Transcripts For CNBC Closing Bell 20240713

Congress is negotiate its next round of Coronavirus Relief for the economy and weve seen a stunning move in oil crude was higher by 2 now down 9 as we await the final details out of the opec meeting. Energy sector now word on the s p. Yeah, been a real reversal there. Coming up on todays show, dan niles tweeting a warning about the rally. Hes going to join us with the risk he sees at these levels, plus, well speak with max levchin. Well ask what his micro loan customers are buying amid the shutdown and his read on the state of start ups right now lets focus on the big stories were watching today though. Steve liesman has detailes on te feds big moves and kayla is following the battle for more stimulus on capitol hill but steve, were going to go to you first to talk about the fed. Yeah, morgan, just quick moves the fed has announce nd the last hour. The its reduce uing the purchases of treasuries and mortgages. Treasuries down from 30 to 50 billion a day. Down to 15 from 25 apparently, those markets are doing better and less fed involvement. Not so the rest of the credit markets where the Federal Reserve announced a stunning 2. 3 trillion of additional lending in programs that were essentially by congress in the c. A. R. E. S. Act in the first place, it has a 600 billion loan program called the main Street Lending facility, where it will make loans mostly to mid sized companies, but Smaller Companies could also qualify its extending the Corporate Credit programs and talent to support 850 billion in credit inside that, fallen angels, another high yield etf companies, etf, sorry. The main Street Lending program, four year loan, open to companies with 10,000 or fewer workers. Principle and interest deferred for a year not done yet because the fed is also doing buying muni bonds in big cities and large counties and states in the country. And also its going to be open to aaa and collateralized loan obligatio obligations. Lots of stuff and lending come frg the fed. Going to take time to stand it up u, but the fed still has additional capacity left even after announcing this. Thanks for that extraordinary liquidity being pumped in, but doesnt necessarily automatically chak which i think the fundamentals well discuss that when it comes to the market. Stocks on pace for their best weekly gain in decades mike has more for us hey, wilf, matter of fact, before we got the news on fed programs, sealeded like the market was setting up for a pause after this strong rally. We got goh t the intraday pop, giving back some weve regain ed about half the total losses of the 34 economy s p we had in a month. Regained in in 13 trading days thats an extraordinary pace of rebound. 2800, which is right where we surpassed intraday, it kind of coincides where we fell off the cliff in late 2018, but also the lows of last summer is in that zone as well if you think about where we were here in the fall of last year before we got that real big ramp into the new year, well, we thought it was going to be a full employment economy, we thought we were going to have 10 Earnings Growth this year and everything look eed good. Credit conditions were strong, so now were back to the lefl before the lift off so it tells you the market has come a good distance in a short period of time, but look at this week. The kinds of stocks and sectors that have been kind of floated the fastest. Partly because of those Credit Conditions and the fed buying high yield debt. The riskiest stuff is up the most high beta stocks whats interesting about the high yield etf which the fed may be buying some of. Its sort of caught up to stocks there was a concern i mentioned yesterday that high yield hadnt really kind of confirmed this latest little blip higher in equities xlg is the 50 largest is to bes. Thats more safe, defensive quality. Thats been lagging the whole group right now. At least on this rebound, guys what i love so much about your charts on a daily basis is that they take complicated substitution discussions and boil them down into one visual that makes it clear and concise. I want to go back to sooef because you just mentioned additional capacity left by the fe what would that look like . Ive seen number of notes circulated ond wall street suggest thag the fed could maybe potentially get into equities if needed now but what is actually still in the tool chest well, lets count the dollars. Congress proep rated 4 450 what the rshry is using to lever at the fed is equity sochlt they used 195 billion in todays program. So we can count out exactly how much is is remaining that would be 255. So multiply this times ten using the same leverage ratio. Morgan, there could be another 2. 5 trillion you can imagine the Federal Reserve finding a lot of interest in one program and making that bigger there could be other areas of the credit markets that it is not yet backstopped or providedly quidty for. It could get involved in that. The other thing to think about is say all this stuff has to be lengthened out in other words, say the shutdown goes longer. The fed would have additional capacity to do that. So additional markets. Wider credit involvement and b possibility longer credit involvement. Those would be the three ways i would think about how the fed could become involved. This is unprecedentedly qu quidty the fed and Congress Addressing all sort of issues, but how concerned are those people going to be. The unemployment by todays claims is b about 13, 14 already. I think they will be plenty concerned. I think what the fed is play in here is these unemployees have a place to go back to. These businesses have to be kept alive for them to have a place to go back to. I dont think theres anybody who thinks we could really avoid a ten or 15 Unemployment Rate the race is on for two things. One is to provide those folks with benefits and sustenance to get through this period and two, to make sure these businesses dont fail theres the ppp program, which we can discuss separately, which is supposedly going to help keep off on to the unemployment ro s roles, but well see if that works. I dont think its going to be that big an impact theres going to be a lot of unemployed the key here is to make sure theres a job for them to go back to. All right steve and mike, thank you for that discussion. Meantime, a battle is is brewinn capitol hill over this next round of stimulus or maybe we should call it relief. Kayla has the latest morgan, its going to be at least a few more days until anything concrete happens with regard to expanding the existing stimulus package today, the senate failed to advance a clean 250 billion add on to that ppp or Paycheck Protection Program that steve was just referencing the issue was democrats largely said we want to expand the program but we want to have a say in exactly how that is done. They had some different ideas for how the money should be broken down. Nancy pelosi in a call earlier today said eventually, will we need more money for ppp, okay, but we havent even spent a third. They have twothirds left so we have time to negotiate to see if we have more time and money there. Democrats had been proposing a break down that looked like this 125 billion that would be injected into the program and an additional 125 billion that would be diverted to Community Banks and also to Disaster Assistance programs at the Small Business administration. Now im told that aides want the white house and democrats to negotiate something directly that everyone can get on board with and pass unanimously. So far as of this hour, that hasnt happened. But that is the expectation in order to get all sides on board within at least shortterm expansion to this pot of money that has already been allocated. Thank you so much the high of the session was up 2. 4 after the break, a small town in western germany has e energy merged as the epicenter of that countrys outbreak, but its providing scientists with a unique look at how the virus spreads. Well speawi ak th key researcher about his findings, next we cannot do all the good that the world needs. But right now, the world needs all the good that we can do. To everyone working to keep america strong, thank you. Weve got 48 minutes left to go on this holiday shortened trading week heres a check on where we stand with the markets now major averages are still in the green though well off the highs of the session both the dow and s p up about 11 apiece right now, the s p is on track for its best week since november of 2008. Up about 11. 7 for the week. Lets get a check though on some individual Market Movers shares of amc taking a hit after multiple downgrades. First from luke capital, then from mkm both are saying that bankruptcy could be a possibility for the entertainment company. Amc has been cutting costs, furloughing 600 employees, including its ceo. You can see there, shares are down about 20 in trade today. Energy names like apache, marathon and occidental are also seeing a volatile day. These stocks surged in the wake of reports of a steep cut in production, but global production, but trading off of those highs as crude has turned sharply lower and as we await more details from that opec plus meeting. Wilf now the worst performing sector on the s p for today. Now a new study out of germany using Antibody Test iing shows h coronavirus may not be as fatal as once previously thought the study focused on one of the hardest hit regions in germany it found that 15 of the population has antibodies for the virus, suggesting theyd had the disease already with a mortality rate of 0. 37 . Thats less than one fifth of the who tallty rate considered in germany as a whole. Joining me now, the scientist behind this verge. Director at the institute of yurology and hiv research at the University Good afternoon to you. Thanks so much for joining us. Good afternoon. I guess the starting point clearly is a very concentrated area of infection in germany where youve got a lot of testing and the encourage result of that is a much lower death rate than previously thought yes, so what we did was representative study within this area where we had a high prevalence of cases already. So got hit pretty hard by covid19 but the surprising part what we found was that they were 15 people, 15 of the people in the population that didnt know they had an infection and overall, that theyre calculating a case fatality rate so, how many people are actually dying of that disease in that population is 0. 