Transcripts For CNBC Squawk Alley 20240713

That companies you want to invest in with Communication Services are the ones that everyone is using, netflix, zoom, you know, facebook, social Media Companies and how do you distinguish which are the better ones than the others we looked at a series of Technology Stocks this morning and broke them up into a couple different frameworks depending on whether their profitability is likely to rise throughout this covid cycle or negatively impact and recover a few we called rocket Ship Companies in there that also happened to be rocket ship stocks the stocks are following the funds. Its amazon, netflix, theres a couple Smaller Companies like wix and go daddy, all of these have had their value propositions kind of stamped on all of during this time period this covid crisis has been kind of an advertising for the benefits and the necessities of streaming at home and shopping at home and theres hard to find better winners than amazon and netflix in those categories. If those are the rocket ship winners, which have a relative perhaps under performance bias towards them given the fact that the bar is so high for Companies Like amazon and netflix and ac ka my . You have the ceo of one of them earlier today that was barry diller from the beginning the most cyclically exposed companies are the travel companies, the otas, you have booking, expedia, and trip adviser which gets advertising revenue from those those have been clocked from the beginning. There will be a recovery in those stocks, they could be great on the other side but youre going to have to wait a while. Mark, to go back to amazon and netflix, two names that despite the incredible selloff that weve seen in the market broadly in the past month and a half, alltime highs today are they still buys at these valuations i think so. Two points one is really important, netflix and amazon are at alltime highs but their multiples arent at peak forward multiples on cash flow and ebitda are closer to the median or even below the stocks can continue to run if i simplify it theres two things investors in the market will look for when it comes to these prints, netflix princes next tuesday do we believe they will have accelerating subads, will they be greater in 20 than 19 and last year they added around 27 million subs my guess is that globally theyre probably going to be able to talk about that for the first half of the year comps are easier Free Cash Flow pictures improving for netflix is a powerful combination and taking it to an alltime high and means that the stock can continue to rise from here you switch over to amazon and amazon is almost certainly seeing Revenue Growth acceleration i dont think theyve seen a demand problem like this theyre trying to struggle to catch up with it chances are you will get Revenue Growth acceleration, heavily fixed cost model that flows to the bottom line and profit acceleration and means amazon can continue to outperform again alltime highs but the multiples are not peak, theyre median and makes them still good buys. Yes some important differentiation, or nuance i should say there another name you cover, google and alphabet is slowing hiring and other investments as well. Sundar pichai at the helm, still new, only a couple months in place. How much of this is covid impact and how much is the fact that you do have new leadership and is it longer term a positive or is it a worry for this company so its we were immediately contradicted and published our report after the close and said we thought google, knowing that having a feel for the character of the Management Team and founders and the lessons they learned from the last recession no way they were going to slow down hiring and then 30minutes afterwards we saw the letter that theyre slowing down hiring. I have two sbrer pretations. Both right one theyre seeing a fall off in demand for google advertising. No choice but to slow down advertising, not cut, but slow down the number of head count ads they were planning on. Thats take one with, which is the demand that theyre seeing for their search advertising and youtube advertising has fallen off a cliff. The other one, hey be a good thing for investors, more disciplined Financial Management from this company than you would have had five or ten years ago both interpretations are reasonable mark, i mean the whole market is waiting for a day where theres some sort of breakthrough medical news that will make us feel better about leaving our homes and going to work and play. Isnt thatgoing to be a day of reckoning for some of these names, the stay at home basket yes. How much risk is embedded in that day, whenever it comes, and are you looking to a period where you do get more cautious because of that pivot . Yeah. So we would probably switch baskets. This is a real challenge for us. Weve offered to clients and investors two baskets. The more defensive you want to be, you stick with your amazons, netflix, akam, maybe chey. If you think were at a rebound phase, were going to be back to full growth by the Fourth Quarter, think about a rebound basket and that rebound basket includes uber, it includes google, includes facebook, names and even booking, names that can come back and will have a lot more alpha than that stay at home basket. The stay at home basket stocks have good fundamentals you want to be long amazon, you just happen to have a period where its going to dramatically outperform i dont think it outperformance as dramatically as the rebound basket if you get that vaccine data point and coast is clear data point i dont know if you heard diller on our air this morning talking about advertising budgets at expedia and says in a given year we spend about 5 billion. This year were unlikelyto spend 1 billion that sort of fits with the downgrades from other places say twitter at jpmorgan, how much what do you think the ad market looks like if, in