Transcripts For CNBC Squawk On The Street 20240713

Phase two trial of its vaccine candidate. Where do you want to begin beginning of june, theyre talking about phase three. I love the confidence. There was a time where if you did that, the fda would really call you out say basically, how dare you plan phase three . You have to get phase two done this is a sign once again that the level of fda meaning business is extraordinary. The time that it takes to do these things is being at a level that no one has ever seen. Remember, mumps, the longest to fruition, four years this thing is happening so rapidly, and theyre talking about scaling if its good so theres reasons for optimism. I know moderna i was the first to interview them these guys are scientists. All right, and theyre using Amazon Web Services to basically, if you want to look at like what a bank robber would do, you have to keep turning until you get the right combo. Thats what Amazon Web Services does for those so david will love this, an algorithmic play, and maybe thats the way of the world. I was thinking that the way we would go would be j j or pfizer, but if moderna can do it, you know were going higher. Yeah, were going to talk to meg tirrell in just a moment, but does this deserve to be a focal point . As fauci suggested, are they in the pole position . I think it is a focal point i know fauci, theres some new revelation about fauci i have been hearing about from the right, but fauci liked this. Hes not supposed to like anything this is the second thing hes liked. The first one was the remdesivir he compared it to a. C. T. I have felt, not to get bullish on a vaccine, until fauci said get bullish, meaning that wait until next year. Fauci is sticking his neck out here i think its impressive that hes sticking his neck out when you see these guys, i mean, this is their world. This is rna world, and i know that j j is fabulous i know the pfizer guys are incredible, the oxford guysare great. But these guys are they are in pole position theres a fabled video go around about the Kentucky Derby with a lot of the different named horses the one that won is too scat alogical for tv, but lets say moderna. Im surprised. I dont know what the odds are, david, but this thing is flying. Yeah. Well, i want to hear more about those odds from meg, carl, so i think she may be available lets bring her in yeah. Lets do meg on that end, remdesivir looking at approval in japan morning, meg a lot of news coming. Moderna part of announcing its quartingly results, saying the fda did give the go ahead yesterday to begin the phase two trial. And also saying that theyre finalizing the protocol for the phase three trial, which they now expect to begin in early summer they say based on these timelines, if all goes well, potential Regulatory Approval in 2021, the ceo on the call this morning talking about that acceleration of timelines. Take a listen to what he said. Today, were very happy to announce that we received yesterday clearance from the fda to proceed with phase two. In just nine days from rna, the fda gives us a green light we plan to stop the pinnacle trial as soon as safely as possible so guys, the next thing were waiting for is the readout of the phase one trial. Those results should be available, we hope any time now, and that will be the first human trial data on a vaccine for covid19 and just to remind you about these timelines, they only began that phase one trial in the middle of march. And as jim pointed out, theyre already accelerating their timelines for beginning phase three. Just in the end of april, they were forecasting that was going to start in the fall now theyre saying the phase three could start at the beginning of the summer. These timelines are just getting incredibly compressed. And its really amazing to watch. Of course, this is a new technology, a new virus, and so there are going to be a lot of questions as this proceeds guys meg, i am aghast, we know that there are many vaccines out there. You have covered them. Where once you start giving them to healthy people, things really go wrong and people, sometimes they used to say we have to give them for a year before we know something going wrong. This is the shortest timeframe is there concern that perhaps they are breaking the longstanding rules of the fda that you should not give someone an illness, a healthy person an illness, that could kill them because it sounds like this is almost Manhattan Project in itself yes, thats a really good point, jim there have been instances before, specifically with dengue vaccines where giving the vaccine made the disease worse when people encountered it so that is a concern here. With vaccines, especially with the new technology i have been talking with a lot of people in the industry who say, yes, its very exciting how fast this messenger Rna Technology can move, but dont count out the tried and true technologies from Companies Like Johnson Johnson and merck, which we havent heard as much about, but we had ken frazer on last week saying theyre in the vaccine race as well and theyre typically quieter about their communications we shouldnt count out those Big Companies because their timelines right now dont seem as fast. So there are definitely concerns, and every time i talk with moderna or anybody else in the space, i ask how much time do we need to know that these vaccines are safe since its a new technology they seem to think they can get that information within these time periods, but i think there are still questions, of course and meg, its david as you pointed out, we had never dealt with timelines like this the market, obviously, and investors overall, not to mention all of humanity very focused on it. What about manufacturing you know, we heard from pfizer as well. Maybe something sooner than we had thought, perhaps again, manufacturing at scale seems to be such an important part of this can mudoderna do that, can fie r pfizer do that are we talking to getting to the point where you have enough doses available for people around the world yeah, its a hugely important question and actually, in rick brights whistleblower complaint, the barta director, who was removed from his job earlier this week, he detailed concerns about the supply of things like vials, syringes, and needles. All of these things youre going to be needing to supply vaccine to millions or even billions of people if and when we have a vaccine ready. So i have been checking with companies. Is that a problem . Are they worried about that inand these companies with huge manufacturing capacities say no, you know, based on our projections that we have given, we are able to provide pfizer, for example, hundreds of millions of doses next year. Moderna has said with its new partner, they aim to be able to supply up to a billion doses per year however, we dont know how soon they could get to that threshold. Youre asking such an important question you know, merck put it this way. Theyre being asked to Shorten Development timelines by unprecedented amounts, and increase manufacturing capacity by unprecedented amounts, all at the same time. So these are going to be huge challenges were going to watch them try to solve in real time moderna, i met them when they came to jpmorgan conference two years ago. You and i were there, meg. They were sitting on the sidelines. I went up to a guy, i didnt know he was a real guy, he said im with this thing, moderna this company, it reminds me, if i were pfizer, if i were j j, butch and sundance, like who are these guys could you please tell people how this is a different sort of drug company . This is not a traditional drug company. This is a computerdriven company. Certainly, moderna does use Artificial Intelligence Machine Learning to speed up their discovery process. We hear about this from a lot of different companies. All Drug Companies are using that in some way to speed up their discovery. Moderna is a very interesting kaerm company. They were founded with this idea that messenger rna would present an entirely new way of delivering medicines, essentially delivering genetic materials to the body to then have the bodys own cells make the medicines in essence so its an amazing technological idea, but critics point out this has never been approved before so thats important to remember. Theres a ton of promise and excitement, but it needs to be proven yeah, i mean, look. J j is great i was speaking to the scientist who is running the trial up at harvard, and the guy is such a heavyweight, made me feel like an idiot i dont know if he intended to perhaps. The guys at moderna, its like a little shop. It would be unbelievable if the little shop these guys are david. And the goeother guys are dolit. Im putting my money on david. David, are you putting your money on david always. Always i still believe, jim you do . All right, well, this would be amazing. I got to tell you, meg, without a proof that this thing thuwork, this would be something. I dont want people to get their hopes up, but this would be something. You have to hope it works im thinking of buying hertz. What do you think, david maybe a cruise ship . Buy the bonds hertz bonds. Subdebt trading at 14 cents you can buy the senior debt at about 36 cents dont buy the stock, buy the bonds. Play that instead of moderna is what youre telling me . Yeah. All right, guys were going to take a break. A lot to get to this morning including results from square, lyft, peloton, costco, viacom, etsy, fox, well get to all of that and talk about claims wchhi came in with rough print of more than 3 Million People. 