About with joe, andrew and becky and the degree to which walmart can post a 74 increase in ecommerce it looks like the big guys won. You basically had them cordoned off as essential services. So many other companies, little companies, medium, small, just couldnt compete this is what happens when you have a survival of the fittest economy. This is darrwin playing out. These numbers are astounding if the stock had not run up every day, i wouldnt know what to do. Add back 60 cents for home depot and before you start selling it thats the costs they said home depot had to keep traffic back they had to hold back traffic because they were trying to do it safely. Walmart had these big stores, they were set, ready, and their dotcom, ever since they bought jet. Com has been amazing they also can do a lot of food these are Great American companies that are on fire the move in walmart is stunning ever since he decided doug mcmillan, who is on squawk tomorrow, decided to creator the earnings in order to build a big dotcom your point on traffic is good home depot traffic down 4, but ticket up 11 what was the difference in walmart and home depot to making up for those additional covid costs . I think thats a great question because i want to wait until the call to give that answer its a quandary i dont know why i know that when you do what costco did, i figure home depot are the same, you made a conscious decision to take care of the employees before you took care of the customers, maybe home depot did that. Well have to find out i do think that lowes is back we dont know what that means. I think Marvin Ellison is doing a remarkable job its no longer a onehorse race. Those stores are all different construction has shut down in a lot of places. I want to put a new roof on, as david would say, on one of my houses, and i cant. I cant get the work done. So there are places where home depot is not a factor. Right, david thats true, though where i am it was open the entire time through this period of time. Contractors may not have been able to work thats true you could go in, you could have things delivered but you werent going to be putting people to work do make that point on costco, its worth mentioning how well they treated their employees its interesting our conversation for many years now has been focused at walmart certainly as well on rising wages, on how they treat their employees, on the growing pressure on them to do better in that way costco has always done better. But to carls question in terms of what home depot was doing there, the added costs, it will be interesting to see where that came from and why that wasnt replicated at walmart or how exactly that comparison looks. One thing that jim sinegal taught us, the person who created costco as we know it, the biggest and worst thing we do is having to train people it adds about 30 to the sg a. They are dead weight and they hurt customers customers go to them, they dont know something, so they go to another store. He said the reason why he would always beat walmart is these people stay. Walmart people turn over mcmillan knew that and he changed it i remember going to a walmart in louisiana, it was the same manager i had seen a couple years before i said oh, my god, the same manager. He said no, the rages were raised its all good now. Walmart was known as a place where, yeah, really not a place to shop. Home depot and costco were always people who greeted you. You always knew the costco guy walmart joined that. Thats mcmillan. He changed the culture quickly david, you told us it could happen because the family was behind him you have the short upport of family, family around 50 or so of ownership at various points that allows management to feel as though they dont have to worry about activists or other shareholder bases getting upset when you have the support of your main shareholder and they control so much of the company the family was behind him. Longtime employees, i remember meeting mr. Mcmillan a couple of times when he ran international. They made a significant change there. One way in terms of employees, but perhaps more importantly for the business what theyve been able to do on the internet beginning with the jet. Com acquisition, which they now are going to get rid of that name, so to speak. And up 74 is a number i dont think they could have imagined having seen. I remember talking to doug, had lunch with him i pulled up his app. The top was kraft mac n cheese, potato chips, bad cereal i said what is this . What are you doing he said we have work to do holy cow, i met mark lurie later on, he said what is your problem . Let me show you what well do. One day well put food in peoples homes. I said are you kidding me . They succeeded they have done everything. By bringing in someone outside the culture who wanted to beat amazon when you met him, he had a beat amazon war room i love that. They were not going to let amazon wipe them out, they were going to beat them look what happened they are able to generate unbelievable numbers theres room for amazon, home depot, costco, theres room for target, room for lowes. Thats what we discovered this week without a doubt when it comes to price discovery, too, its worth doing. Dont just go amazon we found that in this household. You cannot assume it will be anywhere near the lowest price walmart and many others can often do that. I bought my power tower from walmart. Com. Needed to do my pullups couldnt find a place do it. Maybe you can have them come in and cut your hair nobodys cutting this hair. Are you sampson where is delilah nobody in this household is cutting the hair me and the dog are going full shag, man. You should see the dog, he looks worse than i do. Kick him. Kidding. I dont know, carl an exciting morning. Its true what stood out to me, when youre walmart and you hire a quarter of a Million People in the quarter, i did some math, thats 2,600 people a day new hires in a pandemic which works out to just shy of two hires per minute thats 24 hours a day. Thats remarkable execution. That is incredible. Its like a war. Its like a small scale draft. You put these people in, you have to get them to be walmart people immediately, they greet you, know what theyre doing thats extraordinary they made every store a wash house. They have all these stores, why not make them a Distribution Center i just sometimes americans are so smart jim, when you couple this early picture on retail this morning, you have the airlines higher this morning as well with southwest and some others talking about load factors looking to get hire in may, june reopenings in states like california does this price action that we saw yesterday seem valid a day later . I think it does it feels like a bear market spike when you see it that much up, but a lot of companies are just saying, look, march the third week of march was awful. Most of april was terrible we had a lot of Companies Report in april they didnt know things could get better now theres a new spirit, theres also moderna i think moderna dominated i had the ceo of dennys last night. You can comparable sales down 80 in a restaurant . Thats not sustainable thats what secretary mnuchin is worried about. But if you can get moderna and moderna turns out to be ahead of the game, theyve done it with Amazon Web Services, and they digitalized messenger, we can bridge it. Well have illness, but our hospitals are in better shape for the illness. Theyre ready. Well get through to when moderna will produce something that can work. The doctors who have been skeptical that i talk to about every single one of these things started by saying promising. Encouraging. You can craft a scenario that says trillions are coming into the market yes, well lose a lot of stores and restaurants, but maybe we can make a comeback. Its a little saccharin. I dont find that its done its nostalgic for the hold days comeback i see rigorous people saying it can be done. Im hearing those voices as well its being reflected in the price action were seeing. Jim, i dont know if you im sure given how rigorous you are, you read that letter from khosrowshahi yesterday to uber employees about the 3,000 additional job cuts. In my mind, thats an example of what were talking about the stock went up. Did you read that letter uber eats is great, but no wwhe near profitable. How about free . They love free this company is basically saying were were going to do everything we can to make ourselves insulated from having to raise new capital its not like these are good times, we dont expect good times any time soon, stock went up i think what were taking off is the not going under david, Royal Caribbean got the money. I told you about booking that Norwegian Cruise Line for your family giving it away come on. Alaska not doing that one. If it can be me, the crew, you want to come, carl, thats about it and 4,000 others . All right. Thats how you make friends. Its easy. We have a lot to get to in a short amount of time well preview powell and mnuchin on the hill in about 45 minutes. Some downgrades of disney and comcast. Kudlow is on the tape on a payroll tax cut. Faber on jeopardy last night all of that and more when ts see ctiestrtonnu onhituesday. A masters in Chemical Engineering and youre technically a genius. And it appears youre quite the investor. I like to trade. Well, Td Ameritrade has pros ready if you need help, say talking through a new strategy. Just in case things, you know, get a little rocky . Im sorry on the upside i think thats waterproof. Maybe not. Sawithout evenon yoleaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Got a fair amount of media news this morning. Netflix at an alltime high yesterday. Disney chief kevin mayer to tiktok, apple tv buying some back catalog a lot to watch this morning. Yeah. The apple tv, older shows. Thats something we pointed out about their offering, 4. 