Transcripts For CNBC Squawk On The Street 20240713

And the estimated number of deaths we will get ism today. Adp is out several european banks are spending dividends jim, how much of this mornings action does reflect the grim picture that the white house set forth yesterday . Its difficult to imagine how, lets say, optimistic people were versus what the president said last night. I think many people in the stock market understood that the numbers were completely understated. You did leave the office saying, wow, that could be just terrible because they didnt caveat it as much as you might have thought they didnt say, all right, but were doing great in this state, this state, this state they said look, this is the reality. I think the reality rolls back some of the 19. 9 gain we had last week in the s p then whats going to roll back the rest is if we have credit problems ill defer to david. David knows behind the scene what day it is today today is the day youre supposed to pay your rent david, a lot of people wont make those payments, are they . No, a lot arent. Its not just small and mediumsized businesses, plenty of Larger Companies are making decisions, at least again, according to some people i have spoken to, to not pay, or pay some did, but not all in the belief that there should be or will be forbearance or it will give them a negotiating position of some kind with whoever theyre paying that rent to. That becomes an issue. Its one youve been highlighting for some time weve seen the weakness of course in the market in terms of cnbs, talking about credit there, and the reits and those that own so many of the Office Buildings or shopping malls or other things that require a rent payment so that they can then pay their shareholders or pay the dividends typically that they do as reits carl, i think the other thing we have to watch is the oil patch is falling apart whiting filed for bankruptcy today. I saw that. What happens is a lot of people are saying wait a second, this is the other this is the other bomb that is dropping. These are companies that have been the greatest employer whiting had fabulous midwest had the bakken assets. The bakken, you cant make money in the bakken. You cant make money in the eagle ford you cant make money anywhere, certainly in colorado. I think this is something we have to keep an eye on when we start seeing the layoffs, some of the layoffs will bounce back some of them are not coming back at all a lot of headlines around oil today, jim im sure youve seen sources on bloomberg, supply for the saudis at capacity now. Tankers with no destination. The president called it a tax cut last night, but as b of a pointed out, gasoline consumption down 37 yearonyear were not getting that consumer pop as weve talked about repeatedly its ethereal it would be terrific if people were driving no one is going anywhere i think the flip side is better. The fact that no one is going anywhere means maybe we can get out of this faster it is true that what matters in terms of what was the best employment area, it was the permian, more importantly you want energy selfsufficiency you do not want to get us back into where the russians and the saudis want us, which is to be enslaved to them in terms of National Security. I hope that the president and the treasury secretary worry about this issue because i know we had a senator on earlier on squawk talking about why are we supporting the saudis who are really trying to take away our energy selfsufficiency. Something worth watching that could be a real casualty to this period that wont come back i think something that was really great about america thats happened in the last three years. Yeah. I remember when we were talking about 10 Million Barrels a day feels like not that long ago now were at 13 million. The numbers are stunning in terms of what this industry has been able to do. Lets call it now over the last 10, 15 years really, and a continual upward move. I wonder if you think where well bottom here. I know its an impossible question to answer on wti. You were talking yesterday about the fact that when you get to the permian, you know, and youre in the current month, its like 10 bucks or something. Yeah. Is it possible we could see the futures hit those levels as well i think so. I think the fact that the permian is the largest area, theyre only getting 10 bucks, why doesnt that reverberate i deal with Tanker Companies theres room in cushing, but theyre holding it back for when oil trades between 5 and 10. This is a deflationary period, the likes of which we have not seen since the great depression. In the great depression, they were trying so hard to keep prices up. They were doing everything they could. They were killing animals to cre keep prices up, holding back crops. Are we going to get to that . We should be thinking about that we see lumber going down but its really oil. We cant afford oil to go down to 5 or 10 almost every company except for chevron is not ready for that. You do not want a big raft of bankruptcies Scott Sheffield, the man who told me we would get to 12 million a day, Scott Sheffield is the dean of the group, pioneer. Hes talking about having seven Companies Left during this period, maybe ten companies. Can you imagine . People keep saying consolidation. Why would you buy a company that could be bankrupt soon we have to follow that with a level thats almost as important, david, as some of these companies that have really bad Balance Sheets like tmobile in the new world listen, you asked about credit carl, when it comes to credit, there should be a focus on the fact that Carnival Cruise lines can raise 4 billion, this according to bloomberg, dont have it directly, at a 12 coupon now, that is a stunning Interest Rate, but nonetheless, the fact that a cruise line is able to access the Capital Markets should certainly be seen, i think, as a positive yeah, i guess so, but theres a piece called lost at sea pandemic today in the wall street journal, the president of the holland american line sounds aggrieved aggrieved that he had a ship, the zaandam, that left march 7th from buenos aires, if you check the timeline, february 1st was diamond princess, that was the first case from hong kong. February 4th, ten cases. You tell me that this company, which sounds aggrieved, Carnival Cruise, they are aggrieved when one month one month they had to know exactly what was going on all aboard, no thanks sold to you jim, i think you responded to a twitter follower yesterday asking about cruise stocks, and your point was if you believe people are going to be standing in line and paying good money to get back on a boat, then go ahead and buy. Thats clearly not where your head is. I think its interesting. Its interesting, they never identify carnival when you read these articles holland american this is a real company you read this piece, and it comes out the same day as that fantastic im being facetious bond yield. I say frankly, a little shame. These were the precipitous theres been many more since then, but when you take when you leave march 7th from buenos aires, what did you think was going to happen . What did you think was going to happen you may feel that youre aggrieved, maybe you want money from u. S. Treasury none of these Companies Pay u. S. Taxes. None of them but i think that when this book when this era is written and the book is written, youre not going to look at the cruise lines as being good actors that may very well be the case yeah jim, draw a line from this grim aspect of whats happening to sort of the positive things, which we talked about for much of the week, that is the avid test, several thousand samples going around the country squawk had a doctor on today that will start employing those today. More testing news today. I saw yesterday 17 diagnostic companies have received emergency use authorizations from the fda in just the past couple of weeks. The abbott was a game changer. Youre right i dont im reflecting more on the bond yield for being upset. What i do like and i really like is that were now its in the hands of the professionals. Theres an amazing article in the atlantic which talks about how you were getting roche tests, they were going to quest, which pulled today its guidance. And the quest article the article about quest was basically there was a jam up, and one of the reasons why you keep hearing, you know what, i took a test, it didnt come back for days and days may have been related to how convoluted the chain was. Now you can get your test and test and test. We also find out the reason the personal protective gear is in such short supply, every time you tested before you pretty much had to throw raway what yo had. I call that the midway in world war ii, thats the first time we had something against covid. The japanese beat us everywhere until midway i feel like this is the first victory we had and it should not be overlooked. Testing, testing, testing is the real way well win this war. Great piece by bill gates, which im sure you read, which basically has three suggestions, national shutdown, which i know youve talked about. Yeah. Testing at scale, and then amazingly talks about building capacity to make a vaccine at scale if and when it comes so you can quickly spool up and make a billion doses for countries around the world that need it. That was great. I have to hand it to twitter, ned siegel, jack dorsey doesnt come on, i didnt know about that piece until i saw it on twitter. See, we have i dont know if people recognized, alex gorsky, saying he can make when they get their vaccine, they can make a billion doses, which reminds me of what happened with polio polio, one day youre incredibly worried. Your parents dont want you coming out, the next day you are eating a sugar cube, it has something in it, but you dont know it is, but it makes it so you dont get polio. Gates said heres a game plan, but were still not getting that national lockdown, which is a shame. I thought last night they would have talked about that then that would be it against covid. We have to take covid we have to make it so there are not people going to a hospital ship and cheering theyre too close to each other. We have to obey when i get my bagel in the morning, its like theres people there, im six feet away from them. Hey, dont get closer. Thats the way america has to be its very unlike americans were all learning how to relate to each other on the street to the degree we go out there. Lets get to meg tirrell and get the latest numbers on the virus. Carl, were looking at that testing you guys were talking about. The u. S. Did surpass 1 million americans tested this week, a key milestone that the administration had said could have been possible they were saying there was capacity to do that weeks ago, but were just hitting that now we also have pending tests on the chart, only a few states report these, they do reveal backlogs particularly in states like california. If you look at that pie chart, commercial labs are doing the bulk of the testing in this country, mostly quest, labcorp, mayo clinic and others doing about 800,000 so far theres a few reasons why were seeing these backlogs. You were talking about the shortages of personal protective equipment, theres also a shortage of supplies needed to run the test, the chemical reagents, the swabs. Theres shortages of these supplies theres also a backlog generated