Transcripts For CNBC Squawk On The Street 20240713

Commentatoentary the last 24 hos whether its acumen and dalio on one side you point is, no revelation 6 8. Why are we not believing in science . You have been pretty consistent on that. What happens today if the fda approved a drug . What happens if they do that do we then start thinking about, geez, how much pain it will be if we print all these dollars. How about if it is approved and we say, you know what, im really worried about boeing. I mentioned that because its front and center, but im looking at the fda and not at the fed, and i think a lot of people who came on this morning oh, damn, i lived in my car and was not doing so well its not all done in fair weather. I listened to a lot of really rich people, some crying yesterday, today, talking about the end of days, i think the American Worker is a little tougher and i think if we get the drug, we get approval, i think well all say, geez, maybe this thing isnt going to last forever and we can tide workers over, and we can help the Public Health workers i dont know i dont really know. I have no inside information maybe its not today that the fda does anything, but i feel like the notion that science is static and that the worker is going to go down and that the hedge funds, well, we should be shaking because maybe their fifth beach house has to go, i dont like the tone of the pessimists i dont like it. Right dont come by my house. Yeah, were going to try to talk to as many smart people as we know. Cuomo, Governor Cuomo here in new york, david, had a good point yesterday. Where we basically said the episode is like this and it goes from here to here. We dont know the duration, but we do know there is a beginning and an end especially if, jim, if piper is right, that the drug could be approved soon. Obviously, as jim says, yeah, that would be a real positive, as we know, because if you can ameliorate peoples concern that if in fact you do get this, youre conceivably really threatened, that would be extremely helpful. And perhaps also allow things to start to move towards, back towards some sort of normalcy. You know, jim, what i continue to hear, you hear so many things obviously, and its throughout the day. I can only imagine what its like for the two of you as well. So many people want some sign that would give them confidence, though now, in the Financial Markets, i mean, my sense over the last 24 to 48 hours, guys, the people i speak to certainly are a lot more fearful about the economy than they really are about the virus. And i dont mean to in any way imply the virus is not serious and we dont want to continue fighting it as best we can and stopping its spread, but i would say the concern for the economy eclipses that for the virus, and theyre looking for some signs of confidence from our government, from within the Financial Markets itself, so many different moving parts, jim, at this point hard to know exactly even where to look or where to begin. Geez, david, i think thats a spoton view of the conversation that i get is okay, what happens if boeing goes bankrupt . What happens if the banks cant be saved what happens if theyre too slow this one was front and center a couple days ago, clorox, and the gloves now its like, ookay, how many people are getting laid off . I want to look at it differently. I think its really important when you have a guy like jim grant. Jim grant, we know him as negative, but you also know him as a terrific guy and hes a realist. Hes talking about things that could go right when the guys who are pessimistic and correct say listen, lets think about other things, it opens my ears to a different line, what happens when we get through this when, and no one thinks its if. Dewe look at the companies with the clean Balance Sheets that are the winners . Is walmart the nations retailer or do we look at it like its bread lines, and it doesnt matter because there will never be demand again . I dont know, david. I think youre absolutely right that the focus is on the economy, and also a belief that no matter what comes out of washington, its not enough. I look at 90 votes in the senate to try to help something, and i come back and say maybe the politicians are less clueless than we think. Jim, as you can see at the bottom of the screen, ford, you can see, borrowing 15. 4 billion to offset the production shutdown we learned about yesterday. Suspending the dividend. Pulling guidance for 2020. Darden, similar moves overnight, jim. I guess the question is, there was a good chart this morning about the dow peaking when deaths in china were already at 1,000. And even after apples q1 warning on revenue, really didnt impact the markets for several days, and when you have b of a trying to quantify q2 down 12 and jpmorgan down 14, and alarian says thats absurd because what is the markets ability to sniff out the other side of all this look, lets say we see up numbers sequentially for starbucks in china, which were going to, as Kevin Johnson said last night on mad money as they open the store in wuhan, which is ground zero for the epidemic lets say apples numbers are better in china, lets say the government prevails upon disney and they open up shanghai disney, thats not yet going to happen, then we say heres what the other side looks like. Its not great, but its not historically bad you want some irony. David is in a believer of irony. Ford suspends its dividend, but woo we have a Morgan Stanley up grade of tesla, because they have the wherewithal on the Balance Sheet to win again, i say, you know what, we have to think big and creative because thats almost, if i told you three months ago that ford would be good because they survived the Great Recession and tesla was obviously going to go under, that was what the narrative was, and it switched we have to think bigger than what we see on our screens because that was just in conceivable, carl, that ford would be the one on the ropes, the one that survived the Great Recession, and tesla comes out on top as the one with great liquidity. Good point. I dont know if you noticed elon musk overnight suggesting on twitter he could start making ventilators is there anything that guy cant do he probably has a solution and hes just holding out for a little drama probably has it somehow that he knows how to cure. What a guy lets get to phil lebeau for more on the ford news. Hey, phil. Hey, carl you guys hit on this a little bit. Let me give you more clarity in terms of what ford is announcing its suspending its dividend of 15 cents a share not a surprise a number of people have looked at ford, general motors, some of the major manufacturers. This question is coming up with boeing will boeing ultimately suspend its dividend given the fact all of these companies are facing tighter liquidity. Its also pulling its guidance for the rest of this year. We have seen a real slowdown in retail sales well talk about that in just a little bit, and then also, theyre going to be accessing up to 15. 4 billion from two credit lines. They have about 35 billion in liquidity at the end of 2019 we dont have an updated number, but 35 billion at the end of 2019, they have near term lick witty okay, not a problem, but keep in mind when you shut down production at an auto plant, which the big three have decided theyre going to be doing effective either today or tomorrow or in some cases phasing it in over the next couple days. Thats the cash flow that gets cut off immediately. Because automakers, they get paid pie the dealer. So as soon as a car comes off the line, and it goes out the door, thats money coming back in to the company. So onelast point regarding retail sales ford is also offering customers sixmonth Payment Relief for new car purchases. I bet you we see this from other automakers as well, because according to jd power, retail sales on sunday drops 36 compared to the same time last year and down just 20 at the end of last week i think were going to see a big dropoff in retail sales. We can only imagine, phil, that would be the case, of course hard to see how many people are going to be going to the dealership to buy a new oo automobile at this point phil i have a feeling well see a lot more of, covering not just the autos but what is going on with boeing. For now, lets detour and bring in ginni rometty, still, by the way, the ceo and president of ibm, although not much longer, but of course, will remain as the companys executive chairman these are extraordinarily unusual times. I could not ever really imagine think i would be bringing you in by sitting here in my dining area, but thats where we are right now. What is going on at ibm, and let me start if i can with the virus itself and the capabilities you have in terms of Super Computers and watson what are you doing that perhaps is advancing the ability of scientists to actually figure out how they can attack this let me break that into pieces of what are we doing i really believe private sector is going to play a huge part in shortening the duration, you and jim were talking about the economy and the duration three things one, right now, im just looking for the cure one of the most important things you need is highperformance computing. We have the largest supercomputers in the world and theyre at the department of energy i was out at one of the big Health Centers and they have lots of analytics they want to do to build the vaccines, the medicines. They need the highperformance computer to run it one of the things were putting together is well be a clearing house, a gear box for all the High Performance computing, whether its at universities, labs, our own, to make it available. Think of it as really accelerating the cure, be it the vaccine or the therapeutic the other big thing were working on is all around this idea of can a consumer get a trusted sengs of data around covid19 and what is happening cdc has it, Johns Hopkins has it, and i think you might forget we own the Weather Company the Weather Company touches half the consumers in this country. So were looking at ways to be a trusted source of consumer data, to get that out to consumers, even down at a county level of what is happening. And the third thing, i know this is going to sound simple, but we have been called and we have learned this from all the other countries we worked in already, because remember, were not the first in this. We have a lot of learnings from china, japan, korea, europe, and making available watson chat bots to help the states and governments with their call times are two hours in waiting to answer simple questions those are just three big things were doing. And put that on the side of just some of the things private sector can do, in addition to we have centers were making available for hospitals if they are needed out there, et cetera. Flip to the other side, you said what are we doing for ourselves . The first thing was obviously like everyone you had on is about safety of people, which so far, we have done a great job with that. But you guys know we run the Critical Systems of the world. At times like this, what is invisible really becomes visible to people, that all those systems work so im really proud. Our team haas done a super job i have hundreds of thousands of people working remote. We work on this over years to be sure that could happen and we have a lot of clients struggling still with how to go remote we have moved banks in days to go remote. In madrid, we had to take a million kids and get them on Online Learning. Jim and i talked so much about new york city schools. Commissioner tish has us helping, theres 300,000 kids in new york who dont have access to Online Learning that were getting them internet connected. The first thing is about safety and then can you work productively remote . Yeah, ginni, specific to ibm, obviously, couldnt have been in your imagination that this is how your tenure as ceo would be coming to an end, with an economic crisis coupled with a health crisis. Your dividend yield is 6. 