Transcripts For CNBC Squawk On The Street 20240713

Is time. A governor who doesnt want to see these businesses destroyed a person who has said, look, weve got the baseline we know what can go wrong. We have the ability to handle it medically. And initially when i saw this, carl, i said this man, this governor is a reckless fellow. The more i read his excellent speech yesterday, the more i realized the stakes are so high for so many people, im rooting for this man i think hes doing it in a way that makes me feel like if youre going to open it, open it this way i wanted to wait for the vaccines i wanted to wait for when we got s ser roll gist ologyists who coue antibodies it may seem illadvised, when you drill down to the speech he gave yesterday, i have to tell you, i was impressed i know everything has become politicized, but this is a man who is feeling for the Small Business people and recognizes theyre about to be done Scott Gottlieb on squawk this morning did say to him they picked the businesses most at risk and decided to open them at first. Whether or not theyre doing this the exact right way, you still have tennessee, South Carolina, vermont, montana, texas, michigan in the next couple of weeks. Thats 20 of gdp, not opening fully but getting that first door opened. I think theres also a wrap thats based in some stanford studies that says more people have had it already. I would like to think that theory is true that theory says while this is lethal and contagious, a lot of people have gone through it, theyll get involved, not have a problem. I know when i went through with whats going on at wynn, he has a good plan to open up wynn that is the giant casino the more i think about these people, what theyre really saying is okay, economic catastrophe is not something that we should allow in this country. Now, i wish we had in hong kong, a small city, but they make it easy to find everybody and to do a lot of Contact Tracing we dont have a lot of that. We have no Contact Tracing im convinced what we do have is a better medical system. Im not trying to be a yahoo here im just saying if you step back from the political and you look at what this whats going on at these states, theyre saying we could have an economic wipeout. Its not that much different from what Howard Schultz said just now to andrew he said its an unacceptable economic wipeout if we dont have the federal money, we dont have the testing, you know what i think georgia is saying we have to give it a shot i dont think thats as reckless as i thought maybe whats reckless is letting every Small Business person go out of business who didnt get the ppp. I think that would be tragic in its own right. All right two things on that front, jim. Schumer is on cnn this morning saying he believes the senate will pass this expansion of the alone program today. It will include, he said, some kind of National Testing strategy the other element to what youre talking about is labcorp and this new athome test, which is now on their website its called the pixel. Its a swab test its 119. Its going to go to Health Care Workers first, but it will go to consumers in the coming weeks. Those two things, can they make this tightrope walk that well see states do in the coming weeks easier if they can produce in volume one thing we keep seeing is that youll get millions of tests provided by thermo fisher, millions by roche, when you get down to it, theyre not ready or else it would filter down to us. Sometimes you can hear someone say jim, i dont know what youre talking about i can get tested five different ways i tried to get tested this weekend. Why . I want to see my wife. I couldnt find a place. She couldnt find a place. I would love the labcorp situation, can they make it in scale . Yes. It would be good if we could test every day you do have to test every day because of the incredibly evil way that this thing spreads. Because you could be at a restaurant, at table three, dr. Brilliant dr. Brilliant, a guy who wrote basically contagion and conquered smallpox, but you can be at table three and someone at table one could have it, and the air conditioner blow it to table three. Its just so easy to get when you read what georgia is doing, you have to have masks. I know, if you have masks with a masseuse, isnt that just courting danger . I think whats going on now in this country, two different dangers being courted. The danger that says, look, the world the United States is shutting down, thats not healthy. It could lead to economic collapse, social inrest. Theres another side which says listen, we have to have a plan to get open. Well get a labcorp thing. Were going to have new well have the great scientists of the world come up with something you better be ready for the good stuff. I wish it werent so political i do think when you look back in the 30s in europe, you say why didnt they see there was social unrest what were they thinking . All these dizzinebusinesses wer closing, couldnt they tell . Thats become a rightwing argument i say maybe its a neither left or right its about the notion of the center holding, and if, indeed, we have a good enough structure with medical that is ready, go for it just go for it yeah. Does the market then, jim, want these reopenings to go or are they worried if we do it too soon it creates longerterm uncertain . I think theres been a view that the socalled w would be a dramatic and terrible thing. If we had to close, reopen, it failed, that could be catastrophic all i can say is catastrophic to who or what . We have a catastrophic situation going on now when you look at how many Small Businesses that didnt get the loan and who wanted the loan we are back to the thought of that everyone would have a shot. It turned out that a lot of businesses didnt get it im in the camp that says we have to try something. We have to if that makes me into a rightwing lunatic, so be it i worry about social unrest. I worry about what happened in europe in the 20s and 30s im worried about what happened in our country in the 30s we dont want that those who think this is ludicrous, a rightwing plot to do something, read some history. Go read what happened in the 30s you will say why didnt they open why didnt they give those businesses money those were the shopkeepers that ended up going with fascism. Im not trying to overstate the case, just go back and read the books. Ive been reading the books at night. Its frightening how they could have saved those businesses, and you would not have had fascism you can say, jim, thats ludicrous. Is it really is it ludicrous . Who thought of a world like this everybody is out of business you would like to think it was, but theres a lot of vulnerability to social structure right now. A big thing thats on the line regarding these openings is the price of oil, as you were talking about with joe a moment ago. Were watching the june contract, down to 17 the president did address this at the presser last night. Take a listen. Much of it has to do with shortsellers, if you look a month into the future, i think its at 25 or 28 a barrel so, a lot of people got caught they got caught, and there are a lot of people that are not too happy because they got caught. If you look at it, youll see its more of a financial thing than an oil situation. Because you take in a month or so, go a little bit out, its at 25 and 28 a barrel. Its largely a financial squeeze. They did get squeezed. Very true its interesting that the uso has been halted. A lot of people feel the uso, that is a commodity pool that may have been people who got caught, financial people the day before a contract is almost all financial people. I was talking to the head of the largest Tanker Company in the world. Not a single tanker available for oil. People just stepped aside and let these people get crushed we need to know far more i do know youre talking about you know, theres 1,000 barrels in a contract, yet 100,000 contracts. Theres a lot of paper oil involved typically the nonfinancials know to roll things over. These were rookies that got killed a lot of rookies came in and said this thing cant go this low. And i was watching you know what was the barometer watching brian sullivan. Brian watches oil better than anyone on the network. Near the end of the day i was thinking will you take the shoelaces away from that guy holy cow he was really showing it but this is a highly emotional moment oil down 37, thats not thats not supposed to happen. It happened. But its painful for people. It was out of the world yesterday. Were watching the tanker companies. Double digit gains the president did say up to 75 Million Barrels in the spr, considering banning imports from saudi. How much of a difference would those two things make . None. Its all covid i had rusty braziel on hes the best. Last friday he said, jim, you have to knows there going to be armageddon on monday oh, okay youll see eli lilly go from 150 to 145 no, armageddon thats armageddon. I think that youre not going to see anything that tells me that theres any real demand here thats the real problem. Its covid not a lot of people driving. The airlines couldnt use it the cruise ships, geez, do they unless the cruise ships want to fill their cruise ships the princess whatever, fill it, im being facetious i think theres no place if theres no place, if theres not a single 2 million barrel tanker, wow. There was a time when i was trying to find a place to get married. Nordic american tanker offered me a tanker to get married they said it would be great for dancing. I found myself thinking is he serious . But the rates at that point were 10,000. I could have made a killing. Now, more than ten times that. Yeah. Thats a different kind of booze cruise right there, jim. Thats not a boozy cruise well take a quick break. Thats a crude cruise well take a quick break here more to get to this morning including calls on lily, as jim mentions, on amazon, on southwest. Well talk to James Quincey of coke in the next few minutes a lot of airline news today as treasury disperses some 3 million to smaller airlines. Lets get to phil lebeau lets bring in robin hayes, ceo of jetblue from the jetblue offices in new york. Give us an assessment of the market right now i know its changing daytoday. Have we hit a bottom as far as the industry right now when it comes to demand . When do you think we might start to see improvement, even modest improvement . Well, good morning, phil. Its great to be with you. I hope everyone is safe and well i think, look, weve hit the bottom were bumping along the bottom we dont see much yet by way of change to that you know during the month of april were flying 10 to 15 of our schedule that we normally fly. I see a similar pattern for may and probably into june as well were hunkered down right now. Were sitting it out robin, you guys are in the midst of finalizing a payroll grant from the