Suffering a record drop. Earning season is in full swing. Pharmaceutical giant merck topping estimates but cutting its guidance as the coronavirus pushes the rest of its portfolio to the sideline. The ceo ken frazier will join us for an exclusive interview in just a few moments kelly. Looking forward to that. Health care and tech are two of the stock sectors leading stocks lower today. Lets get to bob with a lot more for us just the fact were up three points on the s p is remarkable. This is the second day in a row this has happened. I cant remember when but were down 1 or 2 on all the big names. Microsoft and apple, google and amazon look at all those stocks down. The s p is still up 3 the reason were up is because banks and industrials have helped out today look at these industrials. 3m is seeing growth in some of the safety the blue angels just flew over theres a big roar outside pepsi, xerox, u. P. S. , Harley Davidson withdrawing guidance. Here is a list of the companies withdrawing the guidance 98 of them and our own tally here at cnbc, 30 have suspended or cut the dividend and 67 have suspended buy backs. This is just this quarter. Were only onethird of the way through earning season a lot more to come back to you. Thank you very much the Federal Reserve kicking off its two day meeting as i continues to help prop up the economy during the coronavirus out break. Steve has more on what to expect with details from our exclus ifr cnbc fed survey. Hey, steve we hoped to hear how the fed sees this economic downturn and recovery theres a long hard road ahead and a lot more money needed from Federal Reserve and from congress staying el valted through the year and only falling to 7 by the end of next year now, thats going to require even so considerable funds that. They already put in around 5 trillion another 3. 4 expected in feds Balance Sheet. Congress needing another 2 trillion according to the respondents. Looking at the grading, powell getting an a Steve Mnuchin does well with a b plus this group that has been very, very supportive of President Trump and the economy not so much when it comes to his handling of the coronavirus. Tyler. Thank you very much despiets t despite the mixed day, the s p remains on pace for its best month since 1987 one of our next guests says right now might be the best time to buy the recovery rally. Well explore that with barry knapp. Gentlemen, its great to you both here. Im not clear on what you think the market is going to do next in the short and medium term and why. Can you just explain it to me . Sure. I hope i wasnt the one that said i thought now is necessarily the time to buy because ive been saying that for over a moonnth, actually. I did think it was time to buy around the lows. The point of the note this week was to describe recovery rally looks like a typical cyclical recovery rally. Theres been the focus on your program all day about the stocks that had been leading the recovery when you really break it down and look at the early stage, cyclical sectors, Consumer Discretionary small caps, material, financials, theyve been performing as you would expect fairly strongly from the lows and all the way through. We think that this is acting very much like a recovery out of a recession and those are the sectors you should be positioned and expecting an economic recovery as we get in the Third Quarter and be positioned appropriately for that i think that was the broad point of the note. From a tactical perspective, were getting fairly close to the point and i use measures of risk, the vix but the term st structure of the vix futures market those kinds of measures of risk are getting closer to the point where people are starting to come around to my more favorable point of view. Were getting close to the point where i could see reducing risk a little bit right all right. Let me bring in andrew here. He is the guy who said the best time the buy stocks is when things go from horrible to less bad. I think thats the case here explain. Well, i think the point is that bob pisani already nailed it why are a lot of the comingout stocks doing well because their estimates have already been cut. Theres very low expectations for those stocks the key question is what is embedded in stock prices and a lot of these more economically sense tiitive stocks are down a and theres a lot of bad news embedded in them versus the big stock. They havent had their estimates cut. I think they are more as a rulerable than the companies thats why value stock, cheap stocks do well as economies recover out of recession one och tf the things you pot out is the top five stocks by market value in the s p 500 are trading at forward multiple of Something Like 20. That leaves 495 others that arent and they are trading at a palatable of 15. We know value stocks are all cheap because thats why they are value stock. Sometimes they get really, really cheap thats when you make the most money many value stocks is when they get very, very cheap. They get very, very cheap in the bottom of the recessions no one wants tone a bank or Housing Stock or reit or things like that. They get very, very cheap. Thats when you make your biggest money is coming out of those situations if we look at what is in the value basket, its the type of companies that have been most hit because of the economy shutting down. That is the area to hunt for whether its banks, housing, retailers, restaurants, travel, le leisure. These are the stocks that are still down a lot i should point out that barry and you agree on some areas like financials disagree on others like reits. Lets set that aside, barry and come back to a question that has interested me lately and that is which is the better buy right now . Is it the credit side of a company where you have some protection