Transcripts For CNBC Squawk Box 20240713

New expectations about how long the covid19 crisis may last given President Trumps comments yesterday along with anthony faucis. Well talk about that in a little bit take a look at treasury yields this morning lets show you where the tenyear note stands right about now. Youre looking at 0. 367. The story we probably tonight talk enough about these days, lets show you crude prices because they fell sharply overnight. Wti crude now trading at 20. 53 if that was the only story around, youd think that would have a huge impact on markets unto themselves. Meantime, an update on the outbreak cases confirmed in the u. S. Now topping 143,000, 2,500 deaths. New york is the epicenter right now with nearly 60,000 cases in the state. Another 13,000 cases in neighboring new jersey in new york city, construction is under way to build an Emergency Hospital this taking place inside central park right across the street from mt. Sinai workers from the organization samaritans purse has begun constructing that 68bed emergency Field Hospital across from mt. Sinai hospital. Theyve been working on that over the weekend of course, also facilities being repurposed at places like Javits Center and others. Overseas the number of confirmed cases in italy reached 97,000 with more than 10,000 dead joe, how was your weekend, my friend thanks, andrew. It was you know, were all trying to figure out this new world. Its surreal, as im sure youre aware, andrew. There are times yep. Try to look for normal things going on. I cracked open a little wine kashlgly, i will tell you that much we are here at night and ive had bottles ive thought about in the past and lately ive decided, you know, why not lets have drink a little wine and try to return to some degree of normalcy but its tough its tough watching the toll the you know, the cases and the death toll i try to keep it in perspective, obviously, and hope for some type that the mitigation pays off. I know youre hoping for that, too. Well talk well talk about it in a little bit the optimistic note is that abbott news that happened over the weekend as well on the testing. That could be a gamechanger i think the fda is going to look at that combination, too, right . Or looking at well see, andrew i was surprised. I was hopeful about the market this morning that when i saw it last night, i thought it could have been another one of those days where were locked down limit. It came back as the morning went on were down a little bit today. And then, andrew, some of these names are familiar to me i dont know if you know john prine, hes more from my time than yours but the Country Music world mourning the loss of number one artist joe diffy. Whose name was mentioned in a more popular country song. 61 years ago, died from complications of coronavirus i think he was a big Country Music star in the early 90s i dont remember specifically but he had some big hits back then another grammy winner in critical condition, john prine, a gentleman i remember well from my youth, hospitalized over the week after a sudden onset of coronavirus symptoms he was intubated on saturday night and then did you know this gentleman, had you talked to him, 56yearold cfo of jeffries, peg broadbent. I had many, many years ago, peg broadbent. He spent 16 years at Morgan Stanley and then at jeffries he had been cfo since 2007. You know, as this as this whole pandemic progresses, i guess, unfortunately, we may be familiar with some of the other names. One thing that i dont know if its a positive, andrew, but there are people that have gotten it and the symptoms seem to be minor and then you hear that theyre doing well and then you hear theyre out tom hanks and rita wilson and others were getting inundated. Weve never had this much opportunity to be inundated from media with every different outlet. Nope. I should mention, by the way, because i tweeted out about it about a week ago, a friend of mine, and many viewers may know him, david lat who created above the law, a website every lawyer in america reads religiously, only 44 years old. He was in. Icu on a ventilator for about a week but hes off that ventilator and out of the icu. Thats great news. Were thrilled to see that meantime, we should move this conversation to washington, d. C. , where so much of the policy action is President Trump. Yesterday announcing he has extended the National Social distancing guidelines. He moved it now to april 30th. Eamon javers joins us with more on that decision and Everything Else thats happened over the past 48 hours. Yeah, thats right, andrew. Partly because of the statistics and some of the names youre citing just now, thats why the president said hes moving off this idea that he had last week of reopening the country by april 12th, around easter time, and now saying the social distancing guidelines are going to have to stay in place until the end of the month he said he hopes now that the United States can be back to something for normal by june 1st. This is how the president explained his decision in the rose garden yesterday. The peak, the highest rate of death rates, remember this, is likely to hit in two weeks nothing would be worse than declaring victory before the victory is won that would be the greatest loss of all therefore, the next two weeks and during this period, its very important that everyone strongly follow the guidelines so, the president also suggested that at this point a best Case Scenario, guys, is something between 100,000 and 200,000 deaths in the United States obviously, were nowhere near that number. It looks like the number of fattalitie fatalities, at least in the way the president is expecting it, is going to increase dramatically over the next couple of weeks. The president spent the weekend considering this idea of a quarantine of new york, new jersey and connecticut it wasnt ever clear how that could possibly work, what the legal ramifications or legal und und underpinnings would be at the end he backed off it and just said he wanted to issue a travel quarantine. Well Pay Attention to whats happening at the white house all during the course of the day today. If you could weigh in on the other big debate, which is aille louing or not allowing new yorkers or people from the tristate out of the tristate obviously theres been this battle fight taking place with the governor of rhode island and the governor of new york youre seeing this territorier toal squabbling now and squabbling between the president of the United States, insisting many are asking for things that they dont need and ungrateful for the things theyre getting from the federal government i think its defensiveness on the part of political leaders who are doing everything they can to protect the area theyre responsible for. When you talk about locking down new york, new jersey and connecticut, andrew, how would you even practically make that happen are you going to shut down i95 . Are you going to close the ports and bridges . Penn station has to be shuttered. All of those things are incredibly difficult to do in a free society in the United States and theres no real i have new york city plates on my car, but if i was in rhode island, it sounds like they would pull me over with those plates on my car they might. They might dont try to come down here to maryland look, thats where we are. People are really scared and theyre seeing whats happening here it is terrifying, right . Theres also where i am the realities of locking down a region that big is so difficult. Sorkin, eamon, i consider this part of new jersey to be i never thought id say that, andrew, but we are new yorkers and im not leaving one state. I may be in new jersey, but its a 30minute drive. I happen to go over a bridge or through a tunnel what am i . Am i a new jersey person new york you cant separate this part of new jersey from westchester or any of the other bedroom communities. I actually thought about that. When i leave new york, if i go in there from the nasdaq, you know, be now i have to quarantine because im in new jersey i dont think were all new yorkers at this point. I may be more of a new yorker than you, sorkin, with you way up there in god knows where. I never thought id say that well, im in connecticut at the moment can i just ask, andrew the white house i was reading beckys back. I was reading about rhode island hi, guys. I was thinking about that when i was reading about the governor of rhode island. They were talking about usual the National Guard to go door to door to look for people from new york are you selfquarantining there for 14 days . We are completely sealed off from the world we probably werent sealed off at the very beginning because we made a run to target, walmart and a supermarket. But we now have more food than we im worried about all the fruit thats going to go bad we have a lot of frozen stuff. Yeah, our plan is to hold out as long as we can thats the plan. We have not seen anybody else. This is us. Were kind of doing the same thing where we are its crazy. Its crazy i think its the right thing for everybody. I think so, too eamon, what were you saying . Meantime, becky is with us i was going to say, becky, that the white house spent some time last week looking county by county across the country. You know, there are 3,000 counties in this country or more, trying to decide if you can separate out the counties that had a high infection rate or low, counties that were dangerous, counties that were safe when you look at that, you realize the interconnectedness of all these counties and the touch points between them, as joe was just saying. Theres so much travel back and forth. Its unworkable to really say were going to seal off this county or advise you cant have travel to that county because theres so Much Movement in american society, even in this lockdown. This stuff has to move people have to go places otherwise the whole society breaks down. Okay. Were going to head to break im hesitant to ever talk. This gets difficult when were all in such delays well power through this coming up, markets are in focus. Two weeks ago it was the dows worst Weekly Performance since the financial crisis that was followed last week by the best week for the dow since 1938 notwithstanding the big selloff on well, less than 1,000 points its all relative. The wild ride on wall street is set to continue. This morning we have been down quite a bit. Almost unchanged well see how it finally plays out at this point. Back down significantly again. Well talk about what comes next tethbrk. Flexshares may look simple on the outside. But inside every etf. There are untold hours of careful construction. Infinite what ifs . And contingency plans. Creating funds that help target gaps in client portfolios. Tap untapped potential. And strengthen confidence in you. Flexshares. Powered by over a century of investment expertise before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. But when allergies attack,f any conthe excitement fades. Ion. 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. These expect and way more. Internthats xfinity xfi. U get powerful wifi coverage that leaves no room behind with xfi pods. And now xfi advanced security is free with the xfi gateway, giving you an added layer of network protection, so every device thats connected is protected. Thats a 72 a year value. No one else offers this. Faster speed, coverage, and free advanced security at an unbeatable value with xfinity xfi. Can your internet do that . Welcome back with two days of trading left in march, the dows on track for its worst month since 1998 the u. S. Equity futures right now are at some of the best levels weve seen. At least when we went into break. Well check that out u. S. Equity futures. Lets bring in liz young, by mellon Investment Management in looking at your notes, im not sure im not sure youre sure what investors should be doing at this point. Were at the beginning of a bottoming process. Expect a lot more, perhaps, downside based on what happens with the virus start thinking about certain areas that look that might be attractive down the road does that sum it up for you mostly thats a pretty good summary. Hi, joe. I think what i would start with is you cant separate the market and Economic Data from the health data here we have so much uncertainty. We havent hit a peak yet. We hope we hit the peak in midapril in new york and april across the country once we get on the other side of the mountain, investors can be a little more certain. The reason its convoluted about dipping your toes in because we had three days of gains last week and everybody wanted to call the bottom. Everybody wanted to say monday was the bottom i dont know that he with can do that yet, even if that is the furthest we go down peak to trough, i dont think were out of the woods and going to continue to go up on a trend Going Forward. There will be more pain to come. It depends on how big your pain for threshold is because, liz, the previous breaks weve seen have been more significant. 2008 or even 1987 and weve had a big break, mid30s, whatever it is. But others have gone almost 50 or so. If you could decide, in other words, were still a fair amount above the lows we set. Wed have to go down another, what, 10 , 12 right now to get to the lows and add another 10 , 12 on there before youre not getting too cute if we only go back down to the lows and 5 below that, longterm you could make a case that some of these prices might be good entry points you cant call the exact bottom. Only if you thought we were going to set really significant new lows would you not have to average in at least a little bit at this point, or is that wrong . You totally step aside thats fair heres the numbers around it if you have an investment time horizon more than 24 months because on average we get back to the kind of range we were before a crisis, within 24 months, but theres still outliers to that when you look at what the lows are, what the peaktotrough decline is without a recession, were about in that range right now. We compare a lot to that 1987 crash. That pullback was 33 . So far the biggest pullback weve had here was 34 so, if we dont go into a recession, this feels like enough if we do end up going into a recession, its typically deeper and longer lasting as you pointed out, 2000 and 2002 was 49 2008 was closer to 57 , 58 . If we do have a recession, which we still dont know, if we do have a recession we have more to go that doesnt mean you cant dip your toe in the water. You dont want to miss the whole thing. Even if we retest and go below 5 , as long as you have time to wait it out, you still have a pretty good valuation on things. And then you have to decide what type of recession were talking about, too, i guess because theyre not all created equal. This could be unprecedented in terms of how quickly we went into it and how quickly the markets sold off and maybe we dont have a v, maybe we dont even have a u. Maybe we have a w or l. Those scenarios you can describe pretty well. Its not necessarily one of those structural recessions from things heating up too much and the fed tightening and the kind weve been used to in the past this is because of the virus solely and i dont know, a, whether its it should be defined classically as a recession or as a really quick break and then a quick move back up it depends on that, too, doesnt it it does and i think what we also have to remember is that