fact, this bounce back to normal economy is drawn out . So i give you two things. One i think near term were going to go down 20 to 30 , internet advertising declining 20 or 30 . Were going to have googles first ever and facebooks first ever negative quarter, either Revenue Growth will decline on a year off year basis. That didnt happen during the great financial crisis its going to happen in the june quarter. When we come back, the wonderful thing about performance marketing is you can cut it off super quick, no commitments, turn it back on super quick. You will see a snapback of a v recovery for google with the one exception being that travel vertical because bookings and d expedia are major travel advertisers. Thats not going to recover really until next year so the rest of googles business can be but the travel sector wont so google will come out we think its a great rebound story but i dont think you will get back to full growth for Football Game google or facebook unti 21. Your job is to scrutinize the numbers and make projections for the coming quarters. I would like to set those aside and take a look at a big picture thought in your mind is it of your opinion that this covid19 crisis has actually shiftds consumer consum ission behavior in away that will project years into the future . Has it am i only going to be shopping online for Home Delivery and not going to malls . Am i only using food delivery and not taking certain kinds of transportation is that much of a profound impact right now from covid19 dominic, thats a 100 billion question i think the answer to the question is yes. I dont necessarily think about it in terms of an infection point. I think weve had a decade or two decade long streaming adoption, Online Retail adoption trend thats been accelerated because were going to be in our homes, you know, for i hope just two months, but it could be longer than that and i think its fundamentally changes how we think about how we purchase retail items, especially groceries a real increase in the willingness of people and necessity to purchase groceries online its safer and convenient. I think whats happened for some of these companies, this has turned out to be a Customer Acquisition event. They have a slew of new customers. They could screw it up but if they can manage the customers well and service them as best as they can with some delays and most people will accept some delays, theres chance for them, these companies if they execute well to permanently win over a new cohort of customers that arent going to go back. I think it is going to be a fundamental change in Consumer Behavior amazon is a structural winner out of this. I think netflix is probably a structural winner out of this. Theres not too many of those companies but there are a few. Yeah. Absolutely, mark the opportunity there is enormous just looking at your note, the companies that could suffer in 20 and shoot up in 21, two names we like to talk to you about, but lyft and uber. Yeah. What is your expectation not only for this year but next year why do you think that business is going to continue to recover for these names, speaking of structural changes, and what does it do to the profitability timelines . Morgan, that last one is a real unknown and one of the interesting questions thats going to come up on an uber earnings call. The ceo has laid out a goal of ebitda, break even in the Fourth Quarter of this year my guess hes going to have to walk back from that and the market expects him to walk back from that. One key point. I think this is a vshape recovery travel will take a while to come back, but were going to commute and commute to work rng were going to commute to social events and on our convenience trips. Youre going to see lift and uber spike back up pretty quickly, i think there will be people who will prefer to use uber and lift for rather than get into crowded transportation, Public Transportation venues. The advantage that uber has in all of this they have this eats business, only a small 15 part of their business, but i think thats been a structural win wither from this and that part of the business will have its profitability timeline brought forward because you have so many more drivers and restaurants on that network now. A structural winner of uber that comes out as well. We like both stocks but rebound stocks and just trying to figure out when that rebound begins all right. Mark mahaney, Rbc Capital Markets covering tech and internet, always great to have you on we appreciate it. Thank you, dominic. After the break were going to check in with shark tank host robert on the Cyber Security risks of working from home and more, stay with us the dow is down 98 points. While states and businesses continue to discuss the best strategies for reopening the economy, millions continue to work from home which were doing right now that comes with Cyber Security risks Robert Herjavec the ceo of the Herjavec Group and shark tank investor who joins us this morning. Welcome back good to see you. Good to see you guys, thank for having me again. Weve seen a lot of headlines cross about names like zoom, likts when commit to security. Are you using platforms like that with any reservations well, you know, when all of this first happened we wanted to use zoom because our customers use zoom, but i got to tell you, some of the Security Issues are really pretty bad within zoom. We switched over to teams and as you talk about its one of the reasons that the microsoft soft is doing so well the use of teams at the corporate enterprise level is really taking off. Were seeing web x usage really go up and on your show this morning, there was the acquisition of blue jean, another Video Conferencing platform yeah. Its been remarkable i guess it raises the question how much opportunity i mean if this demand is going to stay constant even at a slightly lower level theres got to be some opportunities for