99, low price point but no library so they seem to be trying to make that a bit more robusrobus netflix is a key name in jims portfolio of covid stocks, 2 200 billion market cap, not as large as disney which had that huge day yesterday. There is a downgrade at disney and comcast today. Continued concerns overall for the old media stocks even including the likes of disney when it comes to advertising and production schedules, when it comes to what youll see in the movie theaters, theme parks, which disney relies on david, what happens if a big part of the country just said i know were supposed to be social distancing, to hell with it. There is a to hell with it component in the country yeah. They think its something that some new york governor created. I dont think its a what if. Doesnt it feel like its happening . People are ready in virtually every state . What is this mask stuff and the social distancing . Give me a break. The numbers still indicate people are getting covid, but theres a rebellion against the norms. The companies are horrified because they dont want the liability. They dont want the liability. Theres still going to it be a significant protocol regardless of what people may do and theyre willingness to congregate without masks the companies themselves will still take it upon themselves to put in place protocols, to try to maintain some level of safety, right . Yeah. That goes for disney at the theme parks and it goes for jpmorgan when they open up the Office Building in manhattan and have people arriving at 7 10, 7 15, 7 20 why . Because of elevator traffic. You have to do this when i was talking to the ceo of dennys, i said one of the gate things is you had guys they needed to corral, sop up, he said no, six per table really and you have to be distant from each other ill go somewhere else go somewhere where there are no restrictions i dont know its almost become voluntary there was some guy who opened a gym and was cited in south jersey i have a feeling theres not enough inspectors to keep these independent guys from not stopping the customers in the same way where its a difficult thing to enforce the mask law does it mean we get a second wave and that well have to respond again . Two weeks because we get a surge . Well know in two weeks we dont know. Two weeks. We bent the curve, people are not i talked to i talked to a guy who was the chairman of mass general, scott sperling, you know him, they have so much room in their icu. Theyre so ready of course that means all the elective surgery which, by the way, elective includes brain cancer theres so much room the hospitals can handle it. I dont know i feel like three weeks ago we were worried about dying from it now we have People Holding hands all over the place thats a good point massachusetts will start opening churches, hair salons, groomers. We forget, it was a month ago, but we were talking more about temporary cemeteries across the river from manhattan and central park it was apocalypse now yeah. You forget how much massive liquidity solvency crises that seemed to be at least a little bit more on the back burner, especially when you look at what the june expiration of oil is, how different that is from a month ago. No, they took the depression off the table. Thats what it feels like. Remarkable yeah. We will see what powell and mnuchin have to say about that progress and any additional need that may be needed for states and local. 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Dow futures down 27, were back in a minute [music] [music] especially in times like these, strong Public Schools make a better california for all of us. Thats why working together ist more important than ever. Nia at t is committed to keeping you connected. So you can keep your patients cared for. Your customers served. Your students inspired. And your employees closer than ever. Our network is resilient. Our people are strong. Our job is to keep your business connected. Its what weve always done. Its what well always do. Welcome back to squawk on the street. Yesterdays big market rally fueled in part by news of a potential vaccine or progress towards it by moderna, a company jim followed closely today they say, well, you know, maybe not a bad time to raise a little cash. I think that people who are new to the market, like 20 years, are not used to seeing the following. You have a red hot stock that needs capital in order to build what it wants to build, so sell 17. 6 million shares at this is going to be done at 76, which, by the way, is tight. Thats down 5 a lot of people are speculating saying if they didnt do this, it would have gone to 112. Why did they do this they hurt me no, this is capitalism it works this is great. Moderna could have sold a part of it to a major pharma or said we will stay independent, we like what we do, well raise money. Some say that the ceo was promotional yesterday. I know they are a bit of a promotional company. If they didnt release some of that stuff it might have leaked out, somebody would say hey. I dont begrudge these guys. Youre supposed to raise its called the Capital Markets you raise capital. Its not just in bonds they raise it in stock right right. But the optics of it, you could say are they being particularly promotional . It comes a day after they release an eightpatient study that was positive, dont get me wrong, but on the optics, it looks a little i told you yesterday when you said i said theyre a promotional company. I meant the guy i love the guy. He approached me saying what do you think about moderna . I said, its fabulous. I love the furniture he said its a biotech i said holy cow, you use Amazon Web Services to digitalize this . Youre a home run. Come on. I loved them since if youre one of the eight, maybe you buy stock, thats bad . Thats like Insider Information . I dont know i thought it was right i know the optics are not the people who bought the stock yesterday much higher would feel i say dont worry about it the offerings will be placed well it will go up. I think. Yeah. Carl, this has been a marketplace willing to accept shares this is 1. 25 billion that blackrock sale by pnc went well i will talk later about tmobile and softbanks plans to sell shares in that, but there seems to it be appetite. Novavox, another one people are skeptical about. Its interesting. The fact that companies have been able to raise so much money is almost a sub text of this loop capital downgrade at disney where they say you have 14 billion in cash but you suspended the dividend, you raised 17 billion in new great that looks great from a liquidity standpoint but it makes you raise your eyebrows in thinking what the pessimistic scenario might be. And the leverage ratios at disney are the likes of what i dont think many people anticipated that you would see its been necessary, you have to secure your future any way you can. That huge offering of debt, the did it reasonable if not cheap, with coupons im not sure we thought we would see disney approach these kinds of ratios. Theres questions as well about management you have iger as chairman. Chapek as ceo taking over the most biff cudifficult time thaty probably has seen. And now kevin mayer leaving to run tiktok my travel trust owned disney since the start of my travel trust. When it was at 80, it was painful. I dont blame the downgrade. Its like listen, remember, you need to have congregation. Theres no congregation in the theme park not allowed. Theres the opening bell. We will watch it closely powells remarks, his opening remarks to Senate Banking are now published. Interesting. We tend to watch these b of a manager surveys, the new one today, 10 of managers see a vshaped recovery. Asked about new bull market, 25 . Bear market rally, 68 wow so the notion this is still a hated rally is intact. I dont buy that. Were waiting for the outbreaks. We have about an eightday period where those people who think its a bear market rally you never want to bet against the American People or bet against people living. But if theres no spike in georgia, in tennessee, in texas, then its not going to be a bear market rally it wont be. Yes, you might have the fall, but if our hospitals are set for it, i think well be okay. Theres eight days they have to have this thing become a w. Thats a dicey thing to bet on a w when you have moderna out there. Did anyone talk to any scientist yesterday who said moderna is full of it i didnt i got nothing but, geez, thats encouragin encouraging. I think goldmans report said that they hit the mark yes thats 1 of 8 in clinical development. Theres 1 of 10 in preclinical thats 118 potential shots at the goal it led some to believe the likelihood of none of them having temporary immunity seems low. When you digitalize is and you spot trillions theres a thing, the illness you have to go three times left, two times right, then dial a 3, 2. Almost like a james bond configuration of the numbers they run is there Amazon Web Services, and they take out a couple trillion that dont work. Then bring it down to a few that do work. Then they can start doing the tests. All the people who said you cant do vaccines were not including the fact that you could do Amazon Web Services to reject the ones that dont work. This is the first digitized vaccine ever theyre using science and technology that didnt exist a year ago not one year ago right jim, back to the market. The s p is down 8. 8 for the year we still have 30 Million People or something unemployed. Even if we have a significant recovery, which we all hope for and which appears to be starting in certain states, how many of those people will have their jobs back . Theyve been made hole to a certain extent, but that extra 600 bucks for unemployment will run out. How many of those people get their jobs back . How many of those corporations have cut capex go to 2021 for me. Look at the numbers. Back into a multiple that makes sense now. And growth rate from 21 to 22. Im trying to understand why this valuation is one youre comfortable with i think indices are not america. The s p represents has a lot of Zombie Companies in it, but the stocks are not american. Theyre a unique combination of companies that seem almost built for this moment. They surprise people, but they shouldnt. Apple has good numbers amazon has great numbers these are giant companies. Facebook has a new Small Business initiative. What could be debetter for stock market alphabet, you can cheat on your homework all day because youre doing it at home these companies, its almost like someone said lets create some companies for a pandemic. Those companies are incredible now you join a walmart or a home depot. There will be a huge number of people unemployed. Im not betting on a v. Im betting on a u. We have to open places and believe that we can hold on. The restaurants, no restaurant can open and have Comp Store Sales down 80 its not sustainable those arenydennys can Planet Fitness open up and do whats right when you have hong kong putting plexiglass between each treadmill were not doing that i think the unemployed will be gigantic, but if you took depression off the table, whatever level the market was, it was going to go higher. Do you worry about the social implications of unemployment, at least double digits and the stock market at alltime highs i think the stock market if it was an individual, it would be somebody with a pitchfork to take it back the stock market is so disrespectful of the unemployed, its scary but its not a person. Its a conglomeration of wealthy companies that can come through this at the expense of the little guys. Thats why secretary mnuchin was so determined to help the small and medium sized businesses. Theres only so much you can do. Only so many people you can put on the sidewalk and serve them anything that can congregate is still no go. Thats going to be a huge number of people in the cities. But not that much in these areas that are sparse. You know what that means for the election what does it mean for the election theres a lot of areas that are that feel these rules are just based on governors from big democratic states. Were aware of the partisan rancor that has broken down. Dont you think its a shame . Yes i do i dont think it bodes well for the future two countries two countries, david yeah. Lets talk about stocks again. All right we were mentioning large offerings. I did a story yesterday that is worth coming back to today t mobi it mobi tmobile shares down about 3. 