt mean its going to eliminate that completely, itll mitigate the depth of the crisis but itll be, as you saw in unemployment claims last week or this week, the numbers are going to get ugly i think over the course of april and may. And i think the market is going to react to that, and i think you dont see a foundation and a bottom until you have a better sense for the depth. So we think we got close to i think 2,200 in the s p, i hope im wrong but we think you get back to those levels over the course of the next few months. Youre not alone in making perhaps a prediction like that coming off last weeks rally, some work done earlier this week, thinking of one note out of j. P. Morgan about a new disconnect between rates, markets and equities, look at what the yield curve had been doing pricing in a recovery, versus the defensive nature of the equity rally do you see that disconnect reappearing . It does feel theres a level of disconnect with the s p at the levels its been at over the last couple days, last week. You have to appreciate the Monetary Policy intervention thats in the process of occurring is quite substantial and thats really allowed the markets to move back to a greater level of functionality thats critical. Its one of the good news things of the past couple weeks, the actions the fed took have helped to repair what was two, three weeks ago, a dysfunctional fixed income market and thats important for companies to support themselves over the short end of the curve so that has elevated levels for fixed income and you exacerbated the level between equity and fixed income and a lot of folks are taking the approach im going to buy what the fed is buying as long as the fed keeps buying, i think that disconnect is going to occur given the creativity you mentioned the creativity of the fed and treasury, why wouldnt equities track that, whats happening in fixed income . I think equities are you know, have an element of option value if you have a snap back recovery, you could see equities move up, so you havent seen the depths as much as one would have thought given the economic decline that were about to see. Weve seen periods of time in the past where markets have gotten off side, fixed income markets telling you one thing and equity markets telling you something else, thats not unusual. Thats why were cautious around equitie equities our advice to clients has been to gradually rebalance over the course of the coming quarters because youll have a chance to get your equity allocations back to where your strategic allocation is, but dont rush into rebalancing because youre going to have the opportunities that may come cheaper from here. We think theres a bit of reambulan rebalancining that occurred in e First Quarter that helped the past week and a half or so but we feel theres more rebound coming by probably not for a couple quarters. You just hit on this, but to put a finer point on it before we wrap up this interview, what is an investor to do right now given the scenario and discussion were having around the uncertainty, the disconnects between different markets right now and the fact that this pain could extend for longer than currently anticipated . We emphasize, certainly, whether its an individual client or institution, to stay focussed on the long term and not get too caught up with the movements because were going to see more movement. You had days in the last few weeks that you had double digit gains, and your head will spin focussing on that market if youre a 60 40 allocator to equities and your balance has gotten off because of decline in equity values, increase that allocation over time but you can take several quarters to do that all right joseph amato, thank you for joining us today thanks for having me. With that lets get to steve leaseman with more on todays adp numbers. Steve . Only a slight decline in the adp number that even the folks who put it out acknowledge doesnt tell the story of whats going on in the job market and the pain being experienced there through layoffs but it provides some information of how things might go let me provide you the data and see what were looking for in the days and weeks ahead here. Just down 27,000 that was against an estimate of 125,000 february revised down just a little bit but the weekly jobless number expected tomorrow, 3. 1 million that compares closely with what we had last week nonfarm payrolls expected to decline by 10000 whats the story first i want to show you the decline in adp by business sides. Whats interesting in this is it lead it is way how were going to lose workers here, Small Businesses down by 90,000 and you expect that, the Larger Companies have the capacity to hold onto workers longer you can see theres a huge increase in education, Health Services there, up by 48,000 that could be unfortunately one of the saving griing graces of economy here you can see the retail trade in it, down by 37,000 leisure hospitali hospitality, down by 11. Worst to come there for sure why is this data lag easy to explain . The survey week for the adp and jobs report on friday is a week earlier than it really hit the economy. In adp youre counted as unemployment even if youre not paid, and the bls will count any work done during the week, even if youre laid off later a better indicator is probably in the jobless numbers let me show you there, 3. 2 million last week, 3. 