in testing before these companies could really get the technology up and running. Tests were coming at them in huge numbers that backlog started from the beginning, theyre working to go through it now im also hearing theres a logistics slowdown with some companies that have to ship the samples to labs as theres fewer flights going on around the country. That can slow down the processing as well finally, dr. Deborah birks last night saying some of the most recently approved tests are not being used from the beginning, labs got used to using technology, sending their samples to the same place, as the backlogs got created, they didnt switch. So theres a clunkiness in the system that is causing this issue. This also breaks down to a lot of variability on the state level. We have a map showing the levels of testing per capita in each state. It wont surprise anybody that new york is number one they have done the most tests per person in the state. But check out those gray states. That doesnt mean theyre not doing any testing, but theyre doing the least. Texas, california, oklahoma. Those states have the Lowest Per Capita testing levels in the country. California has these gigantic backlogs even though we are hearing the curve might be bending there, thats not based on the number of cases doctors say the best gauge to use for whats bending the curve in california is hospitalizations and deaths, guys they are seeing some positive signs there. Back over to you okay. Meg, thank you for the update on all fronts coronavirus related at this point. Lets get to phil lebeau now for auto sales, which i can imagine are not looking particularly good phil david, these will be some ugly numbers today starting with fiat chrysler, reporting First Quarter sales, decline of 10. 4 , that is weaker than the edmunds estimate, a decline of 7. 1 there comparing that with the Fourth Quarter of last year, it was down 18 so were clearly seeing the impact of march sales. Basically the last three weeks of march is where we saw weak sales. Fiat chrysler out, its going to be offering zero percent financing over seven years, thats a new promotion that will begin now. No payments for 90 days. Lets be honest here, what matters, april, may, june. April numbers will be worse than anybody predicted. May is not going to be much better well also be getting gm numbers later today. One other note, porsche out with its q1 sales, down 20. 2 weakest numbers likely since around 2013, 2012 in terms of First Quarter sales and thats how weak theyll be. Back to you. Yeah. Phil, quickly, where do we stand in terms of manufacturing plants many dealerships across the country are closed as well all the manufacturing plants, theres not a single major manufacturing plant, final Assembly Plant working right now in the u. S theyre all completely shut down you have no manufacturing going on in terms of dealerships, youll hear this story out there, dealers saying you can still order online, you can still buy and well deliver to you, thats a drop in the bucket compared to what they usually do theyre essentially shut down. Some parts of the country theyre open, there are not shelter in place orders, but generally speaking, the northeast, upper midwest, west coast, theyre not operating right now. Service bays are operating but not in terms of sales. Phil, thank you phil lebeau reporting on those latest auto sales. Well take a quick break on squawk on the street. When we come back, well be hearing from the treasury secretary of the United States, stev mchennuin its our pleasure to bring in steven mnuchin. Mr. Secretary, thank you very much for coming back to cnbc jim, its great to be with you as usual all right so i was thrilled last night i got my u. S. Department of treasury assistance for Small Business the paycheck protection program, 349 billion, we have to get everybody who has Small Businesses to look at that immediately. How do we do that . Jim, as i said, this program is going to be up and running tomorrow im pleased that working with the sba, well be able to deliver it as you said, the paycheck protection program, you can take out a loan for up to eight weeks of payroll as well as overhead you hire the people back as long as you hire the people back, the loan is forgiven i would encourage every Small Business go to treasury. Gov, theres a red banner on the top. Click on it, you will get the information. And you can go to any sba lender, you can go to any fdic insured bank and any credit union, call your lender, see if they participate very much want people to sign up for this its a great way to hire people back make sure youre getting paid if you have people at work. This will cover about 50 of the payroll of the private enterprises. I thought this was the single most important thing thats happened so far, including the overhead, which i thought was fantastic. Lets talk about the next program. We started hearing bubbling up the notion that both parties would like to see a bond, perhaps some sort of infrastructure or anticovid bond mr. Secretary, you know the credit markets better than any treasury secretary that weve ever had, maybe secretary rubin, but you know that 30 years is a giveaway, 1. 2 can we buy that . We want to buy covid war bonds will you give us that opportunity . Jim, you can buy as many 30 years as you want. Thats no problem. Well be selling 20 years as well and let me just say, the borrowing on the short end of the curve is extremely attractive for us as well. So were very focused on executing the existing plans and doing the government financing, which is being very well received can you give us a sense of the country is about to pay rent i we have the ceo of citi later on, Michael Corbat imconcerned people will say i dont have to pay my rent. The Ripple Effect could be as bad as what happened during the Great Recession according to some could you give us your sense of how tough it could be in the Mortgage Market . Jim, let me say before i get to the Mortgage Market, with you are executing on these plans we have the sba plan, the plan of direct deposit, which will be up and running in another few weeks, that will get money into peoples accounts we also have the enhanced Unemployment Insurance so, hopefully workers, no fault of their own, who are not working because of this theyll get money in their pockets and to the extent that they have problems with mortgages, the fha has already come out and said they will forebear what that means is if people dont have jobs and people have hardship, they can forebear. If people have jobs, we expect those people to continue to pay mortgages. That will be dealt with on a bank by bank basis the most important thing is that fha loans, gse loans, fannie and freddie, the government will be giving people time to pay those loans. Mr. Secretary, david faber. Jim referenced this in part in his question, i would love to follow up. The president recently tweeting about a big infrastructure effort, perhaps as much as 2 trillion is that a real effort . Are you in negotiations at all within the house and the senate in terms of trying to get something, a phase four sort of plan the president is very interested in infrastructure this goes back to the campaign the president very much wants to rebuild the country. With Interest Rates low, thats something that is very important to him we have been discussing this for the last year, with the democrats and the republicans. Ive had ongoing conversations with richard neil on this. Well continue to have those conversations. So, we expect there will be more bills, and we think it is a great time now to invest in infrastructure mr. Secretary, carl quintanilla. Eamon javers reporting on how quickly plans are being made for a phase four stimulus package. His reporting suggesting that the emphases of the white house is on executing phase three. Can you talk about that . Again, let me say, the most important issue is execution on what we have we have a lot of money, we need to get that into hard working americans hands, we also have facilities that were working closely with the fed that will inject a lot of money into the economy quickly. We need to get these things going in the next few weeks. Having money thats sitting around and dribbi and distributr months does no good to hard working americans. I heard the Small Business program will be so popular well run out of our 350 billion if thats the case, that will be the top of the list for me to go back to congress on. It has huge bipartisan support, we want to protect Small Business were also coming out with a main Street Lending program with the fed that will help midsized businesses, well be looking at programs for state and local governments. We had programs for large companies, for money markets to support money markets. I can assure you, jay powell and i are working aroundtheclock at providing liquidity into the economy. Thank you again for this. People dont understand the contrast between 2007, 2009, big banks get bailed out youre helping the base of the country. 85 of the workers can be covered ultimately by what youre doing as someone who is already filling this out, you have to fill it out. How about these big banks . Yesterday the bank of england said, you know what . The banks over there, they should halt paying their divide dividends. I understand we stopped the buybacks do we need to stop paying dividend the at our banks . I assume they want to make loans to help American Business. That is their priority im sure thats where theyre going to be focused on putting their capital. As i spoke to every single one of these bankers, good news is our banks are in good shape. Theyre out there lending. They want to snoupport the marks and Small Business i know you cant reveal who is a necessary entity versus who isnt. We have two different travel entities out there we have the cruise ships, by the way, that dont pay u. S. Taxes i think thats of interest to you and the airlines that do are you ready to take stakes in the airlines, which will keep them alive because when this is over, we need Strong Airlines but do we need strong cruise ships . Well, jim, let me say that the way the Program Works with congress is its very specific there are limited industries that i can deal with direct, the airlines, the passenger airlines, the cargo airlines, and National Security companies. Those are the only areas and contractors that we can deal with direct. We have begun to have those discussions. We posted applications for the airlines well be sitting down with them. Again, its very critical. Anything they take, they will have to maintain, all of their employees. Were working on that quickly. We do not have the ability under the congressional programs to do anything with cruise ships direct we do have the ability to do broadbased programs with the fed where everybody is treated equally. Mr. Secretary, i guess its david faber again. On the airlines, what are your expectation theres in terms of willingness to potentially take or allow the government to take equity stakes . Theres concern among the employees they wont do that and jobs will be lost and time is of the essence given those incredible numbers being so low. Time is definitely of the essence. Let me comment, you look very comfortable in your home there i dont want you guys get too used to this i want to see you back in the studio let me say, time is of the essence. Well