entrepreneurs who were thinking about getting into this space. Yeah. Very much. Ive become very optimistic about the return whenever the return is and what world will look like i think some things in the new world will change forever. Customer meetings will change forever. In the past i never thought that i could do a zoom call or a teams call with the ceo of a company im trying to sell to. In the future, i dont think my customers will want me to come and see them and so i think theres continued opportunity for remote access. Anything that allows you to connect with clients online or build a brand is going to be really valuable. I had an Instagram Live yesterday with kris jenner and, you know, shes been selling online for years now and every Business Needs to move online, especially Small Business. Weve had you on in the last few weeks to talk about what youre seeing among the companies that youre invested in and you would advise what youre seeing among Small Businesses as well one of the things we havent gotten your pulse on, though, is what you think this entire situation, more broadly is going to do to Small Business creation, to new business creation, whats going to emerge from this and how long that could potentially take i used to think that we were in a light switch moment where mir ra miraculously President Trump will get on the news and say were back on this date. What were seeing in california and new york is that were into this for the long haul and certain parts of the economy will go back quickly, but even the ones that do go back, are going to be limited. We talked about this morning restaurants. Theyll have to distance half the tables if i have more space in my restaurant, can i charge more along that line if i think its going to be challenging, but, you know, with all those challenges, theres going to be opportunities. The key for me about going back is testing and what that means and how people get tested theres a great new saliva test approved by the fda, people can do it at home and i think we just have to be able to do that at scale. Robert, its dominic here, you bring up a couple points with regard to were in it for the long haul and it does create opportunities. Im wondering from your standpoint, ive been watching a lot of the shark tank episodes on cnbc and watching all these Small Business owners come in. This is a time in christ when a lot of innovation and ingenuity happens. Is this a situation where you feel this is enough of a crisis if we are in it for the long haul we could spawn a whole new industry or group of industries based upon the idea that we are staying at home more and perhaps guarding our health a little bit more absolutely. Shark tank is a mirror to whats happening in the american economy. When we started the show 12 years ago, it was during the financial crisis and nobody could get a loan and people started a lot of businesses you didnt need capital for. We moved to online selling this will be the same thing. If ive learned anything on 12 years from shark tank, is that the human condition is about hope nobody wakes up and says, i want my life to suck. And every time somebody comes on shark tank, they are full of hope and optimism. And, you know, this is a challenging time, but entrepreneurs will figure it out. The key, though, is, youve got to have a growth plan. The stimulus plan, the protection plan, all these relief funds are simply survival funds. They are not growth funds. If you dont have a plan to grow, if you dont have a plan to gain market share, getting a stimulus today is just keeping you in business. Its not helping you to grow youve got to have a game plan for that although, robert, it actually brings me to my final question which is also about shark tank. Times has a great piece about how the Global Economy will change and one of the lines from an analyst is that companies are now thinking about resilience as well as quarter to quarter efficiency so as you evaluate pitches from here on out will you be asking them what is your plan for the next exogenous shock we might get in five or ten years well, absolutely. I want to know what peoples plans are for survival it makes me want to invest in two types of Companies Either companies with very strong Balance Sheet or Companies Like an uber or a Small Business that can scale back its costs i want to invest in a company that can quickly scale its he can pens to meet a decline in revenue or vice versa. So fluidity and the ability to adapt in a Small Business is really going to be the key i dont want to invest in a business with a large infrastructure, buildings, equipment, all that kind of stuff. That stuff is very difficult to scale down robert, finally, just to get back to the point about survivability, the ppp program hit its ceiling this morning only about 1. 6 million loans have actually been approved for all of that money. And just to put that in context weve got 30. 2 million Small Businesses when would you expect more to be extended and how do you think thats going to play out the governments got to do more and i believe im very bullish on the governments response to all this its going to take time. What i worry about is the people that probably dont need the funds right now, are probably the ones that are going to get them the smaller business most of the employment are subfive employees. Have those people applied for it are they going to get the funds . The people that really need the funds are going to struggle and i worry theres an entire element of our economy that may go away and that next wave were going to start seeing is bankruptcies for those Small Businesses because the liability for them is just going to be too big and theyre using their personal savings to keep their business afloat. Were praying we can keep that number as low as possible good to see you. Well talk to you soon thanks a lot. Thank you, guys all right. As we head off to