The answer is not for a long time even the greatest optimists think a mass vaccine in the middle of 2021 maybe something smaller this fall the idea of something that is just given to you in the hospital iv that makes it so it eliminates the lets say the odds of you dying, its something that makes us feel like maybe this is the tamiflu for this dreaded disease i think, of course that makes people feel more optimistic. Everybody wants the country open, but nobody wants to do its been that stark, that bipolar. How about we get it open versus getting really sick. Thats something that people will say open it up, thats why the market is flying its not the tamiflu, its for when you are already fairly sick its very important i dont want to discount it in any way, listening to Scott Gottlieb has been one of the more rational voices on this throughout. He frames it properly. We actually do still need those antivirals that would be taken earlier in the course of the disease to mitigate its effects, oral antivirals, we hope some will be available as soon as the fall if you have those and if you have remdesivir for people who do get sick and end up in the hospital and you have widespread testing, you can imagine a landscape in which people will feel much more comfortable about going about their daily lives, returning to their activities that they did pursue thats important if and when we do get a second wave its an odds game its not great look, obviously if we took a pill, the equivalent of tamiflu, i dont want to be glib about tamiflu. Whats basically happening here, theres more hope than we had about an hour ago. Thats for sure futures obviously up 500 plus. Gilead opening up 8 we havehave earnings for boeing lets go to phil labeau. Lets bring in dave calhoun, ceo of boeing. Give us perspective in terms of how bad the situation is in the commercial airplane market and what youre hearing back from your customers in terms of future orders, possible deferrals, cancellations, et cetera hi, phil. Its good to be with you before i jump into that question, im going to add my thanks like everyone else to all of the health care workers, the industry supporting so many of us, trying their best and putting themselves at risk to keep us in good health the market, as you know, we feel a little bit like were the tip of the spear, aviation, in light of the shutdowns not just here in the United States but pretty much everywhere in the world. The ramifications are big. For the most part, the industry is not interested in taking delivery of airplanes at the moment and or prepaying against contracts that we have in hand as result, theres this moment in time where everyone is sort of frozen trying to contend with the dramatic reductions. In the United States, passenger traffic at this moment is 95 down from where it was a year ago. Thats remarkable. Flight schedules are not down as severely but down significantly because the airlines have been allowed to continue with connections with much less frequently the world market has been stunned. Its a bit frozen. But we remain confident that it will come back we talk to airline ceos every day, every week. Most of the governments have come forward with their support, certainly here in the United States they have that has theres been a real thaw with respect to the thinking and the Planning Forward with respect to markets. Im more confident now than i have been in some time and i believe the thaw is beginning. Dave, you guys are announcing youll be cutting your payroll by 10 , basically 16,000 of the companys 160,000 employees, with the biggest impact on the commercial Airplane Division are you confident that those job cuts along with the slower production rates that youre introducing starting now all the way over the next couple of years will be enough in other words, that you guys are taking the steps that will avoid having to come back and perhaps cut further, lets say nine months or a year down the road i will never say that with Pure Authority because i dont know what the world will look like in nine months. We have factored in everything we can think of. The recovery with respect to passenger traffic we modeled is roughly three to five years getting back to the environment precovid. We get back to 19 levels in three years, to get back on the growth track it might take another couple years weve been conservative in that respect. Our plans is mostly built around the refleeting of airlines everyone is looking at fleet plans. The retirements will be significant, the investments while not what they used to be will continue to be made to get more fuel efficient, cleaner airplanes in the sky and create competitive advantages for each of our airlines. Thats what weve modeled. We have stress tested the model. The production rates are tailored for that model. And we believe the markets, credit markets and liquidity will be there for us i dont want to suggest that if in mine montnine months, if thie there wont be another change. You have 15 billion cash on hand, but you made it clear will you have to borrow billions more from the private market and potentially from the federal government where do things stand in your discussions with the Treasury Department we have kept the Treasury Department apprised of our situation for quite some time. I think they know precisely our situation, our needs broadly the c. A. R. E. S. Act, the fed program in combination, when they got announced, credit markets loosened up, so we have private options or public options available to us. At this stage, know well evaluate all of those options. We need liquidity. Our Industry Needs liquidity our supply chain needs liquidity. Well file application where appropriate and well be in the Public Markets thank you for coming on i want to follow up on what phil just said. To me, the optimal thing for you would just because of the way the Federal Reserve is working, giant loans. I would like to think you could take off the table that you want to go to treasury and give them loans or stock people dont want that they want to be shareholders of a company thats borrowing money not shareholders of a company thats coowners with the government can you take that off the table . I dont want to predict outcomes well be in the markets, explore all of these options we believe we have good credit we believe in the future of our company and the ultimate ability to pay down debt so well be in the credit markets. Well do what we have to do to sku secure liquidity and explore all of these options yesterday we had gary kelly on from southwest, good client of yours one thing he said was that a lot of people do want to fly but they dont know where they want to go to what its come down to for people is i dont want to get sick, if i go on a plane ill get sick the truth is you can wear a mask to defend yourself against your nextdoor neighbor, isnt it safer to be in a boeing airplane than it is to be in an Office Building in terms of air circulation . Jim, youre making a great point. Oftentimes the public confuses this because it looks like a confined space but the air on an airplane in the fuselage and in the flight deck gets replaced between every two and three minutes. The air that recirculates is filtered in that same cycle through a help pa filtepa filte. So that environment is an amazingly safe environment with respect to aerosol impacts with masks, youre correct that prevents that that proximity question so it really is a much safer environment than most of the public understands i do see the industry beginning to rally around all of the protocols that will be required Going Forward. I dont want to go too fast because i want it to be as factbased as it can and i think all of the agencies that are involved in this, the faa, tsa, cdc,s they all similarly want the facts, they want to lay it out the protocols and guidelines, i think, will be reasonable and it will lead to a recovery of our industry mr. Calhoun, its david faber. I want to see if i can get more clarity from you in terms of your various efforts to raise capital. You said you will go to the Public Markets theres some reporting that says you will be offering bonds, a large amount of bonds in the Public Market soon is that going to be the case if so, when . Does it mean you dont access government aid i hate to give the same answer to slightly different question, but we are going to look at all of our options the Public Markets are in better shape than they were several weeks ago post the c. A. R. E. S. Act, post the fed program. So were going to look at those. Well look at the tools that are embedded in the c. A. R. E. S. Act well look at the fed program. And well make decisions that are in the best interest of the boeing company and shareholders. Its i dont want to get ahead of ourselves, i cant predict the outcomes okay. Work force reduction, 10 , there had been reports that you told some Union Officials that that percentage could be much higher is 10 firm . I dont know of any facts or reasons why anyone would speculate other than what weve announced this morning, which is 10 enterprise number. A bigger percentage in our commercial business. Roughly 45 of our revenue comes from the defense department, the government and defense programs internationally. So the headcount reductions in those areas are far, far less as we continue to invest in what are otherwise Growth Opportunities in those markets dave, its phil lebeau again. You have not said the timeline is slipping and pushing further into the Third Quarter for the 737 max, but its clear thats whats happening what is the issue when it comes to the Software Glitches that it seems like you guys identify them, theres work done on them, but it seems like a process, a bit of a groundhog day where these continue to pop up are you confident you can hit that Third Quarter delivery or at least on the grounds of the max in phil, we are. Let me start out with saying that the max program, believe it or not, despite these deferrals or extenuating moments, its going well the flight tests are going well. We had almost 400 ferry flights, all of them without a hitch. So its all going well there is a mountain of documentation that has to be completed. Sometimes the documentation work is confused with what is referred to as the Software Glitch we have not had Software Glitches in the performance of our airplane at all on test flights or otherwise well complete the documentation. Theres no doubt covid and the virtual work that now has to get done between our folks and the faa, thats taken a bit of a toll on this process as well but i remain confident and constructive about the whole thing. If i could put a bigger context on it, as you know, the max for us was a supply issue. In the First Quarter we paused our production, et cetera. There was a market, a significant market that has transition ed ed to a demand issue yes, we have 450 airplanes that are ready to be shipped, but were working with all of our customers to defer, move deliveries were confident we can do it its a priority