Treasury Department will you also be applying for a loan through the Treasury Department as well from that other bucket of 25 billion . Sure. Great question, phil yep. Hopefully well have all dotted and ts crossed today. On the loans, we have time to make that decision applications have to be end by the end of april i see nothing lost by putting that application in, then well have months to decide if its something we want to then borrow against or not i know you said you expected there to be week demand through may, maybe into june as well if we do not see demand come back, lets say by september, will you have to cut payroll will you have to cut jobs in the fall well, right now were focused on being hunkered down theres a lot of different Recovery Options out there none of us know. This is unprecedented. We have never seen anything like this before. Theres economic factors at play, getting peoples confidence in traveling again we have a lot to do. Theres a lot of costs weve taken out of the business already. A lot of voluntary things we can do at the end of the day, the airlines will be an important part of getting the economy going when the time comes, we want to make sure were here do that that was the expectation behind the c. A. R. E. S. Act when the airlines were given this great support by the administration. Robin, first of all, i want to say i love flying jetblue love to see you back on jetblue, i hope. The way to do that is do the same things you always do with service, make sure people sitting next to me are tested, that im tested, so everybody wears masks, even if were tested that everything is wiped down every second and maybe we come up ultraviolet light, maybe we come up with something, maybe a quick test that shows whether we have it. The guy who does, you can charge whatever you want because we want to go away. Right i think, you know, you remember how much business changed after 9 11 with the locked cockpit doors, the importance of the security i definitely think well see some things here change for good were already seeing the way airplanes are cleaned and sterilized has changed this week, we asked customers to wear masks when they fly with us were keeping the middle seat free, creating buffers on the airplane we already invested in help pa filt hepa filters im sure there will be other measures that will come out. The important thing as an industry is to make sure we operate to a common set of standards. When we are back up and running, if countries have different rules, youre flying from one country to the next and theres different expectations about travel, its going to be confusing for people as an industry we have to work with governments, with Health Agencies around the world to create a single set of standards as best we can look, far be it for me to disagree with you, youre an airline person, i fly to the United Arab Emirates theyre trying to assure you with testing, with everything they havent done Contact Tracing like in hong kong, i dont want there to be a standard that jetblue lives by i want there to it be a standard and jetblue lives above that standard i dont trust any standard of an industry that needed the government if you could offer us that told us that the air is good, you flew a million miles and nobody got sick, game on. Well fly that airline this is not a commodity. Jetblue prides itself on not being a commodity. Give us something that tells us were safe and youll be booked up i couldnt agree with you more, jim. Of course its not just getting on the airplane. Its when you come to the airport. As airports get busy again, youll be mixing in lobbies, foyers, security lines with other people so, again, theres a National Debate around testing. Its an important conversation i think this is why testing is so important so that people know before they fly. Of course we can you may see the rollout of testing and other things at airports, but the more thats done ahead of that, sort of before you can get in the car or get on the train to go to the airport, the better that is. You will see, i believe, over the coming months the industry, whether its the airlines, hotels, the whole travel industry is hurting, we need to come together to kind of really reassure customers the steps were taking to keep them and also our crewmembers our employees are essential workers in this. Theyre coming to work every day. Flying medical professionals around the country, equipment. We have to take care of them as well a lot of them dont want to fly. Its important for the confidence in the system that they also feel reassured and they feel were doing everything we can to keep them safe robin, its carl. Wall streets trying to make some choices here. Parsing the good from the bad in terms of Stock Selection the general thesis is when recovery comes, its going to be leisure over business, and domestic over international. Does that sound directionally right to you i think it sounds directionally right. None of us really know this is unprecedented. I said that earlier. I do think there will be a tendency for people to want to stay close to home i think to begin with, people will rather drive than fly people will rather fly domestically than internationally. It might be International Markets close to the u. S. Are the ones that recover first. There is a concern people have about if things change and i get stuck, how will i get home these things will sort of evolve over time. But i think the travel industry can come together and really kind of reassure people when the time is right, when theyre ready, that were ready. I do think theres such a pent up demand for travel, for people to visit friends and family again, to go on vacation, there will be some great deals around when this is over. For those people who feel ready to take advantage of it, airlines like jetblue will be there to help them get them on their way. Yeah. To that point, International Air transport association had a survey which dropped today they did find that about 40 of respondents would want to wait six months or more after lockdowns are lifted is that number surprising to you at all 40 wanting to wait six months no, its not. Its not surprising. There will be other surveys, there will be different numbers. I think right now a lot of people are taking it a day, a week, a month at a time. Lets see what happens i do think once restaurants start to open, i think people start thinking about traveling again. Even if youre comfortable getting on an airplane, if the destination youre going is not open for business, then again, thats going to have an impact on peoples willingness to travel it could welcome back slowly jetblue, as i say, were hunkered down, conserving cash, flying 10 to 15 of our normal flights. We went into this with astrong Liquidity Position were able to sit it out for as long as we need to sit it out for things to come back. Robin, this is phil again youve got a slew of airbus a22s that youre scheduled to start receiving. Originally the schedule was for later this year, but over the next several years any discussion or plans to defer some of those deliveries given the state of the industry right now . Well, you know, fortunately, phil, the first a220 is coming at the end of this year, and a few next year. The bulk of the deliveries dont really happen for a couple more years. We certainly have time to work through that but we are keen to get into that airplane and use it as a replacement for our 190s in terms of overall conversations around deferring airplanes, thats something that we continue to discuss with airbus theyve been good partners, no news today, but its something that were watching very carefully as we make sure that we protect our liquidity and Balance Sheet over the next year or two you guys have such a huge presence on the east coast, especially in the southeast. Florida, georgia, South Carolina all saying, look, well start opening up these economies come to the beaches. Come down here do you expect to see much demand nearterm . Or do you look at that and say this is just one part of it, its going to be a slow road in terms of getting people back on the planes i think we need to plan conservatively i think we need to right now the focus is on conserving cash, flying an essential number of flights. My thought is thats where we will be for the rest of the quarter. We have time to think about what it looks like in quarter three we have the airplanes. We have the people we can get things ramped up as soon as we need to i think right now the current approach of hunkering down and just flying a minimum number of flights to keep an essential air system going is the right approach well see. As states start to open up, demand starts to come back, well be there to meet it. Let me play devils advocate. You used the term essential. So Many Companies believe they are essential. Howard schultz, a man of great business acumen, he is saying the restaurants are essential. If you listen to the cruise ship people, they are saying their industry is essential. When you listen to the hotel industry, theyre essential. What makes jetblue essential well, i tell you, jim, if you look at the hundreds of thousands of medical personnel that we needed in new york over the last several weeks, weve been very proud to fly so many of them here new york, as you know, has been on the front lines of the covid19 outbreak. Theres people who come from all over the country at great personal sacrifice to them to help out its absolutely right that jetblue and crew members play their part to support that we will see outbreaks across the rest of the country, medical people, personnel need to move as some states come on the downward curve and others go in a different direction. Our people are heroes every day to keep the system moving. Theres a requirement in the c. A. R. E. S. Act that airlines in the u. S. Do maintain domestic air service. Even if its something we didnt choose to do, its something we have to do robin hayes, ceo of jetblue, joining us from headquarters a great assessment of where the industry stands right now as far as the coronavirus and the impact on the industry thanks, phil, jim and carl. Happy to come back and talk some more thank you. Phil, thanks for that jim t jim, it reminds me of the susquehanna call this morning where they do upgrade southwest but cut american and jetblue on some Balance Sheet concerns. Yeah. Just the way our business works in this time of crisis when i saw rob, i said hes not ducking the situation. They could arguably be on the cusp of something that just makes it so they may not exist those of us who have flown them im surprised he didnt take my bait why are they essential because it would cost a fortune it would be like that one route when you go to london, its 5,000, wilf and i often talk about it. Holy cow, how could it be 5,000 theres no competition we need jetblue because we need