5 . Yesterday there were stories of softbank selling about a 25 stake of tmobile into dueutsch telek telekom. I mentioned there were parts not yet told late yesterday we told you what it was which was just not softbank selling some tmobile shares to deutsche tel, but selling a large number of theme into the marketplace. It wont happen right away there were lockups that they had as result of being the Controlling Shareholder of sprint, sprint being merged into tmobile right now Deutsche Telekom is working through that they have a committee working through giving the waivers that will be necessary to allow softbank to do this huge secondary offerings. Yesterday again, the journal then, after my reporting, saying it could be as much as 20 billion worth of stock theyre not set in stone on that number that would be the high it may be less than 20 billion. And Deutsche Telekom will buy some of the stake to take their own stake in tmobile above 50 . You will have an enormous underwriter into the marketplace for a secondary offering that would put pressure on the shares but holding up well. They had a good quarter. People liked it. Its one of the few Success Stories so far for softbank. David, john ledger disappeared. I talked to him, it was his daughters birthday. Can we just say that this guy, even as eccentric as he was, he built a Powerhouse Company no lawyers around that guy he said what he had to say when you have tmobile employees, every one of them met him. They loved him this guy built a Great Company people thought he was a clown. We need more clowns. Send in the clowns yeah. No doubt we continued to watch him succeed and compete against at t and verizon in a successful way. Now with the sprint deal huge integration deal ahead of them they had a lot of time to plan it but still going op mike sievert, the ceo of this company. 1 125 billion market value, theyll have to get the market prep for a large offering. Doesnt mean today or tomorrow, not sure when these approvals will come through. Whatever happened to dumb and dumber it was so much fun when he was calling people names like that at t ceo got named called i dont think hes been called since i was on the swings. You know first time he did that on our set. The first time ledger called him dumb and dumber. We were like did he just say that i thi i think stevenson will be okay we have to mention the jesus christ thing the softbank founder said he was misunderstood like jesus christ. The failure lies not outside but with me. You would backtrack, too illadvised speak illadvised. Completely well well, they are monetizing assets to yeah. The tenyear is back to 74 basis points lets get to santelli. Yes carl, you zoomed in on it. Lets look at the yield curve starting with the shorter mat e maturi maturity a twoweek of two years that shows us we popped up and traded 1 yesterd 18 yesterday, the day before, twoyears are pretty much going to stay glued to the wall. Maybe get up a little bit. Its not out of the realm of possibility to see squeezes and ceos popping seeing a twoyear note sell off. Paired so closely with the feds overnight rate, 0 to 25, its anchored down. If you go to the further end of the curve that carl was referring to, a threeday, yes, 74 basis points keeps showing up here its an important resistance area were now hovering at basically a fiveweek high yield close if you look at a midapril chart of tenyear, if it clears this zone, most likely well be toying with the hugely psychological level of 1 . And when you really think about what is going on with jay powell and mnuchin at the top of the hour, going to be speaking in front of the senate, question and answer, theres going to be some important issues and im sure debt and how much pain tolerance there is with these programs with regard to the treasury underwriting the fed, that will play with the yield curve. We want to Pay Attention to the long maturities. You have 30year bonds hovering in the mid 1. 40s looking at tens minus twos, minus 55 basis points, thats the steepest its been in two months it has implications of how the Banking Sector can squeeze more profits out and whats going on in the housing market. Back to you. Rick, thank you very much lets get to bob pisani with remembering that the nyse will have a full floor opening a week from today, bob. Yeah. Partial, actually. Well be covering that as well the important thing about today, its a consolidation day 21 declining to advancing stocks we want to see a broadening out of the rally we saw that yesterday. Flat today look at the sectors. Tech is doing better Consumer Discretionary is doing better mega caps, the five big name theres are Holding Things up. Thats outperforming a bit Consumer Staples is okay health care, banks again underperforming, going back to that old role there. It would be nice to see a sustained rally in banks were not getting that want to remind everybody, companies are still pulling guidance were at the tail end of earnings season, home depot did it, advanced auto parts did it almost 40 of the s p pulled fullyear guidance we dont have fullyear guidance for most of the companies in the s p. Earnings today, walmart trading up they had a beat. Walmart is near a new high home depot a bit of a miss here. I want to concentrate on comments made by the bottom line way down a little bit by pandemic related expenses. This is a bit of a theme were starting to see, particularly in the retailers. Look at walmart and home depot, they said higher wages and benefits and increased cleaning costs was an issue for both companies. Target mentioned higher costs squeezing profitability. Well hear more from them shortly. This is a theme emerging overall. We had some green chutes southwest had some very optimistic comments from the cfo. The company that recently experienced a modest improvement of passenger demand, bookings and trip cancellations new passenger bookings outpaced trip cancellations that sounds like good news the airlines are trading up today for the most part. This is the first actual twoday rally now theyre flat. They were up at the open but nothing moving dramatically off of the lows there, aside from yesterday as for the markets, modest break through yesterday to, what, 2 2,998 were looking for. Well hear from powell today im sure he will emphasize solvency versus liquidity. They can provide the liquidity, if theres not enough revenue for solvency, they cant help. Thats the big worry we have for the markets. You the cant just have five mega caps generating the revenue. We saw this in the Global Fund Managers survey. The big worry from the fund managers, coronavirus, but permanently high unemployment. This has never appeared on that survey thats an indication that theyre worried about the ability to keep generating revenue out there for some of these corporations carl, back to you. All right, bob. See you in a bit bob pisani when we come back, if you were not watching last night, heres who you missed on gyjeopardy. Corporate scandals for 800. Back to david Dennis Muilenburg lost s hi job over the tragic scandals of this airplane model. What is the 737 max yes vo our communities need help like never before and wells fargo employees are assisting millions of customers across america through fee waivers and payment deferrals, helping people stay in their homes through mortgage Payment Relief efforts and donating 175 Million Dollars to help hundreds of local organizations provide food and other critical needs. When you need us, wells fargo is here to help. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Corporate scandals 2000. Not long before he went to jail for securities fraud of 1 billion, i interviewed bernie evers, ceo of this Global Telecom company that bought mci. Jesse worldcom. Our thanks to david faber, he does those clues, very, very well david announcing clues on jeopardy last night. David, when did you tape that . Well, we taped that at the nyse after our show one day a couple of months back. They do their shows ahead of time so it aired last night but what i was most proud of, guys, i actually came up with the category, and i knew all the answers, but they wrote the questions, but i suggested it. So, the contestants did very well they got them all. Thats so impressive. My family still watches it its an amazing show and i think its an amazing show because they do stuff like what you did. Thats just kind of exciting its really cool thanks, yeah. Always fun, so many different people you hear from, its aiz amazing how many people watch jeopardy and good to see alex trebek still doing it, amazing and thank him for that shout out as well. Looks like his recovery continues pretty well here jim, about ten minutes until we get powell and mnuchin and the quarterly c. A. R. E. S. Act report to congress in front of Senate Banking which will be interesting because its all virtual. Incredible. Dow is down 206 yesterday was the third 90 up day since the march 23rd low, not surprising to see the market give a little bit back as mkm says bulls ought to be happy with the hold here s p is down 12 points. Were back in just a moment. Where will you go first . Will it be familiar streets . Or perhaps unknown roads . Wherever you may go, lexus will welcome you back with exceptional offers. Find a lexus for every road at lexus. Com. No payments for up to 90 days on all 2020 lexus models. Experience amazing at your lexus dealer. Iits not acceptable oor nothing. And its definitely not close enough or nothing. Mercedesbenz suvs were engineered with only one mission in mind. To be the best. In the category, in the industry, in the world. Now, get 0 apr financing up to 36 months on most models and 90day firstpayment deferral on any model. Mercedesbenz. The best or nothing. Lets get to jim and stop trading. Three months ago a start called nvax at 7 and now at 54. The company did see another vaccine competitors to moderna and the rest and the 250 million they filed for in stock, only down 2. 