this pullback and this economic sudden stop is part of the cure for the real cause of this thing. So, the virus is the cause here and part of the cure is that we had to inflict shortterm pain we had to purposely stop the economy in order to slow the spread and in order to save lives. Thats again why you cant separate the health data from the Economic Data. The good news was it wasnt an Economic Force that took us to this point were hopeful there isnt anything structurally wrong with the economy and hopefully theres not too much vulnerability in the market that the government cant backstop that this is a long recession. Best Case Scenarios are a deep v, bigger v than we originally thought in early january and february or a u. The other good news with that is both of those cases means we return to previous levels and we ro recover fully. I cant thing of anything close except maybe 9 11 where the personal terror that you feel for yourself and your families and youre loved ones and for society in general is almost is worse than the terror you feel in the Financial Markets. But to have to deal with both of them at the same time is just very, very daunting. Even 9 11, you know, we heard about sleeper cells and all those things it wasnt like this. It wasnt so pervasive and allencompassing liz, thank you appreciate it. Andrew and becky, when i wake up in the morning, i have to say, you know, every person in the world is waking up its not me you know, its not like, geez, your life, youve got these horrifying things going on in your life. Its like, every human being waking up is like, oh, crap, coronavirus. So, its its crazy ive never experienced anything like it. Everybodys got the same problem. Were all united with that front anyway very true, joe. Very true. I miss talking to you guys. It was nice during the commercial break where we left the mics open and talked like we havent talked in weeks at this point. Its good to have you guys here. Its good to be here with you. We havent had a chance to talk over each other in weeks. Its been a long time. Amen to that. We have a lot more on the program, so lets tell everybody whats coming up in a little bit. Workers at several companies are speaking out theyre now threatening strikes and demanding better responses to the outbreak. Well bring you the latest headlines straight ahead as we head to break, here are images from the Pandemic Impact from yesterday across america. Americas oldest lighthouse has weathered many storms. Seeing the break in the clouds before anyone else. Together, well weather this storm. Welcome back to squawk box this morning facebook just out with news about the news the social media gipt giant is investing 100 million to support the news environment during pandemic. Including grants for local news outlets, facebook relies on those to populate their news feed a new step for face pook, which has had a bit of a contentious relationship with the news media over both the coverage and the funding and in terms of what facebook may or may not have done to the news business. For local outlets, this is a much welcomed grant. Becky, over to you andrew, thank you. Workers at food shopping and Delivery Service instacart are preparing for the possibility of a strike today contractors are demanding the Company Provide hand sanitizer, increase hazard pay and expand the current sick pay policy. Instacart says anyone diagnosed or placed into mandatory quarantine will get up to 14 days of pay. Separately as many as 100 employees at amazons Staten Island Fulfillment Center plan to walk off the job at 12 30 p. M. Eastern time today. They say the company is mishandling its response to the coronavirus pandemic among the demands employees want the facility closed, cleaned and sanitized because as many as seven workers have been reportedly diagnosed with the disease at that warehouse alone. Amazon called the employees accusations unfounded saying, our employees are heroes fighting for their communities and helping people get critical items. We are keeping our employees safe we have taken extreme measures to keep people safe, tripling down on deep cleaning, procuring Safety Supplies that are available and changes processes to ensure those in our buildings are keeping safe distances guys, i dont know what would happen if you start to see Grocery Store workers walk off, delivery people walk off because people are home and hunkering down but weve been told not to hoard. You walk into a dproegrocery st and it says you can only buy two or three of the items. If that were to grind to a halt, thats a much bigger deal. Yeah, the supply chain has been pretty good between the Health Care Professionals if i talk about it, i have to wipe a tear away its unbelievable. Thats one of the positive things to see people so concerned with other people that they put their own situation at risk the super market we have here, in the morning you cant even get a parking space. Im not going in but if were out and i look over at it, i guess thats when its all restocked so everybody thinks they have to go then. You know, theres its a little bit too close for comfort. I mean, what theres a lot of people in the world, and its hard to believe at this point that everybody is basically in their own humble little abode, and they are, for the most part. Its just hard to imagine in a city like new york that the streets are empty. Thats what we need to do. It is. We dont see anybody. Its going to be unless this thing is like sneaking under doors or around corners, you know, it should be possible to try to insulate yourself when im out in the car, im in a little tube. Im in like a little tube. Im in like a little tube. Its surreal life is surreal right now. I wont let our teenager drive, joe i wont let our teenager drive because my concern, a new driver, you get in an accident, the first place they take you is to the hospital. Were not even allowing stuff like that to go on i see that. I can see that i dont know if i could tell my teenager not to drive. I dont think i can. Anymore. We have s. E. C. Yeah, thats right when we come back, s. E. C. Chairman jay clayton will join us to talk about the challenges raised by the coronavirus pandemic stick around squawk box will be right back. Announcer todays big number 12. 84 thats how much the dow jumped last week. Thats the indexs best ek nc1938we i am totally blind. And non24 can make me show up too early. Or too late. Or make me feel like im not really there. Talk to your doctor, and call 8442342424. And sometimes, you can find yourself heading in a new direction. But when youre with fidelity, a partner who makes sure every step is clear, theres nothing to stop you from moving forward. Good morning lets take another look at the u. S. Equity futures this morning. Ive seen down 300 or 200 and change yesterday right at 6 01, i tuned i checked the futures out, as we do, especially after a weekend. And saw some levels last night down 250 or so and those levels were not quite as bad this morning. Down 118 or so right now, we had been down 50 or 60, bouncing between almost unchanged and down about 200 so far this morning given a lot of the news over the weekend, most of the gains from last week, besides that 1,000 or so point selloff on friday, were kind of hanging in there at this point, guys. Andrew you have jay clayton, i think . Yeah, exactly meantime the New York Stock Exchange begins its second straight week of allelectronic trading. Joining us on the phone is s. E. C. Chairman jay clayton. Chairman, its good to have you on the program again its been quite a week since we last spoke feels almost like a bit of a different world even youve now seen the world, or at least the exchanges operate in the case of the New York Stock Exchange completely electronic with nobody on the floor what are you seeing right now . Andrew, good morning. Good morning to joe and becky. We did have quite a week it was a shift i would say the culmination of quite a shift to telework for many of our critical market infrastructures, the exchanges, our Central Clearing parties and the like i have to say that were very pleased with the from an operational perspective with how that shift was accomplished. Of course, a lot of that is due to the what i want to thank my colleagues at the fed and the treasury for their amazingly Quick Intervention under pockets of the market that were under stress particularly at the short end of the curve. We have a lot of 30, 60day, 90day markets in this country, commercial paper, many others i could talk about and we have an incredible shock, incredible economic shock we hope is 30, 60, 90 days. The targeted intervention of the fed certainly helped the operational side of the ledger chairman, one of the questions weve been asked repeatedly over the past week, and i know its something youve been asked, i hope youll respond to it, is about the uptick rule. It came up again on our friday on riday investor leon cooperman called into the program and actually talked about the uptick rule and what he thought was needed i want to play it to you because i want you to respond to it because i think its probably one of the singular questions that at least we get and i imagine you may, too, about the call for reinstating the uptick rule heres what lee had to say the area that really surprises me, im not looking to pick a fight with the s. E. C. , but im absolutely surprised that the ftc has not weighed in here in 2007 for some unslain pd reason they delayed the uptick rule, which are extenuating volatile in the market it works both ways, okay certain countries are banned short selling. Im not in favor of banning short selling. I think it should be allowed we should have this uptick rule to slow things down. Theyre scaring the hell out of the public theyre scaring the hell out of the professionals, okay, and the s. E. C. Should weigh in and to do something here chairman, can you speak to that i know you probably get that, you know, a dozen times a day. Sure, sure. There are two points in lees comments the first is, i totally agree with him we shouldnt be banning short selling. You need to be able to be on the short side of the market in order to facilitate ordinary market trading thats in agreement. His point on the uptick rule is, you know, do you have undue pressure on a stock thats moving down through short selling . We dont have the old uptick rule that lees referring to, but we did put in place, and not a lot of people know this, an alternative uptick rule. Its a rule i believe more closely manages the electronic environment trading today. Let me explain quickly how it works. If a stock drops more than so from the previous days close. Its important its the previous days close. But if a stock drops 10 from the previous days close, for two days, four two days you cant sell short on the bid. So, if the bid offer spread, im going to use numbers illustrative here, but if a bid offer spread is 49 to 50, you cant sell short on 49 and we believe this rule for single stocks, in combination with our marketwide Circuit Breakers have worked to dampen the type of activity mr. Cooperman is worried about more effectively than the old uptick rule. There will be plenty of times to examine that in light of the unprecedented volatility weve had in the last four weeks, but that alternative uptick rule is addressing the issue that lee is that lee is worried about, and hes right to be worried about. We need market integrity but we believe were taking care of it with this alternative uptick rule. Chairman, one of the other things youve done in recent days is extended some of the deadlines for certain disclosures for companies. So many ceos are watching this program this morning trying to understand what the new disclosure or deadlines mean also investors trying to understand it. Can you explain whats happening . Sure. Andrew, were going to have an earnings season that is anything but typical. We have many of our companies who are trying to do their cash flow analysis. They have lots of uses and many of their sources have been impaired or dried up. They have to figure out their Liquidity Position and our investsers are thirsting for that information they want to know how theyre doing from a liquidity point of view and operational point of view now that we have some, im going to say some, insight into another 30 days of social distancing, how are they going to operate their businesses under the current social distancing and other rules and how are they going to operate them Going Forward all of those things investors are thirsting for. In this country we have a great thing for Public Companies investors get to know how management is looking at the business, both historically and forward looking. Now, in an environment like this, thats not easy because theres lots of routine things and other things in addition to all of those changes in the economy that reporting is going to have to deal with so, what did we say to companies . We said to the extent youre unable to get your reviewed Financial Statements together because the auditors cant get to your locations to do physical inventory or the extent you have other problems, well give you more time, but in order for us to give you that more time, youre going to have to explain as much as you can to your investors at this time, including why you need more time so, were trying to be flexible, recognizing that investors in our markets thirst for the kind of information that i hope is going on in the boardrooms and i expect is going on in the boardrooboar boardrooms of most good companies. How are we going to bridge this period to the other side hey, jay, i was trying to figure out how to ask this question just in a generic way, a lot of people that have positions might go on Media Outlets to talk about the Current Crisis is there a difference, in your view, in calling for calm and saying, wow, these stocks are really cheap and knowing that that person has a position and is talking about, you know, it could if the market were to go up, it would help him, is there a difference between that and coming on and talking about the market going down if they have position where they benefit from it going down are both of those things okay in the current environment, do you think . Joe, you know, its america we love opinion. You guys are doing a great job of getting different views and trying to educate the public about our markets and our operation through this period. That said, theres a line where that ends and bad behavior begins now, im not going to go into it because every situation is facts and circumstances dependent. But do we like it if, to use the vernacular, somebody is talking their book, particularly if theyre active in the market and arent disclosing it no, we dont okay. Chair, i think he was very politely referring to bill ackman, but let me ask you andrew, let me be clear andrew, im not referring to anybody. Im just saying that if people have positions theyre coming on, you know, they let me just say as a citizen, lets put aside lets just say as a general citizen, if youre coming on and talking about the markets and you have particular trading positions, you probably ought to tell people and i should say in the case of bill ackman, my understanding, and i cant speak to the segment itself, but i do know that he publicly disclosed in writing prior to those appearances what his position around some of those hedges were. Let me say andrew, let me jump in there and respond more generally to joes question because our Enforcement Division did put out some guidance here we are in volatile market times. When youre in volatile market times and theres uncertainty, thats a time when theres a great deal of asymmetric information and what people would call material nonpublic information. Were telling companies and market participants, look, we know its tough, but practice good hygiene make sure that if youre disclosing, youre doing it broadly. Make sure you have controls over your material nonpublic information. The public needs to know that people are continuing their commitment to integrity here to that end, let me ask you about political leaders. One of the things thats happened in the last week and theres a report out that the fbi is investigating republican senator richard burr related to stock trades around the coronavirus and what he may or may not have learned in his role in his job what is your view of politicians trading stocks, period andrew, we have the stock act, and im i want to be clear. Im not commenting we have a very rigid policy about not commenting about whether an investigation is happening or not happening it serves the public well. It serves us well. And it serves people well. Its america its good due process. But anyone who is privy to private information about a company or aboutds to be cautious about how they use that private information thats sort of fundamental to our securities laws. That applies to government employees, public officials, et cetera and the stock act codifies that. Okay. Chairman, we always appreciate you calling into the program as this progresses, i hope we can continue this conversation we appreciate you joining us this morning. Andrew, thanks a lot. Thank you talk to you soon becky, over to you still to come this morning, weve been watching the futures. After the big losses we saw on friday, albeit the major gains throughout the course of last week, the biggest week weve seen for the market since 1938, take a look at whats happening this morning looks like the dow is indicated down by about 60 points. The nasdaq and the s p indicated up by just a little bit. The s p by 1. 