competition. I was surprised that robin didnt default to that we wont be able to afford to go to california without many different carriers we can still drive there, the monopoly routes are too expensive for the vast majority of people. Yeah. Weve seen what Airlines Look like under regulation, jim a lot of us are too young to remember, but fares were much different in a prior era boy you can before frontier went out, you could go to california and back for a penny well, shortlived. I tried to book some cruises yesterday, carl. Theres a lot of cruises available in june and july i found one from boston to nova scotia it was a killer. I didnt mean that did you pull the trigger . The fine print was so difficult, i felt if i pulled the trigger i dont necessarily think i would get my money back as easily dillon on my team booked a cruise, is anxiously trying to get his money back, but the cruise was such a bargain. My wife wasnt thinking that at all. Shes like youre possibly a georgian, for heavens sake. She called me someone from georgia. Knowing lisa, thats something she would say. Not turning out to be turnaround tuesday, jim. No. Some discussion last night, technicians saying options expiration has been a good tell on a tactical top. Would you argue with that . No. I think were in earnings season now. And thats what is ruling. We will have James Quincey on soon but i i had a conference call, an interview with ibm last night. I didnt think the quarter was nearly that ball one sentence said were withdrawing guidance of course, who knows where the world will be, but that software could be weaker. That was the end i look at that company and i say i know the yield is good but i know that this is the time when you dont want to be in a company that doesnt raise guidance when we have Companies Like Kimberly Clark where the numbers are just going to be fantastic. That stock is down a dollar. Thats probably a buy. So there are two different companies, companies that can raise numbers, raise dividends, and companies that you withdraw forecasts. Withdraw forecasts means regardless of the futures expiring, you just get hammered. I thought the cocacola quarter was fine they withdrew forecast and the stock is down hideously. Someone who wants to say cocacola will exist 100 years from now sarah and i feel like that, thats attractive, but for someone who says i dont want to buy something and have one minute where ill be down, theyre thinking about what happened in the one minute that you might have bought an oil future yesterday suddenly you were trying to find swimming pools to put the stuff in it was incredible. I think the market theres a frailty to the market that i dont think the oil people realize what made the rest of the market feel like sure. Its going to be interesting to talk to quincey in a moment with sara eisen sales volume down 25 since the beginning of april, suggests were looking at pantry loading normalizing. Yes but also the away from Home Business is half of revenue. Households looking at ways to make budgets go further. Maybe that means buying one less six pack of coke a month the convenience stores, not a lot of people traveling. There is a wall of sodas, you can get some, restaurants serve a lot of cocacola a lot of restaurants are closed. I want to look at it another way. I dont want to steal james fire here. But cocacola has been around for a long time. They had a terrific comeback from the spanish flu and you know something maybe you have to look at it like that. The spanish flu, 50 million to 100 Million People died, and in 1920 they had record years i searched for a pandemic that is analogous i think were starting to realize we have something bad going on cocacola came back. Yes. I agree with the sellers that the not the onpremise but on the road is bad, but does anyone have a longerterm view that cocacola will exist when this is over . If they do, if youre 20 or 15, maybe you buy cocacola yielding 4 where its going to be soon. I guess im of two minds if youre looking to buy cocacola today because you think its a great bargain, it isnt. If youre thinking about cocacola coming out of the spanish flu and realizing how it roared, maybe you should think about it at a certain price. Its a great way to set up sara eisen who brings in James Quincey. Good morning well get right to it James Quincey, ceo of cocacola joining us now from home good to see you. Thank you so much for joining the show as you heard carl and jim talk about, the big number that pops out here is the 25 volume decline globally since the month of april obviously the quarter showed you came from a good place give us some color as to what is actually happening now around the world. Yeah. We started the year great. January and february were strong we were at the top end of our growth, building off momentum from the last few years. It was really a strong start, and then weve seen a sequence of countries go into very similar journeys kind of getting initial cases, declines in footfall in the away from home channels, lockdowns coming, steep declines away from home, a stockup phase at apple, a normalization and a stabilization. That was mainly china the back end in march and now its global in april the vast majority of the world is in some form of lockdown. As they said in the intro, we have half the business at home in round numbers and half away the global volumes trending minus 25, most of that decline is coming from the away from home channels. Theyre trending close to 50 the so it really is a tale of two cities and we see the situation stable at the moment. But theres a long way to go to normalization. What have you seen so far i know its early days, since you have such a good global grasp, in the countries ahead of the u. S. In terms of the infection curve and the reopening process, what have you seen and what have you learned yeah. One of the great benefits of the system is our ability to be literally everywhere and learn and pass those learnings around the world. Were focused on managing our way through the crisis, the months and the quarters so we emerge stronger as we always have from a global crisis, make sure we emerge stronger for the longterm. So we really are passing those learnings around from the countries quite clearly as we come out of the profound lockdown phase, we see that most countries are adopting some form of graduated we opening. The exact content and which stores, which channels, exactly how in phase one versus two versus three, varies a little. We see a lot of countries go towards the same sort of phased approach and were right at the beginning. Its too early to call japan had to lock down harder. Singapore has had to go back more into lockdown so i think that we have to adapt an approach where an expectation of phase and also be cognizant there could be steps backward in some countries as the virus flares up again. This is going to be a winding path well have to manage each country, well move our learnings around we have Crisis Management in the dna and we will emerge stronger, but each country will be a path and each step forward is not necessarily permanent. How do you think the consumer will reemerge . Ecommerce, how were buying, what were buying, how will you keep those consumers who may be stocking up now on diet coke who never have before in the longterm . Diet coke grew in the u. S. The last few weeks in the short term, people will move back to the true tried and trusted brands including diet coke the coke brand, coke zero. In the u. S. , were seeing way more people have breakfast sales of orange juice have gone up there will be temporary effects as we go through the lockdown and into the graduated reopenings where different brands, different packages and different channel also benefit diet coke is back up juice is up. In the long run, the big structural trends will reassert themselves the Beverage Industry will grow. Consumers will want choice there will be both a need for premiumization, luxury in a way in some of the channels, but also affordability in others theres no getting away from the fact that the crisis, the Health Crisis and the necessary lockdowns is going to produce a negative economic effect that will be with us for a while. There will be a significant portion of people with less disposable income looking for affordability, looking to manage income we as a business will have to offer a choice of price points to a wide range of consumers Going Forward. That will take some time to work its way through. How disruptive has it been to your plans in running the business product delays, advertising spending, what will be different going into 2020 . Most things will be different versus where we started a year ago. Certainly on the advertising front we are focused always on two things, the return on investment, we believe we will get that from the spend and making sure the messaging for that brand is not just on in sync with the brands positioning in management and in sync and in tune with the consumer mood with the right tone in the very short term, we have suspended almost as much of the advertising as we could if not already committed. And we will do so through most of the lockdown phase. Then as we start to see some of the reopening, we will reengage as were starting to look to do so in china. We will manage our markets not just cautious think from a financial point of view but making sure were investing where we can engage with consumers and where its worth while to do so and productive. A lot of focus on managing the markets and the supply chain teams have done a fantastic job. Theyve been keeping the system moving, whether its the plants or the logistics, the sourcing of the ingredients there have been issues, much longer supply lines in terms of time, issues of orders taking longer i have to say its better now than it was two or three weeks ago. So we do have a global dashboard of all the plants and all the logistics, its better than it was. Not that there are no issues, but theyre doing a great job of keeping the supply lines open from the ability to source ingredients all the way towards delivery to its customers. James, jim. Hey, jim. How are you april 2, 1993, marlboro friday, a day when marlboro realized they had been raising price, raising price, and they hit a level that was too far out of nowhere they announced a 20 price cut and shocked the market but the company recovered. Does cocacola have to have a cocacola monday im not sure i completely see the parallel but absolutely what is true is that every business, every business, whether theyre seeing growth the same or big declines in this new normal is going to have to think profoundly about what will reassert itself as the same as before, what is going to reassert itself that is new, and how do you get through the coming quarters that will be very different we are the same. We answbsolutely are looking atw we do