2 . You have obviously like so Many Companies bought back a meaningful amount of stock over the last number of years how are you feeling at ibm in terms of your clients and their ability to pay you and the financial situation in which the Company Finds itself right now yeah, it is a great question. And look, i feel very good we have a very strong Balance Sheet. And we have been working on keeping it strong. And remember, i feel like we you know, we watched what happened in china months ago as i go through the list with free cash flow, and jim was talking about Balance Sheets and liquidity. Free cash flow, 12 billion to 13 billion. Then you click down and say are dividends secure, and strong Investment Grade, and where pop over and think about at the end of the year, we already abandoned 10 billion of the debt in red hat, and part of the debt is for our ibm global investing business its all Investment Grade as being paid back as well. You mentioned share purchase i have really, really reduced our sharer purchase for a good number of years, and when we announced red hat, we stopped that so i feel good about ibms Balance Sheet being extremely strong and us being conservative and doing everything we can to keep it strong you mentioned about pensions, and as an example, you know, of course, we closed our pensions long ago, but we still obviously pay them to large numbers of people our u. S. Pension, even after everything in the market, is well over 100 funded still. I feel very good about that. And then, you flip over to therefore who are we helping and i look at, again, we have talked a lot about this. First, how to help people work and then the clients we work with, whether its the banks, whether it is the insurance companies, whether it is the health care providers, what were doing now is very interestingly changing like, let me just take the banks. Over this last just couple weeks, they are doing modeling and were helping them, and not only modeling, preparing that the volume transactions theyll deal with can be 40 to 60 larger or the amount of Risk Analytics theyre doing. Even the retailers the knockon effect of commercial flights not going means that cargo goes in a number of those commercial flights. Were doing analytics and helping them to get cargo to move to other places so i see the nature of the work were getting called in to do, its all around keeping those critical supply chains moving because its easy to say keep Grocery Stores open, but back up everything that has to happen between that and a farm to keep a Grocery Store open, and those are all the Critical Systems of the world. So those are the kind of clients that were supporting. Its good to see you and to hear you its jim thank you for coming on. First thing i need to think of is whats going to happen on the other side of this we have so many pez missimists o come on. Im looking for themes that are going to come out on the other side, and i think one of them is 5g well hear from someone later about that the other is the strength of the cloud. And i think that you have directed the company toward the strength of the cloud. Can you talk to me about a year or two from now, something that is going to happen that is not the end of days . Actually, i spent a lot of time with the team already and how we helped clients with that and ourselves, by the way. So the amount of work that will be done in a remote sense is absolutely going to change and that is one of the things 5g enables, because 5g, the biggest uses are going to be in companies. When you do, as an example, a remote surgery today, you would be a little nervous because what if the connection broke up think about how many times as you have been doing these interviews, you wouldnt want them to stop at the important point. With 5g, thats not going to happen its the same as your eye blinking youre going to have the same real time experience, therefore so many things whether its the way you learn, the way a factory operates, you walk in a factory today and theres cords everywhere david, you and i did that interview on 5g, i think it well accelerate those applications on the other side and it will change the way were able to do our work, and by the way, with all that Online Learning, were really preparing, you know, strong believer that there can be more jobs in technology for more people. And this is going to accelerate all those online certifications and the like that can come out there. Im focusing as well time on not just health, not just on cure, not just keeping the systems returning, but what are the great new ways work can change as we come out the other side. Ginni, i think your Lasting Legacy will be the hundreds of thousands of students typically from poorer backgrounds that have been able to be part of the new workforce. Theres just a huge number of people who we thought were going to finish the school year and do well, and suddenly, theyre stuck in a position where theyre not going to graduate or theyre not going to get the education. Ibm has already been so helpful. I guess we have to reach back and say what more can you do, because you know the kids need it yeah, look, just a couple quick things one is even starting, which you can do right now, as many kids still are in school, and as i mentioned, well be helping commissioner tish get 300,000 kids online in new york, thirst is how to get them to productively work in an online mode all the time. Were dealing with that with employees. A home office is a school room and for everyone watching who has any children, how do you get that to work effectively the next thing you can do, and were working with the government on this, and theres a whole group of us, in addition to our individual efforts, well be launching a campaign about how to move into choosing something new. New ways of doing work through all of the certifications and all of the nonfouryeardegree necessarily available career paths in our companies as soon as we kind of get through the next couple months, were going to be launching that and that, to me, is another way to bring many people back into the workforce, and while they may not go back into the job they had before, we can bring them to the digital side, which is more exciting for many people for us, were going to carry on with what we have done with ptech, almost 200,000 kids around the world now, which are sixyear high schools coming online, and then this is for midcareer and others to switch into these professions thats a great point, and it leads me to my question, which is viewers are waking up this morning, theyre turning on the tv they see the numbers, they understand the news flow were in and a chapter where businesses, Large Businesses and small, are trying to solidify, protect, close down, retrench, but at some point, once we learn to adapt with all of this, theres going to be a race to start up again i wonder what signs youll be looking for to determine when that Tipping Point will be well, first, i want to make a comment on something you talked a lot about related to this, which is in part, every day, the news changes here, but the focus has been on when it comes to the crisis, shorten it but when it comes to what the government does with think of it as financial packages, stimulus packages, you know, being bold and being big. And its related to your question, david, because the point is that as i think of whats required, and you say what do you look for Tipping Points, first and foremost, i worry about the individual level and the small medium business, because otherwise, youre talking about a mbt ago, the large just get larger here so we have got to protect those two things first and foremost, and of course, critical industry but those. So when you say what am i looking for in a Tipping Point i think as a Tipping Point, its bringing people back in. I think the kind of work people are going to do going forward, im looking at the companies that dont have the resiliency they ought to have, dont have the ability to work in different ways theyre going to want to go and do all that work and well be bringing in people to do that. Ginni, finally, you know, you mentioned how you have relied less on share buybacks over the last few years it does appear that if anything comes well, so many things are going to come out of this period, but one is going to be stigmatizing buybacks. Were hearing it already, how Many Companies have bought back shares the former ceo of unilever tweeted since 2017, americas big Cat Companies purchased 1. 25 trillion in shares, and he questioned as so many others are right now whether that was in fact a smart use of capital or simply a sign of the real economy being subservient to Financial Markets. When we come out of this, do you think as somebody who obviously also has been focused on the capital structure of your company for years, that share buybacks will be relied upon less or frowned on more . I think what people are going to do is prioritize, have you invested everything you need to invest to so you can exist for the next decade, the next century, and youre going to put that secondary these are the decisions i had to make about completely reducing that to reinvest back in the business to grow a 22 billion Cloud Business i had to do that for those reasons. And to build so ibm would be here for the next century. I think that will become very vivid to people about the priority and order of where they put their capital. Ginni, certainly appreciate your coming on during these trying times thank you. Look forward to seeing you again soon jimmy rometty, chairman, president , and ceo of ibm. That transition will take place in the ceo role, i believe its april 8th. Ginni rometty. Back to you, carl. Thank you thank you, and another eventful overnight for the fed this time regarding money markets, and i think Steve Liesman has additional news this morning. Morning, steve yeah, carl. Another hour, additional fed news of what theyre doing here. You cant say they havent moved fast i want to report this morning, the Federal Reserve increasing the purchases that its doing. These are the outright purchases, remember that 700 billion program we told you about . It did 40 and 40 now, its up almost double to 75 billion across a range of tenors in the treasury market and in the agencybacked mortgage market. I guess thats a sign that they feel like they need to come in and take more of that paper out. Thats just one of the things it did this morning at 9 00, it announced it increased the number of swap lines out there, dollar swap lines with foreign banks, and added nine Central Banks so now there are 14 total about the number, i believe the same number in the financial crisis now this is an ability to solve the dollar funding problem throughout the world, and of course, that comes on the heels of 11 30 last night, the Federal Reserve and the treasury announced a major backstop for money market funds so its true, carl, another hour, another fed action here. We dont know if they have all the pieces in place just yet to really put the backstop on trade in the economy or in the Financial System sure, asset prices will decline. The feds interest here is making sure the decline is in an orderly way and theres liquidity to get from here to there. Carl ill take it, steve thank you, steve Steve Liesman, of course, with the latest on the fed moves lets get to a mad dash havent done this in a while im accustomed to doing it kind of Cross Country when youre in San Francisco as you typically have done every quarter or so. Now were just well, im in connecticut, youre in new jersey i miss you, actually, i wish i was there so we could sort of have our usual time together mccormick is what you want to focus on for the mad dash. I miss you and carl this separation, morally, it feels awful. Theres a downgrade today from b of a i think its kind of emblematic of what im concerned about, is mccormick, they expect slower global food service. We keep saying these staples that everybody likes so much have some sort of hair on them yesterday, downgraded cocacola. Turns out their bottlers may be starved for capital. Mccormick has a substantial food business, food service business. Those have been not so great look at airmark. Its a shame because otherwise i know i had hormel on last night and theyre killing it with spam i know your wife is not a big fan, but we subsist on anything at our place this piece, otherwise, franks and frenchs and spices, the weirdest stay at home economy. Im going to go against this mccormick piece. It was up yesterday, but the stay at home economy is giga gigantic whether it be zoom or hormel, were hunkering down david, youre maybe hunkering down in connecticut. Im going to be going solo in new jersey hunkering down big time with rice and beans yeah, jim, it is a good point. Today, Credit Suisse takes clorox to neutral on valuation to a large degree. I loved your hormel interview last night theres reports today about if closing the border with canada, the degree to which that may impact shipments of agricultural goods which obviously is a big part of the food supply chain. How much risk do you see in there . One of the things that hormel talked to me about is of the chains out there, whether it be the supply chain for auto, the supply chain for aerospace, the strongest is the supply chain for food hormel was saying listen, its actually working i know that we have a perfect storm of negativity, whether it be oil, whether it be airlines, whether it be obviously the health care, ventilators, i dont know, but the one thing that seems to be holding up well is the actual food chain its working and so i guess i could say it could be worse and we dont experience the lockdown like my daughter who is an english teacher in madrid, where they have yes, theyre allowed to use real blunt force if you leave your place. Its almost chinalike so i think that we have Grocery Stores, we have food it could be worse. Nasdaq futures go green as youre talking you know, some of the technicians looking at charts this