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A lot of results to get to on this thursday morning. Jim, you seem to have a special place in your heart for those who are still trying to short beyond meat or lyft or some of these others going against beyond meat is going against history. And not just because i had an unbelievable cheeseburger last night that they gave me. The reason why theres a guy named dr. Willet, the foremost nutritional and epidemiologist at harvard everybody is foremost in this era, but this guy actually was predicting a pandemic basically because of the food chain. And beyond meat is now an ethos. I played a tape about how mcdonalds said its a bit of a hobby. Ethan brown did not go for that. I think the more important thing is the starbucks relationship in china. I think they could make a deal with starbucks this is how powerful this concept is those who are betting against this because it has too much sodium, check the sausages, they dont. I really believe that whats happening in a lot like zoom, when it comes to staying at home, the tyson story, which obviously is abysmal, plus a sense that maybe the wet markets are part of the problem with the food chain, its all going beyond meats way. What is beyond meat doing . Theyre cutting prices so the price of meat is going to go up, the regular meat, and the protein that skips the whole meat chapter is going to do well beyond meat is one of the most dangerous shorts in this market. You talked to ethan brown last night on mad. Heres what he said. We have reached the point where theres so many livestock on the earths surface that were running into challenges with keeping that system working and that supply chain is now as many in the industry themselves have said, is under enormous pressure i think we are reaching a tipping point. Oh, yeah. Look, before i became jimmy chill, i would have said, you know what, what really is wrong here, theyll never make it because whats happened is food service is kind of dead because of whats happened with the economy and whats happened with the shutdown the retail demand here is so strong he is trying hard to keep up with demand. Now, i know my skeptical friend, and notice i use air quotes, friend, my skeptical friend david faber will say, jim, its still a very Small Company david, so was amazon, so was facebook so was alphabet. Really . Yeah. That monumental is the opportunity for this company i think that this food the total Addressable Market for food, i mean, for beef, for pork, for chicken, is monster, and i think that this is i think mcdonalds is dead wrong theres no hobby here. The hobby is going to end up being meat particularly if we hear more stories about the food chain i think the pandemic is saying start eating plantbased you may say thats pie in the sky, and you know what, pound sand its real. The move is real is there a chance we run out of Something Like that, though is that in question or theres an endless amount of peas . Endless david, endless remember, theres a glitch in eating protein, and the glitch is that it goes through an industrial cow yeah i used to have a longhorn, david. I dont want anything going through that beast on my plate im getting fed up myself. I might go vegan have you sworn off meat have you are you going to do that i dont know. I had a tbone on sunday it was pretty good tasted pretty good, didnt it i can swear off meat because im tired of the idea that when you go to a meat packing facility, the question is how much, how much covid is in the place . Im tired of covid were all tired of covid. Yeah. So is Smithfield Foods which is going to reopen sioux falls after three weeks closed the worlds biggest pork processor. The ag secretary yesterday did say he sees full capacity back in a week to ten days. So theres going to be a fight about how much beyond meat can lower their prices and maintain margin as the Meat Industry tries to get back, but youre a believer we know that by now. I am, and the people behind this thing see whats going on theres less sodium. The sausages, by the way, which are quite good, now have less fat and less sodium than the regular sausage. So ethanbrown is constantly improving things hes doing everything he can, dont forget, impossible has gmos younger people do not like gmo this is going to be a very big company. Is he tesla . No someone said, jim, hes not amazon, come on. Im just saying, it just starts like this. Youve got an evangelist an evangelist that makes real good stuff, and you have younger people who dont understand the concept of the industrial cow. Theyre looking at these cruise ships where they make the meat, oh, no, theyre not cruise ships. Theyre plants and theyre saying hey, you know what, i see this stuff at my store, and when it becomes cheaper, which it is, its going to come through the price of regular beef, i think the adoption is going to be strong yes, i am a believer im a believer in the stock. I am not a skeptic at one point i was skeptical, and then i got young i was so much older when i hated it im younger than that now, david. That was a song i know it was. Jim, listen, i would remind people that when you become an evangelist on stocks, on certain stocks, oftentimes you end up being correct. Shopify is a name you have been talking about for years and its now the Largest Market Cap Company i believe out of canada. Who created fang . W who was that fang guy . My head is so big, it cant get through the door im only a friend in air quotes, so really, i have no memory of ever sitting next to you. You told me you dont like anybody. Until you said i dont really like anybody, i thought i was your friend. Once again, youre misquoting me out of context, incorrect all right yeah y have seen that done all right. Mmhmm. Yeah we have ten minutes until we get an opening bell. Were also going to talk to greg hayes, the ceo of the old United Technologies its now raytheon. As well, rtx, the symbol there, reporting earnings we want to hear what mr. Hayes creto say about theurnt environment. More squawk on the street coming right back. Working day in, day out at t is here providing support with advanced services for First Responders and connecting temporary hospitals, mobile testing sites and Emergency Management centers because until their job is done it is essential we all have their backs its what weve always done. Its what well always do. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. We hope you find our digital. Solutions helpful to bank safely from home. Deposit a check with your phone or tablet. Check balances, pay bills, transfer money and more. Send money to people you know and trust with zelle. Stay safe. Stay home. Together, well get through this. Pnc bank very large movers premarket, viacom up 14 paypal up 10 peloton up 19. Futures are green, but can they hold on this thursday . Well find out when we get the opening bell in about seven minutes. Welcome back time for a mad dash. As we get you ready for the opening bell about four minutes from now. A lot of earnings to talk about this morning and the stocks, of course, related to them. Lets start off with Bristol Myers for the mad dash david, Bristol Myers. Surprises. Surprises all over the place key lines, eloquist, the anti stroke drug, much better what i do want to say about eloquist, which is the real driver here, a lot of people feel the driver is optivo, which is anticancer. Eloquist is the superior stroke drug when my father had a stroke, there were many different stroke drugs at work. You had to choose from them. The one that is now becoming the standard and may get 100 of the market is eloquist thats the driver. People dont talk about it i cant wait to sit down with dr. Caforio, the unsung genius he put together this great deal. Youre going to find sellers theyre all over the place, but this may be the least expensive. Three times earnings because people dont believe in celgene that he bought and the fact that the company has a big patent cliff. I believe. I genuinely believe in Bristol Myers. Amongst the group, is it one of your favorite names, jim . Indeed, it is because the group has so much game, i mean, its hard. Novartis is on the far turn, j j, and then dr. Fauci. There is really these companies are doing so much good, but Bristol Myers is not in the race for covid. Its not been their strength glaxosmithkline, j j, pfizer, theyre all in the hunt. Bristol is just doing its thing. The merger is a good one those who are against the merger, i think you have to rethink. Just like the people have to rethink the merger with allergen and abvy, now that you can go see your dermatologist these are two great combinations theyre working. I approve. Yeah, abvy and allergen likely to close tomorrow lilly is the best performer in the group amongst big pharma dave ricks is doing so much right. Quietly, indiana, stocks doubled. People didnt believe his ra drug people thought his diabetes franchise could be attacked. Hes doing so much good, and by the way, he understands the system better than anyone. Yes, people say who really represents pharma in a way that is quietly the smartest, and they always go to ricks. Even though goreski is doing a great job at j j, ricks is the Gold Standard because hes nonpromotional, really good. And very understanding of the system tremendous guy you would like him good guy i would im sure i would i listen to him whenever he comes on you would like him. He always says he doesnt really he wants to be well, that tends to be the case with a lot of these people who you somehow convince of that not sure why you do or why youre successful in doing so. But we like to share, too. Come on, jim we do including greg hayes who you booked i dont want to take credit for that were always happy to have mr. Hayes on carl, as we get close to an opening bell here, of course, people need to keep in mind the unemployment claims this morning. I dont know, whats the full number were up to at this point, carl . Its 33. 5 million over i think seven weeks so you tack on another 3. 169 million this week. Theres the opening bell eric millen is the nyc facility supervisor at the nasdaq ringing the bell remotely. Its, again, limited a Software Provider celebrating its ipo. We have to talk some media viacom subs up 50. Best month for streaming so far. This new deal with youtube that was a doubledigit gainer premarket. Yeah, the stock is opening up about 12 this morning of course, it has been nothing but pain for those shareholders as we know well and they know well really, ever since the deal was announced and the cash flow numbers have come down this was a good quarter for viacom, at least based on the expectations as you point out, they did generate almost half a billion in free cash flow. Very different than last quarter. The advertising, you have to take the super bowl out for the comparison, the same way you have to take it out for fox because fox had it this year in this quarter and when you do, ads looked okay i did speak to bob backus earlier this morning, the ceo of the company. We talked about the Advertising Market he said well see Significant Impact in the secondquatorer in advertisi advertising. Hes hopeful the third and ninetyfour fourth quarters aregoing to show up. May so far, his expectations are for june, the scatter market ads is looking better, certainly than it did for april. Were dealing with an unprecedented time here, in so many industries, the lack of up front. Everybody would have their up front right now, booging their advise tizing for much of the year thats not happening were going to hear from the nfl on the fall schedule, but thats just the normal fall schedule. He did tell me they are in constant conversation with the nfl about what the season is going to potentially look like at this point, and he did tell me he believes the nfl is very much focused on playing. Exactly what thats going to mean, well, were going to have to wait to see does he expect more cord cutting . Absolutely we have seen it. We continue to see it in terms of people signing off, going with the broadband, going with the youtube tv, which is on behind me. Its a big delay behind he as well, but they do sign a new carriage agreement with youtube in june, the viacom, key Viacom Networks will be available on that the fees are the same that they would be for the regular distributors so that is seen as a positive. And then overall, streaming. You mentioned it, carl pluto, their free platform, 24 million maus this is all domestic, and cbs all access and showtime. They dont split it up for you, but 13. 