marketing, innovation, pricing and packaging, and how we execute with customer spaces to drive the business. The cocacola system has a lot of experience in crises, over 134 years. You used the example of the spanish flu. We have emerged from every crisis whether military, economic or pandemic, and we have always been stronger afterwards than before the Crisis Management is in the dna, because we reconsider everything to make sure we just not manage the daytoday but grow stronger from the crisis. No doubt about it that you have the best models marlboro friday was really against the generics lets say we have 30 Million People unemployed, they may trade down to some cocacola equivalent that we would never drink. You know im a coke zero fan i have never thought about going to a generic zero fan, but maybe something happens with 30 Million People unemployed. Maybe they say i dont need branding could that happen . What we will definitively see is a lot of people with a lot less disposable income and they will be more conscious of the price points they spend their money on we as a Business System must respond with price points more accessible for them. We have a long history of doing so in certain parts of the world, that means a push on refillable bottles. We will look at smaller packaging. We have to offer them price points that are accessible to them there will be people with less money. Well be more dedicated to making sure they have a cocacola option thats right for them lets talk about dividends. A lot of people who watch mad money, they watch it to find out which dividends i say are solid. Here we have a severe test of cocacola in april and march anything there that would make you feel like, you know what, i have to go to my board and say, hey, maybe were paying too much of a dividend . Um, we are focused on, you know, managing the business. We have very clear hierarchy of priorities in every dimension, trying to get job security thats why we have not done big layoffs and the people we furloughed we furloughed on full pay. So we have clear priorities. Similarly with the shareholders, we have clear vision of the importance of the dividends, the share buybacks, we pulled out of doing share buybacks, we said we dont see much m a coming, we understand the priority shareholders put on the dividend, we continue to invest in the ongoing business. For each toshareholder in the business we have a point of importance and we will manage through the quarters with a view to the longterm and emerging stronger and making sure we do whats right for each of the stakeholder groups james, just trying to figure out consumer behavior. You have such a good handle on it your homestate or cocacolas homestate of georgia has pretty ambitious plans to start reopening its economy on friday for beauty salons, fitness centers, gyms, salons. On monday theyll reopen movie theaters and restaurants do you think consumers will come i think, look, as you look at the reopenings, whether its the ones coming up in georgia, in europe, china, singapore, japan, south korea, we have been able to draw on our experience of what happens in each of those places clearly you see there are groups of consumers that when the doors open, theyll come and reengage with the world on those terms. There will be some more cautious and some that will have less channels and places to congregate until they see more clearly the virus has dissipated so absolutely i have no expectation that there will be a snap back to normal on friday or monday morning each part of the world is trying to find a path to reopening. Whether its the program that georgia has, or its what germany and austria have, or what china, south korea and singapore have each place is trying to find a way to have a phased, gradual reopening such that people can start to reactivate the economy without letting the virus take off. But theres no guarantee, and i think its going to have to be done phased and with an effort you can already see, you know, japan and singapore have had to really increase the level of lockdown to contain the virus again because they had slight upticks. I think youll see people be cautious because it will be phased, there will be some worries about second upticks is china really open for business as usual . What does it look like there within china, there are restrictions traveling in and out, but within china, the business has largely stabilized. We were doing great in january, good growth. Really down in february, and then volatile but slowly stabilizing through march. And kind of coming back through n neutral into april it stabilized. The country is open for business were doing similar amounts to last year. We havent recovered the levels of growth rate we had before, but it is largely open at least for the products were selling. Wanted to also ask you about raw material costs weve seen this crazy drop in the price of oil really across the board. Are you able you able to take a of that to lock in any prices now so it will help you later managing costs wow, i wish i could lock in that crazy oil price forever, but look, you know, we have a very effective Central Procurement Team to work for us under our system and have done a great job in managing both the availability of commodities and capturing the benefit of price increases. Of course, we dont use oil directly we largely use it to convert into residence but whether its oil or any of the other commodities to the extent weve been able to capture the benefit of these low prices, we bring it into our hedging and as do the bottling system. How are the bottling doing . Are they all open and do they have the material and supply chains they need could you ever envision a situation where youd have to seenially bail them out if they do run in financial trouble . Virtually all of the bottling plants around the world are operational. They can get the Raw Materials and the ingredients they need. The Distribution Systems are open, so the weakened suppl eeen supply the customers are there it dpepds on tepends on the cou all of the bottlers are essentially operational and weve come into this crisis with a super strong set of bottles. We spent a lot of time over the last number of years strengthling the bottling system half of it is in the hands of public companies, strong well capitalized Balance Sheet, theyre coming into this crisis with a great financial position and really strong executional capabilities in themarketplace so i think theyre in a really good place, and the other half is small and mediumsized bottlers and you know, the vast majority of them are in a good place and well work with, over the course of this crisis especially if it lasts for some extended period of time, if there are any issues in the system but the point is were in a really good place. James quincey, thank you for your time. Walking us through these results and what youre seeing out there. Thank you the ceo and chairman of cocacola, carl, with a big rebound in the stock through the course of the interview, down less than 1 i think it was down more than 3 when we started. Sara, thanks for bringing it to us. See you in a couple minutes. Jim, as we were talking to james the president tweets we will never let the great u. S. Oil and gas industry down. Ive instructed the secretary of energy and treasury to formulate a plan which would make Funds Available so the very Important Companies and jobs will be secured long into the future. Well see if that makes any difference on any oilrelated names. I know that the Texas Railroad commission is going to vote today on quotas from different producers but again thats not going to be enough. The oil people i speak to are saying short of the government paying these companies not to produce, its going to be a very hard time to try to get this to stop i mean, look, you could be creative and say the government should go in and just burst into the uso and take that up, and the only reason i say that could work, covid is the reason. Its not saudis. Its not russians and the president tried to make a deal, but the supply is just not needed, and you do need to have these Companies Stop pumping but we know some of the wells if they stop pumping dont come back online, and we also know that the companies are addicted to producing oil the late aubrey mcclendan, used to run chesapeake. Im an oil person. How about if the price is down produce oil. Thats what you tdo i think thats the attitude of the oil men and women we have come on the show, theyre optimistic at all times about pricing, and their optimism is really betraying them right here, really betraying them. Yes well keep an eye on that. The other piece of news were getting from our eamon javers on twitter, we might get an announcement on an expansion to ppp this morning lets get to eamon right now good morning, eamon. Good morning, carl. Senior Administration Official telling me just a few moments ago that they do think theyre wrapping up a deal here and expect an announcement soon for a ppp deal remember were talking about an additional 300 plus for the loan program that proved so popular. The question is how quickly will the funding run out . Larry kudlow said this week he expects this program will go like hotcakes, the first round went like hotcakes and the second round will, too they might have to do more than this but the senior Administration Official telling me theyre hammering out language now on testing. Remember testimonies had wanted sort of a National Testing strategy republicans were pushing for more of a statebystate approach for Virus Testing also in this deal reportedly now, we havent seen final terms yet but reportedly 75 billion for hospitals, 25 billion in funding for that testing, and then 60 billion for Small Business Disaster Relief this clears the way now if they do announce a deal for the senate to presumably go first in terms of a unanimous consent measure on the senate floor. The house, though, is going to struggle theyre going to have to bring back members of congress from all across the country in order to vote on this, because they do not think theyll be able to get unanimous consent so the house will be working on that throughout the week presumably if they get this deal announcement as a senior Administration Official tells me they expect soon carl, back over to you okay, eamon, well watch all of that. Jim, i guess the testing element here, youve been this morning, you were saying georgia deserves to take a shot how important is a National Testing strategy to you right now . No, i think we just have to take our cue from governor kemp. We have to see how he does i think that if question spring into action, if this works. Am uo think about this politically think about people losing their jobs, going on the equivalent of bred lines in the 30s you dont want social unrest were a great country, that cant happen i disagree if you have 35 