Transcripts For CNBC Worldwide Exchange 20240713

Another retailer looking at bankruptcy it is tuesday, april 21. You are watching Worldwide Exchange here on cnbc good morning, good afternoon, good evening with el come from wherever in the world you may be watching. Im Brian Sullivan welcome. I hope you are having a great tuesday. The stock futures looking like it is continuing off yesterdays decline for the dow futures in the red right now indicated down about 200 points yesterday, a rough day all but two dow names were down. Each falling 6 in the red it has been the action in the Global Oil Market that has really captivated the worlds attention and the Historic Development around crude trading yesterday negative for the first time ever. Thats right the may contract which expires today. At one point, this is not a miss print, trading at negative 40 a barrel the lowest on record not only zero, it is below zero. A lot of you question why would oil or any commodity trade in the red and go inverted . That is relatively simple, when you own that contract, you are obligated to take physical delivery in mind every contract we talk about is 1,000 barrels, 42,000 barrels. The problem is that there is nowhere to put that right now. You have to take delivery. Every piece of storage right now is full. The concept is this. You would be willing to pay someone not to take the oil or not to send it to you. Selling away your obligation to the highest bidder it might be less expensive to pay somebody to shut down the well even temporarily. In some cases could damage a well and make them useless in the future that gets us to other contracts for wti. You can see the current trades on your screen june delivery, july delivery, they are at 19 plus dollars those are the real prices for oil. The real price, i understand in the futures market right now is negative showing on your screen. But the actual price of oil people are paying is about 19 for june and above that for july and august it is not a negative trade remember that futures we talk about are just a tool for investors to profit like a hedge fund or or protect against swings but that also means there is a lot of healthy speculation or unhealthy speculation. Traders dont really want 1,000 barrels of Oil Delivered to their door once the contract expires. Taking delivery like you do on an amazon package, they will basically pay anything for somebody else to take that obligation so that they dont have to figure out where to put all that oil thats how futures go negative the pain in the oil patch is not just being felt at home. We have more including why there are huge fleets of ships on their way in moments getting you caught up on your day of investing we have matt and julianna. Matt, well start with you it was a negative session across the asian space today we saw the collapse in crude oil overnight. Really weighing on sentiment declines on the record of around 2 hong kong was the weakest performer. We saw thedo down grade come through. Take a look at some of the asian oil plays. Particularly those in china down more than 2 off around 6 in the trading session. We did see the kospi still tracking down around 1 . This was on the back of the unconfirmed reports of the north Korean Leader kim jungun is gravely ill. They are saying they are not seeing anything unusual occurring and reports saying it believed as well nonetheless, we did see south Korean Defense stocks surging up by 20 or 30 . We always see these react given the issues in north korea given the proximity to south korea incredibly story out of north korea on kim jungun well have to see how that develops to julianna in europe. It is much the same story here we are seeing red across the board here every major region is trading lower. The dax is about 1. 7 lower. Similar losses for the french index. Italian and uk stocks under pressure investors no doubt reacting to that plunge in Oil Yesterday as well as a number of corporate earnings a raft of corporate earnings the message the same visibility is thin looking ahead, more companies withdrawing guidance danone one of those withdrawing guidance for 2020. Take a look at the sector split. We are seeing red across every basket of stocks the better are the most defensive sectors. Health care, retail, real estate perhaps the stand out there. Oil and gas down 3. 3 . Oil numbers are plunging on the back of that back to you. Thank you see you in a bit lets turn to news here at home House Speaker pelosi said congressional leaders have in principal made a deal for an aid package around Coronavirus Small Business relief. President trump maintaining hope for a senate vote as early as today on the more than 300 billion in additional aid on that program all of this as the president last night saying he will sign an executive order temporarily suspending all immigration into the United States citing risks around the virus and, quote, the need to protect jobs for u. S. Citizens, end quote. A formal order barring green cards could come next. Well get to rahel solomon back at hq. So yesterday, it was Neiman Marcus today, it is lord taylor looking at bankruptcy. Chapter 11 is one of the options being explored also trying to explore relief. Airlines looking to keep payroll. You can see those are down as much as 2. 