5 million that did look like a pretty good number as well so a positive response this morning to viacoms numbers. Local ads continue to be hard hit. Fox talked about it. Viacom will talk about it. Your local advertising restaurants, auto dealerships and the like, theyre just not going to be there in terms of ads. Certainly werent there in april. Probably not in may as well. All right remarkable fox, too, guys, which talked about ad revenue going down 50, but even as, jim, the nasdaq is now green for 2020 this is nothing short of incredible there are so clearly two markets. There are companies that are actually doing okay or actually i dont want to say benefitting because it sounds too mercenary, but you take a stock like paypal. I mean, theyre just doing much better because of the way people buy things during a pandemic i mean, its really incredible when you look at an etsy, i have etsy on today. That stock is down four. It wouldnt shock me if its up by the end of the day because its about how great things have done since the pandemic started. It is a weird world that the nasdaq is filled with companies that are zoomlike, where you just get you just have such good numbers and so i think its just two economies. Theres the economy that does well and the economy and health care. And the economy that does poorly, and i think people who are looking at the stock market and think that were nuts because the pandemic, remember, the stock market is made of Companies Like zoom and made of Companies Like paypal. Made of Companies Like microsoft, of amazon, and these are companies that are doing terrifically in this market. And then theres travel and leisure and industrial and retail and restaurant, and theyre not doing well and obviously, were not trading hair salons here, right . Were not trading locksmiths were not trading little boutique coffee shops. So it is not it mystifies so many people, but it shouldnt if you just look at the makeup, and its why the s p is not a threatening index to be in, because they have a lot of companies that do poorly in a pandemic we saw about 13 trillion in winners in the s p out of a total of about 27 trillion, so just keep in mind, the market is not made up of companies that fail under a pandemic. No, but we are a consumerled economy. Jim, and to the extent that the consumer is not there to participate in the full manner, that eventually trickles through to everything. But our companies are worldwide. Microsoft, customers a well good but theyre international and david, if you want to know, mr. President , hold your ears. If you want to know how you really come with numbers here, you come through with numbers from china the Technology Stocks that do business in china, they are on fire so any time you hear that the trade people from our country are talking to the trade people from china, you may loathe the prc, but oh, man, the numbers that youre getting out of china, and then fang in general. Facebook, not china, but its made up for what you do when youre sitting at home amazon, how many things did you buy . I bought like socks and detergent during the intermissions. Okay, its incredible. Netflix, what are you doing . What part of netflix are you watching this weekend . Were pathetic alphabet its just great when youre at home and youre a kid and youre cheating on your school work with alphabet. These are the companies that are made for this environment. Microsoft. I dont know apple. Look at peloton, guys peloton this morning, since the ipo, since the ipo, its up 69 . Over a similar period, s p is essentially flat sales up 66 , jim. There was a time where people didnt believe that it was that the elitist character of the product could ever be shaken its an ecosystem as we said yesterday, the market came right in its direction. Theyre talking about it as a treadmill, but this is one where heather gaines, who is key on my mad money team, put one on order. Theyre talking about late june. I mean, moderna is going to get its results before you can get anything from peloton. This thing is incredible the gyms how many gyms can open social distanced and wiped down how many people can go to lifetime you know about a b, right . David, your kid is your kid going to be in a or b . Thats the big thing people are talking about. A goes to school, b stays at home youre going to have to go to a gym. When you go to the gym, you have to take a number or be assigned a number, and i dont know what you do if you own five Planet Fitness franchises what do you do you buy a peloton, and you just, i dont know, you crush it you crush everybody else peloton made for this environment. Really Good Conference call, by the way. Fabulous Conference Call its funny, jim, we talked about how the crisis has accelerated the down move for so many businesses. Retail, of course, being the key one we talked about. But in this case, it seems to have accelerated sort of the adoption that might have taken place over the next four to five years in really what may be four to five months and wait until they open back to where i bought my wife her peloton. The clothes are off, david, of my wife on peloton, not herself. I made that kind of ill fated error last time on the show. Im moving the peloton to the beach house where she is sequestered because of this quarantine i get to see my wife this weekend. I think it could be interesting. I remember what she looks like you know, dynamite are you allowed to say that about your wife . I think so thats a very nice thing to say. Shes bringing the peloton, because you cant go to the gym. The gym is considered to be like an airplane. Its like a cruise ship. I have norwegian on tonight. That was a plug. That will be interesting to hear so many Different Numbers will you watch . I watch i watch. You know its on all day long now it never stops, jim. Yeah im sure. Im always home to watch now. Its funny and to endlessly take use ll phone calls. But i did spend a lot of time yesterday afternoon as i know you did talking about some of the earnings that came out, including tmobile i watched mike seifert join sarah and wilf on the closing bell that stock is up sharply, along with so many media we mentioned viacom earlier. That was the best in the industry look at that stock. Yeah. Talking about a lot of positives at this point. Legacy . Well, some would say it is. Hes no longer a part of the company. John ledger, but its now mike seiferts company. Hes saying all the right things on delivering on the energies of the deal that they waited so long to close, and on margins. Well see whether they can actually deliver, jim, as he continues to say they will but the stock is responding very positively you see that this morning, with the overall tone as well back to media. Fox is up 8. 2 again sort of the positive commentary, at least to a certain extent based on expectations from the call, in terms ofmarket, local is terrible, but theyre seeing national. Things are changing but theyre not that bad, and this belief that football and sports is going to come back certainly football, which youre very focused on, were very focused on bob backus from viacom said theyre ready to engage with them whenever they want about doing a new deal, but that hasnt yet happened. The players will be sequestered in hotels. And it will be remarkable, fanless. A stock thats not moving up is raytheon, david. Raytheon technologies. So we have to find outwhats going on why dont we bring in the person who runs raytheon, the new raytheon, which is the part of the old United Technologies and the old raytheon, and i thought the quarter was very good. I want to speak to greg hayes, ceo. Greg, youre no stranger welcome back to squawk on the street. Thanks, guys. Thanks, jim. All right, so what would have happened if you just kept United Technologies aerospace by itself without merging with raytheon. Would the discussion be with mnuchin, with jay powell look, the Aerospace Business is the legacy business, theyre going to have a tough year were going to see sales probably down 50 or so on the commercial aeroside. Keep in mind, both of those businesses have a pretty solid defense portfolio as well, about 30 of their businesses. So we werent going to go bankrupt if we stood on our own. We would have probably been close to break even for the year from an earnings standpoint, but we wouldnt have been looking to get a handout from the government its good franchises the business doesnt go away, but it is a tough time in commercial aerospace, as everybody knows. Can you talk about the defense side which i find very interesting because defense is holding up. You pick up the patriot missile, which has always had good sales but the Gross Margins have been wanting. What can you do about that to make sure that you take unbelievable technology and start making more money with it . Well, look, i think the key with the merger of raytheon and utx was Technology Merger as well as a talent merger. We come into this merger between the two companies with about 70 billion of defense backlog i think we have a good track record on utx side of driving Cost Reduction if you thing about the engine for the joint strike fighter, we built i think we just delivered the 500th fighter, and that engine cost has come down from 20 million to about 10 million and the margins have gone up. And were going to bring that same discipline to all of the raytheon businesses. We have solid businesses some of them a little more challenged from a margin stand pnl standpoint, as you said, but as we think about the talent we bring together, well have the opportunity to do more on supply chain to find savings there as well as