5 the nasdaq up by 28 points were also watching oil prices very closely this earning month. Crude actually dipped below 20 a barrel overnight right now you can see wti back above that its still down by about 5 , but its sitting just above 20 at 20. 44 brent is all the way down below 23 a barrel at 22. 92. A reminder, you can watch or listen to us live any time, any wri on the cnbc app. Stick around, squawk box will brit cke ghba what do you see . We see breakthrough medicines getting to patients in record time. We see harnessing natural gas unleashing the promise of clean energy. We see engineers simulating the future to improve today. At emerson, when issues become inspiration, focusing core strengths to create a better world isnt just a result, its a responsibility. Emerson. Consider it solved. Coming up when we return, dr. Scott gottleib is going to join us with an effort on the updates to flatten the curve and halt the spread of coronavirus scott, a new paper out on what it will take squawk box returns right after this dont forget to subscribe to our podcast. Youll get interviews, original content, and behindthescenes access look for us on apple podcasts or on your favorite podcast app and subscribe to squawk pod today. Welcome back to squawk box, everybody. Weve been watching the continuing toll of whats taking place with coronavirus the number of cases in the United States continues to grow, and the death toll in america is now topping 2500 people. Joining us right now to talk about what he sees happening and potentially some plans for when things might actually open up again is former fda commissioner, dr. Scott gottleib he is also a cnbc contributor and he serves on the boards of both pfizer and i willumina. Yesterday he put out a plan on what can happen before we can get back to work and school. Why dont you lay out the steps that are vital before we can get back we believe that in order to start lifting these populationbased mitigation tactics you need to see a sustained reduction in the number of new cases for at least two weeks, two weeks being one incubation cycle you also need to have the capacity to screen the entire population, people presenting with symptoms of coronavirus thats a capacity that we peg at about 750,000 people a week. Well probably be there by the end of this week those are two of the key steps that you need to achieve you also need the ability to do Contact Tracing and need the ability to support the local Health Care System those are some of the conditions that we think need to be met in order to start lifting populationbased mitigation approaches i think theyre probably going to be met towards the end of april into may by the end of april well be peaking at the number of infections well shall able to start contemplating lifting some of the mitigation tactics if you follow what we outline in the plan we release this weekend. The white house saying yesterday that they are extending this and expect it to continue until at least april 30th you think it will take at least a couple of weeks beyond that . Rate. Its going to probably peak end of april, which is what weve been saying on this show for a while now, end of april, early may. Then you want to wait a couple of weeks to make sure the reduction in cases that youre seeing is a sustained reduction before you start lifting so some of the populationbased mitigation efforts the president talked about june getting back to business in may well be coming down the epidemic curve well be starting to slowly lift the approaches and substitute and other things for example, you might tell a population they dont need to shelter in place but wear masks if they go out into june well be continuing to slowly take off, put off the brake. In july and august well get back to our lives. I think the summer also, the depth of the summer is going to present a backstop one of the concerns needs to be when we come back in september that this doesnt come back again. Theres likely to be seasonality with that. We have time to put in place the tools and we have time to think about what the toolbox is to make sure we dont have large outbreaks and certainly dont have another epidemic come the fall part of it is not just getting tested and making sure people get the test to see if they test positive for coronavirus, but making sure you can get the results back in a timely manner, not waiting a week, not waiting 12 days in some cases and beyond to try and see what the situation is. Right they have a backlog of tests thats why they slowed down communitybased testing to work off the backlog, which is largely around hospitals they didnt want to have tests delayed at the hospital so people were waiting in the hospital to get the test results. They worked off that backlog this week. I think youll see them roll out more communitybased testing what you really want, i wrote about this in the wall street journal over the weekend is a massive sentinel Surveillance System testing people in the background to detect where the virus might be spreading that will be an early trip wire. You can implement moesch urs there and implementing casebased interventions thats what we need. If we have a therapeutic, i think we will by the end of the summer, thats a robust toolbox that can prevent another scenario like what were experiencing now. Dr. Gottleib, thank you again. We appreciate your regular updates. Joe . Thanks a lot. Speaking of which, becky, coming up were going to talk to Mohamed El Erian for one of his regular updates. Well talk about the market volatility and what we normally do with mohamed in the next hour. U. S. Equity futures are a little bit better at this point assuming that my 15 second de y delay it is outdated but we were down less than 100 last i looked well be right back. Investors bracing for another volatile week on wall street as President Trump extends social distancing guidelines an update on what you need to be watching straight ahead. The airlines asking treasury to spread the wealth quickly and evenly the latest on the sectors 58 billion life line is coming up slowing the spread could rely on faster testing were going to speak to a doctor about the latest coronavirus numbers and getting tests to every american cnbcs special coverage of the coronavirus pan 2kedemic and th markets continues right now. Good morning, everybody. Im becky quick along with joe kernen and Andrew Ross Sorkin. Weve been watching the markets this morning after a big up week but a big down day on friday, you are looking at mixed messages coming from the markets the dow looks like its down by 110 points it would open by 110 points here nasdaq and the s p 500 are both indicated a little higher. The nasdaq up by 3 1 2 the s p has turned positive. Its now down by 5 1 2 andrew lets bring you up to date on the lateston the coronaviru pandemic Johns Hopkins university now saying the total number of cases globally has risen to more than 700,000. In the u. S. Cases have topped 143,000. President trump extended social distancing guidelines through april 30th from that easter deadline before as the government tries to flatten the curve. Meantime, the fda has given approval to avid the company will begin making the tests available to Health Care Providers sometime hopefully in the next week then in new york the epicenter of that outbreak in the u. S. , as many as 100 employees plan to walk off the job today at 12 30 p. M. Eastern time. They allege the company is mishandling its response to the covid19 outbreak. Among the demands, employees want the facility closed, cleaned, sanitized because as many as seven workers have been reportedly diagnosed with the disease from that outbreak alone. Theyre calling the organizers accusations, quote, unfounded. Joe, over to you just heard andrew mention that President Trump did extend the guidelines for social distancing until the end of almost april, until the end of april, and eamon javers joins us with more. Hi, eamon. Reporter yeah, hi, joe the president spent much of last week sort of agonizing about the impact that this social distancing is having on the u. S. Economy saying that the cure couldnt be worse than the disease and suggesting that he wanted the economy open again by april 12th or easter time, but last night in the Rose Garden Press Conference the president said he is going to extend that social distancing guideline until the end of the month he said he hopes that the u. S. Can be back to some semblance of normal by june 1st heres how he explained the decision the peak, the highest point of death rates, remember this, is likely to hit in two weeks. Nothing would be worse than declaring victory before the victory is won that would be the greatest loss of all, therefore, the next two weeks and during this period its very important that everyone strongly follow the guidelin guidelines. Reporter the president also put out a new benchmark for success. He talked about a worst Case Scenario in which deaths could reach more than 2 million and said that because of the efforts that the United States is putting in place, he thinks that can be held to somewhere in the 100 to 200,000 range he said if the numbers are in that range or lower, then the United States will have done a good job here. So even the best Case Scenario, guys, is still pretty grim and no indication as of yet of what additional help might have to come from congress in order to finance the whole u. S. Economy being locked down until the end of april and Economic Impact through june 1st at this point as the president s talking about. It looks Like Congress will have to take steps on a phase 4 package of aid but not clear exactly whats going to be in there, becky yeah, eamon, already you hear some of the back and forth i think i saw Mike Mccarthy saying that he is a little concerned about whats going to happen next. He doesnt think we need to be talking about more money at this point. Its hard enough i think to have gotten them to all agree at this point. It will probably get more disjustdi disjointed from here reporter yeah, they came together really quickly. You saw the 960 vote in the senate and nearly unanimous in the house. A couple of bumps along the way, but i think the big piece still missing from this, you hear this from the governors, is aid to the states you saw Governor Cuomo say just how badly hit the state budgets going to be in new york state from all of this revenues falling off a cliff for all of these states. Thats a piece that Congress Might be aible to get its arms around and do something to help the states as you say, politics isnt suspended indefinitely here. Of course, i mean, kevin mccarthy, the house leader, not Mike Mccarthy, my friend from the wall street journal days they said the states and localities might be places where they need extra help obviously this is already circulating through. That would be a Pressure Point where people hear from their home districts, the congressional representatives hear it from their home districts and thats something that is motivating reporter yeah, look. I think the inexorable progress of this disease is also going to change the politics of it, right . It wont just be a couple of states, you know, in screaming fiscal agony, it will be a lot of states. Once you see the broad effect in red and blue states, that evens out the politics and the federal government will be more inclined to step in and take some action here. Hey, eamon, let me ask you another question here. Harvard Business Review put out a piece taking a look at the Lessons Learned from italy the things that they had done wrong, and the authors made the point that in order to really be effective, you have to take some early and very extreme measures and as a result if you do that properly, it really does lower the number of cases making it work do we run that risk that if this looks like its working, theres going to be a call to openup things earlier to get back to business as usual . Reporter yeah, absolutely. You know, you saw this in the financial crisis back in 2008. The Obama Administration sort of struggled with this idea of, you know, if you succeed and your bailouts and your Huge Investment here works, then it looks like nothing really went wrong and, therefore, you dont get any credit for avoiding something that was potentially much more disastrous politics doesnt work that way on the avoidance of a negative you dont get sort of political points going into the next election for that because the negative thing never happened. The same kind of dynamic could play out here except its a lot more dangerous in the sense that if you do avoid the negative, people say, hey, no big deal, lets get back to work, and you see another spike happen i didnt see the harvard Business Review piecebut i did see other scenarios laying out a series of spikes, peak and trough, peak and trough where if you open up the country you get another spike, you have to close down again, open up, get another spike, close down again. Thats a worst Case Scenario for the economy. You want to do this once and get it over with i dont know, guys, if you t w he wanted to have a Bumper Sticker made that said, without me it would have sucked less youll never get elected saying it would have sucked less. I thought that was hilarious is