1 million expected this week that combination of 6 million is close to what we had in continuing claims during the worst part of the financial crisis we just got there much more quickly with the question being would it be bigger well see the number tomorrow. If the states could process it more its going to be three phases to this crisis when it comes to economic data. The really is going to be much worse than it looks like in the data, then the data is going to look as bad as it is on the ground and finally you get the improvement and the data will lag and well be looking forward to that third phase. Looking forward might be a strange way to put it, steve, but we know where youre going well know more tomorrow for sure take a quick break here. Dow about 450 after being down almost 900 points earlier this morning. Financials are well represented among the laggards back in a moment the barkins are empty nesters now. So it doesnt make a whole lot of Financial Sense for them to stay in this great big house. But, well, this is home. Its where they raised their three boys. Could they downsize . Sure. Will they . Almost 900 points earlier this more than just money. It let equitable be your guide. Woi felt completely helpless. Hed online. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Shbecause xfinity mobilehen ygives you more flexible data. You can choose to share data between lines, mix with unlimited, or switch it up at any time. All on the most reliable wireless network. Which means you can save money without compromising on coverage. Get more flexible data, the most reliable network, and more savings. Plus, get 300 off when you buy a new Samsung Galaxy s20 ultra. Thats simple. Easy. Awesome. Go to xfinitymobile. Com today. Welcome back the dow was down 895 at the low. Right now its down just about 500 points so doing quite a bit better. The other indexes also off their lows of the morning. Apple still outperforming the Broader Market as the dow closed the worst First Quarter ever bank of america adding stock to its best investment ideas now. Joining us now, senior tech analyst at bank of america good morning. Good morning. How are you . Tell me, apple because it has the most upside from here or least downside, why is this a great idea i think its an absolute outperformer in this market, john when you look at the apple we have the Balance Sheet thats important in this environment. But when you step back and look at the Value Proposition of apple, its really about product cycle innovation which we think remains on track its about a stable replacement cycle which i also think remains on track so lastly its bolstered by Services Growth which is seeing an uptick given the fact more people are staying at home so the net of it is, yes, theres going to be a real shock we know that, we cut our numbers aggressively for the Second Quarter but as you look out for the next year, we need the 17 of earnings that people are expecting is translating to 16 of earnings. And the multiple has increased, which is a huge disconnect, but the temporary dislocation gives you an excellent opportunity to own the stock. Apple has just this practice of having a tiktok cycle in iphone releases. We expect 5g iphone this year but if theres ever been a reason for apple to call an audible, its here is it a bad thing if apple does not release the phone that so many anticipate this year, instead decides to lower prices, you know, wrapping component cost, improve margins and let things ride for another cycle . Jon, look, thats fairly unprecedented. When you look at the functionality of the phone, theres been significant improvement over the years its basically become something thats fairly indispensable for people when you look at the cycle itself, what is the implication if apple delays the cycle for whatever reason it might the worst case situation is 5g gets delayed another year. Fox com came out and said its not likely to happen but if it does, you have a one year delay, so you dont get from 11 number in 2020 you get to a 14 number and the following year you get to a 16 number. So in the bigger scheme of things, is it a disaster if it gets delayed no, its not it delays the recovery in the stock, but all that said and done, the decision apple is going to make is is it going to be on time to release a product thats really going to have all the future functionality that is attractive has it got everything that meets its specification . Does it have quality standards once you hit those metrics, apple will release the product i think the discussion is always open to play around with pricing. Weve seen cycles where apple has taken up the pricing and then the subsequent cycle it came down. When you have 5g in the phone, more likely than not there will be a slight up tick in pricing as far as the supply chain goes, the recovery has really come on very, very strongly. What started out like two months ago as a supply problem has translated into a demand problem now. We think the supply side is good were expecting the normal caden cadence, if there is a delay we think its in the near term. You have to wonder whether were going to see more supply chain diversification once we come on the other side of it in the meantime, apple has been a massive buyer of its own stock. Weve seen stock buyback programs halted in the midst of the uncertainty around covid19. Do you think the company is going to continue to buy its own stock right now . Yeah, we absolutely think so. When you look at apple in this position of having gone through the last quarter, having buying back more stock but its cash flow exceeded what it brought back to try to get a net cash flow neutral position is