Transcripts For CNBC Closing Bell 20240713

Now projecting anywhere from 100,000 to 240,000 total deaths in the u. S big investors are weighing in. Rosengren says the feed needs to adapt as the crisis proceeds and he expects the Unemployment Rate to rise dramatically weve got a big guest lineup coming for you in just a couple minutes, talking to james gorman from Morgan Stanley. Hell talk about the market volatility and how the banks have fared so far in this crisis lets focus in on the big stories we are watching at this hour, the final hour of trade. Mike santoli watching the market plunge meg tirrell has new details on the state of Virus Testing in america, so important. Micah, first to you on this market were seeing a pretty steep selloff here. A pretty steep selloff sad to say not that unusual after you get one of these crashlike moves, then a rebound. I think a lot of folks were hand capping this to be an area where it would stall out this may be a little more than a stall. Well have to see. This is a twoyear chart we were talking about the levels of late 2018, maybe we were going to break them. They broke for sure. But were kind of up in that same zone again, yund s and youi rollover of that rally i dont think weve necessarily completely given back whatever we had in terms of a panic selling moment and a decent rebound, but it does seem as if we have a few percent to work with before you can basically say, hey, that was it, a mere dead cap bounce. We didnt v did not pass many tests on the upside in states of emergency of clearing various thresholds folks were looking for. Thats something to keep in mind on the credit side of things, obviously it has been calmed down a little by the fed actions. This is the etf to track the highyearold treasury markets this is the market lows for equities when credit was at its worst. We got some issuance going past couple days softening up. The credit spreads are kind of moving back out in a soft way now, so thats one of the reasons along with treasury yields getting compressed even lower that i think you have more of a flight from risk today, although i would say v say not really a headlong rush, just a little bit of a giveback and some selling opportunities after that rally for now, sara its nice to see you in front of a telestrator again, mike its good to be in front of one. Thank you, sara. One part of the market that stands out today in a bad way is the reits. Short term, long term, if youre look at the impact of all of, this one place that could be hurt is commercial real estate, whether its Office Spaces because everybodys working from home pretty efficiently or malls and the retailers are just going to face even more pain think about it in the conversation today april 1st, the rent is due whats the main thrust of a lot of the voices that you hear right now is dont pay the rent, i cant make the rent, whos on the hook for that is the landlo landlord that along with margin calls and leverage commercial Real Estate Securities obviously is creating a little bit of pain in that area absolutely right pipgts not as if everything was fixed with the fed back stop and the rest of it it definitely did placate the markets far little while, but i think youll still have to deal with the wear and tear of what it means when we start running this kind of credit cycle in reverse in parts of the economy. Mike, good to see you in front of a telestrator good to see you in person as well ten meters away. Keep it that way sara, we miss you in person. Miss you too, guys. Were keeping our distance even here in studio. Mike, thank you. Looking forward to more telestrator action throughout the show more fed officials are weighing in on the unfolding crisis that is happening and the moves to stabilize the markets. Steve liesman has the latest for us Eric Rosengren speaking on a webcast in boston actually saying i dont know if hes the first fed official to say this, but it is stark to hear him say he does see two quarters of negative growth i think people know that thats basically whats been in many economists forecasts, not necessarily been voiced by Federal Reserve officials. Eric rosengren saying he sees two quarters of negative growth. That would mean an actual recession. He said initially in his opening remarks he sees unemployment rising dramatically. During the q a he did reveal that the boston internal fed forecast sees the Unemployment Rate topping 10 i have seen wall street forecasters with numbers that are higher than that, maybe closer to 15 . Hes also worried about high yield and leverage loans if the crisis persist beyond say a couple quarters. He has some concern this ere as well when you guys were talking about commercial real estate, larry summers, the former treasury secretary, speaking, saying he wouldnt be surprised or he could see possibly gdp going down 50 in a single quarter that would be among the higher forecasts that i have seen he did say congress and the fed are off to a strong start but went on to say that the biggest mistake, the greatest mistake that we could make would be to declare premature victory. He wants to be sure that we dont sound the allclear before its time and we have a relapse of this situation. He also said, guys, that he believes an equity stake how about should be taken in boeing if the government provides assistance you, sara, and i chatted with president meser yesterday as well how did you gauge how down beat and bearish some of these officials are . I felt yesterday he was relativelyrelative ly encouraged or encouraging despite acknowledging how difficult the situation is i dont hear anybody being either encouraging or disencouraging, wolf i hear people stating the facts as far as they can know them it would be unusual for a Federal Reserve official to acknowledge that were going you have to a recession. In general, fed officials can sort of their policy must divert a recession i think its discouraging in the sense that i believe that the fed thinks at this point they cannot avoid a recession, that what were playing for here now is the cleanup were playing for the idea of having a fast rebound. Were playing for not having lasting damage done from the process of shutting down the economy to stop the spread of the virus. Thats whats going on in the fiscal side with the 2 trillion stimulus thats whats going on the money the fed side, making this into the idle of the productive capacity, not the shutting down of productive capacity i see them stating the facts here unemployment will be a mathematical equation eventually when the job counters catch up to whats actually going on in the jobs market. It wont show up, however, in the friday jobs report steve, thank you. Steve liesman. Pleasure. The u. S. Has now completed more than 1 million coronavirus tests but states are still reporting shortages. Meg tirrell joins us with more on where we stand in testing meg, bring us up to speed. Hey, sara well, that milliontest threshold has been passed this week, but that kind of obscures the difficulty we still have in getting a test in the u. S. , and that really varies by which state youre in. Check out this map that shows the numbers of tests run on a percapita basis the darker the state, the more tests run. No surprise, new york has run the most Washington State as well louisiana comes in third its run more than 40,000 tests. Thats third most per capita on the other end of that, those lighter colored states, texas, south carolina, california, oklahoma, all doing pretty poorly when you look at it on a population basis and california has a major backlog in tests they report 57,000 tests pending in that state. So what is going on driving all these backlogs first, theres a shortage of supplies to run the test and protective equipment for people taking the samples there was a backlog that was generated at the beginning before these labs had the capacity tons of samples were coming in the backlog still exists theres been a logistic slowdown in terms of fewer flights across the u. S. Delivering samples to labs to process them dr. Deborah birx said yesterday in the Task Force Briefing that labs just send the samples to the places theyre used to sending them, so even though theres new technology thats been approved, theyre still sending them to the original places all these things coming together to create quite a backlog. Back over to you so how do we read the curves, how do we make the curves, understand what the actual mortality rate is if the data is so scarce because the tests are not happening at scale, meg . Its a great question and in california in particular, weve been hearing that the curve might be starting to flatten. And experts there are saying you have to look at things like hospitalizations, deaths those are really concrete things that are being counted in order to know if theyre really starting to flatten the curve and make a difference as testing is so different in different parts of the country meg tirrell, as always, thanks so much for that. We are down 4. 6 on the s p 500 with 50 minutes to trade up next, President Trump planning to meet with Oil Executives friday as crude comes off its worst quarter ever well discuss the outlook with is a dad al husseini and our live interview with Morgan Stanleys james gorman is just 15 minutes away dont miss that amid this market rml oi tuoi there are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Welcome back just over 45 minutes left of the session. Heres a checkin on the markets as you can see weve got the s p down 4. 6 , the dow is close to 1,000 points lower, down 943 points, which is there or thereabouts at the session lows all sectors led lower by real estate utilities and financials, which, by the way, also the worst performing three sectors for the week as a whole. Lets check in on some individual market moves. Quest diagnostics state fell after its previous Financial Guidance for 2020. They said even with the surge of covid19 testing, overall testing dropped more than 40 during the last two weeks of march, down 3. 