60. Be careful the stock thats up 1,278 this year is a stock that may not be able to hold they were on air with me, for the first time they wanted to put them on, but our restrictions of the size of a company, we couldnt have them on now everybodys crazy about it i want people to be careful because people hate this, who have been goiunning the stock novavax is confident but so is everybody else and theyre raising money and i just said be a little cautious. Yep, thats a good way to put it, jim. Up 1,200. We have a Company Called ping, another one of the companies that makes it so you can work at home securely and we have a Company Called five9, a Contact Center which is the rage how do you get, someone calls, how do you get customer service, what do you do and this guy has built an Unbelievable Company five9 and well speak to him i have all these companies that are what do you do when you work at home. These are workathome guys. I dont think it goes away even if moderna is successful its a boom for a lot of companies. Jim, we have to quickly touch on chips nvidia reports later in the week sheesh. A lot of talk about activity resuming, the chinese building some inventory as the rhetoric heats up and chips benefit from a reopening anddynamic ill take the opposite thing on this. I think china, the negativity on china may have peaked for this year, for this moment. I dont think youre going to hear any more saber rattling i think the president was concerned even with the nasdaq telling luck and the delist, tightening their standards . Im not talking about that but i think the saber rattling may not be so loud right now president navarro focused on building factories that make our own pills with our own ingredients. I think this cats will play cats away, mice will play, nvidias had a big runup but the technology is incredible watch for ana log devices tomorrow, that has an Auto Component not so good. I think that the chip stocks have some justification to run here if nvidia is as good as everybody thinks, and it may be. Remember, they have inference chips, nobodys ever seen it before theres nothing like it. Theyre using a new architecture, much faster than intel. Its remarkable company. Its Science Fiction jansen wong developed a Science Fiction company. Its not skynet either its meant for good. David is always worried about skynet yeah. We hope not. Is it true, david guys, hey, jim, have you steen Stanley Black decker its interesting i mean, revenue decline up 20 to 30 organically in the Second Quarter but thats better than what theyve been planning for, they tell us this morning. Which was 35 to 40 organic revenue decline. I expect it to be down 50 . I just make up some number no, what happened is look, these companies were priced for a depression, not a recession. And theyre not getting a depression i know there are a lot of people who seemed to even root for a depression i wonder what their political thinking is. Yeah, lets hope there arent too many like that i want to root for people living. Living, n living, not dying on a ventilator thats where i am. Were right there with you. See you tonight, jim, mad money, 6 00 p. M. Eastern time welcome back to squawk on the street with david faber, and sara eisen, im carl quintanilla. After the banner day yesterday the s p is holding not too far from 2950 and powell and mnuchin at Senate Banking. Lets get to Steve Liesman this morning. The dynamic duo financing the american shutdown, set to testify today in what will now become quarterly testimony on the c. A. R. E. S. Act, it is mandated in the cares act. Powell will say the feds committed to using the full range of tools and the data show theres a sharp drop in output and a rise in unemployment but its a comment he made last wednesday at the Peterson Institute that may cause some controversy at the hearing, and its about the concern that liquidity problems become solvency problems and congress may have to do more. Recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems additional fiscal support could be costly but worth it if it helps avoid longterm damage and leaves us with a stronger recovery this tradeoff is one for our elected representatives who wield powers of taxation and spending so senator pat toomey thought that comment was so important that he went out of his way this morning on squawk box to comment on it. One of the things id like to clarify is the mischaracterization of the chairmans comments about the congress strapping another money bomb on the economy. He was not calling for that. There was a much more nuanced comment, in which he observed that there are costs to doing that, so it might be helpful to clarify that lets talk quickly about the programs the fed and the treasury put together. Treasury committed 195 billion of 454 billion from congress in eight programs at the fed. Those will be leveraged up into trillions of dollars of lending inprograms including main street, municipal and Corporate Bonds and also buying ppp loans. 259 billion not committed and david, that may be another subject of discussion this morning. What happens to that other 260 billion, round it up wed ask secretary mnuchin about that i think it was last week, steve, him talking about giving them the flexibility they need to respond based on what theyre seeing steve, thank you speaking of secretary of the treasury mnuchin he is also testifying this morning. Lets get a preview on what hes talking about this morning good morning, ilan good morning, david its been a busy day for the treasury secretary before this hearing he was meeting with Vice President mike pence as well as Republican Leadership on capitol hill over the next relief package. Also news that President Trump will be meeting with republicans on capitol hill later on this afternoon. So far, republicans have not coalesced around a strategy for this next package. Just this morning, white house economic adviser larry kudlow was talking about a payroll tax cut. Mcconnell wants business lab liability protections. So we will be watching closely to see if mnuchin signals any sort of consensus is emerging from his remarks this morning. In addition we expect mnuchin to face some tough questions around the lending programs that steve had mentioned. The ranking democrat on the Committee Sherrod Brown wants to make sure there are guardrails around the main Street Lending facilities to make sure the money is going to the small and medium sized businesses it was designed for a bipartisan Congressional Oversight Committee reported 37. 5 billion has been disbursed. As you mentioned mnuchin will say 200 billion is committed and wants to reserve the rest to create or expand the programs as necessary and also bullish in his comments in his written testimony. He said that we are optimistic about the progress being made on vaccines, antiviral therapies and testing, and that he expects Economic Conditions to improve in the third and fourth quarter. Finally just a few more numbers from his testimony for you guys, mnuchin said 530 billion has gone out through ppp, 240 billion in household stimulus checks and that means a typical family of four is receiving 3,400, sara, we will see if the administration gets behind another round of stimulus. Back over to you thank you lets talk about the market implications of this with our panel as weigh wait the treasury secretary and the fed chair. Fidelity joins us and Eric Friedman of u. S. Bank Wealth Management is here as well gentlemen, good morning to both of you urian, what is the markets expectations right now as far as potentially more Fiscal Relief the market is pricing in a v. Theres really no way to get around that. Just a very handy way of looking at what the market is pricing in using this years earnings, the pe went from 20 times at the high to 14 times at the low, to 26 times now on 2022 earnings gone from 16 to 12 to 16 so the market is pricing in that the government is providing a full bridge to the other side of the abyss between monetary and fiscal, and obviously the monetary side is coming in loud and clear, and chairman powell has made that very clear as well in recent days, and now its really a question of whether another fiscal is needed and my guess is in order for that v to be correct, it probably will be needed and its a question of what it looks like between the democrats and the republicans. So youre saying the market is pricing in the fact that the stimulus that weve gotten so far will be enough to bridge the gap, and yet restaurant executives in the white house yesterday were saying that they need to extend those ppp loans an extra several weeks to get through the reopening. So does the market have this wrong, jur rien that is the big question. The market seems to be betting on the liquidity problem, not becoming a solvency problem, and thats been the big debate, and so i think the market is justified to be at kind of that mid 2000s level, were higher than that at this point but the markets are pricing in that by 2022, earnings are back to where they were in 2019, and you know, obviously we dont know the answer, but that seems to be what the market is pricing eric, what will you be looking for from the treasury secretary and the fed chief as far as potential relief and what could move the markets sara, i think the biggest thing were focused on is the signal from the fed. Theyve been consistent and clear with their message that they stand at the ready to do more as more is needed given the backandforth within the legislative branch it will likely be that change agent as we wait and see what passes through the house and obviously the senate so bottom line for us is that we think that this is a very gradual transmission mechanism we as one of the countrys largest lenders are really involved with the main Street Lending facility, as well as the Paycheck Protection Program and these things take time, both to process as well as to ultimately get to the many people who need them so we do think there is likely more to follow the fed certainly again has been very market reactive we also think ultimately there will be more fiscal stimulus to come through the system because the bridge has to extend further than we are right now. Jurrien, you had good data over the weekend, dry powder so to speak nearing 08 levels. Can you talk about the sensitivity of that money to headlines like the kind we got yesterday out of moderna, and what happens to that sensitivity if in fact we see the back end of rates start to climb higher yes, so my sense is just my gut feel is that i dont know nip who is bu anyone who is bullish. The pain trait clearly has been higher, and when you look at some of the Investor Sentiment surveys, the aeii has more bears now than at the bottom theres 4. 