37 so this case fatality rate is not actually different in other countries, but that they can assume a pretty high rate of infections that asymptommatic. Does this suggest to you that the prospects originally of herd immunity are ones we can believe in and we can hope for or do we still need to take an approach of containing this virus in all nations where possible so the initial containment is important because we also in germany had some super spreading events where we had many people infected at the beginning. And this led to like an overwhelming of the Health Care System but if youre now in that phase to stop the super spreading event and starting the typical measures of hygiene and social distancing, we are now seeing that these are enough measures to actually contain or control the virus spread enough that at least in germany, our Health Care System is not going to be much overwhelmed so were going to stay within our capacity of intensive care unit beds theres been a lot of talk so far baseded on the data that exists that this is a virus that at least to this point has not mu tated the way we have seen for example strains of the flu mutate and require new vaccines every year what is your research so far yielding in terms of that and how much does that then shape the narrative for how economies, how people get to go back to work, not only in the near term, but in the longer term well, we have not done any research now on the mutation rate on the mutations in general of covid19 or sars covid 2 right now. What were seeing in most of the viral infections, when its being passed from human to human, that it loses partially viral infection so its becoming less lethal. So its kind of adapting to the human system but at the same time, its becoming less severe. But for measures that are being taken and political decisions, im a viralolo gis t, thats something i cant really comment on thats encouraging as it relates to germany, that perhaps 15 containing the antibodies so theyre now immune to the virus. Earlier today on cnbc, becky quick interviewed bill gates i want to play you a sound bite because it relates to what weve just been talking to then ill follow up with a question. Ser logical testing, the idea you could test and see whos got antibodies in their blood then maybe say perhaps they have immunity does that sound like a good plan well, its not very interesting because the extreme measures were taking are to try to make sure that the total infection rate is a small percentage of the population you know, so the u. S. , we should end up with less than 10 million overall infections, so 10 million out of 330 million is not a meaningful amount of herd immunity now those people, the most interesting thing about those people, maybe they could go do risky jobs, but the thing were working on, we have six company consortium, to look and see if the blood in two different forms from those recovered patients can be used as a therapeutic in people who are getting sick. Professor, do you disagree with the theme, the sense of what bill gates was saying or is it just a case that perhaps germany is in a different position to the United States so far . Well i very much respect bill gates. I met him a couple of times and hes very intellectual and intelligent, smart man and i think going for the therapy is a good way to use antibodies as a potential way of treating very severe cases it might be that germany is in a different place, but i think theres a larger amount of immunity ongoing already in the population, at least what were seeing in germany. Now seeing some of the pictures in new york with very severe cases and where we assume a high case fatality rate, i actually think, i believe that in new york, they are many more being infected because i dont think that the case fatality rate differs between countries much the same virus but that they are just much more unknown cases of infections in that cities. Thank you for joining us. We look forward to hearing more about your research as you continue to work on it thank you. Thank you weve got 40 minutes before the bell and the dow is up 1. 1 or about 244 points right now the s p is also up 1. 1 or 30 points still ahead, dan niles tweeting a warning about this rally weve seen in recent days. Hes going to join us with his fresh take on the market st wh ayitus 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. [spokesman] if youve tried colleg group cheering shed, snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu weve worked to provide you with the financial strength, stability, and online tools you need. And now its no different. Because helping you through this crisis is what were made for. Earlier today, b a plea for the fed to give money to individual american citizens as opposed to large corporations. Saying hedge funds, banks and large Family Offices dont need the stimulus are you argue iing to let airlines for example fail . Yes why i mean how does that make sense in the broader scheme of the economy . When you look at what it means, this is a lie thats reported by wall street. When a company fails, it does not fire their employees it goes through a package bankruptcy right . If anything what happens is the people who have the pensions inside those companies, the empl employees of these companies, end up owning more of the company. The people that get wiped out are the speculators that own the unsecured tehran chs of debt for the folks that own the equity. Those are the rules of the game. Thats right because these are the people that fought to be the most sophisticated investors of the world but the employees doebt get wiped out. The pepgss dont typically get wiped out. I dont understand. Why does anybody zverev deserve, using your word, to get wiped out from a crisis created like this how does anybody deserve to get wiped out . Who we talking about . A hedge fund with a billionaire Family Offices who cares. Let them get wiped out who cares. They dont get the summer in the hampton, who cares lets bring in scott wapner now to discuss this interview you did earlier today. Pretty contrarian comments there but perhaps not surprising i think what really got my attention though was the fact when you were talking about airlines, an industry thats already gone through bankruptcies and consolidation and it wasnt just hedge funds and investors. It was pensions, in some cases, employees salaries that did get downsized after those brufsys, too. Youre right and thats clearly the other side of the argument, morgan its a good point that you raise. That there is no guarantee that if an airline for example goes through a bankruptcy process, that all of the employees all the way down the line from the pilots to the flight attendants to the person put iting the bago the plane to the person driving the truck to the plane for the person to put the bag on to the hospitality workers are all going to keep their jobs and the other point is that as you say, hedge funds arent the only ones investing in these companies that you obviously should believe that employees and rank and file employees have 401 k s and there are other pension issues to worry about. And i also think were getting caught and i think you know part of his point in look iing at the collective, i dont even want to use the word bailout because i dont really feel like this is a situation of bailouts at a time where youve had a, a Natural Disaster of sorts of nobodys making and the government and the fed collectively are trying to make people as close to whole if you will, and i know he takes issue with that as well, but this is not the same as 2008 where there was a legitimate moral hazard i think you can say. In the kinds of bailouts that were given and to the parties they were given to as i said during the Halftime Report today, i believe this is an immor haal hazard not to hel everybody. I just dont understand how you can let anybody fail necessarily. I mean making a blanket statement and maybe not everybody applies. I dont think its constructive to say well, we should let the airlines fail at a time where none of this was of anybodys making it was a Natural Disaster that nobody saw coming of this magnitude. I agree and as wild and unpredictable and severe as this is, clearly no one could have predicted it, the other fair point to bring one the airlines is that they in the u. S. In particular as an industry, have massively prioritized shared buybacks over paying down debt in recent years. If they had no debt, fine, but they do, and theyve prioritized something that was designed to push up the share price instead of better preparing for a rainy day. Now that is unpredict bable and hard to prepare for, but in that sense relative to some other industries, the equity holders deserve to take a bigger hit than perhaps others. Now theres worse examples like boeing who are clearly responsible for their own issues or some carnival cruises and others that are domiciled offshore and havent been taking u. S. Taxes, but when you have prioritized buybacks to push up your stock price when youre highly indebted and you could have paid the debt down. I wonder if hes had that discussion with his partner in his space project, Richard Branson because bransons got a tough act on his hands in the u. K. To get a bailout for his airline, virgin atlantic, which is 49 owned by delta and 51 by him and hes a tax exile id love to see that debate. Let me say this so if you want to start going through the s p 500 and putting you know punitive measures of some kind on every Single Company that bought back a lot of stock over the last ten year, youre going to have a lot of companies that are getting hit with punitive measures and i get it the airlines were asking for 50 billion. They spent, i dont know, the top five or six, spent