5 there hertz will layoff 10,000 emploeys they had about 38,000 employees as of december 31. The majority in the u. S. Late last month, they said they were implementing furloughs across north america tough times for more americans and more American Families really, a raging debate. With the last two weeks, stocks saw a violent 25 to 30 snap back was that a sign of nearterm lows or a bounce in otherwise bear and declining market. Getting you insight into this discussion, today. Others say we are in a bear market others say no. What say you thats right. A u shape, v shape i think the most safe answer is the u shape. We know it is going to be bad. How long does it take us to get back to work i think thats why the u shape sounds like an attractive view point. If it takes longer, this volatility can last longer you have to think about the other side of that the v shape is very, very possible here. We have the mother of fiscal stimulus now coming into the economy. I have to think some of that money is coming into the stock market we are seeing shortages like we did in 2016. A short squeeze can happen here. Its very, very probable with the magnitude being so bad, ceos specifically try to create the most dire picture to create those hurdles later. It is a good chance of a vshaped recovery. What we are suffering to is, we are here, with a slow turn and a vshape is sort of a rapid bounce back with a treatment or vaccine. What does that mean for the stock market do you believe now is the time to invest or sit back and raise cash and wait . I think you should be invested here. You cant rule out that vshaped recovery the data again will keep coming in terrible. No one will debate about that. The market is a discounting mechanism that will be ahead of the data you look back to the first really bad piece of Economic Data didnt really come in until march 24 and marketed bottom on march 23 markets can bottom out as much as 24 months into the future it is hard to be an investor right now. You need to have your positions on that is really more to the upside more think it will be more to the down side but i think the buildup will be higher we showed if you miss those great days, you miss a lot of the long return. Thats why you have to hold your nose and stay invested thank you for joining us here. When we come back, there is more to do well have much more on the historic selloff on oil and why unbelievably there are millions more barrels of oil right now on the way to the United States in super tankers in the water well show you that. And the one stock billionaire mark cuban says could go up, up anupd we thank you for being up with us us. We are back in a minute. Welcome back it is 5 16 in the new york area. Your top stories the same as we had yesterday. That is oil. This is really an incredible graphic to see oil for may delivery is up 36 a barrel prices have risen overnight by 36. They are still overall negative. In other words, you have to pay someone a buck and a half rather than pay for it. Because there is no place to store it even with this oversupply, get this, there are still millions of barrels on ships headed towards the United States and other parts of the world with us on the phone, sam samir madani he has been spot on about his call on oil. We appreciate you joining us here it is a hard story for viewers to believe that there are still more ships on the sea. How severe is the problem . How many ships are we talking about . Caller good morning, brian thank you for having me on there is a lot of oil heading to the u. S. Particularly from saudi arabia they have shipped recent record amount of 50. 4 Million Barrels across 24 vessels. These are very large crude carriers, super tankers. They have been arriving as of recent during may, well see a very large boost of imports by the u. S. Because of the fact that they have announced in april, they will be delivering 600,000 barrels a day. Weve seen an average of over 1. 05 Million Barrels that means the 600,000 in april will be compensated by an even higher number than the may delivery most of these will arrive in the gulf covid and reach a refinely they own in port arthur. We have seen allocations to the loop, which is the Louisiana Oil port there are some shipments going to california, san diego and l. A. It is quite a big allocation in the u. S. , you have all this cheap oil now let me jump in here sure. It is about 5 15 here so 60. 4 Million Barrels. 50, five o. So effectively, forget about u. S. Supply. The ships currently on the oceans right now could fill over half of our spr. We showed your beautiful satellite picture of all these red dots going around basically south africa how long until this armada of oil reaches u. S. Shores . That will arrive during may all that stuff you see around africa from the east to the west north of brazil, thats all arriving throughout may. The vessel that is we out in the arabian sea, that is june delivery you have a couple that are about to finish off in april so may will see quite a lot of import of course, this will offset whatever production is out for the u. S. It seems like we might want to slow down a few things we are going back to the 2016 playbook where they naturally send off more oil to the u. S. In order to compete and undercut the local shale players . The issue is that 45 to 44 of the Refining Capacity is along the north coast. Those refineries got short side access those are further inland they cant reach those refineries they are not available they are out for the season. Storage tanks are rising quickly. The trucks, no drivers around. Everything that is coming on by sea will be preferred right now. Really an incredible story. You and i are in touch often well talk again soon, sam this is an incredible story. Thank you. Do appreciate that folks, think about what you just said youve got oil coming to houston area when there is oil in the United States that is cheap tore ship in by ship than it is to get from oklahoma to houston dow is off about 200 points. Oil still negative we are back after this announcer todays big number, 36 . Thats how much u. S. Gas prices have dropped in the last year. A gallon of s gais now 1. 