bring more automation to factories. We have 195,000 employees across Raytheon Technologies and about 95,000 of those folks are working from home, but i have another 100,000 that are still showing up to work every day to build product and to support customers. And its been a challenge to get everybody there, but we were trying to keep them safe, providing ppe, and i would just like to say thanks to all those folks for supporting the customers. This is tough, but over the long term, well take cost down and well get margins up across the business i think weve got i think you know, weve tried to simplify the organization the raytheon organization. We have a missiles and defense business and an intelligence and Space Business and those guys are both focused, laser focused on Cost Reduction, synergies, and margin improvement. Lets go there. Lets talk about commercial aerospace. I have to believe that next quarter is just going to be plain awful. I wouldnt disabuse you of that notion, jim look, the First Quarter, right, we had a really solid First Quarter. Commercial aftermarket was up 4 and that was in spite of the head winds you had on the 737 max not flying and some other things at collins. So a solid First Quarter and if we think about like inductions into our overhaul shops, just to give you an example. You typically get 80 to 100 engines a month. It takes about 90 days to overhaul those, and we generate revenues as we overhaul the engines. For the month of april, that was 24 engines instead of the normal 80 to 100. So yeah, its going to be tough. On the collins side, we repair many of the things around the world in our repair shops. That was down about 55 . So this is going to be a tough quarter on commercial aero the good news is we see some light at the end of the turnal as we have spoken to the airlines theyre starting to see some bookings out in the summer months and fall starting to pick up youll see a recovery, but clearly, q2 is going to be very tough. Yeah, i would imagine and greg, its david a slow recovery. I wanted to go back to your comments about sort of the factory floor, the 100,000 employees you have coming in every day. Outfitting them in ppe, as you said, but what about the efficiency of their work how do you socially distance when youre building an engine, and if you are, does that impact their ability to actually make that engine more quickly david, its a good question what we have been doing, and again, engines are a little bit different because they go through a production line, but usually theres one technician working on an engine and it moves along the line, so its not as difficult to socially distance on the engine line. More difficult in some of our facilities where were doing mass production of overhauled turban blades, for instance, where you have 500 people in a factory. What we had to do there is we stagger shifts so we have some people coming in first shift we added second and third shifts we have weekend shifts were trying to where we cant socially distance, were trying to stretch out the work week, if you will, to try to accommodate those people we have our own mask manufacturing setup in malaysia. Anotherfactory here in the u. S were taking about 100,000 masks a day for our folks. We have done a pretty good job of sourcing ppe, but we wanted to make sure we were selfsufficie selfsufficient. We have temperature stands, every employee who comes in today is getting their temperature checked. Well look at testing, once the antibody tests have been sorted out, well probably be testing employees on a regular basis for the antibodies so its difficult. Theres additional cost. We mentioned on the earnings call, probably about 8 cents to 10 cents of headwind, maybe a couple hundred million in costs because of that. Thats not accounting for inefficiencies its expensive, but at the end of the day, you have to support the customer we have to do this work. We have to deliver to keep the war fighters safe and keep the airplanes flying right you know, which comes back to the larger picture, of course. Part of the reason well, part of the promise to shareholders of this deal was significant returns of capital to those shareholders youre putting that off a bit right now, arent you . I believe the 18 to 20 billion you talked about last june, youre now saying is going to take place over four years versus three years why . Why well, because revenue passenger traffic is 95 lower than what it was last june its Pretty Simple we came into this merger with about 8. 5 billion in cash on the Balance Sheet. We have about 25 billion of debt were in a solid position from a liquidity standpoint we took the board through this a week ago before we declared the dividend we took the dividend to 1. 90 a share. Thats up significantly from raytheon for 18 or so and as we had the conversation with the board, we went through a lot of different scenarios and said how bad can it be even in the worst case scenario, we still had adequate liquidity to fund the dividend for the next three years theres just so much unknown out there, i could not possibly recommend to the board to do Share Buybacks this year we still see good cash generation over the long term. But i think our commercial aero businesses for this year where we expected about 3 billion in positive cash flow will essentially be break even from a cash flow standpoint. So that will recover over the next couple years. It will put us in a position to do Share Buyback we also have a lot of opportunity on the Balance Sheet if we want to borrow money in this environment, borrowing to do share buybac were going to keep our p podder powder dry if the stock lags under intrinsic value, well be in the market but not this year how about china and china aero space we saw the same thing we saw in china as the u. S. That happened in january and february today weve started to see a recovery if you think about the global fleet. Its about 30,000 aircraft out there today. 55 of them are parked about 40 of the parked aircraft are covid related the beginning of the year it was about 15 parked china today, three months in, theyre park is only about 20 weve seen a return of passengers in china itself of course, we have not yet seen the International Traffic return that may be some time. But i think t heartening that you see china as a reflection of the u. S. Economy china is the second biggest passenger market after the u. S and i think the dynamics we see in china will probably play out here in the u. S. Its carl one quick question on the difference between balance of dividends and furloughs. Do you expect companies to have a hard time maintaining dividend when theyre letting people go thats a question we wrestled with when youre making decisions about having to reduce peoples salaries, we took a furlough or 10 pay cut for all corporate folks and all the folks on the commercial aero side, were furloughing people as volumes decline, but we have an obligation to our investors, many of them who are our own employees to continue to pay a dividend we didnt take the dividend up a lot. I think it was 1 from an adjusted basis we thought it was important to signal the strength of our liquidity in spite of the difficult times. Ive told employees were going to try to save as many jobs as possible we have a couple thousand openings for engineers on the legacy defense side. Were moving folks over. Were moving production to some of the facilities in cedar rapids were going to do everything we can to maintain employment we know there are going to be furloughs and layoffs as volume goes down. But at the same time i think its important to signal the fact that we still believe in longterm value of the stock and we wont buy back stock. We will support it with a dividend overall, because youre a terrific businessman who had insight into otus and climate alcohol companies. Is there any chance that you think we may have bottomed, the country may have bottomed in the month of april certainly from a commercial aero space, i think you cant get much worse than down 95 if you look at tsa traffic, i think its down to about 150,000 people going through versus about 2. 3 to 2. 7 million on a regular basis. I think that has bottomed. Weve heard anecdotely youre going to probably see some pickup here in may and june as you get to the Summer Season the fact is people can only binge on netflix for so long and zoom is fun, but you cant experience the eiffel tower from a zoom meeting and you cant take your kids to disney land on zoom people will start flying again and recover. I think april is obviously from a passenger assistant point low. That will play out in the aftermarket over the next six months or so and probably then seeing a recovery. I think the bigger issue is going to be on the oe side where today you have boeing and airbus cutting production, but nobody needs new aircraft when 55 of the fleet is parked. Thats going to take longer to recover. You have to take the parked aircraft and put them back in service and then yol see demand on the oe side legacy otis is probably as recession resistance a business, a Strong Service business. I think judi marks will talk about that later today they made it very well through the 09 financial crisis carrier, again, they saw an impact in the First Quarter. Theyll talk about that. But i think, again, the recovery will happen. But the ultimate, the bad bad news is the month of april, and i think everything will get better from there assuming we dont have a big resurgence in the number of cases and hospitalizations. All right well, thats excellent, and i have to tell you, gregg, i think that may be one of the reasons were having such a good rally over the last couple weeks we heard from gregg, the new ceo of Raytheon Technologies its always great to have you. Thank you. Thanks, guys, take care thanks, gregg jim, your point is good on the rally. Nasdaq is green for the year dow is eyeing 24 k s p 2890 oil is trying to hold 26 were back in just a moment. I love these fries. You know, the chef here trained in france. Mmm, it shows so good. Oh hey, did you say you needed help with investing . Because i know someone whos really great. And you trust him . Totally. Yeah. We went to school together. Ill check him out on investor. Gov. So, whatll it be . Ill just have the burger. Before you invest, get the full report. Check out an investment professionals background for free on investor. Gov. Before you invest, investor. Gov. [female vo] restaurants forare facing a crisis. V. And theyre counting on your takeout and delivery orders to make it through. Grubhub. Together