million unemployed and looking for something to do, doesnt necessarily end well im not going to say i applaud the governor because i wouldnt have done it in this style and certainly wouldnt have opened it with these businesses but were a little bit better in terms of handling whats going to go on and if it works for him and we know what the baselines are and we have the right, we have the hospitals that can handle it, that gives us a way to trace things out. By the way, i thought that James Quincey gave you a way to trace things out, too. Im not optimistic, carl, but i am a realist and one realistic way to do it is to have a state that has got very good mixture of rural and urban to put it all out there, so i dont know i mean, the hatred for this guy i think is very political. Hes trying to figure it out like the rest of us. Right obviously its not going to be perfect, but jim, daily new cases in the u. S. Are down by a third from the peak ten days ago. Right thats not to say its not going to resurge, but at some point you have to ask, if not now, when . Yes thats it. If the trend continues like this thats it i think you have to say okay, were over the hump. We can continue to stay hunkered down, but the consequences is so great for the middleclass, and lets just be look, ive good a job and i have a contract. So you could argue anyone with a job and a contract just simply has no idea what the people are doing, but i also own a restaurant and believe me, there are people every day who say, boy, i wish he had got than contract, i wish he had gotten that ppp whats going to do is he going to decide tomorrow it closes . There are a lot of people trying to decide whether to close we have to take that off the table. Right jim, as for tonight, netflix texan, whats going to be interesting, and i mean, whisper numbers on netflix subs are in the double digit, right, so how much can they do that would still impress . You know, when you put it on, you get that tiger king. Geez, people really love that. I dont think there is a number. I think there are people committed to this company. Weve got what we call transom virus, mutual funds come in and buy the same stock over and over again. I dont think theres anything in the quarter they announce will deter them from continuing to buy Texas Instruments we have to hear a little readthrough to cell phone, little readthrough unfortunately to auto, some readthrough to internet of things it is a very good company. People sell it a lot after the quarter, and they regret it. That could happen again. Take a look at amd, how many times has that been sold after the quarter and people regret that were in uncharted waters. Understand that when a cocacola comes back, thats because theres value, and i think that some of the younger people, talking about this tonight, who use robin hood, are buying the disneys. Theyre buying the carnivals theyre taking a tenyear perspective, and if you take a tenyear perspective from cocacola, youve really done quite well all right, jim, what is on mad tonight . I have puritan on tonight puritan is a private company, but puritan makes the swabs. The president said this weekend that at one point last week theyre cotton swabs and he put out another swab on one of the shows this weekend and had a regular qtip next to it, theyre not the same puritan makes them and they were in very high demand. The president said theyre readily available. Id like to know, are they readily available because if they are, im swabbing, because id like to see my wife and ill send her some swabs and she can jam it up her nose, to her brain, whatever they tell you to do, and i prefer to be a little more, maybe thats not subtle enough, but wouldnt it be great, you jam it up, find out how youre doing and go see your wife lets do t yeah do some jammin well all be there eventually we think thank you, guys we you tonight action , mad 6 00 p. M good morning, im Carl Quintanilla with sara eisen and mike santoli lets get some housing numbers on existing, diana olick hey, diana hey, carl existing home sales in march fell a wider than expected 8. 5 monthtomonth, seasonally adjusted unit of 5. 27 million. Sales up 0. 8 . Important to note these sales figures are based on closing, so thats contracts that were signed in perhaps late january and mostly during february what the realtors are telling us is that, while sales were very strong at the beginning of march, they really started to full off at the end of march, and that would be the effect of the coronavirus and the economic shutdown the National Association of realtors chief economist said you could expect to see sales fall 30 to 40 over the next coming months and even in the fall if demand should come back it will not make up for a lost spring selling season. We could see overall sales up to 10 . Inventory, 1. 5 million homes for sale at the end of march, that is down 10. 2 year over year to a 3. 4month supply and that is the lowest on record for any march going back to 1982 now a lot of potentially sellers are delisting properties, doing that for the past month. Concern thus because they dont want people coming through their homes. Median exist price is 280,600, up 8 . The general consensus is the gains will shrink considerably but prices may only fall in some of the hardesthit markets where leisure and hospitality fuel the economy or in highpriced areas like california and seattle, and of course, new york city now the hard ehit reengion in h sales down 13. 6 monthtomonth and in the northeast down 7. 1 the realtors say some sales are still happening and in fact, days on market are very short, so if youre out there as a serious buyer, homes are moving fast the problem is there arent any homes for sale again, sales down 8. 5 in march, could get a lot worse in the months ahead carl we thought inventory numbers were low before, diana, remarkable diana olick with existing home sales. Mike, i havent had a chance to talk to you since your week off. Yes i love your take on oil and where equities stand coming off that options expiration last week yes, you mentioned the options expiration it seems like it often is when moves culminate, maybe thats what happened on friday with that emotional rally it seems there is is a rethink how far the rally has come you look today microsoft down 2 , one of the leadership stocks in that narrow Group Holding the market together. Were not built to have those stocks kind of take a rest i think that basically leaves a little bit of room for chopping around i think a lot of people are pointing to s p levels down a little bit below 2,700, perfectly logical consolidation and pullback seems a little bit hard to get our heads around whether that would be it. Treasury yields tenyear 55 basis points seems theres an ebbing of risk and whats going on with oil obviously just creates complications, reminder those kinds of market dislocations are possible and those kinds of extremes as we were talking yesterday arent easy to swallow. No, but i think the overall conversation continues to be, mike, this is a market down 14 this year. Only 14 shouldnt it be down more with the size and scope of the economic losses that we are looking at from this shutdown, not just in the u. S. , but globally, and on that front, you know, the view continues to be more in the optimistic camp at least if you look at the size of the declines, down 2 here for the market, down 1. 5 this morning, versus the declines that we saw in march, and i wanted to bring you one other piece of news that gets tossed around that i dont think was talked about that much, which was from President Trump inthe News Conference yesterday, in his briefing, he said that there are 72 active trials under way across the u. S. , researching treatments and therapies for covid19, and another 211 in planning stages. That just shows how much the pharmaceutical industry in this country and not just pharmaceutical, academic institutions, clinics like mayo, are working and putting all of their resources into trying to figure out vaccines and treatments and therapies, and i think that continues to give hope mike, does that mean the markets should be, you know, so far almost 27 off of its lows and only down 14 for the year who knows. Yes but clearly those are the kind of news stories along with the better numbers that carl shared on optizationhospitaliza infection rates around the country and glimmering hopes, the market is focused not on the housing numbers diana reported or the jobless claims which continue to pile up at an alarming rate. It does seem if you look at the market in aggregate it has rushed to a place where its in a hurry to price in things going from awful to a little bit less bad, and thats when market returns tend to be good in that phase but also the market is a little bit obscuring whats going on below the surface the industrial sector is down 25 yeartodate, financials have been awful. You look at autos, look at the areas of the economy that would be doing well if we felt things were coming back in a big way. Theyre not doing well in the market it is a little bit of a kind of how you view the aggregates in those big Growth Stocks have been obscuring that. Yes, i would also point to that was a point made well last week. Oh, go ahead, carl. I was going to say, mike, to your point, i. T. , Communication Services, health care are approaching 50 of the s p things that you would think would do well in a pandemic stayathome economy and thats really sort of, we tend to think of the s p as just pure economic engine but a lot of them are levered to things youd use if you were home. Thats right. Its an intuitive rotation thats occurred. I do think the question you have to ask on a day like today, is it a crowded one is it too obvious . Are people hiding in the areas in great numbers that makes it vulnerable to a routine kind of pullback and the rest of the market doesnt have an answer for it well see how that plays out i think youre right more than half of the s p 500 companies have a very high quality rating, which means they have resilient Profit Margins and stable Balance Sheets and things like that that didnt used to be the case when it was much more of of a cyclical index decades ago we just add to the stayathome theme and whats working now. Smucker today, thats a stock oh, yeah. I mean they came out i was also going to add that thats why quinceys interview was so important, his visibility all around the world, exposure to oil prices, exposure to advertising. That was really good stuff yes, cutting back on advertising, but offering you know, coke is sort of halfway one of the stayathome stocks because they do benefit from people pantry loading and buying basics during economic stress points, which were facing here in recession, but on the other hand, half of the business is the social drinking, restaurants, movie theater, stadiums, away from home and thats