be doing this very quickly. These are going to be optional programs were not forcing airlines to do these deals. Well make these available to the airlines, if they want to take them, theyll take them i think as you know, didnt airli Different Airlines are different credits. Weve been clear theyll be compensated for anything they do i want to follow up on my previous question about potential infrastructure bills you said there will be more bills, were you referring to infrastructure bills or more bills dealing with the relief that this economy needs . The president has been very clear. Hes prepared to do whatever needs to be done to make sure American Workers and American Business is protected. This is a unique situation, an issue because of a medical issue, were fighting a war on this virus, which we will win, we have shut down parts of the economy, the president is determined that we will protect American Workers, American Business we have a lot of money to do that if we need more programs or more money, well be going back to congress and asking for that mr. Secretary, i think that its very explicit how you do the loan i thank you for making it so really, just to read it and click and get it what i want to know, how do we get the word out to people who have one and two people at their i know youre focused on the business thats ten people i know youre focused on the business three people. When i read this, i was shocked at how you give us overhead protection how do we in the media get the word out because theres tremendous negativity abouts what whats going on in the covid world. I think this is something i have never seen before or something that people may not know they can apply to what do we do to make sure people know this is a way to keep your job during this period you have to keep talking about it and get everybody to sign up. I want to thank all the people at the sba and treasury who have been working 24 hours. The fact weve been able to get up a new program in less than a week is extraordinary. This not only covers Small Businesses but independent contractors. As well as selfemployed and sole proprietors it will take an extra week for us to get that up and running that will be up and running next friday i want to thank everyone in the government who delivered on our commitment to get this up and running tomorrow mr. Secretary, concerned about the job creation that was the permian, the job creation that was something called our Energy Independence. Can we let this happen can we let oil go to 10 and wipe out our own independence and wipe out an energy that i know you think is important for job creation can we just stand by and let that happen . Well, jim, you know, we talked about getting approval from congress of buying oil at these prices, filling up our Strategic Reserves well continue to ask congress for that approval. And i know the president has had calls with both saudi arabia and russia to talk about this. The president is absolutely determined to protect our Energy Independence and our ability to continue in this industry, which is a very important industry for our workers. Mr. Secretary, you mentioned to jim the feds main Street Lending program. Can you give us a little more sense as to when its going to be fully implemented what your conversations with chairman powell focus on just a bit more there in terms of allowing us to understand what could be an enormous impact from that program. Both the fed and treasury has a team of people, were meeting on this every day. Its a very big priority its something were focused on, the design, we want to make sure that mid Market Companies have access to liquidity. And, again, i cant comment on the exact timing, let me say it will hopefully be soon again, all these programs, we want to get up and running so that theyre available to American Business and American Workers quickly. Thats our objective and well be delivering on that shortly. Mr. Secretary, one last one i know that the treasury seems to be a little bit adverse, as was when i asked secretary geithner about it, giving us a chance, americans to buy a specifically labeled bond that would help Small Business. Why not have a mnuchin bond, a President Trump bond i dont care, a crush covid bond, why not give us something that is like the war americans want to contribute, and if you had a Small Business bond that would allow it so even businesses could begin when this is over, make new businesses, give them loans, i think it would be embraced by democrats, republicans, provided it has infrastructure in it i know if you got behind it, sir, it would happen jim, well continue to work with you on that as i said, our focus is making sure these programs get up and running. We have 6 trillion to put into the economy. That should create a lot of liquidity, a lot of help for Small Businesses, American Workers. As we deliver on that liquidity, its going to create a lot of help thats really our focus. As i said, well be working with the president on infrastructure and other areas to continue to work with congress on. Mr. Secretary, thank you very much for calling in. Thank you so much for doing what you said would do and more for Small Business, thats 85 of our country. Always great to talk to you. Jim, i hope you guys keep on talking about the Small Business loans all day. Go to treasury. Gov, get the information, call your lenders, sign up. We sure will. Carl and david jim, very interesting, of course, that is such an important program, you brought it up many times the secretary bringing it up constantly so people know how to connect, so if theyre not being contacted by their bank, they reach out, and clearly indicating that theres more money behind the 350 if the program gets fully subscribed to you pointed this out many times, its a key to keeping employment levels in Small Businesses yeah. The loans are forgiven if you keep the employees i think first of all, we didnt know about the overhead one of the big worries i had, how about the lighting bill, the insurance bill taken care of. Then i also thought it would be too obtuse, if you go in and click on it, its a couple clicks then some people are criticizing me on twitter, which is the main thing, thats why i became the you know, that its only because i have a banker i dont have a banker. I couldnt even get a loan from jpmorgan give me a break. You can fill this out and get a loan you do have to call the bank its not just certain people get it this is for everybody. It is so the opposite. When we think about 2007 and 2009, did we think about who got the bail out and who didnt get prosecuted this is a license to be able to keep people. And i know a lot of Small Business people are saying, i guess i have to go dont go just go to the site. Get the money. Theyre giving it to you keep hiring. Start new businesses thats what will happen when we get out to the other side. It cant just be costco, walmart and amazon it cant be. We have to do better than that thats what im hoping the program does i love this program. Yeah. Jim, youve been pretty consistent on that i noticed today, Palo Alto Networks joins the club of not laying off employees during the pandemic caterpillar with some pay raise initiatives. Comcast devoting 500 million to employees who are impacted and Senior Management giving up the remainder of their salaries for the rest of the year a lot of this will come from the top down its important. The Small Business loan program will be up and running on friday, not tomorrow i want to make sure everybody knows, its friday but this is a different world. We have people like i had palo alto on last night, i said this does not help earnings per share if you have to lay off anybody. I know the orders cant be as good it was somewhat facetious, obviously in the old world all we cared about was earnings per share. In the new world, you can call it the benioff world, because hes out there trying to get everybody to take this pledge, were trying to think about what happens after covid. After covid we have a world where people will still have a job. I know its so terrible to look at these employment numbers and see how bad theyll be everybody is chipping. Everybody is chipping away when you see these forgiveness plans, when you see these companies who could lay off people are not, you have a world that may be the kind of world that benioff from the ceo of sales force says, which is that business is the greatest force for social change. There are businesses that i urge, take the pledge not to lay people off we will remember you on the other side there is something going on in the country that is ethereal, different. I know were perplexed, there is such gloom but there is another thing happening in capitalism, which just turns out its not what i thought it would be. We can hope thats the case its a subject we discussed a great deal before the crisis hit in terms of esg, but overall the changing nature of capitalism and whether or not shareholder privacy would hold so many things will be changed as a result of this in terms of behavior, in terms of Corporate America as you say, and so many other areas that we dont even really yet have a handle on. So lets see. Lets take advantage of this moment and joining us on the phone is citis ceo, mike corbat thank you for joining us thanks for having me this morning. Will you take the pledge, sir . Will you take the pledge to not have any layoffs i would normally think that given the fact that things are tougher, citi would. The old citi would lay off people right now well, jim, we we instituted our own pledge a while back, that we have not been laying people off we actually announced a few weeks ago that about 75,000 of my colleagues would be receiving a check, helping them with the challenging times right now. We have given anyone who needs it in our Company Paid Time off, sick or challenged family situations weve expanded benefits. We have obviously been expanding the utilization of our foundation in the community. So were were pledge plus at this time. There are a lot of people, particularly seniors, who rely on dividends for income. You have a yield of 5. 