almost 50 billion over the last ten years to your point, wilf, buying back stock. I get the argument but i think theres a bit of a disconnect in a situation like this where you say well, they should have planned better for a rainy day so now that the you know what has hit the fan in a way nobody saw coming from what is essentially a Natural Disaster like event of course im not saying go to the extent that you should mark cuban said it great when we talked about boeing and i think when they collectively come together, the industry, gives them more bargaining power, then maybe perhaps they deserve in this point and the point should be case by case, if you need to be boiled out bailed out, come to s and well have a conversation, but you cant make sweeping statements to say oh if we take a bailout, then the government will not be given an equity stake. Youre in in a position to say that i think its reasonable that the way of some of the language of these bailouts if you want to call them that, if you get the money from the government if youre the airlines for arguments sake, you shouldnt be allowed to buy back stock for whatever period of time youre talk iing about. I totally get that and the other thing that you know, other side of the argument that he made as well is that youre giving too much money to the people who dont need the money as much you think they do while at the same time, you are leaving people on main street who arent getting a big enough share of the money that were more r worried about propping up wall street at the expense of main street and theres a legitimate argument b and and conerer sags to be had on that front sh, too. We all think that people on main street need to be taken care of in extraordinary ways. That it shouldnt be help that wall street gets quote unquote baileded out and main street gets screwed that only is going to the lead to even greater issues of income inequality perhaps in the years ahead as were trying to delve into a significant social issue and you dont want it to get worse than it is yeah. I think this debate is the one thats playing out among lawmakers as well as we try to move forward with more funding and yeah so good conversation and a great interview, scott, so thank you for bringing thaus to us. Here are the three things driving the action the fed announces a new injection. That as more americans filed for employment last Week Congress is negotiating relief for the economy and weve seen a stunning move in oil as well crude was up 12 earlier it is now down 6 as we await final details out of todays opec meeting ment. Time for a coronavirus u news update. Sue has it for us. Hello, everybody. Heres whats happening at this hour british Prime Minister Boris Johnson has been moved out of intensive care a Spokesman Says hes in quote extremely good spirits and will be closely monitored as he continues to recover he was in the icu for three days a European Commission trade official says supplies of critical medical equipment are being disrupted as some countries prohibit exports the official warns that are very negative and will increase recovery costs for everyone. 580 million more people could be living in poverty due to the coronavirus pandemic. Thats according to a new study by the United Nations university that is the equivalent of 8 of the global population. And here at home, First Lady Melania Trump tweeting a picture of herself wearing a mask. Shes encouraging people to follow recent cdc guidelines to wear face coverings in public when social distancing measures can be difficult to maintain, but also warned those new measures are not meant to replace social distancing. As always, you can get more on our coronavirus coverage at cnbc by going to b cnbc. Com. Morgan, back to you. Sue herera, thank you still ahead, well speak with the former cbo director well get his take on the latest round of stimulus proposals and whether he thinks its enough to stabilize the economy and heres a check on bonds adds well. Treasury yields are moving lorer today. The tenyear currently yielding around. 73 . Stay with us well be right back. Stocks rally today with the dow on pace to recoup the last months losses not all investors think the stock market euphoria is here the stay dan niles tweeting this afternoon he believes the bear market rally will end soon hes adding to his short positions and is joining us live by phone good afternoon to you. Good afternoon to you, too. We just put the tweet up. Clearly, youre adding to short positions again. Gauge for us where that puts you . Net short or long . Yeah, so we came into today with about 80 more dollars. Invested on the long time than the short side we had the big rally in the morning and had about 20 more at this point and well see where that is by the end of the day obviously the markets moving around quite a bit so we try to readjust our positions to you know manage the risk at it were as we go through this so its typically how we run the fund and when youve got individual stocks moving 8 to 9 in a day and youve got the market moving 3 in a day intraday or more, its calmed down recently. You need to adjust as you go along. Talk to us more broadly why youre skeptical of the level of this rally today versus a week or two weeks ago you get these bear market rallies pretty consistently and we have talked about that bf if you go back to the nine prior crashes that have been 30 or more on the s p 500, op arch, you get 11 rally off the lows if you go back to the great depression, its bigger. But if you look at today, the Biggest Issue i have is valuations are still high. But thats not the biggest problem. The biggest prop is that you added 16. 8 Million People in three weeks that got unemployed and your Unemployment Rate is if you sort of do the math, somewhere around 13 right now, which is the highest since 1940 and youve got earnings season coming upstarting next week and youre going to have company after company come in and give you guidance especially when gp is down 20 to 30 . If youre at super high valuations and earnings are still coming down, you should be taking risk off especially after you have a 25 rally from the bottom or 14 rally from last week or however you want to look at it. Thats what we try to do when people are super negative and you can look back through my tweets, try to get more bullish and when we think things are running too far too fast with the catalyst like earnings coming up, then we say okay, were going take profits, add shorts then try to manage the risk that way as well. How much is the collapse weve seen in crude affecting the market even today major averages are higher, but well off their highs of the session after we saw that reversal in crude after it looks like the opec meeting is not going to yield as much in production cuts as believed. How much is that weighing to the broader sentiment . Yeah, morgan, thats an excellent question because people kind of forget we have two things that hit us the virus thep the opec price war. And if you look at the opec side of the equation, i think the Biggest Issue is even if you cut most people assume that theyre somewhere between you ship about 95 Million Barrels of aoil a da. Most people would tell you we e destroyed 35 million of consumption. Even if you cut the barrels by 15 million, youre still having excess production relative to demand and that still causes issues youre 100 right, that reversal in oil makes people think about it and it puts pressure on Bank Balance Sheets youve got overindebtness on that side. I think wilfreds prior conversation he had about you know buy backs and dividends et cetera, i think its one of those things just like with the Global Financial crisis. The government should sort of say look, you cant do buybacks or dividends unless youre sitting in a net cash position thats why the banks are in such better shape today than they were back during the Global Financial crisis i think that extends to oil. The oil industry is highly indebted and thats why weve got the problems in the credit markets to a great degree. Were looking at wave of bankruptcies unless oil improves and we should try to make this better for the next time we go through this we touched on your thoughts of the broad market levels what about two specific areas i want to ask you about which we talk about, structural growth stories at levels lower than they have been in months firstly the semis, sexdly, apple. Where you on both . Yeah, i mean i think you know, with semiconductors to me, this is very simple. We, people think last year was a down cycle that wasnt a down cycle we had economies across the globe expanding. So you had sort of a simply issue sorted through that. Youre now about to go into a recession. This is a real down cycle and were b about to find out how much leverage a lot of these companies have because stocks and semiconductors went up about 60 last year. While earnings went down 20 and so by definition, that means all these stocks are more expensive so i think as we go through this cycle and through q2 and q3, youre about to find out how much leverage you have on the downside when youre going through a recession and demand is falling off and you know, smart phones is part of that when i hear people say smart phones are a consumer staple think b about that logically does anybody here actually think the 16. 8 Million People are thinking about ining buy ining . Theyre worried about paying rent gettinging food. Shelter. You cant need an iphone, live in an iphone, you cant be warmed by an iphone. So at 800 on average, and a 20 multiple i think its very hard to make the case that apples a bargain at these levels. So thats kind of how i think about it from just the practical point of view. Looking forward. You can broadcast off an ipad and iphone thats what weve been doing dan niles, thank you for joining us thank you up next, well bring you unint p rupted coverage of the final minutes of trade when we take you inside the market zone. Stay with us yes. The first word to any adventure. But when allergies and congestion strike, take allegrad. A nondrowsy antihistamine plus a powerful decongestant. So you can always say yes to putting your true colors on display. Say yes to allegrad. Aand were here for you ry day fespecially now,rs. To putting your true colors on display. 