for us weve moved from a bit of a supply issue to what is a demand issue. Well work our way through it and work our way through it steadily thats the big picture dave, one last question had t. H it has to do with covid19 and not just with your company but really all companies around the world as they start to open up again and get back to work how slow will you expect this process to be . Clearly youre not going to have people reporting to shifts in the same fashion, safety protocols have been put in place. How slow do you expect this ramp up in not just production but getting back to work to be ill describe is a couple of ways first, we are opening factories as we speak. We are getting back to work. Our big locations are in the puget sound and in South Carolina our supply chains are in better shape than three weeks ago if we can rely on the supply chains, and now with our reduced production rates, we think we can steadily improve it will cost us in terms of productivity because of the circumstances youre describing. We engineered the work differently. We do have different shifts coming in at didnt times. So there will be productivity penalties associated with that probably for a quarter or two. And then i think we can achieve the kind of stability and maybe even better stability than we had previrus. Simply because of the reduced rates. I think thats the way at least for boeing its likely to unfold the next couple of quarters. Were focused on the safety of our people we have taken every precaution we can think of. We get data every day. If we see any trends that work against us, we will not be afraid to take the right actions and suspend again. But at any rate, were in a decent place like i said at the beginning, im feeling a bit of a thaw, im hoping its a thaw well continue working towards reopening. Dave calhoun joining us remotely just within a couple hours, the company reporting its First Quarter results. We appreciate you joining us carl, ill send it back to you busy morning i know you have other big guests and news coming up it is a busy news day, phil thanks phil lebeau bringing us dave calhoun of boeing. Jim, the thaw is beginning is the line thats made the wires it does seem like the market is starting to get its head around the idea that the recovery may be two to three years, or as dave said three to five years in production i think there are demand issues, but two weeks ago we would have said is boeing going to file . How is boeing going to raise money . Are they going to be a ward of the state . Now were thinking how much will they borrow and what is the rate they may not need may not need stock, that may be too pollyan pollyannaish, but i think theyll be able to get through this he would not give us specifics, we asked the question as he acknowledged a couple different ways, a couple different times in terms of what their plans are. There are expectations that they will come with a large bond offering i think we can expect thatkcase what will be interesting is that maybe they dont in any way come to the government because they dont want to give up equity in some fashion i think its for real i think thats why the stock is moving up. Theres so much happening. David, we have to switch the transitions here are happening way too quickly. One stock down in after hours is advanced micro devices, amd. Im not sure thats right. Its been wrong several times when this happened lets go to the doctor, dr. Lisa sue. Its great to see you. Want to get things straight from the beginning. I have four pieces of research, lowered expectations, lowered your number, thats not true you maintained your number we have to clarify the record right now. Thats why the stock is getting hurt am i right good morning, jim its great to be here with you guys i appreciate the time. Were pleased with our performance this quarter theres no question that its an unprecedented time and there are no rules for this. But that being the case, we saw 40 growth year over year, 5 points of Margin Expansion when we look forward, we see 25 growth in a market that does have some uncertainties. What we have is strong product cycles, were excited about those product cycles so we feel good about the performance. What do you have to say about theres some softness from covid19, but in general you have a good story for work at home and also play at home both sides are working in your favor. Yeah. I would say in this world that were living in there are a couple of secular trends that are positive for computing work from home is positive we saw Significant Growth in notebooks, a lot of people are refreshing their notebooks either for use at home or for use at schooling so thats a nice secular trend consoles, gaming, another important trend for us the microsoft and sony console launches later this year are two of the most anticipated launches from everything that we see, those are on track and were very excited about those also the data center we talk a lot about the trends, the facts were doing video conferencing, all doing work from home. It requires more cloud computing. Weve seen nice trends there as well overall i think there are some pockets of softness, the pockets of softness were around in the First Quarter. We saw some softness in china as they were shut down. Thats come back a bit here in april. Overall, i would say all Things Considered were very fortunate that were in markets where people need more computing thats really our focus. Im glad you mentioned the cloud. There are few things now in the world that are accelerating. Almost everything is slowing down or just stopped it seems as if this is a moment where cloud demand is far greater and digitalization is far more ahead its like everything is being rushed by this by the downturn and that we became digitalized almost overnight where we already thought we were. Speak to how strong the growth is in cloud. It is truly amazing, jim. We basically turned the world to working from home in sort of an instant. Thats had ramifications on the infrastructure people need more infrastructure, whether its broadband infrastructure to get connectivity to the home or Cloud Infrastructure to support all this computing remotely it has been a significant cloud deployment, and we see that continuing into the Second Quarter and beyond overall it says how important the strinfrastructure is. Beyond what happens over the next quarter or two, we all have a new expectation for what the infrastructure looks like and what the experience looks like we want the flexibility we want to return to the office, see our friends and colleagues, but we want the flexibility to always have at our fingertips the computing that we need thats what we always thought. We always thought High Performance computing would enable that. To see the build out in the cloud, people upgrading home infrastructures, thats the wave of the future. Lisa, you talk about being in all the right categories, that makes sense. As we see Life Sciences becoming pretty much without a doubt a larger and larger part of the economy, will there be efforts to deepen your expo sure to those categories and markets overtime i appreciate that question. I think this is such an important moment if you look at what Health Care Professionals are doing, either those on the front lines or those researchers who are helping us look for therapeutic vaccines we are really proud to power some of that equipment its a focus for us to do everything we can. A lot of large Super Computers are actually being used to accelerate the research that is being done in terms of the search for therapeutics, vaccines were pleased to participate in the white house High PerformanceComputing Consortium were also making significant donations to universities to forward that research. Its an opportunity. Its an opportunity for us to modernize health care and im very excited about that. I think again, thats another secular trend that needs computing and can utilize all of the capabilities that we have. I do think its an area that we will spend a lot more time on Going Forward. Lisa, its david faber. Coming back to amd as a company and you as its leader, how are you approaching the going back to work that we all are awaiting and helpfully will be coming fairly soon for some companies and some states . What are you doing in terms of changing work spaces if anything or thinking about how people are going to work differently in this postcovid environment . Great question. Thats on all of our minds today. I think our strategy is going to be conservative in how we approach it. Were all thinking this will be a phased approach. Health and safety of our employees first. The fact is we have a strong infrastructure we can be productive with our engineering and sales activities in a work from home mode well take this slowly in a phased approach and ensure that, you know, we bring back a fraction of our employees when the local regulations allow. I will say that im proud of the productivity that weve seen overall. Again, youre transitioning 12,000 plus people in a very short amount of time like many companies, we have been able to adapt on the fly. And were very fortunate to have that capability. Lisa, want to drill down again on something that may be more pedestrian, but has to do with the stock you bucked the trend, you guided for a full year. You guided for 25 growth in the face of the pandemic other Companies Including companies in your industry pulled their forecast. The reason why they did that was because they knew it would be down you, i think, are being personalized for a forecast thats up 25 . Isnt it true because of the strength in gaming, the strength in the cloud, the strength in notebooks, you were able to give a forecast when every other company in your segment pulled its forecast yeah. Jim, i heard you and david talking about this comment actually yesterday on your morning show so, look, we decided to give some guidance for full year, so we guided to 25 with a wider range than they normally guide 25 with plus or minus 5 . The reason was is because we think the story is different yes, there are uncertainties in the market yes, were all watching the macro and how people how that reacts we have some very strong product Growth Drivers in the second half of the year we wanted to make sure we were clear on how those played out. Notebooks will be very good for us we have a strong product cycle were starting the rollout of new notebooks, and they are very much in high demand. Consoles and gaming we think will be a great growth driver. Lots of anticipation the fact is those cycles are big, especially in the first few years. We think the second half of this year will be strong. I mentioned cloud. Cloud is another growth driver for us as we see new platforms coming on board. Were excited about 25 growth year, there are uncertainties on the pc side with consumer demand, well watch those. They decided to give fullyear guidance to make sure people understood there are some things in the product cycles that we see good visible