Fliers grounded. A risk few are talking about but we are the ticking time bomb amid many bank Balance Sheets. You are watching Worldwide Exchange on cnbc. Good morning, good afternoon, good evening wherever you may be watching what already feels like the fifth day of the week. After yesterdays wild market ride stocks, they open way down stock futures down 1,000 points. Then the market swung more than 700 points as the Federal Reserve says it is ready to buy Corporate Bonds. Basically a direct bail out struggling with individual debt issues right now, stock futures are powering up 500 points not just stimulus for the fed. Reports the Trump Administration is creating a plan for roads and bridges but some funds will be reserved for 5g and rural broadband. Infrastructure has been talked about about three years with nothing passed yet lets wait and see what happens. Treasury yields are surging on that news continued at a whoping 0. 74 . Up from a couple of days ago a huge reversal around the world. Japan, look at that, surging nearly 5 in one of its best days in a long time green all around youve got china up. Markets surging as well. Germany, uk, france, all up. With optimism helping stocks right now, lets not forget the first wave of the virus. It is not gone and still growing in many parts of the country good morning thats right. It is growing in our country and other parts of the world china is reporting 40 new cases with 27 of those in beijing as the new cluster continues to grow there were 32 locally transmitted cases and eight imported cases beijing had no new reported cases for almost two months. In washington, larry kudlow is playing down the risk surrounding the up tick of hospitalizations in states like texas, arkansas and missouri saying the trend is, quote, not worry some with regards to the black lives matter movement, he says he finds it hard to understand the concept of 20th century systemic racism we have seen tremendous growth in my lifetime. I believe more is about to come. Thats why i do not believe in whatever it may mean systemic racism we are about progress. Americans learn from history move on and progress from that this crisis now, whether policing and other matters related to policing, we can change this and improve and indeed with will turning to u. S. Airline industry, passengers who refuse to wear face coverings during flights could have flight privileges revoked alaska, american, delta, united and jet blue for passengers who are unwilling to comply could be put on the do not fly list back to you. Thank you, buddy. Elsewhere, fed chair jay powell begins two days of testimony today addressing the economy and fed policy he will speak to the Senate BankingCommittee Beginning at 10 00 a. M. Eastern coming a day after the fed announced it will start buying individual corporate funds for the first time ever. Easing conditions and stocks loved it rallied back 800plus points. Ceo of commerce street capital. Welcome dorey. How long have you and i been talking . A good while. Did you ever wake up aand think there would be a day the fed would step in and buy individual Corporate Bank rates . No. I didnt and even more shocking is the response to the fed it is like any time i get bad news, i expect the fed to bail me out and what should be at least a measured response and that the bond takes off in a rally. I like good news is that really good news that the fed is buying anything and everything in the market dare we call it hopium where we talk about this optimism powering the market. Believe it or not, complaining about the market then and the numbers are much smaller let me ask you this. Does debt matter in i more on any level . It was a question we had the other day throwing the numbers around i remember in the Reagan Administration a trillion dollar not deficit was debt was reached and we thought whoa is us and now the deficit is in the trillions. At some point, there has to be a reckoning. Debt should matter unfortunately it doesnt in that environment, do we just hold our nose listen, there is going to be a day down the road where there is going to be a debt reckoning maybe next month or down the road but it will happen. Does that prevent our view and clients from holding their nose whether they hate it and buying our equities you have to look at the political incompetence around the world. At some point, politics does tart to mess with the market right now, the dollar is the world currency and when shaken, where does the w0rorld then turn to at that point, then i think you have a reckoning on the dollar we are a long ways now weve had a tough with the virus and the unfortunate political unrest and rioting going on. Im hoping a lot of this stuff will work itself out over the next 6 to 9 months with the election and if we can get past that, we see a much brighter day for the u. S. My gosh, with Everything Else going on, its easy to forget we have an election what we saw is the market did nothing ahead of 15 months of that election. We are closer than that now. Do you expect the markets will freeze up like in 2016 ormaybe get more volatile as we get close tore november . I do. Im surprised the market would be this optimistic given the market would be coming up. The market has baked in a little bit the difference with the polls and the market is expecting a Trump Victory and wouldnt be so optimistic. It isnt that the market is biased as to the one policy or another. The market doesnt like change in midstream i think the markets have baked in a Trump Victory and the more the polls either prove themselves toward a biden upset, then i think you can see unrest in the market. The stock market has been extremely unpredictable as of late with trading and manipulation goes on the bond