5 may citys shares dropping, hitting levels not seen since they reemerged from bankruptcy as a Public Company in 1992. The fall came after s p, Dow Jones Indices announced they were moving macys out of the s p 500, down almost 8 today. Oil taking a bit of a turnaround today though coming off its worst quarter on record. The biggest Oil Executives are heading to washington to meet with President Trump on friday as the demand drop has the industry reeling, not to mention the price war between saudi arabia and russia. Joining us by phone is Sadad Al Husseini nice to speak to you again what do you expect President Trump to do about this well, good morning. I hope that he will listen, because the Oil Executives are going to give him some numbers and the numbers are going to surprise him from what i can see. The biggest Oil Importing source of oil for the u. S. Is actually canada, and the second highest is mexico. These have nothing to do with opec so if he will listen to them, they will probably tell him that the u. S. Imports a lot of oil and exports products, imports 8 billion barrels of oil and exports about 9 billion barrels of product the u. S. Production itself is very light oil, ontinngls, not d for producing the exported products i hope he will be listening to them because they have, im sure, some very stark numbers for him. Clearly there is always a global price for oil, and thats whats putting pressure on u. S. Producers at the moment. What ultimately do you think is the incentive of the saudis at the moment is it to temporarily keep prices down so that in due course opec and russia cut production to put prices meaningfully back up again . Or do you think the saudis are trying to put large sways of u. S. Production and other global producers out of business for the long term . Well, a very important point. This is a worldwide issue. Its not about the u. S its not about saudi arabia or russia oil demand has collapsed basically. Were looking, you know, a lot of consultants have different numbers, but with e oar loere about 50 billion barrels loss of demand when you have numbers like that, there isnt a single country that can fix that problem. This requires a collective cooperation from all the major producers and others the only way to separate which fields and which production should be continuing on beyond this crisis and which ones should not should be the economics, the criteria that can be applied worldwide is basic economics. If you put a ceiling of about 40 or 45 for production, any oil that is above that cost should probably be mothballed or shut down until we get through this crisis because nobody can fix a loss of demand of 15 Million Barrels in this very tragic situation, which is not even controlled by economics its all by the pandemic of the coronavirus. Anyway, i think this is what everybody is hoping to achieve sorry to cut you off, but obviously the demand dropoff is a huge driver right now and the coronavirus has take an huge toll economically, but even the saudis have come out and said they are increasing their production here, and weve seen this price war between saudi arabia and russia. Are you suggesting that thats not having an impact on the price of oil no. What im saying is there are several points, but what im saying is its not about the oil war or any oil kind of confrontation between countries. The markets cannot handle the amount of oil thats out there, and the saudi oil is the cheapest, least costly oil now, weve tried to work with every country and opec and outside opec and im just a consultant following all this. I can see there hasnt been any response even now, when the u. S. Looks at the oil problem, they consider everybody else in oil as being somehow invading u. S. Markets. Its not like that the u. S. Consumes 21 Million Barrels and only produces 13 million. So its not as if people are taking market share or trying to underprice u. S. Oil. Its a collective market everybody, the highcost oil, has to come out of the market. Thats the only way we can drop 15 Million Barrels still, its certainly out there, and, you know, a senator from alaska this morning on squawk box said this could jeopardize our strategic relationship, the u. S. And saudi arabia, if trump, you know, wants to put pressure on the saudis how ultimately do you think this will reshape the geopolitical landscape, u. S. And saudi arabia, u and russia, and opec versus russia . Can anybody make a deal with each other here . I wish it was as simple as making deals theres a Global Demand issue, and the Global Economic recession, and the only way that we can fix the market is by restoring global growth, economic growth. The strategic issue that everybody has the same objective, economic welfare of the world. Nobodys trying to undermine anybody. The relationships are all healthy between saudi arabia and the u. S. For sure, between russia and saudi arabia. Theres no issues. Its not a strategic confrontation. Its an attempt to collectively resolve the economic problems of the world. And cheap oil, by the way, is the only way to go right after this crisis, thats what everybodys going to look for, and even the u. S. Has fantastic opportunities. But the more expensive marginal oil everywhere, whether its in the u. S. Or russia or in saudi arabia even, will be shut down Sadad Al Husseini, thanks for phoning in we appreciate the perspective. Weve got just about 40 minutes left here of trade take a look at the major averages they are slumping pretty sharply on the first day of the second quarter. Were looking at near session lows with the dow down 953 points the s p is down 4. 6 every sector is in the red and those defensive yield plays like reits and utilities are getting hit the hardest. Consumer staples doing the least worst. Coming up, Morgan Stanleys ceo megoanoi ujas rm jnss. Welcome back 37 minutes left of trade help may soon be on the way for some of the hardest hit companies in this crisis, the Treasury Department releasing new guidelines for Small Business relief loans. Rog v ka kate rogers has the details those loans will be available beginning friday and senior trishls say the capital could be in the hands of Small Businesses as soon as same day. The sba ask wois working on a pl where Small Businesses can find lenders. Then theyd apply online through that bank. The sba is alsobroadening out the rules about who can lend to include any fdic insured bank. These loans will have 0. 5 Interest Rates for a twoyear term payments will be deferred for six months and there is loan forgiveness available if employees are either retained or rehired and the loan is used for certain expenses like payroll or rent and utilities. The loans will also be available on a first come, first served basis, and demand, as you can imagine, is likely to be very high, which raises a lot of questions about available capital, particularly for sole proprietors and independent contractors who will have to wait until april 10th to apply an Important Note, weve heard from treasury secretary Steve Mnuchin saying if the money runs out he plans to go back to congress to ask for more aid another Important Note here, this is typically a 20 billion a year program thats ramping up to a 350 billion a year program in just a matter of week, guys the pressure is on across the board. It certainly is, kate its good to hear theres more capacity potentially to come because my bank sources expect the full 350 billion to be taken if not on day one then on week one the banks frame this as the most insane mad scramble to be ready for friday as theyve ever had to face. They only saw the guidance from treasury when we all saw it yesterday. And theyre still waiting for other certain key details from the sba and from treasury. Despite that, a few of the large banks ive spoke on the said they should be ready to take requests by 12 01 00 a. A. M. Ony for the majority of their clients, but thats key, only for their existing clients and it all will be online. The money then should reach borrowers within 24 hours if all the tech platforms process the applications smoothly. The banks will be a conduit for the loan, which is underwritten by the government, and at that point, the bank will receive a onetime processing fee, which ranges between 1 to 5 of the loan depending on the size no interest is due if its forgiven in that 60day period, if not as you said, kate,. 5 becomes the interest rate. The fees therefore are low but in total the industry will receive billions of dollars of fees despite taking no credit risks themselves no doubt this will lead to some criticism in the weeks and months ahead, especially if there are any hurdles in getting money to certain Small Companies that need it most. The banks didnt ask for this and theyre also building out the pipes in an unprecedented way to make this program possible in the first place, e in that sense, they are part of the solution this time, not the problem, but of course it remains to be seen, sara, whether we see any kind of pushback and kickback in due course thats fascinating you think its going to be so large and have so much demand that it could all be allotted on day one. Kate, if youre still there, what are you hearing from Small Business as to willingness to go for loans and if there is, you know, so much demand p e man, ho they prioritize who gets first so, sara, thats the thing thats definitely concerning a lot of Small Business owners were talking to, that it will be first come, first served so a lot of them are reaching out to their banks now in advance, getting application work ready and hoping theyll be ready to go they are concerned about this loan Program Running out of money quickly. In terms of taking on the loans, i think a lot of them are willing to do it one Business Owner says hes thinks its patriotic to take on a loan like this even if hes not able to rehire everyone. His loan forgiveness could be 89 ef 90 instead of 100 kate, thanks for that more ups and downs on this story before friday. After the break, Morgan Stanley chairman and Ceo James Gorman will join us live. His take on these crazy markets and how the Banking Industry is holding up heres a check on bonds. Treasury yields taking a big leg lower today, particularly the long end, the tenyear yielding around 0. 61 our special coverage is right back after this break. Ever since weve gone mobile on the now platform, somethings gotten into the office. I hear you. Feels like theres no barriers between departments now. Do you think everyone appreciates it . I do. Huh. Forgot my glasses. Serivcenow. The smarter way to workflow. Welcome back 30 minutes left of trade it is a sea of red out there on this first day of april with the s p down more than 4 . Theres a look at your sector heat map everybodys lower at the moment, but the sharpest declines are really coming for the utilities and the real estate stocks, each down more than 7 . Banks are not far behind the financials down 6. 