tsibility to, d theres some areas we have to watch out. Overall it comes to 25 growth year for us, plus or minus were happy with that. Some were on the call and some analysts after said this is a situation where amd is starting to cede share back to competitors. I came back and said, no, they just won the Lawrence Livermore contract, sales will be better in q2. Do you have any feel that the analysts saying that this was really the high watermark in terms of share for amd, thats a true narrative i would say i dont agree with that. I would say that, look, you have to take a step back from, you know, quarterly dynamics, look at the big picture and what we see as Growth Drivers. I think, you know, in any environment, 20 plus percent growth is a great year i think in this environment especially we believe that the growth story is a differentiated story. When i look Going Forward, i still every time i talk to you i say were in the early innings, but, jim, were still in the early innings theres a lot of product cycle to go. Were excited about the large super computing wins with Lawrence LivermoreNational Labs and oak ridge National Labs. Those will be exciting projects for us we have a lot of exciting projects in the cloud and with gaming overall, you know, as i said, its a its a challenging environment to predict, but there are some things that we know in terms of our product cycles, and well do the best we can in the environment thank you very much, lisa, for coming on. Another great quarter. I think the stock is quite wrong. I think lisa su is quite right its always great to see you very much appreciate it. Thank you so much great being with you carl . All right well get the opening bell in a moment the big board, its robert glorioso, and at the nasdaq, a shot of the tower in times square so much to get to. We have not touched on advanced q1 gdp down 4. 8, we were looking down 4 thats the worst number since the crisis the consumption down 7. 6, the worst since the early 80s you couple that with some of the metrics out of mastercard today. The consumer basically left the last five weeks. Down 20 to 30 according to mastercard these are depression numbers. But i think they also may be, lets say, the beginning of trough i wont say that its the trough when we listen to ge later on, they will say q2 could be worse. Boeing is not saying weve seen the trough look, i want to balance that against what were hearing medically. This is a this is a bio panic, it is not a financial panic. If you have people who start opening up their states and people say, you know what . I think theres a little less risk that ill die, you have to use that term, then what well see is maybe june is going to be the beginning of when we start seeing better numbers. Not just because of what i heard from gilead, amd is good starbucks wasnt bad and alphabet is coloring the market, google that was very good they saw some green chutes at the end of march that continued to april not everything is bad. Some companies are doing well. Amd and alphabet is the nongilead call of today jim, i think youre referring to the quote from ruth porat, very early signs in recovery and search they surrounded that quote with a number of things that said were not so sure, well have to wait and see she took it back like 100 time times. Yeah. But its being seized on as a positive search fell off dramatically the last two weeks of march. Revenue up 13 the company is slowing its hiring the numbers at google are astounding, particularly for those of us who remember the company when it first began as a Public Company going through these numbers is incredible 117 billion in cash. 11. 5 billion in operating cash flow, though Free Cash Flow convergence not so great, 5. 4 billion. 4 billion in ads for youtube in the quarter. Tax rate, 11. 9 . U. S. Government could use more revenue. 11. 9 adjusted tax rate there for alphabet importantly the slowing of hiring is something that many are focused on the company was hiring more than 20 of its work force each year. They were actually on pace to hire as more as 20 of their existing works for this year, just to give you some numbers, they did still hire 4,149 people for that First Quarter, but theyre going to decelerate that they also are decelerating their spending on global offices and buildings and that is also making people at least who are positive to begin with more positive when they look at a company thats trading or a stock trading at 11 times forward ebita. Youre so right it was kind of funny, things that people kept seizing on was maybe green chutes and efficiency, that was the word. That was code for were not going to spend like drunken sailors anymore. People loved that. Possible green chutes, which was taken back, and maybe not spending so much crazily, theyre more efficient, youre right. Something to hang your hat on or two hats lets talk about a situation that people initially were not as sanguine about, the quarter from starbucks we have ceo what a show this morning. Ceo Kevin Johnson joins us i dont know i can take it one of two ways. I could say bad numbers or look out, youre about to open up around the country and theres going to be lines around the block. My biggest worry is how will you handle the lines safely and in terms of time . Im taking the latter, the optimistic approach as you know i like to take with starbucks. Jim, you know, certainly, you know, we have been on a journey. You think about it, were on week 15 now since we started working on covid19 in china were seven weeks behind that in the u. S. , were in week eight in the u. S. And weve learned some things about how this plays out theres a phase you go through that we call mitigate and contain. And thats the phase where governments instruct people to shelter at home, businesses shut down, and really everything stops while we flatten the curve and stop the spread of covid now we went through that in china for about three weeks. We have gone through that in the u. S. For six weeks and as were seeing the virus flatten and the spread of the virus flatten, were entering a new phase, a phase that really is described as monitor and adapt. We started that in china in monitor and adapt we reopened stores we do it in a safe way, and we slowly turn up the dial as we get customers back into more normal patterns. So starting next week here in the u. S. We will open a significant number of Starbucks Stores by early june we plan to have over 90 of the stores open in the u. S. We are beginni inning the monitd adapt phase which is the path to recovery dont be confused. It will take some time for a vaccine, for the appropriate treatments to be available for covid19 so well be in the monitor and adapt phase while that happens by monitoring the number of covid cases, by adapting the different Customer Experiences we create in our stores, well be able to open and begin that onramp to recovery in the u. S. , which is a significant milestone. Speaking of onramp, you talked on the call about entryway handoffs, something ive been desperate for at starbucks. Can you make this work contactless entryway handoffs, means you have an acceleration in samestore sales that we would not expect as we open next week we had drive throughs open only only drivethroughs open so we had roughly 50 of our Stores Closed over a several week period. As we open, well open in a safe way with drivethrough, with mobile order for pickup, and then this pickup we have a contactless handoff, its at the entryway, and in other cases we have got mobile order for drive through, well enable mobile order for curbside pickup, and in some cases where its safe in certain cities or communities, we might have to go. Well begin there. One thing we do know is what customers want now, what consumers are looking for are experiences that are safe, familiar and convenient. People have been sheltering at home for six weeks they want to get out and do something. But they also want to be safe. They want to know whatever theyre going to go do is not going to contribute to the further spread of the virus. They dont want to get sick. So they want something thats safe they want to go someplace trusted, familiar, and someplace thats convenient. And that is what we are enabling, an experience oriented towards a safe, familiar, convenient experience for customers. As we do that, we knowthat the will show up i got this idea, instead of talking about the virus infection, danger, nigtro cold brew isnt this the hottest well, coldest but hottest drink youve had in years . It is if you look at whats happened over the past two, three years, the wholebalance of beverage mix has shifted from primarily hot beverages to a mix of cold and hot. Specifically in our coffee and espresso platforms cold brew and nitro cold brew are significant driver of sales. This goes back to what we know how to do well, which is lets create a great experience in stores, innovate on beverage and extend that relationship to a Digital Customer relationship. So cold brew, nitro cold brew, the cold foams, all of those things are driving significant amount of interest and connection with our customers. Even in the period where we just had drivethroughs open over the last month we feel very good about our beverage platform, very good about the new breakfast sandwiches and wraps we introduced, and we feel very good about the plans we have to reopen starbucks over the next 30 days. That early june comment, kevin, is getting attention even as we speak. We love to talk about the percentage of stores open, but what does traffic look like in this new world where capacity is limited, maybe you do more curbside, its more drivein what should we get used to in the way of traffic which we in the old world we were trying to figure out ways to get big percentage gains heres one thing that i think that you should be aware of and something that we kind of shared broadly. Precovid in the United States, 80 of customer occasions were to go. So these were customers that were ordering in our stores, mobile ordering, picking up beverage and food and taking it away to consume it outside of our stores so we have the throughput, the capacity to meet that demand we had it before, we have it today. All weve done is sort of modified the way they order through mobile ordering and the pick up to really drive that and what we found when we opened the drivethroughs, people find the channel where they can get access to starbucks. We had lines around the block in many of our drivethroughs, even our drivethroughs as they opened were performing some of them were comping positive. I think the first thing were trying to do is make sure customers know we are reopening starbucks, we are doing it in a safe and responsible manner, and were there to deliver a little bit of uplifting experience for their day, to come get your beverage and cold brew, get your nitro cold brew, were here to serve you and we look forward to that next week, a significant number of those Stores Across the country will reopen. Right kevin, its david. Yeah as