break, take a look at shares of verizon announcing it has agreed to buy Video Conferencing companies Robert Herjavec just said blue jeans network. Verizons ceo joining squawk on the street discussing the acquisition and the right time for employees to go back to work those shares up half a percent well be right back. The Airline Industry is different from the Telecom Industry it has to be a staggered coming back to the economy, both geographically but also industry wide but i think its clear that Everyone Wants to get back as soon as possible but only when you can have the safe and health of the citizens. Veterans, in times of crisis, youve served our country. If youre a vet and youre experiencing any symptoms of the coronavirus, please contact your local va hospital. Protecting your health is our greatest duty. [ siren ] doug give me your hand i can save you. Lots of money with Liberty Mutual we customize your Car Insurance so you only pay for what you need only pay for what you need. Liberty. Liberty. Liberty. Liberty. When yowhat do you see . 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. Welcome back the mixed picture for stocks here in the u. S. European markets are set to close in just a moment as well seema moody has the breakdown overseas seema . Morgan, european markets turning mostly higher here into the close emboldened by the slowdown in new covid19 cases germany getting attention, cautioning losing restrictions including reopening some shops this week as long as they implement social distancing and wearing masks. Schools will reopen may 3rd only for older groups that have exams this year. Restaurants and large events ruled out until the end of August Jpmorgan notes its challenging to assess the impact on the economy. Key question, while also kickstarting supply chains specifically in the Automotive Industry which we know is so important to germanys growth picture. Chinas it First Quarter gdp out tomorrow morning and that will provide a reality check for companies that rely on chinese demand analysts expecting a year on year decline in chinese gdp and the range of negative 6 to 9 which will be historic in nature carl, over to you. Interesting thats what happens when countries are run by engineers and chem lists thank you very much. A news update with rahel solomon. Good morning, everyone. The Small Business Relief Program has run out of money, 350 billion Paycheck Protection Program provides loans to Small Businesses to help them maintain their workforce. Republicans and democrats say they want to increase funding for the program but theyve failed to reach an agreement to do so. Brett crozier could be reinstated to command the uss theodore roosevelt. The captain was relieved of command after raising concerns about an outbreak of covid19 aboard the aircraft carrier. Mark esper says an investigation into the incident has been completed and the results are under review the pga tour will resume tournaments june 8th without fans present for at least the first four scheduled events. And facebook will start warning users who have either liked or reacted to or commented on covid19 related posts that have been proven false by the World Health Organization and have been previously removed by the company for posing imminent physical harm. For more coronavirus coverage head to cnbc. Com. Morgan, back to you. Rahel solomon, thank you. After the break, former philly fed president on todays weak economic data, another 5 million plus americans filing jobless claims well be right back. Stay with us every Financial Plan needs a cfp® professional confident Financial Plans, calming Financial Plans, complete Financial Plans. Theyre all possible with a cfp® professional. Find yours at letsmakeaplan. Org. Welcome back to squawk alley. Joining us to talk about the feds response to the covid19 pandemic is former Philadelphia Federal Reserve president charles plosser. Good to have you back. Good morning good morning. Nice to be with you again, carl. I would love to get your take on these Small Business loans today as the sba says they can no longer process applications earlier this morning the fed did say that program to back those emergency loans was fully operational and some suggested maybe that was the fed trying to tap congress on the shoulder saying you guys can do more now. What do you think . Well, that could be i think the question with all these programs at times is sort of their Operational Efficiency and how do you get these things where you want to get the money out and, you know, the federal government, the treasury and the fed, you know, like to have a lot of paperwork and sometimes that slows things down i think that well see how Congress Responds and theres demand out there and what comes to pass. It might be an unfair question but how would you rate the feds speed and creativity in the alphabet soup theyve given the markets only over the past few weeks well, carl, you know, im not always a big fan of what the fed has done, but i think in this case we have a severe crisis theres no question about that and, you know, i think the fed has attempted to do what it can and has been very decisive about it kind of pulled the old bag of tricks out from 2008 and created some more of their own at the encouragement of the c. A. R. E. S. Act. I think, you know, i applaud them for their efforts and their good intentions here im a little worried about sort of the longer term consequences of all this. I mean this is a shock to our economy and the shutdown and the virus are all demand, i think, huge fiscal responses. The fed and Monetary Policy cannot have much impact on this crisis and so i think that it does demand a huge fiscal response and i think that a lot of what the fed did sort of the very first thing they did whether cutting the rates or buying treasuries or providing liquidity in some areas was quite good but now a lot of their new programs are really implementing