8 trillion sitting in Money Market Funds, thats about 16 , 17 of market cap, thats not as big as 08 but its certainly a large number of collecting nothing in interest and probably suffering from some fomo at this point and i think the rationale that most people have is that theyre fearing that the other shoe will still drop, that states will reopen too quickly and then you have a second wave, and then like the news yesterday, owhen that come out, it starts to make people feel a little bit more comfortable that that second shoe does not have to drop there is a lot of money on the sidelines, no matter how you look at it, but again, when you look at the fundamentals, the markets pricing in 2022 back to normal, and the risk of course is that it takes longer, and that doesnt mean the market has to go down it just means that the pe is going to rise even further for the time being, while we wait for the earnings to come in. So there are a lot of different moving parts still well, its rising as we speak. S p just gone positive here up four points. Jur ri jurrien, eric, thank you both. We are seeing improvement of the overall market s p and nasdaq positive. We have groups turning green like Communication Services and health care, industrials, joining Consumer Discretionary and technology, all trading positively dow is down only 37. On the other side of the break well hear from the treasury secretary evsten mnuchin and fed chief jay powell just a few moments away from fed chair powell, and the secretary of the treasury steve mnuchin. Lets get to it. Our programs support the flow of much needed credit to american workers, families, business, states and municipalities i am testifying today on camera at the request of the committee. I look forward to testifying in person Going Forward in a safe way with proper social distancing according to medical guidelines i want to begin by acknowledging the unprecedented challenges the American People are experiencing due to the covid19 pandemic this disease is impacting families and communities across the nation through no fault of their own the American People are also enduring economic challenges im inspired by our nations medical professionals and First Responders on the front lines taking care of our fellow citizens thanks to their efforts and unwavering commitment to their communities, i am confident that our nation will emerge from this pandemic stronger than ever before President Trump and the administration are provided to committing necessary relief to help people get through this time the Treasury Department is working hard to implement the c. A. R. E. S. Act we appreciate Congress Working with us to enact the statute which is the single largest Economic Relief effort in the history of our country we also appreciate the feedback we have received from members of congress on both sides of the aisle as we implement a number of the critical programs established by the c. A. R. E. S. Act. We worked closely with the Small Business administration on the Paycheck Protection Program to ensure processing of over 4 million loans for over 500 billion to keep tens of millions of hardworking americans on the payroll. Nearly 400 Community Development institutions and minority depository institutions in many small banks and nonbanks are participating in this program. Weve issued more than 140 million Economic Impact payments for over 240 billion to provide direct relief to millions of americans. The typical family of four received approximately 3,400. We distributed about 150 billion to states, local and tribal governments through the Coronavirus Relief fund for essential services we have also approved nearly 25 billion in payroll support to the Airline Industry to protect this critical sector of our economy. Turning to the central focus of the hearing today, the c. A. R. E. S. Act also provided authority for 454 billion in support for the Federal Reserve lending facilities to provide liquidity to the system. Since march 17th a proved the commercial paper funding facility, the primary dealer credit facility, the Money Market Fund liquidity facility, the term assetbacked securities loan facility, the primary market Corporate Credit facility, the secondary market Corporate Credit facility, the main street business lending program, the Municipal Liquidity facility, and the ppp Lending Facility we have committed pistol 200 billion in credit support under the c. A. R. E. S. Act we have the remaining noun create or expand these programs as needed and we continue to monitor a variety of economic sectors closely and are prepared to support these programs with the Federal Reserve as we need to move forward. We are sympathetic to the hardworking americans in business enduring tremendous challenges due to covid19 we have had to take unprecedented steps to shut down significant parts of our economy in the interest of Public Health as a result in the Second Quarter of this year, we are continuing to see large unemployment and other negative indicators it is important to realize that the large number represents real people this is why it is so important to begin bringing people back to work in a safe way as we listen to medical experts, we are optimistic about the progress being made on vaccines, antiviral therapies and testing. Working closely with the governors, we are beginning to open the economy in a way that minimizes risk to workers and customers. We expect Economic Conditions to improve in the third and fourth quarter, and into next year. I want to conclude by thanking the hardworking people at the treasury, the Federal Reserve and throughout the administration under the leadership of President Trump, i am proud to have worked with all of you on a bipartisan basis to get relief into the hands of hardworking americans and businesses at quickly as possible. While these are unprecedented and difficult times these programs are making a major positive impact on peoples lives. Together we will destroy covid19 virus and our country will emerge from this pandemic stronger than ever thank you for the opportunity to discuss these efforts today and i look forward to your questions. Thank you, secretary mnuchin. Chairman powell. Ranking member brown and other members of the committee, thank you for the opportunity to testify today at the first quarterly hearing on the c. A. R. E. S. Act this is a worldwide Public Health crisis and Health Care Workers have been the First Responders, showing courage and determination and earning our lasting gratitude. So had the legions of other essential workers who put themselves at risk every day on our behalf as a nation, we have temporarily withdrawn from many kinds of economic and social activity to help slow the spread of the virus. Some sectors of the economy, economy have been effectively closed since mid march people have put their lives and livelihoods on hold making enormous sacrifices to protect not just their own health and that of our loved ones but also their neighbors and the broader community. While we are all affected, the burden has fallen most heavily on those least able to bear it the sack fileses were all making represent an investment in our individual and collective health as policymakers should continue to do what we can to help cushion the blow. The scope and speed of this downturn are without modern precedent, significantly worse than any recession since world war ii, seeing a severe decline in Economic Activity and unemployment and already the job gains from the last decade have been reversed, well more than 20 Million People lost their jobs and recent fed Research Shows what others have also found that people earning less are the ones being hard e hit this caused a level of pain hard to capture in words as lives are upended with the uncertainty of the future Federal Reserve is committed to using our full range of tools to support the economy in this chal edging time. Our actions so far fall into four categories. First outright purchases of treasuries and agencymortgagebacked securities to restore functionality in the critical markets. Second, liquidity and funding measures, discount window measures, extended swap lines with foreign Central Banks and several treasurybacked facilities supports smooth money bharkt function. Third with additional treasury backing, facilities to more directly support the flow of credit to households, businesses and state and local governments. Fourth, temporary regulatory adjustments to encourage and allow banks to expand their Balance Sheets to support household and business customers. So far, we have created 11 facilities under section 13. 3 of the Federal Reserve act, liquidity, funding and the flow of credit. All of these facilities have been undertaken with the approval of the treasury secretary and many supported by funding from the c. A. R. E. S. Act. Ive discussed these facilities in greater length in my written statement, which i provided to the committee. At the fed, were committed to transparency particularly in deploying our Emergency Powers thank you and ill be happy to answer your questions. Thank you, chairman powell. Ill begin with you, mr. Chairman as you know, with regard to the municipal facility, the thresholds for cities and counties are established but they are established at such a level that many of the small cities and counties across the United States cannot apply for individual loans you have indicated it would be contemplative the states would be able to apply for loans for the smaller cities and counties and theres a lot of concern out there about this id like to ask you to clarify that it is intended that these dollars do reach these small cities and counties, and tell us the process by which that can be accomplished thank you, mr. Chairman we as youve seen, been gradually expanding the scope of potential borrowers in this world, and there are 50,000 entities capable of borrowing so we need to draw some lines to be able to handle this, but in the first instance, weve said that we will always be willing to lend to a state and allow it to with the purpose of downstreaming to counties, cities, other sub divisions of Governmental Authority within that state so thats one thing. We also lowered the size of the city and i would tell you, were continuing to look at ways to accommodate further borrowing, including perhaps in the case of states with relatively low populations, where the only borrower with access may be the State Government itself. We are looking at ways to make sure that in those states that we addressed the needs of potentially another borrower or two, and thats something well be working on Going Forward. Zwr thank you very much. Secretary mnuchin, the c. A. R. E. S. Act appropriates 500 billion to be utilized through the Exchange Stabilization fund to help facilitate the implementation of these section 13. 