why global volumes fell 25 so far in the month of april. But investors are looking through that heres what quincey said about what hes seeing right now from consumers everywhere the vast majority of the world is in some form of lockdown as they said on the intro, we have half the business in our home in round numbers and half in away. The global volumes trending minus 25 most of that decline is coming from the away from home channels so theyre trending close to 50, so it really is a tale of two cities, and we see the situation stable at the moment, but theres a long way to go to normalization. Did say that business was coming back in china, pretty strongly or pretty regularly and all the factories were operational. Interesting stock move during that interview the stock was down more than 3 . Its now down less than 1 , mike, as i think he gave a pretty clear outline and a lot of confidence about cokes ability to get through this as a strong brand, which say theme weve heard, not just from cocacola but other established strong brands like nike. They have playbooks the global picture and been in places that could come out of this, like china earlier where they can apply that to the rest of the world and putting inplace plan to come out even stronger, and i guess thats whats going to be investors choice now to differentiate between these kind of companies and others who might be in tougher financial shape and also in tougher shape like the retailers from when we come out of this for sure. In a way, its very similar to the way the market was gravitating before we peaked and had this huge decline which was companies where we can be sort of certain theyre global winners, the brands are resilient and the terminal value, however far you want to look out theyll have cash flows associated with them and the Balance Sheets are good. Weve had the massive correction adjustment cokes not immune to some of the losses and yet still in terms of relative performance, theyre coming through okay, whether its nike, starbucks, coke and the rest and of course software. I was just going to point out what was happening in the move in bonds as well today we are seeing this constant undercurrent of buying of treasuries, which pushes yields lower and todays move, were seeing money come out of stocks and into bonds that sort of makes sense, mike but i was wondering how you were reconciling the move in bonds, which doesnt appear particularly enthusiastic, as it relates to the economic outlook, looking over to the other side, looking out to the reopening, and sort of following the statebystate guidelines to figure out whether the economies will come back you have a tenyear yield sitting up 0. 5 . What does that tell you . Yes, exactly. I do think you can basically say bonds have not really endorsed the rapid comeback view, naturally the fed doing a lot of buying, naturally the fed will be at zero for a long time, thats an anchor to yields but its been a little bit of a complicating factor for the case that treasury yields have remained stuck near these levels all right, mike, lets bring in sada al husseinie, former Vice President at saudi aramco, talk about the day after we saw the contract go negative for the first time in its history. Sadad thank you for the time as always good to talk to you. Likewise, thank you i just would love to start just getting your reaction to the move we saw yesterday. Is it something you ever imagined imagined especially in that short a time frame not really. The signs were all there the demand collapsed particularly in the u. S. Where the wti finds its hope refinery runs were down to 70 69 as of early april the demand for gasoline was down from 9. 5 million to 5 Million Barrels from just a month ago. Jet fuel is down from 1. 6 to 0. 5. Everything demand wise was down in the u. S. , and i couldnt see how the april contract could have held out. It just wasnt any more demand for that oil, and they had to get rid of it. I guess the oil had to be unloaded right, so at this point, what are the chances that the current front month does the same . Well, it is tough you know, the opec countries and opecplus got together and made a very substantial cut 9. 7 Million Barrels, and they did note in discussions with the other producers, u. S. And other g20 that there was going to be a need for further cut from the nonopec, nonopec plus producers of about 6 million or 7 million, and that has to happen quickly, so the burden now is on everybodys shoulders to take these additional cuts and its not happening fast enough in the u. S. So we may well find that june is not avery good month again, an i dont know whether it will be a repeat of may, may, april, but we are looking at a tough next two months coming forward. What is this historic price plunge mean for saudi arabia look, saudi arabia globally we sell a much smaller volume to the u. S. , about a half Million Barrels a day average typically. So were very much linked to the brent oil prices, and the International Prices outside the u. S. , but of course its one market globally, and when demand is down in the u. S. , and theres consumption is down by 6 million or 7 million, thats just part of a global phenomena. The rest of the world is down also, were talking about 25 Million Barrels, loss of demand. So its going to affect all the prices but saudi arabia is more connected to the brent than the wti market the paper oil, futures contracts, derivatives and things like that, that needed to be sold and maybe thats going to recur again with the june contract, if you look further out, toward the end of the year, where the forward contractor trading, call it brent, whatever you like, what has to happen in terms of the pace of economic comeback, when economies come back online to even justify those prices on the demand side . Well, when you look longer term, of course we hope that the pandemic, covid19 will be under control and countries will be getting out of the lockdown slowly, but when you start getting towards yearend, you still have a buildup of inventories thats been going on now in the next couple of months probably and you still have a lot of idle capacity that will have been sidelined due to these cutbacks that will be coming back into the market, so the combination of bringing back inventory and utilizing the idle capacity is bound to maintain a ceiling on oil prices, i would guess around the 40 mark for brent, 40, 45. I wouldnt count on a very strong surge in prices just yet, but we still have to see what happens on the medical side, and whether countries are able to get around the covid or whether that will drag out further thats really the main issue and to that point, we did see some headlines this week from russia and putin suggesting that on the medical front, the peak is still in front of them. Were sort of blind to a large degree of the impact on these prices on russia can you talk, can you speak to that well, i think russia is no different from all the other countries in the world, were all facing the same challenge. Once the virus starts moving through a country, theres no stopping it, other than drastic action, so everybodys on the same boat. Nobody has a Silver Bullet or a magic wand to correct this were all learning together, but definitely its a tough situation, and we all feel for the various industries i dont think anybody wants to see this go on any further than absolutely has to, but from the energy point of view, you will need a lot of energy for a recovery, once we get past this down trend that were in, and hopefully the u. S. Industry will survive, will come back up the marginal production in the u. S. Unfortunately will not be there, but thats the same story across the world marginal production across the world will be probably shut in for a while, at least through the 2020 cycle senator kevin kramer of north dakota has a proposal to block saudi arabia oils shipments to the u. S. , its a proposal President Trump said he would look at. You just said hopefully the u. S. Oil industry survives. The feeling here is that saudi arabia, along with russia, wants to crush the u. S. Shale oil industry, and that they can ride this painful point out in terms of prices but theyre cheering the fact that the u. S. And specifically highly leveraged Smaller Companies will not well, sara, there are a couple of points here. The first one is saudi arabia does not sell oil in cushing or big volumes within the u. S may nominations are already out and the sales are i guess around 400,000 barrels and thats the saudi oil from the u. S. , u. S. Normally consumes 21 million so its a very, very small amount of oil coming into the u. S. , and this other thing is saudi arabia took a Production Cut of 2. 5 Million Barrels and so did russia to try to save the markets, and thats a very, very significant cut. I think the rest of the industry across the world is now going to have to also share that load, because thats the only way the industry can be saved within the u. S. The Shale Oil Producers have a whole spectrum of qualities of oil from some that is very desirable and prolific and economic to others that are just barely staying afloat. Thats the kind of penalty we face across the world in all sector, not just oil or energy so its a tough call for anybody. That is definitely true sadad we appreciate the characterizations as always. Is adad al hue seenie. The dow is down almost exactly 1,000 points yesterday and today. Looks like 2 declines for the dow and s p. Well have a breakdown of the standout stock, the rally in amazon stay with us til we board. Til we board. Oh yeah, we gotta take off. You downloaded the Td Ameritrade mobile app so you can quickly check the markets . Yeah, actually im taking one last look at my dashboard before we board. Excellent. And you have thinkorswim mobile so i can finish analyzing the risk on this position. You two are all set. Have a great flight. Thanks. Well see ya. Ah, theyre getting so smart. Choose the app that fits your investing style. Where does the delivery piece fit into the overall Amazon Investment case and are they even able to kind of fully take advantage of that, given that everyone is getting everything delivered right now . Great, well thanks for having me on. I really appreciate it amazon had a difficult holiday in 2013 and put 60 billion of capex into its Retail Business over the last six years that built an interesting delivery infrastructure they should be able to leverage in certainly g. The fourth Largest Delivery Company in the United States behind fedex and u. P. S. And built quite an infrastructure abroad and that infrastructure i think will create some interesting opportunities both for their internal packages which theyre delivering 50 by themselves now, and also potentially a Third Party Service down the road. These advantages including the logistics and delivery side of things pretty wellrecognized