market has not given us a great read next time, well ask you about that manipulation there. Have a great day thank you. You bet big a block and we are just getting started. More to do a troubling trend that is anything but new when p it comes to institutional investing and minorityowned funds well break down that important sto story. New tensions between north and south korea bubbling over. And well speak to one firm that certifies their efforts around diversity and the hard but important question they should be asking themselves and their stake holders. And spray mopping. To lock away debris and absorb wet messes. All in one disposable pad. For a complete clean, vacuum, spray mop, and toss, in one click. The shark vacmop, a complete clean all in one pad. drum beats whats gonna happen next in the market, can i get rich quick . , companies are saying. We dont know how we are going to be doing in the next couple of months. Were withdrawing our financial guidance. So, there seems to be a massive disconnect between whats going on in Corporate America and what investors are believing is going on in Corporate America. The message to you dont trade because you think youre gonna get rich quick. Because you think. Dont trade because you think youre gonna get rich quick. Bbut what if you couldg do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Welcome back and good tuesday morning. Look at dow futures. There on their way back. Up 441 points right now. Lets continue to critically Important National conversation around race, diversity and equality focusing on the continued path toward Economic Prosperity for all. A new study out, showing that leaning towards white majority investors and how it leads them. Not just a racism issue but a fid usury duty as well thinking that funds may be missing out on returns by undervaluing highperforming Fund Managers. That was found in a study through a study and a firm called illumin capital asking them to evaluate on returns and investors at the highest levels, they tended to give black managers lower performance rating than white of similar quality. Among the weaker teams, the allocators were prone to favor black managers in a real world, it is unlikely they would invest. In addition to racial disperities in the pipeline for Fund Managers there exists systemic Racial Disparities of how they value wait funds and allocate money conducting the awareness of biases key in these groups of people are system matticly locked out because of the race specifically which is part of what we proved in our research. Unless there is a proactive strategy that is Market Driven in based to protect the highest performing managers in these communities, then nothing will change currently of the 69 trillion across the world, just over 1 is managed by women and people of color 1. 3 of 69 trillion. That small that includes women, which represents half the population africanamericans, hispanics these are large groups of people representing 1 of the Asset Management industry. There is a ton of work still to be done it is an important conversation. Huge gap. Coming up, we have the cofounder that will help companies be smarter and better on these issues. Thank you for an important story this morning still on deck, a crisis in the making maybe. What could be the ticking time bomb on many banks Balance Sheets a story few are talking about but we are and it is ahead announcer todays big number, 519 billion thats how much commerce apples app store facilitated in 2019 including sales of physical goods and well as in app advertising. 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. Okay, give it a try. Between wisdom and curiosity, theres a bridge. Between ideas and inspiration, trauma and treatment. Gained a couple of more pounds. Thats good for the babies. Between the moments that make us who we are, and keeping them safe, private and secure, theres webex. Beautiful. Gas, homes and no gas. Lets look at important stock stories right now. Chesapeake will reportedly file for bankruptcy as soon as this week finishing negotiations on 900 million debtor in possession loan the looming filing is at noon and we have been reporting on it since midmay. The company has more than 9 billion in debt. Today, lennar shares trading higher offering an improving outlook and continuing this month. Dont miss lennar ceo coming up. Tesla striking a deal to buy cobalt from glen core supplying the new shanghai giga factory and the proposed facility in berlin i think musk would say lol . That is stock news a happening outside the world of business Frances Rivera is in new york with that. Good morning today President Trump is expected to unveil his executive order on Police Reform in the wake of killings of george floyd in minneapolis and Rayshard Brooks in atlanta. He will ask to create a database to track officers. North korea has blown up an interkorean liaison office. Showing the explosion and smoke rising from the complex. The building was opened in 2018 to improve communications between the two. As the nfl moves to start the season, word several players from the Dallas Cowboys and texans have tested positive. And ee zekal elliott is one name who has tested positive. Better now than in the regular season yeah, i know zeke elliott apparently not happy his diagnosis was revealed saying wait a minute, where are the health rules and laws . Still ahead, an unlikely winner amid the coronavirus and lockdown who is that company . Well tell you the name. Otherwise, it wouldnt be a mystery check. That is the mystery in mystery chart. Well ve trealhat name stock futures are up 450 back after this. bling see, incident resolved. How did you. Gotta enjoy the small wins. You keep being you, derek. Keep being you. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. Talk to your financial professional or consultant bbut what if you couldg do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Building bridges and set to buy. We are up 471. From wall street all about that stimulus first, fed chair and maybe the white house. Why the American Banking system could be on the cusp of calamity feds may not be able to bail you out this time. Thursday, june 16. Tht Worldwide Exchange here on cnbc welcome and good tuesday morning. We are kicking off this half hour surging with a hugely different story coming off the monday wild market hour. You remember whack to jed stocks slid way down. It is ready to do something they have never done before basically a direct bail out of many Different Companies already dipping their toes and their money. Stimulus from the fed also reports this morning of the Trump Administration trying to draw up some sort of infrastructure plan with roads and bridges. Those funds would be reserved for the 5g infrastructure if thats the case as well as rural broadband. Remember infrastructure week and then infrastructure week it has been talked about three years now with nothing passing fed stimulus possible plan has dow futures up nearly 500 points treasury futures are up roughly 0. 74 . Thats higher than they were around the world now, youve got green across the screen. Julianna tatelbaum with our indicator of a couple of weeks ago with your 6 mocha latte paid off what are the top stories overseas good morning. There are many brits getting back to the coffee shops no doubt about that. But beyond the return and the reopening here in the uk, the bigger focus is no doubt on the Federal Reserve announcement around buying the Corporate Bonds and around the potential corporate bill putting it all together, we are seeing a very Strong Demand in material stock clearly a link to the infrastructure report. We are also seeing a Strong Demand for travel and leisure and banks where money is being put back to work oil is also in focus we are seeing Oil Prices Edge higher this comes despite warning from the agency that the crude demand wont fully recover until 2022 that is something weve been watching back to you. A couple of years all i say is be careful of long projections. They can be wrong. Take care. Coming up, we continue the important conversation around race, diversity and business and mpeak with the founder of a coany that learned to ask the right and very difficult question the covid19 pandemic is creating Food Insecurity on a scale not seen in decades. An estimated 54 million americans will struggle with hunger. With 200 food banks and 60,000 meal programs, feeding america is the largest hungerrelief organization in the country. Join Morgan Stanley in supporting feeding america and your local Community Food bank. That go out today get delivered. There are people who can only get food from amazon. When you come into work, thats what drives you. My little one, i would say hes definitely proud of me. Every time he sees the blue prime trucks, he says, daddy, theres your people i know every single one of us is here busting as hard as we can go every day to make sure these packages get delivered. Try natures bounty sleep3, as hard as we can go every day a unique trilayer supplement that calms you, helps you fall asleep faster and stay asleep longer great sleep comes naturally with sleep3. Only from natures bounty. With spray mopping to lock away debris and absorb wet messes, all in one disposable pad. Just vacuum, spray mop, and toss. The shark vacmop, a complete clean all in one pad. Welcome back the sun rising over washington, d. C. Where fed chair is expected to discuss the impact of the federal impact and respond to the pandemic and specific focus on minority owned businesses we have more on this important topic, by the way, also from washington, d. C. Good morning i think lawmakers are really going to push powell to focus on the minorityowned businesses and the lack of funding to minority businesses despite how theyve been hit the number of blackowned businesses dropped by 41 . It went from just over a million in fed to 648,000 midapril. Other minority groups saw steep declines latino owned businesses down 31 . Asian businesses down 26 . Warning there could belongterm consequences as well these businesses are so important in creating jobs, particularly for other minorities and help communities of color create wealth republican senator rubio wants to address these in the next round of federal aid senator cardin said that should start now requiring agencies to priorities under served communities right away 10 billion has been set aside but you can expect towel to look to more to be done a lot of talk but is there hope for action . That depends on if we do see another round for businesses on the fed side what is important is that they recognize and he said they should take a broad definition of the maximum employment mandate and addressing these inequalities will require an allin government response and that congress will have to step in at some point in d. C. , big day on capitol hill thank you. The deaths of george floyd, breon Breonna Taylor and Rayshard Brooks has shed light. Not just society but companies to do the right thing because it is good for all of america and good for business. Coceo in the b lab that sets standards as a force for societal good. A lot of talk. People are saying everyone is trying to say the right thing. Do you think they are go doing the right thing . Good morning, brian i certainly hope so. I think this is a time where companies are finally seeing when their role in society can be in the wake of the last few weeks, we have seen Companies Step up with antiracism statements and