3 facilities by the Federal Reserve. Most of that has not yet played out, correctly am i correct so theres of the 500 billion, approximately 50 billion was in direct lending programs from the treasury and 450 billion was available for the 13. 3 facilities. Ive allocated about half of that, and let me be clear, i am prepared to allocate the rest of that the only reason i have not allocated it fully is we are just starting to get these facilities up and running we want to have a better idea which one of the Facilities Needs more capital as well as the potential for adding additional facilities so i expect to allocate all the capital as needed as was given to us. Once the money is alocated as you just indicated to a particular facility, and the fed implements that facility, then that money can be leveraged into greater amounts of liquidity for whatever market or situation that is addressed, correct yes, that is correct, depending upon the credit risk, it depends on the leverage weve allocated with the existing capital up to about 2. 3 trillion in existing facilities and mr. Chairman, let me just make a comment because i know theres been a lot of questions as to whether the treasury is willing to take risk with that. I would say the answer is absolutely yes the way these facilities work is in the facilities that dont have any credit risk, such as the ppp, i approve those without capital allocated by definition, any facility that the fed believes puts them at risk, i do put up capital so by definition that capital is at risk and we are fully prepared to take losses in certain scenarios on that capital thank you. I have just about 20 50 seconds left and want to stay with the time there have been allegations that Big Companies are benefited by these facilities could you quick lay dress that, secretary mnuchin . Well, let me just comment the announcement of the Corporate Bond facility without putting up 1 of taxpayer money, unlocked the entire primary and secondary market for Corporate Bonds. Companies such as boeing that i had expected would need to borrow from us on a direct basis were able to borrow 25 billion in the primary markets so i would say in the best case scenario, the markets open up and we dont need to use these facilities in the case of main street facility and municipal facility, we expect both to be up and running by the end of the month, we expect to have a big impact on both those markets. Thank you very much senator brown . The workers who have kept our country running, the essential workers that we all Pay Lip Service at least to are often the lowest paid workers in our economy, theyre usually women, theyre disproportionately black and brown workers, too often they dont have a union, theyre low wage workers who do the laundry at hospitals who prepare our food, put their lives on the line to keep their country running, still worried about paying the bills, staying afloat and staying healthy. Mr. Secretary, do you think thats fair . Mr. Senator, i apologize, due to the technical issues, i didnt hear the beginning of your question the people who are, that we call the essential workers and we call out and thank those essential workers are often the lowest paid workers. They do the laundry, theyre the custodians, the security people. They prepare our food, they put their lives on the line for very low wages, and theyre still worried about paying the bills is that fair well, mr. Senator, i just want to thank all the essential workers, whether it be the health care people, the thanking is great, but these are people, is it fair that our economy pays the essential workers so little in such work conditions mr. Senator, some of those people are paid less than others again, i my question, is that fair again, mr. Senator, i dont know what specific workers youre referring to. I can lay them all out. Ill try the chairman of the Federal Reserve. Mr. Chairman, is it fair that those workers who are exposing themselves to this virus, that are making low wages, we call them essential by all of our definitions, is that fair . You know, those are workers who are in basically the Service Sector thats whats unusual about this is its all about the Service Sector, particularly those parts of the Service Sector that are, where there are lots and lots of inperson contact and those tend to be lower paid workers and definitely the most affected and i would just say that, you know, all of our efforts are to do what we can to help those people and create conditions so that theyll have the best possible chance to get back to work well, some of the best things you both could do is to support pandemic pay for these workers and support another recovery act that included more dollars for these lowpaid workers who we continue to celebrate as essential. Mr. Secretary, we passed the c. A. R. E. S. Act to help millions of workers who make our country work youve set up c. A. R. E. S. Act programs to lend trillions of dollars to companies am i right youre not requiring companies to use the money they borrow to keep their workers on the payroll . Mr. Senator, i am following what was the exact letter and spirit of the law that we negotiated with you and others on a bipartisan basis. In some of these facilities, there are specific requirements and i assure you that the chair and i are absolutely enforcing those requirements as required in the literal and spirit of the negotiations well, that was a nice sounding words, but the administration is willing to send people to work without regard for their safety, but the administrations unwilling to make the trillions of dollars of taxpayer money will help these workers directly secretary mnuchin, Public Health experts have told us its not safe to reopen the economy until we have Worker Protections in place that will control the spread of covid, things like testing, contact tracing, protective equipment, efforts the president has clearly failed to lead to help our country. Secretary mnuchin, you said theres considerable risk of not reopening, that keeping some businesses closed could cause permanent economic damage. How many workers will die if we send people back to work without the protections they need, mr. Secretary . Mr. Senator we dont intend anybody back to work with protebs. I was prepared to come there today, i thought it was safe to testify. As a matter of fact i was at the senate this morning wearing a mask and i assure you, both myself and everybody on the task force, the Vice President and others are following the best medical advice and i couldnt be more proud of the medical advice that were getting, and the way the economy is opening up in a safe way so how many workers should give their lives to increase our gdp by half a percent, that youre pushing people back into the workplace. Theres been no National Program to provide worker safety the president says reopen slaughterhouses, nothing about slowing the line down, nothing about getting protective equipment. How many workers should give their lives to increase the gdp or the dow jones by a thousand points no worker should give their lives to do that, mr. Senator and i think your characterization is unfair we have provided enormous amounts of equipment we worked with the governors weve done a terrific job of mr. Secretary, im not going to let you make a political speech who a great job we hear that from the president at his news conferences when in fact this country, the president has still not led an effort to scale up testing hes played state against state. Hes played hospital against hospital to get protective equipment. Everybody in the country, your comments not withstanding, knows that chair powell, you said last week the additional fiscal support could be costly, but longterm economic damage in the stronger economy so Congress Needs to think about more than just the National Debt right now. Its less costly to actively help people than to help pay for our failure to act in the future if youd answer quickly, mr. Chairman i said it could be. This is really a question for congress to weigh. I wanted to call out a risk there, which was the risk of longer term damage to the economy, and thats what i was doing, and i said we may need to do more and congress may as well thank you, and mr. Chairman, one brief comment. The administration thinks we should put more workers at risk to juice the stock market and havent come up with a basic plan how to protect workers when they go back to work, when President Trump and leader mcconnell want to give away trillions in tax breaks to billionaires, the price tag didnt matter a couple years ago when that happened, but we need to spend money now to keep workers safe in spite of the comments of some in the administration and some in senate leadership. Thank you, mr. Chairman. Thank you i would disagree with that characterization as well but lets move on to senator timmy senator toomey thank you, mr. Chairman thanks for joining us this way i want to follow up on this discussion about additional spending and remind everybody, while we authorize something on the scale of 3 trillion to round things off of direct spending and lending, and then authorize the fed to compliment that with another roughly 3 trillion, that could be 6 trillion thats like 30 of our entire annual economic output, and in fact, actually more than half of it has not been spent or lent. So i think you can make a pretty strong case that before we rush out and do another spending bill, we actually let some of this stuff go to work and understand the consequences of what weve already done. I appreciate the chairman observing that his comment, while i think it was often mischaracterized, is calling on congress to pass a new bill. In fact it was much more nuanced an that and acknowledged among other things the potential cost of new spending. The comment that you made at the Peterson Institute, mr. Chairman, do you still stand by that comment i do. I do would you like me to expand on that, senator . I think we covered it so i appreciate that. Let me move on to follow up on something the secretary said about reopening. I think its worth remembering why we shut down our economy in the first place. It was a very specific reason, and that was to prevent the virus from spreading so rapidly that so many people would get sick so quickly, that we would overwhelm our hospitals. Well its been clear for weeks now that were not going to overwhelm