1 yesterday the european banks suspended their dividends. Do you have plans to do that or can we count on the dividend i know we cant count on the buyback anymore. Yeah. We a group of us, the eight large banks in the u. S. Made the decision a few weeks ago we would be suspending buybacks if you look at the u. S. Banking system in particular, amongst the largest banks, buybacks is the vast majority of the capital return to shareholders we did that to be in sync with the challenge of the crisis that is going on. To make sure that all of us coming in and in Strong Capital and liquidity positions could maintain that stance theres structural nuances between the u. S. And europe that are different. One is that the european banks pay an annual dividend, theres a window in which to declare we pay quarterly dividends if you look at the ka tacapital levels, the earnings of the u. S. Banks, they come into this from a different position from our perspective, our dividend is sound. We plan on continuing to pay it. Michael, i keep reading these articles today in the new york times, outbreak sets off stampede by companies to tap credit. I read the Companies Involved in the Mortgage Market are asking for forbearance. I read a piece this morning saying these combination, the revolvers, the Mortgage Market could be worse than 2007 to 2009 im i know and you know me outside of work, occasionally given to hyperbole, but is that hyperbole . Is it something we should be more worried about than we are, which is this colossal edifice coming down because of forbearance . I think one is that to really set the table here, this is a Public Health crisis that has manifested itself into an economic crisis. I heard you talk about it a number of times. The testing and vaccines are core to getting us back on track. Certainly from a u. S. Perspective, from a broader global perspective, the worst thing we can have is uncertainty. In these times, people have been rising to the challenge and the acts of kindness and acts of giving that ive seen have truly been extraordinary, theres no doubt in my mind, like other things before, well get through this i think its up to the system to try to chart that way. You had secretary mnuchin on, i would start out by saying the actions of our government, of the administration, of the treasury, of the Federal Reserve have been extraordinary. As banks, our role is to is to or our roles are to do a couple things. One, make sure were here supporting customers and clients, which were doing as you talk about credit, the Bank Policy Institute put out a piece last night saying that banks in the u. S. Lent about 0 400 billion in the First Quarter of the year. Citi was over 50 million of that in terms of supporting our clients. Sure, weve seen revolver draws. But it has not been necessarily outsized weve seen the bond markets functioning well we had a record month of 2 260 billion of record issuance high yield issues getting done Companies View this and the uncertainty as a place where its prudent to build liquidity. Programs weve put in place, the programs the government have put in place and other bachgs are the banks are there to do that mr. Corbat, its david faber. On this subject of capital adequacy and liquidity, can you give us a sense of what your modeling looks like given the revolvers being pulled down . You mentioned 50 million in the First Quarter in terms of new lending, we know there will be some bankruptcies. People will be unable to pay things like their credit cards what are your models looking like in terms of capital adequacy, reserve cushion. You seem to be painting a positive picture, is that the way you feel right now given all the unknowns that are yet to come as you say, david, there are a lot of unknowns. But you have seen over the last several years the stress testing thats gone on in the system the severity of the scenarios that the banks are run and held to in terms of capital and liquidity adequacy and i think we feel like were coming into this from a position of strength. Clearly the system will be challenged as your own people say, our people say, well see spikes in unemployment i think the responsibility of the system is to try and turn that those spikes as quickly as possible. Going back to secretary mnuchins comments, i think the 3 350 billion that we need to gt asap into Small Business hands is critical as part of that. And i think from our perspective, you know, were here, were open, were lending. And were also making sure that our customers and clients have the ability to take advantage of these government programs. I think an important nuance that weve got to be mindful of here, though, is that theres liquidity and theres the extension of credit. Both things have to be operating properly and i think a lot of what weve seen is is government and regulatores responding to liquidity. The second leg of this is we have to be focused on making sure we get credit into the right hands to make sure these businesses and people have a chance mr. Corbat, my travel trust has owned citi for ages. It was a huge winner, now its down like all of the bank stocks tangible book value, 70 completely scrubbed. Stock at 39. Cant buy back stock, which might be a great buy does this signal something we dont know does the decline in stock signal that the nonperformers will spike . The disconnect is palatable. As i said, we go into this from a position of sound capital and liquidity, Balance Sheet as you say, its been scrubbed but theres a lot of uncertainties out there. Around rising unemployment, around business challenges, i think people look and they say its not necessarily city specific, but they say the banks are there, they have exposure to the businesses, they have exposure to the people we dont know where this will go going back to my point of uncertainty. Again, i think the banks come into this from a position of strength, and we have a very Important Role to play here, not just in terms of our daytoday jobs of supporting our customers and clients, which we do, but being that sound intermediary between fiscal and monetary and the real economy and making sure that all these extraordinary actions, not just here in the u. S. , but around the world, they can be brought to bear and brought to life for our economies and the people in them michael, its carl. Your point about liquidity and extension of credit in the shortterm is obviously the most important thing. Once case load in this country returns to a socalled manageable level, how does Small Business lending and Consumer Lending structurally change . What would you say to Small Business owners who are worried about getting a loan a year from now having taken on debt and lived through the episode were in i think, one, to secretary mnuchins point that provided this money is used around whats outlined, it wont be ballooning their debt and were all hoping through testing, through social distancing and the other best practices that are going on that we can bend this curve quickly and, you know, in the cares program, you effectively get 2 1 2 months of coverage were hoping we can bend this curve and to get these businesses back on their feet or keep them on their feet to be able to come out the other side of this so theyre not ballooned up with debt or having challenges interms of debt service into the future. And then they can make their decisions in terms of how they want to invest in capex and grow their business mr. Corbat, david faber again. One thing we hopefully look forward to, of course, getting on the other side of this. And one of the key questions is how are behaviors going to change in a significant way. As the leader of a Large Organization with scores of employees, i assume working from home, not to mention a lot of retail frontage in terms of your branches, how do you see citi and in general general the changes that are taking place now affecting behavior in the future in terms of your work force, both on trading desks or bankers, and the people in the branches well, we all went into this with lots of contingency plans i dont think many or any of us really imagined the day where we would have the vast majority of our people working from home as of today, weve got over 160,000 of our 200,000 employees working from home. At various percentages around the world, but roughly 80 of our people, and we didnt imagine that and i think a couple things really come out of this. One is that we can do it we stood this up very quickly and i think we were fortunate, if you would call it that in terms of having been in this Public Health crisis in asia early on, i see it coming west and had the ability to experiment and try Different Things so that as it came here we were as prepared as we could be i think it changes things from a social aspect in terms of potentially how people interact, and what meetings or other things are like. Maybe in particular at certain times of the year, maybe some of your more contagious seasons, i think it changes the way businesses and people contingency plan as an example from a human aspect, i grew up in a family with two depression era world war ii parents, and our pantry was always stocked in the and maybe Going Forward the pantry is just going to be a lot fuller in a number of homes around the world as people think about things differently michael, you remember the canned peaches and canned pears from delmonte . Werent they terrible . We didnt know at the time it was so bad we had the treasury secretary on hes talking about this great page he created where on friday we can apply for loans and we talk about bankers how does it work lets say citi is my banker and i have a dry cleaner its consistent. I dont have any inventory thats why its a good business. Do i go to my branch do i call . What do i do to be sure that i get my money well, one is we instituted several weeks back for Small Business basically available any time support nights, weekends for our Small Businesses and i think one thing that critical in terms of the implementation of whats gotten to be known as the payroll protection act is weve got the ability to do it digitally we dont want to have people having to come out making sure that weve got the digital interface set up so people can apply online. We can get the documentation that we need online for the vast majority of these loans and we can turn this money and get it into Small Business hands as quickly as we can. From our perspective, we are working around the clock to make sure our port is set up and not skrus our business but any business that wants to come to us for help and access to the program, that were up and running to be able to do that. Youre a family guy i know your wife and kids. Whats it like when you get up in the morning . Do you think about the mall that might close or the loans that are in trouble . Do you think about covid and your family and what do you do about the way . Are you separated from your family whats life like for a big banker right now in an era that weve never seen before . So im fortunate that im with my wife i am with my son and my daughterinlaw. My daughter and her husband live abroad, and theyre fine and being sheltered in place with her husbands family world Head Quarters is set up in something thats a little bit bigger than a closet initially we had to skirmish to get wifi and bandwidth sufficient to support all of us. But the day starts clearly with the family, but its thinking about our people our 200,000 people and how do we keep them out of harms way. How do we do everything we can to support our customers and clients . And what are the things that we can be doing to be able to do that and obviously, trying to make sure that were in the long run making the right decisions for our shareholders in terms of how we run the bank and making sure were supporting the communities that were in. And kind of knowing that those communities need to be there and to be healthy, in order for us to be healthy. So i think its really in the round. It goes back to i think what you were talking about before in terms of finding the right balance between all your different constituencies, and ive got to say from a city perspective, my colleagues have been incredible in terms of the resilience and people doing just extraordinary things to help other people, to help our customers and clients, and, again, i think were seeing just great examples of human nature and really who we are and im very encouraged by that. Michael, your point about your family members and dpegs era family members is so vivid i wonder in the early days when we got a sense of how serious this was going to be, just a month or two ago, there