you said on the call, 90 approximately 90 of all Company Operated stores, u. S. Starbucks stores will reopen by early june you also, though, talk about this current phase of one that youre calling monitor and adapt. You talked about your monitoring capability on your Conference Call what actually is involved in that what are you monitoring . What are you watching to help predict how you need to adapt . Yeah. David, these are things that we learned in china in china, every day we get visibility to if there are new covid cases by city in china and the data that we get reports were those cases imported or Community Spread thats information officials and businesses look at when we see that, we see is there a potential of a spread of a certain virus in a city and if there is, what can we do to be responsible and make sure were dialing back and implementing extra safety protocols that data gives us confidence that we slowly turn the dial up. By turning the dial up we start to expand the number of services that we provide to customers for example, in the u. S. , we now get daily feeds by county. The number of covid cases. And this is combined with some of the technology that our Artificial Intelligence team has done the team has come up with ways to get also Customer Sentiment as well as partner sentiment combined with the covid data, intercepted with the store locations. It starts to give us a digital picture by store of whats happening in that community. That data is now allowing us to figure out the appropriate protocols to implement in that store. So, you know, next week youll see stores open that have mobile order for pick ups, some will have curbside, some will have contactless delivery, some stores might be open for togo, where you can take your food, order and beverage and leave as we monitor this data, we will see communities where we can turn the dial up and offer limited seating in stores. Thats going to happen a few weeks down the road as we keep monitoring in certain stores, not a big switch across the country but in a targeted way. By offering limited seating we can assure social distancing and a safe, familiar experience of community in our stores. Thats what the data is helping us do. Its helping us adapt the formats and protocols we offer in stores and do it in a way that meets the needs and meets the aspirations of our customers. Kevin, there was a moment on the Conference Call where they talked about how your numbers were not as good in china as yum china. You were more in tourist areas, cities maybe your is the ways saturati is far less than i thought is it possible you could do double or triple the number of starbucks based on what we heard last night on yum china versus you . Precovid we were opening a net new 600 stores per year in china. In fact, thats a new store on average every 12 hours we announced last night we throttled back from 600 new stores to 500 new stores as we go into fiscal 21, we will ramp it back up to 600. So we can open a new store in china every 12 hours, and we could do that for the next decade or two. Theres immense Addressable Market for us to capture in china. Its a tea drinking culture were introducing premium coffee to, as weve done that over the last 20 years, were over 4,300 stores and theres a phenomenal longterm opportunity for growth in china thats why were still bullish on it. Thats why we continue to invest in it. We announce d 13 130 million Capital Investment to open a coffee Innovation Park that will be built in china and it will be completely green. An environmentally sustainable roasting plant in china. Its one of the global roasting plants that we will now operate, and so were very bullish on china for the longterm. All right thank you so much, kevin again, a stock that looked down and that was wrong, thats okay. Market gets things wrong always good to see you thank you, sir thank you, jim. Lets go to one where the stock is flying. Spotifys ceo, daniel eck. He joins us postearnings. Great to have you on you have a story about the way people consume spotify that i think surprised people i think there were people who said, you know what, this is a commuting story. It looks like more of an athome story. Tell us about the new narrative of spotify well, you know, its not so much as a new narrative as something we have been investing in for the past five years its a part of our ubiquity strategy we have over 300 device partnerships in homes, in mobile with the likes of sonos, playstation, xbox, smart speakers, but also cars as well. Whats happening now is people are staying home, listening has shifted to inhome instead of just being on mobile or in car and were very, very pleased with the progress. 130 million subs, and 286 million monthly active users i think some people would be concerned that advertising was down, when i look at the mosaic of your earnings, advertising is not a factor what we should be looking at, i believe, is growth in subscriptions. Yeah. Youre right, jim. Advertising is about 10 of our business so its a very small part of our overall business and were very much a subscription business. And thats the primary driver, i think, of our business certainly in the near to midterm when you were introducing the concept of a podcast, a lot of people were skeptical. They werent sure about the acquisition. Podcast looks like it is exceedingly profitable and well ahead of what we thought could happen yeah. Its been a great story. A year ago when i was on the show last time, i introduced the shift in our strategy from music to audio at that time. We were a very small player in audio but growing fast now were the number one player in more than 20 markets around the world. And quickly catching up in the markets withhere were not numb one. The content has grown from about 250,000 podcasters to now over 1 million this quarter and, you know, im just waiting for when youre going to join us, jim, as well as a podcaster. Maybe soon. And me, too, im sure, daniel its david faber of course i know you meant me as well of course wed be happy to have both of you as podcasting, maybe competing podcasters were always a team always a team. All right i did want to ask about Gross Margins. You got a number of questions on the call about that in terms of the gross margin improvement whether its sustainable, how podcasts are playing into that in terms of money you paid, but perhaps expenses that are not yet realized can you explain and tell viewers what your thoughts are in terms of Gross Margins and whether we can draw a lot from the Current Quarter . Yeah. Again, we are at the upper end of our forecast range in terms of gross margin. Saw a lower cost in distribution, saw healthier growth in streaming on the subscription side as well. Thats a story that we think will play out nicely over the coming quarters as well. Dont see much of a reason other than reiterating our guidance and gross margin how are you approaching Global Expansion i know you may have delayed your russia for a bit, there are a number of other countries who are planning on rolling out. Has that been delayed as a result of the virus around the globe . Were always taking decisions quarter by quarter as reality changes around the world the strategy were taking as it relates to new market launches, we want to make it right, so to the extent that, you know, for us its not just about turning on a switch. We want to be locally relevant, have editors in place. We want to make sure we have a great progress of new music coming on to the platform that people can check out and new podcasts as well we are always changing quarter by quarter the mix of what were doing. Again, i would come back to the user growth and the increasing user growth that were seeing so were feeling good about it, compared to q1, 2019, we increased our growth2019 weve increased our growth rates in all four of our territories. Were pleased about that and will keep making the adjustments. And to those investors of yours who say listen, we love your growth, but wed like to see you put the brakes on a little bit, cut costs, pursue more efficiently, similar to the way google is giving voice to that, what do you say to those people if youre just upleveling, the trend were seeing is linear radio is moving to on demand were talking about something that has billions of consumers around the world that are now moving their behaviors online. Something like the covid will likely accelerate that trend so for us, were really just in the growth stage of trying to capture that growth, and eventually, we will, of course, get to a more point of maturity where we focus more on profit over growth. But for the next few years its going to be predominantly growth for us you talk about listening in cars we talk about working from home. And during well past the health care crisis, what is listening in a car going to seem like or be like for most commuting time in general do you see it recovering to precovid levels its hard speculating in when things will go back to normal or even what normal will be what weve seen is a massive shift in user consumption and obviously no sports. We have seen a huge focus on news weve seen focus on health and wellness to a large extent on the music side, theres been more focus on Classical Music and chill music as well in terms of just everything here under the coronavirus. I think Going Forward i very much believe that people will come back and want to get back to a normalcy. So when sports will come back, i suspect that well see record numbers of people attending those. I know im one who certainly is craving more sports. So i believe people will come back to more of a normalcy as well and in terms of advertising, youre not heavily exposed to the ad market in general, but in terms of categories, i wonder what you think will be most resilient through the summer in terms of advertising, again, were seeing on our podcasting side, again, it being pretty resilient i think people will move toward a better ri and better measurability. Digital will be strong i think the key thing for investors to look at is the trend lines weve been seeing. I believe they will be accelerated. Physical to digital and linear to on demand are the big trend lines accelerated. And more measurability on the ad side will also be the trend line that well be accelerating daniel, theres obviously a tremendous number of job loss worldwide. And i have to think that in terms of competition, you have a good model, because 60 of your users start free versus everyone elsewhere they insist that you pay from the get go. Yeah. Youre right, jim. We have a model where you start out being free on the platform and eventually people become paid users more than 60 of them. This is a great thing in an uncertain economic environment like this one. You can easily if youre feeling economic pain, you can go back down to the free service and then go back up to the Premium Service when you have the means to do so and we think thats going to be a very strong competitive driver in an uncertain environment. A lot