going to take three to four years we dont expect a pause in buying back stock, it has the capital to deploy as far as the buying back stock and all the good its doing, providing masks to people, over 10 million and apple is such a good social player in the market we think it will continue to buy back from a capital deployment standpoint. I would just add, look, we have actually written about this for a long time we call it get America Manufacturing again, this is one of those elements where this is that impetus for changing the dynamics of where things are made. For that you require really design changes, design process changes, system in Chip Solutions that can be manufactured and assembled and so it splits the supply chain across the east and west we think this is another catalyst, the trade war was the first. I think on the Electronics Industry you can see there is a decouple in the supply chain. Its going to require expertise to be trained in the United States or imported somehow, no answers on how thats going to happen thanks for joining us. Thank you for having me were going to take a quick commercial break just get a check on the markets before we do s p down 2. 6 , 2516. The dow is down 490 in t arthSecond Quarter stay with us welcome to the place. Where people go to learn about their Medicare Options before theyre on medicare. Come on in. Youre turning 65 soon . Yep. And youre retiring at 67 . Thats the plan its also a great time to learn about an aarp Medicare Supplement Insurance Plan, insured by Unitedhealthcare Insurance Company. Heres why. Medicare part b doesnt pay for everything. This part is up to you. A Medicare Supplement plan helps pay for some of what medicare doesnt. Call Unitedhealthcare Insurance Company today to request this free decision guide. And learn about the only Medicare Supplement plans endorsed by aarp. Selected for meeting their high standards of quality and service. This type of plan lets you say yes to any doctor or hospital that accepts medicare patients. Do you accept medicare patients . I sure do so call unitedhealthcare today and ask for your free decision guide. Oh, and happy birthday. Or retirement. In advance. Welcome back theres a lot of attention once again on carnival today in the wake of their liquidity measures lets get more on that big move in the stock right now as carnival rushes to the debt market to raise capital this is a 3 to 4 billion bond offering with a cue upon as high as 12 thats a yield more in line with high yield junk bonds. It comes as Credit Rating agency moody downgraded their rating today. Whats unique about this bond offering is its in part secured by some of its ships with sailings not expected to resume until mid may or further out, theyre facing a cash burn. Its already drawn down a 3 billion resolving credit facility, states like alaska have been pushing for relief from the cruise industry after being left out of the relief bill but remember littcruise lines py little to no federal tax and were watching holland cruise ships headed to florida waiting for clearance whether to disembark. President trump last night saying hes going to speak to the governor about those two ships. Back to you. After the break, the virus impact on advertising. Well hear from the ceo of wpp, st wh esadgey. Rgt anc ayitus. And non24 can make me show up too early. Or too late. Or make me feel like im not really there. Talk to your doctor, and call 8442342424. Good morning im frank holland, heres your coronavirus update for the First Time Since world war ii the wimbledon tennis tournament will not be held this summer organizers said with great regret they had to cancel due to Coronavirus Health concerns. Americas top doctor appearing on the today show this morning to push social distancing and other measures. The somber news is coronavirus has spread across our country, all 50 states no one is spared. The good news is states like washington, california, countries like italy when they leaned into aggressive mitigation theyre able to flatten their curve. We know if you do this it takes about three to four weeks from the time you start to lean into it before you level it off. The captain of a u. S. Aircraft carrier is working to evacuate most of his 5,000 crew members as sailors become sick on his ship. For more coronavirus coverage head to cnbc. Com frank, thanks very much. Well take a quick break here as john said a moment ago well check in with the ceo of wpp with the impact oravof conirus on advertising all over the world. Dont go away. [spokesman] if youve tried college but never finished, group cheering snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu 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. Welcome back lets get to julia with a special guest, the ceo of wpp. Morning, julia. Good morning, carl. Were joined by mark reed, the ceo of wpp joining us by skype thanks for joining us today. Wpp has suspended its 1. 2 billion Stock Buy Back Program as well as the final payment in your 2019 dividend as part of the plan to survive coronavirus. I know youve also pulled your 2020 financial guidance. Can you tell us how much your revenue has declined due to coronavirus and how much further you expect it to fall . I think coming into the situation what we were keen to do is put the company in the strongest position financially weve raised 1. 