week say look, we dont care if looking for signs of health, you dont want to see large moves down or large moves up so i wonder if youre taking some comfort in what looks today obviously early, tepid signs of lessening volatility thats fine at 3 30 a. M. , we had kind of a mini bull market in the futures, then went negative at 5 40 and came all the way back. The knuckleheads and morons sorry, the people who are ill advised and trading those things, truly, why dont they just go play some gin rummy. It would be more valuable . The s p off slater had the strongest negative reading, meaning the most oversold, exceeding the crash of 1987. I think thats important because it was a suckers game to short 1987 now, look, we dont get anything from the fda today and boeing suddenly files bankruptcy well take out that, too, and those are just conjengtuconjectt what we want is not a big snapback the other day, it was up big and it was a suckers rally, but we need to see stabilization. We need to see the vix go don. If you look at the average yesterday, they were lying the reits said those guys were basically going to go under. Restaurants, we looked at darden last night and eat, they look like theyre bankrupt, and all im saying is that if you buy companies that have good Balance Sheets, you might do well here yeah. Jim, lets get to the bell here at the nysc, where theyll go all electronic monday. We had a head start so we can get our operations and logistics down jim, a quick shoutout as brett fills in, to all of the i. T. Managers and the hr managers around Corporate America and Small Business to the degree you can work from home, it is a bit of a small miracle what were able to do as a country, and imagine that this crisis had hit without this capability. I have verizon on tonight to talk about the system that did not get overloaded i know david is focuses on 5g, that the i. T. People, unbelievable how about the Public Health people theyre just out there right now. We know theyre going to be ten times the number of peement who are infected because were way behind look, i come to work in a suit david with the no tie, but we come to the desk those people, they aint just playing with clorox. Lets have a shoutout to them, too. Guys, as the market opens here, of course, every day is its own singular event, it seems. Yesterday, so many people calling to talk about dislocations and so many different Asset Classes. We saw yields back up, of course, in the government. We saw that incredible fall in oil prices yesterday a bit of a rebound at least the last i had looked. But that in and of itself, its own incredible story at this point. A lot of talk, of course, about mass force liquidity events and various funds you might imagine is true, although theres also so much room for rumor in a market like this those that are running the risk parody strategies, Big Hedge Fund complexes, people concerned about funding stresses there unclear how much, again, is true or not, but jim, during the course of one day, we can go through what feels like the events that would typically take place in a month if not even a longer period of time, given the moves, the volatility, of course, that you and carl were just talking about look, david, what that brings to mind is something you know better than anyone else in the country, from the hedge fund days when you made the unfortunate calls. What it says is there are people who are not in control of their capital. Theyre having redemptions or margin calls because the moves are so accentuated i cant believe its people just saying, you know what, i dont want to own brinker at 8 i riley want to get rid of southwest air. There are people who are motivated not by value but by someone from the Margin Department who is saying get that money in by 2 00 or youre gone yeah, i mean, i think theres absolutely an element of that going on in various markets. Theres got to be. And we have to stay focused on sort of the larger questions, too, in terms of the banks that are obviously there to some extent for players in the Financial Markets. Those that are huge Commodity Traders in the oil markets globally then you get back to things like the airlines and the bailout that we assume is going to take place in the not too distance future, one would expect the government was out signing up Legal Counsel very recently to represent it in what would be a fairly complex structure then, guys, the bigger question, jim, which we havent talked about today, which is what are mnuchin and Company Going to do here in terms of getting money into the hands of employees out there . You know, jim, you were talking about this a lot during yesterdays show and its not as though its gone away in fact, its only picked up steam. Many different people coming forward with potential plans im hearing about them during the course of the day. People trying to get them into secretary mnuchins hands in terms of maybe this is a better way to go or thats the better way to go. One that i would love you to chime in on because i talk to a number of leaders in the Financial Services community about this, who sort of seem at least to coalesce around the basic idea is as follows you would refinance the first lien and some second lien loans and bonds and the Balance Sheets of companies, not necessarily your biggest companies, but many of the ones we know about that have the frontline employees who are going to lose their jobs the employment loan would come from the government. It might replace the banks or perhaps it would backstop the banks. It depends and it would be equal to about 50 of the compensation deduction the company took on its 18 returns. You could have an Interest Rate of 5 to 8 pefrs but it could pay in kind for the first two years, mature in five to seven years. The idea is get at the very top of the capital structure, replace the banks or augment the banks. And get the money to the employees. Jim, i know youre hearing a lot of these plans i know youre talking to people as well who are in a position to actually implement some of these plans. When are we going to get something that happens here . Because every hour matters i know. I just was going back and forth with the treasury secretary. They come up still with the president is determined to support the u. S. Economy, and there are many great u. S. Companies that will emerge strong were still getting what i regard as a high level of, i hate to use the word platitude, but what you revealed is good for companies that are solvent, but put my other hat on, i care more about small and medium sized business i cringe when i hear were going to make loans available. Thats all you need is to have a business that cant do business thats told to close where you then layer on debt so when you open, you close again because you cant afford the debt. I like your plan for the solvent companies. It doesnt do much for the companies that are insolvent immediately because the government is demanding them to be insolvent right, but jim, i mean, we know in six months or some period of time, were going to be out of this, and theyre going to be in a position to actually have their business operating again. You can infuse capital to those companies to let them actually operate. And the government steps in at the top of the liability stack boeing is down the most in the dow. If what you heard, and boy, that would be terrific, if that came out and they said its available to greg smith, the cfo of boeing, then i think boeing would not be the stock that would weigh on the dow if the president were to call saudi arabia and say, all right, guys, hey, terrific, you wiped out half of our industry but were going to be empty of you because when youre overrun by the bad guys, were not going to be there, you get oil back to 28. 30 theres some things the government can do. Maybe five calls, done by 11 00, fda comes in and does the drug, and what we say is why did we decide that 10 million workers had to be thrown out i like the plan, the needs to be put in action. Especially we need to refinance in the first lien and extend any maturity, but it has to go to boeings 2 million people. Please do not think were trying to rescue the ceos let them get no pay. Its a good point, and it reminds me of what marriott has said this morning on their Conference Call. Suspending arne sorensons salary for the balance of the year, reducing salaries for Senior Executives by half. Temporary leaves in north america, cutting work weeks around the world and a pullback on essential spending. I wonder, jim, what your take was on these reports that kudlow floated the government taking equity stakes in companies that need massive aid schumer requiring a commitment to lay off no employees as opposed to 90 , which was sorkins idea earlier in the week look, i like anything that protects the workers i think that the big problem when you go back and look, what was the punishment from dodd frank for the investment saids in the banks which made money, by the way. What was the punishment was, you know what, we cant keep doing this because the ceos made out like bandits so what we have to do is just take a look at the proxy see who the highest paid people are, and tell them, look, you can get this first lien, but you know what . That money, your salary, is going to go to the workers i know thats going to sound too much what is going to be done with corporations, but i dont think any of us care at thips point, we cannot have the fat cats make money at the expense of the workers i have to ask you guys, will there be a fifth Home Hedge Fund provision . Because we have had a couple hedge funds on this morning who behold there is a pale horse, yesterday, too, and its shaking because i think i dont want class warfare in this country. The way you get class warfare in this country is have billiona e billionaires tell us, look out, its the end of days we have to be more focused what do you think of that . Are you referring directly to ackman come on im not picking on people. This is jimmy chill. You have been on air for 15, 20 minutes yeah, its all right. You know, this programming it was suboptimal i would say illadvised along with suboptimal, but everyone is entitled to an opinion we learned that early on when we were in fifth grade. They are. You want to try to keep emotion out of it as best you can. Thank you carl yeah. On this idea of the government taking stakes that i guess kudlow brought up, in part, that was done, a great deal of moral hazard that was brought on by the banks and the idea that perhaps as the government would be in there as a Significant Shareholder to balance that. Im not hearing that most of these companies, other than buyback stock perhaps over the years instead of using the capital in a different way, though its not clear to me they wouldnt have been pressured to use their capital, so its not clear they would have had oodles of cash sitting around, but nonetheless, they did not do anything here that is bringing this on. This is not deserved in some way. This is an unexpected event that has overtaken so Many Companies at this point. Im not hearing a desire on the part of many that the government take a stake, in part because its going to have the effect of depressing stock prices even further perhaps because of the delusion that would take place better to have the government come in to backstop the banks or replace the banks at the very top of the stack in some fashion for companies that need the aid as opposed to taking equity stakes david is right. I looked at the equity stake idea i think that you can have the option of doing that if youre the ceo. But of course, obviously, no more buyback, and no more payment. No more ceo payment during this period thats what distinguished what did the bankers do wrong during the other days . They said listen, we were making 10 million this year, and were not going to make as much. They have to take that away. I think youre right, david. Im precipitous in saying equity stake unless a company says they want an equity stake i think youre coolheaded on this and very factual. Lets check in with bob pisani who would normally be on the floor but were trying to work out our future teamwork and logistics. Hes joining us remotely who would have thought i would be here in my home rather than on the floor of the New York Stock Exchange. Its a microcosm of whats going on around the country. Its are essentially like a giant mall that has restaurants and stores in it the restaurants and stores are essentially the floor brokers and designated Market Makers out there. You can say were going to close it and reopen this giant mall two months from now, but the question is are all the rest rauns and shops going to be able to efficiently open two months from now that was one of the concerns that existed about closing the nyc. And they did make the right decision as soon as there were any positive coronavirus cases lets look at the sectors. A little bifurcation, but not dram Dramatic Health care, Consumer Staples down, not as much as banks and industrials. Energy was briefly positive, they have been pressing any rally in energy for the last several weeks. I want to show the Broader Markets, which caused so much distress yesterday to traders. Most traders, i have it on top, the first thing i have on top is the s p 500. The second thing i have is the bond market, lqd that was weaker yesterday. Continues to be weak today oil up, 18year low, up today, but down big yesterday gold fractionally on the upside as well. Thats not as bad as yesterday there was a lot of distress when everything was down dramatically, at least today, oil is on the upside here. Mr. Kudlow was talking about maybe buying equity stakes this has wall street in a tizzy. People are remembering with the bailouts where the equity got wiped out. Its a problem boeing is down 9 . The airlines still having problems they have to clarify this. Are we just talking about government loans, 20 billion, 40 billion. Whatever to boeing are we talking about loans that convert to equity . If its a loan to convert to equity, wall street is going to have a different viewpoint because of what happened in the 2008 financial crisis. We keep saying, well, the s p is 30 off its highs, and it is, but you want to look at the Broader Market most Everything Else is around there, the russell has gotten clobbered. I dont think we have been emphasizing that the russell 2000 down 42 from its high it suffered small caps here in the United States, Small Businesses have suffered much more than the larger businesses. I think thats a key point here. Finally, a little shoutout to nick coals who pointed out some of the disparities in the way these are weighted, the s p is only 18 off its high, but the s p tech index is 41 microsoft and apple. 