anybody in washington talking about some of these reports, it goes to the particular point you were just making, eamon, about reinfection in certain countries, in asia, including in china just that friday we saw some reports that some of the numbers had gone up, not huge numbers but nonetheless concerning to some ive gotten some emails over the weekend from some people in the Investment Community who have been looking at those numbers. Reporter yeah, look. The big challenge is that we as a nation and as a society have gone into this thing relatively aggressively here and theres no real roadmap for how to get out of it. Once you start writing checks to individual americans, right, 1200 checks, theres no real political roadmap for when do you stop writing those checks. Is Congress Going to continue that for six months, a year . How long is that going to go on . How long is the social distancing going to go on . What is the cost of stopping those things these enormous measures that we as a country have done collectively the question of turning them all off is going to be a challenging political one because these things take on a momentum of their own and there are real dangers on the other side if you get it all wrong. Eamon, thank you very much. Well check in with you later this morning obviously investors will figure out how to navigate these roads as well. Joining us to talk about what investors should be bracing for is the chief Investment Officer from Goldman Sachs sharmin, lets talk about what you said over the weekend. You say you think there is light at the end of the economic tunnel now were hearing from the white house theyre pushing social distancing back. June 1st is the time we do break out of this. Have you put that into your equation already based on the panel of experts that we talk to on a pretty frequent basis, the thought that you need to maintain social distancing for some time is actually what will help us at the end of the tunnel in terms of the recovery. If we abandon social distancing too quickly, in fact, the risks are greater in the long run. The fact that that is being pushed back we think is a big plus we think the size of this fiscal package, all of the Monetary Policy measures are very significant, very large and have been actually enacted in a very short period of time relative to the Global Financial crisis. So all of that together gives us a sense that there is a light at the end of the tunnel for most of us. Obviously for those of news in the health care facility, nurses, doctors, its a very different situation, but for the economy and the financial market, the social distancing is a good thing in the long run sharmin, youre in the private Wealth Management business what do you hear about your clients these days how panicked are they . How are they willing to put people to work now that weve seen the markets come down significantly . Its a very mixed picture in terms of how different clients react. We always recommend clients have a very Strategic Asset allocation the ones who have started with a good Strategic Asset allocation where theyre comfortable with their mix of equities and fixed income, they have more staying power. We have been recommending that they lean in a little bit into this market to slowly start adding to their equity risk. Initially we had recommended they do it in a more conservative fashion using some option strategies. Early last week starting monday we recommended incrementally actually adding to equities outright we have generally recommended u. S. Equities. We would rather tactically be in u. S. Equities with the greatest liquidity in the market, the greatest transparency and where the policies are very coordinated. Where there are other markets or other sectors they should be lacking at, we have recommended staying focused on the s p 500 there are others who have asked whether there is a light at the end of the tunnel or an oncoming train, and thats why i saved the title for last sunday nights insight was that we didnt think it was an oncoming train other than for the health care industry. Your reasons for starting to push your clients into more aggressively u. S. Stocks a week ago, was that because the stocks had come down so precipitously or was that because you started to think, okay, we think we have a handle about how were going to manage coronavirus here in the United States . I think its definitely too early to have a strong opinion on how Coronavirus Spread will be dealt with. Its difficult in that theres not a social distancing practice as you discussed in the prior session across the board, so its hard to know exactly the path but eventually social distancing does turn the curve or flatten the curve as is commonly used so we will see a decrease we dont know when that will happen and what the peak level will actually be, but we know that it is going to happen the amount of work thats being done on therapies and vaccines is enormous. Theres a sense that whether its off the shelf repurposed drugs, new drugs, we will see new progress and that should lead to some optimism, but we also tried to put this big down draft in context if we look at high to low, whether its close of business to close of the market or whether its interday, were looking at peak to trough draw down of 34 to 35 . When we put that in context we can look at other episodes so in other recessions weve seen numbers down 40 if we think of the Global Financial crisis, weve seen a down draft of nearly 60 . We try to put that also in the context of major pandemics like the spanish flu, like world war ii in terms of destruction and try to put some context around these numbers. Nobody knows exactly where the bottom is, and we try to make sure our clients are aware of the fact that nobody knows whether the numbers we saw on friday and parts of the 2200 level is the lows or whether were going to retest those lows so obviously we recommend clients start leaning in if they have some staying power and they can withstand the volatility n. That case we say that this draw down has been very significant the amount of resources dedicated to solving the problem as well as providing a floor to the economy and providing tremendously quit at this so the Financial Markets can operate and function, that eventually things will improve. The markets tend to discount that sooner rather than later, so we need to slowly start averaging it sharmin, thank you for your time today we appreciate it. Thank you for having me andrew . When we come back, a lot more on squawk box. The airlines urging treasury to move quickly to disburse up to 58 billion to the industry. What investors and consumers need to know about it next take a look at this mornings biggest winners and losers right back after this. Its a challenging market. Edward jones is well aware of that. Which is why were ready to listen. And ready to help you find opportunity. So. Lets talk. Edward jones. Its time for investing to feel individual. Yes. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Ok. Yep. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Xfinity makes moving easy with twohour appointment windows, even on nights and weekends. Go to xfinity. Com moving to get started. Welcome back the ceos of Major Airlines sending a letter to treasury they want the 58 billion to be set aside and disbursed quickly. Phil lebeau has the story. Reporter they want the money as quickly as possible and they also want other considerations from the department of transportation the airlines are in the process of trying to consider whether or not to consolidate flights well talk about that in just a little bit heres the reason the Airlines Want to move as quickly as possible look at the rapid drop in the number of people who have been screened by the tsa to fly essentially this is how many people are flying every day. They have dropped down to 184,027 people yesterday guys, a year ago it was 2. 1 million and all the way back on march 16th, 2 weeks ago, 12 days ago it was 1. 25 million. When you look at the decline, you look at the airline index. Youre seeing essentially a 91 decline year over year in the number of people who are flying right now. Seats, maybe 5 to 15 on most planes are being filled at any one time its not uncommon when you talk with airlines to admit, yeah, weve flown an empty plane here or there they all agree, april will be worse than it was in march with that in mind, delta announcing that it will be stepping up its disinfection disinfecting of airplanes. Theyve been doing this on their international airplanes. Now theyre doing it for their domestic airplanes, every night. They will be going through this process. We profiled this company a couple of weeks ago that has been doing this disinfecting now delta says its going to be stepping up the sanitizing of its airplanes. Delta is also offering free flights to medical professionals. Youve seen these pictures, guys, of medical professionals from around the country who might be going to new york or might be going to seattle or wherever there is a need right now. Delta says it is offering free flights to medical professionals to assist them to get to where they are needed. Now to this question of whats going to happen with the airlines when it comes to potentially consolidating flights. I talked to several Airline Executives who told me they plan to have discussions with the department of transportation about the possibility of consolidating flights. Think of it this way, guys you take a flight from laguardia to st. Louis now you have american, delta, southwest who all do that right. Part of the agreement with the bailout is youre essentially going to to the best of your ability keep your route structure in place if youre all flying planes with a handful of passengers on it, doesnt it make sense to consolidate on one plane maybe its delta and then on a different route it might be american who takes the potential flight so this is one idea that is being discussed. We reached out to the department of transportation. They will be having these discussions with Airline Executives this week a lot of changes potentially to what we see with airline service. They have to do something, guys. They are hemorrhaging cash the bailout will help them its a definite need the life line will help, but they need more help. Hey, phil, my only question is as you cut back the number of planes that are running, even if you were to swap off and say deltas going to run this one, americas going to run this one, are they going to make sure theres enough space in between so its not a crowded flight its not possible to run the empty flights. Reporter were at a point right now, you literally i got a picture sent to me by ceos yesterday, you have four people on a plane even if you consolidate all of that, youll have plenty of room all of the airlines are practicing social distancing the passengers are glad to do it i have yet somebody to do that i was told to sit in the back. Nobody cares they want to go from point a to point b. Ill take the middle seat in the back row if i get away from everyone right this is not a case where the airlines are saying, lets get 150 people together and put them all on one flight. Were talking about those cases where youve got multiple airlines going to a particular city and theyre flying with maybe eight people on board. It just does not make sense to put a couple of planes doing that route every day okay. Phil, thank you so very much were going to bring in an industry veteran into this conversation this morning. Joining us right now on the phone line is gord dan bethumne hes a former Continental Airlines ceo and chairman. One of the questions i have about the bailout for the airlines specifically is how long you think that money will last given the extension of what i at least think the expectation is when we go back to some semblance of normal. When the president talks about june, i dont know if you think june is rate or not, but you have to imagine it will extend out potentially when it comes to air travel for a much longer time than even that. Do the rescue efforts that the government has made with taxpayer money, will it suffice . Well, i suspect it will go through the summer with the taxpayer money subsidizing, doing some things like phil lebeau said, consolidating flights. Thats kind of pie in the sky because our government is so anal about that lack of competition and the justice department, you know, they precluded us from doing that after 9 11 even though it does make sense those big policy decisions will predicate the answer i would suspect they would be okay without layoffs, significant layoffs by the end of the summer. And then, gordon, the other question i think that investors have today is, you know, effectively would you ever put money behind an airline . Do you think that long term there is going to be new legislation, new regulations that require airlines, for example, to have, you know, massive Balance Sheets to withstand these types of things, rainy day funds, things that will prevent them from doing buybacks, dividends, things like that and what it does to change the dynamic of this industry well, andrew, it pretty much guarantees an outcome like anthrax. If the government runs it its not going to make money because of the rules and regulations, especially if you put Balance Sheet restrictions that really makes capital intensive industry even worse. So i dont see that happening. I think we had a dynamic industry with the economy and its a plague going around the world. If we can rebuild the economy, which i see steps being taken to do it, we wont be this way next year that will return and revitalize the industry and revitalize the aircraft and factories as well so youre not anticipating legislation that would regulate the industry more aggressively than today i think theres a lot of people out there by the way, its not just true of the Airline Industry but more broadly who say, look, we have privatized the games and we socialized the losses we seem to do it every single time we dont give much credit to companies that actually do create rainy day funds because taxpayers seem to be willing to jump in to help any time that theres a problem. Dont you think that there has to be a change there well, i would say given today, yes, there would be but today could be seen as a black swan event the whole world shutting down is unprecedented, but weve become a Global Economy and these kinds of things are happening or could happen theyve happened before. Before there was an Airline Industry back in 1918 with a flu so were learning as we go that the world is getting smaller and what happens in one nation quickly affects others and spreads around the world pretty quickly. That would be true if the government owned the airlines as you recall, especially in europe where governments control and own the airlines that didnt save them from going private because of the losses. So i dont know i dont see it i dont see it happening any time soon. Okay. Gordon, we want to thank you for joining us this morning. We have some breaking news that just crossed on the tape that we want to bring our viewers and it is good news this morning. Johnson johnson after working on a covid19 vaccine since january, the company has now identified a socalled lead candidate. This would be a treatment with enough to warrant Clinical Trials they will launch Clinical Trials by september of this year at the latest with the