3 Consumer Staples holding up the best, down only 2 materials right behind them. With 30 minutes of trade, coming off the worst First Quarter for the dow in history yes, indeed, sara stocks down sharply, having had their worst quarter for decades and banks have been one of the sectors front and Center Including today. Morgan stanley ceo and chairman james gorman joins us now in a cnbc exclusive opinion thanks for joining us good afternoon sure, wilfred thanks for having us i wanted to start if i may by the pledge you made recently that was no layoffs whatsoever at Morgan Stanley for all of 2020 talk us through your thinking behind that and the response you got internally well, if you just step back a little bit and think of how many folks are suffering through this process and through this crisis and i was out walking late last night around the streets and just watching the ambulances go by, went by one of our local hospitals. These people are heroes, what theyre doing, and the way theyre treating people and being so responsive. So for corporations like ours that frankly are in good financial shape, its an easy lift to support our employees in a time of stress like this its the least we can do and i know a lot of other companies have done it were not unique at all. But were a Large Company and can absorb it. Did you get responses or were people expecting it . Listen, everybodys got so much to worry about. Theyre worried about their families, their health this was one worry we wanted to take off the table for this year of course folks appreciate it. You know, our teams are doing a lot in their communities and a lot of other philanthropic stuff. But its what Large Companies should be doing. So i dont feel it was a particularly special moment, it was just something to help take one piece of anxiety off our employees and their families shoulders. James, where all of those employees at the moment . What percentage of the workforce is working at home and have you been surprised by how the companys been able to continue its operations almost as normal, i guess, despite a lot working from home . Its extraordinary. Weve got over 90 of our employees and contractors working from home, over 70,000 folks. Thats all over the world, by the way. 90 . And the place is functioning i mean, you know, for a period there we had our ten busiest days in history in terms of just volumes. Processed all of that well we have bcp centers in london, tokyo, hong kong, and of course new york, and that all functions well and wilfred, you and i spoke about this a while back, this this was during the financial crisis, which i also lived through 12 years ago, the industry would not have been capable of handling this kind of response we just didnt have the infrastructure set up, and i dont think Morgan Stanley is unique i cant speak for the others but i know based on my calls with the other ceos, everybodys managed through this extraordinarily well good to hear that, james, and clearly volatility is back today and its been ferocious all year pretty much, but was particularly ferocious a couple of weeks ago during those moments, i mean, gauge for us how bad was it . Were you worried about the outlook for the industry at all, a couple of those trading days well, listen, if you go back a couple weeks we obviously had the massive uncertainty around the health crisis, which were getting more and more data on. It still remains very scary for a lot of people, but at least we have some understanding what the arc looks like and some positive news coming out of particularly korea and, you know, what hong kong did and singapore did so there are example where is that works we had that with funding issues, massive liquidity issues, emerging credit issue, unemployment issues and of course equity market volatility. So its not surprising that two weeks ago was kind of the apex of collective anxiety. And, you know, was i concerned were probably the largest equity volume transactor in the world, the largest equities business in the world, so i was confident that the industrys pipes were working. But there were clearly liquidity challenges which, you know, im sure well talk about the actions of the fed and treasury to deal with that, which theyve don brilliantly. Lets talk about that how impressed have you been by their response and what areas still need to be addressed . Weve soon khmeen commercial pad credit tick up a little bit today. Talk us through the response and what you still need to see just a start with the human side the most important initiatives, separate the markets and talk about unemployment and folks who are struggling what treasury did with the Small Business Paycheck Protection Program i think is just brilliant. You know, you take out a loan as a Small Business owner, you hire people back, and the loan gets forgiven and, you know, the infrastructure being set up at the banks and the lenders to process, you know, you can combine that with the unhansed unemployment insurance, combine that with what freddie and penny are doing on the mortgage side, potential further initiatives coming out of the government its the bazooka of bazookas, and that has to give people some comfort. For the markets, what the fed has done and the way theyve supported the tp market, moodys market, obviously theyve figured out a whole range of things which we learned from in the crisis but the difference is the implementation has been dramatically accelerated from a month down to days i think the fed and the fed markets folks in new york city on the new york fed board have done a brilliant job in navigating this, and thats why youve seen liquidity come back. But, you know, it remains choppy, and its going to remain choppy for a while james, its sara. Thanks for joining the show. Good to talk to you. Sure, sara. You just used the word apex when you were talking about the markets and sort of that period, the height of fear and some nervous sentiment. Does that mean you think weve seen the worst of it here . Personally, i think weve soon t seen the worst of the market funding liquidity issues weve seen how the banks and Market Participants and the exchanges have operated, so weve seen a pretty good window into how the operations have held up globally now were operating with 90 of our employees roughly from home. Probably all the banks are 80plus percent, so thats functioning. Equity markets, i mean, house calls, were banging around all over, but honestly, the next six months still remains uncertain, and despite the physical actions, you could see a lot of volatility and will see in the equity markets if i look at the aggregate of sort of marketrelated activities, i do think a couple weeks ago, it felt to me like as bad as we were going to get without dramatically different economic or human tragedy taking place in the next several months so many of the wall street firms are saying were already in recession, weve heard that, even jay powell on the today show said that, and the forecasts are pretty bleak for at least the second quarter, down 20 , 35 for gdp. Is that something that you can see for this economy what would that mean for the banks . Well, you know, having 3 million unemployment claims spike in a week, youre clearly in a recession you know, whatever the technical moment of inflection point, you know, were going to have a global recession i felt it a month ago. And, you know, thats clear. The issue is not do we have a recession is we are having a recession. The issue is how well do we rebound, is it a v, a u, a long l . The bazooka reference by the government and these combined Central Banks would suggest once the medical emergency passes and more and more people who have been infected can go back to work or the social distanciing has worked where more people can be employed i think the shorter the recessionary period. But were going to have one. Whether the economy is down 20 , 25 , 30 , everybodys got an opinion on that for the next quarter, im less focused on it. Im more focused about longterm stability. James, back to Morgan Stanley specific questions if we can what are you thinking about the etrade acquisition . Do you think that was particularly well timed when your stock price was high or badly timed relative of course to the environment that were in thousand that you couldnt have predicted . I dont think its fair to judge, you know, and speak about valuations i think it was fairly valued it was an allstar field as you know as both stocks hadmoved and would have moved post crisis, im very comfortable with having done a stock deal. Ill say that. For the business more importantly, the folks have handled this brilliantly theyve had very little disruption in their platform and this is exactly the kind of reasons why we wanted to buy this business. This gives us worldclass Technology Capability and people have learned to deal much more remotely, it will augment what were doing with our financial advisers, so i think thats terrific and it just provides more balance to our Business Model. Its more Wealth Management revenues, more stability, less volatile than the core markets businesses netnet im happier now that we did the deal when we did it. It would have been impossible do it right now the team over there is terrific. And, you know, from the price perspective, it was a stock versus stock deal so pretty straightforward. James, youre the current chair of the Financial Services forum and that was the medium that the suspensions and buybacks were announced so you were front and center when that decision was unfolding where do you stand on Dividend Payments clearly across europe and the uk, that became very topical and they all led to suspending their dividends. Will you and your peers keep your dividends, do you think yes, we will. And let me just stop at the buyback. This was a voluntary decision. It was pretty historic the big banks got together and said, listen, we have plenty of capital, but we want to preserve that capital to support our clients and our corporates and use their Balance Sheets to support them they came together as a group. I was really proud of the way that happened. And i know, you know, the Regulatory Environment appreciated that and it was a smart and wise thing to do dividends are a differen matter the banks have given up 70 . Remember, the recipient of the dividend, many times small individuals who own these very large bank stocks all over the country, to lose that income at this time, i happen to think would be a very poor thing to do and, you know, this is not about us as institutions its not going to materially change in terms of your capital picture by foregoing, but i truly think its destabilizing to investors and its dealing another punch in the head to the individual ventilator who frankly needs some of that Dividend Income coming in, whether its from the banks or some of the other companies. Now, if we were capital short, that would be completely different, but were not, and im not going to comment on other regions of the world i focus on the u. S. Financial system for now james, i know we have to let you go a final kind of bigpicture question to finish things off on the banks. As were talking, Morgan Stanley is down 8 in line with all the other banks, your stock is down 40 year to date and it was down more of course at the troughs of the market, which clearly paints a picture of at least a probability of armageddon, even if that is the wrong picture how should people think about what the banks are facing . Is it just an earnings hit for the year ahead or is book value really under question to the extent that the share prices fall and whether book value could halve as writedowns start to come out . Listen, wilfred, its a fair question better off or worse as i said, i was copresident here during the financial crisis and took over the reins in early 2010, so ive kind of seen it all in the last 12 years our stock was 6. 71. In 2012, i think it was 11. Im looking at the screen now. 31. 