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. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. Weve got 13 minutes left until the closing bell last chance trade, cnbc, were bringing that segment back with im so excited to do it the last chance trade is United Health care. Trades about 16 times forward estimate, which is historically at a discount to where it usually trades at. They have a very diversified r v revenue stream i think 20 is going to be pretty solid. Coming from medicaid, Medicare Advantage and a pbm thats been on fire. On the call side, they do a great job of controlling costs a lot of that is because theyre investing heavily in technology and digital. So between solid revenue, youll see nice operating leverage. On earnings, they have a good Balance Sheet and the politica environment now just got a little less or little more benign, if you will, with Bernie Sanders dropping out of the race its quality on sale we have got 12 minutes left in the trading day so stick with us both major averages down s p are higher 1. 5 now in the closing bell market zone commercial free coverage of all the anchor going into the close. Mike is is here to break town these crucial moments of the trading day and today, weve got stephanie link as well stocks are rallying after the fed unveiled details of its plan to support businesses. Ubs head of operations art cashin saying today despite the feds move, an economic recovery could still take quite some time i am not of a v shaped rebound. I am more of a u shape, probably an l shape even if you open all the bars and restaurants, movie theatres, people going to disease is still around so i think there will be some hesitancies and i think if you watch the full interview with bill gates today as well, you come away with a u shape at best economic recovery gl is the Market Pricing in v shaped i dont think specifically necessarily yet. What i do think theres going to be to be a reckoning down the roadwith what kind and strengt of recovery we get what i think has happened so far is that the market has burned off this oversold condition. Its kind of made use of an overchute to the downside in terms of sentiment, in terms of big funds liquidating and basically also a seized upon the incremental improvement in the Health Picture then today of course with this fed news, this added little push not to mention an opec supply cut to me, the question now is have we kind of overextrapolated the good news into a rapid restart of the economy at 2800 in the s p, has it used up all the plausible good news in the shortterm, but i dont think yet we said that this is going to be an off races economy once it gets going soon. We did see actions by the fed today. Also the speed at which they are deplaying these different programs how much do the actions today specifically help buoy or at least stabilize the credit markets which have been such a big focus . The credit markets, the biggest part of this whole thing. Obviously outside of the health care issue, but it clearly, liquidity was not there. The bond market happen telling us that for weeks, that there wasnt enough liquidity. I thought when the fed announced unlimited qe, that was different. It was a sense of urgency to help try to improve that liquidity and then again, they followed it up with today, which again, now theyre buying all sort of bonds. And that is actually a good thing from a stabilization point of view. In terms of a v recovery or u recovery, i really dont know what its going to be, but its going to be a recovery theres an interesting tstat they had Second Quarter comps in china down 50 but the mix was 27 mobile versus in february it was down 80 in mobile ordering so it clearly shows that the consumer does want to go back into the world, into the economy. The its going the take time but china is an interesting example and something certainlyy to watch all right that does kick us off into our next conversation. Starbucks issuing a warning about how coronavirus is impacting earnings and kate rogers has those details for us. Kate thats right. Starbucks out with that warning after the close yesterday issuing some guidance that its q2 earnings would fall by roughly 50 from the year ago quarter due to the ongoing impact from covid19 now the last two weeks of march made a major impact on starbucks bottom line earnings are now 19 cents below prior to the u. S. Lockdowns. The company says u. S. Same store sales fell 2 and in china, fell 50 . The company also withdrew guidance and temporarily suspended buybacks then today the National Restaurant association sending a letter to congress to highlight issues with the need to act with urgency with the loans add thag 3 million jobs so far within the Restaurant Industry have been lost 15 of restaurants are permanently closed and revenue loss rs approaching 100 billion. Those are some devastating stats as they urge raw makers to take action on clarification and additional funding back to you. Thank you for that. Mike, want to get your thoughts on all of this especially given the fact that ppp has been in such incredible focus over the past week since the application process which first rolled out it seems like some lenders so far are handling the demand and have the infrastructure in place a little bit more smoothly than others but how much is going to hinge on more money making its way through congress its not replacing anything like dollar for dollar not getting out there as fast as some were hoping t yet another single area to cushion the blow, but its not going to be a full off set i do think just the sense that theres a lot of programs in motion a lot of cash that is being deployed into the economy to try to backstop things is a positive but im not sure that we really know exactly what the toll is going to be in terms of business loss weve got five and a half minutes left were up 1. 5 . About a percent off the highs of session and 12 for the week disney shares sharply high er after a massive increase in disney plus subscribers. Hi, julia. Thats right. Disney shares now up more than 3 after the Company Announced that disney plus is is, its subscription service, has more than 50 million paying subscribers in less than five months since its launch. It is growing much faster than expected nearly doubling from the 26. 5 million subscribers it reported at the end of last year after expanding to eight european countries. Now disney originally forecast it would hit between 60 million and 90 million subscribers by 2024 now as it continues its rollout across the rest of europe as well as to japan and latin america, its on track to hit at least the low er end of f that range four years early back over to you thanks so much for that steph, i guess the big debate here is whether this is disney plus specific because they built such a great platform and have such a great product or whether its linked in part or in large part to whats going on around the world and all this work from home stuff and i guess what that means for the likes of f apple tv as well i think its a little bit of everything what you said and dont forget, verizons offering this service for free for a year so that will be interesting to see as that rolls off what the numbers come in at theres definite momentum here thats good sign we were thinking 50 million by 2022 so two years earlier is a good thing. Problem is, what do you pay for that because its not making money and the stock trades at 24 times and youre not doing anything in terms of theme parks youre not doing anything in terms of movies. Maybe they do direct to streaming from their movie library. Well see. But i just think at 24 times earnings, very competitive environment. Its a bit rich. Yeah to that point, mike, s p closing low back on march 23rd since then, ten of 11 sectors are up more than 20 led by energy actually. The one sector that is not up at least 20 right now is communications services. How tuz it speak to the valuations within that part of the market yeah, part of what that tells you is that on a relative basis would have held up better going into the lows, so it was not really battered. Remember, that segment is dominated by alphabet, facebook and such and so i do think thats part of the story. The other part is advertising is going to take wear and tear and a lot of this stuff haas mating the new risk is not as applicable to new media. Disney becomes a theme park stock and also, disney plus was meant to be additive not to be replacement of the box office business. And of the cable nets. And right now, it looks a little more like an either or because theres not billion dollar movie movies being leeted into the theatres right nouchlt so thats why i think the stock is hampered, even though its a home run yeah and certainly its like constantly streaming in my house with my toddler as well, but those are some good points yes. Like just yes. Market internals what are you seeing, mike . Pretty strong although softened up over the course of the day. New york stock exchange, better than i8 , but it was above 90 some of that demarcation line between a really blockbuster day and yus a strong one look at the equal weighted this week. The average stock is outperforming the index this week youve had the rank and file, the sort of even the left behind groups really come back a lot. Thats usually a positive sign in terms of stock b picking and risk taking then look at the volatility index it remains stub fwoborn to give ground on a strong upday, down just a point and three quarters is not really showing you that its willing to do stuff. Just the daytoday moves are too jumpy for it to really come down too hard. Thanks for that weve got just over one minute left of this session in fact, s p up 144 as we stand. Was up 2. 4, 2. 5 it was up 5 a 75 points a the high of the session. The nasdaq up just shy of 1 for the week as a whole, were looking at 12 of gains for the s p and the dow. The nasdaq up 10. 