2 billion in asset sales in the last few months to give us a buffer of whats going to happen the coming year. I think it would be unwise of us to speculate on what would happen to revenues so far we said in our statement we saw revenues in china down about 17 in the first two months of the year and were seeing a gradual improvement in the rate i think looking into the Second Quarter, its going to be uncertain but my view is we need to have the company in the strongest position and those companies in in the strongest position will come out of the situation ready to take advantage of the opportunities that will no doubt exist then. Wpp is truly a global company, you have exposure to china, europe, which obviously a little bit ahead of the u. S. , especially countries like italy, in terms of exposure to coronavirus. Can you give us a sense of how much further you expect the ad industry to fall, especially here in the u. S. , and how this is impacting your plan for layoffs . I think the number one priority for us in the crisis has been looking after our people, we have 107,000 people around the world, roughly 10,000 in china, we sent them home. And about 2. 5 in italy we sent them home. And we asked all of our people to work remotely or from home all around the world it has worked well the company can operate with delivering important work to our clients at the moment. So if you asked me three weeks ago if a whole organization could work from home, i would have thought you were mad. Actually the company is operating extremely well. What about layoffs, are you going to be able to avoid layoffs in the country we stopping hiring people, looked at freelance and any discretion spend, so it should be designed to put the company in a good position but the future is too uncertain. That will be the last step we need to take. Mark. Its jon fort, thanks for being with us once again tell me what is happening to Marketing Budgets right now. Many businesses arent operating, some business like travel and entertainment, just i imagine arent spending at all what do you see happening . Whats the impact going to be, particularly in the digit sphere i think whats interesting is that Consumers Want to hear from companies. You know, we did recent research in the u. S. And 84 of consumers said that how Companies Act at the current time will be extremely important to them in forming long term brand loyalty. And 62 of americans felt the companies should continue to talk to them through this crisis what they want to hear about is what companies are doing for people, and what companies are doing for their customers. So through our client Walgreens Alliance were helping them communicate how customers can get access to the Critical Services the Company Provides at the moment so i think there is a relevant role for marketing at this time. There are some sectors of our business, travel and tourism, which is 4 of our revenue, that are impacted but at some point they will need Marketing Services to come out of this recession. Mark, morgan here on the tv side were seeing increased ratings because more people are sitting at home, they dont have much to do in terms of events or consumption of sports for example so theyre turning on the tv. Were seeing stronger user metrics and engagement from the social Media Companies as well when we get through the worst of the situation, you see the spigot start to turn back on in terms of the advertising dollars, where do you think theyll go is this something that can propel the acceleration towards digital or do you think itll continue to play out the way it has been. Its going to accelerate the ship towards digital were seeing 10 years of innovation crammed into four weeks. The way we communicate, work, travel, shop, use financial services, educate our children has been turned on our heads and were moving quickly towards Digital Channels so i think the Digital Media owners and companies will be the winners from this. At the same time i think the traditional stills that advertising organizations like our own and others, understanding consumers, how they think, feel, want to be communicated with, is important in terms of getting the conversation right because the companies that seem to take advantage of the situation or not listen to their customers have been criticized during this time clearly well see much greater adoption of Digital Channels were looking at the whole esports areas. With the sports franchises cancelled or stopped, kids are teaching their parents the joys of esports today so im sure esports will be a bigger business coming out of this than it was going in. I want to hear about the tonality and how youre creating appropriate messaging right now but back to the questions about the platforms that benefit this from this. Which companies are you advising your compliants to put money into is it facebook, google, ad platforms . Which companies do you think will benefit the most . Wpps four largest Media Partners are comcast, disney, facebook and google, each are benefitting from the shift the launch of disney plus and peacock, i think consumers are moving to streaming services as much as theyre moving towards the Digital Channels i think the digital platforms, this is an opportunity for them to build and rebuild trust with their consumers and weve seen a lot of messaging, a lot of activity on google and facebook platforms to prevent misinformation playing their part in helping governments and Health Authorities inform people so were advertising our clients to go where consumers are going and i this i theyre going in those two directions mark, its carl id love to ask you about categories Automotive News has a piece out about Fiat Chrysler