30 its pretty good for what were dealing with you know, the market is the market is scared when the market is scared and volatile, in the more volatile sectors, the energy seconder to, trngs, youre going to take these hits, but, you know, 12 months ago our stock was 40, three months ago it was 58, today its 31, and im going to Say Something thats probably going to surprise you. I really dont look at the stock at all now i dont care its just not a meaningful driver of how our company is performing, what our book value is, what the quality of our operations are, and what were doing to serve our clients the stock will look after itself thats the last of my issues james, as always, thank you so much for your time and your insight. Much appreciated sure. Thanks, guys thanks, sara thanks, wilfred. James gorman, the chairman and ceo of Morgan Stanley, joining us there the stock down sharply, but, you know, trying to look past that sara, as you picked up on there crucially in the middle suggesting that the apex in terms of peak of fear for the markets is behind us unless we see a wild card pickup in terms of the fundamental Health Issues from where the base cases are at the moment yeah. Really encouraging comments and praise for the Federal Reserve and the fiscal authorities i think he called the Small Business loans a brilliant move. As we were speaking to mr. Gorman, just want to point out the market for you we have 15 minutes left of trade and we are racing to new session lows here. The dow is down more than 1,000 points, 1,015 points, down 4. 7 . Remember, this comes after a pretty strong rally for the markets to end the quarter and the week but also a pretty dismal quarter overall for stocks President Trump last night warning of a very, very painful period here for the next few weeks for america. Thats clearly impacting sentiment. This is the last commercial break well take before we take you into the close up next, uninterrupted coverage of the final minutes of trade when we go inside the market ne the dow down 1,026 points. 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. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. 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Welcome back 11 minutes left in the trading day. Commercialfree coverage of al the action going into the close. Mike santoli will break down the crucial moments of the trading day. And today we have josh brown with us as well. Lets kick things off with the broader market, double on capitals, jeffrey gundlatch says he believes the worst is yet to come saying i bet the low from march will get taken out the market has made it back to a resistance zone and the market continues to act somewhat dysfunctionally in my opinion. Take out the low of march and well get a more enduring low. Its a bearish take, josh brown, but its not that hard to see why you would make that kind of call given the headlines out there and the number of cases out there and still the work that needs to be done on testing and all these other big unknowns that investors have been grappling with yeah, no, i think he could b certainly be right and one of the things that ive been saying recently i think on this show last week, its really hard to make a credible case to look back at the low that we printed and said, yeah, thats it, thats as bad as its going to get, while the death rate continues to go up i understand its not accelerating at the same rate but were talking about every night thousands of new deaths just in my city. So, you know, how can you look at the past market low and say, yeah, thats probably the end of it i really do feel that what your prior guest, james gorman, the ceo of Morgan Stanley, said is actually more important than, you know, is it 18,000 and 16,000 hes talking about the duration versus the depth it makes no difference at this point if were going to be down 30 in gdp or 27 . That is irrelevant its the length of time before we can get back to normal that i think is the primary reason for why the market is selling off today. Look at whats going down. Mortgage reits, right . Banks are way worse than the overall market by double why . Because the duration that is a direct extension of what we heard last night, that the next two weeks are going to be terrible and that this could be extended through the end of april. Two weeks ago we were thinking midapril. So as that duration gets pushed back, the market gets worse and the exact parts of the market that you would expect to get worse, small caps are horrendous today, thats what youll see playing out. I wont change my opinion until i feel like weve gotten the health side of this the stimulus is gra et great the health side is the issue to joshs point in bringing up James Gormans points there, they werent exactly the polar opposite to gundlachs comments, but he was addressing the functionality of the markets at the moment and suggesting if peak of the poor functioning of markets has passed us. How are we functioning today amidst another big selloff down 5 or so are we functioning better than we were last time we had these sorts of moves to the downside i do think functioning better by the way, were not having these types of moves because we were going down 9 or 10 , it was more jumpy and air pockets, but thats a low bar to say were able to transact somewhere near the market. I am looking at things like muni bonds trading poorly today and other credit products that are not well bid people are keeping capital close, so i think hes probably correct that in terms of the absolute functioning of the market, the plumbing story, that has probably been addressed to a large degree but, you know, the market is impatient. I think a rational person, to what josh is saying, says we just have to wait and see, wait until the data build up, wait until what we see what these trends are the market itself doesnt wait and see. It trades every day. If theres no buyers at price, it will go lower to find a buyer at that price. Thats really all thats going on in one way, this is a very unique situation in another, what gundlach says is textbook, you get the minimally acceptable balance off a panic low, which is what we got, then you backslide and see if you find some footing after that point so i dont think anythings ordained at this point we have to kind of see how it plays and be open minded about it exactly what the tactics are going to be. Mike and wilfred, you want to see how the markets function, look at treasuries theyre in demand today. Theyre buying safe haven debt and thats pushing yields lower and that is what you expect to see when you see a 1,000point selloff in the dow while it shows theres fear and nervousness out there about the market and the news, its a good thing for functioning because treasury yields were higher on days stock sold off sharply like today, and that was a sign that things werent functioning so well that was also a sign that people were having to just sell everything they had and get carried out afterward. That activity seems like its worth its weight the other thing of course on that point is the dollar is higher today albeit its doing so in a slightly more reserved fashion we had seen over prior weeks. Lets dive directly into the banks. Kbw making calls on two big banks today, upgrading jpmorgan saying it will withstand a recession. They downgraded citi to market perform from outperform citing citys elevated risks outside the u. S. And less certainty on the damage coronavirus could have on the banks Revenue Growth the bank has no plans to offer its dividend there are some structural nuances, jim, between the u. S. And europe theyre a bit different. One is that the european banks pay an annual dividend so theres a window in which to declare. We pay quarterly dividends if you look at the capital levels, the earnings of the u. S. Banks, they come into this in a bit of a different from a different position, a position probably of some more stretch. So, you know, from our perspective, our dividend is sound and we plan on continuing to pay it. Morgan Stanley James gorman joined us and echoed a similar sentiment. The recipient of the dividend, many time small individuals who own these large bank stocks all over the country, to lose that income at this time, i happen to think would be a very poor thing to do, and, you know, this is not about us as institutions this is not going to materially change in terms of your capital picture by foregoing, but i truly think its destabilizing for investors and its dealing another punch in the head to the individual investors who need that key income coming in. The banks have already canceled over 75 of their capital return programs in europe by canceling buybacks theyre tilted towards dividend and canceled the dividends instead. Mike, to come to this point, though, a lot of those banks therefore, it seems like theyll all keep their dividends i doubt youll get one doing it and not the others because it would paint a picture that they needed to if the others needed to wells fargo on 7. 5 , most of them about 4 , a couple around 5 but are people buying stocks yet because of valuation indicators like a dividend yield or are we still not at that point . I think not while were in an environment where the stock price itself can go down 6 in a day, as many of them are today, and youve basically lost your annual dividend. I dont think thats purely whats going on. I think on a relative basis it will make them look more attractive than they otherwise would. I think its fair so accept all these companies saying that they fully can cover these dividends and they are committed to them and thats their intent, but it doesnt mean the business gets a lot better we say theyre well capitalized, banks as a whole, its true. But that just means its more capital they can burn through before they get to a critical point. If were going in a rough credit cycle, thats whats going to happen at some point theres yield support, but not when the market is this jumpy. Three minutes left of trade, guys weve got to hit auto sales because we got new data on that front all day today showing the impact of the coronavirus having on the consumer and autos in particular phil lebeau has the details. The numbers for the First Quarter for the automakers not pretty nobody expected them to be good. Remember january and february were up, but then you have fiat, chrysler, toyota, and gm all reporting declines between 7 pefrs and 10 . The decline all because of what happened in march, need some specific snapshots of how bad it was in march for the automakers . Look at toyota, down 36 , actually 36. 9 in the month of march for u. S. Auto sales. Hyundai even worse down 43 if there is any good news at all, a sliver of good news for gm, ford, and fiat chrysler, is that their zero percent offers probably bought in a few people, muted the declines they saw on the month, but guys, still, not pretty across the board for the automakers phil, thank you phil lebeau. Two minutes left of trade. Mike has more on the market internals today. Mike, what are you seeing . Its pretty lop sided to the downside as you would expect, sara, kind of washout on the new york stock exchange, up versus down volume more than 90 to the downside that shows you another kind of liquidation day even at a slower pace want to look at a couple retail names. Walmart, this is basically your flight to safety in this market, stocks like walmart. Its well outperforming. Tjx, 30 off its highs because its reliant on instore browsing the vix is pop bug basically matching the actual realized volatility of the day, back up into the mid50s, still well below last weeks high, as probably appropriate given we had that crescendo of panic. We have got 40 seconds left of the session and we are down, down 4. 