of people dont realize it, but im a chill guy. I heard what you said about people listening to chill music, but it is true there is a mindfulness wave that is somehow being captured by the people who work at home. Are you able to detect that from Artificial Intelligence . Because thats not exactly what i thought would happen during this period. Yeah. Youre very much right, jim. Our personalization is discovering changes in Consumer Behavior almost overnight. And we are seeing a lot of people turning into wellness and health they want to destress, want to focus on health. Those are strong drivers, both in podcasts and certainly when it comes to podcast creators, those that are doing the best are the ones that are tuning into those trends either on news or focusing on wellness and health and similarly on music, thats also been a big driver of our engagements these past few weeks. Yes speaking of engagement, you mentioned jim talked about free. What are you seeing in terms of free trials right now . Overall healthy growth across the board. Lapsed users, i previously users that have left us are coming back were encouraged by this were also seeing, of course, Strong Subscriber growth by hitting 130 million subscribers in the quarter so so far so good. You talked in the past about india being a big opportunity. I havent necessarily seen anything mentioned recently. Is that still the case, or are you pulling back there in any way . Definitely not pulling back and yes, theyll massive longterm opportunity. Its more like a decade long opportunity. Were talking about a population of over 1 billion people of varying economic demographics. But obviously that growth will happen in india, and more and more people will have more economic means, and as part of that, the overall market will grow, and the overall opportunity will grow. Were there. We just in the quarter signed a bunch of new licensing deals including warner music that brings their repertory to india and local music providers. Were seeing more catalog and content on the service lit translate to more engagement were pretty happy about india daniel, how about kids . It seems like youre making a major effort there yeah. Spotify, we started very much as a millennial brand and millennials used to be people in the 20s. But more and more millennials are also growing into their 30s and having children as well, and were seeing those kids are now asking for content, and their parents are asking for safe ways to access spotify. We launched a kids product. Weve expanded the number of territories that kids product is in its fascinating to see how kids are engaging with spotify, choosing their avatars its obviously an adfree environment environment. Its a very safe environment and were seeing lots and lots of fun explorations by kids both on story telling, but also, of course, in music you can imagine trolls being a big sound track for us right now. I know. Were always worried youre running out of expansion, we talked about russia but south korea could be good for you. Absolutely. South korea is a massive music market you have kpop being a big global phenomenon. Were excited to launch there. Theres a big opportunity for us, but we shouldnt forget about Africa Africa is the next contin cont for the next decade. This is billions of opportunities were going after, and were only in the beginning of that growth all right daniel ek, chairman, ceo and cofounder of spotify. A stock up 18 points thank you for coming on squawk on the street. Thank you guys so much for having me. Carl . All right, jim. Weve processed a lot in the last 60 minutes. Youre going to stick around with us a little extra time today, but dow up 450. About session highs. As the remdesivir headlines sort of drown out the gdp number. I think, remember, the controversy was that you had that terrific study that was broke in stat which said the university of chicago that it was working. And then you immediately had china changing the narrative saying listen, the reason why we stopped wasnt because we couldnt find patients it was because it was killing people and that really took all the air out of gilead. People have to understand gilead has no plans to make any money off this, but what it does do, and i think david is right im going to temper my view. I use the term tamiflu. I should have said its an intravenous way that if you start early enough, it makes it so the doctors seem to have a new protocol or at least the doctors have a weapon. I think most the articles we read about are about how once you get in, they dont know what to do. If they have something, then it leads to other things in the antiviral i think this fuji pill is going to be something that were going to be listening to and the vaccine story, i think has always been overhyped. Its what we need, but its so hard to inject a healthy person can something that could kill them that the government and no government wants that to happen i hear china is ahead, but david, as you know, an antiviral is truly something that would make it to you might want to go out and think you know what . Its not a death sentence to go out. And that does matter, david. Without a doubt thats important in terms of people leading their lives again. Which we all want to do as quickly as possible. Indeed. Coming up on 10 00 a. M. , welcom to squawk on the street. Im Carl Quintanilla with jim cramer and david faber and sara eisen. Getting numbers on pending homes today in addition to the wave of news this morning. Lets get to diana carl, pending home sales in march fell 20. 8 month to month and were down 16. 3 year over year sales were hardist hit in the midwest down 22 and out west 27 for the month and down 22 annually Washington State and california, of course, seeing the first in the economic shutdowns out there. But the chief Economist Says he expects home prices to hold up for the year up about 1 he says, of course, there will be some markets that fall and he does predict weakness on the high end of the market he is also, however, lowering his forecast for sales for all of 2020. He expects them to be down 14 year over year because he says even pent up demand if it comes back in the fall will not make up for this spring market. We are, however, starting to see a little bit of improvement. We saw that in the Mortgage Applications to purchase a home last week. They jumped 12 because Mortgage Rates hit a new record low on the Mortgage Bankers association index. Starting to see some movement in this market. Again, the pending home sales in march down significantly pending home sales represent signed contracts to buy existing homes so youll see these in the closings in the coming months and april is not expected to be much better. Sara diana, thank you. Taking a look at the stock market rally today dow is up 422 points guys, this is a perfect example today of how the market has behaved during this entire 30 plus rebound weve seen from the lows in the last month and that is, very strong market in the face of very weak economic data. We got the gdp number for First Quarter. Down 4. 8 . That was even worse than economists were looking for. They were expecting a number from 3. 5 to 4 down. And if you dive deeper into that number, it was personal spending that was the really weak disappointment down 7. 6 the estimate was for a decline of 3. 6 we knew the economy was going to be bad toward the end of march thats captured here, but apparently it was worse than expected as the news was coming out the market was doing well, jim, because the gilead remdesivir data was coming out giving hope to that treechlt thats been a huge driver of the market and then the Federal Reserve and the fed chairman is giving a virtual News Conference today. Its the 5 trillion in perspective Central Bank Buying thats helping fuel the market, and thats whats leading to some of the gains. Youre so right lets get to meg straight off the top here for more on todays big news out of gilead which came as a surprise, especially after that disappointment out of china last week. Weve seen an up and down in reports but today we get the official word. We got an official word we werent expecting. The first news from gilead this morning was about the nih run study of remdesivir. Thats the Gold Standard trial because it was placebo controlled thats how youre going to tell where a whether a drug works they said it met the primary goal and were expecting more details on that drug, how well it worked out of upcoming briefings from the niaid and potentially dr. Fauci. We know the primary goal there is the time to recovery for patients so well look for any more details. Separately gilead also gave us the update we were expecting today or tomorrow. And that was in its own trial of severe patients. That was not a placebo controlled trial its difficult to take any take aways about how well the drug worked there, but the main headline from that study was they compared two different dosing regimens. Five or ten days thats important they showed those two dosing regimens appeared about similar. That means there can be a sort of doubling of supply potentially of that drug now, Scott Gottlieb saying this morning he expects the fda could move to authorize the drug under an emergency use authorization immediately. And now supply is going to be the main question. Gilead has said that by the end of may it will be able to supply 140,000 doses of this drug at the tenday regimen. If it works as well in the fiveday treating regimen, that almost doubles the supply of the drug david . Meg, thank you. We are obviously watching that closely and the markets certainly responding positively to what is positive news as you explain it for us. We want to move onto earnings bonanza ge reporting the First Quarter 2020 results severely impacted by the spread of the virus around the globe. Particularly when it comes to aviation a very important part of the companys overall business where they saw dramatic declines in commercial aero space and are targeting more than 2 billion in operational costs out. Lets bring in the companys chairman and ceo larry culp. Always good to have you with us. Earlier in the program we had the ceo of boeing who joined us. He said, larry, its going to be perhaps three to five years for them to get back to 2019 levels. When you hear that, how do you have to adjust your business and do you feel youve already done it to adjust for that new reality . David, good morning thanks for having me on. I had an investor call earlier i missed the interview with diver, but we speak frequently as we do with all our customers here i think what we said on our call, and i would repeat here, is that the first and most important step we take as a company in the face of this pandemic to make sure we come out on the other side a better, stronger ge is to embrace the reality of what were seeing clearly the pressure is going to be no greater in the shortterm and maybe over the medium term for us than it will be in aviation, given the airlines are trying to conserve cash, parking