21 microsoft, 20 apple essentially, because theyre not down as much, microsoft is only down 11 , apple is down 16 , the rest of the stocks in this, which are the majority, are really suffering theyre down a lot more. Micron is down 35 ibm, 23 lam research, all the semiconductors down a lot more. This goes back to what i call the politics of index construction you have to know whats in them, and theres a lot of etfs out there that dont weight these companies by market cap. They weight them by other factors, equal weight, some of them weight them by quality, by earnings, and maybe thats another way to look at that, because obviously, youre going to get a very different result here if you weight them other than market capitalization back to you. All right, bob, talk to you in a bit dow down about 3 lets check in with Rick Santelli this morning as well. Hey, rick. Hi, carl. There is so much volatility going on, and it certainly seems as though some of these negative rates and low rates around the world are getting a whole lot more positive. Lets look at a week to date of tenyear note yields and realize we at least peak so far at 1. 27 yesterday. Intrady, about an hour before the stocks closed and it tapered off a bit. Here we now hover at around 1. 12 lets look at whats going on with regard to other paper across the globe lets look at whats going on in italy, for example the italian tens unbelievable volatility. Boons, unbelievable volatility boons right now are hovering at some of the best levels we have seen it is unbelievable its now on the sunny side of minus 20 okay, italian rates which were at 3 yesterday, around 1. 82 today. You look at the swiss. The swiss tenyear, it was at minus 100 last week. Now its at minus 24 these are big moves. And actually, in a perverse sort of way, it will make recalibration of all global rates better remember, we have not really normalized on the rate structures economy to economy, large developed economies, european, japanese, u. S. , chinese, since the credit crisis. And this is not necessarily a good thing, but its going to put everybody on a much closer footing. Maybe the dark side is we havent really seen europe or japan heal from some of this we heard jim grant talking with joe kernen this morning about that exact topic when it comes to foreign exchange, nobody is beating whats going on in the dollar. Heres a chart going back to early 2017 of the dollar index, which right now should it close be at the best levels in three years. March of 2017, it is just so aggressive, it is really showing us in real time this unbelievable insatiable demand for dollars and its not necessarily a good thing once again, i still say the amount of time were going to spend over 100 isnt going to be long, but it doesnt mean we wont get up to 104, 105, 106, but it will moderate when it moderates, most likely, it will coordinate with global reprieves with regard to equity prices david, back to you okay. Rick, thank you. Rick santelli. Take a look at shares of qualcomm this morning, the stock is down, of course, like so many others, its down roughly 32 or so over the last few months, but its still up about 5 over the last year joining us now is the companys chairman and ceo, steven mall akauv. Always good to hear from you, always good to have you. I want to start on the business itself and then talk more broadly about 5g what are you seeing from your customer base. What are your expectations you only recently raised your dividend 5 . I guess do you regret having done that . No, i think were in a strong position from a cash perspective. And clearly, strong Balance Sheet. I think very fortunate to have that going into an event like this but in terms of what were seeing from our customer base, you have to think about it from the perspective of where they are. We have a lot of asianbased oems we sell a lot into the china market what you see a little bit is really a recovery with respect to the coronavirus, the impact of it. So for example, you saw big if youre just looking at activations of cell phones for example in china, in week five, at the end of january, you saw a big dip. That actually recovered by week ten, which is really the beginning of march so you know, they obviously had a very Fast Reaction to the virus, but it was very good to see that the demand and the activations which are essentially people buying cell phones and turning them on as returns, so its really turned back to the same level that you had a year ago clearly, a very difficult time in february, but good to see that returning in terms of what our customers are doing, their supply chains are back to 70 , 80 they continue to prioritize, i think, technologies that are good for qualcomm, meaning theyre taking their capacity and allocating it to new phones using 5g and trying to figure out how to take advantage of it. Everyone is trying to determine what the impact of the to the u. S. And the european consumer, but in terms of things we can control and the impact in china, you know, youve got a little bit of a bit of a recovery in terms of what were seeing relative to what we saw in february steve, ive known you for many years youre an engineer you think about things in a linear fashion how do you view whats going on here in the u. S. When you look at the virus, when you look at what youre seeing in terms of shutdowns in the u. S. Economy . How are you thinking about qualcomm, its position, and when, in fact, were sort of going to get to your point on china, on the other side of this well, i would say you have to think about the things you can control and the things you cant control. As a company what we can control is can we take care of our employees and make sure the Business Continuity is there i think weve done a good job. In an environment i think its difficult to anticipate. So, for example, we have the majority of our Development Teams are still making progress but theyre making progress from home a lot of that has to do with some planning we did to be able to work remotely we have people in the labs that have to be essential personnel, but a small percentage were working from home and thats working well continue to work on 5g we dont think it will impact the 5g schedules were working on which is very good. I think a testament to the good planning in terms of the consumer and what the impact will be to our business, the only thing we can really think about is make sure we have a strong Balance Sheet and take care of anything we can take care of which we will be able to do i will tell you we continue to hire we continue to add engineering talent because were excited about the opportunity thats coming with 5g we have to make sure were prepared to come out of this dip. How long its going to take and all of that, i think its very difficult for us to add anything to that debate, but we have to make sure were prepared to take advantage of what we think will be a Good Environment after we emerge from this period. Hey, steve, your company is known as being, switch directions here, david got the 5g covered and what youre doing in the future, but your company is known as being perhaps the best Corporate Citizen in american when it comes to what you do for a city. How do you step up and help Public Health workers . They seem to be the ones the most exposed, working overtimes. We worry about Small Business, but im worried about the people who are in the hospitals right now for the tentime explosion were going to have. What can Corporate America do . Everyone looks to you because you seem to have thought about everything i think we dont have any special answers. I think we feel fortunate to have the opportunity to help out when we can help out we helped out in china to a small degree i think everyone is trying to figure out how to do the best work, and youre right its the Health Care Workers and people that have that dont have the strong positions you might have if youre employed at qualcomm or others that you have on every day i think everyone from the Business Community is trying to figure out how to help people. We dont have the ability to manufacture some of the medical equipment and supplies they so desperately need, but i think providing direct financial help to people in the communities we work and live in is something that qualcomm will be doing. Were evaluating that right now. Were also trying to figure out are there things we can do to encourage people or make their life easier in terms of working from home or educating from home, a new thing thats happening now. A lot of people dont have access to broad band and they need some access were trying to ebb courage people to do that. I know some of the carers are doing the same thing we will try to figure out the best way to help its an enormous problem as you know to try to support people. Its heartening to listen to your data on cell phone activation and supply chains out of asia. How do you calm concerns among people who believe that other metrics coming out of asia and specifically china are not reliable well, i think in terms of order flow and whats happening to our supply chain, theres a lot we know whats going on there, obviously our employees are back to work in terms of factory employees. Our production were seeing still remains. The real question is what happens with the consumer in the west i mean, i always use the analogy that i think the sun has come up in china with respect to the restoration of how they return to kind of a normal state. And well see what happens as people get through preparations and dealing with what i think is still a ramping issue elsewhere in the world for us, you have to put that into what can we do and not influence. For us the best thing is to make sure our schedules are on track and make sure we take care of our people i think every company is trying to figure out how to do the same thing. Yeah. They are you know, your stock prices turned around since you started speaking with us i would assume on the positive comments you said on the Chinese Market let me come back to your expectations it seems like on february 5th th when you reported numbers, you were talking about 5g mobile hand sets. Up to 225 million. Do you feel like when the year ends, thats the number youll still be between its too early to tell. Everyone is trying to process what is the shape of the recovery and how long is it going to exist clearly theres a hole in the china market in february which has filled back in as i described. But i think its too early to tell as to whats going on with the consumer you know, in the Western Areas i will tell you tremendous amount of activity with the carriers, with the hand set oem in terms of launching devices. We launched a device with will go in the United States last year we did that remotely we had people working from home, helping to support the launches around the world dokomo announced their 5g launches with seven different hand sets two days ago were obviously working hard to make sure that some of the larger hand set manufacturers that have key launches, theyre going to be successful were going to do what we can do and well see what happens with the market i will tell you we are thinking and still very, very optimistic that the longterm drivers of why were so excited about the