donations, investments in their dni departments. Yet, those are small and tokenized commitments. They are a first step. They are incredibly important. I do hope we see sustained investment and much more systemic approach to how we can solve the problem. We do forget now we are focusing on the s a lot of ceos are watching and thinking okay, i cant be doing all these things at one time what are some of the realistic steps. Actionable steps that ceos could and should be doing right now . Weve been talking to our b Corp Companies those already take commitments against stake holder capitalism made famous by the round table last fall. We are asking them to really take a lens of that s, that social impact idea and think about it through the lens of their stakeholders being their workers, customers, communities and supply chains and think about the link and ask those questions from a strategic and operational lens for example, for workers, lets take one of these stake holders. When you think about your worker practices as it pertains to hiring an support once inside the company and how they are interacting with Senior Leadership and Career Growth how are you putting a lens on ensuring that black and brown and people of color individuals within your oranganization and w are they the primary target to ensure that groups traditionally level out of broad based platforms are part of the center of the conversation. Are you noticing in your own business, are the calls and emails coming in . Are they saying they are starting to address it on a fundamental level . Absolutely. This week or last week, i sent a letter to our B Corp Community with a call to action and my own experience being a black woman in america, being a black Business Leader and understanding what that means as an individual that looks like me to a majority of White Coalition of companies, which is the b Corporate Community in the United States and canada those companies heard me and heard that call to action they are eager and we have never had the volume of requests to help companies and to figure out what we need to do. They are primed and ready. There are no perfect answers there is a lot of work to be done they are keen on making that happen go to your website. Around our little team power fully written. An important topic will we see you back soon . We are not going to stop the conversation i hope so promise. On deck stock futures are pointing to a positive open as investors are seemi seeming optimistic on fed spending what a difference. The implied open coming up, talking about what neasshould be doing with your moy Worldwide Exchange moy Worldwide Exchange comes right back. Can i find an Investment Firm with a truly longterm view thats been through multiple market cycles for over 85 years . With capital group, i can. Talk to your financial professional or consultant for investment risks and information. With spray mopping to lock away debris and absorb wet messes, all in one disposable pad. Just vacuum, spray mop, and toss. The shark vacmop, a complete clean all in one pad. Welcome back and good morning. Fcc chairman is calling for an investigation of tmobile that comes after an outage that impacted users yesterday separately creating shares of soft bank that holds 25 of tmobile and Deutsche Bank holds 44 . Pg e is expected to plead guilty to 84 counts of Involuntary Manslaughter as a result of a fire that wiped out an entire town victims family members are expected to speak. Shares of ww better known as Weight Watchers are jumping. Getting a boost of higher subscriptions amid the coronavirus pandemic a story we call won key but correspondent. Despite all the rules put in place by congress, wall street has, as we say, new and inventive ways of finding things to sell like the hundreds of millions of mortgagebacked securities similar but simpler wall street product needs to be on your radar. Clos, collateralized loan obligations. Not what helped destroy the Banking System in 2008 Business Loans generally made to smaller, Midsized Companies that do not qualify to Traditional Bank loans biggest differences no mortgages and none of the dangerous credit default swaps remember those, built into those the market has boomed in the past decade. The loan market is now 750 billion beyond 2018 with investors pegging the number of clo markets as there are leverage used at 1. 2 trillion the Current Crisis has exposed the wave that could lead to a crisis bigger and more serious to what we saw in 2008 joining us now detailing this new major risk detailing the collapse of one of the most read stories of the week. One of the top five Business Books i have ever read written by that man. An important topic how much more or less risky are clos than cdos it depends on the time. In 2007 or 2008, we werent worried about these. We were worried about sub prime mortgages defaulting right now in the pandemic, we have a lot of businesses in trouble and likely to default. So today, clos are more dangerous. How much in your article noted as of annual filings or quarterly call igz, wells fargo, jp morgan and city bank had billions on their balance sheet. How much more are out there . I think thats right. We know there are more than 100 billion of clos at banks we know there are about 100 billion of clos unaccounted for. We are getting a lot of surprises. Jp morgan announced that it had ls 100 billion wells fargo announced 7. 