first batch available for emergency use by early 2021 we should tell you that Johnson Johnson ceo alex gorsky will join us. It wont be available in the next several weeks or necessarily several months so we dont want to get ahead of ourselves, but when you try to look and find the light at the end of this tunnel with some kind of date certain, it does look like at least in sometime of 2021 we may very well have a vaccine and it may very well be made by j j. If you think this could be an 18month pandemic, this could help. Becky, over to you. Lets hope to hear more. Were going to be talking to alex gorsky later. Thats great news. Well talk more about that when we come back. Also, Mohamed El Erian will join us with his update on whats going on in the markets hell set things up for the week with us. Stick around, squawk box will be right back. I knew about the tremors. But when i started seeing things, i didnt know what was happening. So i kept it in. He started believing things that werent true. I knew something was wrong. But i didnt say a word. During the course of their disease around 50 of people with parkinsons may experience hallucinations or delusions. But now, doctors are prescribing nuplazid. The only fda approved medicine. Proven to significantly reduce hallucinations and delusions related to parkinsons. Dont take nuplazid if you are allergic to its ingredients. Nuplazid can increase the risk of death in elderly people with dementiarelated psychosis and is not for treating symptoms unrelated to parkinsons disease. Nuplazid can cause changes in heart rhythm and should not be taken if you have certain abnormal heart rhythms or take other drugs that are known to cause changes in heart rhythm. Tell your doctor about any changes in medicines youre taking. The most common side effects are swelling of the arms and legs and confusion. We spoke up and it made all the difference. Ask your parkinsons specialist about nuplazid. Coming up, slowing the spread of the coronavirus. The race for testing and what the data can provide for the medical community. Most people are doctors leading the drive to save lives. Then at the top of the hour former barclays ceo bob diamond will join us to talk about the rks. E ic relief efforts and th maet we are coming right back and sometimes, you can find yourself heading in a new direction. But when youre with fidelity, a partner who makes sure every step is clear, theres nothing to stop you from moving forward. Im part of a community of problem solvers. We make ideas grow. From an everyday solution. To one that can take on a bigger challenge. We are solving problems that improve lives. Welcome back to squawk box. Johnson johnson has come out with a covid19 vaccine or its going to be working on a covid19 vaccine since january its been working on that. At this point its identified aleve candidate. J j plans to start a phase 1 Clinical Trial by september at the latest with the first batch available for emergency use hopefully by early 2021. The stock is up by 5. 5 on this news these are the things the people have been waiting for. Obviously this takes a long time it takes months to work these things out, but if you can see Clinical Trials that are in phase phase 1 Clinical Trials in by september with the first batch available for emergency use by early 2021, that would be great news alex gorsky will be joining us in the next hour to talk about the Significant Development in the fight against coronavirus and, andrew, you have some reporting that youve been doing on this as well. I just in terms of the stock and in terms of what everyones expectations should be, alex gorsky will talk more about this when he joins us on air. For the most part while theres a chance that we could have emergency use of this in early 2021 in terms of just tempering paems expectations, the great likely hood is that if this all works it would be available on a wider scale in the summer of 2021 so were talking about a little bit more than a year from now. Still, that is a remarkable speed and does represent a remarkable achievement if were able to do it given that some vaccines can take six and seven years to produce the other thing to mention just in terms of the stock which is moving on this, my understanding, we will talk to alex gorsky about this as well, the anticipation is that j j would sell it at cost. This is not necessarily going to be a hugely profitable enterprise i think that they will be doing that for humanitarian reasons, but i temper not peoples enthusiasm because the enthusiasm should be there this is exciting, Important News for the globe if were able to be successful. Just in terms of what we think the impact may be on the company and the stock, its not clear this will be a remarkably profitable venture nor, i thi , think and alex gorsky can talk about this, nor do they want it to be. Well talk to him in a little bit and lay out what is going on and what we should anticipate. Meantime, the Mortgage Bankers association is warning that the u. S. Housing market is now in danger of what theyre calling large scale disruption its blaming the fed for this, at least in part thats where we want to start our conversation this morning with Steve Liesman who joins us with that story. Steve . Reporter good morning, andrew yeah, massive fed purchases in the Mortgage Market that were successful, by the way, at rescuing a part of the market that was in severe distress has now appearedto have caused at least in part severe distress in the other part of the market many mortgage landers could simply go out of business because of margin calls and the unintended consequences of these fed purchases. Let me show you the fed purchases and what its done to prices you can see here from the blue line the fed coming in at 20, 30, 40, 50 billion of purchases. Added all up they did 168 billion worth of purchases you can see what happened with the bonds. Lurching around at 100 points a day. Four, five times the volatility. Its because of a specific hedge that allows your mortgage banker to lock in a rate. The mortgage banker gives the rate lock to a consumer. The banker goes in and shorts a form of the Mortgage Backed security to protect the banker until the closing. So about a 20 or 30 or 40day short there. But this huge rate sparks all of this volatility that forces his lender to do a margin call barry, you have from mbs highway says some individual Mortgage Bankers are facing tens of millions of dollars of margin calls. Let me tell you what the mba has said on this issue its been a dire, dire situation sparking the need on the margin calls here it appears to have been easing back, guys theyve heard the market theres the thing. Margin calls, staggering, unprecedented levels whats going to happen here, i think, the fed appears to have heard something of the call of the industry on friday theyve eased back their intended purchases by 10 billion. It could go down more. A beep says they ought to come out entirely, others say that would cause more distress. Every part of the Mortgage Department has been distressed by some form of Government Intervention Steve Liesman, appreciate it very much. Send it over to casa concern than y. Im here, andrew. Joining us as we get set for a new trading week in the end of the First Quarter. Allianz chief economic advisor, Mohamed El Erian will you come out when its time and say, all clear, or do we have to sort of read between the lines with you where are we right now, my friend were not in an all clear and i will come out when theres an all clear just like i came out warning. Look, i understand this temptation, this desire to call the all clear. Look, in just over a month we went from a record high for the dow on february 12th to the fastest correction in history to the best week last week since 1938 weve been living in fast forward. Now we want to fast forward to a much better destination. As you heard from Scott Gottleib, there was a lot of uncertainty. I think, joe, liquidity. This is a valuable week positioning for people we are balancing from end of quarter, stay on massive they are giving us all an taunt at this to reposition for what is going to be a volatile outlook outlook. The reason i ask is how much further to retest the lows that would be a significant selloff because wed give back all last week and how much further below the lows are warranted given the backdrop for the economy and the backdrop for the virus and Everything Else. And unless youre talking about a 2000 or 2001 scenario, something akin to that, 50 pull back hey to low, it just seems like youre not going to call the exact bottom and im wondering when you would say, you know, were close enough for this stock. Were close enough for that stock. Were close enough for this one because you know how quickly you can miss them. By the time you know theres an all career, a lot of times its 50, 20 above what you could have bought. No, i agree with that. Do you buy the index or operate with individual names . If you feel its the all clear, go out and buy the index in fact, buy all indices some of them have been beaten up more than ours i dont think were there yet. I think were at a time where you should be selling names that are subject to bankruptcies. We are going to have bankruptcies and bankruptcies unfortunately destroy the capital structure completely there are other names where i am comfortable buying them now. They have rock solid Balance Sheets they have a ton of cash. The cash drain is very limited some of them are accumulating cash these are not only going to survive, theyre going to emerge to a landscape that speaks to that strength. So it is a very selective game right now rather than calling the all clear and going in for indices or on the other side, just selling everything. No, were not there anymore. That was a few weeks ago this is much more for name picking and names on the other sides. Play out the scenario that you think is most likely, mom. I know thats difficult, but, you know, we have these very sharp rallies. Some people would say theyre bear market rallies. Doesnt matter what you call them there will be more of those and more retests of the lows based on what . Based on Economic Data that we see coming in or based on infection rates and mortality rates . So we switched regimes. In the next few days were going to continue to benefit from these end of quarter rebalancing, and theyre huge because paem who have these automatic rebalancing are looking at the dow down 24 , s p down 21 europe is down 27 so they automatically rebalance. The technicals will support us over the next couple of days thereafter its all about the fundamentals and the policies. On the fundamentals what we need is the doctors to tell us with some certainty this is where we can stop the infections and then on the positive side, we need the money to get into the economy. We have a welldesigned program, we just need it executed there is no time to waste because we havent got bankruptcies bankruptcies destroy the capital structure. Hey, mohamed, what do you think is in the market when it comes to the time line, at least in the United States, of people quote, unquote, getting back to work and im not sure what that means, but some version of normal what do you think the market believes because weve had so many investors come on in the last week who literally were talking about mid april or talking about the end of april as a time when we were really going to see people come back to work and reemerge to some sense of normalcy were now hearing the president even talk about june youve heard Scott Gottleib talking about mid may maybe where the curve bends enough that some people come back what do you think is in the market i think thats a critical piece. Then it explains or doesnt whether the rescue efforts and bailouts will be enough wlrks companies can actually persist and continue and what even the summer therefore looks like. Thats a great question its in the market we want this to end. What we tend to embrace is we will go back to normal and also, this is important, because it happens in the market, we also tend to embrace the notion that getting there is not going to be too painful. Yes, were going to make some sacrifices, but its not going to be too painful. There are two notions out there. An inclination to embrace date specific and not put a massive boundary of uncertainty around it, and secondly an inclination to believe that we can get there in a relatively lowcost manner. These two things are going to be tested the question is going to be at what point does the market realize that the uncertainty involved and the Liquidity Risk involved is much higher than what we have right now thats why i worry about volatility and thats why i see this as a repositioning opportunity as opposed to go out and just buy the index mohamed, thank you very much. Mohamed el erian we will talk to him again soon getting these great regular updates from him. When we come back. Faster and easier testing is the key to kind of stopping the pandemic, finding out what happens next when we comeback well be speaking to a doctor whos at the forefront of trying to fight the spread squawk box will be back after a quick break. Welcome back, everybody. Researchers at Rutgers University has a new test. Dr. David alan is the chief of Infectious Diseases at new Jersey Medical school. He and his team are working with a new test developed by sephied granted emergency approval by the fda. Thank you for being with us today. Thank you for having me how does this new test work . Why is it so much faster most tests are big machines that need to be operated in big laboratories you take the test to this ins a lot of analytics and Automated Parts to get the test run. Its complicated to set up all of these tests can do a lot of tests at once, these machines the test that sephia developed that weve been validating is taking the laboratory to the location of patient care its a plastic cartridge that has a lot of chambers in it and ways to move fluids around and a machine that operates that these cartridges have everything in it to run the test, all you have to do is put the sample in. The instrument runs it and press a button and the answer happens in less than 45 minutes. This is huge, and weve heard from so many people that the problem has been not only waiting seven days, sometimes 10, 12 days, even longer to be able to get this and get it in 45 minutes, how many of these tests can you do at this point . So i dont work for the company. I dont think im able to comment on how fast these tests are coming out the machine that we have can run the single machine that we have right now can run about 20 tests an hour there are instruments that are larger that can run up to 1,000 tests an hour. Let me take that back. Up to 1,000 tests a shift. Maybe up to 3,000 tests a day. We would be at a slightly lower rate than that doctor, can you speak to a competitive test, abbott announced that it had a test that it could do, would tell you whether youre positive i believe within five minutes or six minutes, would tell you within 13 minutes that you were negative and that they can do 50,000 tests a day how does that compare to what youre working on . Im not familiar with the information that youre describing the abbott test that im familiar with takes a lot longer than that. I think that must be a Different Technology that i havent heard of yet or that may not be completely accurate. The problem