5 speaking to the scale of the bounce weve seen in just this week, the russell up 4. 5 . Up 18 as a whole. Speaking to the point that mike said the things that have bounced are the things that have underperformed over the prior couple of months real estate, financials, utilities at the top energy is the only one in the red. Of course oil prices as weve mentioned have turned around massively. They were up 12 in the session, now down 6 . All eyes on when we get that opec deal. Dollar weaker today with those huge stimulus packages coming out of the fed as the bell goes, we are higher by 1. 5 on the s p 500. A full 12 in just one week. Morgan welcome im Morgan Brennan along with wilfred frost also joining us mike not only the day, but this holiday shortened trading week on wall street the dow finishinging the day up 1. 2 at 281 points 237. 15 for the week. 12. 6 . Best week for the dow since 1938 taking a look at the s p as well finishing the day up about 39 points or 1. 4 . 27. 89 and again with a gain of 12 for the week, looks like the its the best week for the s p since 1974 nasdaq also finishing the day higher first time weve seen backtoback gains for the nasdaq since the beginning of march. Finishing up about. 8 the russell 2000, the big outperformer today finishing up 4. 5 coming up, were going to pask max levchin about whether the coronavirus will make working from home the future for many americans. And joining us to talk about the market day in the meantime, stephanie link, also larry adam. Chief Investment Officer at raymond james, but first, mike, ill go to you i know youve been talking about it in the past hour and really all day. This rally we have seen within the markets, the fact that the dow is now up about 30 from its march 23rd low how sustainable is it . What are the levels youre looking at next . I mean how sustainable is it . A tremendous question and very, very kind of timely at these levels because youve regained basically half of the total decline of the s p maybe its logical for it to pause and pull back and tell you whether this is just a very strong bounce off of very oversold conditions or if its Something Else i think its fairly likely that its going to be range bound for a while at best. Now i think you can basically say that the fed has taken away the scariest scenarios in terms of a disorderly meltdown in credit and ill liquidity in the markets and thats part of what this was about i think you fed off a fair amount of both oversold conditions, negative sentiment and good news to gettous this point. The next stretch would probably be harder. Its going to be a harder to please market. Especially with the economy not gi b bing you any help larry, to that point, clearly, the economic numbers this morning were huge and disappointing to see do you think the markets rallied too hard in light of that . So i think the most recent rally has been catalyst driven if you look at what happened, not only have we seen significant speed in what the fed has done and what congress has done, before if you looked a t the great recession, it took them a year before theyd done as much thats been done now so thats been important and theyve come in well above expectations look at today. They included high yield bonds most people werent looking for that so i think to move higher, were going to have to see more catalysts and the next is going to have to be some form of therapeutic so we can get the discussion started on how we can start reopening the economy. Stephanie, do you agree is that the next catalyst . Well, i actually think earnings are going to be some form of catalyst i dont know if its positive or not. But i have been saying all along, you have to write off 2020 in terms of earnings and also in terms of the economy so now you have to start thinking about 2021. So because the problem were in now is that we do have the market at aattractive levels and certainly there are certain sectors like value, small cap, some of the cyclicals, theyre very cheap and depressed, but you dont have the visibility so you have this limited visibilit on earnings and the economy yet negative sentiment and depressed valuations and so i think which is going to win out . I think earnings story or at least the commentary on the Conference Calls will be of help now earlier today, bill gates was on squawk box saying he doesnt see the economy reopening anytime soon despite some u. S. Cities nearing a peak in coronavirus cases some places are near their peak but just because things start to come down, not the time for opening up the absolute level has to be very, very low and you have to have a new testing system that prioritizes new cases and doing Contact Tracing and quarantine reenforcement that the asianen countries are great examples of doing that in a very strong, National Level approach. The full interview is on cnbc. Com about 25 minutes long and few people as educated on this topic. Mike, the other points he made about the reopening of the economy was that it would be highly piece mill when it comes. And that were not going to get a fully open economy until theres a vaccine, which he said from start to finish, the 18 months and hard to expect it to come quicker than that, so maybe best case scenario, 12 or 15 months from now. Again, back to a similar point we just iscussed, but this equity market which is now down 10 year to date for the nasdaq is sort of pricing in that the economys going to be back and going within a quarter or two, not 18 months from now probably at least start tog get back you can slice it many different ways the s p is still where it was well over two years ago so its not as if were back at the extreme highs. But i do agree at some point, there is room for disappointment about the character, the strength in the economy coming ahead its nteresting. Without having any real economy being permitted to operate right now and therefore no expectations about how its going to operate, the its almost like theres this blue sky effect where you cant be disappointed by it because you dont expect anything of it. That will probably change down the road depending on where the market is going. The rest of the world remember its not just the u. S. Then i do think it might be tougher to get the next 600 points on the s p to the upside than it was to get the last. Yeah. And larry, certainly you just made the point about breakthroughs in Health Care Technology you know, just a few moments ago which i think correspond really well with this conversation, this interview with bill gates im curious though, we had jobless claims 6. 6 million. Were now up to 17 million jobless claims yet the market seems to have shrugged it off. Why . And at what point does that start to factor into Investor Sentiment as well or is it already priced in . I think it was already priced in i think the market is a forward looking indicator. If you think about it historically, the market tends to bottom about four months before the economy, before the recession ends so if you think were starting to get back to northerlial turning the corner by the August September period, nows about the time where you start to price in that next movement up at least for a recovery in the economy. And our Health Care Policy ammists thinks theres a 40 chance we could turn the cornerr by memorial day and an 80 chance we start to turn the corner by july so that August September time period, you could start to see the economy slowly starting to pick up. But i will say we are looking with what bill gates was talking about, a u shaped recovery, not necessarily a v shape. All right lets get to bob pisani for a look at the stocks driving this weeks big rally and we had a rally. Up 12 for the week on the s p but got some reminders that its a limit to how far you can push the rally today. This is what i call the restart of the economy rally look at gap. Five or six days ago, gap was 5 nine now in five days thats a restart of the economy. But still its catastrophic considering where it was a month ago. Restaurants. Breaker was 10. They own chilchilis. Look at that re its they we falling apart to 9. This is catastrophic on the longer level, its terrible, but is still a rally theres limits to however you can push the rally the semiconductors arent going to have great guidance taiwan went from 44 to 50 then just faded away and all the semis just faded away. All the accepts decided gee, i dont know how far you can push this then the oil we final rly got a deal maybe wh opec here. 4 prs, apache, five days ago then it went to ten and just died in the middle of the day because everybody realized its demand demand has collapsed globally and theres only so far ub push those rallies. The s p 500. We have lost 1,000 points. And then regained 500 of the points essentially guys, we have regained 50 of the losses from february 19th to march 23rd on the bottom and im just calling it markets in the middle not calling it a bull market, a bear market. Just markets in the middle back to you. Thanks so much for that lets get over to rick now for a check in on bonds. Whats we in middle there or either extreme still well, i still think were at extremes these yields just dont come off the bottom and i dont consider that necessarily a good thing. Considering were closed tomorrow, lets look at from last friday to the last trading day of the week. Theres two year note yields theyre down three basis points on the day, one on the week. Farther down the curve, you get a cushion. Heres a week of tens. Down about six basis points today, but up 11 basis points on the week and i think that makes me feel a bit better we dont want the yields, especially on the long end, to be hugging the lows. If things are Getting Better at least with respect to how much money the Central Banks thrown in, id like to see those yields pop a bit. Finally if youre looking at intrata of the hyg, looks like it had a big pop on the opening but it isnt until you tag in yesterdays even though it flat lined, look at how much higher above yesterday it is. Closed up. 5 . When it first opened, it was up close to 10 and this is what happens when our central bank decides not only Investment Grade etf, but high yields are going to be in the cross hairs for puchlss as well. Whether its a good thing or a bad thing in a big picture for the here and now, its a positive for the oil patch back to you. Thats right. 