81 according to triple a. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. I know that every time that i suit up, there is a chance that thats the last time. 300 miles an hour, thats where i feel normal. I might be crazy but im not stupid. Having an annuity tells me that im protected. During turbulent times, consider protected Lifetime Income from an annuity as part of your retirement plan. This can help you cover your essential monthly expenses. Learn more at protectedincome. Org. Welcome back we are watching shares of ibm. Joining many other Companies Pulling their guidance for the rest of the year saying sales fell 3 but it was mostly before the virusled shutdown of the economy. Speaking last night, new ceo says the outbreak is actually presenting ibm with certain opportunities specifically around Artificial Intelligence the 16 trillion market for productivity driven by ai as ai can infus business process and help optimize it when we look at that market, we are 4 in. This crisis is going to make the adoption of ai even faster than we could have predicted before that was the new ceo of ibm speaking last night. Disney in the dull drums why disney is straight in the eye of the storm when it comes to the financial lockdown. With so much talk about oil tanks filling up, could it be ll they are already full weget an insiders take on just that. Next ever since weve gone mobile on the now platform, somethings gotten into the office. I hear you. Feels like theres no barriers between departments now. Servicenow. The smarter way to workflow. Oil soaring 44 a barrel but still negative an insiders take on what is going on right now in crude and whether or not the markets are broken leaders on the aid package as Business Owners are voizing frustration getting access to that money the Magic Kingdom losing a lot of sparkle well speak to an analyst about exactly how much trouble the Magic Kingdom may be in. It is tuesday, april 21. You are watching Worldwide Exchange on cnbc. Welcome back. I am Brian Sullivan. Thank you for starting your tuesday with us. Lets get to how your money and investments look coming off of yesterdays nearly 600point drop for the dow futures not looking any brighter today. A drop of about 200 points premarket bond yields about 3. 6 but they have been relatively steady. Getting to oil more on the markets throughout the day. Lets hit the topic that really captivated us yesterday. That is the Historic Developments around crude oil. If you are not paying attention yesterday, crude oil traded in negative territory for the first time ever. What does that mean . It means that the contract for may delivery which expires today and onepoint trading as low as minus 40. 32 a barrel. The lowest on record many of you had a simple question why would any commodity like Oil Trade Negative it is relatively simple. If you own the oil contract that expires today and you are sitting on that when it expires, you are obligated to take that physical delivery of that oil. Each of the contracts with he show you on the screen is actually 1,000 barrels of oil. The problem is where are you going to put 1,000 barrels of oil . 42,000 gallons when any piece of storage anywhere in the United States is full so you are willing it pay not to take it. Taking away your obligation not to take it to oil producers, they usually use this to health their positions. Why dont they shut down a well . In some cases, shutting down a well can be more expensive than a negative contractor you could actually damage certain types of wells for longer term production that gets us to other futures contracts. The one that went negative was the may contract to take oil in may. Ill show you prices on the screen for june, july and august they are higher. Not high june is back above 20 consider this, folks, to be the real prize of oil. Certainly what happened in the market was a real event. The actual price of oil are those june and july contracts. As of about 2 30 today, the price of oil will go from negative a dollar to 20 just like that. Well get more of the insiders take lets get a check on the global markets. Matt, well begin with you thank you for that, brian we did see a weaker session across asia. Trading down around 2 on the back of that historic selloff we did see for wti we woke up shocked to see where the oil price were sitting this morning. A number of the big oil players across asia seeing significant declines particularly in australia. Oil was off about 6 we did see some names weaker in the order of 2 to 3 . We did hear from city state extending social distancing restrictions there to 14 days. That country downgraded. South korea, we did see a big move the kospi moving lower but it managed to close off a lower session. On the back of an unconfirmed report that north Korean Leader kim jungun is gravely ill saying that skeptical report saying there is no evidence of anything unusual we did see south Korean Defense stocks rally any time there is any geopolitical concern about north korea, we see a lot of money flow into north Korean Defense stocks now to early trade in europe with julianna. Good morning. That weak momentum that matt described has filtered over to europe where stocks are coming under pressure coming into today, the european markets had rallied in eight of the last nine sessions today, investors are taking profits on some of those we are siege every major region and every sector coming under pressure the energy story, no doubt, taking top focus as they assess what the route of Oil Yesterday in the may contract means moving forward. We heard from a number of Companies Reporting their earnings the overall message is that nearterm earnings