Challenges theyre facing in q2 from a production standpoint we think it might there may be a few things at work here. The pain from having production shutdown is clearly, you know, probably more than an annoyance. I think people signing up to the tesla dream longer term dont doubt tesla has the liquidity to ride it out and could access more without a problem but i think elon, part of his part of his style has been kind of lets play to win, a play to win strategy, a play to dominant with, how can i say it, wanton disregard for traditional business communication norms and while that will ruffle some feathers along the way, many investors absolutely adore that and see that as a strength so investors, in a way, the starting up earlier and mitigating the cash burn with the potential liability that all auto makers face by maybe starting too early and contributing to some persontoperson contagion so it sounds like i mean, absolutely i think everybody agrees with you that his ability to play to win is a superpower, any other ceo had done that, they would have been laughed off the stage, so why not more bullish on tesla in particular we think the stock is worth 680. While we have a bull case of closer to 1,200, we need to be able to tell investors, if youre going to take on the risks of this story where theres still a lot left to prove, theyve proven a lot, a lot more to go, including potentially massive Capital Needs as they announce tera watt hour scale capacity, where is that going to come from, how do they deploy it many of the economics would be unproven at the scale theyre talking about. We need investors to have at least, you know, something on the order of 30, 50, 100 upside to compensate for those risks. Thats where we are now. So were trying to let the model do the work for us and lets not forget with some of the economic impairment that were that youve been talking about in your program, tesla is not immune to that. They arent. It is way too soon theres a lot well learn once they open up as to where true demand is in places in europe and the u. S. Mainly outside of china, which is where our concern is that could use a bit of resetting before we revisit that recommendation. Given the focus on capital and the Balance Sheet at at tesla and the auto makers in general, whether its near or longer term, if this company relocates from california to nevada or texas, what does that mean from a financial stand point . The fremont plant, with all due respect to the men and women making the cars, theyre doing a fantastic job, that plant, autocompanies were closing plants in california in the 1960s. The fremont plant was actually closed once by General Motors and once by toyota the economics of making vehicles in arguably one of the most expensive places of the world is challenging. While tesla has certainly benefitted to the access to talent, particularly on the Software Side but also the manufacturing, they benefitted massively from that. You compare it to other regions, even other u. S. States, the comparison could be unfavorable. And a lot of the experimentation and in some cases mistakes that were made, the trial and error, those learnings can be applied elsewhere. The concern we have, though, is that by making this a public debate about leaving california and kind of having that hey, were really going to leave. Were serious. When you take that stance, we cant help it to put ourselves in the position of someone going to work being asked to go to work, taking some sort of risk and saying, huh, maybe the next time the uaw sends me a flyer, i might read it. So were concerned that may backfire a little bit. No doubt in our mind over time that fremonts portion of Global Production will go down and we think the next plant is going to be in texas where elon is spending more time anyway with his passion which is space. Interesting point its jon fortt im wondering, gas prices are low, consumers were taking on historic levels of debt for auto loans before this. Given all that, how are you modeling what happens to auto demand coming out of this . And then kind of include tesla in that, but overall what do you expect to happen its interesting. The prognosis if you go back a month or two ago, the early part of the quarantine, very dark the conversations with dealers were incredibly dark, no other way to put it. Pretty terrifying. And you fast forward to now and just think about whats what happened we pumped in, i know im going to get the numbers wrong, folks, 5 trillion, maybe a path, maybe a decade or more of aggressive fiscal and monetary stimulus all crammed into two or three months, this cant be ignored. Right. And then you factor in theres some pent up demand, used car prices are certainly weak but not as weak as many of the fears. And april auto sales were about 70 higher than we expected. And it looks like may, early indication, may be above our bull case. So we think the rate were at a lower level of demand than prek precovid. But the pace of the recovery and demand we think is going to significantly exceed the recovery of production even if you started production may 18th, you got to throw out materials, theres lubricants that expired you have to retrain workers, space them out, take their temperature. You just dont flip a switch so the next couple months well have tight inventories and maybe even attractive pricing in mix with respect to tesla specifically, the low oil price we get asked this all the time, does it hurt, on paper it only takes a period out from 5 years to 10 years. For tesla, its not part of the calculus right now move into the fleets, the Small Businesses that those dollars and cents matter for the rest of