we can help save the restaurants we love. Jim, you got a packed show tonight. Yes stocks in the market, we have etsy we have square, and get this we have nowhere weekrwegian crue theyre not afraid to talk they did a big deal. Frank delrio wants to talk guys, fabulous show. Fabulous really good, jim. Yeah chopped a lot of good wood today. Really quick, we have a minute here what did do the bulls need to do to prove they have the ball here as we once again rotate around 24 k, 2890 we need to see there would be some widens of the rally here, maybe its not for retail, amazon, target and well mart for restaurants maybe we get darden and mcdonalds to move. We would love to see any pulse in the actual industrial market. I think raytheon might be giving you that and then i think were okay. I think april, because it was so awful may be a trough. Im going to say it. I know its dangerous. Maybe the airlines can rally wow. I said it. I said it. Hey, you know, boirngs the top dow component for the moment it makes sense with what were seeing in the first hour well see you tonight. I just want boeings 24 million may have been the bottom they got that 25 billion i think people felt they were going to have to be bailed out there was no bailout big. Maybe well look back and think it was historic. Jim, well see you at 6 00 p. M in the meantime, good morning, welcome to squawk on the street. Im Carl Quintanilla with david faber and sara eisen coming to you live from various locations. Once again the bulls are trying to make a run. Almost all the dow components are in the green despite another difficult print to look at on jobless claims more than 3 Million People it takes the total to 33. 5 million as it was said this morning on the today show, the number we get tomorrow on jobs probably wont reflect the true number of pain given others who might still have work but fewer hours, lesser pay, that kind of thing it is shaping up to be an ugly report for the month of april on jobs. Lets get to Steve Liesman with more on the claims number today and what we can expect overall steve . Yeah. Thanks, sara the number 3. 169 million, just a little bit of an aside here, creates a quandary for us how to round this number. All the numbers to the right of the decimal were the normal numbers wed report. Just add the three were keeping it out as far as we can go. 3. 169 million claims thats down higher than the estimate 22. 6 million continuing claims thats a week older but it shows the people getting benefits. Insured Unemployment Rate is those eligible for unemployment in the nation receiving it thats 15. 5. We have a slightly Different Number from carl because we count an extra week, 33. 8 million a study decline on the chart in the number of claims and yet, it remains orders of magnitude higher than a normal week which we have 250,000 jobless claims take a look at the hardest hits by state, by the Unemployment Rate michigan followed by vermont, connecticut, pennsylvania and nevada which has been a huge problem there with the closure of the casinos the states with the fewest claims, some of these are doing much better. Arizona, utah, wyoming perhaps then the rest of the nation, but look at florida at 2 . We believe thats almost entirely a problem of them processing and paying claims with their Unemployment Insurance system being really a National Story ive seen some data that showed that just 43 of those who have filed have received claims or are being paid claims in florida. So they have a long way to go to actually get up with the rest of the nation theyre 2 compared with 15. 5 i think theres three economic things to think about. You have the wave of unemployment from the shutdown you have an economic wave of people who are not making it businesses are not making it and then youre going to have another going back the other way which is perhaps some of the decline happening from the reopening. Sara my question, steve, is youve heard this anecdotely. Because of the cares act and theres new generosity in terms of what people are getting on filing unemployment claims on what theyre getting if theyre getting more than they would typically make, how fast can the return jobs come back and whether they do come back i think theres an argument that in some states for a brief period of time there will be an incentive to stay home i believe the unemployment claims run through july. But its only about half the country where theyll get more than they made but thats not going to be the thing that determines if people go back. Do people want to go back to work in almost surely. Are people going to be afraid for their jobs in a situation where theres going to be a lot of unemployed in the country so i think the wages may attenuate the length of it for some americans i think the biggest problem is going to be are stores open . Do businesses open do customers decide to go . Thats the problem well have, and by the way, it may turn out that having these extended benefits through july may end up having been the right call to give more people the aid and the been fits they need. Yeah. Lets hope so, steve i know you saw goldmans piece earlier in the week. Because the benefits are so robust this year, they see disposable personal income positive for 2020. Thats not what we certainly were considering when this pandemic first broke out. No. Whats interesting is the extent to which its spent or is it saved . Theres two factors. Peep dont have an ability perhaps, people still employed, to spend as much as they did before those receiving benefits obviously are having other issues when it comes to their income the other issue is when we go through a shock like this, Savings Rates seem to escalate we saw a massive savings rate of 13 , 14 the story is not going to be the income story the story is going to be how much of peoples income do they feel secure and safe enough to part with, and one of the lasting things well be watching is do people feel like in the new world on the other side of this, they want to go to bed at night with a bigger nest egg than they had before Steve Liesman, steve, thank you very much. Well see you soon pleasure. And want to bring up a few other threads. Factoring into the market, because you see these crazy terrible unemployment numbers like we got and the market higher and that has been the story over the last few weeks. In fact, most days where weve gotten bad unemployment claims, the market has gone up in other words, investors are looking past the data which is considered old to the reopening of states and how the economy might look and get back. On that note, two encouraging pieces of news from china which people are looking at because theyre so ahead of us in terms of the virus china exports data, surprise rise of 3. 5 compared with the same month a year ago. Economists looking for a fall of 15 . That shows some demand outside of china picking up but that china factories are getting back online, and then theres reports that the u. S. Trade negotiator, david, lighthizer, and the chinese vice premier are going to have a call potentially as soon as next week to talk about the implementation of phase one. And i think that was encouraging also for people who are watching the rhetoric between the u. S. And china and President Trump threatening that china needs to make good on this trade deal for it to move forward the fact that those conversations might get back on the calendar, market usually likes that kind of stuff yeah. I mean, to that point, though, mike pompeo, the secretary of state, joined squawk box this morning. Im sure you listened in as well, sara, continuing that line of arguments, saying that this is at the feet of the chinese. And that they did not do what they should have done in terms of communicating and a lot of other things talking about the intelligence, again. And just raising the stakes, it would seem in terms of what appears to be a potentially pitch battle between our country and china. Yeah. Yeah hammering the communist party of china. Definitely with the tough talk question is how much of that is just to gin up political will ahead of the election for electoral results as the president talked tough on china last time around, and how much is going to result in potentially new policy that investors would be afraid of like tariffs which could hurt growth in an already depressed environment. Yeah. All right. We want to bring in our first ceo of the morning for us on squawk on the 10 00 squawk on the street. Teva Pharmaceuticals Stock very strong this morning, meg good morning. They reported their First Quarter and reaffirmed their 2020 dwiend20 guidance joining us is the ceo of teva pharmaceuticals. I want to start on the 2020 outlook. Tell us how youre seeing the business evolve over the course of the year. You said q2 might be tough, but youre sensing a rebound for the rest of the year yes in the First Quarter we had a big challenge with covid, and we were very happy that through hard work after our employees we were able to maintain continuity of the business and maintain supplies to patients we have them depending on our medicine every day it was a great achievement, and it resulted in good results in the First Quarter. For the remainder of the year, we see maybe some reversal of some of the extra demand we saw in march but basically underlying, a Strong Business Development and we are confident that we will see revenues in line with our guidance i want to ask you, also, about that increased demand you saw in the First Quarter teva a huge supplier of ja nark medicines and the fda is reporting increased numbers of drug shortages, especially in drugs related to treatment of covid19 and for tevaprovided drugs it lists tablets being tested for covid19, azit ro my sin other drugs for answesthesianesa it look like allocation or propof propofol, there were shipping delays tell us what youre seeing around drugs like that yes first, its correct. Some of the icu medications have been in high demand, and some other products are higher demand in all the cases we have been dramatically increasing our outputs and manufacturing to secure supplies for all the patients who need these products there has also been some supplies but not dramatic in the distribution this is due to the fact that the reduction in air traffic led to less air cargo being available and some of the shortterm restrictions on exports that some countries implemented led to temporary delays. I would like to say all governments at the end of the day have been positive toward securing the full value chain being open for medical products worldwide. Is