launching the first coronavirus campaign, touting 0 for 84 months, using a song by one republic, that was recorded while the band was under quarantine which industry do you expect to be most aggressive i think its a difficult time and you need to do things in the right way. But if its a time when none of your competitors are on air, you can buy media more cheaply, consumers shifting towards traditional channels, consumers consuming more media, but the companies that fought it i think its a good way to communicate in an appropriate way with customers. Weve done work with ford, advertising consumers on how to get extended Credit Facilities from them. Companies need to look t out for consumers but i think companies are looking at longterm brand building the evidence we saw from the last recession was companies that look at longterm brand building come out 30 to 40 stronger than those who dont. At the same time clearly its pressure on budgets, certainly in the Second Quarter. You know, current expectations, less in the third and fourth quarter. I think we are seeing a downturn in spend, which is what we need to be ready for. Mark, you mentioned youre working with your clients right now trying to have appropriate content. How are you navigating, a, the challenge of physically creating new content when most people are in lockdown, and b, also trying to figure out what that appropriate content is for advertising right now and whether its okay to have ads next to coronavirus news, which i know has been an issue thats really damaged a lot of news publishers theres a recent campaign in the uk with publishers asking advertisers to run content next to coronavirus news and i think that consumers can figure out whats advertising and whats news, i wouldnt personally advocate avoiding coronavirus news particularly when theres so much of it out in the market. One example is what we did with proctor and gamble we can play our role in this crisis, the governor of ohio contacted them and asked them to educate young people about the coronavirus. Young people think theyre immune, theyre not immune so we worked with p g to create the dance or distance dancing on tiktok this has been watched 3. 8 billion times in the last seven days if you can talk to people in the right way, using influencers who young people can relate to, you can get your message across in a relevant way we can all play our part in this. Mark, as a ceo of a Major Company with so many different Business Segments in it, with so much of your workforce working remotely right now, longer term, even as we emerge from the outbreak, how do you think it will change or shape or shift your view towards where people are working and what creates the most productivity . You know, this is a mass i have experiment, isnt it that were all going through. As someone who may have been slightly more cynical about the ability to work from home, clearly we can see that people can work from home we can use stock photography, typeogr typeography, use old film. So i think the need for people to sit at their desk is going to be less. Across wpp id say its building, people working together, collaborating. I did a call this morning with our team in spain, had 1,300 people on the call, all from their home talking about what they should do, how they should do it. The problem is this is an anxious time for most people i can tell you from europe, im sure its the same for people in new york at the moment, people are feeling anxious and its not easy working from home, whether you have two young kids like i do, whether youre living on your own, whether you have a partner, its not easy were used to going into the office and, working from there i dont know that well all work from home in the future but i expect well invest in less commercial real estate in five years time than we have today and i think we need to learn to trust our people to work and be more focussed on measuring the output rather than how many hours a day theyre sitting behind their desk. Just a final question, mark as you look ahead to the future when we have emerged on the other side of this coronavirus crisis, how different do you think your business and the Advertising Industry will look, and is there a risk that some of your brands will start working directly with the big platforms like facebook and google and try to cut the ad agencies out of the equation im not concerned about that. When i talk to ceos, they say they need us more than ever, need our advise on the tonality and the right communication and how to deal with the platforms i think some of the glamour of building inhouse agencies and fixed costs associated with that will go away when companies learn what they need to do in ann event such as this i think were an industry that understands what we do is more important. When we come out of this, some consumers will be optimistic, some will be in a different place, they will have lost loved ones and family members so we have to get the communications right. In terms of what we do in terms of helping Companies Come out of this will be more critical than ever thanks, mark. Thanks so much thanks, julia jon julia thank you for bringing us that. As we go to break, look at the faang stocks today, amazon faring the best down just one and a third percent roughly. Alphabetow dn 3. 