were anecdotal stories about Bank Branches running out of 100 bills, demand for cash whats happened with deposits lately well, carl, i would say weve tried to strike the right balance. Weve tried to make sure that theres money in our atms constantly we want to make sure our screens are getting cleaned and disinfected constantly we want to make sure that our branches are open. We may not have every branch open, but weve got our branch employees at work, and at the same time, we want to make sure that theyre safe. That theres enough distance between them and the people that theyre serving such that we dont put them in harms way, and so we have operated really uninterrupted through this and again, weve really been trying to also drive people remotely and to make sure they take advantage of all the digital things that are out there. So remote check deposit. We upped limits in terms of the use of zelle and the way people with transfer money, and were always open to make sure people have access to their cash when they want it mr. Corbat, earlier you said that the system, meaning the financial system, is going to be challenged i wonder, what are you watching closely . Whether its an increase in infections, or something in the Financial Markets to try to determine when that challenge is going to peak and when were going to sort of be on the other side of it you know, i think one of the lessons here is that in this, and i think its an important lesson for life. That you cant go to where this is when we look at the virus, if we simply judged where we are today, by nature were behind it and i think what weve tried to do is really look and try and get to this or get ahead of it and i think the expectations being put out there is that its likely in the u. S. To get worse before it gets better. I would say another important thing is that not everything is equal in this. Meaning that geography perspectives, around the world, the cure rate or the recidivism of this will be at different pace based on social practices, on many testing or other things. And weve got to understand thats going to be the case in the United States. Maybe new york is going to be at the front end of this in terms of peaking and hopefully rolling over, but were going to have to take a more nationalist approach and so clearly, were watching the virus. Were watching the pace of acceleration, deacceleraticelerd were seeing some early signs of deceleration, and hopefully as it rolls over, it does so quickly. We have to be mindful. Weve seen it in places like asia i had calls this morning were seeing importing where cases are going up as people are starting to move again weve got to be mindful of that. I think from an economic perspective, employment is clearly going to be a big thing that were going to watch, and again, i just think some of the vulnerabilities of the u. S. Economy around some of the challenge sectors, and i saw a statistic in one of our reports right now that said 75 of the people and 90 of the gdp in the United States right now is either at stay at home or social distancing and so to me it comes down to how quickly can we turn this how quickly can we get the testing and get uncertainty out . And how quickly can we get people back to work and back to living normal lives as part of this own those are the things that were obviously watching very closely. All right michael, very important to point out the Citi Foundation committed to find 15 million to fund covid19 relief globally. I want to thank you for coming on the show and giving us the muchneeded perspective and optimistic perspective you always share thank you stay healthy thats Michael Corbat he runs citi do we have sara . We do great interview. Thank you very much. Here i am. Top of the hour, everyone. Welcome and good morning good wednesday morning to you. Im sara eisen with the gang, carl quintanilla, jim cramer and david faber. We are from separate locations as were putting social distancing to work we kick off the Second Quarter with declines for the market coming off the worst First Quarter for the dow ever the worst quarter for stocks since the depths of the financial crisis more than 3 dow down a few hundred points. Bonds are in demand. The safe haven bonds with yields falling, especially the tenyear and 30year and the dollar is stronger we have Economic Data break right now. Ism manufacturing just crossing. Rick santelli with the numbers yes 49. 1. Once again, not a horrible number and i know, weve said this about all the numbers. Whether it was claims or adp this morning which was done 27 or this numberwe expected in the low 40s at 49. 1. Well, listen, they can say what they want. The number is better than expected to put knit perspective. 47. Was december 49. 1, you can see the numbers are not that bad they will get worse, obviously 50. 1 in the Rearview Mirror does not get revised lets look at new numbers. Prices paid dropped. Deflationary period, its funny how that seems to be more realtime than many of the other components thats 37. 4 versus 45. 9. Finally employment thats at 43. 8 versus 46. 9 on Construction Spending and also remember this is a february number im sorry. Yeah february number. And there arent that many negative months in Construction Spending this is down 1. 3 and down 1. 3 comps to minus 3. 2. Thats october of 2018 like i said, not that many negative numbers in this series. So that construction number really reflecting kind of the hit that you would suspect would be into the construction business, of course, and housing. Even though Interest Rates seem to be helping it out on the Interest Rate front, of course, we continue to drop a bit. Were at 60 basis points on the tenyear the all time forever yield close is 54 basis points well continue to monitor. Carl, back to you. All right rick, thank you very much. Rick santelli. First half hour of trading under our belts on this wednesday. Dow down 739 session low 835 to the downside. Lets bring in dollar trees ceo to talk about this unprecedented shift of household, especially meal budgets but all kinds of Household Budgets moving away from out of home to grocery. Its good to have you with us. Thanks for the time today. Thank you thanks for having me on today. We can only imagine the volume increases youve seen, but can you talk about overall what this past couple of weeks have looked like and are you beginning to see any easing in the shortages of some key either disinfecting supplies or Paper Supplies that were all familiar with by now . Good questions, and thank you. Let me just start off by first a shoutout to our teams at dollar tree and Family Dollar associates that have risen to the occasion on something thats hard to plan for, and as weve really managed this thing in realtime, have responded in great ways in their communities and with their neighbors and i think what youve caught on, the essential size of the business we use words like unprecedented but clearly the customer was shocked very quickly to get the things she needs into her home to protect, clean, hand sanitizer. And now when you think of all the kids out of school, theres at least ten more meals being done at home than there were before, so the impact to the food business as well. I would say this our supply chain that be stressed clearly as our trucks show up to stores we probably have enough for a day or a day and a half. More is coming and we called out and have a billion dollars in the pipeline somewhere our vendor partners have ramped up its coming. Its just that t not going to be enough for the next few weeks but there is enough coming overall. And so were working very hard with our supply chain own our Distribution Centers we have 24 around the country. Working seven days a week to get product to the stores. I dont want to make your peak traffic hours any busier than they are, but what advice do you give to shopper who is want to know when the best time is to arrive at the store and hopefully just come in just after that delivery of certain categories well, good point. We did call out for our senior population for anybody at risk the first hour we would like to dedicate to those folks and kudos to folks who have responded to that. I think as folks are shopping, listen, the levels on the shelf are going to get better and better as we go through this i was in a store last week, and our customer who seemed to be a bit in a panic, you know, our store manager said listen, we have two you can take today. We have more coming next week on the truck. I see that already and just that conversation reduced the angst of that particular customer. So i think as our levels across the country and we wont be the only retailer that sees an influx of more goods, people will have confidence that they can go and shop any day of the week in more times but this will be a build process over the next several weeks. Gary, its jim. Gary, im a little confused and perpl perplexed. When you were on last, dollar tree was good. Family dollar not good the last week of march you were minus 14. 3 for dollar tree Family Dollar starting to get better what went wrong at core dollar tree because Dollar General reported some pretty good numbers and minus 19. 4 is not like you well, keep in mind, jim, we really caught an to a positive comp on the quarter which was a 7 plus comp for dollar tree. What we called out was the change in foot traffic that we saw in the last seven days that we want to make sure everyone saw. So i dont think anything was wrong. I think what we saw the customer respond to at dollar tree was we have the essential items she needs, paper towels, cleaning, hand sanitizers. We certainly saw that spike that got us to that plus 7 i think we have a reduction in traffic. Theres two things one of them with that kind of spike in demand, we just ran out in some stores i think secondly, appropriately, customers are taking this shelter in place seriously and thats some of the reduction in foot traffic. I think at Family Dollar we have a broader expanse of consumables that people need we have more in store. We have more in the supply chain. And thats some of the difference between the banners right now. And listen, people are very focussed on taking care of their foams. We have a holiday coming up easter i think folks are not focussed on that like they typically would. And thats some of what dollar tree is seeing right now i would say. Were in unchartered waters but im convinced dollar tree has always responded when weve had other events and effects on our business we know that we sell everything for a dollar. Our customers know that. Theyll be back as soon as they get out of shelter in place when the right time comes around. But i think just to follow up, gary, its sara, on that point about some of the negative numbers in this report, can you give us more color on what people are actually spending on . Are they buying anything except for absolutely essential goods like sanitizers or goods are all discretionary items falling at this point . Its a good point people are focussed on the essentials as they should be with what they have to stretch their budgets to but its interesting customers with kids at home are much more buying anything related to education we have those at dollar tree our crafts section is going through the roof at dollar tree as folks are trying to find ways of entertaining. Same thing at Family Dollar. In addition, at Family