100 thank you. Stephanie, want to get your thoughts on this idea of markets in the middle. Especially if youve seen opportunities to buy in theer with thhere with this rally were up 25 in 12 trading days these are crazy times, but this is exactly why for the last couple of weeks, on the down days and even on the up days, i have been nibbling because i cant time this morgan, nobody can time it. Im not a day trader ooip trying to think medium term im trying think longterm looking at quality upping my po portfolio. So really where theres value is in industrials and energy. Those are hard places to buy, but those are the areas in the last couple of weeks i have been buying ratheon, wynn resorts, but also cocacola and png. Balance is really key and just dollar cost averaging. Thank you both for joining us great to see you as always thank you thanks, guys. Up next, well ask peter orsag when he thinks the economy could begin to recover and whether more stimulus is needed right now. Well be back in 90 seconds. 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. Congressal Budget Office expecting the economy will decline and biggest risk is undoing social distance efforts too soong which would prolong the health crisis. Peter, very good afternoon to you. Thanks for joining us. Good to be with you lets talk about the later set of measures what weve seen from the fed this morning. Last time you were on with us, you commended how quickly Central Banks have acted do you think this is right thing to be doing, basically throwing everything you can at the problem . It is the right thing to do and aisle glad theyre doing it. Theres a caveat ill get to in a a sengd but the reason its the right thing to do is if you dont act really aggressively now given the di rupgs to the economy youll be living with the after math for years and years. This is a Humpty Dumpty moment where if it breaks too much, its very difficult to put it back together again later so kudos to the central bank and European Union for reaching an agreement a few minutes ago on the fiscal side. All of this is great now heres the issue though. The administration of all this stuff, the execution of it, is very complicated and it needs attention. So there are problems that are probably worse than whats been reported in the way that the sba program is being handled additional loans on top of ex t existing loans but how does that work with the security what if the maturities are different . There are all sorts of practical questions that are really important to get right and to get money moving quickly because its no benefit to have these programs in place and then not have the assistance flow iing o the door then final point. We all need to realize that in the absence of a vaccine which would be as i heard bill gates comments on your show before, which will be e delayed or an antiviral like therapeutic, we are going to be in a world of intermittent social distancing for some time. You put it on, the disease comes back in force and you have to go back into social distancing. Like has happened in hong kong, like has happened in singapore and in that environment, we are likely to need more stimulus and so that brings me back to the point of the administration. You need to remember theres going to be fraud. Theres going to be backlash it hasnt really happened yet. It will come but we need to kind of power through that and adopt additional measures to help the economy again to avoid the Humpty Dumpty effect yeah. And when you talk about social distancing, it makes tme think o polio and the outbreaks we had here 70, 0i years ago and that playing out as well. Im curious though because time is of the essence so were seeing all of these programs, all of these initiatives being launched by the federal government now and being done so really at record speed in term oss o that oversight, wt needs to happen and how quickly could it happen . I think the more oversight the better in part because we really do need to get money out the door fast and if you dont have any at all, youre just asking for proubl there will be more froud than necessary. More backlash and youre therefore harming yourself down the road you can get money out the door quickly and still have some basic oversight and basic kind Good Governance around these programs so i think its great were experimenting with lot of different programs theres an alphabet soup thats forming. Thats all great because were in a moment where that kind of aggressive action is absolutely warranted. But that doesnt immediamean yot need any oversight and oversight doesnt necessarily impede speed here and in fact, what i would say is theres a risk to too little oversight because it will generate more backlash when things go wrong. And therefore, undermine the ability to do more later when we need it. Peter, you mentioned we want to avoid the Humpty Dumpty moment in the shortterm but all sort of economists estimate, it seems like unemployment is at about 13, 14 . What would be a humpty duftty level . Are we close to it were there and i guess my point is rhetts nlets not mak worse. So for many Small Businesses that have seen a revenue disappear, every day that goes by in which theyre not getting this assistance, the liquidity, the funding they need to at least stay in operation is puts them at risk of closinging and again, its not so easy to just if the business closes to just once the disease is handled, to just come back online. Thats not very easy to do so i think we unfortunately may already be partly in that moment, but lets mitigate it or limit it as much possible. Want to get your thoughts on modern monetary theory because it was sort of seen as very fringed not that long ago even just a couple of months ago and now it seems to be moving more into the mainstream in the midst of this outbreak and some of the policies that are being crafted in the debates around those policies whether its that. Universal basic income, which seems to be moving more to the core, do you think this is going to mark a shift in terms of politics and also Just Economics and the theorys around economics and this country moving forward . Well i think moments like this that are you know dramatic and just a massive change in the structure and operation of the economy, naturally bring with them lot of big experiments. So yes, we are going to run across the world, a lot of government data. I think thats a, an experiment worth running, but its going to be substantial we are going to have government involvement across the world pervasive, more pervasive in the economy for years to come because the government is lending directly to corporates and will be taking equity stakes, receiving warrants in a whole array of Companies Across multiple different sectors not going to unwind very quickly, so yes, we are going to be in a new structure for some extended period of time. That reflects the fact that the only entity that at this point that can off set the massive loop that has occurred are governments and necessarily that means were going to be in a different relationship with the government over time for you know, a number of years because governments are appropriately acting quite aggressively. Peter, thank you for joining us today great to get your insights thanks for having me. Up next, the latest details on the race to develop treatments for coronavirus including one promising new drug that could prevent the virus from replicating stay with us 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. Beholdeach for astors different type of music. When i have all six strings, im going to turn all the trolls into rock zombies. Rock and roll ahh im not going to let you do this. Well overpower them with glitter. Grrr were gonna have to go. Where no pop troll has ever gone. Who wants to party . Without smiling. The World Premiere is in your home friday. Shbecause Xfinity Mobilehen ygives you more flexible data. You can choose to share data between lines, mix with unlimited, or switch it up at any time. All on the most reliable wireless network. Which means you can save money without compromising on coverage. Get more flexible data, the most reliable network, and more savings. Plus, get 200 off when you buy an eligible phone. Thats simple, easy, awesome. Go to xfinitymobile. Com today. Welcome back pfizer announcing a promising new potential treatment for coronavirus. Meg has the details. Hi, morgan, pfizers been working on multiple approaches to covid19. One involves screening a compound, a library of compounds that are antiviral, ones that interfere with the virus ability to replicate now they say theyve identified a lead compound they aim to have in human testing by the third quarter. Thats several months ahead of schedule the company also saying that they and partner biointech plan to start human trials by the end of the month thats the same technology that modernas using. Theyre also studying existing drugs. We talked with the chief scientific officer about the timelines for a vaccine. Heres what he said. If successful to the clinical studies and approval by regulatory authorities, we are now in our timelines able to predict that we could potentially supply millions of vaccine doses by the end of 2020 so this is much faster than the original prediction of 18 months and approval past the time so these new technology guys really speeding up timelines but you do hear experts saying that 18 months would still be incredibly fast to get a vaccine thats widely available. How many times do you practice saying some of those most complicated drug names before you say them on air for the first time its always flawless thank you like unique new york i say i generally, its e easier to sate once ive heard you say it then when i read them which is almost impossible the first time thank you so much. Have a wonderful well deserved long weekend still to come, well ask max levchin about whether the coronavirus will give a major boost to Contactless Payment Services back in a couple of minutes. 