that something youre still encountering, the difficulty with the air travel and transporting products where they need to go . It is still a challenge, but i think weve overcome it. The price of transportation has gone up. We have increased our volumes on these specific products. And its working out quite well. And, of course, we have a situation here where we are like you said, were the worlds biggest manufacturer of pharmaceutical products of medicines, the biggest supplier in the u. S. Of medicines i think overall, were very happy that all our facilities are operating at full capacity and weve overcome the majority of the logistical challenges weve been seeing. Wanted to ask you about hydroxychloroquine i know youre one of the big manufacturers of it. Its been somewhat controversial here there was so much demand and it was being used in so many places at the outset and the fda put out a warning. Im wondering about the demand and what happens to the pills or doses of that medication you previously donated to governments like the u. S. To help fight this. I wont able to tell you in shortterm whats happened to the product we donated i wouldnt be able to give an answer we were responding to a demand we saw we did our best to secure this shortterm from our different manufacturing sites where we produce the product. I think we were successful in supplying the product, and then, of course, the clinical outcomes and how its used or not, thats something thats being determine bid the health care professionals. Wanted to also ask you about the second wave which were all expecting, dr. Fauci thinks its inevitably coming. And what were hearing is that hospitals and Health Care Workers and governments need to prepare by stocking up on medications like antibodies or other treatments you use are you seeing that happening . Are they taking necessary precautions to stock up . I think its early to say the demand right now is more related to the current level of covid19 patients in many hospitals in the u. S and weve been working very hard also through our distributor to secure that whenever we had regional shortages, we would support the states and hospitals to make sure they would get products as soon as possible overall, i think right now we see an okay supply situation there are some shortages, but i think we are overcoming most of that of course, its important that we all increase manufacturing of these products so that we are prepared for a potential second wave lets hope it doesnt happen and some of the precautions weve taken in society will be effective so we do not see a major second wave. Theres been a lot of talk of late about securing our supply chain for pharmaceuticals and various drugs from Raw Materials right up to production in the United States. Given youre the largest producer in the world and i know you source Raw Materials from china. You have manufacturing there and manufacturing in india and europe, would it be a significant hindrance to your business if, in fact, there was some move to try to make sure that manufacturing moved back to the u. S. I think its a historical fact that Raw Materials has moved out of the u. S. Over the last ten or 20 years due to comparative forces between the Key Manufacturers today, china and india. We have a lot of manufacturing still in europe for historic reasons that weve maintained, also israel. But its true that the most competitive place today is china, india they have benefits on labor cost, in the concerns on health and safety and so on, and if it was to be moved back to the u. S. , it would have to be some preferential treatment of products that were manufactured partly or wholly in the u. S. And that would be possible to do gradually. It would not be possible to do overnight. It would be a gradual process, and given the current circumstances, it would lead to higher cost of api and Raw Materials and ultimately of the finished products. Are you being pressured or encouraged strongly by the u. S. Government to try to bring your manufacturing in the end back to the United States or into the United States for your medicines that you supply here no. Thats not the case. But it is i would say its an old political question its a political decision. Its not a decision that we as a company, we or that the industry as such will take we are simply reacting to the conditions in the marketplace, and if there is a preferential treatment of products produced in the u. S. , then, of course, we will adjust to that, and that will bring more manufacturing back to the u. S. But as i said before, the conditions for manufacturing api and Raw Materials in the u. S. Are such that the cost levels of that are higher, and, of course, well be more than willing to do it, but it would only be possible if theres a preferential treatment for those products i want to follow up on the preparation for the second wave. You noted most people are still dealing with the first wave, but its imperative that you increase manufacturing now of the products to be ready are you observing kind of still a lastminute kind of dealing with what we have now and a failure to plan ahead, but it sounds like you are trying to plan ahead with increasing manufacturing. One of the things thats remarkable about this situation is it seems like everybody is playing catchup and trying to lastminute make sure we have what we need what are you sensing from the government in terms of the attempting to plan ahead it sounds like maybe youre taking that initiative not because governments are. Its interesting. Everybody was surprised by covid19 its fair to say everybody in the whole world. Including teva and all Health Care Systems and politicians now, of course, were not surprised anymore. We know its there we know from historic evidence of previous pandemics that theres a risk of a second wave. And that, of course, means that we have a responsibility to patients to prepare for that thats what were doing. We can only prepare on the products that we manufacturer. We cannot prepare for everything we dont manufacture everything. We do manufacture more pharmaceutical products than anybody else and were looking at all the products that are relevant in the treatment of covid19, and making sure that we increase manufacturing of those as we speak. Right and finally, i want to ask you about the impacts on other medicines. As a result of whats happening with covid19, we know from a lot of companies that some Clinical Trial Development Programs are getting delayed at the end of all this, what kind of delay doyou expect were going to see in new medicines getting to market outside of covid19 because of the pandemic yeah. I think theres going to be some delay longterm. Of course, you have to keep in mind that developing a new drug takes 10 to 15 years and that means that three months delay on your Clinical Trial recruitment is not really a catastrophe. We have very interesting phase three program with regeneron, pain medication in phase three we expect it to continue, but we also have new Clinical Trials we were about to start, and thats been stopped for now so i think the length of the lockdown is really what drives whether well see big delays or not. If we get a lockdown with the effective duration of the three to six months, then it will be a marginal longterm effect on new product development. All right thank you so much for being with us carl, back to you. All right. Meg, thank you we are getting Neiman Marcus joining j. Crew and filing for bankruptcy protection. This was pretty expected that this was coming relatively soon. Neiman marcus was on a watch list for a number of months well before this crisis, but theyre now officially filing for chapter 11 bankruptcy in a texas court. The ceo says that before the covid crisis they were on the path to getting back to longterm profitability, but the crisis turned things upside down in his opinion, at least Neiman Marcus plans to eliminate 4 billion of the 5. 1 billion in debt they secured a 675 million debtor and possession loan here. It does not look like theres a mass store Closure Program undertaken they have 43 stores which have been closed most of them, at least are still closed, during this crisis. But they plan to reemerge from the bankruptcy in the fall of 2020 back over to you yeah kourtney, its david i think its coronet to point out for people, and listen, this is a difficult period for any retailer, but both j. Crew and Neiman Marcus were leveraged buyouts. Neiman marcus went lbo to lbo. That does a great deal of debt and pressure to their Balance Sheets in a difficult time exactly thats a great point yes, since 2013 Neiman Marcus has been owned by the private equity group that still owns it. And just like j. Crew, sort of this lbo and really saddled the companies with debt. Its not as if there were no sales this certainly not the sales levels as before, but they had massive debt loads they were always going to be fighting against that had been one of the big crushing factors for many of the retail bankruptcies we saw actually in the years following the financial crisis so if they were able to make it through the crisis, and then they were bought out by private equity or had some involvement, it was the debt loads that were too big to bear as the retail landscape has changed dramatically yeah. Just to name names, the owners here were arie management and the canadian Plan Investment board. Before that was tpg. Clearly a long history of private equity im wondering about the next steps. Is it still out there that they could be a target for a buyout i mean, hudsons bay is always mentioned. We talked to the president of sacks. I guess the question is for the hudson bay, really a commercial real estate company, they cant be doing well right now. I dont know whether they have the capacity to buy neemen at this point exactly and hudson bay not long ago got rid of lauren taylor, and thousand now that company now that company is facing the same fate you know, i guess anything is possible i dont think it looks like a hot deal landscape right now in retail im not sure anyone is going to want to swoop in and go after this the company says they intend to restructure, take the opportunity to take down the debt, maybe renegotiate leases there are some benefits to filing perhaps thats what happens. But anything is possible i just havent heard a lot of deal talk in the retail space as of late. And i mean, they have 14,000 employees. I guess they get furloughed . Exactly just like almost every other retail employee. Thank you very much on the neemen marcus filing today were tracking the moves on wti crude, on pace for the best weeks ever. The comeback for Oil Continues Biggest Energy etfs in the morning are in the green this morning, i should say. About 2 to 3 higher. Still among the worse performers this year. Programming note as we head to break. Dont miss richmond fed president with us on the closing lbe at 3 00 p. M wel right back. Stay with us 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. 