8 well be right back, stay with us dicare and supplemental insurance. Medicare is great, but it doesnt cover everything. Only about 80 of your part b medicare costs. A Medicare Supplement Insurance Plan may help cover some of the rest. Learn how an aarp Medicare Supplement Insurance Plan, insured by Unitedhealthcare Insurance Company might be the right choice for you. A free decision guide is a great place to start. Call today to request yours. So what makes an aarp Medicare Supplement plan unique . These are the only Medicare Supplement plans endorsed by aarp because they meet aarps high standards of quality and service. Youre also getting the great features that any Medicare Supplement plan provides. You may choose any doctor that accepts medicare patients. You can even visit a specialist. With this type of plan there are no networks or referrals needed. Also, a Medicare Supplement plan. Goes with you when you travel anywhere in the u. S. Call today for a free guide. Shbecause xfinity mobilehen ygives you more flexible data. You can choose to share data between lines, mix with unlimited, or switch it up at any time. All on the most reliable wireless network. Which means you can save money without compromising on coverage. Get more flexible data, the most reliable network, and more savings. Plus, get 300 off when you buy a new Samsung Galaxy s20 ultra. Thats simple. Easy. Awesome. Go to xfinitymobile. Com today. Lets get over to Rick Santelli at the cme group in chicago. Rick thanks, jon so many things going on. I heard carl earlier talking about the complexion of the yield curve there was a time it was inverted, recession, we wanted steep then we get steep and were like i dont know if the steep is good look at what it took to arrive here. Lately its been steep but something happened on the way to the forumin the last36 hours its reversed a bit. Look at a day of ten year note yields hovering at 59 down eight basis points if we open the chart, first thing, 54 basis points the all time low close were getting close. Thats not necessarily a good thing, it reflects a the lower e yields go. Sometimes too low is just not good and if you look at the yield curve, today alone, obviously, were down eight on tens and one on twos, its flattened seven basis points were now hovering tens tos two around 35, 36. So weapon want to continue to monitor these. As far as the federal reserve, listen, you know im a tough grader im always a tough grader. The two programs i would like to contrast on today is repo liquidity and swap lines and i have to give the fed an a plus on both of these. Basically, what theyre telling me today is reverse, repo, volume, and dollar amounts are bigger than repo what does that mean in english the fed has provided so much liquidity, reserve repos are now maybe the vogue. And that is that good thing. Now, in terms of swap lines, something has happened in the last 24 hours, and before i even get to this chart, i would like to say, many of you are watching this on an l. E. D. Tv do you know how it works no you can change the channel or adjust the volume. All you need to understand is that when this goes up, what it means is that its easier to procure dollars outside of the u. S. As a matter of fact, its so easy that right now, approaching 20 basis points, its the best its ever been but when dollars are cheap overseas or a little more expensive here, that will be a Santelli Exchange for another day. But yesterdays swap Enlargement Program by the fed was a major success. Morgan, back to you. An aplus for Rick Santelli, i feel like thats breaking news in and of itself rick, thank you. Eall take a quick commercial brk. All the major averages are lower right now. Stay with us what do you see . We see breakthrough medicines getting to patients in record time. We see harnessing natural gas unleashing the promise of clean energy. We see engineers simulating the future to improve today. At emerson, when issues become inspiration, focusing core strengths to create a better world isnt just a result, its a responsibility. Emerson. Consider it solved. [female vo] restaurants are facing a crisis. And theyre counting on your takeout and delivery orders to make it through. Grubhub. Together we can help save the restaurants we love. Where people go to learn about their Medicare Options before theyre on medicare. Come on in. Youre turning 65 soon . Yep. And youre retiring at 67 . 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Welcome back new york state legislators, some of them, pushing for a potential rent freeze. Our robert frank has the latest. Today is rent day, twothirds of new yorkers are renters, so thats 5. 5 million renters, and by my math, that works out to nearly 20 billion in rent checks that are due today. Maybe 40 of those will not be paid, because they just cant. Now, homeowners and landlords, of course, have received mortgage forbearance renters, though, are still legally required to pay their rent thats created a Cancel Rent Movement online and on the streets, protesters in new york and in california calling for a rent strike, a big digital protest planned today at 2 00 p. M. Eastern and john, as we mentioned, theres a bill making its way through albany that would allow new york state residents to cancel their rent, remember, not to delay it, but just cancel it for three months the bill would provide some relief for landlords through mortgage freezes but the domino effects here are huge not just for the banks, the mortgage holders, but also the city of new york, which of course gets a big part of its revenue, maybe up to a third, from property taxes. Now, Governor Cuomo has put a threemonth freeze on evictions, but lawmakers saying thats not enough for those millions of new yorkers