with its not a problem. We need tests like the one made by abbott, fischer, roche that do tests at once there are a lot out there and thats important, but these tests are all done at central facilities theres issues about getting samples to those facilities, having the cue run up so that the patients can be tested all at the same time and getting the results back the tests weve been working on, the beauty of it is you can put it in a doctors office, an emergency room we hope ultimately to have these tests up in vans, multiple vans. You can go around and test that. Since the results are so fast, you get actual information that we think will be helpful with decisions about quarantine, about treatment and ultimately trying to eradicate covid19, get into where the patients live, we would be able to test people there and then test around them. Dr. Alland, i know certainly people personally who have gotten negative results and then later they tested positive a few days later when they were tested what happens in those scenarios . Is your test the same as all of these . This is a disease and it runs off of human biology and every persons different and the disease manifestations are different. Most of the time patients will test positive when they are quite ill but theres a range of presentations for covid19 some patients can be asymptomatic or have not many symptoms at least initially in presentation as the disease progresses and patients develop more virus, tests become more positive so theres a range in presentation for the patients but also the tests themselves have a range in sensitivity. I really am unable to comment because i dont have the experience personally, but certainly these different tests have a range in how well they detect the virus i can tell you the test with sephia is extremely sensitive. It can detect one genome of the virus and less and it can detect really very, very small amounts of virus so depending on the test, youre going to have a test to detect things earlier which will detect the test earlier the patients will present with virus earlier. I would caution people, there are a number of tests that ive heard about coming out of other countries that havent been validated by the fda and their performance may be really sub par. So its really important to get an fda validated test. And even there the validations have been done very, very quickly. So its going to be a while before you get headtohead comparisons to see which ones come out the best. Dr. Alland, i want to thank you for your time and your work on this front. We appreciate it. Thank you very much any time andrew . And just to clarify, abbott did announce on friday that it had fda approval for a new test that would take five minutes and it does plan to roll out starting on april 1st, 50,000 a day. So that is accurate. When we return, a lot more on squawk box. Were going to talk to former barclays ceo bob diamond with how the banks are handling the Economic Impact from the coronavirus. Then later Johnson Johnson ceo alex gorsky making a huge announcement his company has identified a socalled lead candidate of covid19 treatment to warrant clinical talris. Well talk all about it. Stay tuned, a big hour ahead breaking news. Another month inside President Trump extending americas stay at home guidelines through april as worldwide coronavirus cases close in on 3 4 of a million investors so far taking the news in stride. Futures much calmer than weve seen in many recent mornings were going to be speaking with former barclays ceo bob diamond about when he sees the markets turning around plus, interviews with tom friedman, texas senator ted cruz and alex gorsky, ceo of Johnson Johnson. The dow component announcing this morning that it has selected a lead vaccine candidate for the coronavirus. Cnbcs breaking News Coverage of the pandemic and the market response continues right now good morning im joe kernen along with becky quick and Andrew Ross Sorkin i was hoping we would come back quicker. For a minute we had green, not in the dow, but we had green in the futures for both the s p and the nasdaq once again, i checked quickly checked on boeing and boeings down about 10. Most of the losses youre seeing in the dow could be attributed to just that one stock the dow would actually be in the green. But its all over the place. Check back in five minutes and it could be completely different. Treasury yields there you can see. 10 points on boeing. Thats right around 75 it is interesting, living in fast forward except for when we look at the boards, then were living in the past half the time trying to do this. Anyway, treasury yields are about. 65 or so this morning i dont know who im going to, but i know someone is going to take it from here. Andrew i got it, joe ive got it. Meantime, the debate in congress over the 2 trillion Coronavirus Relief package is over President Trump signed it into law on friday. Joining us right now to talk about how that aid will impact the u. S. Banking system and the rest of the economy, bob diamond, Founding Partner of Atlas Merchant Capital hes former ceo of barclays and knows a thing or two about one bob, thank you for joining us this morning good morning, andrew. Glad to be here. Help us try to understand how youre seeing this crisis, what the time line looks for you and how you think its going to impact the economy before we even Start Talking about the banks and the rest of it about ten days ago when i was on cnbc we talked about, you know, we felt that the near term impact in the economy generally we were underestimating. No ones talking about that anymore. We know theres going to be, you know, really, really serious impact near term on the economy for all the reasons, but i think what struck me last week, andrew, is this bazooka is going to be much more effective than i had anticipated over the previous couple of weeks if you look at Monetary Policy, particularly Monetary Policy now relative to what happened in 2008, its coming much faster. Its coming in bigger size if you notice on most of these programs, we havent even had limits put on them and its coming in a much deeper and broader sense. So whether its municipals, Investment Grade debt or corporate commercial paper, this bazooka in terms of how quickly its come, how broad it is and how large it is is incredibly impressive and is going to have a big impact on liquidity for sure in terms of the economic recovery, do you look at this as a v situation, a u situation, an l situation . Whats your time horizon for how this all works itself out one way or the other well, i think the time horizon is very much a medical question and im not i dont have anything to add to the experts that weve been listening to, but i do think theres been theres no question that we will see an economic recovery, particularly given the fiscal stimulus which we can talk about. I think the fiscal package, both in terms of speed and in terms of size and depth, is very, very impressive i think its unlikely that this is going to be just a vshaped recovery i think well see a very uneven recovery depending on which sectors of the economy were talking about. Personally i dont see businesses, i dont see nonbusinesses really reacting particularly quickly in terms of travel i think people will be a bit hesitant to jump on crowded planes, go to crowded hotels and resorts for a while. I think it will be uneven. I think it will recover, but it will likely be uneven. I think the same in business certainly at Atlas Merchant Capital, i think were all very pleasantly surprised at how effective weve been working remotely and how effective many of our Portfolio Companies have been working remotely. Some of the benefits of this will definitely translate into working behaviors Going Forward. While im pretty positive on an economic recovery, dont know the timing i do think the fiscal stimulus package has been quick, has been very, very large, its been very broad, but i think were likely to see more of an uneven recovery. Bob, what do you think of the valuations of the banks today . So i think the big banks, and i assume, andrew, youre referring to the listed big banks, jpmorgan, Goldman Sachs yeah. At a point they were down 35 to 40 now i think theyre down 20 to 25 , Something Like that i think that reflects earnings potential given a lot of the changes going on, but we have to keep in mind that this is a the Banking Sector particularly in the u. S. Has never been safer and sounder, better capitalized than it is today i do think one has to be careful about translating that outside of the u. S as you know, a lot of the things that were done in 2008, 2009, 2010 to help the Banking Industry recover here in the u. S. Around chairman bernankes Monetary Policy, but more importantly the t. A. R. P. Program were not replicated in europe, at least not for a number of years. I think it was 2011 or 2012 before mario draghi really came to grips with the need to, you know, have a bazooka in terms of Monetary Policy. The Bank Recovery or Capital Markets recovery in europe has been nothing like it has been in the u. S. I think it will be very uneven but i think it will be very positive in the u. S. For the big banks. The other question is do you have any risk. Weve definitely had to manage this. The spreads between mortgages and treasuries i think the attention that the fed is paying. Bob diamond appreciate it. Cant miss interviews coming up the New York Times columnist, tom freedman hes trying to keep social distancing in place. The phase 4. The Johnson Johnson alex gorsky will be here. By the end of the summer check out the futures. Speciacora binrit w. L vegeegs gh in nearly 100 years serving the military community, weve seen you go through tough times and every time, youve shown us, youre much tougher your heart, courage and commitment has always inspired us and now its no different so, were here with financial strength, stability and experience you can depend on and the online tools you need because you have always set the highest standard and reaching that standard is what were made for and reaching that standard is what were made for [ one morwoo me b[ laughing ]] woo play pop music no way dude, play rock music yeah woah no matter what music you like, stream it now on pandora with xfinity. And dont forget to catch trolls world tour. Lets party people one more time welcome back lets take a quick look at the futures. Boeing, i havent checked it it was indicated down about 10 points there they are finally stalling waiting for the boards to come up here. Well see what happens its early market going to 4. Its tough to determine. President trump is extending the National Guidelines put in place two weeks ago. Nothing would be worse than declaring victory before the victory is won, therefore, we will be extending our guidelines to april 30th to slow the spr d spread. Joining us to talk about the fight against the coronavirus, tom friedman, tom, weve gone back and forth i know how youre trying to occupy yourself at times in your house. I told you that wouldnt be possible for me. If i was chipping in the backyard, id hurt someone probably anyway, his latest column is an open letter to President Trump the nation craves a plan not hunches. So fill us in, tom, for people that didnt actually see the column yeah. You know, joe, whats basically come together i would say in the last ten days is if you listen to across the expert community, theres basically a broad consensus, i think the president on friday took the first step in fulfilling it. Its kind of three phases. One, we have to do as much of a national lockdown, social distancing, sheltering in place number one number two, we have to accompany that with massive testing so we understand where the virus is, can do Contact Tracing we can see whos becoming immune after theyve been locked down for a while. We can understand who needs to be see kwquestered and then onln the basis of the data down the road can we begin phasing people on a risk stratified basis back into the work force. And what i saw happen friday at the white house with the president s announcement is that i feel like hes really following now what is the consensus in the expert community. You heard it from Scott Gottleib this morning you can read it in the papers in every paper over the weekend, different experts. That is a good sign for me and, tom, were still trying to number one, we dont know what really went on in china, i dont think. We still hold out the possibility that mitigation can work with the social distancing, but all along weve been saying, well, were not as draconian as china. We cant do what communists can do in terms of things, but youve seen whats going on in new york the empty streets. The social distancing is pretty i saw a beach in florida again. I dont know what goes on with some people, but for the most part are we going to be more successful than people have given us credit for in terms of shutting things down so that it doesnt spread as quickly . Do you feel that we can accomplish that . You know, joe, im just not an expert enough to answer that question what i do feel and can answer is im seeing in maryland, the streets are empty. Downtown is empty. It feels as an observer that we certainly are locking down you know, i think were going to go through sort of several stages on this, joe, which is i guess let me step back when i get optimistic or hopeful is when i see us doing things we have never done before because were up against a virus that is a kind of enemy weve never had before so when i see this what the president ordered for 30 days, thats really thats a source for me of encouragement, of hope and i think were going to go through several phases here. Abnormal, thats a total lockdown phase to what i call the new abnormal, did you out, wearing facemask and gloves and still practicing social distancing then to a new normal, have thermometers outside of every airplane, restaurant, shop then we get to normal once we have a vaccine so were going to have to go through those four stages, and if you look at the disease around the world, you see its going to be up and down, back and forth. I was just reading news that south koreas had a new outbreak in seoul, a little bit ticking upward there its a devilish disease and were going to be having to fight it with extraordinary measures now for im sure for a while. Tom, but if youre thinking along those lines and were going to have alex gorsky from j j coming on, hes anticipating having a vaccine and likely not available to the public until i dont think effectively a little over a year from now, are you anticipating that some of these steps that youre talking about really do take a year . I dont know if both the Political Class or the investor class is thinking that way yeah. That i think is going to be the struggle well have to see where we are at the end of april, andrew. You see sweden taking a very different approach, in effect opting for herd immunitimmunity i dont see any consensus for that we kind of entertain ourselves or soothe ourselves with this notion that, you know, churchill always said americans will do the right thing after they try every other option or some such variant of that. That was against a human enemy it was against the nazis basically. It took us a while to get mobilized, finally enter world war ii this is not a human enemy when youre up against mother nature. She is viral, shes silent, relentless, merciless and in