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. Shares of carvana tumbling siting the covid19 as an unexpected detour. Joining us to discuss what hes seeing in the business, ernie garcia, carvana ceo. The stock is getting hit hard, even though the analyst reaction is favorable was it that the expectations were higher because of your online nature of the business than what you actually saw i think its hard to know exactly whats driving the stock. We try to stay focussed on the business in the late First Quarter we saw sales drop by 70 , 80 we were still able to grow at about 40 in the First Quarter things have been going great so far in the second. Were pleased with how were hanging in there, for sure what about the fact that you do have this Online Business and can deliver cars to your doorstep do you expect that to give you an edge to help turn the numbers around definitely. I think as i said across the Industry Sales dropped dramatically i think many people arent thinking as much about buying cars weve seen that across retail and in the Automotive Industry and people are more interested on buying things a way thats safe online. For the last seven years weve given customers a great experience where they can go online, buy the car, speak to customer advocates, get a low price and broad selection. That same Business Model serves this time well customers can buy a car in a way thats safe. Weve seen the number of people expressing a interest in buying cars double online i think were likely to be a ben for ri of the trend. Dont think youve seen a profit since ipoing in 2017. There was concern about your cash levels. You were able to raise money in the markets. Bring us up to speed on where that stands. Sure. We have about a billion dollars of liquidity weve been building a business thats grown its roughly doubled six years in a row its grown quickly as consumers have moved from buying cars at dealerships to buying them online our expectation is this new world will likely accelerate the trends so weve been investing in the business to give customers the experience across the country. Today were excited to be announcing were opening 100 new markets to provide this service in other locations as theres been so much demand for it recently we talked about the model early on in the public life. Now that were dealing with conversations that involve potential dealer consolidation, to what degree does that become a tail wind for you . How can you leverage that . This is an enormous industry. Theres 40 million transactions per year the largest 100 players in the Automotive Retail industry combined, t a fragmented business i think in general, in businesses where ecommerce takes hold, there tends to be a lot more consolidation i think were incredibly well positioned for that. We have a business that delivers great experience to customers. Its very scaleable. Its tailor made we think things will take care of themselves. What can you tell us about the used car market right now . How weak is it how much is that potentially helping your volume in. So the used car market in general is definitely down there a couple ways to look at it on the retail side, its soft. Year over year sales over the last several weeks have been down probably on the order of 40 give or take weve been up 20 or 30 weve benefitted from the trends of moving online pricing, in the wholesale, prices are down by 12 april was the biggest decrease in used car values thats been seen thats impacts were trying to make sure we take advantage of that by buying cars at lower prices and deliver them to customers at lower prices. What typically happens to the market in recession . Generally, we saw new car sales drop by approximately a third. And nused sales by a third. This has been obviously a much more dramatic situation thats impacted supply chains i think potentially this could be a more dramatic event across the board. Although, were seeing signs of steady recovery over the last couple weeks its hard to say how it will play out thank you for joining us, ernie. Good to see you. Thank you appreciate it. On the market on earnings with the stock down a little less than 4 all right yeah well watch that well watch the markets continue to test and test here. Just south of 24 ,000. A lot going on dont go anywhere. Across america, Business Owners are figuring things out. Finding new ways to serve customers. Connect employees. And work with partners. Comcast business is right there with you. With a network that helps give you speed, reliability and security. And enough bandwidth to handle all your connected devices. Voice Solutions Like remote Call Forwarding and readable voicemail. And safe, convenient installation. When every connection counts, you can count on us. Get the connectivity your business needs. Call today. Comcast business. Good morning heres whats happening at this hour in india, eight have died and nearly 1,000 people are ill after a gas leak from a chemical plant. The lg polymers plant was repairing to restart after coronavirus restrictions were eased there. Police say nearly 100 people have been hospitalized and nearly 3,000 have been evacuated from the village near that plant. Back here at home, residents of a portland, oregon nursing home are being moved the other locations after that facility had the license suspended. At least 28 people have there have died of covid19 and additional 117 have tested positive in Oklahoma City who mcdonalds employees were shot after two people were told they could not use the dining area to eat their meals. An argument broke out and one of the customers pulled out a gun and fired. Both employees are expected to survive. The customers have been arrested ill be back in another hour sara, back to you. All right. Sue, thank you stocks up more than 1 only Consumer Staples are in the red. Everyone else is positive. Led by financials today in the market the nasdaq is up 1. 25 going flat on the year a quick commercial break re. Onheh us on squawk t stet the Lasting Impact of the coronavirus on the Global Economy could be years warns one expert more squawk on the street coming up. Jobless claims, earnings and oil all taking center stage as the markets are trying to hold 24,000 uber tonight anglo with other big names. More squawk on the street continues in a moment. These days staying connected is more important than ever. So were working 24 7 to 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. Dow and s p are trying to hold onto gains for the weekend here, david. Interesting sector action this morning. Financials up more than 3 energy almost 3. And then industrials and materials better than 1. 5. Definitely a cyclical bet outpacing the gains in health care yeah. Stills and the dow obviously led by boeing which is up almost 5 . You know, we pointed out so many times, carl, in the last week or so as the nasdaq has come close to the flatline for the year its more or less hugging it right now. How extraordinary that is. A month ago if you told anybody that the nasdaq would be flat for the year, i think they would have thought otherwise, given the 33 million unemployment claims, gdp numbers looking down im sure you saw the Deutsche Bank estimate, sara, in terms of what they see for gdp in the world and u. S. Microsoft is up for the year apple is up for the year facebook is up for the year. Many of them substantially yeah. And from that record high that the nasdaq hit back in february, its only off less than 9 thats from a record after being flat on the year, to put it in perspective, s p 50 5 50015 s p 500, 15 . The leaves the s p down 10 for the year the big cap tech names investors flocked to during this crisis and held up proved to themselves during this, to the crisis and recession from microsoft, facebook, netflix, even apple to some extent. I think thats part of the reason you have to talk about the nasdaqs outperform. Papal is trading at a record high after very strong results there are pockets of strength in this market. Its a theme cramer has talked about so many times of Companies Holding up, are even doing well, versus the Small Business economies. Versus the Smaller Companies finding it hard to compete the retailers which were in bad shape. Its a tale of who corporate americas thes have and have notes in terms of how theyre weathering this from access to Capital Markets and also just in general how theyre dealing with this huge revenue dropoff. Yeah. I mean, anything that relies directly on a consumer coming in and buying something, obviously, is in deep trouble and, or anything related to travel and leisure as weve said many times is also desperately looking for liquid in some fashion as long as they can try to get it. This morning we saw when it comes to retail, Neiman Marcus, the latest large retail tore file for bankruptcy. Lets get to Rick Santelli who has a special guest for us this morning as well. Thank you, david. It like to welcome carlos gi gutierrez, former secretary of commerce under president bush. Thank you for joining me today thank you thank you for having me, rick. All right put on your commerce secretary hat here so we had initial jobless claims today a whisker under 3. 2 million. If you look at all the numbers going back to the 20th of march, cumulative running totals, 33. 5 million claims running 22. 65 millions how do you look at the numbers acknowledging the cessation . Its a horrifying number, obviously, rick. What concerns me is we look at the total number, and the expectation, of course, is that those jobs will come back. My concern is that not all of those jobs will come back. Some restaurants are open at half capacity. Hotels will not be at full occupancy. You know, the economy will not be running at 100 for quite a while. So we should expect some of the jobs regrettably, to go away so the idea that we would go back to a 3. 