Dollar we have lots of items you can go outdoors with. My sense is as families get together, you know, theyre gathering around and grilling out when possible and using it the grills and chairs to keep their social distancing outdoors so people are navigating this in different ways theyre home much more they have to stretch their budget, but i think as we go through this, theyre finding the right way to maintain their neighbors within some social distance their families are obviously at home so the shock right now is to the customer i dont think any of us thought at the beginning of march wed be here. I think folks are navigating the new reality, and i think over time folks will figure out how they continue to do the things that create both family and neighbor events at the right social distance. Finally, gary, two questions. One, what is it like trying to hire 25,000 workers amid all these safety concerns. And two, when do you imagine yourselves or your peers starting to reinstate guidance theyve pulled in the past couple weeks let me start with the hiring. Were hiring 25,000 folks for all of our 15,000 stores and all the communities that we operate in we have the 24 Distribution Centers that were also in need so we operate oftentimes in these neighborhoods that have had a loss of jobs waiters, hotels, we are seeing some of those folks show go online, go to dollar tree or familydollar. Com and find the applications and find the store or distribution next to you. I want to call out obviously like other folks weve paid a premium to our folks of 2, and today were announcing were going to extend that up through april 18th as well what was a 30 Million Investment when she announced it this was another 15 million for all our folks were paying a premium to as we go forward. Forward guidance, i think we have to see how the customer responds over the next eight to ten weeks, my crystal ball is no bigger than anybody else i know we can be serving our neighbors and communities with our stores we have what they need the supply chain is working. The essentials we have will be in store then well have to see when do we get back to selling i think a broad mix of items across our stores both discretionary and what has to be essential goods so our focus right now is very simple were here our priority is to fill up our stores, get our supply chain working the way we need, take care of our folks, keep them safe, and have a safe working environment. You wont get well get back around to guidance when we have the right viewpoint where the customer is somewhere past april, i would guess i mean, the customer is likely to be in a lot more pain than they are right now, gary. Some pretty steep warnings of recession in this country. I tend to think of Dollar Stores as retailers that do well during good times and bad just remind us, how you gear up for recession and what youre expecting it to look like in this country this time good point. If you go back to 2008, 2009 crisis, its a different element than were working with right now. But both dollar tree and Family Dollar, people come for the right reasons. We had great value we were convenient the things theyre looking for to stretch their budgets, we delivered on both banners if you go back to that particular time, had a wonderful up tick in both traffic and sales. Thats what were focussed on. If we can get all the items we know in the store, people will come find us and so thats what were focussed on as we look forward into april and beyond. I want to make sure our stores are stocked with the right items. Our customers will navigate this in the best way they can we will have more folks, unfortunately, i think, that will need to come to us to stretch their budgets. So thats in our shortterm, thats what were thinking about and how we accommodate our customers Going Forward. Gary, appreciate your time. On a busy week thank you very much. Ceo of dollar tree well see you soon thank you david it is a momentous day for sprint and t mobile. Almost a full two years after announcing their intent to merge, closing a deal today and becoming one its also a momentous day for our next guest, mike sooef effort, taking over officially as the ceo of the combined company today. John lodger has been the longtime ceo of t mobile. Mr. Sievert, thank you for joining me thanks for having me. 43 billion, that was the number on april 27th, i think it was when you originally announced this bill, 2018. 43 billion in synergies. 26 billion from the network side is that number still the same . Is that which was the driving force still in play as the key number can you believe it . You said the date. April 28th of 2018 this has been such a journey yes, thats still the number weve had eight quarters of block buster results during this nothing has changed. This is about bringing together the two companies and the uniquely positioned assets of the two to unlock the potential of massive scale and invest the synergies from that massive scale into creating the best 5g network. The network portion is 26 billion in our forecast over the long haul. All the potential that we saw when we announced this continues to be what we see in it. Thats why we pursued it so ambitiously during the long pendency of this deal. Yeah. Well, of course, a lot has changed very recently in terms of the landscape for the u. S. Economy. You did focus so much well, you and john legere and others in arguing for why this deal should be aproved on 5g, on your ability to bring it throughout the country, offer speeds which we have not seen how much of the current economic crisis is going to impact the ability to bring 5g to the country and perhaps even more importantly, the ability of people to actually buy the new hand sets theyre going to need to access this service well, in many ways what it pacts first and foremost is the importance of what we do one thing weve learned or certainly has been reinforced for us is that the service we bring to the American Public is essential. As were social distanced, the technology that brings us together is more important to us than ever, and consumers will prioritize spending in this category if they need to this crisis is going to be shortlived. But well return to some sort of normal after it. What that normal looks like, though, nobody knows its certainly going to be a different normal than the one we had before entering the crisis if that normal, is the normal where more americans are under cuffer economic circumstances and have tighter budgets and have to make more choices . Were going to be here to serve them were going to be here perhaps as the best positioned player to serve them if you have a tight budget, you want value thats what the new t mobile thesis has always been about breaking down that tradeoff that customers have been forced to make in this category since the beginning of time. Do you want better value or the best network pick one this merger is about creating a company that says very emphatically, you can have both. And i think in the circumstances that well most likely find ourselves in economically when this crisis abates, thats a message that will be very important for the American Public mike, how quickly can you put back that you now own in your network to deliver the 5g speeds that obviously are one of the keys to why regulators approved the deal very quickly. Our teams have had a long time during this merger to plan the net work we will start lighting up 5g on what was sprints spectrum almost immediately and well keep you informed as we do that that will start to benefit consumer who is came from both sides of this business immediately. And thats one of the i guess benefits of the long pending merger well be able to start bringing the benefits you asked if the crisis will affect that. It might it might in permitting and other things as governments are around the country local municipalities are operating at less than their usual capacity but it wont slow us down. Weve been classified by the department of Homeland Services and the administration as essential services we are allowed to continue operating. Weve determined we can do that safely much of the work tower by tower happens by crews, individual crews of one person. Sometimes its three, four, or five people that arrive in separate cars, work outdoors and work at a safe distance from each other so were planning to proceed its essential for the American Public we get this network built and we determined we can do it safely other than some issues around permitting and things like that, we dont see a slowdown in our ability to bring this network to bear but what about a slowdown in sales . I mean, youve got like all your competitors, 80 or so of your companyowned stores are closed. I would have to imagine thats impacting sales or is that being made up for online it certainly is on march 17th, we issued an ak saying we felt that the impacts of the crisis would be material, and they will be what ill say is that theyll be material but shortlived remember, yes, weve got i get to perform at a combined now about 75 of our Stores Closed and that has an impact, of course a major one on sales but so does the rest of the industry and in the grand scheme of things if its a few weeks or some low single digit of months where were prioritizing the safety of our customers and our people, thats something were wellpositioned to get through this is a recurring revenue business where people have an ongoing subscription and were the value player in this market. So were here to serve them. We think over the long haul while there may be a shortterm material impact, nothing in our thesis is unchanged. And the potential in the merger is as exciting as ever mike, jim glad you called in hi, jim im trying to figure out, john legere always made me so excited about you guys and he did have kind of a different style. Well say that one of the things that im trying to figure out is if im a sprint customer, why should i necessarily go with t mobile what kind of proposition are you giving me that makes it so i shouldnt go to verizon . Well, its about having the best network and the best value. Its about not having to pick. You know, this market as i was telling david, has always made people pick. Verizon claims to have the best network. Thats something that theyre going to be scrambling to try to talk about as we build the worlds best 5g network with the combined assets with this company. What well be able to offer is the best value and the best network simultaneously thats unprecedented in this industry well, also you talk about the best value, but if you do that, then youve got to buy from huawei theyre the cheapest we all know it but some of us question whether buying from huawei means huawei hears for the communityists, hear everything we say it wouldnt put the past them. Those companies are supposed to be dedicating to spying. What do you do when the lowest cost producer of equipment is huawei, but they may not be such a great actor . Well, our biggest suppliers are nokia and another. Were planning to expand our 5g network with our existing suppliers. And with our existing suppliers, we have a synergy pool on the network side that we see line of sight to 26 billion in synergies. Just from the network side 43 billion overall. This merger as were planning it with our current partners is something that will unlock the potential of massive scale finally