fiscal policy. Theyre implementing and becoming a bank for issuing credit all across not only the Financial Sector but the nonFinancial Sector as well and, you know, i tend to think about one of the longer term consequences of that and im quite concerned about the way that treasury and congress has used the fed to actually conduct fiscal policy. I think thats going were going to have to grapple with for a long time to come and have some worrisome implications to me charles, its dominic here. The points you bring up are immensely i guess relevant to whats happening right now because the fed is not without critics. We know that but the feds activities and as it stands today is a function of being brought up brick by brick over decades now if you take a look at the way the fed functions as youve pointed out do you think that the fed exists today the way it should have been back in the day, is it it overstepping its bounds what do you feel as though the feds role should be Going Forward if not what its doing right now . Well, way back in 2009, when the fed engaged in similar kinds of policies, bailouts and so forth and so on, exercised the lending, i was a critic of some of that not because i think the fed doesnt have a role to play, but i think it has to do with the separation between fiscal policy and Monetary Policy and preserving the independence of the central bank i have proposed back in 2009, i think, that there was a way around this where the fed could do the kind of things its doing now, but it had to be recognized this was fiscal policy the fed should be not have all this nontreasury stuff on its Balance Sheet. The treasury should engage in what i called was a new accord where at some point near after the crisis was over, that the treasury admit that this was fiscal policy and swapped those assets off the feds Balance Sheet for treasuries what that would do is make it clear beforehand that this is fiscal policy actions and the congress is responsible for it otherwise, what happened in the 2008 crisis was the fed got blamed or criticized for allocating credit. Why are we bailing out the big banks and not the automobile companies, or why, you know and, you know, the fed, you dont want to put the fed in that position. We could have avoided this position had we done something about it after the last crisis one caveat though, i will say the good step that was made at least in the c. A. R. E. S. Act the fed, congress provided a backstop, if you will, of 10 to back up what the fed is doing and thats a step in the right direction, but its not near enough im worried about the fed independence and the temptation of congress to use the fed in the future for fiscal policy actions. Thats what worries me and thats what deviating from a long history since the 1950s charles, i wonder if you think were entering a new economic era in general. Modern monetary theory was seen as a fringe concept only a couple months ago. Some of the policy making going on on the fiscal side right now, you have these checks getting directly deposited, universal income right now, do you think that this is that these theories are now startingto actually become a more mainstreampiece of the discussion and what does that do to u. S. Economic outlook longer term, especially given the fact that we have a deficit that is now ballooning and at some point once the crisis is over it will have to be dealt with . Right morgan, those are excellent points and, in fact, i would argue that ha weve seen right now is, its not actual monetary theory but a step in that direction. Thats in effect what congress has done its using the fed to do off budget fiscal policy and to issue i mean the fed has already bought 2 trillion dollars worth of government securities in the last couple months theyve already funded, if you will, the c. A. R. E. S. Act at 2 trillion dollars so i deeply im deeply worried about the implications of this for the longer term. Congress is now talking about a new infrastructure big infrastructure bill of fiscal policy Green New Deal or you name your favorite big project and weve set the stage for whats happened now for congress to use the feds Balance Sheet to in effect help fund those things. I think thats coming. Yeah. I think this is a perfect example of what theyve done now and im worried about that well on a shorter term basis, charles, i mean everybodys head spun when they got into junk bond etfs. We asked mnuchin the other day if there were discussions to broaden the universe of assets, stocks even right now. He said no even though yellen suggested that might not be a bad idea long term. Do you think theyre done in terms of the array of restaurants they can own well, i mean they can only own restaurants if Congress Makes changes to the laws. But remember, bank of japan is buying has been buying equities for a long time now, to not much avail i think that would be a mistake for the fed to buy equities under any circumstances. As you said, heads turned and mine did too when they decided they were going to buy junk bond etfs and longer term corporate bonds. I think this is new territory. Im not sure its a very desirable territory. But that seems to be the way were heading and i as Milton Friedman once taught us, theres no such thing as a free lunch and these choices that were making institutionally for the fed and how it reacts with the treasury and congress are going to have consequences and im afraid theyre not always going to be desirable. On that note, thank you so much for your time today its great to talk to you. Well talk again soon, i hope. Thank you, carl later on today dont miss the current fill he fed president Patrick Harker at 3 00 p. M. Eastern time. Guys we just heard the latest numbers on covid19 from new york from Governor Andrew Cuomo. This is what he had to say a few moments ago. The rate is down from 18,000 to 17,000 mark that is good news. Total hospitalizations