this case shes exponential. Hey, tom, when you think about when we doget on the other side of this, not just the curve but the other when we can put this behind us, im imagining theres going to be a raucous political debate in this country about both the steps we took and what kind of steps we need to take about the idea of privatizing gains and socializing losses and what that means for business i think we were talking to Gordon Bethune and airlines and whether there will be new regulations and requiring them to have a larger Balance Sheet or requirement for taxes i dont know where this is going to go. How do you think about where this heads well, i think youre touching on something thats really important, andrew. Its a conversation we havent even begun to have imagine the arguments that are going to emerge when people discover who gets bailed out and who didnt basically, andrew, most everyone in america is long theyre long a stock theyre long a bond. Theyre long a little shop they own. Theyre long a Home Mortgage theyve basically invested in an asset with borrowed money. Not everybody, but a lot of americans, you know, directly or indirectly and a lot of these are going to tip over theyre going to be bankrupt theres loans that are going to be called. You talked about it on the show and, therefore, the moral hazard issues, the question of who got bailed out, my neighbor did, i didnt my Friends Company did, i didnt my apartment house didnt, his did. Were in for more than just a raucous debate i really fear for that moment, and the kind of business and Political Leadership were going to need to navigate that discussion will be profound. Id welcome that debate if i knew that i want to get there. Yeah, joe, so do i. Privatizing versus and just get there where its behind us and then well deal with these things i do think that were going to get a little more slack for how we handle it because this is not you know, compared to the financial crisis and im not saying it was totally selfinflicted, but certainly there was bad behavior that went into that. This is you cant really i dont know where the bad behavior was maybe the origins listening to the show this morning, you really as i was listening to you guys and your different interviews, you really see this contest between moores law and covid law. The innovators and the hope that were going to innovate our way out of this based on moores law that the speed and power of micro chips will double every 24 months and covids law says the average coronavirus carrier infects 2 to 2. 5 people. If the number is 3 people and 3 people infect 3 people ten cycles of that you get to 59,000 people. Were in this race between this exponential power of ability to innovate and the j j news is a result of it its unlike any war weve ever fought i still am ready to bet on our innovation, but its not going to be a straight line. Right thats another thing, i dont know if youre watching. I wake up and i think, oh, my problems my problems woe is me. Woe is us. Everybody is waking up the same way. I dont know if i feel better or just its really a reflection on how unprecedented and surreal it all is. Tom, thank you you betcha. Keep writing. Youve got Nothing Better to do. Its already phenomenal, which bothers me to no end as you know anyway, thanks thanks. Good to have you on yeah. Thanks, tom. Coming up when we return, texas senator ted cruz is going to join us at that talk about what the 2 trillion Coronavirus Relief bill means for Everyday Americans and for business and then a live interview with Johnson Johnson ceo alex gorsky on how we can get from a virus vaccine candidate to worldwide distribution as we head to the break, take a look at the airlines in the premarket. Several industry executives telling us the u. S. Carriers and the department of transportation may be forced to consider consolidating service to dozens of u. S. Cities that would be to hp rrrselcaie cut losses well talk about that after the break as well when we come right back welcome back to squawk box, everybody. Weve been watching how the market reacts after a weekends worth of news. Last week was the best day friday the dow was down by a little under 1,000 points. You can see green arrows across the board. The dow futures are indicated up by 32 points s p futures up by 12. 5 nasdaq up by 60. Been watching the treasury market this morning. Right now it looks like 10 year is yielding. 66 the last i checked on this. Take a look and see what happens with the treasuries as well. Guys, ill send it over to you all right yeah positive, becky. Unless im too delayed. Coming up, were going to be joined by Johnson Johnson ceo alex gorsky. Theyve picked a lead Coronavirus Vaccine candidat and is making plans for clinical testing near term, but still obviously could be some Time Next Year when it would be ready probably later today, abbotts incoming and outgoing ceos. Well talk to jim cramer tonight at 6 eastern up next well speak with texas senator ted cruz who has been in quarantine himself well talk about the 2 trillion relief bill. Look at crude Oil Prices West Texas intermediate hitting close to an 18year low. Its bounced back a bit. Stay tuned were coming right back. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Hey, our workers comp insurance is expiring. Should i just renew it . Yeah, sure. Hey there, Small Business owner. Pie insurance here with some sweet advice to stop you from overpaying on workers comp. Try pie instead and save up to 30 . Thirty percent . Really . Sure get a quote in 3 minutes at easyaspie. Com. That is easy. So, need another reminder . No, im good. Reminder for what . Oh. Ho ho, yeah need workers comp insurance . Get a quote in 3 minutes at easyaspie. Com. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] amazon workers in the new york city borough of Staten Island are planning to strike today to try and call attention to what some there believe is a lack of protection against the coronavirus. The facility is known as jfk 8 nearly 100 workers there are planning to participate in this work stoppage. A lead organizer and others say they are concerned about coming to work after someone tested positive for covid19 last week. Employees want the facility closed for cleaning and they want to be paid during that time of shutdown. An amazon person said anyone who came in contact with him or him could stay home for two weeks. Amazon said its following all guidelines from local health officials. Joe . Thanks, beck. Phase 3 is a done deal President Trump signed into law the 2 trillion aid package intended to offset the fallout from the virus joining us on the phone, senator ted cruz senator, good to have you on first of all, update us on how youre doing and spending your time are you like arguing and litigating with family members some arcane legal principles what are you doing are you tough to live with right now, i can imagine well, good morning, joe good to be with you. I think all of us are tough to live with right now. I think were all getting stir crazy in the house ive been at home with heidi and both girls i was up in d. C. For two weeks working on the emergency relief bill that we just passed, and as soon as we passed it i got on a plane and went back to texas and ive been at the house ever since working from the house driving my daughters crazy, but actually, we got some practice for this because you may recall a couple of weeks before that i went through 11 days of selfquarantine very early on in the coronavirus when i had encountered one and it turned out two different people that had tested positive. I went ahead and selfquarantined i had already spent 11 days in the house and now im back in the house. You know one of the great things, heidi and i and the girls go for a walk in the neighborhood you can social distance, get out, see sunshine, hear the birds. Its a nice chance to enjoy family time that the normal craziness of the schedule doesnt allow you to do. Having dinner together and everyones home, really clean closets and things like that i understand what youre saying. Tell us about whether you think the expression necessary but not sufficient is applicable to the aid package. Do you think its necessary and sufficient is this going to help us to bounce back more quickly than we would have as a country and economically i certainly hope it will help, although its important i dont refer to the bill as a stimulus bill. I refer to it as a relief bill and those are very Different Things this bill is principally designed to provide much needed relief to people who are hurting deeply hurting because of the massive economic consequences of the Public Policy response to the coronavirus epidemic so youve got the individual payments where every american in the country who makes 100,000 or less is going to get a check. In that group most adults are going to get a check for 1200 a couple will get a check for 2400. If that couple has kids, theyll get checks for 500 apiece which means a couple with three kids, theyre looking at 3900, and thats going out to every couple that makes collectively less than 150,000 a year thats real relief for a whole lot of people right now that are hurting, that are scared, that may have lost their jobs, that may be sitting at home wondering how im going to pay the rent. Thats designed to put real money in their pockets, not in a stimulus approach but simply emergency relief for a lot of the people who are hurting likewise, the Small Business component. The Small Business component, the easiest way to understand it is the bridge loan for all of the Small Businesses, we had over 3 million jobs lost last week. I think this week is going to be brutal as well the Small Business component is directed to every Small Business in america if youre a Small Business if youve got 500 employees or less, Congress Just appropriated 377 billion in emergency loans for you. They go through the Small Business administration and then through your local bank or Community Financial institution. Whatever your normal bank is that you go to in your business, if theyre an approved Small Business lender. Go to them these loans are guaranteed and the unusual thing about these loans is if you use the loan proceeds to pay for salary and payroll or to pay for mortgage or rent or to pay for utility, then in a year the loan will be forgiven entirely. The amount you spend on those items, its designed for avery specific purpose if youre a restaurant, if youre a bar, a hardware store, a nail salon, all of the different Small Businesses, many of which have been shuttering the doors and laying off employees, its designed to be able to hire back your employees, keep a paycheck coming to the employees so that they have the ability to support their families and that money becomes essentially a grant, it becomes forgiven to allow the Small Business to stay alive and theyll allow the employees to keep a paycheck. Now the reason i say this is relief, joe, thats not going to solve this underlying problem. The economic problem is not going to be solved until we defeat the pandemic. The underlying problem here is the coronavirus pandemic, and so until we get more widespread testing, until we get begin developing vaccines, treatment protocols that are more effective, until we start bending the curve down, which is what the objective of all of this social distancing is, the secondary consequences, which are significant and real on the economy will remain. Look, as long as a restaurant doesnt have any customers, as long as people are sheltering at home and they cant go sit down in a mexican restaurant, that restaurant is not a viable concern so these are essentially bridge loans to keep the Small Businesses going and keep the employees paid until we defeat the underlying challenge, which is the coronavirus pandemic. Senator, tom friedman and i in the last segment were talking about the future of politics and politics have almost been turned upside down in this crisis in some ways. Im curious, when we do get to the other side and looking at this in the rearview mirror, do you think thischanges poll sniks do you think it changes the Democratic Party the Republican Party how you look at health care and the Affordable Care act. Whether we will force airlines to have massive Balance Sheets to deal with this so there isnt a moral hazard in the future how do you see this changing that dynamic i think this crisis changes everybody, and let me talk both about us as a people and then us as politics. Us as a people, the economic repercussions i think are going to be far reaching as youve got 34 millions of people now learning to work from home. Im sitting here in my living room doing an interview on the phone. Ive been working from home for weeks. There are people learning from telephone, email, teleconferencing that you can do an enormous amount in your house. This morning both my girls start doing Distance Learning at school so weve got them set up, each one on a different computer in a different room of the house, and i think youve got millions of people that are functionally home schooling, whether they wanted to or not. And then in terms of how people get goods and services, i dont know a person who isnt using uber eats or door dash or whatever app they have to get food delivered to their house, who isnt ordering groceries online, who isnt going to amazon and getting kind of almost anything you want delivered online those repercussions are going to last we were moving to a world where digital was replacing bricks and mortar after this crisis i think there will be a very substantial number of americans who stick with the new patterns theyve developed. So i think that is consequential in terms of our entire economy and the decisions made, ordering decisions Going Forward. In terms of politics, look, i have always believed that good policy is good politics. If you do the right thing in whatever circumstance it is, that that ends up having political benefits as well i think thats true here, too. That any leader who is serious about this crisis, who provides leadership to deal with this crisis and helps us get through, i think thats what the American People rightly expect in their leaders. When we were negotiating this emergency relief package, i think Congressional Democrats met that test quite poorly i think when nancy pelosi delayed the bill sunday and monday and tuesday and wednesday because she and Chuck Schumer put out this partisan christmas list of things they wanted to add onto the bill, i think that was completely inappropriate when she came forward and said she wanted emissions standards for airplanes added to this bill, you know, i went to the senate floor and gave an empassioned speech where i asked, i said, listen, what in the hell does airplane emissions standards have to do with the Coronavirus Crisis with thousands of people being hospitalized and dying, we need to focus on the problem, and millions of people losing their jobs instead, the democrats focused on the green new deal, solar and electric tax credits and all sorts of things that were not related to the problem now thankfully they backed away from them. We were able to get most of the partisan garbage they were pushing for out of the bill. Theres time for fighting for that, but not in an emergency relief package thats focused on a crisis i think that underlying dynamic will remain there. In terms of the republicans, look, some journalists are having