5 Unemployment Rate, i dont believe t real its realistic, and its going to be a long, long hall to get back to that level so not all of those jobs are viable jobs. Now, mr. Secretary, i guess my question would be acknowledging what youve just stated and its very similar to many of the administration, being realistic, mr. Fink expressed similar viewpoints is there anything that could be done to ease the transition above and beyond ppp and some of the current programs well, you know, i think that technology is playing a lot bigger role, especially in the covid19 era, and i think its going to continue. So we need to be thinking a bit longterm and how do we retrain some of the folks. Obviously attracting Foreign Investment is key. I know the administration is doing a lot to bring back manufacturing, especially from china, from other countries. That can add, but theres nothing like preparing workers for whats coming, and i do think that we have made a leap in terms of technology weve gone to a new level during this covid era, because these Technology Tools have helped us. And but they will also take some jobs. And preparing people for that new economy, it sounds like its longterm, and i know people want immediacy, but were going to have to deal with that, and this is the time when its staring us right in the face now, you described the potential to have some growth in manufacturing. The president in his administration are turbo charging the notion of trying to extricate some of the supply chains out of china. Were not the only country indias trying to do this. Japan is trying to do this will that, indeed, be an extra bump with regard to trying to reset up and i know there may be pricing and inflation implications, but ultimately wont that help . Wont that create a demand for that sector . That will have an impact. The manufacturing facilities that will most likely come back or will leave china or those that were in the china as an export hub or just manufacturing in order to export it will be tougher for those plants that are there to serve the Chinese Market now, theres some discussion about the administration putting in place a ban on Government Procurement of pharmaceutical products imported from china that would require even though theyre made by u. S. Companies, that would require those companies to relocate, and part of the regulation of the executive order could be that they relocate to the u. S that would bring back manufacturing, but, of course, those are supply chains that take a longer lead time. It wont happen next month it takes years in some cases but yes, that will also have an impact in some cases the manufacturing will lead from china, and as you say, india is making a big play for that theyve opened up their industrial states. The states that already have experience with industrialization, and theyre opening up land rights to foreign investors, something thats very new incentives so thats an opportunity for companies in china, vietnam, japan, korea, australia, new zealand. Tha theyre all part of this Prosperity Partnership thats designed to take manufacturing out of china so what started as a trade war designed to reduce our deficit, designed to change chinas behavior toward ipr, i believe its turning into policy and that policy is the coupling. And were seeing signs of it so pharmaceuticals, other ppe, theres discussion about limiting imports from china that go to our electrical grid. Im sure that theres discussion going on about a global ban of huawei exports so were going to be seeing a lot more steps designed to decouple our economy and to reduce our reliance from china so what became a little bit of a tactical squirmish, a tactical war, i believe is now becoming a strategy and becoming sort of a doctrine of decoupling excellent commerce secretary, thank you very much, former commerce secretary, for your thoughts today. I would like to have you i would like to have you back. You weres the youngest ceo of kellogg named in 1999. I want to talk about those supply chain next time. I would love to always a pleasure. Thanks. All right Rick Santelli, thank you quick note as we head to break later today on the closing bell, dont miss former treasure secretary jack lew, 4 00 p. M. Eastern time, and well talk about this market and these Economic Data points were getting. Stay with us as the market holds on to its gains. You should be mad they gave this guy a promotion. 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Interesting days here for Movie Theater chains in the state of texas where restrictions are beginning to loosen lets bring in tim, the founder, executive chairman and former ceo of alamo draft house its good to have you on the program. Good morning. Good morning. Good to be here. Im a huge fan of the chain i think you play an Important Role in the future of film in this country, but whatis the strategy right now for you in terms of reopening in states like texas well, i mean were certainly going to reopen, but it was the schedule was a little abrupt for us when we reopen were going to be doing it in the absolute safest possible way and that requires a lot of new equipment, lot of new procedures were rethinking our menu, thinking about our staff, making sure that theyre safe when they come to work, so were not ready to open yet, were still in the lab working out all the processes, but our benchmark we want people to feel safer than a supermarket when they come into the theater and thats what were gunning for. Does that feel like something that could happen this year or not . Sure. Everybodys day and your perception of the world changes every single day, right, so we will get open when we feel that we can do it safely, both for our guests and staff i dont have any date in mind, but i anticipate for sure its going to be this year. Now you have this new vod service which includes film for rent and purchase. I mean, i see that and i get a little worried like maybe youre pivoting the model to a point where the physical theaters become secondary can you explain what your strategy is there . Thats not where were heading with this. So i am, you know, absolutely ive invested my entire life and my entire everything ive ever earned into the theater business and i continue to do so our vision is were going to come out of this and going to expand on the theater fronts given that our theaters are closed thats allowed me to have a little bit of focus and the interesting thing about being a Movie Theater and a part of the movie business is, our job in the past has been done when the movies leave the theaters and so what weve basically built is a cur rags engine. The movies were passioned about and champion throughout the year you dont always get out to the theater to see every single movie you want once movies are available posttheatrical for people to go and see them on our recommendation it kind of continues the dialog we have with our guests about the movies we love our sister company, tim, universal, launched Trolls World Tour kind of in a bold move digitally instead of going through the Movie Theaters it created a little rift with chains like amc and led to some questions about whether this would be a new Business Model, especially with the numbers looking very strong for that digital debut. How do you react to that well, im not i guess im not reactionary to that. Weve had lots of conversations with the studios and they are committed to Movie Theaters. Were just in a very strange time, and, you know, i cant necessarily say thats a reflection of things to come you also have to bear in mind that theaters closed maybe just a week or so before trolls 2 came out and a lot of the marketing was for the Theatrical Campaign you have to take any data about trolls 2 with a grain of salt and i am a Firm Believer in the future of Movie Theaters but i like to watch movies all over the place. I watch movies at home and at the theater and so i think once were back up and running we are going to have a great supply of product from the studios the sky is not falling do you think its going to be hard to convince people that its safe . I mean just anecdotically before this whole crisis i always feel like people are coughing the whole time during movies in a Movie Theater. How are you going to avoid stuff like that and the distancing and the whole protocol you know, obviously its going to be a certain segment of the population that is not wanting to go out and, you know, were following the guidelines of the cdc also and, you know, right now i think its still a time where people need to cluster at home, but there will come a time in the future where it is safe i cant say when that is, but we will, as a country, as a society, get past this eventually and thats where i put my focus whether or not certainly theres going to be a certain amount of people that want to go out to a socially distanced safe environment before theres a vaccine but thats an interim phase and im not focusing longterm on the interim phase, im focusing on the idea that in a normal society when were past covid, people want to get out of the house and socialize and be with people and i believe that we will have a return to normalcy, not just for cinemas but for society. Finally, when we get to that point, do you think the idea of the multiplex takesa hit does the market pivot to models more like yours . Well, i mean i am a multiplex, so, you know, we have multiple screens at the alamo. Our whats unique about us is a couple things is we serve food and drink and we show a pretty broad array of movies, classics, foreign, independent and all the studio blockbusters. Im i got into this business because im a i love all kinds of movies. I would love to see a more diverse slate of movies everywhere im definitely in an all ships rise point of view from that standpoint yeah, i think it would be great if more theaters were doing what we do. I want all theaters to offer a great experience yeah. Its going to be interesting to see how all this shapes and colors the Creative Process out of hollywood and all sorts of areas where film is generated. Tim, its fascinating. I think were in for an interesting ride regarding film and Movie Theaters and hope to talk to you again soon thanks. Thank you very much yeah. Tim league of alamo draft house. Welcome to squawk alley. Im Carl Quintanilla with Morgan Brennan and jon fortt coming to you live from various locations today. Interesting Market Action as we pivot around dow 24k and the high s p 2800s as we get earnings to work with, jobless claims, jon, once again are no good at 3 million plus china exports good in april. Well see if that holds up as the rest of the world does cancel orders for all the things that china makes. Yeah. Thats a great look at what the market is looking like overall on the micro end im looking at paypal up 12. 5 after earnings, a particular bright spot is that paypal said that in april, business really did rebound 20