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Itical issues facing our world, we see a billion more people breathing free. We see access to fresh food being the global norm, not the exception. We see homes staying cooler, without the planet getting warmer. At emerson, when issues become inspiration, focusing core strengths to create a better world isnt just a result, its a responsibility. Emerson. Consider it solved. 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. Welcome back over to mike for a look at Investor Sentiment this is the weekly poll from the American Association of individual investors it had a little moderation, a little uptick many bullishness, a little decline in pessimism. Theres still more bears than bulls. This is about 45 bulls to 36 bulls, i do think some of the notable things is yes. You saw a fair bit of pessimism. Pretty much the top of o the range for the last several years, back in 2008, 2009, more bearish, but you didnt see people give up the bullish idea. You didnt see the full flush in decline and bullish attitudes about the next six months for the market that you have seen this time. I think one explanation is just how rapid this decline and comeback was so it didnt give time for peoples attitudes to really adjust to a new reality i dont think it means that you have to go back to the lows and coax more pessimism out of people, but it suggests that maybe a were not in for the really long running upside reaction we got say after we did in early 2016 see things get more washed out on these measures the speed with which weve seeb the sell off, does this also suggest that for some investors, they may not have taken part in either destruction in terms of selling and buyinging where as in 2008 because it prolong ed, you had such a major second leg down thats true the s p 500 is higher than it was a month ago. Clearly, there was a lot of yoit flows near the lows, but mostlyy it seemed to be b professional tactical money that really got out of the market. So for those who didnt do much, its kind of f no harm, no foul. Still down year to date this is fastest, strongest rally after this kind of cascading decline that we have ever seen. In terms of getting back a percentage of the loss thanks for that time for a coronavirus news update moments ago, total u. S. Deaths from covid19 topped 16,000 according to johns hopkins. Globally, 94,000 people have died also in the last half hour, European Union finance ministers agree d to a 590 billion Coronavirus Response package state side, michigan governor extending the states stay at home order through the end of april. So businesses are now required to designate their team of essential work eers and then implement strict social distancing practices kcalifornia residents, lining u in their vehicles at a drive through food pantry in los angeles. People there can drive up and receive 36 pounds of free food including fresh meat the event is set up to serve 2,000 residents while still maintaining social distancing guidelines and one chocolate maker in germany is trying to add levity to its easter bunnies this year. Theyre wearing candy face mackses and carrying toilet paper. Some are saying the bunnies are in bad taste he says no offense was intended and all profits will go to charity. For more coronavirus coverage, head to cnbc. Com and morgan, i could use all the levity i can get these days back to you. Yeah, trying to figure out if theyre made of White Chocolate or a different type of candy gl thats the better question. Thank you. Sure. Im all for the levity, but the thing is that the shopper system wasnt wearing gloves or face mask so its a major trade off there. Good eye. Okay. Well thank you a Software Company is out with a big new revenue projection josh thats right. So our source telling cnbc that its expecting to generate revenue of 1 billi 1 billion thats up from 379 million last year and importantly expects positive operating cash flow for the first time in its history. The companys run by alex carp back in 2004, they founded the firm which provides software that customers use to import volumes of data from images to spread sheets and to a central database where it can then be analyzed and interpreted with different maps and charts. Its still best known for its work with government agencies, but remember it has a number of corporate clients, too, like bp, airbus, america and credit s suisse a source saying its providing its platform to the u. S. Government the point is to give realtime information on how to best fight the coronavirus. Back to you. Of course theyve had a number of high profile pentagon contract awards in recent months thank you for bringing us the latest up next, we will discuss the outlook for Venture Capital companies and start ups more broadly amid the coronavirus outbreak in within exclusive interview with max levchin when you look at the Critical Issues facing our world, what do you see . We see breakthrough medicines getting to patients in record time. We see harnessing natural gas unleashing the promise of clean energy. We see engineers simulating the future to improve today. At emerson, when issues become inspiration, focusing core strengths to create a better world isnt just a result, its a responsibility. Emerson. Consider it solved. Welcome back as more americans settle into working from home, their Shopping Patterns are beginning to change. Affirm reports that while it has seen a decline in travel and ticketing purchases, more americans are spending money on home appliances, office furniture, Fitness Equipment joining us to discuss, max levchin. Always great to speak with you thanks for joining us today. Thank you for having me you know, my family actually just used a firm to purchase a piece of Fitness Equipment im curious whether the declines youre seeing in certain areas and the increases youre seeing in others are balancing each other out right now and how that reads through to Consumer Spending in general through the lens of a firm you know, as big and entirety of various categories as we are, we see the extremely mixed reaction in Consumer Spending. Its all over the map. Ticketing and travel dont exist, but your family is among a very, very large group of people who has purchased some form of home Fitness Equipment 163 growth in this category against our own internal baseline forecasts the other area thats just exploding are things that make your home cleaner and tidier for example, molecule dyson, theyre all surging, almost to double kitchen supplies are up a lot. People are trying to make their suddenly a lot more home cooking frequency more comfortable, more fun. Everything from grills to blenders i can keep going, but those are the categories that are winning then of course zoom, so fashion is down a bit and so on. What about the consumers themselves its been debated over the last couple of weeks whether credit card payments should be suspended and covered by government help. Are you finding your consumers, i guess its not, it isnt credit cards per se, the payments that you are, but you find that consumers coming to you asking for some kind of flexibility in terms of repayments you know, weve always taken the side of the things, incepti inception. The company was founded on this notion of we will do right by the customer in good times and bad. For example, weve never charged fees of any kind, not even late fees, so many cases, were seeing customers coming to us saying thank you for treating us the way youre treating us that said, theres a real impact among those that have been furloughed of laid off and were seeing those in the past few if we will work with them on helping them repay different timelines or help them find a way to settle the bill somehow with a more comfortably and weve set up our own center to help online and on the phones that are doing this. I would say i think most reasonable companies are either doing it already or should be doing it so i think were not unique in that sense, but of course were seeing it. And max, weve seen lot of banks extend flexibility to their customers. Clearly, you were already doyin that you said you want to stand by your customers would you be against government mandated flexibility for credit card customers clearly theyre your rivals in the longterm. Do you think it should be more free market operating in this current environment or would you support that if it came about from the government . You know, im hardly an economist and certainly thats an armchair one. I think free market is always a better solution for a majority of problems except in truly unprecedented times and thats where we are today so long as the Playing Field is levelled and credit card providers and other bank and nonbank lenders are not disadvantaged against the other, i think that would be normal and to help consumers to buy and hopefully thrive through this pandemic, just as long as the government dolls out their stimuli evenly it makes a lot of sense. It disadvantages some of them against the other. I think where its pushed too far against the other premarket economy. Yeah. And max, as somebody whos been both a serial entrepreneur and investor, just want to get your read on the start up u landscape more broadly and what were seeing in terms of Venture Capital and money thats flowing or perhaps not flowing into some of these new companies and whether you think that that is a situation that is going to be here to stay for a while if theres a reckoning or whether it is temporary you know, again, its really stratified i think this is the very best time to be either in late stage wealth funded start up because the competition knows that were capitalized are probably squam scrambling to survive and thats where you can take market share. On the other hand, its the time to hunker down, you know go 10,000 feet below ground and build something truly amazing. You can be sure not many people are dreaming huge so if you can get yourself in front of a great idea then hopefully venture funded, this is