planes, bringing flight schedules down, postponing in some cases orders of new planes. That hits us, and you saw that in the First Quarter numbers numbers that we didnt particularly like, and acknowledged that are going to be more challenging here in the Second Quarter in turn its why we doubled the amount of cost actions that were taken in aviation up to a billion dollars and cash actions up to 2 billion all the while broadening those same efforts to a 2 billion level on the cost side across our company 3 billion on the cash side i dont think youre ever done preparing or reacting in a moment like this i dont think weve taken a particular view if this is oh two or three or four year recover. Were mindful. We need to make sure were taking the right actions in the shortterm while protecting the things over the decades that made us a strong franchise in the commercial Aerospace Industry and to that point, when it comes to liquidity where a lot of investors, you can imagine are focussed, you end the quarter with 37 billion in 47 billion on cash. You said thats to cover longterm debt maturities through 2021 and after the april actions you were down to 30 billion in maturities for 2022, i believe. Is it going to be enough, larry, or do you need to do more . Well, i think that with the closing of the biopharma transaction, the 20 billion we received giving us the 47 billion of liquidity at the end of the quarter, were well positioned from a liquidity perspective for what we see in front of us. David, we would never see that thats all we need once and forever. Right . Part of the reason we stepped back from offering a formal guide today was tlsz still, i think, a great deal of uncertainty out there relative to the economy at large, how the pandemic impacts our various businesses so were going to control what we can control were pleased to have that Liquidity Position again, the cost in cash actions will help us a great deal here in the short to mediumterm, and we will play it forward from here mindful that we want to make sure that we continue to bring those leverage levels down were unlikely to hit the targets we envisioned and very much thought possible just weeks ago. But make no mistake, we are committed to making sure that we bring down these leverage levels in time. Yeah. Well, larry, you were about a year and a half into what is a longterm turn around at ge. One that really just appeared to be gaining momentum when the virus hit. How do you reset to think about, again, the longterm opportunity that you were trying to seize while youre still dealing with life or death issues for the company . Well, in many respects, david, having an 18month running start helps a great deal right . Because we were already in the process of improving and changing the good bit about our company. So i think we just get up and say and embrace this reality we wish it were otherwise. But this ultimately will allow us to drive more change. Our new leaders will assimilate more quickly the people we brought into the company the last several months, were going to be able to drive, again, not only cost reduction, but more process improvement you talk act inventory and inventory and we talk about accelerating the pace of lean implementation into our factories. We cant move people around as freely as we could before in our Service Businesses its going to require us to use Digital Technology we already are more today than we were a few months ago those are the source of things when the dust settles that i think are going to show that we really have positioned the company longterm well through the downturn while at the same time we need to take some of the actions that are perhaps more tactical to make sure we work through those nearterm pressures. Larry, its jim dont know how you do it its kind of jobelike at this point, but one thing that also happened this quarter was that the president seemed to be interested in a company that really is chiefly a scanner company. All of us have had mris and know you have to play the music loud because. The president wanted you to make ventilators, but toward the end, you became ventilators are us. Pretty important we are a proud ventilator manufacturer not our biggest business, as you highlight, but having been on the front lines in health care, really since wuhan, we knew this was going to be an opportunity for us to play a role not only here in the u. S. But really around the world as the case count mounted. So we took a unit, double production, double it by the end of the quarter again all the while tending to the rest of the business and in addition, we are working with ford to bring on a lower cost unit at higher volumes where were handling a good bit of the design theyre handling much of the supply chain were pleased to play a role its probably a small role in the grand scheme of things, but so much else of what we do is critical here. Weve seen our ct scanners importantly deployed in the same situations our patient monitors, even some of our digital Monitoring Solutions have been helpful in making sure that the care givers who are so challenged and doing such important work here have the best tools possible at their disposable one of the things ive found this quarter is that weve learned is that we outsourced a lot of things to other countries. Not always with the highest quality. Youre bringing back some manufacturing to the United States, arent you well, our supply chains are in flux most times as demand changes, but we have in a number of instances brought back certain operations to the u. S. , yes. Aircraft end year to year im sorry could you say that again some parts of india to here seem to be on trend. Im putting this out because weve taken our future mortgaged to a lot of countries they kind of liked but now im not sure theyre necessarily in our best interest well, i think ge will always be a global economy. And as a result, were going to be in most every market around the world. Designing, building, selling and servicing. Im a big believer in trade. I think when we get to the other side of this, we may have a different trade dynamic. And that will require that we have more of that capability here in the u. S. And that will be a transition over a number of years our standards, jim, in terms of safety and quality, the world over are constant. Thats the way we want to run our company. Thats the way we want to serve our customers all around the world. Larry, when we would typically bring you on for an interview which we always appreciate, we might focus on power, of course, which had been certainly one of the key areas you were focussed on in terms of the turn around at the company what are we see right now given the dramatic fall in Energy Prices and oil prices in particular right now in terms of your gas Power Equipment business, your Gas Power Services and your overall power portfolio . David, the gas power business youre asking about continues, i think, a multiyear turn around. Though itself will see pressures here we shared on the call that by and large we think were going to see from a turbine delivery perspective another strong year in that regard, but i think that as the year plays out, just given some of the financing pressures here in the u. S. With the ipps, perhaps the middle east with certain customers, we think that demand for new orders and thus down payments could be softer than we anticipated we also see in our services, some challenges here as customers didnt necessarily want to have our Service People on site. Where it was optional, they rescheduled the outages. The second half of the year, we have challenges moving our people around the world to perform some of that work in addition to some of the supply chain friction that weve been working through. So it was a decent quarter another quarter of progress. It wasnt perfect, but im encouraged by what i see as much in the financials as much as i see in the operating reviews we do with the businesses that theyre on their way no ge business is really immune, david, from some form of covidinduced pressure here well aware. It leads me to my next question, your decision to cut capex how do you get to the proper number without injuring year two, year three down the road in terms of your ability to grow . Were reducing year on year about 25 capital spend. I wouldnt say thats a final number we dont want to spend one dollar more than we need to this year, all the while making sure we dont shortchange the longterm . How . I think it started last summer when we went through the multiday in depth strategic reviews we did with each of the businesses to make sure we have a clear consensus as to where were trying to take the business and the investments we need to make with that strategy in mind. Rather than it being a financial exercise, lets get cap ex from x to y we want to make sure we retain the context of the strategic intent we have longer term for the business these are judgment calls one by one, but i think we set the stage for better Decision Making last summer, of course, not knowing we would be in this environment today. Larry, what happened in grand forks, north dakota . Did you have your employees Wearing Masks . Did they have any Temperature Check . What the heck happened i need to know, were you protecting the employees correctly . I believe without masks and Temperature Checks, we could have something as disastrous as this happen many times yeah. Jim, what happened at our Renewable Energy wind turbine blade facility in north dakota is really disappointing. We had an outbreak there the site has been closed for two weeks. Weve been working with the team on the ground. Working with the governor. Everybody has been very supportive we had our standard ppe and procedures in place. Were still investigating the root cause of what happened to the team members there who have been impacted or infected with the virus. But make no mistake, safety is the highest priority we have at ge, and from the time people enter our sites, Temperature Checks and ppe, thats the way weve been operatiing in the facilities that have been up and running through this period and is certainly the construct and the mind set we have later this year as we look to bring back those who have been working from home you know, on that note, larry, to end, how do you view the new world in terms of working and working together i mean, do people who put together a jet engine have to remain six feet apart . How are you viewing the return to work for many of your employees when that day comes . Well, david, it will be a challenge in a thousand different ways as we rethink the way work is performed in a factory, a job site, or office but again, safety will be the overash overarching priority here. Well take it step by step trying to leverage the experience we have from those facilities be it in north dakota, those in china relative to best practice. Let alone all the help and input were going to get from local, state, and federal regulators. It will be a step by step process. Were working with everyone we possibly can to do this effectively and well to make sure that folks arent only safe but that they have in that psychological comfort as well. Very important to us as we look forward to the rest of 2020. Yeah. As we all look forward to perhaps a different day coming as soon as possible. Larry, thank for joining us. Very much appreciate it. David, jim, thank you. All right. Ill pick it up. 2 rally for stocks Communication Services a bright spot with google, alphabet, 8. 