it would seem by the market. I wonder how you view the stock at this point. Amazon is now Something Like more than 40 of the market cap of the Consumer Discretionary industry, amazon against the world and people are giving the odds to amazon, so valuation wise in terms of how you think the cadence of investments are going to go right now on the companys front, how would you characterize the opportunity sure. Two things first, they have 40 ecommerce market share, so obviously the world is moving towards ecommerce, 15 online, think that can grow 30 over time. Secondly, if you think about the athome beneficiaries right now in this market with the stores closed, youre clearly seeing a real increase in ecommerce volumes. So theyre taking advantage of that we did raise numbers for revenues recently, i think they will have a strong top line. Costs could be an issue, but really think theyll have a strong benefit here, and i think the big advantage to them Going Forward is really pushing their grocery business, which has been a struggle frankly for the last ten years. They rolled it out to prime members this year as part of the prime membership free delivery and i think the timings really right for them to take traction in grocery that can continue in future years, when the surge is over justin, its carl how much do we think theyre actively trying to discourage discretionary goods from being bought on the site, taking their foot off the pedal on advertising, on promotions, and is that enough to ease up on the supply constraints they currently have i think orders are overloaded, taken the deal of the day off the app, im sure theyve turned down advertising and been less promotional, just trying to keep up with volumes publicly they added 175,000 people to payroll or trying to add that many. Thats as much as a holiday surge. Trying to keep up with demand, deliver consumables to people, help with the problems right now deliveries are delayed and delivering the best they k which is why were concerned on costs for the quarter but the revenue should see big upside. Justin, thanks for your time today, appreciate it sure. Time for our etf spotlight today we look at the banks, ticker kbe down, on pace for its sixth negative session in the last seven all the major commercial banks are under pressure this morning, and the etf is down 2 wells fargo down about 50 this year there is a look atment so of the declines, one of the hardesthit groups often when you have energy, stocks under pressure, you also have panels. You have low yields and financials under pressures and both things have been pretty common in recent trading lets get a check of todays market, 2 declines. A little less for the s p. It is broad. Every sector in the red. Hardest hit right now is technology, down 2. 5 . Communication services as well, theyve been relative winners lately ngodow is down 380 points dot anywhere. Were back in just two minutes its only human to find inspiration in nature. And also find answers. Our search to transform. Farm waste into renewable natural gas led chevron to partner with california bioenergy. Working to provide an alternative source of power. For a cleaner way forward. Featuring the Emmy Awardwinning voice remote. Access to your favorite apps, including netflix, prime video, youtube and hulu. All without changing passwords and inputs. The most 4k content and movies and shows on any screen. The best Entertainment Experience all in one place. Welcome back lets get the latest on the coronavirus outbreak sue herrera. Senate minority leader Chuck Schumer says a deal has been reached on a coronavirus aid package worth nearlies it 500 billion. The deal should be approved today. More than 300 billion will be added to the Small Business payroll loan program another 75 billion earmarked for hospitals. Domestic air travel around the world is down 70 , according to a Major Airline trade group iata is forecasting a slow recovery with only a modest rebound through september. Over in germany, munichs oktoberfest has been canceled, as that country started to loosen its virus restrictions. Germany had already banned large events throughout the end of august and worldwide i. T. Spending is expected to drop only 2. 7 this year, thats according to the International Data corporation. Hospitality and Tourism Related Industries are, however, expected to have the heaviest declines health care and telecomshould actually see small increases in i. T. Spending. As we are all online a lot more. For more coronavirus coverage, you can always head to cnbc. Com. Carl, back to you. Sue, thank you very much. Dow session low was down 606, currently down 360, as the s p and nasdaq are sharing in the pain this morning. Were back in a moment these days, its anything but business as usual. Thats why working together is more important than ever. At t is committed to keeping you connected. So you can keep your patients cared for. Your customers served. Your students inspired. And your employees closer than ever. Our network is resilient. Our people are strong. Our job is to keep your business connected. Its what weve always done. Its what well always do. Welcome back lets get to Rick Santelli and get the santelli exchange. Good morning, rick good morning, carl. Welcome former dallas fed president Richard Fisher richard, its great to have you today. Id like to also congratulate you, you are the chair of mayor johnson, dallas mayor johnsons Recovery Task force. Thats right, here in dallas. It gives you good insight into what sense youre required to bring the country back up. Yes and thats exactly where id like to start. As i look around my state of illinois isnt necessarily like texas at this point. It seems mostly to want to stay hunkered down, which has worked. Weve lowered the curve as many other states have, but it seems certain states, whether georgia or maybe to some extent texas seem to be taking a more aggressive route in part in a safe way reopen the economy. Why dont you tell us about that well, first the governor has what he calls a strike force, and when the governor of texas and other states i assume issues an executive order, that becomes the rule, and then the cities and the counties and others have to operate off of it i know the governors going to be announcing something new on friday, further slight reopening initiatives. Well wait to see what he has to say. Im a member of the strike force, one of the only ones in there that never gave any money to any texas politician, currently serving, so thats kind of rare, but look, heres the problem, rick. You take a city like dallas, which has been the Growth Engine of a state which has been a Growth Engine of america you shut everything down you have to make sure the medical side and the virus side is clear before you open up president the real backbone to texas, like any other state, like in the United States or small or medium sized enterprises, getting them back up and operating is critical, and i know thats what the governors planning to address, and of course we are also particularly in the houston area and west texas, are being hit hard by whats happening in the energy patch so it gets things done the order of difficulty is great. All this has led me to conclude, rick, were in for a long ushaped recovery in the United States as a whole. Its going to take time to patch things back together, to get them up and running, to get the financing for working capital for small and Mediumsized Enterprises and to lift up the economy, bring people back to work and start growing again its going to take quite a while. Yes you know, it does take quite a while and richard, there really arent any examples in history of shutting down an economy and restarting it. Maybe the only example is the depression and the sad part is, what really got the economy going especially the industrial economy at the time post depression was world war ii, and obviously we dont want to go in that direction so reopening is a dicey prospect with very little history. I vacillate. I look at certain areas of the country where people are getting in legal woes by walking on a beach but i understand theres police powers, states need to protect peoples health. Is there a fine line here . Are we walking it correctly . You know, many believe that the American People are adult enough, responsible enough to take more responsibility for going outside and enjoying spaces in a healthy way, whereas certain governors of states dont believe thats the case. How do we deal with these issues that are different state to state . Well, thats up to the governors and how they feel comfortable in what their citizens are demanding again, you and i are going to have to just listen to the president , to the governors, et cetera, but in the meantime, getting back to what you and i worry about for a living, which is the financial wherewithal to bridge until we get back up and running is the most important thing and obviously the government has backed up certain systems, they are being implemented deliberately by the Federal Reserve in particular, we are just getting started. The pipes are built, but the flow through the pipes needs to be properly documented and dealt with in the meantime the markets are beginning to obviously very volatile, based around this uncertainty. Rick, you look across the commodity spectrum today, its not just oil, natural gas, heating oil, but copper, wheat, soy beans corn down and the u. S. Dollar is trading back up. It underwrites our ability to borrow and to spend and allocate to the states right you know were lucky the u. S. Dollar is where everybody wants it to be we have to take time to figure out the answers and be patient and have the bridge financing to get it done in the meantime. Richard, lets pivot a bit. Youre one of these verse tight guests that the point in time who understands the markets as well as all the issues you just described. I look at Interest Rates and i see tenyear note yields toying with a new alltime low, our current low yield close for march 9th is 54 basis points, plus weve tested it intraday today. Who knows whats good and bad with market signals anymore, richard . Interest rates being low has a benefit but it seems the lower it goes, the more nasty many Business Leaders and economists and analysts think thats advertising for the economy in this flight to safety. But who knows how to read any of the signals when the Central Banks of the world and the treasury of this country and our central bank have put so much into these areas that even though yields arent representative of risk and reward, theyre certainly trying to help the coronavirus effects. Thats a very good point, rick it is helpful. It allows us to maintain the cost to carry of these deficits and government debts that are being run up im worried about it longterm but for now its a great help. I dont believe my friends and former colleagues