the greatest time to start a company, its the mid market so the series of unprofitable start ups where every investor has to make a decision do i keep throwing good money in or back out so i think thats where the situation is the toughest. By contrast, were seeing amazing growth in the mid market merchants. All the merchants miles an hour made and integrated, the ones that sell online and ship to your door, theyre thriving. You can see massive growth, the way theyre coming to us asking a firm to help them sell more things meanwhile, the really tiny ones are suffering as the large ones are also trying to figure ut ouw to how to make sure their logistics are thanks for joining us thank you up next, Goldman Sachs says companies that ref bailouts may not always be great investments. Omarita tt iutwh lilenp fr mk cuban, next. At t has connected us every day for over 100 years. And were here for you especially now, doing Everything Possible to keep you connected. Through the resilience of our network and people. We can keep learning, keep sharing, keep watching, and most of all, keep together. Its the job weve always done. It is the job we will always do. Goldman sachs out with a note today analyzing 40 years of relief to u. S. Corporations and finding that the stock prices of companies that have receive d relief typically rallied following Government Action but lagged in the median term. Mark cuban joined us yesterday weighing in on what he would do if negotiating with boeing for a bailout. Id say bye, see you. They also said they can get money elsewhere and i said look, ooimg negotiating for the american taxpayer and in any private equity deal, well use a template what Warren Buffett did with bank of america when he gave them 5 billion and he made 12 billion. Thats exact same type of deal that i would do. Because when youre sitting at the table with boeing, its not okay, we recognize you didnt have anything to do with the virus and its not your fault, but guess what, not the american taxpayers fault either if im negotiating for the taxpayer, im asking for everything but the kitchen sink and if they can get a better deal from pe, more power to them, go, dont waste our time squl zbl we discussed this with scott relating to the comments on a similar vein. In terms of the longterm analysis Goldman Sachs made about the returns, clearly an immediate bounce is to be expected once youre in a position where the companys future was questioned and then you no longer have that question Going Forward, but weve seen such a bounce in some of these stocks already i wonder whether we even get that immediate shortterm bounce unless the structure from the government is unbelievably generous to the equity holders look, the Airline Stocks are still far below their highs. Theyve been cut in half even after this very strong bounce but i think it helps explain that performance a little bit. Youre obviously going to get a relief boost in near term, but the reason you got it was because there was potentially impairment of the business and it is also that analysis pretty heavily weighted on the financials in 2008 even though they were earlier examples, so i do think you know, that was more of a lingering systemic issue that the market had a fight its way through. I push back on the word bailout and boeing is probably the exception bailout, youre talk iing about for many of the industries, government imposed lockdowns, shutdowns because of a broader pandemic boeings trickier because they already had their 737 max issues they were already halting production it was rippling through their supply chain and there were all of these other issues and this has compounded it. So i do think its going to be interesting to see how this plays out in aerospace and manufacturing more broadly because u keep in mind, theres also National Security tied to that as well many of these same companies, boeing included, are contractors for the u. S. Government is so the government i think is watching that very, very closely because they need to make sure that Defense Products and Security Products are going to be able to be made and not impact aed by the ripple effects. I would not argue those points if the argument is we want you to give us capital, but no strings attached, whether dil e diluting equity or buybacks, i think thats where the negotiation occurs whether you want to call it a bailout or not i do think its not unfair for the government to say safeguard, even in the abstract, were at risk here. The other thing i will raise as well looking at the uk governments bailout of the banks because their stake in the bank has remained for so long after the fact, exactly how its structured here will be interesting and that one, whatever the terms were at the time it included government seats on the board, and that can then, until the stake is fully down, lets sort of fixed restriction on what the company can do were not doing a buyback. It could be many years after the fact depending on how quickly the industry or the company recovers, but i still wonder going back to the first point, mike, that in 2008 when lehman went bust it totally changed how investors were pricing the other companies that then may or may not have received support after wards and were not at that moment right now in the market we bounced off the lows and i felt that they were after the bailouts came out and the initial bounce, we might focus on the restrictions Going Forward as opposed to celebrate the fact that company a or company b is not going bust. Theyre not priced for extinction right now and thats the way it was to some degree with the banks in 08. Yeah. The fact that were having this conversation speaks to the 2008 and 2009 still ahead, your daily good news rundown tiktok unveiling several new initiatives to support those impacted by the coronavirus. Ghafr iss d redetailanmo rit teth break shouldnt you pay less when you use less data . Now you can. Because Xfinity Mobile gives you more flexible data. You can choose to share data between lines, mix with unlimited, or switch it up at any time. All on the most reliable wireless network. Which means you can save money without compromising on coverage. Get more flexible data, the most reliable network, and more savings. Plus, get 200 off when you buy an eligible phone. Thats simple, easy, awesome. Go to xfinitymobile. Com today. Ready for some good news me, too. Every day theres an endless stream of companies and Community Members pitching in amid this pandemic here are some of the latest examples tiktok pledging their 250 million to coronavirus aid including a creating learning fund for educators and free ads for small and mediumsized businesses progressive and geico, the late of the Insurance Companies to offer refunds and credits to commuters who find themselves stuck at home and disney has published the secret recipe it uses to make churos at its theme park so everyone can enjoy them at home. I dont know about you, will, i didnt need that encouragement. Youio are revealing trade secrets and it is important. No one needs to go to the park anymore. Citibank offering its summer interns, and delta, jetblue, southwest and united offering free travel to new york for volunteer medical workers and current and former players of the nba and wnba will be participating in a televised game of horse in which they attempt to remotely copy one anothers trick shots. There we go. That gives you a bit of clips to watch online even if its not a proper live sport, morgan. Well take it up next, jay powell on the record, the fed chair weighing in on the banks and what he thinks about the big lenders and the Coronavirus Crisis thats when we come back our Retirement Plan with voya gives us confidence. We can spend a bit now, knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Im good at my condo. Well planned, well invested, well protected. Voya. Be confident to and through retirement. I know that every time that i suit up, there is a chance that thats the last time. 300 miles an hour, thats where i feel normal. I might be crazy but im not stupid. Having an annuity tells me that im protected. During turbulent times, consider protected Lifetime Income from an annuity as part of your Retirement Plan. This can help you cover your essential monthly expenses. Learn more at protectedincome. Org. Wach after announcing that massive new Liquidity Program Jerome Powell spoke live on a webcast at brookings and he said the economy is deteriorating at, quote, alarming speed, but does he also expect a recovery. He addressed the issue of Bank Dividends that we discussed as some, including former chair janet yellen, to preserve cash wilf, i know youre following this pretty closely where the banks are concerned and i wanted to get your thoughts on the fed chair today. The interesting thing on this is clearly a number of ceos on our air recommitted to their dividends which you would expect them to do, and it doesnt necessarily totally preclude them being suspended at a later date provided it comes at the direction of the Federal Reserve because if that happened then the banks would be able to say we dont need to, we dont need the liquidity and were not in a precarious position and weirdly, were in this middle ground position where its still possible even though weve committed not to cut their dividends and still not likely they would cut them, and of course, theyve cut the majority of their Capital Return Program already in cutting buybacks, but well have to see and most importantly, well hear from the banks next week and Bank Earnings will be absolutely key for a pulse check on how many businesses they think are struggling or not. Which we look forward to. We do in the meantime, happy passover, happy easter i hope everyone has a good, long holiday weekend. For all of us, mike, morgan and myself, stay healthy brians got you covered now. Hi, everyone welcome. Im not sure anybody will give up a threeday weekend given that weve had a 42hour workweek another day and more green on the kreen. You will hear a lot of stats like this. The markets best week since 1974 or 1938 theres your big changes the dow up 12