5 move post better sales number facebook out tonight well take a quick cmeial omrc break. Stay with us here on squawk on the street. [narrator] at Southern New Hampshire university, were committed to making college more affordable. Thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Featuring the Emmy Awardwinning voice remote. All the apps you love, including netflix, prime video, youtube and hulu. And the most 4k content. The best Entertainment Experience all in one place. So were working 24 7 toected maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Welcome back time for our etf spotlight today the First Trust Dow jones internet etf having another strong day. Up more than 3 . Google parent alphabet, 13 sales growth there the cfo saying the company has seen, quote, some early signs of recovery and commercial search behavior by users. Facebook out tonight thats helping propel the overall market which is higher by about 2 the s p 500, the only group that are downright now are the defensive stocks utilities and Consumer Staples well take aui qck commercial break. Stay with us here on squawk on the street. 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. Since 1926, nationwide weve been there in person, during trying times. Today, being on your side means staying home. Nationwide office of customer advocacy. But we can still support you and the heroes who are with you. Were giving refunds on Auto Insurance premiums, assisting customers with financial hardships, and our foundation is contributing millions of dollars to charities helping with covid19 relief. Keeping our promise to be on your side. Just a couple days of trading left in april as the s p is going for the best month since 91 as the headlines on remdesivir outing athe gdp contraction this morning and we have a fed meeting at 2 00 wee ckn montrba ia me what do you look for when you trade . I want free access to research. Yep, td ameritrades got that. Free access to every platform. Mhm, yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. Now offering zero commissions on online trades. We charge you less so you have more to invest. Snhu lets you transfer up to 90 credits [announcer] if youve tried college but never finished, toward your bachelors degree. [woman] it doesnt matter how old you are, you can do it. You can finish. [announcer] finish your degree at snhu. Edu. Welcome back, everybody. Good morning heres ha we know at this hour the navy is expected to announce an investigation into the spread of the coronavirus aboard the Aircraft Carrier uss theodore roosevelt. It delays the reinstatement of the former captain the captain was fired after a letter rewrote pleader for help was leaked beast buy will start instor consultations at about 200 of the companys 1,000 locations. Best buy will also resume inhome deliveries and repairs in early may bp is donating 3,000 gallons of jet fuel to transport essential goods. It will go to Federal Express for charter flights directed by fema and hhs and also to alaska air to support deliveries and Emergency Services for remote communities. And mattels fisher price brand is releasing Action Figures of essential workers there are 16 different figures including doctors, nurses, and delivery drivers net proceeds go to support First Responders as always, you can get more on a coronavirus coverage by heading to cnbc. Com. Back to you, carl. All right. Sue, well see you in a little bit. Well take a break here. Lots of things are working this morning including oil, the transports, the industrials, the russell, the vix continues to implode. When we come back, well continue to talk about what restaurants may look like in the future with the ceo of subway when squawk on the street comes ck ba life isnt a straight line. And sometimes, you can find yourself heading in a new direction. But when youre with fidelity, a partner who makes sure every step is clear, theres nothing to stop you from moving forward. But when allergies and congestion strike, take allegrad. A nondrowsy antihistamine plus a powerful decongestant. So you can always say yes to putting your true colors on display. Say yes to allegrad. Retail is tracking for the best month ever. One trader says there are only two stocks worth buying. Find out more trading nation more squawk on the street coming up. Welcome back the dow is up more than 450 points with us now on the path forward to reopening the economy, subway ceo. John, thank you for joining us you have more than 40,000 locations all over the world how many are actually open at this point globally about 75 to 08 are open and in the United States, the ones that are open, how do they conduct business its about 85 in the u. S for the most part, the ones in colleges, universities, places like that, malls shut down, those are closed but for the most part the drive throughs and in lines are open we dont have in room dining, but third party takeout allows the vast majority of our restaurants to stay open in the u. S. And around the world. How do you keep the people who work for you safe, and how do you keep your customers safe when you fully reopen again . Sure. Well, obviously the thing thats most important is the safety of our sandwich artists and guests as well. So were focussed on wellness checks, Temperature Checks when the crew starts shifts, theyll wear gloves and masks. The fresh food will be covered up at all times. We doubled down on safety. I hope when guests take out whatever they do when they see people in gloves and masks theyll realize how seriously the industry is taking food safety and coronavirus overall can restaurants like yours operate in a world where we have to social distance for the long run . Keep such a space from each other, and how does it effect economics if it means fewer people in a place at the same time i think subway is ideally suited for a couple reasons. One, were first, a chain of 100 franchise unlike a lot of qsr systems, we have the average person has two or three restaurants in the United States were the ultimate mom and pop were woven into the fabric of local communities. Because theyre smaller and they own just a hand full of stores, theyre able to watch over them and make sure the crew handles everything properly and the guests are spaced out appropriately. As you know the restaurant industry, qsr has gone heavily third party to takeout and catering i think its going to grow faster in the coming years i think youll see a bigger shift to the channels than even what youve seen in the past john, im curious about how youre dealing with costs right now given the uncertainty thats out there. Advertising, for example have you cut it significantly . Some reported youve cut your budget by as much as 50 yes we obviously cut our advertising budget the back half of march and the first couple weeks in april, i didnt think it made a lot of seasons, nor did our marketing people and globally we did pretty much the same we cut back and now that things are starting to reopen, asia is ahead of us. We have markets that are up in asiayear over year weve started to turn the spigot back on. And by the middle of may, well be back to our full marketing weight as we push through the back half of the year. Wow okay middle of may is back. Back to what sara was asking about. How many of these practices that youre putting in place do you expect to stay with well beyond when the virus has passed . Well, i think the consumer is going to dictate that for us and science. Nobody has a crystal ball here nobody knows will there be a second wave and what will hit with Colder Weather in the late fall, early winter so i think its hard to say. I think we have to go by what science tells us, how the consumer feels and whatever the Industry Needs to do, im confident well react that way and ensure guests safety and the safety of our crews stays of utmost importance theres been a study in china which talks about airconditioning pushing droplets from one table to another to another how are you going to avoid a situation where an aircondition flow doesnt infect multiple tables from one person who is sick and how about just demanding that everybody wear a mask who goes into subway . Well, that is certainly something thats under consideration and in some countries thats being done, whether its done by law, or done by sort of society convention, and i think thats something we are looking at in certain markets and thats a distinct possibility john, im wondering how much subways leveraged to people going to work, having a place of work that they are on their way to, or coming from to get lunch in terms of traffic. I just wonder, we can open all the stores we want, but to what degree are we relying on full employment to drive people to come to the restaurants . Actually, sales have been decent for the most part places like colleges and universities are closed, malls, things like that that havent reopened but subway is the largest restaurant change in the United States and the largest restaurant chain in the world. With over 27,000 outlets in the United States, were sort of ubiquitous were everywhere and again, when you consider what percentage of the business even before coronavirus, again, was take out, delivery, and things of that nature, weve done relatively well weve improved a lot over the last few weeks and i hope we continue to see that improvement gradually over time. Im not so worried if we had countries like europe where things are completely shut down, restaurants arent allowed to be happening. But in most countries like the u. S. , i think traffic will continue to improve and i dont think we need to have the economy back to 100 to have reasonable returns again, subways are much smaller. I think as you know we dont have nearly the footprint. The amount of labor in a subway is smaller than a mcdonalds or burger king. Therefore, the Unit Economics are a little more friendly for restaurant footprints of our size than some of the larger players. I think were ideally suited for an environment like this finally, john j i know most of your franchisees applied for ppe. What do you see for critics who say this money was meant for Small Businesses hanging by a thread subway is one of the biggest restaurant chains in the world but as i mentioned, were 100 franchise. Unlike others who have 500, 800, we have 10,70 0 franchisees on the u. S. , and on average they own two or three restaurants a piece. Theyre mom and pops out there in the community thats why we got involved in things like feeding america. They need to be a part of that community to