positioning us at a scale comparable to at t and verizon, but with obviously a culture and a brand and a Value Proposition that is so much more attractive mike, the new Company Still owned by t moebls longterm parent and soft bank soft bank is talking about selling some of their stakes sooner than may have been anticipated. You know, youll have to ask them that. Were delighted to have soft bank as a Parent Company along with deutsche and telecom. Today we welcomed people to our board of directors i think were going to make a great team youll have to ask them about their longterm plans. I see huge potential for us with Deutsche Telecom and soft bank and here in north america with tmus to build some interesting collaborations and cross oceanic synergies. I really like the potential of this as we can collaborate with partners at a global scale now so were very excited to have them as a part of the family does the sprint brand go away quickly here the main brand will be tmobile were not going to make big changes. Think about the summer time frame as when we unify and market with all of our stores and all of our advertising and all our offers in a more unified way. Mid summer we havent picked a date yet thats always been our intention. That doesnt mean the sprint brand will go away completely. We havent made those decisions. The sprint brand has an incredible legacy. But we believe that right now in wireless it makes all the sense in the world to unify under the t mobile brand the company is called tmobile and the flag ship is tmobile. I look forward to many future appearance by you. We hope as mr. Ledger used to join us. Final question, something we used to talk about often before the Current Crisis how will 5g impact people at home especially now given all the streaming were doing . Do you believe youll have a competitive product in 5g wireless into the home that competes with right now the cable that i am using to connect to the internet . Well, first of all, david, t great to talk to you, and id love to come back and talk more. You followed this merger so well it seems like youve broken every major story including the fact that i would become ceo so thank you for following the company so closely yes, you know, 5g obviously, its more important now than ever because what were really realizing during social distancing is these connections are more important than ever and remember, our competitors have 5g strategies that are so different from what new tmobile can do verizon used to talk about sporadic places around the country. We intend to cover 99 of the country. Not just with low band 5g like stand alone tmobile but with broad and rich 5g thats transformational 90 of americans will have this is Game Changing and its one of the reasons we worked so hard to bring this out we look forward to obviously following your efforts and talking to you in the future and certainly appreciate you joining us on this momentous day. Your first as ceo and obviously the first with the combined sprint and tmobile. 23 months after you guys announced it mike, thank you for joining us thanks, guys. It sounds like you have good guests tonight on mad. Nestle, cisco, what theyre doing to deal with the crisis, web ex, rest med im interested in what mick is going to say he has machines that maybe build plow shares. Thats what they do. They can make vents, ventilators out of their cpap machines and pbh. Manny is never afraid to come on we know Department Stores are in trouble, but we have to figure out if theyre selling the regular stuff. I cant wait until tonight im also on halftime and mayeds vin at 10 00 i cant tell looking forward to all your appearances. Dow down 625 points off the worst levels of the session. Time for a spotlight looking at the First Trust Dow jones internet etf ticker fdn coming off the worst quarter since the Fourth Quarter of 2018. Its down a little less than 3 . Amazon, facebook, and netflix are the Top Three Holdings of this one theyre currently all trading lower but less than the overall market were going to take a quick break and continue to monitor this Market Action for you all sectors are lower in the s p 500. Real estate getting hit the hardest. Down more than 7 . Financials, utilities and industrials getting hit. President trump warns the nation to brace for a painful few weeks. Well be right back. S p 500 on this wednesday, lets get the latest on the coronavirus. Good morning. Global cases are now more than 883,000 and the death toll has now gone above 44,000. In the u. S. The death toll is above 4,000. Spain recorded a record 864 deaths since yesterday the countrys death toll is above 9,000. New cases fell a possible sign the lockdown is working. And thousands of brazilians have been protesting their president s handling of the pandemic by banging on pots. Hes one of the only World Leaders to think it does less harm than calling the virus the Big Education challenge of our time masks being handed out for free in some stores. Russia is spending medical supplies to the u. S. Video from the Russian Defense ministry shows a loaded military plane talking off from moscow early this morning for more coronavirus, head to cnbc. Com frank, thank you lets turn back to the Market Action this morning. First day of the Second Quarter. Dow down less than 600 points. We were down more than 800 at the lows s p is down a little less than 3 joining us is diane swank of Grant Thorton and meghan shoe of Wilmington Trust its not an economic question, but when you have white house officials telling americans to prepare for 100,000 to as many as 240,000 deaths in this country, i mean, its hard to separate sort of the humanity and society cost to all of this with the markets and the economy. How should people be taking the headlines . It really is tough. I think thinking about these numbers, we know that the 100,000 to 200,000 or 100,000 alone is more than the wars since vietnam and the casualties we lost as a country since then alone over decades and were talking about losing that many people in months its truly heart breaking. And weve seen the december administration to the economy also be equally swift and heart breaking and thats what were trying to come to terms with right now, knowing that tomorrows jobless claims are likely to top 9 million. These kind of numbers never even popped into our radar screen ever theres no precedent for understanding and framing this but it is important to still try to stand on the faultline were standing on and try to see not only what were going through but how to get to the other side, and when we do, how much of a rebound in Economic Growth can we expect . I think its an Impossible Task we just dont know it is unprecedented and we dont know what its going to look like so how do you craft an Investment Strategy . Well, diversification is the biggest point. Were in unchartered territory and we can look at historic drawdowns and historic analogs for different parts of this crisis, but there really is no precedent for it and when we think about our portfolio, we are taking a 9to 12month outlook we think there could be some further pain in the meantime it means building a portfolio that is diversified as i said and has exposure to different types of environments. We are still constructive on more growthoriented type of stocks we dont want to be totally out of value that is probably going to see a strong balance when we get to that bottom. Its about protecting your portfolio, making sure you dont get too defensive because some of the biggest gains that were likely to see over the next year will probably come in the first few days of the bottoming. We just dont think were at the bottom yet clarity on the labor statistics well get adp today, were getting granular about when the surveys were, what they reflect in terms of High Frequency data how sensitive is the market to the numbers right now and going into jobs friday for me the numbers are less than than number the unemployment claims that more than 13 million job losses in the last two weeks alone, and thats only the ones people apply for the unemployment for the survey ended on the week of march 12th anyone who worked an hour that week was considered on the payrolls whatever the number is, im looking for more than 100,000. But even those numbers are guesses at this time the losses we experienced which the survey showed in the Small Business sector are reflected in what they assume about birth and death rates of new firms this is something that weve asked the bureau of labor and statistics about theyre weighing whether or not to change the methods and reestimate that either this month or next month, and it will be laid out in the report if they did i went to a former bls commissioner to ask what the chances of that happening are. And the way they responded to us, theres a chance they could change that number of firms particularly birthrates go down when i hate the use this kind of words in a crisis, but it is how they refer to it particularly the birthrates of new firms go down as everything seizes thats one thing that could suppress the numbers even more and get to a closer reality of what was going on in restaurants during this period of time did you just say how many millions of unemployment claims do you expect out of tomorrows number over 9 million. Over 9 million . Tomorrow yes how many of those do you how many of those do you think are furloughed in other words, with the hope of coming back and some shortterm relief here in the form of expanded unshurns ainsurance an many are just lost jobs . Thats an excellent question. They werent in the numbers yet. And what we were seeing coming out of states like california, this is the week where everybody shut down and you were seeing unemployment claims. We think 1 million from california alone from that week. So its not hard to get to those numbers given the numbers were seeing at the state and local level. The furloughed workers didnt go in until they passed the legislation that expanded Unemployment Insurance to gig workers and furloughed workers and provided some enhancements and checks for the workers so they wouldnt be able to apply for Unemployment Insurance yet. These numbers, not only were the websites overwhelmed by the volume so they were undercounting but many of the people who now qualify for Unemployment Insurance were not counted in last weeks data. Yeah. And the states ability to handle various claims as Governor Cuomo said yesterday, it varies depending on what state you live in. Meghan, i wonder we talked to the dollar tree ceo a few moments ago about when they might reinstate guidance he said probably sometime past april. I wonder where you are on s p 500 eps for the year, and when you think we can get enough guidance back to start putting reliable models back together. Yeah. The models from an earnings perspective are greatly impeded by the lack of guidance, and specifically the lack of time frame. We dont know how long this is going to last. Were at about 140 for s p earnings for this year, closer to 165 for next year and when i think when we look at that, its probably likely, again, that part of the bounce that i think weve seen is pricing in a bit of the light switch scenario, if you will and i dont think were going to see the economy switching on like a light probably going to be more gradual. We might have more guidance earlier, and better activity