5 on the s p 500, similar percentage decline for the dow, which is close to 1,000 points lower, the low of the session about 20 minutes ago, down 1,132 so were fractionally off those lows but a pretty ugly picture as you can see nasdaq down a similar amount, 4. 4 the russell suffering today. Its down 7 just today. Should mention, though, if the s p is down 4. 4 as we stand, it is down 2. 8 only for week a bit of positive early in the week as the bell goes, we are down 4. 3 on the s p 500, all sectors led lower by real estate, utilities and financials, down 5 or 6 each. Those three sectors also the worst so far this week there is the close, the dow down 973 points, sara kicking off april and in the red. If youre joining us, sara eisen, im here with wilfred frost and mike santoli lets check in on the closes for you, down 4. 44 on the dow, 973 points lower fractionally off the session lows by about 150 points or so but still an ugly day, down 4. 4 for the s p, similar percentage terms for nasdaq, down 7 for the russell. Coming up in just a bit well speak with the ceo of senti and the moves theyre making josh brown and liz young join us but mike, first to you, comfortably today wiping out the gains we seen this week, but a bit to work with from last week in terms of bouncing off the bottom yeah. Obviously went up close to 20 off the low of last thursdays high, then basically surrendering some of that gain since then doesnt seem like theres a particular story behind it except for the fact that everyone got extremely fixated on the quarter end, the pension Fund Rebalancing back into equities we did get too focused on it probably because there was nothing else to pin any specific hopes on in terms faceoff catalyst for buyers. First day of the quarter and backsliding a little bit not terribly unexpected to give some back, but i think its inherently kind of tenuous when were talking about we only had three up days that were getting us away from the recent lows so it still seems like its a little touchy and the compression in treasury yields also tells a story the stock market doesnt do that well when those yields get toward their lows. Josh brown, as for the why, i mean, you know, there are so many catalysts right now when it comes to the buy risks and the economy and the impact we did get that pretty dire warning and a total change of tone from President Trump i thought last night that as many as 240,000 americans could die according to white house officials projections of this horrific disease at the same time, you know, you do have good news in the abbott labs and the j j and the continued innovation and ingenuity of the u. S. Pharmaceutical sector and the u. S. Health care system to come up with tests and antivirals and ant antibody tests and all the things we need to try to get back to normal how do you make sense of all these headlines and how they dictate a markets direction on a given day . Well, ill just address the testing quickly. Its great that all these tools are now leaving the labs and going out into the fields. But all the testing does is tell us that actually the spread is worse than we thought. Of course we need that information. Health care providers need that information. Policymakers need that but the market interprets that as, oh, this isnt a spring thing. This is a summer thing thats what youre seeing today. I dont think you touched on this the leaders to the downside being mortgage reits and utilities on a day where yields are down is extremely concerning there are only two reasons you would ever see a selloff led by mortgage reith rts and utilitie. Interest rates go up, offering a more riskfree competition in terms of the yields investors desire thats not whats happening today. Two, if there are serious widespread concerns about home owners being able to pay their two most important bills, the mortgage and the power i dont like an environment where yields are being compressed and going lower and at the same time were getting big, nasty selloffs in the quote unquote safest parts of the stock market that ordinarily you would think people would be looking for to buy for those yields and so when you have a market being led that way, then im more inclined to say people are now repricing in an even further economic disruption than wa had been previously priced in and most of what we saw last week was counter trends josh, i wanted to ask about the reits in particular, because you have liked this sector and recommended it a number of times on closing bell it has been relatively an outperformer on defensiveness and on yield plays but in a world where, you know, james gorman just on with Morgan Stanley and so many other ceos telling us a bulk of their employees are working from home and its working out efficiently, the question is how does that change the Business Model in the future . Maybe they can spare some expense not paying those high commercial real estate costs down the line and have more people working from home i think people are trying to figure that out. Thats a really tough question for commercial Real Estate Investors i dont personally have an exposure to offers building reits or any kind of paper related to the sector but for sure thats going to be a very highly trafficked area for investors. What is the real price per square foot in manhattan, boston, chicago a year from now when we see how easily so many companies, small ones like mine with 31 employees, and large ones like mr. Gormans with thousands of employees, how seamlessly so many of our daytoday tasks were moved from an Office Building to a living room sara, i think that is absolutely the right question i dont think thats related to what were seeing in mortgage bond reits today, but, yeah, thats a whole other area, so there are two ways the look at that obviously its not great if youre an ventilator in that space, commercial real estate in general, however, if youre an equity ventilator saying what is the opportunity as a result of that, you know, i know zoom has been discussed op the network forever, and im an ventilator there, slack, microsoft, amazon, any company with Cloud Computing as part of their Business Model, Remote Working software, the drum beat for that stuff is only to get louder. More people are going to want to learn about those companies because i do think not only are they giving us a bridge between now and normal si, but on the other side, were going to realize how much more efficient it is to be communicating that way in so many different arenas. Liz young, josh pointed to some of the structural aspects in todays trade that worried him in terms of the sector performance. How did you take what we saw today . And does it concern you that were going to retest the lows or is this just to be expected as mike was kind of pointing to after we bounced 20 from the lows a lot of this was to be expected last weeks rally was due to monetary and fiscal support. I dont think it was unusual to expect to see a little bounce after that what i would say about that Going Forward is as we get used to the fact that this is probably going to last longer than we thought, if we even get another fiscal package down the road, we probably wont see as much positivity as a result because that means that its lasting longer so Going Forward, i think we are going to stay in this range for a while, and i dont think its unreasonable to expect us to stay in this range if you look at the forward p e and the s p right now, 15. 4 times is still quite a bit above where we usually get to in a crisis we usually get somewhere between 10 and 13 times. So its okay to expect that we have a little more downside here, and you also have to remember march was month where we really had no data to work on whatsoever april is the beginning of a month where we have actual Economic Data to look at were going to have Earnings Data to digest markets hate uncertainty were still in a pretty uncertain time here, but as we move through april, well have a little bit more to model out and we can get some clarity even in the worstcase scenario, we can get more clarity how to model this lets go to bob pisani for a check on some of the movers and what happened today. Bob . Sara, josh had the right tone on this. 6 decline banks, utilities, reits, just take a look here reits, we can talk all day how they were to the downside. No bounce there. 6 decline, 7 decline in regional banks like fifth third and regents financial, so the bank index down about the same amount, 6 opini utilities, even American Electric were down about 6 . What do they all have in common . They could all get stiffed if consumers and businesses dont pay their mortgage and utility bills. I agree with josh. Unusual situation. We were in a defensive crouch all day. The cloroxs of the world were up, the krogers, the walmart, the costcos. One level to watch, s p, 2,237, that was the february 23rd low were well above that right now. Bob pisani, thanks so much. Over the Rick Santelli for a checkin on the bond markets today. Hey, rick. Maybe twoday charts gives us a great glimpse of whats been happening with treasuries today. Maybe yields moving down is happy times for some but on days like today showcases how it makes many nervous twoday, twoyear, a flatter scenario you can see the drift on the long run and tens minus twos, definitely flat and rather dramatically today trading around 36 right now. Lets look at the hyg. Since midfebruary, it closed down over 2. 