down. We talk about the flattening of the curve, the apex, how long is it flat, when does it start to curve . We dont know. But this is a good sign today. If you look at the net change in hospitalizations, its down more significantly than it has been so thats positive news. Threeday average, which again is more accurate than the daytoday counts, im a little skeptical about the day to day counts, this is all new reporting system but the threeday average is more reliable. Icu admissions number is also down significantly for the first time so thats good news intubations is down. Thats really good news because the intubations ultimately lead to the worst news. 80 roughly of people who get intubated never come off the ventilator the number of new people who are diagnosed with covid, about 2,000 still yesterday. So when you see the reduction in rates, remember what were talking about. Were talking about a reduction in increases you still have 2,000 people every day about who are walking into a hospital for the first time or who are being diagnosed with covid for the first time. And 2,000 is still a lot of people but the good news is, it means we can control the virus, right. We can control the spread. And we did not know for sure that we could do that. We speculated that we could do it, but we didnt know so now we know that we can control this disease the bad news is, 2,000 people walked into a hospital yesterday for the first time with the disease and the worst news is, 600 people died yesterday from the disease. That is still continuing at a really tragic, tragic rate of those deaths, 577 in hospitals, 29 in Nursing Homes weve been watching the Nursing Homes because Nursing Homes in many ways are ground zero for this situation last night the number of Nursing Homes was relatively low everyone asks the same two questions, when is it over. All right were listening to Governor Andrew Cuomo talking about stats and updates what happened with the new york state coronavirus cases, 606 people died from the coronavirus overnight. That is again tragic, however, less of a number than it has been over the course of the past couple weeks well watch that as those developments happen. Now with more than 20 million americans filing for Unemployment Benefits since the start of the government shutdowns, some states are beginning to think about reopening essential businesses Contessa Brewer has the latest on that story. You heard cuomo there talking about everyones question, when are we done with this . The nation is chomping at the bit to get people back to work, to get businesses reopened, but theres a real power struggle happening nationwide over who has the decision to do this. City mayors and county executives know best which can safely open and the essential engines of the local economy and protests breaking out in states like kentucky and North Carolina and michigan where americans are demanding states lift those stayathome orders. This arbitrary blanket spread of shutting down businesses putting all of these workers out of business its a disaster. In pennsylvania the state legislature has approved a bill to force the governors hand it requires him to modify the shutdown orders that currently only allow Life Sustaining businesses to be open. Instead, some businesses would be allowed to reopen if they followed the cdcs health and safety guidelines. Governor wolf says he will veto it and the republicans dont have enough votes to override that meanwhile Governor Wolf is working with six other east coast governors on a coordinated plan to reopen, meaning theyre looking at the logistics here and all this while the president is insisting he alone has the power to determine when the economy reopens. Hes expected to, of course, come out with his task force on reopening later today. Morgan yeah. Were waiting to get those details. Contessa brewer, thank you for bringing us the latest. Just what are Industry Leaders looking for before reopening the economy and how severe has the coronavirus pandemic been for Business Operations joining us now snapon chairman and ceo, thanks for being with us today. Its my pleasure. Good to talk to you. All right as a major employer you have operations around the country and the world. Tens of thousands of employees and associates and i realize some of your production and operations have continued as essential businesses, in the midst of this pandemic but what do you want to see, what is going to give you confidence to feel like the economy can return to normal, business can return to normal, and you can keep your workers truly safe well, i think were keeping our workers safe all of our factories in the United States are open because as you say were essential we serve the military and the transportation system, how you get your groceries and critical transportation and even in europe, for example, the London Ambulance service keeps going. Are you going to be able to deliver your products. So were essential, which is why we have our factories open and try to keep our workers safe its one of the things we think about in terms of distancing one of the things about factories today we kind of improved it so workers are working in three or four different machines so theyre far apart to begin with. Those who have to get together we give ppe. We deep clean and were safe i think the workers are in a safe position. Thats interesting to hear you say that i mean given the fact that you do supply so many tools, so much equipment to so many end markets, and you are deemed essential in this time, what are you seeing in terms of the business mix what has that demand looked like have there been places where theres been weakness and stable well, its certainly stable with emerging Services Like the military or truck, transportation the airlines can be down a little bit you can see that you can look at it in the United States and in europe, it changeses from place to place