7 billion of loan form clos that were a surprise these are big numbers for those three banks, we are talking significant numbers. They are not the kind of numbers that would bring the bank down on their own but there are numbers that should cause us concern when coupled with those losses in the next quarter and beyond you lose your phone, you hit a buttonand it starts beeping. I dont know how 100 billion of product goes missing moving on from 2007 with a history lesson, everything was stacked together famous for the movie the big short. The bottom went bad and so the whole thing collapsed. Are they structured the same way and the risk still in that small percentage at the bottom but kind of Holding Everything up . The basic idea is the same 15 is triple c. Those underlying loans are the triple loans the way you package them, the top should be the risk a lot of these loans default at the same time the way sub prime mortgages did. Even those top layers rated triple a or double a could come at risk. In march, those triple a layers were severely at risk. The fed has intervened we have support psychologically in the market many people are worried that those will build in to the triple a and double a players. We are not here to terrify people at 5 50 in the morning. Not many people saw it coming and they didnt act in time to save mortgages that went back thus crashing everything down all these fed regrams are hard to track do you think the fed has gotten back out ahead of this because of what we learned 12 years ago. Certainly the fed is quick and theyve learned to impact the psychology of the markets. Thats what they did now and what they did yesterday. Also interesting to note that the fed said it will start examining banks more and it wont start doing that they are concerned and getting ahead. It has a lot of money it is important to realize the fed cant buy everything after the last financial crisis restricted the fed it has restrictions and is not supports to rely on Credit Rating now what the fed is putting out freak p wently, they are relying onraits. Well hear from the chair today and tomorrow he may well be addressing some of these concerns. You think the Credit Rating agencies will get it right this time right you were present in criticizing the credit agencies. Unfortunately, the same kinds of models are being used today. I dont know if history will repeat itself this time. The original bernie madoff, you may know somebody who wrote about him. An important article and segment. By the way, if you need a summer book to read, check out the match king. Really about the original madoff he got into the match Book Business it is good thank you very much. A day after the market staged a market turn around dow up 460 being looing at the momentum we caught the tail wind. Getting more insight in the markets with Julian Emmanuel its like a fed party every day. Julian, how much of that turn around yesterday 100 0 was the fed saying, hey, lets start buying individual company bonds. Caller definitely a large part certainly 50 or more. We have to remember to step back and think about the environment we are in. The volatility index is more like 15 to 20. Last week it was more like 25 and 30 to 40 this kind of rally coming after what became very quickly oversold in four or five days is typical. It shows you what we are in for in the summer. It is about percentages i get it we are starting to see an 800point day that is not the norm this may be a summer maybe not of love but volatility caller we had a quieter month. We were exhausted and burned out from march exactly it goes back to what your last guest was saying there is a lot of risk out there. Certainly to expect volatility to calm down before a very consequential election is probably not reasonable. You are overweight financials are you worried. The clo bubbling at the surface. Caller again, to say the fed is the answer to everything. History doesnt sell it out. Youve had bare markets while the fed was easing and you have the interest rate. We dont think the Financial System is in any kind of the same stress we saw in 2007, 2008 acting quickly to make sure the Public Health crisis did not turn into the financial crisis we do not see that happening the good news is maybe that fed had gotten ahead of all of this by doing all this buying. They are spending taxpayer dollars. The people that worry about the fed. The creature from jekle island theyve been doing the fed induced for a while. Do you think there will be a debt bomb going off anytime soon caller not anytime soon. Right ow, the desire to own u. S. Debt is the safest market well watch the currency and Interest Rates very carefully. Something further down the road and after we get through the covid19 crisis and the recovery begins to take shape it is something to worry about but not in the next year or so i completely forgot about the pandemic being tongue in cheek there. Our yearend price target is 3,000. We dont see a ton of movement in and around it, we see a lot of rotation in the cyclicals is our theme. Btig laying out the risks still out there. Thank you. Wow, goes by like this dow futures are up 463 a little brighter than it was this time yesterday. Ill see you thursday. Off tomorrow squawk box is next between ideas and inspiration, trauma and treatment. Gained a couple of more pounds. Thats good for the babies. Between the moments that make us who we are, and keeping them safe, private and secure, theres webex. Beautiful. Bbut what if you couldg do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Good morning futures are surging after yesterdays incredible reverse al that saw the dow wing 900 points and thats if you dont include the premarket trading when the market was down 1,000 the fed planning to buy individual Corporate Bonds maybe hertz and the new report that President Trump could propose a 1 trillion infrastructure and a story from ebay stalking scandal sending live cockroaches and a bloody pig mask. Thats what it says here good morning, everybody. Welcome to squawk box here on cnbc im becky quick along with joe a