survive i would say we are the ultimate small mom and pop. I dont know of another qsr chain that has as many small operators as we do ppe is important to make sure we can keep those restaurants open. John, thank you so much for joining us keep us posted on the reopening. Subways ceo session high up 476 on the dow. Were not far away from that the fed meeting and statement at 2 00 ahead of facebook and microsoft and tesla tonight. Well take a quick break here. Back in a moment life isnt a straight line. And sometimes, you can find yourself heading in a new direction. But when youre with fidelity, a partner who makes sure every step is clear, theres nothing to stop you from moving forward. Welcome back to squawk on the street. Despite the sharp drop in gdp, stocks are mostly higher this morning led by gains in Communications Service and energy some of the more defensive plays like utilities are falling today. Among the worst performers in the group are natural gas and electricity providers like wec energy cms, eversource and atmos. Thank you, stay with us on squawk on the street. House speaker on the other side of the break 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. With us now, in the emergency funding package and the path forward to opening the economy is House Speaker nancy pelosi welcome back to the show good to be back where are we in terms of your level of confidence that as we open the country, we will not get in trouble and be right back to where we were because not that much has really changed in terms of masks, in terms of contact tracing. Are you confident right now . The polls show the American People are wiser than anyone overwhelmingly, 6 to 1, 7 to 1 they say we should not go out there any sooner than ready and we should not end the social distancing because of the risk involved to their health we operate in the lives out American People, the livelihood of the American People, and the lives of our democracy all of these are connected and the peoples will to say im not i dont want to go out there until i feel some confidence, because you go out there, you bring home what you bring back to your family and your children. So science, science, science again, we have to have a calibration. It has to be factually based, scientifically evidencebased as to what the prospect is of opening up certain businesses and the rest, but we have to be very careful, because were going to lose the investment weve already made and keeping people safe at home, say home shelter, whatever you want to call it, and, again, as we engage in distance learning, t buying things online and all the rest, we have to also respect that there are many people who are risking their lives to save lives, and their jobs may be lost if we dont do the state and local. That is essential to both lives, the livelihood and the life of our democracy. As i listen to the changes youre talking about, telemedicine, staying at home, i think okay were in a world where people who are ealthy, people who have jobs, contracts, they can stay at home. I see another world. I see the possibility of two societies developing society that has to be out there every day in the masses, subways, risking themselves and this other group of people safe at home with all sorts of computers, very rich a society that is not what you and i want to see. How do we prevent that let us do it together this is a moment of truth for our country, who we are, what is the humanity of america. We wanted to support the Small Businesses, they are the vitality of our economy, the dreams that people have, the entrepreneurship, the risk theyre willing to take for an idea so thats why we all gathered and wrote the ppp for that, so we can try to reach as many people as possible for their jobs and their businesses. That was not being done in a way that reached the underbanked and the rest to address your disparity issues in our second bill we were very proud to be able to do that as we increased funding for hospitals and testing essential to how soon we can open up. But the if you gave everyone in america, every child in america, a laptop, he or she may still not have access or seniors or anyone but thinking about the kids and school and the rest, if they dont have service. So one of the things wed like to see as we go forward is we will have funding for broad band always on, high speed, all over america. Because now, if they have a laptop, they cant go to a library ora school or a cafe o any place in order to have access to the network. So that is a that Digital Divide is now becoming a digital chasm and we have to address that so there are many disparities, whether its access to testing and health care that would go with that, whether its access to credit, which is why we try to connect in the other bill, when theres access to the internet, which is our means of communication. And also, if its respect for the postal service, which is for many of these people, especially largely in rural areas as well as urban, how they get their medicines or their products that theyve ordered and the rest so we have to understand what connects us as a country what unifies as a country. And im very confident that when people realize the assault that this has made, not only the health, the lives of the people and the livelihood of the people but to the sense of community of who we are as a country, well have an opportunity to do something working together recognizing the role that every aspect of our society plays in it the public sector, private sector, et cetera. The public sektor when we do our bill state and local, that means honor our heroes, our health care workers, our First Responders, our food delivery services, food providers in every way, postal service, the list goes on and on. Madame speaker, one of the things i think we have to address because the employment is going to be here whether the fed backs this or Treasury Backs that isnt it time for a modern peace corp. , is it time for civilian conservation corp. Where we plant millions of trees, something that puts younger people to work, because i think its going to be a Staggering Number of younger people who are unemployed soon . Well, we do need that, and its a beautiful idea, thank you for giving it more currency. We need to have that actually do the testing, the next step, the contact tracing. So we need an army of people to do that. And its job creating. We also need, on the ongoing, as a Public Health corp. , as we go into the future. We also need to ramp up, because suppose, jim, that tomorrow someone will have a vaccine or a cure, were not prepared to manufacture it in our country. So we have to focus on in saying, we need the supply chain and we need the decision that we will make as much of it as possible in america. This is a worldwide pandemic, if someone has a cure elsewhere, theyre going to treat their own people first but we could start right now if somebody has a vaccine very soon, we dont have the ability, the viles, the syringes and the rest to make that happen for us. Itll take a year to do 100 million syringes and viles and the rest lets get moving on it now, have more entities working on it, shorten the time, increase the supply so we need a core to do what is needed at the time, the manufacturing and the supply chain here and we have to have the integrity, the ethical basis for how this would be distributed later. So that everyone in our country, regardless, as you started the conversation, so values based and so beautifully, everyone in our country would know that he or she would have the same access to whatever that cure or that vaccine might be. Whether theyre poor, whatever their ethnicity, however they got here, whatever it is, as well as those in a position to pay for it and know more about how to get it. Its about outreach. Whether its outreach to the vaccine, outreach to the care, outreach to the credit we all have to be unified in this, because it not only is the right thing to do, its whats going to make everything better for our country, our health, the health of our economy and democracy. Thank you for those kind words, madame speaker. In this budget, i think that cdc is woefully underfunded. I dont know whats happening to osha, particularly when it comes to meat packing plants where people are exposed and have to go to work where is our manhattan project, where is taking the j js and the pfizers and getting them together so its not just working against each other im trying to figure out what the cdcs role is here and what happened to the cdc . We used to know that as the Number One HealthCare Organization in the world. Theyre not delivering, madame speaker. Im not pleased, but you have to know even in the face of this pandemic earlier this see, the administration cut made very serious cuts to the cdc. Even in light of this happening. And so, they have not they said in the beginning they rejected the World Health Organization tests, they said they were going to make their own. They made their own, they didnt work, it set us back a few weeks. The outreach that they should have been doing curtailed because of the cuts that the administration made, already knowing that the pandemic was here so that has to be a very vital force. Center for Disease Control is the main prevention and Outreach Organization in our government and they work closely with the World Health Organization exchanging ideas, scientists, Clinical Knowledge and all the rest, and yet now the white house is saying were not going to fund the World Health Organization thats horrible. But even worse is that theyre racing World Health Organization from any of our initiatives that were not going to cooperate with them. Its a pandemic. It knows no borders. Even if you dont like an institution, you have to recognize that its in the interest of every person in our country for the World Health Organization to succeed. Especially in the Southern Hemisphere now where theres an opportunity to stop it from spreading like wildfire if were thinking in more global terms. Its personal, its local, its community, its economy, its society, its global, its worldwide. You dont want me to go into my disappointments about this administration but i will say a long time ago, dr. Fauci said, if we learn from our mistakes we may be able to make more success. I think the mistakes continue to be made, thats my concern lets put that there lets go forward with legislation that brings people together in a way that saves lives, grows the economy, and protects our democracy madame speaker, thank you so much for coming on our show. Great to see you. Good to see you i wish it were under other circumstances. Take care. Stay safe. Carl. Jim thanks for that thanks for sticking around its good to have you the extra hour welcome to squawk alley. Dow up 500 the shooting for the best months since 1987 and the s p shooting for its best month since 1974. Tons of news today regarding guillard, a statement coming up at 2 00 from the fed, and facebook, microsoft, tesla tonight, hopefully we get lots of questions