of course new york, people are sheltering in place a little bit more and people arent driving quite as much one of the interesting things about this and people have, you know, not quite understood the Business Model when youre essential is pretty robust its one of the reasons why weve been able to pay a dividend every quarter since 1939 and never reduced it. It tends to keep up. It isnt that weve been impacted the other thing that people havent thought about is this, this isnt a time for the workers. You see, what theyre working on is essential many of them, car mechanics or welders think of themselves and we think of them as having settled for the consolation prize of our society but when the days are darkest, those are the people we depend on they enlisted an american calling and feel that. How are the morale of the workers . I think its pretty good they demonstrated how very important they are for our society. Its such a key point that you make there and i wonder what that means in terms of how youre approaching the workers does that mean that you are not only not furloughing workers, but potentially hiring does it mean that youre taking a look at bonuses and other were not hiring right now, because of course were impacted like everybody else with the virus, but ill tell you this, one of the things about it is, we think of our workers, our team, as essential as our brand, or our product so whatever we do Going Forward, wherever this goes, were going to consider the preservation of that great advantage highly as we configure ourselves in the weeks and months ahead one of the things i would say about this, gee, you know, its been less than a month since the first shelter in place order new york was probably march 22nd were not going to take any precipitous actions based on three or fours weeks of data we hold on to that workforce as much as we can that doesnt can that doesnt mean were never going to furlough or take reductions one of the problems or the disadvantages of saying your work force is important is on occasion you have to act like it we plan to act like it when we go forward you talked about when the days are darkest i harken back to a couple of years ago when we talking about a u. S. China trade war and the fact that manufacturing was such a huge focus do you think this crisis has cast a very big spotlight on the u. S. Manufacturing sector, the Industry Group and do you think that the manufacturing in america will change and evolve and be perhaps more valued in the coming years because of the strategic importance of making some things domestically here to solve our own problems and take care of our own. I know i will be tray troyin make that case and the National Association of manufacturers have been trying to make that case for a long time we have lost the respect for the pride and dignity of work in america. Snap on calls on one million technician who is apply their train and take pride in what they do. In fact, this has never been more clear and important to us you read books about it in world war ii were protecting the common defense and manufacturers are working on that right now. Yeah. I got to think this will be a longer term trend that we see. How supply chains are thought about as we come out of this pandemic along those lines in terms of longer therm e term trends that could take route here, do you think this will accelerate the adoption on factory floors if things like automation, 3d printing, some of these newer technologies i think people have been adopting it in our factories we have one robot for every four people and moving it along in that time even as we added, because its improving the come menti complexity i dont know how much it will change i think people have talked about working from home. I think maybe some of that will occur. I think, for example, people may be worried more about do i want to be in tight places. Do i want to be in cities . Do i want to be in ride share . Should i drive more . Thats what happened to beijing. They snapped right back in terms of driving in shanghai because people dont want to drive mass tr transit. That may change. What drove the last verecession was the psychology everybody got up every day and got bad news for breakfast the bad news for breakfast stops and we snap back nick, snapon ceo, thank you for joining us today sure. S p has gone green and the meli azoanitive for the year as nas keman d netflix are at all time highs. Were back after a short break when you look at the Critical Issues facing our world, what do you see . 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. Dow is trying to go positive here pork producers are not bringing home the bacon that theyre used to thanks in part to the coronavirus utbreak. We have the story from california add to the supply shane issues, now Workers Health concerns, so much has changed in food who thought bacon would go from sizzle to fizzle it depends on restaurants. Because thats gone away, usda is now saying were seeing record low prices at the carcass level. Over the last two months negotiated prices have fallen over 50 for bellies over 40 for ham prices for farmers going down and into the mix, smith field has closed three processing plants due to a covid19 outbreak he says his company has follow cdc requirements they are doing all kinds of precautions. As for continuing food supply hi hiccups. If youre not seeing stuff on the shelves its because of where supply and demand have to meet in the United States we have plenty of food the bare store sheflves are a demand issue, not a supply issue. Its packaged different for a school than in the grocery store. You will see maybe prices go up if more stores close. Not for the farmer back to you. Yeah. Thats a key story thanks so much lets get to the judge in the half. Thanks very much breaking News Coverage of the markets continue good to have you with us on this thursday stocks are mixed they are t