youre farther up in the Credit Structure or is it the equity . Where is the real value . Thats a great question i wrote about it a little bit in the context of what happened to me in 2009 when i was barclays equity strategist and i fell in love with Bank Preferred at 25 yields and missed some of the Bank Recovery rally. I think the answer is theres opportunities in both. I liked the comment about really looking for value. I pulled my underweight on it last week and said, perhaps you want to look at the credit side of the Balance Sheet theres a spot if youre further up the capital structure you might get some protection and youre really getting paid to wait i think theres pretty good opportunities in credit. High yield has lagged. The recovery is still pretty wide i think theres opportunities there. I would avoid the assets that the fed is buying like treasuries, Agency Mortgage backed security and buy more value othriente eed equities an credit parts of the capital structure that are still very wide i actually think andrew and i were in sync on all of this. You know the best the best to both of you go ahead, andrew tie it off you know that performing sector of the s p month to date . I do not. The Energy Sector i thought you were going to say that i was going to take a wild guess. That would be deep, deep, deep value where in some cases the lerndss may become the owners. Thank you very much. Always great to see you. Kelly. Thanks meantime, round two of the Paycheck Protection Program is in full gear after a rocky start yesterday. Its seeing Unprecedented Demand despite the blow back about which companies are severing the relief lets go to kate rogers with the latest the sba telling us there were double the number of users accessing the system compared to any prooefrs devious day of the ppp. From the minute it opened, the sba says more than 100,000 loans were processed with more than 4,000 lenders as of yesterday. The processing automation will make it more reliable and accessible as outrage continues over Large Companies accessing ppp funds, Steve Mnuchin said there would been audit for a loan above 2 million. Its the borrowers who have criminal lieblability if they me this certification and its not true well do a full audit of every loan over 2 million this was designed for Small Businesses it was not a Program Designed for Public Companies that had liquidity. Now, remember, these Companies Legally applied for this funding some returned it after public backlash or seeing the new guidance out last week back over to you thank you very much we appreciate that coming up, merck is under pressure saying it will take a 2 billion hit even as it works on a possibly coronavirus treatment. Well have a special interview with the ceo in just a moment. Its the debate happening all over wall street can every company get a bail out or should some just be left to file for bankruptcy. Well bring you both sides of chorpouestion later this hour as mu me wer lunch continues right after this derek, seems like your team is operating just fine remotely. Yeah, everything is running smoothly with the now platform. bling see, incident resolved. How did you. Gotta enjoy the small wins. You keep being you, derek. Keep being you. 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. Featuring the Emmy Awardwinning voice remote. All the apps you love, including netflix, prime video, youtube and hulu. And the most 4k content. The best Entertainment Experience all in one place. Welcome back here is a look at shares of merck this that will be worst performer in the dow they are reporting an earnings baelt but the lowered guidance lets bring in our own meg with mercks ceo. Meg, kick things off kelly, thanks so much excellent timing ken, thank you for being with us today. I want to start by askingyou about covid19 vaccine merck has a tremendous track record recently with your ebola vaccine in developing solutions for these issues your chief of research said that during the past quarter century theres been seven vaccines against tell us about your efforts here thanks for having me. Merck has deep expertise in ant antiviral research. From the very beginning of this epidemic we have been looking at how we can play a useful role in advancing, for example, Vaccine Research we have been in collaboration with other people in industry, with academics around the world and we have now gotten to a position where we are focusing on some proven platforms vaccine platforms that we have used before developed vaccines with desirable qualities and we are very optimistic and excited about moving forward with some of those programs. The details of which we intend to announce as soon as we can finalize the arrangements. P. Merck has been a little quieter than other companies on this front and not uncharacteristically of the way that merck communicates. What can you tell us about a timeline for a vaccine i think, first of all, its important to recognize the context in which were oerpperag here this is a novel coronavirus. Its new to us were still trying to learn a lot in terms of the basic bodys immune response to that. The challenge we face across the industry, not just merck but the other companies, is that we have to develop a safe vaccine with unprecedented speed. At the same time we have to manufacturer and distribute and deploy it at an unprecedented scale. Its no small challenge that we face the approach that merck take is lets make sure we do as much as we can to make sure the fundamental biology is understood and that will allow us to approach the design of a new vaccine with the greatest probability of success tell us about the antiviral search as well will that time line be shorter and what can we expect to see from merck there i think we expect that antiviral could be developed