5. That shows nervousness the fiveyear generic cds, they moved up a bit as well there are credit issues going on in the market today even though yields moved down. Thats not always a good thing sara, back to you. Rick santelli, thank you. Would add to that, that stronger dollar, also a sign of stress lately, liz young, how do you take as an equity strategist some of these signs in the credit markets, the cds that rick was talking about, the currency and factor that into the action youre seeing in stocks weve lost liz then sorry. Go ahead i thought it was my shot frozen im so used to that being the case liz young, are you back with us . Can you hear us . I think im here. Okay. Youre here. The gremlins are out again today. I was asking to follow up on ricks point rick mentioned signs of stress in ill liquidity was patchy and the credit markets today, showing some cds widening, credit default swaps, the fact that the dollar was a little bit higher i was wondering how that factors into the overall equity trade and how closely the stock Market Investors are watching those sort of issues i think anybody who isnt watching them should be watching them and credit is certainly one of the vulnerabilities that weve been watching since the beginning of this. And it was a scenario we were pretty concerned with even before we had stress in the market, mostly because theres so much debt out there and the proliferation of etfs in the space, too, has made things trade much differently than they ever did before, and weve never had this many etfs around during a crisis this is something that i think exposes the vulnerabilities, whether we knew about them or not, especially in times of stress but the saving grace here is that the fed came in, the fed knew there was vulnerability there, the fed knew they needed to do something to produce liquidity in the market and they really threw everything in the kitchen at it. I think at this point were at a pretty good level where the fed will protect liquidity in the market and the market is functioning certainly better than it was two weeks ago. Were going to continue to see stress, especially on down days like this. I dont think thats unusual but its certainly a place that investors should be watching if youre an equity ventilator and youre thinking about putting some more risk on the table. Josh brown, you echoed more of a cautious tone at the top of the hour in this segment if we stay with a time line where this is a summer issue as opposed to a spring issue, as you referred to it, what level of fall in the s p 500, again, from here, would make you think that we get to the level where this is a buying opportunity again as opposed to something to be cautious of you know, its a really good question i think about it all the time. But as a rulesbased ventilator, we really dont make those guesses. We have a tactical model that is usually a portion of clients accounts and it reacts to the trend of the market. So my gut instincts or my opinions on covid19 treatments, none of that stuff makes it in, thank god, because im really not good at that the one thing i would tell you, though, is there has been absolutely no change in trend when you pull the lens back. You could look at last week and say this is really great look at the recoveries i was all for looking at that and saying we got a chance to catch our breath but no change to the fact were in a bear market and ill remind you, and i know ive said this before, the history of bear markets tells us that 20 rallies are not out of the question and they dont signify the end, they signify the fact that things just got too bad too fast thats what we had last week be prepared it can happen again. Another 20 rally that means absolutely nothing next week or the week after. Josh brown, liz young, great to see you both. Thanks for joining us. Thank you up next, blackrocks russ esri wl ins. Kotechiljo u soft music [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. 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. Welcome back breaking news on anc Julia Boorstin has the details julia . Thats right. Feeder chain amc ease learns are hiring lawyers for restructuring talks according to a dow jones report amcs bonds are trading 40 cents on the dollar and amc faces default risk after closing more than 1,000 feeders both here in the u. S. And around the world. Amc shares closed the day down about 17 . Cinemark, the other major publicly traded Movie Theater chain, its shares closed the day down about 21 you see those theater chains closing down dramatically despite being included in the bailout. Back to you. Julia, thanks so much for that a tough sector to be in at the moment lets have a look at the markets, a reminder of how we closed, down about 4. 4 , close to a thousand points on the dow, just off the session lows, which was down about 1,100 points on the dow. Joining us now via phone, russ koesterich, manager of Blackrock Global Allocation Fund russ, great to have you with us. I wanted to kick things off with the technical aspects were seeing in the market as you looked across the different asset classes. We spoke with james gorman about how bad it was a couple weeks ago, it may have peaked then but today a few hints of that coming back when you see the dollar strengthening again and a little bit of a pickup in credit spreads. But overall are you still happy that the technicals are much better than we were a couple weeks ago . Well, happy the a strong word, but i do agree the technicals are better and there are a few reasons for that, one of which is its not clear weve hit the absolute bottom but we are seeing some pullback i volatility it looks like some of the forced selling that characterized the market a few weeks ago where you saw risk party funds, levered funds, all sorts of different players dramatically reducing leverage it looks like weve worked through a lot of that. And your point about credit, we did see a little widening of spreads, but were definitely in a much better place than we were a couple weeks ago when it wasnt just the credit markets, it was the money markets, the treasury market dislocated i dont think youre seeing that same type of luckwy dags today this is a normal process of backfilling a bottom so, russ, how do you make a call from here on the stock market without knowing how many cases there are in the u. S. , how many deaths there will be in the u. S. , how long were going to be working from home and sheltering in place, long its going to take to get tests out onto a broader scale . These are questions that even the doctors dont really have answers to because weve never experienced anything like this how do you take those sort of Big Questions which have been driving the uncertainty on the economy and the markets and form late a view on stocks . Well, i think the short answer is you do it humbly because of all the reasons you just cited we dont know the path of the virus. We dont know when the lockdown is going to end. We dont know the path to recovery because weve just never seen anything like this in modern times you have to acknowledge the uncertainty. I think you look for a couple things one, rules of thumb, were likely to see the credit markets bottom the before the equity markets, so i think youre totally right beginning this discussion, whats happening in credit markets, thats a key variable the second obviously is going to be to get whatever indication we can both out of europe and the u. S. , which are now the epicenter of this crisis, of how if virus is progressing. Were starting to see some deceleration then finally the other thing to look for are valuations. Stocks are a lot cheaper than they were. You can debate if theyre actually cheap depending on the metric you use, but the reality is can you on a bottomup basis find Good Companies that even on your worstcase scenario appear to be trading at a br gain thats where i think youll start to see more sustained money coming back into the market. What about on the flipside, russ are there protectiontype assets still worth buying even though theyve appreciated in value wilfred, i think thats key were doing a couple things in the portfolio. One, on the equity side, one of the things you can do for protection is emphasize quality to style what does that mean . Fortresslike Balance Sheets, companies that can get through this earnings consistency. Outside of equities i think hedges are the ones you typically look to, and quite honestly, theyve worked not every day weve had days when gold has not behaved or treasuries have not, but if you look at what rose in the First Quarter, it was exactly what you would expect to rise, treasury, it was the dollar, yen, gold i still think in an environment where your big risk is this huge economic uncertainty, those hedges still have a place in the portfolio. Theyre likely to continue to work you said to find Good Companies that will survive with good Balance Sheets. I know you cant necessarily name names but give us a sense of what types of companies, what types of sectors investors should be looking to for that right now. Absolutely. So, you know, the truth is that mostly the places we were emphasizing before because i think a lot of these are going to see not obviously a benefit from this but perhaps some of the changes were going the see both on an economic basis, a societal basis, are still going to favor sectors like technology, software, health care, particularly services and pharma we still think there are some models on the consumer side when youre talking about media, entertainment that are going to continue to work obviously everything is going to be correlated when we dont know how fast the economy is going down, but a lot of the sectors and industries i discussed, these are places we see high quality, we see very high profitability and were confident that he v theyre going to make it through this environment. What id be cautious in doing is what typically works at the bottom of a bear market. Normally you load up on value, load up on cyclicals and thats because often you get that vshaped recovery with pentup demand as you pointed out, we dont know how this recovery will play out. Id be much more cautious about that type of strategy. Yeah. Our friend weighing in on that on twitter saying this is about active versus passive management when it comes to choosing the companies and not just choosing the index. Do you see this, russ, as a defining point, a turning point in this sort of decadeslong debate absolutely. There are a number of reasons why weve seen the move towards Exchange Funds and other index products and thats likely to continue but i do think this is a stock pickers market, because eve enwhen you cite the industry, the segment of the market youd like to be in, the reality is there are going to be winners and losers you think about the consumer space. There are Business Models that will benefit from this and also businesses that are probably going to be put out permanently. You have to distinguish between those. Russ koesterich, thanks for joining us from blackrock we have retail earnings to tell you about Courtney Reagan has the numbers. Pvh turning in adjusted earnings of 1. 88 per share. Revenues of 2. 6 billion compared to 2. 5 billion the company is not providing guidance for either First Quarter or the full year because of whats going on with the coronavirus. They are also suspending both their dividend and their buyback program. They have used the revovrler, tapping into 750 million of a billion dollars available. The ceo was pointing to their history of a solid Balance Sheet but also says, look, were taking a hard look at discretionary spending, inventory, payroll, cap ex, you name it, and the ceo will be on mad money this evening pvh earnings beat bug no guidance given shares higher by 6. 7 . This was quarter ending february 2nd, so a lot has happened since then back to you. Thanks so much for that quote. Pvh up 6. 7 . Still ahead, an influx of new obama members. So what are you working on . Im searching for info on options trading, and look, dr just wasting time. Wasted time is wasted opportunity. Exactly. Thats why Td Ameritrade designed a firstofitskind, personalized education center. See, you just oh, this is easy. Yeah, and thats oh, just what i need. Courses on options trading, webcasts, tutorials. Yeah. Their awardwinning content is tailored to fit your investing goals and interests. And it learns with you, so as you become smarter, so do its recommendations. So its like my streaming service. Well exactly. Well except now, youre binge learning. Oh, i like that. Thank you, i just came up with that. Youre funny. Learn fast with the Td Ameritrade education center. Call 8662967451 or visit tdameritrade. Com learn. 