the year we dont think thats going to be a major change of telemetry of adoption. Interesting hearing you talk about demand versus production sounds like the best deals out there for potential car buyers already exist, adam. Im curious, as we move through coronavirus and get through the worst of the outbreak, the auto manufacturers have been throwing money at things like selfdriving, sort of the next generation of automobiles, do you expect them to pull back on those investments . What does it do to those trajectories we think theres a shakeout if you have electric on one side versus Autonomous Vehicles on the other, we think many are going to have our sense talking to management teams, both are important but electric is sacred right now. And an area that they feel they really cant sacrifice at all. They might even need to accelerate autonomous, the challenges theres so many factors outside your control, including regulatory and the moral, legal and ethical aspect without a near term path to revenue, youre staring at the prospect of spending 1 billion on something uncertain to market and no revenue for five years. We would expect to see the autonomous budgets start to sink folks like General Motors were adamant they were not going to do that. I have no reason to kind of go against that right now we think over time, the preponder rans of investment with prioritize ev but at a more gradual rate. Listening to you talk about aggregate auto demand versus production this year, sounds like not only could people find shortages or they cant get the model they want, but also kind of sounds like nissan is cost cutting, bmw is warning, worries about liquidity at ford and gm are overstated at least . Theyre not overstated. Its moving into the rear view mri regulatory ri mirror no question q2 is dreadful for Balance Sheets and thats the unknown. I think the Auto Companies have done a mag any sent job getting all the cash out of the cushions as possible. These Companies Get better in downturns. They get better. They get leaner. They get less complacent they come out stronger the key is you dont want to own one that goes away for good. We dont think any of the major ones weve talked about in your program will go away so i dont want to paint this rosie picture that the arrival at the other side of the v or u or whatever it is, but we think the Auto Companies will be fitter, theyll lower the break even points, may be able to use a cash for klunker but thats more an insurance policy than a dire necessity thats a change from the last time we were on your program a month or so ago. Adam, thanks for kicking off the hour were glad to have you talk to you soon. Take care, buddy. After the break, former dallas fed priority Richard Fisher is going to weigh in on fed chair powells earlier remarks with stocks trading in lbeigd right now. Wel rht back. Stay with us this is decision tech. Find a stock based on your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. We hope you find our Digital Solutions helpful to bank safely from home. Deposit a check with your phone or tablet. Check balances, pay bills, transfer money and more. Send money to people you know and trust with zelle. Stay safe. Stay home. Together, well get through this. Pnc bank across america, Business Owners are figuring things out. Finding new ways to serve customers. Connect employees. And work with partners. Comcast business is right there with you. With a network that helps give you speed, reliability and security. And enough bandwidth to handle all your connected devices. Voice Solutions Like remote Call Forwarding and readable voicemail. And safe, convenient installation. When every connection counts, you can count on us. Get the connectivity your business needs. Call today. Comcast business. The evidence of the effectiveness of negative rates is very mixed. There are no theres research that says theyve been effective, there are plenty of doubters and the issue really is the concern over interrupting the intermediation process and, you know, reducing bank profitability. Thereby reducing the availability of credit in the economy. So its not its an unsettled area, i would call it. That was fed chair Jerome Powell earlier on negative rates. Lets get to the cme group in chicago and rick santelli. Thanks. Id like to welcome Richard Fisher, former Dallas Federal ReserveBank President and ceo was that a ringing nonendorsement in your opinion in that sound bite yes, it was i dont think anybody its not just chairman powell its everybody on the f1c is clearly stated they realized theres more damage done by negative Interest Rates than positive impact. Rick, i appreciate you putting up that picture of me because if you could see me right now i look like Bernie Sanders gone wrong. I have to push back just a little bit i agree. After listening to that, lets let the markets speak. And what i did was i went back and looked at several fed fund futures contracts from november, december of this year and distant months what i noticed is, todays low, if he really pushed hard on negative rates the contracts should trend a bit lower the lows today are no lower than theyve been yesterday or the day before that tells me he might have pushed back but he certainly didnt remove or accentuate the negative aspects of economies that have used and are still stuck in negative rates. He basically made it sound as though the debate is ongoing you really think theres a debate you think our banks, the toll keepers to the liquidity, theyre instrumental in every plan the fed has initiated they would end up more like european banks which means i may have more money in my wallet than theyre worth yeah. First