fun theres a 2 trillion spending bill thats true. Just a few days ago i voted to spend 1 10 of our National Debt in one fell swoop. Thats not something i did easily or lightly. Thats a big, big deal, but i think its necessary given the magnitude of the crisis, the millions of peoples jobs who are being lost you know, joe, i think its important for all of us to acknowledge, this is a very, very different situation than t. A. R. P. If you look at t. A. R. P. With the great financial crisis, in that instance many of the Financial Firms had committed conduct that had contributed to the problem, that they had been and that they had benefitted from the system the system was in a very real sense rigged where they got the benefits of taking extreme risk. They could earn vast sums of money for extreme risks, and when the risk didnt pan out, they got bailed out. I think a lot of people were understandably resentmeful that the system seemed rigged here this is very, very different. The folks receiving the relief, its not their fault they havent engaged in any conduct to have this happen. The restaurants, hardware stores, barber shops, they havent made done anything to contribute to this and so it is and, in fact, for many of them, the business devastation is being caused by government policy, direct government pol y policy the cities or the state have ordered restaurants shut its doing so for Public Health purposes, but the constitution, the fifth amendment of the constitution, the takings clause says that private property shall not be taken for public use without just compensation. Now its clearly being done for public use were trying to stop a global pandemic, which has to be the priority, but it also makes sense that if the government is causing the airlines to essentially shut down because the government is grounding their flights and telling people, dont get on the flights, that there should be a vehicle to help make those companies whole. I think this emergency relief bill was in a very real sense that relief that those people were duly owed senator,President Trump is speaking this morning and hes saying at this point that hes going to be calling the russian president , putin, today to talk about oil and other matters. He also says that saudi arabia and russia went crazy on the oil issue. Coming from the state of texas, the Lower Oil Prices are a big hit there. Do you think the president should use his influence with either saudi arabia or russia to get them to stop producing as much oil right now absolutely. I think that is a major priority, especially for my home state of texas and if you look at what happened, right in the midst of this Coronavirus Crisis, a Public Health crisis that is dominating our focus and an economic crisis that is slowing from it, millions of people losing their jobs. The saudis and the eruptions choose to take advantage of that by flooding the market and driving the price of oil way, way down and that was opportunistic, it was designed with a very explicit purpose that the saudis are hoping to drive out of business american producers, and in particular shale producers largely in the permean basis in texas and north dakota although also in another of oilproducing states across the country. That behavior i think is wrong and i think it is taking advantage of a country thats a friend you know, a couple of weeks ago i joined with a total of 13 senators in a letter to the saudi ambassador calling on the saudis to pull back and allow the price of oil to stabilize, to stop trying to drive it down artificially low we did a Conference Call with the saudi ambassador 9 of the 13 did a Conference Call becky, ive got to tell you it was as candid a call and direct a call as ive ever had with the foreign leader the nine of us, we quite frankly unloaded on her. And their defense was essentially, but russia, but russias doing this. My response was, thats fine. Russia is not our friend we treat them accordingly. We are aware their intentions to us are maligned. The saudi kingdom is supposed to be our friend. We are a military ally, diplomatic ally. You are not behaving like a friend when you are trying to destroy thousands and thousands of Small Businesses all across texas and the country. And so the senators on the call with the ambassador urged vigorously, and we said, listen, there are a whole series of steps we can take to escalate Foreign Policy pressure. We outlined a number of them if you continue engaging in Economic Warfare against the United States trying to drive down the price of oil in order to exploit this Coronavirus Crisis to drive a bunch of american producers out of business, im hopeful the president will echo the same message. Im hopeful the saudis will hear it those 13 senators were not only from the were the strongest champions of energy and oil and gas, but those 13 senators have also historically been the strongest allies in the senate of saudi arabia. And if they dont change their course, the relationship with the United States is going to change very fundamentally. Excellent, senator. Thank you. We appreciate it stay inside. Stay well. We hope to speak to you again soon im going to toss it over to you now, andrew. I want to point out that there is the jack behind me is green. We do have green futures and its made its appearance now people around here nice. Are amusing themselves with the background, andrew. There it is. Its green back to you. Maybe ill have to do something with the books the big interview, Johnson Johnson ceo alex gorsky on this mornings news that his Company Selected a lead vaccine candidate to fight the coronavirus. As we head to a break, check out the futures, as joe just bcntioned, we are in the green cns special coverage and interview with alex gorsky continues in a moment. Has stood strong through every dark hour and bright dawn our country has endured. It has seen the break in the clouds before anyone else. For the past 168 years, weve also stood by you, helping you weather storms like this one, to protect your loved ones. And well do it for 168 more. vo hequickbooks salutes the grit and determinationone, of those who work for themselves. Theyre the backbone of our economy. And in these challenging times, theyre adapting to support their communities. But many need our help. If youre a Small Business in need, or want to help a local business, go to quickbooks. Com smallbusinesshelp intuit quickbooks. Welcome back to squawk box this morning we have some big news on the fight against the coronavirus. Last hour Johnson Johnson announcing its now selected a lead vaccine candidate and says it expects to begin phase 1 human Clinical Trials by september at the latest. Joining us now is Johnson Johnson ceo alex gorsky. Alex, thank you for joining us this is very good news tell us about whats gone into this and why you are so optimistic about it. Andrew, joe, becky, thank you very much for having me on, though its always tough to follow senator cruz. Were very excited about the announcement that were making this morning about the partnership were doing with barta, the Government Agency responsible for pandemics and vaccines and what were doing to accelerate our development but also our production for something against covid19 really, this started decades ago. Weve been working in the immunology field for some time weve been working in areas like sars, ebola, hiv i think what gives us confidence is based upon the work that we have done with this vaccine platform, we have very good early indicators that not only can we depend on this to be a safe vaccine base, but also one that will ultimately be effective based on all the early testing and modeling weve been doing. We expect to begin first human testing in september in parallel, not only do you need a safe and effective vaccine but you also need to have one that can be produced in large volumes. Well be doing that at risk simultaneously right here in the United States. We expect to have results, interim results from our trials likely in december at the latest early january. That should put us in position early in 2021 to have huchndreds of millions of doses available and by the end of the year up to 1 billion. Thats our plan. Thats the reason why were confident. We understand we have more testing. We still have a lot more work to do but this is a bit of a moonshot for j j, but its one we feel is very important for us to be doing at this point in time. In terms of the timeline, the ability to get this into the marketplace, if you will, youre talking about early 2021 for lots of people to get this is that just for special access . Are you talking really about next summer . Whats that timeline looking like in your mind . Sure, andrew. I dont mean to sound like an economist, it is going to depend on a few factors let me tell you why were optimistic if we have the interim results from Clinical Trials late this year, lets just project forward a time where frankly there still is significant concern about the pandemic as we head into 2021, we will have the ability to work with regulators, to determine first of all that we have a safe and effective vaccine based on trial results within the First Quarter of next year because we would have made the efforts to open up a Production Facility here in the u. S. , to do all the Technology Transfer required, we should also be in position to have a very significant number of dosages available in that q1 q2 period well have to learn more well have to see exactly what our yield is, but were very confident in the Underlying Technology that we have that we that we can have that level of dose saages available d ultimately make the right decision early in 2021 about whats in the best Public Health interest and how we proceed. Alex, what is this vaccine going to cost the consumer, do you imagine . And your stock has moved on this number is this going to be profitable for you . Look, this is about doing right but for global Public Health as we said in our statement, we want our number one concern after bringing it out and demonstrating that its safe and effective is to make sure that its accessible and affordable on a global level. In fact, were taking this step further and well do this on a not for profit basis were working jointly with the government on this, well be putting more than 1 billion worth of investment in terms of the research and development, but also scaling up the Production Capacity on this. In the nearterm and so that is our expectation its difficult for me to say an exact price, we still have to determine some other factors bewa we want to make sure that everyone can get access and that we can do so consistent with what you see other commonly used vaccines for here in our country and around the world alex, put on your scientist hat for me tell me what youre keying on in terms of basing the vaccine on is it something on the surface of the virus something that is in the nucleic acids, the rna itself, why are you confident this is conserved . If theres mutations, this will be essential to the way the virus works, so it will continue to work even if there is a mutation appreciate the question first of all we have a lot of confidence when youre building a vaccine, one way to think about it is like a car the body of the car, the platform were using is one we have already demonstrated safety and efficacy in things like sars, a similar condition or similar science to what were seeing with covid19 weve also used it in older patients for ebola, for example, in younger patients. We have seen the safety to be, you know, very consistent. The next step is what kind of a motor or software can we insert into that car that will be effective against covid19 what you what we know about all of the work weve done in vaccines is the early testing that were doing, tends to be predictive of ultimately what youre going to see in the human trials itself. As you know, coronavirus, its a tough coronavirus. Its an rna virus. So were based upon what weve seen so far, we think we have the right approach. We wouldnt be taking these other steps if we didnt feel that way we do have to conduct the human trials and well learn more through that process as we go through the Fourth Quarter of this year. You can scale up manufacturing quickly and get a lot of it . Its not like some of the vaccines that are difficult to make joe, thats a great point you know, as im sure youre aware, with traditional vaccines, frequently youre actually working with an egg, like a chicken egg, you may be able to yield a couple of doses per egg. It has to be done on the surface of a large vat, that takes time. And it can result in years of development. What is unique about our approach its interesting because actually from a technology, another vaccine platform, initially we didnt achieve some of our objectives, that frequently happens in investment, research and development, but the production capability, basically what that does, instead of having to use an egg or instead of having to have it on the surface, this can be done where its very in an intense environment. Think of a thousand liter beaker, where these proteins can be harvested they dont need to be on the surface. We can get high yield. For example, in a 1,000 liter beaker, were getting yields of hundreds of millions of vaccines that, of course, gives us the confidence that not only will we have a vaccine that works but we can produce it in the kinds of volumes that will make the difference frankly tamp down the curve and, you know, eventually prevent this virus from happening in the first place. Thats related to my question i know you are taking what would normally take five to six years and compressing it into five to six months is that because technology is advancing so quickly is that because youre pouring a billion dollars worth of resources into it or because the fda is relaxing some guidelines . What gets you to that point . Its all of the above it starts with huge thank you to dr. Paul stoffels, people who have poured a good chunk of their careers into understanding Infectious Disease and conditions like this they have been working 24 7 to identify how do we, first of all, put this through the most rigorous tests that will give us the signal that indicates it we quickly went through our library, now we have focused on this one particular vector that were highly confident in. Simultaneously weve been working on all the Technology Transfer, the production ramp up another shout out to our Global Supply chain colleagues who have been working aroundtheclock to say how can we do this and how can we do this in the United States, even though thats not where the original technology was developed. How can we bring it to a level that we can scale up, not compromise at all regarding safety and quality but do it in the right way. So all those factors then the partnership with the United States and i want to thank the government, barta, the work theyve been doing, hhs, fda, they work closely with us if you do an interim analysis, statistically how can we accelerate that . Making sure were getting all the information that we need, but also recognize frankly the situation that were in around the world. Alex, we want to thank you for joining us this morning. We want to wish you well your success will be the worlds success, we appreciate you downing us this morning. Just thank you. Look, biology started this, biology and pharmacology will be a big part of winning this in the end, a