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Welcome back big District Of Columbia s g drug company arent the only ones looking for a vaccine British Tobacco said its using tobacco leaves out of kentucky the maker of lucky strikes cigarettes showing these images of the plants being cultivated with the goal of making a vaccine available by june and producing 1 million to 3 million doses of that vaccine per week they have not started human testing just yet, making it a real challenge to get this potential vaccine ready on that time line. The company cloned a portion of covid19s genetic sequence, inserted that into tobacco plants and developed a potential antigen. Thats a substance that induces an up immunity response in the body the company says this vaccine has the potential to work in a single dose, potential is the key word here. British American Tobacco says its engaged with the fda on this, but the fda is not commenting on the matter that is a surprising development, the maker of cigarettes working on a lifesaving vaccine here. Frank holland, thank you cente centene announcing it is wave v waiving costs for coronavirus treatments for medicare, medicaid, and marketplace members. Theyll Cover Telehealth Services related to covid19 for more on this, we are joined by centenes ceo, Michael Neidorff in an exclusive interview. Outline what you are doing for your clients and those that use your health care and how much its going to cost so let me say probably two, three weeks ago at the white house, we agreed were going to waive copayments for anything associated with that thats across the population and the intent is one that takes the pressure off anyone thinking they have payments to make we deal with a very vulnerable population, medicaid, lowend on the marketplace, et cetera but it also the motivation why we did it, it protects the providers because the copayment, if its not paid, then they take the hit this way, well be covering it so that was the motivation of it and it will be across the market, copayments associated with this, where theres no need for them to be concerned about service. I wanted to ask you specifically about go ahead sorry, michael finish your thought. Our side, 106 billion the cost, whether it be 30, 40, thats not the issue the issue here is that we deal with this, youve got to ensure that the population gets the care that they need. And theres a lot of talk about whats going to be services they wont receive because theyll have access to other doctors and other services ive commented for some time now, earnings this year are going to be lumpy. And demand, thingovers that nature we have to be directly responsible. Shareholders will be in pretty good shape all Things Considered wanted to ask you about your medicaid services, because i know thats a big, big part of your business. New york today, new york state released some data showing that the covid pandemic is disproportionately affecting new york citys poorest neighborhoods and ravaging its poorest residents. So what are you expecting there and what are you actually seeing in terms of people who have medicaid we expect a higher incidence of it. These individuals tend to live closer together, dont have the luxury of spreading out in their communities. We have not seen a lot of claims data yet to know whats there. It said it was anecdotal at this point. We expect a higher ins zens in the urban areas. Some of our nurses who are not as caught up in the office are now volunteering to help in the hospital settings and clinical settings to help this population michael, are you seeing yet or are you expecting a big pickup in Medicaid Enrollment based on the spike weve seen in unemployment claims . We see a considerable spike in enrollment in medicaid. We have a team working with the states to determine how they do that because its important that the enrollment through there, theyve been able to enroll and get the services and work with the states to eliminate predetermination and steam line things so it can happen quickly. Weve been working on our phone services or the preauthorization issues weve talked about. Those are things that we are doing. So we see a big spike but were planning for it. It should develop in the next i would say 30 to 90 days. I saw senator Bernie Sanders on the view today talking about the fact that we need a singlepawier system because of this crisis. How do you think this pandemic is going to change the u. S. Health care system if at all when this is all over . I dont think i dont think that its going to change the attitudes of the general population in total for the singlepayer i think were going to have to be prepared for this type of thing and think more about it. Ive said for several weeks we have Strategic Reserves for oil, we have Strategic Reserves for military, ammunition and equipment. We need do that in the medical world as well. We have to be prepared to inventory the things we need when this comes up i wush i could say i thought this was going to be the last one. I dont think it is. It will last longer than people are anticipating Michael Neidorff, thank you for phoning in thank you ceo of centene. Heres a look at how we finished the first session of the second quarter, first day of april on wall street, deeply in the red the s p 500 down th4. 4 , the do near the session lows spilling into the close 29 out of 30 dow stocks lower. All sectors in the s p lower hit hardest the utilities and the reits. Still ahead, the ceo of Education Company chegg will join us on learning omomfr he. Dr 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 we finished lower to the tune of 4. 5 for the major averages. Russell getting hit hard, down 7 the worst sectors on the s p were utilities, real estate, and financials sara lets send it back to mike santoli taking a look at momentum stocks, mike. Yeah. Somewhat surprising, perhaps, sara, owning the best performing, most popular stocks going into a nasty market collapse turns out its been a great strategy relative to the rest of the market this is s p 500 stocks that have already performed the best on a backward looking basis compared to the equal weighted s p 500. This is momentum stocks versus the average stock. You see making new highs, so if you happen to own those Top Performing names, shorting the rest of the market, youre still up two interpretations here this has almost been too easy, some people saying its basically become more overheat and perhaps you need to have the strategy buckle, and it was down appreciably today. Well see if that develops into anything tech, health care, overweighted also in the utilities in the momentum etf look at amazon as a weighting within the Consumer Discretionary sector of the s p 500. This is from chris varon got to 42 recently, now just below that, around 38 , 39 , only down half what the market was today. It shows you that amazon consolidating its advantage in investors minds as we look at what happens to auto stocks and the rest of retail within Consumer Discretionary well see if this has anything to say about the shape of the market, the economy, once we come through this crisis mike, thanks for that the Coronavirus Relief bill giving ploy v employemployers aa incentive to help pay Student Loans f. Of well be joined by the ceo of chegg. soft music [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. Welcome back time for a coronavirus update with reshgs ahel solomon pat toomey has been advocating for rules that all americans wear masks to fight the epidemic he says President Trump is, quote, sympathetic to the idea but did not commit to it the Washington Post reporting federal stockpiles of respirator mask, gloves, and other medical supplies are depleted. One official toll the paper the supply chain for personal protective equipment has broken down and price gouging is widespre widespread in israel, the government has announced that people must wear facemasks while in public. Prime minister Benjamin Netanyahu also says that upcoming religious holidays including passover should only be celebrated with immediate family members finally, back here in the states and in new york, some new York Hospitals got a helping hand from warren buffett. Berkshire hathaways private jet subsidiary loaned two planes for transport of respirator masks. For more coronavirus coverage, head to our website, cnbc. Com. Sara, over to you. Rahel, thank you. Small business is feeling a huge impact from the coronavirus and were bringing you stores of just how hard hit it has been. A paradise for smoked fish in new york city has been an institution for over a century theyve never had a layoff until now. Heres fourthgeneration owner nikki russ betterman in her own words. Weve weathered the spanish influenza pandemic, wars, recessions, depressions, terrorist attacks, hurricanes, floods this is Uncharted Waters in 106 years weve never laid off anyone and within a matter of days we laid off 80 people, which is half of our staff. Its a horrible experience i am sick to my stomach. Im still thinking about it. Its so hard to tell cooks who have been so important to us that the least bad option is to lay them off to get unemployment knowing that Unemployment Benefits at least here in new york state are unacceptable. You cant tell someone to shelter in place if they dont have the money to pay for that shelter or to feed themselves or their families that was nikki russ fedderman in her own words so many food Stores Across the country feeling the impact up next, Remote Learning the new normal across the states well hear from the chegg studio, what his student e omnys indungdog ri thcoronavirus crisis you may be learning about, medicare 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. The major indices lower, a little off the lows of the session. The dow low was about 1,100 points, down 973 points. Real estate utilities, financials, the worst performing sectors. Yields down a little bit wilf mentioned oil had a nice runup into the close ending up about 4. 7 or so, though still 21. 