our hospitals, certainly not in pennsylvania and i know not in most of the country, and so i think its essential that we begin the process of carefully, thoughtfully and safely reopening the economy. Secretary mnuchin, the longer that we continue a shutdown, when weeks turn into months, doesnt that necessarily increase the risk that some businesses will fail, some jobs wont be there to go back to, if a lockdown and a shutdown continues indefinitely thats absolutely the case, mr. Senator. There is the risk of permanent damage, and as ive said before, were conscious of the Health Issues and we want to do this in a balanced and safe way. Thank you so for i guess either of you, this one i want to talk about the main street programs first, give us your best estimate of when we can expect borrowers to be able to access funds from these programs. Ill go ahead so on main street and frankly on all of the other facilities, we expect all of them to be stood up and ready to go by the end of this month i dont say it wont be a day or two into june but thats our xmg expectation and the funds should be directly flowing after that very briefly, would it be possible to characterize the remaining hurdles youve got to get over in order to start actually being operational sure, so all of them are complex and challenging. Main street is in a class by itself really. It is not the bond market. These are small and medium sized companies. They live in a world of bank lending. Thats a world of negotiated documents and were trying to enter that world and make loans to qualify buyers. So weve set up, you know, big operations athe the Federal Reserve bank of boston and hire Service Providers and doing all of that to be ready to face off against it its a very diverse, small medium and large companies, very Different Industries with very different credit needs, some of them, assetbased, some of them cash flow based so its a really complex undertaking and people are working literally around the clock and have been for weeks to get it ready by the end of this month. Thank you for that. I also observed that one of the terms, one of the conditions of these facilities is that the banks who are acting as lenders and by the way im hoping on banks can participate well, business and others would be effective conduits for these funds but the lender is going to be required to keep some of the risk on their own books, and im wondering what kind of reaction youve gotten from lenders and potential borrowers, what kind of participation are you anticipating do you think there will be Strong Demand for these facilities, given the way theyve been structured . You know, there are three facilities weve had a lot, a lot of outreach to borrowers, lenders, everybody, going back over the last couple of months, and three facilities will probably attract Different Levels of demand we are getting a good deal of interest and inquiry on them, and i think well find out fairly quickly you should know that we will continue to be prepared to adapt as we have shown, if an uptick is not what we hope, well be prepared to find ways to address the needs of these, this area, of the economy all right, thank you very much thanks, mr. Chairman thank you senator reed chairman powell, thank you for your great leadership. I think you recognize that late and local governments are absolutely critical to our response to covid but also to our economy. Its been estimated for example that there are 20 million jobs in state and local government that they contribute state and local governments 8. 5 of national gdp and we know theyre facing dire economic circumstances, projected 10 budget losses this year, 25 next year. How likely will it be for us to have robust recovery, if our states do not receive additional and flexible Fiscal Relief, not a loan for the fed, which increased leverage, but fiscal grants to the states, how robust can our recovery be if this key sector is out of play . Senator, i dont want to get into into individual fiscal proposals. Those are really for you i tried to stay at a fairly high level on this. I will just echo that i think Something Like 13 of the workforce is in state and local government a lot of the Critical Services that people rely on day to day are, you know, provided at the state and local level, with balanced budget amendments, that means that balanced budget revisions in state constitutions, that means when revenue goes down sharply, it can mean job cuts and service cuts those are all important things to consider in Going Forward thank you secretary mnuchin, i just want to make a comment, because i made this comment to you repeatedly, that is, i do believe that we are in a Coronavirus Relief fund we passed, you do have the flexibility to provide support for the states when it comes to lost revenue this lost revenue was not anticipated in their budgets, far from that, and second, it is directly related to the covid virus. If you go to most states it is directly related i would urge you to relook as youve done at ppp and youve tailored that several times, look back again and reconsider the ability to use flexibility in this Coronavirus Relief und so thats just a comment, mr. Secretary. Let me return back to chairman powell chairman powell, we know that our unemployment is going to be something that will be with us for a while. Its about 15 now ive seen us as high as 20 or 25 next year, and yet our Unemployment Insurance programs are key to date, they will end at a certain time. Do you think its important for us to have the confidence and give confidence to people that they can still receive funds like this, even if the date is surpassed, the economy is still in disarray, states still looking at 10 unemployment rates . Dont they need that certainty so we have to build in some type of tech, not a date but a test for Unemployment Compensation . Senator, again, thats a question about a specific fiscal policy, that really falls to you. We try not to get into too many specifics. I will say, though, that the risk that i called out last week that ive been concerned about and others have is that long periods of unemployment can really affect peoples ability to go back to work, because they lose their networks, they lose their skills they lose contact with the job market so i think anything that keeps people intact is probably, hopefully in their job but in the meantime, keep them out of solvency and things like that, should the expansion take, start later or take longer to get going. Those are appropriate things for you to look at thank you just a final point, chairman powell i think were missing the boat, once again, this is sort of like deja vu. I was here in 08, 09, and 10 and we leaped in to help the Mortgage Market with both feet but we didnt help people avoid foreclosure. It seems to me that thats what well do again, unless we have a Fiscal Program that provides resources to keep people in their homes, when they cant pay their rent, when they miss their mortgage payments, that will put pressure on the mortgage community, and you and the fed and the treasury will rush to help wall street will get to help main street will be left behind. There will be as there was in 08, 09 and 10, thousands and thousands of people without homes, and any economic recovery is going to be slowed by people in those conditions. So i would just ask whether you consider this fiscal response to the core problem people cant pay their rent, they cant pay the mortgage, is probably the best response rather than filling it in later. I think youre right. Foreclosure, waves of foreclosures can undermine Household Finances obviously and as a result of bad Household Finances are troubled. So but of course in this case, there has been some significant forbearance on that, and i think thats again something to continue to consider thank you very much, mr. Chairman i thank chairman powell and cha cha chairman scott . Thank you for being with us this morning really important time in our country. Theres no doubt that the Global Pandemic has shocked the world and frankly, shuttered a lot of businesses and because of the Paycheck Protection Program i think the two tranches of the Paycheck Protection Program has saved from my understanding somewhere near 50 million jobs, the First Tranche 30 , the second tranche about 20 million jobs and we still have about 100 billion left that we can deploy into our communities. With that said, thinking about the backdrop of 100 billion left in the ppp, mr. Sick tear, i feel passionate about helping the underserved communities, orrey county in South Carolina or West Virginia an some rural parts of West Virginia, very often small minority owned businesses are the lifeblood in these small Rural Communities, and frankly, we have the Minority Business Development agency that has done a really good job of helping to deploy some of the resources from the ppp into those underserved communities. My question is, how can we use the mbda or some other mechanism to get more of those resources in our Rural Communities or frankly, in our inner city communities where perhaps that Paycheck Protection Program has been more intimidating for smaller businesses, like barber shops and beauty salons, some of the rural gas stations that may not have the banking relationship that was necessary at the beginning of the program, or their 1099 which means that basically they had to wait a week before they were able to get in to cycle. How can we help those organizations and agencies like the mbda actually provide the marketing so that more people understand the benefits and they understand the program of the ppp . Mr. Secretary . Well, senator scott, first of all, thank you, because we appreciate the work youve done with us on this issue already, and we will continue to work with you, and others one of the things we are very pleased about the additional money is that the average loan size has come down considerably. I think we all had certain concerns about in the First Tranche how Larger Companies will prioritized i believe thats now been corrected. I also couldnt be more pleased how weve been able to get sole proprietors and others into the program. As i have said is fortunately right now, we still have a significant amount of money left, but we are very much willing to consider the bipartisan request of reserving money for cdfis at the end to make sure the underserved communities are properly served in this program. Thank you. Thank you, mr. Secretary, once again, let me just say to you, since i can see you on the screen, you have done a fabulous job under intense pressure, and without any question america recognizes the valuable service that youve provided to our country, and i am personally