business remain intact, and in fact, i think the Biggest Issue you have to be prepared for is when this thing snaps back, its going to snap back hard and make sure youre in a position to take advantage of it were trying to make sure were prepared and be a good citizen and a good member of the communities were in i think our teams are helping us do a good job. I got a lightning round call today on qualcomm. I looked at the dividend and your stock i forgot it had fallen so much i said just buy. Youre at the forefront of 5g. Let me ask about National Security china has come out of this theyre opening starbucks in wuhan. Are we falling in danger of really falling behind in 5g just because of where we are as a nation right now and what were doing with our issues involving covid19 well, i would tell you we have probably as good a lens into that as any Company Given what were doing and i can tell you that we are not falling behind in our 5g Development Due to some great work in terms of quick planning. Just to give you a sense for whats going on, we have the ability to remotely log into all the chips we do around the world. Weve had i think on monday, which was the first day of our i would say worldwide work from home, we had 35,000 vpn connections with 37,000 total employees. A tremendous amount of work continues to go in 2 million Microsoft Team messages thats people debugging code and continuing to do it forward. In terms of our ability to remain a leader in 5g and keep our schedules and do it, based on what i see at qualcomm, were going to be continuing to be in a strong position. And we feel good about that. Some of that is the way in which we work, but also were excited about the opportunity and well continue to work on it i wouldnt call that a big concern. I think the biggest concern is how do we take care of some of the 70 of the economy thats trying to figure out how to deal with the virus and probably not in as strong a position as we feel like we can be in yeah. Steve, it is interesting to note, obviously, that your stock prices reacted positively since you began speaking i think youre up roughly 10 rare to see. But qualcomm shares up over 6 let me end, though, on share buybacks, because it may in the future become a nasty word and one that is not going to be embraced by people in your position you undertook one years ago for any number of reasons. Youve also had activists come at you you still have a decent amount left on your authorized buyback. Do you suspend that buyback out of caution right now well, if you just to recall, we had a very large buyback over the last year. Of course, we thought that it was at a time when the stock was undervalued. I think what happened was that ultimately became true were obviously in an unusual situation right now. Today were looking at the dividend in terms of being something that we know we can handle at least in the current environment. We have a strong Balance Sheet and Investment Grade rating. And i think for us, its maintain your liquidity, make sure you can continue to be strong in 5g, and if we see an opportunity to buy stock at the right time, we will. But our focus right now is making sure that our 5g programs are on track and that we continue to maintain a strong Balance Sheet. And were in a fortunate position to be able to do that yeah. Well, steve, always appreciate your willingness to come on with us steve is the ceo of qualcomm carl and jim, back over to both of you that was good stuff verizon tonight two great guests. Thank you. I got verizon. Continuing my theme about whats going to come out on the other side, verizon is huge for the other side vm ware is cloud on the other side, and then a company, Cyber Security for the cloud im trying to build portfolios of what happens when we beat covid19 rather than just cry and say this is the worst thing in history just a little optimism there i got my collorox out. Sold out nationwide. Good thursday morn were with Morgan Brennan and david faber live from separate locations as we put social distancing into effect as the New York Stock Exchange gets set to go all electronic beginning on monday. Data to start the hour lets get to Rick Santelli our february read on leading economic indicators. Expect it up one tenth of one percent. Last month was strong up. 8, and it was downgraded to up. 7 those are solid numbers. But, of course, maybe the effects of coronavirus havent hit this particular data set yet. I will point out that the curve continues to steepen with short maturities under pressure. Longer maturities are unchanged. Carl, back to you. All right rick, thank you very much. About 300 points off the initial lows on the dow. Obviously not a good morning once again but mike, within a more i guess normal range if youre going back to the end of february here and the volatility index trying to see, has trouble busting out of the 70s yeah. I mean, theres some natural constraints on that, carl. I mean, i do think you could look at yesterdays action you could kind of make a list of things that showed a little bit lower selling intensity than, for example, we saw last thursday weve been believe it or not, kind of hashing around a similar range for the last five or six trading days even though it doesnt feel like it it feels like we traveled a farther distance it doesnt mean its strong or its setting the floor but it means theres a little bit of evidence of slightly less heavy selling. I keep talking about the vix at these levels above 80. That implies a daily move of 5 to 6 or something percent. If you get something less, thats a drag on the vix itself. But i still think traders are watching closely outside of equities whats going on the dollar rally which seems kind of squeezy and forced and furious and the feds efforts to try and get other parts of the money markets and fixed income markets in better working order and allow banks to share the feds Balance Sheet, loosen things up. So i think thats why its touch and go, and everybody who thinks that a onethird drop in the value of u. S. Equities in a months time is overdone is nervous about acting on that it seems like things are fouled at the moment in terms of the operations of the markets themselves and the signals were getting from them. Right when youre looking at again, the 2008 play books are a little wobbly the situations are so different regarding the participation of the banks, the origination of the problem to begin with, obviously its health concerned. Its global. But are you seeing signs that correlations are beginning to break down between stocks, things you would look for to get to a point where you could say were marching our way toward a nearterm bottom i think only tentatively are you seeing things like that. I dont think yesterday even though we see walmart being able to rally, were redefining what a rush to safety is right now. I do think we can kind of look for those things within the market after todays close i mean, jpmorgan being down 6 to me is not compatible with a statement of confidence that we found some kind of core value. And thats whats going on this morning. So i dont think that the market needs to be any more scared in the shortterm i dont think the market needs to kind of have more liquidation to show that people are basically on their heels to stage some kind of a stand here and try to put in a floor, but theres a lot of other ingredients that arent necessarily coming together. Nobody thinks we have gotten to a core value and you talk about 2008, one thing thats also similar is that we see whole industries very much going from being structurally challenged to being existentially threatened were looking to washington to see if we should make bets on them or against them thats a similar feel even if it seems as if the markets probably done enough on the downside to account for a lot of economic pain. Yeah. You know, mike, i wonder during the course of the day, some of the dislocations weve seen various Asset Classes and a lack of correlation at all, these big risk party funds that are running different strategies in different areas cant get anything hedged, it would seem to me. Theres liquidations taking place. I guess im wrapping this up and saying there are moves going on right now that have nothing to do with fundamentals or peoples view its a result of moves to safety, inability to hedge, and funding stresses coming from all over the place exactly i mean, if youre trying to read the signals coming from the various markets and you were somebody who felt as if my Treasury Holding should act as a hedge to my equities, its not working. You step back, reduce exposures in general and thats sort of a feedback loop that has been in motion for a little while right now. You see also things like plain vanilla fixed income bond funds trading at huge discounts to their Net Asset Value because of mass it outflows or because the Market Making function normally keep these things tight are not working. Thats been going on for a few days i think thats why the fed, theyre going to keep trying things, keep pulling things out of the tool box and see if one or two of them work better in terms of where we have historically seen a relationship and im thinking back to between different Asset Classes and thinking back to 2014, 2015, 2016 the last time we saw a collapse in crude prices we saw those types of prices moving in correlation with equities. I realize youre seeing a bounce in the energy complex. A little bit of one today. Given the fact that were at dressed levels, how much is that weighing on the Broader Market as well . Yeah. It fits right in, morgan if you did a chart, i think we put one together u. S. Dollar index against gold, oil, Corporate Bond prices and stocks, its just dollar up, and Everything Else down a lot now, the move in crude oil is obviously kind of breathtaking with other drivers it reinforces the other things in motion whether its concerns about the real economy and how its going to function people talking about running out of storage its extraordinary stuff thats more just another Pressure Point on top of what weve already been trying to absorb well continue the markets conversation on the phone line jpmorgans chief economist and citis chief u. S. Strategist if im reading this note correct, youre expecting gdp in the u. S. In the Second Quarter to drop 14 . I can see it. Thats correct. How do you get to that number well, you basically shut everything down in march and april. Obviously its not just the u. S. Its happening in western europe its increasingly happening across the world we have this enormous disruption that is not limited just to spending on entertainment and travel its spreadingout to closing industries and it does enormous damage not just to gdp but the led markets. We saw the first step of that in todays jobless claim numbers. I dont think right now there is really any question that were going to have an intense hit and its going to take Second Quarter growth down a lot. The real question is how long does it last and how do we recover from it . Right now we still have a decent recovery in the second half of the year it incorporates a fading of the virus drags and an opening up of activity, but still some important lingering damage in credit markets and industries that have been hurt. The question is can we stem the damage being done in a way that those lingering effects are just limited . Yeah. In the meantime, today the s p right now is basically right around the flat line 2396 is the level currently its trading at looking at one of your recent notes, youve reduced your s p target for the year to 2825 from 3375 much lower but still represents some up side how are you forecasting . What is your modelling for that . So were looking at nine to 12 ways of achieving that. What i would say is that for starting from a lower base its one of the problems the earnings estimates as well i mean, i share the comments about duration, how long does this last . And if its four to six weeks, thats fine. If its four to six months, there may be more pain one of the things thats interesting to us is when you look historically on trailing earnings as opposed to forward earnings which are the place where we have the biggest difficulty forecasting, on trailing earnings between 14 and 16 times estimates or actual results, rather, has been kind of the second best place to buy the market over the past 80 years in terms of subsequent Market Performance that would be somewhere between 2300 and 2600 on the s p where we are right now suggests valuations reflecting a lot of bad news and even if we run numbers suggesting recession recalls of maybe 130, 135 on the earnings estimates, we can still see markets in the 2400 to 2500 range. In that context, there is some opportunity here the problem is that sentiment is still not in panic territory in january. We were warned 70 probability of downside to the market. We were fairly neutral now were not in panic level and not measuring emotional states were measuring where people are