50 its all relative. Yeah. The small caps battered, down almost 40 from their recent highs. Well, muchneeded relief brought to student loan borrowers in the relief package from washington, the c. A. R. E. S. Act including allowing employers to pay off student debt without tax consequences our next guest has long been a major advocate for that position and joins us now, dan rosenweig, the ceo of chegg explain why this is such a big deal thanks, sara and wilfred. I hope youre all safe thank you its a big deal for two reasons. Theres one provision that allows students to delay paying their debt for two months and its interest free if they continue to pay it, it goes to the principal. The second thing, something chegg has advocated for and something chegg started over a year ago called chegg equity for education is weve decided to pay off al of our employees student debts. We argued every company is toy r allowed to give a credit of 252 a year for continuing education for their employees and the employees do not get taxed for that however, if you they pay off their student loan, they would get taxed for it theres a oneyear hiatus on that tax, which means if you were going to give 5,250 for each employee that has student debt this year, you would help them pay off 5,250 and its a really big deal. Only 13 of companies actually do something around student debt, and weve been a big advocate for this. I want to thank rocky dpraifs illinois, the congressman who helped lead this effort. He called to thank chegg for our efforts. So its one step its not permanent we need companies to agree to do this for their employees and we think we can make it permanent its great to hear that, so hear some of the small positives in a relative sense to a lot of the negatives out there. Right wanted to switch focus as well and talk about the core business and the idea of Online Education. I mean, have you seen a significant uptick in demand and do you think that thats something that will last or is it a temporary shift whilst clearly schools are closed well, chegg was created ten years ago with the thought that betting on the inevitable, which is that more and more students were going to have to learn, they were going to have to learn online eventually the u. S. Education system was going to get that, understand it, and its unfortunate that this is the situation that has caused them to understand it but theres no doubt that theres been an acceleration of online learning. What chegg does is were not the curriculum were the online homework help support. So were teaching people who normally would get help on campus or get help from a tutor or from a friend sowe of course see that in our business because more students than ever need help. 21 of all students have reported that they go to their campus help centers, whether it be for math or writing or any subject they need help on. Now they have no access to it. Chegg is filling that gap quite nicely weve been set up for this for day one so were able to scale with the demand and we feel very fortunate. Were also working with a lot of big players. Verizon is one of them well be able to provide those that cant afford our help, which is only 14. 95 a month, the opportunity to get access for a couple of months to chegg for free so they can finish their semesters. No student has had to do this before, so we want to be there to help those students and were grateful for our team, our company is working around the clock to provide that. You mentioned sort of the Financial Hardship that students have weve been going in and out. Obviously, the Online Education is at all levels so if you do have if you do have a lot of student loan debt, whats the best advice, dan, right now how to sort of take advantage of some of these new provisions is it not to make those payments for the next few months to not accrue interest and higher debt loads . If you have expenses and most College Students do. You have to understand the average age of the College Student is 25. 40 of them work 30 hours a week or more and 36 of them claim to be hungry over the course of the month and so we recommend that they take care of themselves first if they happen to be better off than they can pay and it reduces the principal and thats good for you. They have to think about their physical health and they have to think about food and completing their classes and their Mental Health and we recommend they do whatever they need to do for themselves and its a twomonth benefit. Honestly, i believe there will be another stimulus, and i do know that a series of Congress People and senators are arguing for particularly on the democratic side at this time to be able to eliminate 10,000 a year in debt so we want to make sure that students do whatever they need to do. That would be another step forward. Thank you for joining us good to see you. Thats my home. Thank you. Stay safe. Former guitar hero ceo, as well i had not realized that as part of my research. Time for our daily good news rundown highlighting the positive stories out there in spite of the pain of the coronavirus. Livenation launching a 10 million fund to support concert crews. The Crew Nation Fund will provide monetary relief for those impacted by the virus amid widely canceled concert, festivals and other event around the world. Home depot will no longer sell the n95 respirator mask to general public and will instead dope eight them to hospitals kroger now providing all hourly front line groceries and supply chain manufacturing and Call Center Associates with a hero bonus, theyre calling it its a 2 premium above their Standard Base rate of pay. Comcast, our Parent Company, ceo brian rogers pledging 500 million for employees whose jobs are impacted by coronavirus. Roberts adding that he and other top comcast executives will be donating 100 of their salaries to charities to support Coronavirus Relief efforts and of course, a reminder there that is the Parent Company of cnbc. Pop star taylor swift supplying a nashville Records Store with money for each employee and three months worth of health care this after prelove music had to send its employees home after having issued a stay at home order. Maybe our producer had something to do with that. Hes a huge fan. Getting that in the rundown. You and i always talk about how much we love this segment and every day we come in in the morning and are we going to run out of stories to put in this segment and by lunchtime we have too many to include, and i do think its important to continue to applaud all these corporations whose original, kind of raise on debt is to make money doing things like this that are in the opposite vein and they should be applauded for it i think it also shows you that innovation can be borne during crisis. You can turn a factory from making mens shirts and bow ties like Brooks Brothers into making surgical masks and all of these other sort of examples which are really fascinating to see what American Companies can do. Absolutely. Up next, thousands of homeowners are already struggling as weve been talking about to make their mortgage, their monthly mortgage payments. April 1 the ll cbiomes due well talk about what happens next when we come back 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. But inside every etf. There are untold hours of careful construction. Infinite what ifs . And contingency plans. Creating funds that help target gaps in client portfolios. Tap untapped potential. And strengthen confidence in you. Flexshares. Powered by over a century of investment expertise before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. For a prospectus containing this information. Ever somethings gone mogotten into the office. M, i hear you. Feels like theres no barriers between departments now. Do you think everyone appreciates it . I do. Huh. Forgot my glasses. Serivcenow. The smarter way to workflow. Welcome back the fed just announcing a temporary change to relax bank capital rules, in particular they are changing the supplementary leverage ratio to strains in the treasury market so where the supplementary leverage ratio speaks to how much core tier 1 capital the banks have to hold, the banks over 250 billion in assets have to hold and 3 of that type of capital and the globally systemic banks have 5 and this will reduce the amount of that sort of capital they have to hold, and theyre going to exclude treasury securities and deposits from the calculation and essentially going back to my point and lowering the amount of core tier 1 capital and just in the statement and just a couple of quotes, liquidity conditions and treasury markets have deteriorated rapidly and Financial Institutions are receiving significant inflows of customer deposits and jumping forward, the change will mitigate the effects to better enable firms to support the economy. Mike and sarah, obviously both aware of this and the fed has done so much over the course of the last couple of weeks and this is quite a highprofile individual move and clearly targeted to the banks, but a company with Everything Else weve seen shows that they are listening and it goes along with what james gordon was saying and theyre ready to act i guess you could say this is more significant as an individual step and it comes at a point when we hoped the worst stress was behind us and all in all and addressing the problems when they see them. The fed saying weve done this much and weve cleared a bunch of blockages in the system and lets see where clogs develop and its allowing banks to more easily hold treasurys and deposits on the Balance Sheet and therefore theyd be more willing to own and make markets and treasury so it should liquefy the system a little bit and thats what theyre after. All right guys, we want to hit the Mortgage Applications numbers. Another big story. Mortgage apps to buy a home fell dramatically as home shoppers pulled back and those who do own a home, some are having trouble making the Monthly Payment diana olick here with the details. Sarah, the calls are flooding in the ceo of Caliber Home Loans said they had 8,000 calls on southbou sunday alone they allow borrowers to miss up to a years worth of pages, they estimated 2 million borrowers would apply for forbearance by may and it will go higher the longer it takes for the economy to reopen. The Forbearance Program does not require borrowers to show proof of hardship. Calabria reporting they are working on the honor system. Thanks so much. Diane a we have a minute left of final thoughts and a big selloff again today down 6 or so for the worst performing sectors and 4. 4 overall for the market and mike, as we had announcements from the fed, there clearly are technical issues theyre worried about and theyre throwing everything at it you have multiple players trying to sit on cash and theyre not willing to put money at risk or to make markets and this should loosen things up and as for the stock market stock market you did what many did get was a predictable pullback 20 bounce off the low didnt mean the low was in. 6 decline doesnt mean it wasnt i just want to also say, brace yourself for another economic report tomorrow morning, initial jobless claims that are set to have a record spike after the 3. 3 million claims we saw last week. The economists looking for even more than that ive seen ranges from 5 to 10 million claims the good news is, though, congress did just expand that relief in the unemployment benefit package. Were out of time, for sarah, mike, myself, stay healthy Brian Sullivan has fast money. All right. Welcome to cnbcs continued coverage of markets in turmoil, everybody. Welcome to april, by the way i am Brian Sullivan still distancing hoping you and your family are well all over the world and the united states. April on the down side, th