more quickly than the vaccine. As roger said this morning, typically vaccines take a significant amount of time often, decades were able to be successful in Public Health emergency. Even that took years we think its possible to either repurpose current antivirals or develop new antivirals that have Significant Impact on the covid19 situation i appreciate the carefulness of your answer to megs question about a time line regarding vaccines but others have said dont expect a vaccine to get fda approval for a year from now and it will take more time does even that forecast sound too optimistic and i have one more question id like to pose woini wouldnt say its too optimistic i would say merck has a lot of experience in getting vaccines across the finish line the time line is shorter than any time line thats every occurred with a successful vaccine. At the same time, i think every one recognizes the urgency of this situation and we have to look at ways beyond sort of the customary ways of doing this there is a certain amount of time thats inherent in doing clinical studies to ensure that vaccine that you would use and millions, if not billions of people is truly safe and effective. So, from a leadership point of view, im very curious. How do you pivot a company and specifically the research arm of a company the size of merck to focus on a pathogen you didnt know existed how in the world do you do that and when decide you make that pivot . How quickly. E lly did you make t let me start by saying my scientific colleaguescouldnt be more excited and enthusiastic about taking on this challenge we have had a long history in developing antivirals, antibiotics. Merck is one of the largest and most prominent Vaccine Companies in the world we have deep with deep expertise and knowledge in those areas its easier to get them to pivot to these things. Everybody sees this is an unprecedented Global Health emergency. People were willing to put their attention immediately on this. We are cautiously optimistic merck or one of our industry colleagues will come up with a vaccine with the right kind of neutralizi neutralizi neutralizing antibodies against covid19 bringing different avenues and different paths. Since youre on this economy now with governor murphy to reopen new jersey, a lot of us who live in the state are wondering how quickly can that move along new jersey is one of the hardest hit. The last we heard from the governor, he said the stay at home order will stay in effect for the foreseeable future new jersey is one of the hardest hit states in the whole country. Lets go back to fact were still learning a lot about this particular coronavirus in terms of the nature and extent of it we have to make sure that we think about all those things and we have to be responsible in bringing the states economy back into full service, so to speak. We want to make sure when we do that and i think we will do that and it wont be forever to do that, we have to make sure that we see the number of cases beginning to plateau for a period of time that we have the testing in place so that we can send people whether they are consumers or workers back to more normalcy. I want to ask you about mercks outlook for the year you did reduce your guidance expecting a 2 billion hit to your sales what are you envisioning for the rest of the year in terms of seeing a second wave and how that will impact your business let me start by saying were confident in the long term prospects of the business. Our First Quarter is indict tifr of the strong underlying demand for the products as we look forward, we are seeing stay at home orders in place around the country people just dont have access to, for example, physicians offices for well visits. Youve seen the huge impact on vaccines elective services. Even in oncology oncologists are delaying some of the visits that would result in a diagnosis or treatment of patients were optimistic we will start to see more normalcy there because people will be able to have more free access to those clinic, hospitals or physician offices or the Health Care System will find safe, alternative ways of treating people we will see more normalcy, so to speak, again i think at the end of the day to answer your question, i think money of us really can predict what will happen this is a new coronavirus. The cdc has said we can expect to see in the fall, perhaps more cases of coronavirus our forecast are based on the concept by the Fourth Quarter we should see more normal access to physicians and hospitals and clinics. We sure hope thats the case. Ken phrasfrazier, thank you for joining us thank you for being here always a pleasure again, i want to reenforce theres ample reason to be optimistic that we will find either a treatment or a prevention for this terrible virus. Thank you. Cant think of a better note on which to lever ave it thank you. Interesting conversation coming up, oil falling as much as 20 at its low points today. Wti hovering near 12 a barrel as demand drops. The oil market set to close in just a few minutes well have more on that after a quick break. Investors are bracing for first of the mega Cap Tech Companies to report earnings that will be alphabet on deck. Teisonafter thisho srt inrmsi however, there is one thing you can be certain of. The men and women of the United States postal service. Were here to deliver cards and packages from loved ones and also deliver the peace of mind of knowing that essentials like prescriptions are on their way. Every day, all across america, we deliver for you. And we always will. Say hi. A pandemic has the possibility of bringing us together in ways none of us would have been able to expect. Im so small said the mole. Yes said the boy, but you make a huge difference. Welcome back, everybody. Lets go to su