are dismal. Looking ahead, companies are trying to give signs of hope of what is to come. One of the Key Highlights this morning, danone withdrew their guidance for 2020. Looking ahead for european investors we are keeping an eye on thursday. European Council Meeting where well see if they can come to any further agreement on additional policy support. Back to you. Thank you very much lets get to washington wareHouse Speaker pelosi saying congressional leaders have agreed to most details of the next wave of coronavirus relief. President trump hoping for a senate vote as early as today for 300 billion additional aid. Kate rogers with more. Good morning. We are hearing from Small Business owners still in limbo over their ppe funding we are really frustrated to hear that Big Companies like ruths chris and shake shack had been able to access funds shake shake said it will return its 10 billion. Saying that money will go back but loans cant be made against that until more money is made available. Data showing that 75 of loans were in sectors of 150,000. Industrials receiving the most were in manufacturing, professional services and construction highest loan count to Small Business ratio north dakota, nebraska and south dakota. New data showing 25 of Small Businesses got ppp funding but nearly 80 are unclear where they stand almost 25 think it will not be until 2022 or later before the economy returns to normal. Advocates are calling for at least 220 billion to be allocated to the smallest businesses with 20 or fewer employees because of the way the fund played out the first time this story for the stock market and for business. The stock market is not going to go up until business goes up Small Business is the new wall street you talk to Small Businesses all day long what are you hearing how are people doing are they able to get the money and are they able to survive without the money . Certainly not able to survive without the money. Particularly in the restaurant space. They specifically only have about 15 or 16 days of working capital. We know money needs to get into their hands quickly. It is split. We have heard from Small Business owners that applied right away a lot had good relationships and did get their loans funded a few worked with bigger banks the vast majority of businesses im still waiting to hear from waiting for bank of america customers and some working with santandar and havent heard of their loans being processed. They just got a letter saying funds ran out. We featured a gym owner who said i have to tell my landlord i cant pay mays rent he is even considering working at at amazom while he waits a lot of people frustrated and scared right you cant do it when the cash flow goes to zero. Thank you, kate. Back to the story that captivated the u. S. And the world yesterday. That is Oil Prices Going negative the may contract which expires today closing at a stunning negative 37. 63 per barrel. Getting to more insight and where we may go to Kate Richards kate, you live and work in oklahoma the contract we are talking about is northeast of Oklahoma City thats what we are talking about. Is all the storage in kushing and other parts of texas and oklahoma, is it now pretty much full all right, well get kate richard back on. Maybe well give her a call. Well take a short break and get some of these technical things worked out and talk about this Incredible Oil price this may be the most incredible graphic you see in a long time the price up somewhere around 36 a barrel talk about one stock mark cuban really likes right now stick around dad, im scared. Its only human to care for those we love. And also help light their way. Its why last year chevron invested over 10 billion to bring affordable, reliable, ever cleaner energy to america. Ever somethings gone mogotten into the office. M, i hear you. Feels like theres no barriers between departments now. Servicenow. The smarter way to workflow. That insiders take on what is going on. Kate, we got you on the cnbc news line. What exact liqueurly occurred y. How in the world can prices go to negative 40 a barrel hi, good morning. So storage isgetting increasingly full. The important thing when we talk about crude prices is that each is a crude contract. Telling investors what will happen over the next two months basically the role from the may contract to the june contract, which occurs today this is the day when the market syncs up with the paper market due to the massive supply demand imbalances storage is getting full. We see that in kushing, oklahoma where there is some of the largest Storage Capacity in the United States filling up the relineries that have already come to us and said, cut back by 25 . We cant take the production the second reason is because refineries were running in march 10 to 15 demand when you do reference checks with some of the largest gas station owners, what we saw in texas in march is demand was down 45 to 50 for gasoline and diesel the actual physical market was devastating for the demand happening so quickly in march. So refineries, even the worst estimates were off it is important to note, it got a lot of headlines the main contract and the one steal negative now traded a long time over a year. The majorities were not for negative oil i would imagine it was a tiny percentage that did that on the margin what is the actual price of a barrel of oil right now . Just to give you some context, the negative trading or the contract that traded negative, which is the may contract was 7 of volumes yesterday. The volumes were 60 less. What happened yesterday is sensational, historic and got everyones attention around the world. It wasnt a real market in the sense that this contract