thankful for your accessibility. Under pressure, you have still been very receptive and responsive, and that is to say a lot under the Current Conditions so thank you very much on that, and i heard chair powell, you talk about forbearance very quickly there. This is an issue that continues to grow in importance and really in urgency, whether its a Small Business, whether its the Residential Market or the commercial market. The one concern i have that continues to grow would be commercial mortgagebacked securities there are a number of Shopping Centers in South Carolina and frankly throughout the country, where having spoken to some of the folks who own those Shopping Centers, like 20 to 22 of the folks are able to pay their rent, which means that were looking at a domino effect in the Mortgage Market, whether its commercial and frankly, residential the same concern im not sure what the answers are. Certainly its either forbearance or frankly bankruptcy for many firms. What should we expect, what should we anticipate from the fed and from the treasury as it relates to creating more liquidity in that market, and is there, i dont know that theres a silver bullet. I dont see a panacea, but what would you both suggest that i should tell my constituents on this really important issue . Thank you. So it is an important market. As you know, weve supported the cnbs market with our open market purchases. That did help the market keep functioning. In addition legacy cnbs are eligible for our term asset loan facility, which is an assetbacked security. Its an important market, we continue to monitor it you know, the 13. 3 facility is a Lending Facility, and thats the tool we have not every problem can be successfully addressed with such a facility, but where it can be, were willing to take a hard look okay, thank you mr. Secretary, anything to add to that, sir quickly, please again, i would just add that working with the fhfa and ginnie mae on the agency side, and then working with the fed on the securitization side, unfortunately securitizations have certain limitations, but we continue to do this. Thank you. Thank you, mr. Chairman i may be over my time, i cant see time i cant see the clock so i assume i have five more minutes left. Ive been trying to tap ill do something louder senator menendez. State and local governments are facing unprecedented budget challenges were looking at an enormous wave of budget shortfalls about to crest which will leave to a devils cocktails of devastating layoffs, dangerous cuts to Public Safety and essential services and massive local tax increases. Any one of those ingredients threatens to make this check crisis even worse and the combination of all three is almost unthinkable the bureau of labor statistics just reported that state and local governments laid off nearly 1 million workers in the month of april thats almost 1 million firefighters, police officers, teachers, Emergency Health personnel that should be on the front lines of the Public Health crisis but are sidelined instead. Chair powell, let me start by asking do you agree that our economy will get worse if state and local governments are forced to layoff even more firefighters, police officers, teachers and Emergency Health personnel . Well, let me say what we are doing, senator we are we have a liquidity facility that is there to address the shortterm liquidity needs that these entities have because of their loss of revenue due to the effects of the pandemic thats really the tool that we have to i appreciate that thats not my question my question is, if states, counties, municipalities continue on the path to lay off, we have a million laid off even more, just from a economic situation, doesnt that make the economic recovery even worse essentially yes, senator, and we have the evidence of the Global Financial crisis and the years afterward where state and local government layoffs and lack of hiring did weigh on economic growth. One of the tools we have to alleviate this problem is using the Money Congress provided in the c. A. R. E. S. Act to bring down borrowing costs for our state and local governments to set the stage for a tron recovery. I was glad to see the Federal Reserve support local governments through the municipal Lending Facility but i dont think its enough. In a letter that i senators tillis, brown and murkowski sent to you last week, we called on the fed to establish another facility one that would purchase medium and longterm Municipal Bonds directly from issuers as well as on the secondary market and ensure our state and local governments can finance Key Public Services and invest in infrastructure in other areas to jump start our economy and get americans back to work will you commit to work on that proposal that senators sent to you . Well take a look at that, senator. I will say that generally with 13. 3 were trying to address liquidity needs. Not with standing that we are taking a look. I appreciate that in a speech last week you said additional fiscal support could be costly but worth it if it helps avoid longterm economic damage and leaves us with a stronger recovery, the tradeoff is for our elected representatives and i agree the hit is tremendous and not just specific to my state of new jersey, projections released by moodys reveals every state in the nation is already or will soon face budget shortfalls. They found that ohio and arizona are each facing a fiscal shock totalling about 20 of their entire state budget. Some are worse like West Virginia facing a 40 fiscal shock. The fed cant be expected to solve all of our problems. Yesterday i introduced smart act, a bipartisan three republicans, three democrats, to provide 500 billion in direct support for our state and local governments, its the first bipartisan bill of its kind in the senate and i think when we have colleagues from mississippi, louisiana, and maine on the republican side its not a partisan issue. Would that be the type of solution that can get us back in terms of the states into fiscal recovery senator, you know what weve done with the Municipal Liquidity facility but those are for elected representatives. Let me close on this. A lot of minority owned businesses are not getting access to the Paycheck Protection Program as we in congress have intended i hope you will be receptive to alas vegas Community Development and Financial Institutions and minority Development Institutions to get greater access to these programs and to the lending facilities set up on the c. A. R. E. S. Act so these funds can reach businesses and lowincome and underserved areas of our country and its still not happening and i urge the secretary has been receptive about this, i would urge you mr. Chairman to be receptive as well. Thank you well next move to senator sass who will be with us by telephone and senator sass, i will tap at about 30 seconds left of your five minutes you can proceed. Thank you, chairman and gentlemen, thank you for both being here and sorry im in the hallway outside of a Judiciary Committee hearing so i dont have the zoom camera here. Im grateful for your time and responsiveness on this i want to start by asking by some of the recent cyber attacks. Weve seen an increase in schemes directed at Financial Institutions that have been active in trying to help with corona response and im just curious if you have any update for us on the Cyber Security attacks we see in the space . Well, i would just comment on that we have a department within treasury that is actively working on all these issues and coordinates and makes sure our infrastructure i will give a pitch for our secret service bill, moving the secret service back to the treasury i think they can help with on these cyberrelated issues we have all the resources working on this jointly and taking it very seriously [ inaudible ] the institutions that dont have the scale to have huge cyber defenses on their own and when we see foreign actors doing stuff like this its critical we view this as a whole of Society Problem not just these institutions alone thank you for your pledge to keep looking at that chairman powell, the fed has done a series of announcements over the past two months over the 13. 3 lending facilities and in the announcement of april 9th the fed announced the term asset backed security loans would be expanded to include mortgage security backed and loan obligations. The wall street journal described that as, quote, the fed will in effect be buying the worst shopping malls in the country and some of the most indebted companies, closed quotes could you give us your perspective on the characterization of this expansion and are they right about the risk levels with some of the commercial properties as america goes through this experience of corona time, lots of people are not just doing telecommuting and distancing for the present, but we see in Silicon Valley lots of Companies Planning to migrate their longterm strategy and i would assume thats a wellwetter bellr the taxpayer should not be on the hook for flooding into that space. Can you tells us how you would respond to the argument . First, in talf were supporting asset backed securities, car loans, credit card loans, in addition to that you mentioned. Were only buying the aaa rated piece with a good sized haircut. The credit risk is actually very, very low on this to us and same thing of the clos thats helpful the aaa point. Secretary mnuchin, i want to go back to china i. P. Issues you and i have discussed the Chinese Government has been stealing intellectual property tore decades while weve indicted companies and individuals for Cyber Espionage and some of the theft of the intellectual property we rarely see sanctions for these crimes we have indicted huawei and its subsidiaries and cfo for a long list of crimes for secrets, sanctions evasion, money laundering, but we havent placed any sanctions on huawei itself how do you and the Treasury Department assess the cost and benefit of utilizing sanctions against some of the communist cheese party champions like huawei that are not really private sect companies, they built the business side to sort of ostensibly private sector side of their organization by stealing i. P. , but the back end of huawei is hooked in not just to the communist party but to military intelligence, why do we continue to treat these quote unquote companies as if theyre really private sector . Where do you come down on the cost benefit analysis on utilizing sanctions . I think as a matter of policy, you know, and ive said this before, i dont comment on future sanctions, actions, nor do i comment on specific sanctions on specific companies, although i will tell you that the issues related to huawei, we