positioned i know its shocking but we havent gotten to people kind of giving up. Everyone is looking for the bottom everyone is looking for where the opportunities for the bounceback is. There has to be a level of disgust and revulsion toward equities to really hit the bottom and tobias, for goldman, that number is 2000 on the s p mid year do you have a number like that we dont, but i would suggest that if you break the im not a chartist or technician, but a lot of our clients look at the charts carefully if you break the levels we saw in december of 18, i know our technicians are talking about potentially seeing 2100 as the next level where there can be some support again, its not where we come from from a fundamental perspective, but i can look at the charts as easily as anybody else does. I think theres an element of people saying if ive got nothing else to look at, im going to look at the chart bruce, im curious what you think the fed response right now, the fiscal response, all these different phases in terms of bills that are being drafted by the federal government right now. Some of these other actions, how much that could actually quell the worst of the economic damage here in the u. S. And how that factors in so i think what the fed is doing is very important and very helpful, not just in easing policy, bringing rates to zero but also in terms of trying to make sure markets are functioning really stemming the tide of pressures in the treasury market now beginning to move into some other areas as well, commercial paper, specific i think right now the really big issue is theres a lot of pain thats going to be felt in a very concentrated way in Company Space and people losing their jobs we need to not just get fiscal stims yuls but targeted health i think we need to look at how quickly and how effective will the targeted benefits come i think the jury is still out on that it will be an important factor in terms of how quickly and how strongly we can recover from whats going on a big hole in the Second Quarter all right i hope youre wrong. I really do. I do too. Tobias and bruce, thank you for joining us today thank you thank you we are getting some headlines that reinforce realism when it comes to hotels. The marriott Conference Call seema has it the call was scheduled late last night marriott taking a number of bold steps here halting share buybacks, suspending the Cash Dividend and the ceos pay for 2020 the company also reducing salaries for the Senior Executive team by 50 . All of this coinciding with a very sharp decline in shares of marriott at one point it was down as much as 30 in yesterdays trade where was addressed. Looking more deeply, the markets are understandably looking for assurance that we will survive why do i say this . Because there is no other rational explanation for the selloff on our stock none of us can know how long this will last we think it very likely the crisis is well behind us sometime in 2020 or early in 2021 at the latest the stock recovering a bit in todays trade. The cfo of marriott addressing Balance Sheet and liquidity concerns following the sharp decline at Hotel Occupancy around the world mentioning the 4. 5 billion. Its tapped about 2. 5 billion to support the repayment of commercial paper thats something to keep in mind carl, in terms of some encouraging news if you want to call it that, the company is saying occupancy rates in china are beginning to rise, al bee it slowly theyve gone from 90 hotels in Greater China closed at the height of the coronavirus outbreak, and right now theyre under 30 closed today. Back to you. Interesting, seema. Coming on the heels of our conversation with qualcomm it will be nice if we can assemble anecdotes like that crude at 22. 60 off the third worst session ever senator thank you for joining us thank you thank you harold, looking at a release out of continental, a 55 cut, expects cash flow neutral under 30 per barrel, wti how would you characterize u. S. Producers ability to adapt in this short time . Well, we cant adapt harold, let me start with you. Okay. Jim is right you cant adapt to this type of scenario so we do the best we can, and National Security interest, thats what it is. The irony of this is that were over there defending their National Security. Im talking about saudi arabia, and here they are undermining ours over here so we cant allow that to happen they picked this time of this Global Pandemic to try to undermine us, and it cant happen ill let jim go from there jim, how does this carry on the hill well, i dont know how it carries on the hill. I know how it carries in oklahoma and in the United States im the chairman of the Senate Armed Services committee im very much concerned. I dont want to get us in a position where were depending upon importing oil for our ability to defend america, to fight a war and run our economy. Thats what were faced with right now. And ill be the bad guy and tell you that i sent a letter to secretary ross, secretary of commerce, and said that we would like to have him start the process of imposing 232 tariffs. Thats the National Security tariffs that he has. First, he has to determine that dumping is taking place. We know dumping is taking place. We even know from some of the russian people that there a reason for this. And that is to get us to be dependent upon them. We cant let that happen im going to recommend that we impose 232 tariffs to preclude that from happening so we dont become dependent upon saudi arabia or russia or anybody else for our ability to run this country. Harold, are there i mean, given the environment were in, its hard to imagine this scenario, but what happens if there is recovery and we go from oversupply to undersupply . How much risk is there in that well, you know, you always deal with that you know, the good thing about this situation that jim just talked about is we have an agency that is charged with protecting american interests such as this so thats a good thing we have a secretary of commerce that understands and can deal with this quickly. We talked with him obviously with the Armed Services committee moving forward to take charge here and also the Commerce Committee and the senate you know, they can move very, very quickly and stop this situation thats been imposed on us senator, i appreciate the National Security argument, and all of this and certainly you go back a couple decades, and i think back to the opec oil embargo. We know how Important Energy independence is to National Security i recognize that were at record levels of production in the u. S. And exporting crude all over the world, et cetera but in general, from a refining infrastructure standpoint, we still are importing quite a number of barrels right now because of how those refiners are structured and how also the ability to get crude to different parts of the country is set up right now. What do you do about that situation . Well, were the exporter, thats where that is at. Well always import some, because theres refineries that are owned by foreign entities. Canada has a number of those youll always be importing some barrels for some types of crude. But were a net exporter have been in the past year yeah. Senator, i want to get your thoughts on this too, as you do bring this petition, this request for section 232 to the commerce department. Yes well, that request to answer your question earlier that was asked, i wasnt sure it was asked of me or harold, but you know, we can impose the tariffs. And then we can change that. Now, if something should happen to the market where its no longer necessary, we wouldnt impose tariffs we just dont want to as it is rieght now, we cannot continu to produce the oil that we have to have to run this country, and we would depend on people like russia and like saudi arabia we cant let that happen mr. Hamm, its david faber. There are going to be any number of millions of people in this country who aregoing to need help in the not too distant future because theyre losing their jobs one can imagine them asking why should a company like yours where you are an unhedged Production Company be helped out more than any other . You are reaping what you sew well, david, first of all, were not asking to be helped out. We have an agency that thats their job. Thats what they do. Were not asking for a handout nobody is. Weve delivered something here that was unheard of, and that is bringing up production this National Energy renaissance has been tremendous for the american people. Were going to have low prices for the foreseeable future were not asking any handout thats not what were doing, but i think let me respond. Its unfair whats going on yeah. Let me just respond to that, because you know, if the industry goes down, nobody is going to be working. So this that is a lot of jobs are depending upon our ability to be able to produce domestically and that is very consistent to the things were voting on right now as we speak. Youre on a short list of senators who voted against this fiscal package and im sure youll take a lot of heat for it do you want to explain why you did that yeah. At the time we were a state of Small Business, and the way they handled Small Business, they said you in the Small Business will have to support your employees, and you wont get reimbursed untilsomewhere between a few weeks or a few months they cant survive that young. We spent all day the last five or six days talking to our small employers and were trying to keep them alive. All we have to do is make a change which were going to make, i believe today, on the vote today, for those individuals who are taking care of their employees will get reimbursed prior to the time they are out the money its a matter of cash flow, not a matter of changing the amount of money yeah. The devils in the details right now we are a huge sm. 99 of our activity is out of Small Business in the state of oklahoma and were going to help the employees and the employers, and that will be taken care of in the vote that well be taking this afternoon yeah. And certainly the devil is in the details and employers are feeling the pain just as much as employees. It brings me to my question for harold thats the contact that Continental Resources put out an update one of the things outlined is the average rate count is going to go from 9 to 3 in the bakken. 4 to 10 1 2 in oklahoma when you see rigs go up or down, it translates to quite a number of jobs. What are we already seeing in terms of some of those issues, some of those potential layoffs for workers in the oil patches right now . Well, its drastic. Halliburton Just Announced a large furlough yesterday the good thing about is, the furlough, theyre not laying those people off you know, were seeing it everywhere in wichita, i think that layoff furlough was 700,000 jobs. So its crossed a lot of industries, and these are contracts that people out there with rigs and Oil Service Equipment and all that, and its devastating. Yeah. To put that in perspective, mr. Hamm, what is the oil price that you would need right now for continental not break even per well, but for you to actually earn a return at the corporate level . Well, you know, we just put out a budget at this level that would be cash flow positive at 30. You know, we have Great Properties were a Strong Company we can weather this storm, but its we need to correct this situation. Thats what were trying to do weve asked through the Armed Service committee, asked the Congress Committee to fix this trade situation and we believe well do it. This thing could end quickly its unheard of that somebody come in with a Global Pandemic and try to take advantage of American Companies here and break this industry. Were not going to let that happen harold, we appreciate your time senator, thank you as well we hope to talk to you soon. Harold hamm and senator inof how is up about 75 points carl, thank you as the u. S. Is attempting to flatten the curve, the infection curve, our meg is looking at what lessons we can learn from china and italy. Meg . Morgan, were all wondering how long well have to be doing these measures and when well be able to see an impact. Rbcs analyst usually covers bio tech stocks and his team taking their modelling skills to the epidemiology out of italy and south korea and china. You can see the red line thats chinas total cases they did begin to start flattening the curve in the middle of february they note when the lockdowns began in china first in wuhan and then in the greater province of hubei. It was about 25 days after that, about four weeks that they started to see the curve flatten. Unfortunately, thats when the blue line takes off. Thats global cases and when we see the cases rise in italy and other countries and now in the United States. So looking at lessons from italy, they start to look at the intensive Care Capacity of that country, and when the mortality in that country started to spike. What they find is the inverse correlation between how many patients can be treated by intensive