who, today, will have to, or in some cases wont be able to write those checks carl, back over to you all right, robert, thank you. Our robert frank lets check in with mike san to toely, talk a bit about the markets. Mike, interesting 24 hours where we had more calls from wellknown market watchers, howard marks, gundlach, some reporting by steven cohen. That is what the historical odds tell you, at least. That its going to get a little bit sloppier or continue sloppy after you get this kind of crash and then bounce. I dont know that anyone has a particular edge on whats going to drive it. One thing about these environments, there was so much of a fixation in recent days on this idea of pension and other asset al indicators, kind of, you know, reshifting back into equities, this rebalance trade the reason we fixated on it so much, it seems to me, is because theres nothing else to grab hold of, really, fundamentally or otherwise perhaps didnt come through as much as expected, and most of the news on fed measures and stimulus is kind of out there already. That being said, you know, down 2 or 3 , this is not the same kind of rush for the exits we saw at the lows. So it does seem to be a little bit of a trendless action and, as i said, 70 or some of these waterfall declines, according to ned davis research, do end up challenging those lows and breaking them by a little bit. Thats all we have to go on in these environments someone said at the beginning of the week, mike, its a week without major catalysts, even though we are getting some highfrequency labor data, at least. And obviously, ism but at this point, theyre just not baked enough to give us a tree sense of where we are at the moment no, not nearly. And thats why i think when the market goes down 2 in a day, goes up 3 in a day, its not necessarily sniffing out anything this particular about the macro. I dont think, right now, the market itself has a fix on exactly what the trend looks like, what the proper metrics are, at this point its responding to Credit Conditions that has softened up in the last couple of days, but certainly off the worst levels we saw about ten days ago i think its almost like the context is the catalyst. Its, are we going to heal have the Capital Markets kind of adjusted and repriced enough for the whatever probable environment out there . But unless you tell the durations, as everybody keeps saying, of this lockdown, theres no way to really get it. Now were at the leading edge of a default cycle of some description out there now, in terms of corporates getting into some trouble so that all has to be absorbed, as well. Mike, searching for metaphors to understand this market action, is it kind of like we have the major earthquake market wise, and now these are little aftershocks. Is the bad news that the president sort of forecasted last night, perhaps priced in at this point, although thats a ghastly thing to contemplate sure, no, its very hard to do that with any precision but i think the aftershock metaphor probably works reasonably well. Its very hard to figure out, if everybody is bracing for the aftershock, does it still come well, yeah, if were talking about geology, it still comes, but if were talking about a behavioral system like the markets, its not clear right now. But i do think that buyers will be patient everybody is kind of hewing to the same familiar kind of qualitytype names if you look at the momentum indexes, theyve been vastly outperforming because its all bigcap software and tech and also utilities to me, nobody is brave enough to kind of overthink it and look through this period and say, let me try to do some bottom fishing and bargain opportunitying it just doesnt seem like thats the time for that. Mike, meantime, were talking about equities, but the bond market certainly seems to be open for business. Seema mody just reported carnival earlier in the hour, we saw record issuance for companies for Investment Grade last week, as well. What is the read through next week its definitely open for business obviously, youre going to pay up if youre not one of the better credits and thats par for the course. I think its a net positive. Its progress based on where we are now versus where we were fed buying 800 billion worth of coupon debt out there in a week. Its going to have its effect. And i do think that thats something, though, its going to get a little bit ragged if you look at the way that the credit is trading, not just the new issuance market. And that to me is one of the leading metrics that we have to go on right now with regard to stocks, as well. Mike, well watch that. In the meantime, a couple of stories on the tape from House Speaker pelosi, outlining some parameters of an infrastructure bill that potentially we could be talking about more in the coming days, which would include some money for Community Health centers. Lets get to the half, the judge, and cramer back at hq we do appreciate it, carl. Thanks so much we welcome all of you to the halftime report. Im scott wapner continuing our breaking News Coverage of the markets, which are selling off and selling off rather sharply today. Were going to do what we always do well try to make sense of it with our Investment Committee and our own jim cramer today Joe Terranova is here along with steve weiss andcarrie firestone, the ceo of rea Asset Management with us today well start with stocks, the continuation of yesterdays selloff jim, i turn to you weve asked aloud, really, how the market was going to deal with some of the