traded for five years all that happened yesterday was long lost of the contract that had not yet closed out, closed out. The reason it traded negative is because of players that traded long and those left to close out were willing to pay rather than to be paid and not physically receive crude next month thats what happened it really isnt as well. What is very, very important for all players. The rest of the forward contracts for 2020 probably the first or second half of 2021 are still too high. We went into yesterday with the average 2020 contract for the remaining months of 2020 with 30 oil. That is too high when you have the level of demand and level of oversupply and level of daily inventory builds around the world right now. One thing weve been telegraphing to investors is that oil prices are too high and they need to fall. They might fall look at june at 15. 18. Kate, we appreciate it really fascinating insight into the world of oil kate Richard Keith richard, you name it ill never live that one down. It is early and we are working from home. Ubs downgrading disney saying the company, quote, is in the eye of the storm lets welcome john i would imagine whatever interest they are seeing on disney plus it is in no way going to balance out that disney world and land are shut down you are correct disney plus is doing better than we thought but the company is seeing pressure across all other segments most notably at the parks which were closed in march and we expect to be closed for quite a while. Do we have no idea how long quite a while is no. We dont actually. In our note, we had assumed previously june 1 would be the open when they closed in march with this note, we pushed it back to january 1. We made a number of other changes. When they open, we have the parks operating at much less than full capacity First Six Months at 50 capacity and next six months at 75 capacity now that company has furloughed so many workers, it has cut losses dramatically. When it opens, our estimate suggest at 50 , they still lose money. What really matters is when the economy gets going and people start traveling again, we get parks back to 75 , 80 full. Thats the problem. We have no idea what people will do they could open the doors back there are disney fanatics out there, maybe it is 95 full because people dont care or maybe it is 10 full for three months because people are terrified. It is hard to guess. Thats right. A lot depends on the issues around the virus and what is going on from the health care standpoint with he do a lot of work with the Health Care Team at ubs. You are right, we just dont know a lot of these states are starting to open their economies. Florida, where disney world is is one of them, which opened the beaches recently california may be slower we have to take all of this into account. At the end of the day, it is not just when they open but how they open and the additional cost and when are those crowds going to show up . Thats the ultimate question. I dont envy your job right now. With ubs downgrading disney. Thank you for joining us here. On deck, another volatile day of trading taking shape moodys analyst laying out economic head wis mendso investors may not still understand hell join us next welcome back mark, well jump back into it. We are starting to see trickles, parts of economies slowly start to reopen. About onethird of gdp is there any way to determine right now how much of a hit we are going to take in the United States this year for the year . Our estimate is gdp will be down around 6 . The peak was q4 2019 the bottom will be this quarter, down 10 the peak to trough decline happened about a decade ago, we were down about 4 that gives you a sense of how significant this is. Equally significant, mark, is the debate about what letter of the alphabet this recovery will look like. An l, u, w i wonder how many people will go back to work and when . It is not a v people arent going to travel, businesses arent going to allow businesses to travel or invest Business Trade will be disrupted or impaired. We are going to see with these business shutdowns a lot of failures. So even when people can come back, there will be a lot fewer businesses for people to come back to. Getting a lot of stimulus and lawmakers. Feds doing their job and cushioning the blow to get back on track it will be a long time, i mean years before we are backed into anything we could consider to be good or normal it really is an unbelievable time basically saying it is time to build. We have underbuilt we dont have enough homes, the president has talked about a 2 trillion package weve been talking about that for years. Will building come back. Physically constructing things new deals. Things like that help salvage some of the damage sure. Even in a lot of states. That is no reason why we cant use the package to help stimulate the economy when businesses do reopen if im right and businesses struggle more than a year, that would be perfect for the package that would sort of roll off during that period. We appreciate that. See you soon cocacola withdrawing guidance we saw ibm withdraw. Companies simply with no visibility well get more on oil, ibm we have more when cnbc continues after this stocks looking to add to yesterdays losses crude bouncing back some what. Just moving into june. That may contract, crazy historic slide into negative teg torry. President trump says hes suspending immigration more live report from d. C. Straight ahead plus reports from cocacola and travelers. Tuesday, april 21. Squawk box begins right now. Good morning im becky quick with joe kernen and Andrew Ross Sorkin this is squawk box. We have been watching the markets. After yesterdays big decline of