care as the case numbers rise and more severe patients are in the hospital and the mortality rate spiking they created a calculation essentially for that capacity, and they plugged in the u. S. Numbers. What they found is under different scenarios, their base Case Scenario, the orange line here, were going to hit the capacity in the United States of our intensive care units in early april. And thats with even more stringent measures than we currently have right now that line on the right, the best Case Scenario, thats if we impose really strong restrictions quarantines, making it even illegal to go outside, they tell me in the epicenters of the outbreaks in the United States then they could really start flattening the curve these models assume we do more than were doing right now morgan and carl. Wow, when a picture is worth a thousand words meg, thank you its time now for a coronavirus update sue herera has that for us i do. Thank you very much. Good morning, everybody. Lets start with an update on the Global Situation total confirmed cases have now risen above 222,000. The death toll has topped 9100 iran is the worsthit country in the middle east. It is reporting 149 new deaths just since yesterday bringing the total to nearly 1300 it will now pardon 10,000 prisoners in an apparent attempt to combat the virus by reducing the prisoner population. We have positive virus news. China reported no new local infections today for the First Time Since the outbreak began. Officials did report 34 new cases, but they were infected outside of that country. Here in the u. S. , Harley Davidson has shut down most of the production plants through march 29th the move follows closure announcements by many other auto makers jpmorganchase temporarily closing about 20 of its branches about 1,000 locations and its reducing the staff in the rest of its branches. And in las vegas, Mccarran International airport has temp r rarely shut the air Traffic Control tower after a controller tested positive. Tech crunches reporting Telecom Giant Charter Communications is telling its workers to keep coming to the Office Despite at least one employee testing positive and other staff coming into contact with someone who passed guidelines. A spokesperson said theyre following cdc guidelines get more by going to cnbc. Com. Were seeing a remarkable bounce in a number of familiar names but we have to mention lyft and uber. For more on that, well check in with diedre. Hey thats right uber shares are surging. Theyre up nearly 30 . This is after ubers executive team held a call this morning, essentially reassuring investors, saying thatve phenomenon they see the worst Case Scenario which he describes as gross bookings in the ride segments falling off 80 for the rest of the year and not recovering, he says they still have enough cash on the Balance Sheet that even if that happens, they would still have 4 billion and theres a revolver, a shortterm Credit Facility they could use basically to survive this coronavirus outbreak if it continues. Now, he also said that in certain places like hong kong, theyre starting to see somewhat of a recovery, but he also said that in some of its most major markets like San Francisco, los angeles, new york, and others, he expects that the worst is still yet to come. He also spoke a little bit about the uber eats. Their good Delivery Business he says it continues to grow he says that even in seattle which has been extremely hard hit by the coronavirus, he says that continues to grow he underlined theyre taking care of their drivers, covuriers but difficult decisions will have to be made in the coming months he didnt say what, but you could think there would be layoffs in the corporate side. Uber is surging some 30 lyft, this is interesting, up about 15 . It didnt hold that call, and they do not have a food delivery to make up for ride sharing. Back to you. Deirdre, thank you lets bring in lori, rbc capital head of u. S. Equity strategy, joining us on the phone. Good morning lori, let me start with you. I think we peaked around february 19th or so. Its been a rather dramatic fall since then what are you expecting when it comes to the fears of a recession and what it will do in terms of earnings and how your model responds from there. Sure. Thank you for having me on, everyone just in terms of our forecast, we actually cut our number to 139 for 2020 epf today thats a decline of 16 . We updated our macro assumptions. What was interesting to me about the output is that at the end of the day, it was in line with the median drop that weve seen in s p 500 earnings if you look at all the years dating back to 1990 that were affected by recessions we think thats a good starting point. We know its difficult to forecast exactly whats going to happen right now but we think its worth considering that we at least have that kind of impact the reason why is were trying to listen to the market here the market has been trading it hasnt broken below the 2300 lows but its been trading around there thats in line with the percentage drop of 30 , in line with the average drop we tend to see in s p peak to trough in recessions to loris point, this is not a market right now that is being or is trading on fundamentals. There are all sorts of different mechanisms or forced selling and the like thats going on how do you try to make sense of it how do you try to come up with some sort of idea of where were going to be and whether this is in some time worth buying . Totally agree its all about the market internals. Not about fundamentals yet fundamentals will matter as you talked about earlier, we need margin calls reduced. All time records monday, tuesday, wednesday, hedge funds are forced to reduce gross exposure risk parity funds are forced to sell we have credit markets that are seizing up from time to time when we got last thursday, the widening credit spreads even within the treasury market if we can calm those things down, and i think the markets start to tell us that might be the case, well grab hold here and attempt instead of straight down, well have volatility, but in both directions, not just down and i think 2350ish on the s p weve gotten there, there abouts a bunch of times including december of 18. Maybe were going to hold there, but the forced selling and the credit markets are what im watching most carefully. Yeah. Youre not alone in that the credit markets are key but it feels as though every time weve sensed at least theres i dont want to call it stability, but were up a bit and were actually seeing some stocks sort of rebound and find some stability, the next day concerns about a deep recession or even dare i use the word others are, depression, some to the fore yet again and everybody just sells everything. Youre right, david i think people are finally beginning to mark their numbers to market. I mean, were going to have it seems to me in the Second Quarter, im not an economist, but id be surprised if the number wasnt minus ten or worst in gdp thats a whack the question is going to become when does the Second Derivative coronavirus cases peak so we can begin to get a handle on the other side history of viruses you get whacked hard, and then pretty quickly you start coming back. Yeah, there will be residual effects that last a long time, but if we can get past that, and were starting to see that the intensity of the put call numbers, the up side downside. The trend numbers. These are the things that i think in water fall declines youve got to watch, and im starting to see less bad news there. Solar r all the major averagr moving modestly higher given all the dramatic moves weve seen in the month of march, the russell 2000, small caps are up. Theyve been hit the hardest when it comes to places that look potentially the most attractive for somebody who is potentially looking to get into this market, given the selloff weve seen, is it small caps is it megacaps and large caps and how would you break that down across sectors . Sure the small caps are interesting from a valuation perspective right now theres a lot of doubts about what valuations actually are its a little bit tough to buy them on that basis small caps also historically get whacked the hardest when domestic economic views are eroding. Were still in that mode for now. I think long term small caps offer opportunities. Shortterm, its a tough place to be. The place we are telling people to do bargain hunting is the industrial sector. We think the sector was deeply attractive before the coronavirus situation. Areas like machinery, multiindustry, road and rail those are areas that will do well once we have an economic cycle. Theres nothing structurally broken about the areas weve been telling investors if you want to do bargain hunting, if youre kind of a three to fiveyear buyer, thats one place wed look. Yeah. Bob, im wondering if you would piggie back on that. Theres headlines for senators calling for infrastructure which has been called for we all know for several years now. But in the wake of massive unemployment actually might carry more political water and what might that mean for construction, infrastructure plays, commodity plays when you consider the action in copper and iron the last few weeks . I think, carl, that will take time we know it takes a long time to get that approval, get the design going, getting the shovel in the ground. In the nearterm, i think we have to look at post qes before. Qe 1, qe 2, qe 3, this is qe 4 what sectors did well post that. Technology and health care which did poorly in utilities and reits. Infrastructure can take a long time bob, i just lori sorry, go ahead, morgan bob, i want to dig into whether the u. S. Is still the best place to be for investors right now or whether there are potentially greater opportunities, again, given the timeline, given risk appetite, if there are better opportunities in other parts of the world right now, especially as we see markets move with coronavirus headlines . So as long as were in this defensive move, we know the u. S. Is the most defensive of the big markets in the world, and, therefore, along with the stronger dollar, the u. S. Is doing reasonably well. On the other side of this, if we, in fact, do have a noticeable recovery, a bounceback from the its going to feel like depressionlike levels, the more cyclical areas will do better. That speaks of nonu. S. Markets. Were a big Growth Market with a lot of defensive stocks. For now, stick with the u. S. Finally, lori, give me a couple of names right now that you think have been overly penalized by the fear of recessions even worse that are wo worth buying i cant give you individual names for compliance reasons i would go back to the industrials, and i wouldalso say if you want a set of stocks to watch, and i wouldnt necessarily pound the table on them and say theyre buys today, but something weve been watching very closely is our list of the most popular stocks in hedge funds weve noticed the names have been resilient throughout most of this drawdown this week they started to see some pretty significant underperformance relative to the broad market nature that coincided as we were starting to hear concerns coming out of the Hedge Fund World about some pod closures, about redemptions, and also frankly just derisking. A lot of them are secular growers. A lot of peoples favorite stocks are on the lirs if you want to trade this market and look for some longerterm opportunities, if we continue to sort of see some of the underperformance we saw earlier this week, if we continue to see that happen, i think youll get buying opportunities there i think once we come out of this to the other side, there will be a initial bounce, but then i actually do expect to sort of get back to this moderate growth type environment and Growth Stocks can work well in that environment. Well, first things first. I guess. One thing really quick before we let you go 139 for 2020 eps is there anything that would make you reevaluate that number either to the downside or the up side or is that number you think pretty firm for now for 20 20 . I think its a good working number for now and you know, we said in the piece this morning that were not immune to sort of the panic that we see thats going on around the street. We try to keep our emotions out of the process like everybody else but just because its a dicey time, were keeping a shortterm significant coronavirus scenario in our back pocket and thats where we expect model in rather more of a negative q2 hit that bounces back quickly on q 3. That snacenario we come up with 153 eps. You can keep that in your back pocket if things start to not look as bad. Unclear when thats going to be the case. Lori and bob, thank you to you both morgan, over to you. A quick check on the markets here weve been fluctuating between gains and losses for the major losses the dow and s p are currently in the trade. Slightly the nasdaq continues to hang onto gapes of more than 1 lets get over to Rick Santelli in chicago for his take and what hes