at the Federal Reserve have control over the yield curve that far out this is driven by markets. Its driven by a desire to warehouse and stockpile dollar bonds and also to have dollars in the corporate pipelines around the world, and thats whats driving the tenyear yield. Normally wed have a nominal rate of 4 on the tenyear now were close to 50 basis points by the way, that tells congresswoman, congressman or senator, you can spend eight times as much and the cost of carry doesnt go up. Its kind of a good thing but also a dangerous trap. I understand. Were out of time, richard its been a pleasure discussing these rather unpleasant issues with you i hope youll be back because you get more into this task force, and maybe learn some of the tricks about restarting complicated economies. Thank you for your time today. Mike santoli, welcome back back to you. The Mortgage Market getting relief from fannie and Freddie Diana olick has the details. Reporter hi, mike. Major relief for mortgage servicers looking at more than 3 million loans in the government Forbearance Program, that is 3 million borrowers who are delaying their mortgage payments the fhfa, the regulator for fannie mae and freddie mac announced the servicers usually on the hook to pay bond holders for up to a year even if you dont make your mortgage payment are only on the hook for four months after that, fannie and freddie will pick up the tab this is not the full liquidity line that the Mortgage Market was looking for from the fed and treasury but sources are telling me that could be coming as early as this week it does say, though, that for only four months, they will have to pay at this point, gsebacked loans 4. 6 of them according to the Mortgage Bankers association are now in the Forbearance Program thats triple what it was just three weeks ago. Is it enough well, some say that if this were to hit 20 to 30 of that market, a 5 trillion market, that mortgage servicers wouldnt be able to hold up for four months but it f is stays close to this level it will be of helpful. The fhfa director who had been pushing back hard said the fourmonth Service Advance obligation limit for loans and forbearance provides stability and stability for the 5 billion Housing Finance market mortgage servicers can plan how long they need to advance principle and Interest Rates on loans for which borrowers have not been making payments sara youve been all over it, diana, thanks. Teatnae ceo of Philip Morris inrniol Andre Calantzopoulos will be with us well be back in two minutes theres nothing to stop you from moving forward. A massive rebound in the second half of this year find out what has one top strategist so optimistic on tradingnation. Cnbc. Com more squawk on the street coming up. Philip morris out with earnings this morning beating on the top and bottom lines saying the covid19 impact on the quarter was limited but the pandemic may impact fullyear results. Joining us to talk all about it in a cnbc exclusive is an decalantzopolous thank you for joining me thank you for having me difficult circumstances for sure how is covid19 impacting your business why did you have to cut guidance or at least suspend it well first of all, from the beginning of the pandemic our focus was on the health and wellbeing of our employees. We started implementing immediately remote work and issued very strict guidelines for the people that had to work on the front lines and factories, field forces and so on, and helping the families in the Community Support the employees. Also recently we announced a set of principles to guarantee employees that there will be no redundancies, that they have financial continuation, their salaries will be paid and they will be there for the people who work on the front line and also helping the community in states of which we operate, we pledged approximately 30 million so far in monetary contributions to help and many people work with the communities and i think thats the most important part of this stage. The second is, of course, we need to do work to ensure business continuity, because some of the factories were impacted by the restrictions, and i think so far, thanks to the work of our employees, who have very Good Business continuity, and sufficient supply for our customers and the consumers. Now, the reality is that although we had the very strong first quarter, and also we have strong liquidity and very good Balance Sheet, so we can look ford with optimism, we cannot be immune to whats happening in the world with covid, and we see that in certain areas of the business, with a certain degree of certainty that for as long as the crisis continues, we will have impacts, for example, duty free, because there is no traveling essentially around the world, so that impacts the business, and we dont know when this will finish nobody does, actually. The other is in certain developing countries, we see that people that have a lot of, you know, daily salaries and difficulties, you have to assume that there will be some impact on consumption temporarily and at the same time you may, although we dont observe it downgrading as people dont have daily jobs, and they dont have the social support systems in the developing countries right and we dont know when the pandemic will finish right and which shape the economy will be, so i think its prudent to guide the market on a quarterly basis, whereas relatively we have certainty and then for the year, we just said we will give quarterly guidance, because its very, very difficult to forecast a year understood what about the health concerns, particular warnings from experts that smoking cigarettes and even vaping could make risk of infection from covid19 a lot more severe. Has that hurt the business well, you know, covid is a new and fairly complex disease, as we discover every day yes, there is a lot of very con hypothesis we hear that are reported in the media as facts so there is not enough data today to know exactly what the impacts are on smokers, for example. The reality is that in my view and i said many times on cnbc, any sound Public Health guidance should be given based on facts and scientific studies today we dont have any in this area having said that, i think its very important that smokers and nonsmokers all follow the instructions of governments and Public Health authorities and protect themselves and others and we always said the best thing is to quit because no tobacco product is risk free i suggest that we wait for fact and statistics before we draw conclusions. Sure. And i did see that the fda is saying that its uncertain at this point andre, while we have you, i wanted to get you on another topic, which some might find surprising and unlikely and maybe a little ironic, that is, Companies Like yours helping to fund and if you figure out a va apparently youre supporting one of your canadian subsidiaries. Why is big tobackco getting involved when it comes to making a vaccine and whats the edge here you have . We have an investment in the Canadian Company since 2013 and there was always research on how to develop vaccines on tobacco plants because the tobacco plant can reproduce particles that can be used for vaccines much faster it has been there forever. Now the company, which we have a minority share holding, is working obviously like any Pharmaceutical Company on developing a vaccine we are developing a vaccine with accelerated measures and thats all. Of course if they find a vaccine that will be great for all of us, and we support their initiative that stops there Andre Calantzopoulos, good to check in with you. Thanks for the time. Thank you very much, sara, thank you. See you Philip Morris international. Carl one more big story in the q1 season, sara, as were looking at 2 declines and a lot more earnings coming up later on stmes d reth netflix, texas inruntanmo were back in a moment another down day for the markets with every s p sector lower. Among the laggards tech and Communication Services we see Companies Involved with enterprise and services. Salesforce, servicenow and paycom tech on the whole has fared relatively well compared to the s p 500. Been a Leadership Group down 8 on the year versus the markets 14 drop we are back after a quick break. Americas oldest lighthouse has weathered many storms. Seeing the break in the clouds before anyone else. Together, well weather this storm. Thats why working together ist more important than ever. At t is committed to keeping you connected. So you can keep your patients cared for. Your customers served. Your students inspired. And your employees closer than ever. Our network is resilient. Our people are strong. Our job is to keep your business connected. Its what weve always done. Its what well always do. Confident financial plans, calming financial plans, complete financial plans. Theyre all possible with a cfp® professional. Find yours at letsmakeaplan. Org. Governor cuomo with an early briefing ahead of his trip to the white house. Lets listen in. The total hospitalizations are basically flat from where they were yesterday and as you see the overall curve is on the way down and that is good news, certainly. The net change in hospitalizations is down, not as down as much as we would like. Change in intubations is down and thats always good news because intubations means a person is on a ventilator 80 of the time when people are on a ventilator they dont come off the ventilator in a successful way. The number of new people in the state who walked in the door yesterday or were diagnosed with covid is 1300. That is down and thats good news, relative to really bad news, which is what was happening up until then, right we have to remember our calculus of good, our definition of good, has changed here good is now not terrible, but an on absolute scale, 1300 people walk in the door with covid on a single day in the state of new york, that would not be good news in any other context between this as the context were living in. This is erie county, buffalo is in erie county, new york, and you see the numbers. We had a dramatic cease in erie county and then basically a leveling flat little uptick yesterday. Number of total hospitalizations in erie threeday average, again, basically flat. These numbers i would not take any of these oneday numbers, even threeday numbers, as absolute this is a new reporting mechanism that just was put in place, so from a statistical point of view, i dont know exactly what the margin of error is with all due respect to the great stat tatitions doing this, weve been watching the spread all across the state because this is like stamping out a brush fire you need to run to where the fire is and put it out there we were watching for a spread of the fire from down state new york towards upstate whenever we see a small fire starting, we jump on it right away, testing, isolation, et cetera but thats remained fairly