of all, even before the covid virus, the only index in the world that was lower than it was in 2009, before things turned, is the european banking index. This is a destructive mechanism. And think of Insurance Companies already were hearing reports that some Insurance Companies are unwilling to write new live policies so negative Interest Rates, a, regulatory ri are damaging from that standpoint b, have not worked theres no definitive proof, before covid, that they worked to lift the european or japanese economies. And they did enormous damage. They create a spiral richard, let me interrupt you you mentioned Insurance Companies, many of my friends before the coronavirus told me they had to buy so many bonds to get any kind of kick thats part of the distortion, the lower Interest Rates go and the more longterm liabilities and assets are mismatched, the more they buy, thus making everything go lower in yield, making the problem worse. I agree with you. I dont think theyre going to adopt it the markets may push yields because again further on the curve the markets are determining the shape of the yield curve. Theres an enormous demand for dollars and securities and Corporate Cash pipelines i think thats whats shaping the curve further out. I do not foresee the Federal Reserve going in this direction. In my ten years as i recall, we talked about it once it was an academic discussion and no one cottoned to the idea of the attractiveness of negative Interest Rates, i dont think thats changed i think that jay powell and company are doing a good job, this is a horrible thing were living through id like to read Something Else that chairman jay powell said and id like to hear your thoughts on it, in terms of fiscal discipline i believe we must and we will eventually have to return to a stable fiscal path that means you have to get the economy growing faster than the debt listen, richard its hard to argue with that but since the last crisis im not sure any of that has occurred and if it has, its small doses it hasnt occurred outside the u. S. And when you look at entitlements and issues of insolvency there, i dont see the fed has the leverage to make any of that happen your thoughts . I think what youre hearing from powell, hes the only adult in the room. He has a franchise he needs to protect. I understand the reason for saying that. As you know, im a big supporter of his i think hes doing a very good job under intense focus and criticism. But once you let these horses out of the barn, its hard to get the fiscal authorities to rein then back in. We saw the difficulty of shrinking the Balance Sheet of the Federal Reserve after expanding significantly. So theyre going to be caution in the way they expand the Balance Sheet. Theyll do a lot of talking for the markets which we saw recently helped the markets significantly without having to take significant action. But youre right, risk, the fiscal authorities are a different animal entirely. As George Schultz used to say, the only difference between democrats and republicans when it comes to spending money in Congress Democrats enjoy it more but both do it well have to see if we can rein it back in. I wanted to ask you more about how the difference phases are working in texas, well discuss that another day thank you for joining me today be safe. Carl back to you. Rick, thank you dow is down 300 back to session lows when we come back, californias attorney general on the states reopening strategy and, of erurse, all the news surrounding ub, lyft, tesla and more dont go away. Usiness. When youve got public clouds, and private clouds, and hybrid clouds things can get a bit cloudy for you. But now, theres the Dell Technologies cloud, powered by vmware. A single hub for a consistent operating experience across all your clouds. That should clear things up. Woi felt completely helpless. Hed online. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Truly transformative sleep. So, no more tossing and turning. Because only tempurpedic adapts and responds to your body. So you get deep, uninterrupted sleep. During the tempurpedic summer of sleep, all tempurpedic mattresses are on sale welcome back just taking a look at the markets, stocks are at sessions low the dow down 336 points the s p down 1 as well. Meantime, keeping an eye on royal caribbea caribbean the latest cruise line to tap the debt market. Its using part of its 28 ships as collateral. It follows norwegian which last week raised over 2 billion in debt and equity but at a steep Interest Rate of over 12 . Carnival, the biggest of the three cruise lines raised 6 billion at 11. 5 . So the financing is there for the cruise lines fighting for survival as they burn through cash but the question is at what terms and how much risk the investor is willing to take on part of the understanding comes from what will demand look like once the cruise industry kicks back into action we have sailings expected to resume in august remember that cdcs no sail order is in effect until july 24th and summer is the peak season for the cruise industry thats why the focus is on the next couple weeks to see if the cruise lines can get the green light from the cdc because in the meantime they are burning through cash royals offering is expected to be priced today. As we learn more details well give them to you back to you. As we head to break, lets get a quick check on the markets. All the major indexes are lower, the s p down by just over 1 the nasdaq down by just shy of that the dow down by almost 1. 5 , led by rathon, and exxon well be right back. Welcome back, everybody. A cdc Spokesman Says u. S. Health officials will alert doctors to report cas