out of some of those Retail Stores like dollar tree than we might have for some of the airlines or our mass gatherings. People are going to take long tore get comfortable with that type of thing. You know, you can look at certain analogs historically, 9 11 is probably a pretty good indication or at least a good comparison for Something Like the airlines in terms of the fear factor. That took about a year to recover passenger traffic after 9 11 different pockets moving ahead of others and specifically different regions. The response from the mitigation effort has been localized. I would expect the ramping back up process to also be localized. Meghan, tell us what youre adding and subtracting right now. This is a great opportunity to be upgrading the quality of your portfolio, and again, looking auloo looking out, weve taken down some of the cashstrapped businesses like airlines, hotels, like financials that are specifically really their business is geared toward financing of deals and things of that j Insurance Companies weve been adding to more diversitied, larger banks. Actually added to some larger industrial conglomerates we see industrial activity picking up over the next 12 months but probably rocky in the meantime i think this is a really Good Opportunity to be picking out Technology Names that maybe have been a little pricier. Still, perhaps, a little pricier than the rest of the market but at more affordable levels and we see technology as being longer term that will resume. Companies will realize they need to have supply chains that are more diversified and maybe bring some activity back to the u. S. Where they have more control but to do that, theyll need to automate technology will be a big part of that story over the next five or ten years. Finally, diane, were out of time meghan, thank you. Good to see you both thank you be well lets get to phil who has been bringing us auto sales all morning for the quarter. Hey, phil. We have the q1 number from General Motors sales falling 7. 1 in the First Quarter. Clearly coronavirus and the impact its had during the month of march weighed down total sales. By the way, thats a greater than expected decline. Edmonds was expecting a decline of about 4 and for perspective comparing q1 versus the First Quarter they fell off 16 from the First Quarter compared to the Fourth Quarter. Well get the total sales rate for the industry later today or tomorrow curious if we see the lowest rate since 2012. Ive had a number of people say to me when do things potentially start to improve or do they bottom out in april and may . Youll notice heavy advertising from the auto makers sometime this late spring, i bet, where theyre going to say look, zero financing for seven years. No payments for 90 or 120 days theyll start the programs and heavy advertising once they get a sense that you will start to see people be able to leave their homes again. And that dealerships can open up again. We likely wont see that in may, april, and probably not in the first part of may. But then at some point youll start to see the advertisements kick in for all of the auto makers and dealerships huge implications for media as well. Advertising is a huge deal especially from the auto makers. Phil on gms numbers phil, thank you. We are holding on to the s p 2500 a short break and lwel be back in just a moment dont go away. The snap sn yes. The first word to any adventure. But when allergies and congestion strike, take allegrad. A nondrowsy antihistamine plus a powerful decongestant. So you can always say yes to putting your true colors on display. Say yes to allegrad. Dow down 570 points. Lets get a special guest. Fhfa director with a focus on how this is goingto affect the Housing Market yes the they oversee fannie mae and freddie mac. Borrows can miss payments for up to a year and the payments are tacked on to the end of the loan weve heard from one mortgage ceo who said they got 8,000 calls last sunday from borrowers. Are you starting to get a read on how many borrowers are going to ask for forbearance we are, and i want to caveat the numbers are rough and preliminary. If you talk to me in two days, theyll probably be different. With that in mind, my estimate now for fanny and freddies book, were hearing of a take up of about 1 of their book. April looks like it will be approximately 3 00,000 loans for overall market that translates approximately into 700,000 loans. Were thinking closer to may well see closer to a million. By may a little more than 2 million. This is between 3 and 5 of the market i want to emphasize were not seeing the worst Case Scenarios of 35 takeup. Closer to 1 and the lenders im talking to are telling me 70 to 80 of their calls are people who arent yet facing a hardship but want to know their options those are some incredible numbers. Now, the cares act specifically states borrowers do not have to prove any Financial Hardship no documentation of anything it seems like the potential for fraud here is pretty immeasurable, is it not . Theres a concern there were operating on the honor system we are asking and putting together a script for servicers. This is supposed to be limited to if youve lost your job, lost income please if you havent lost your job, continue paying the service and capacity and industry is down by 25 , 30 we have to triage this like everything else. If viewers are listening and trying to hold liquidity, if you can pay your mortgage, do so we need to focus on those who cant. If the numbers get bigger, weve seen a quarter of homeowners, about 12. 5 million households could seek forbearance. Servicers could owe about 100 million to investors is the mortgage industry equipped to handle this . Weve seen nothing for the servicers who are going to have to pay all this. Great question. I think if this is only two or three months, in a worst case scenario, 25 , i think most of the servicing industry could make it that time. If this goes beyond two or three months and we get worse, thats going to be strain and certainly were going to see firms get into liquidity trouble mark, i want to ask what youre hearing about the Mortgage Backed security market. The fed obviously stepping in in a major way last week. But when they withdraw, there are somesigns and chatter wer hearing about that market really tightening up. What do you hear about liquidity and how its functioning we are seeing that. And theres a lot of stress in that market before the fed stepped market before the fed stepped in. Different segments are performing differently the specified pools arent performing with the liquid market the broader tba market the spreads have come down unfortunately some of that still isnt being passed to borrowers, the feds are wide as far as what ends up for the borrower many of which were trying to streamline and deal with, but i think youve seen more stability in recent days for the nbs market than you did last week. Headed in the right direction. Forbearance is available for government backed loans. About 48 are not government backed those are in Bank Portfolios or private label. What happens to those borrowers . Thats up to the lender but weve had conversations with the bigger lender. We got out there to set standards and congress essentially codified what weve started to do, we worked with fha. So while the government loans are not the overall market, my sense is probably 95 of the market are following similar circumstances. Were trying to put guidelines out there, trying to get everybody to offer the same terms so that for borrowers when you call you get treated the same regardless of what loan you have as you know, many lenders offer a suite of loans and they want to give a consistent experience to their borrowers regardless of a loan product. I spoke yesterday with the ceo of caliber home loans, he was the head of citi mortgage during sub prime crisis. Hes saying its possible we could see more delinquencies than we saw during sub prime, do you think thats possible and it could translate to foreclosures or its not going to happen the way it did in sub prime . I think in some markets its possible the truth is, sub prime really didnt as much go away as it went to fha. So you have a lot of fha boar regulatory ri borrowers that i think could be at risk. Were told the inquiries theyre getting are coming from bo borrowers who have never been delinquent and have good credit. So if this goes on two or three months we see a pop back in the economy, people hired back to their old jobs this is something the industry can get through without too much stress but if this goes on for six months or more youll continue see a lot of stress. The place to look right now is the fha market with the quality credit to the borrowers theyll be the first canary in the coal mines as to what implications will be. Weve been talking about t taking fanny and freddy out, how is that going to change the picture you have of bringing them out of conservativeship i think as you know, im almost a year on the job, next week will make a year for me, its been an interesting year, but i think a consistent theme i have raised over that year is we have a number of structural deficiencies in our Mortgage Market including fanny and freddy, and this has illustrated where some of the flaws are. We put out a request for information on nonbank capital liquidity. We were timely on that, ahead of the game, but i think there are parts of the system that need to be strengthened as we go forward. Its been my view that an exit from conservativeship is going to require a Large Capital raised by fanny and freddy, i believedthats a 2021, 2022 event. Mark director of the fhfa, thank you so much. David, back to you diana, thank you. And thank you for bringing him to us as well. Well take a break on squawk on the street. Stay with us 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. When you take align, you have the support of a probiotic and the gastroenterologists who developed it. Align naturally helps to soothe your occasional digestive upsets 24 7. So where you go the pro goes. Go with align, the pros in digestive health. S p holding onto 2500 this morning, dow low was down 895. And were above that oil holding even though inventory is up way more than expected well take a quick break and be right back in just a moment. Dont go anywhere. When you look at the Critical Issues facing our world, what do you see . We see a billion more people breathing free. We see access to fresh food being the global norm, not the exception. We see homes staying cooler, without the planet getting warmer. 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. Welcome back to the show every s p 500 sector as you can see trading lower this morning as the selloff continues financials amongst the worst performer so far today every stock is in negative territory today with declines. Also keep a close eye on many of the regional banks, weakness driven in part by a narrowing of the difference between longer term and shorter term Interest Rates or a so called flattening of the yield curve banks like these tend to perform better when the rate differential is wider apart, thats worth paying attention to as the fed becomes more active trying to prop up the economy given the coronavirus concerns carl, ill send it back to you guys in your home office back to you. Good wednesday morning, everybody. Coming to you live from separate locations