watching today. Rick thanks, morgan. Like to welcome a special guest, john taylor who along with George Schultz wrote an interesting book choose Economic Freedom. Enduring policy lessons from the 70s and 80s. I started to trade in the 70s. I havent read your book yet, but by the title and skimming the things written about it, what an appropriate day. Here we are at a time where everybody wants the government to help. Bank of england cut rates further. Theyre going to be buying more. They have a special mp meeting Christine Lagarde seems to have pulled back the notion that shes not responsibility for sovereigns of high policy bunds. Nobody is kplcomplaining. We havent settled up from what we did the last crisis i think there are recent changes that are promising some of these liquidity facilities Just Announced late last night and the day before by the fed for the primary dealers, money markets, those are specifically focussed on problems in the markets. I think those are maybe more promising than some of the more general things that youve mentioned. And also, i think thats the spirit behind the book, choose Economic Freedom choose things that work. Dont throw the money away that can happen at times like this three big programs by the fed. I like the short term paper. Now we have friend of cnbc, we both know larry kudlow really well top economic adviser, kind of putting it out there if theyre going to create advantages for some of these businesses that need it or special loans, that there may be a cost associated with that. Equity positions what do you think about that kind of redoing what we did with gm ten years ago i think some of the money should be focussed on people that are clearly hurt, and thats low income people but i think the general sending lots of money, that hasnt worked in the past 2008 it was a program of sending money to people that didnt do a lot of good. The economy kept coming good id like promises of how about no tax increases for a while how about some regulatory moratorium for a while those could be a boost, and id like to see a little bit more talk about it. You dont see much of that at this point instead, its really talk about the third phase. By the way, i think the second phase, paid sick leave, testing of payments, they make sense but going on beyond that, its a concern. And it hasnt worked in the past i couldnt agree with you more certain big businesses and certain sectors may need some help think airlines i couldnt agree with you more the average joe on the street maybe didnt get looked after as well in the last crisis and it seems as though we really are aiming to help that particular group of people that we all know whether its my parents, your parents, friends now, final thought we are seeing some of these spreads and some of the bad barometers of whats been going on ease back a little. Professor, can we actually see the markets start to grab here maybe it overcompensated your thoughts on where the gps of pricing is versus what we know about the horrible effects of the coronavirus the global side is important. You have seen some increase in the medium tenyear rates in the last couple days i think the Exchange Rate is you want to look at that as well because ecb has done some things the ecb made some Big Decisions yesterday. One thing i think is important, they didnt change their rates and they have a specific analysis of why. The good piece, the chief economist ecb just put out explaining more effort to explain what theyre doing that applies to the fed as well. It will be very good at this point and lends a good example excellent professor, thank you for your thoughts today we will be having you back as this ongoing issue, of course, someti stymys medical workers and those in the economy rick, thank you the dow is down 228 points right now. Were going to take a quick break. Stay wh itus this piece is talking to me. Yeah . So what do you see . I see an unbelievable opportunity. I see bestinclass platforms and education. I see awardwinning service, and a trade desk full of experts, available to answer your toughest questions. And i see it with zero commissions on online trades. I like what youre seeing. Its beautiful, isnt it . Yeah. Td ameritrade now offers zero commissions on online trades. But when allergies attack,f any the excitement fades. Allegra helps you say yes with the fastest nondrowsy allergy relief and turning a half hearted yes, into an all in yes. Allegra. Live your life, not your allergies. Welcome back on this thursday morning goya foods is seeing an obvious increase in demand for its products sales have quadrupled since march 11th and theyve distributed 23 million cans of beans to retailers since then. Joining us this morning is the president of by to goya foos thank you for having me. Ever seen a spike in demand like this . You know, this isnt our first rodeo. Its kind of what we do. You know, we consider ourselves first responders, sometimes in hurricanes weve always stepped up to the plate in puerto rico and other places but this clearly is an exceptional time i wanted to say from the outset, how extremely proud i am of our goya family around the globe that is working around the clock to get this much needed food out to where its needed you know, were working tirelessly, were producing, were distributing, and, you know, at great personal sacrifice i have to say but im so very proud of our group and anyone who has gone to the Grocery Store and found your products on the shelf, im sure is thank for that can you sort of describe the challenges youre seeing right now whether its in production or distribution or raw input what is the problem at this moment well, you know, as a privately held company, we have several months actually of product that comes from not only the United States but around the globe. Some of our products are seasonal we have reasonable inventories weve been producing around the clock to get these products out. The big problem i think, the biggest problem for us is the personal sacrifice people working burning the candle at both ends, but so far, you know, like i said, im so proud of the group that stepped up to the plate and theyre just doing a fantastic job, not only here in the United States but in europe and the caribbean and in other places so i realize that sales, bob, have quadrupled from demand in supermarkets and retailers how does that compare on the restaurant side of the business, as we are seeing closures and curtailed activity were kind of recessionproof when things are bad. People stay home to eat. Several years ago restaurant sale dollars surpassed grocery dollars, so what were seeing now, of course, is with everyone sheltering in, a tremendous upsurge in home eating at home, and yet, of course, the restaurants are taking it, you know, a direct hit. To keep up with the demand that youre talking about and the fact that i know you mentioned employees burning the candle at both ends and the personal sacrifice that comes with that, in terms of being able to ramp up the production what does that mean in terms of additional costs or is this something youre able to i guess address or adjust pretty easily given the fact that you do have past experience . We have very modern factories. Weve always invested in our facilities to go faster and faster so that investment is already there. You know, running extra hours, overtime, our costs have increased in labor were paying wages well beyond what the politicians say because its, you know, free enterprise. The costs of transportation, transportation has gotten very expensive to move our products which is heavy and less costly than shipping an iphone or piece of clothing. Looking at a live shot here of the White House Briefing room where we are expecting a briefing some time we think in the next hour. Bob, weve seen a lot of crossborder traffic reduced down to nonessential goods, whether its in europe, u. S. canada, how what kind of impact is that likely to have on ag supply and are you considered essential . I think were very essential. Beans, for example, which the majority come from the United States, the bean belt that goes across the United States, and 90 of our products come locally from new york and michigan and throughout the country weve that available and beans, for example, luckily they are essential and at the same time they have protein, fiber, antioxidants, phyto nutrients and when combined with rice you have a complete protein. Thats a lot of things we focus ob is low sodium, organic, expanding the line in those areas, focusing on the quality that beans, in fact, beans have been recommended by a lot of the experts out there, you know, stay at home and eat beans its really a protein and a very healthy one. When rooeetailers call in and make an orderer i assume they have to get in line. How you prioritizing those things we have to limit and make sure everybody has a piece of the pie or if customers need to pick up, were making that available. We do direct store delivery where were orderering today, loading tonight and delivering tomorrow door to door. Whats the best selling item right now . Our beans are we cant theyre flying off the shelves. Sometimes the trucks arrive at stores and theyre not even making it into the stores. People are taking product off the trucks of course the supermarket employees, and then selling them on the sidewalk. Yeah. I mean, i assume it would be nice to cut to somehow undercut that secondary market if you could, but thats out of your reach, isnt it . Oh, no. Were not selling that were making a delivery to a store and say the truck arrives and, you know, were going to instead of stocking the shelves the store is selling to customers right out on the street, right in the parking lot lets say. Yeah. Bob, thank you. Please keep us up to date. Important issue. Thank you. Will do, god bless, thank you. We are just thank you, carl, we are Just Moments Away from the White House Task force. Weve shown you that video on your screen. Bring in eamon javers as we await an update from the task force and potentially president trump. Eamon. Yeah, morgan, thats right. Were told that there are a couple things moving behind the scenes and we expect an fda announcement in the 11 00 briefing from the white house. Not clear on what theyre going to announce. Im given some indication we will be talking about expanded Clinical Trials for two particular drugs from the fda. Well wait and see on that meanwhile, im told by a southeastesenior Administration Official behind the scene the white house is considering longer term bonds, 25 and 50year bonds even, to help borrow the money thats going to be needed for this massive Coronavirus Relief effort thats going to be clearly under way. Meanwhile, theyre still working up on capitol hill on that phase three bill were told theyre circulating ideas and getting input from republican members back to the white house. Democrats also weighing in here. Well see where this lands they were talking about 500 billion in stimulus payments, checks 250 billion, one in april, one in may, all what is contemplated for the phase three right now. For this 11 00 briefing were watching were not sure necessarily whether were going to see the president of the United States here or just the Vice President and the Coronavirus Team as has happened in the team. We expect an fada announcement and theyre working on longer term bonds to help the u. S. Government borrow the money that will be needed. Thats something that some folks have been calling for for a very long time it would be nice to get some detail on that want to point you to the defense production act, which you talked about on squawk this morning takes you back originally the war powers act and affords the government broad powers in the way we produce goods. It does it allows the president to sort of direct individual companies to produce specific materials that he says are needed for National Defense or in a national crisis. You can imagine that would be medical equipment, masks, all the things were hearing about, the personal protective equipment, thats in short supply right now and basically enlist private companies into that effort in a very big way. It also gives the president a lot of tools in terms of loan guarantees and authorities financially to create incentives for the companies to do just that its not just a matter of simply ordering them to produce this material then it also has a very sort of world war ii feel to it in a sense that theres a provision in there which allows the president to call in a council of executives, with vast experience in whatever the crisis area is, who would serve in the government. These would be private sector executives the president would in essence draft into Government Service to help coordinate all this among all the Different Companies in the private sector some tremendous authorities there for the president. He says over twitter that he does not necessarily expect that hes going to be using those authorities any time soon. He just wanted t