Transcripts For CNBC Squawk On The Street 20240713

Restrictions, giving us clues as to how consumers may react durables down 14 june wti holding at 17 as energy is the only positive sector for the week a lot of discussion about 2,800, are we range bound where is the ceiling now markets giving all kinds of important clues. A lot of analysts, we follow them for a long time they wait and wait until theres a moment where they can go negative theres enough companies that have done well, i have every piece of research in front of me i dont have an upgrade. I have downgrade, downgrade, downgrade. Because the stocks have run, it gives these analysts a chance to say, uh, im so lucky. It went from 29,000 down to 18 it bounced back, and now i can get off and not look bad and thats the whole tone of this morning i find it curious. I think that in general the companies have done a pretty good job just they like to pull their forecast because who the heck knows. If dr. Gottlieb doesnt know what will happen, why should he expect these guys to know what will happen. Those who expect companies to pull guidance, i think thats a silly exercise gets you no where. Yeah. We do have the two upgrades that i saw were ebay and peloton. We will exercise in our basements. Theres a long wait for peloton. Ebay, that is an interesting piece. Its basically saying traditional retail, something david thought about it being laid to waste, so therefore, ebay, there was one for etsy, too. I have another one, traditional retail, no good. Et etsy, look at this, traditional retail, no good. Way fair we ought to do a squawk on the street dotcom, we can sell old clothes, we can do garage sales and well be recommended by these analysts yeah. Etsy is doing a big business on face masks ebay will have the new ceo taking over on monday. Wednesday they report earnings at ebay. It has had a resurgence given Current Conditions as we know, guys, old retail continues to be in very deep trouble. Its no surprise what we hear from jcpenney. Even in a normal environment we might not have been surprised to see the Company Preparing perhaps for the likes of bankruptcy its not alone in this given how difficult it is given how many retail establish the ments are e to do anything since they are closed one thing we have to think about with jcpenney is not the stock or bonds but the people who work there what will happen to them theres 43 Million People who work in retail restaurants what happens to those people they get unemployment claims su have be you have been a salesperson at jcpenney, what is your next move i dont know when we had a great economy, the answer is you make some calls. You go to craigslist now, i dont know what happens to someone laid off. David, theres a note today about ralph lauren, and whether people have changed tastes almost as if since this virus started that people dont even wear they dont wear ties when they go to work ralph lauren ties. Right theyre closed . Sorry. It is friday. You wear expensive shoes. Its not saturday, david. Its friday its casual friday no, im wearing shoes. I feel like you need shoes to have the feeling that you are at work im not in slippers or socks i am tieless today were all making decisions here, im with you even when we are fully back at the New York Stock Exchange on friday, i will be without a tie on friday. Im sorry. Do you think well ever go back yeah. You think, carl yes good. I miss it so much. I just miss it i miss the camaraderie we all do its its really beginning to wear, i think, on us emotionally. The way the three of us react to each other its got to get repaired, which, jim, is why this georgia experiment is so important elerian on squawk this morning saying well learn a lot in the next few days about how safe people feel i want to clarify for the confusion that i created, i wanted to see what happens in georgia, okay . Because i want to see. Its an experiment i wouldnt have done it with tattoo parlors or gyms you sweat and stuff. I do want to see what happens and i wouldnt approach it the way he is. The president i think first encouraged and then didnt i think all of us are thinking is there any hope here that we can return to something normal maybe hes been premature, but i think a lot of us just want to go to the store and, you know, kind of go to the store. Yeah. What is that . Used to go to the store all the time until the checker got covid, now im scared to go to the store. I know. I never went to the store, but im with you guys. Everybody wants to get back to work as quickly as possible. You know, it is that balance that is so difficult to determine at this point in terms of opening the economy and keeping the virus at bay, and or opening the economy and taking what comes because frankly the human suffering that will occur as a result of keeping this economy closed for a longer period of time will be greater than the suffering that occurs if, in fact, its not open at the same time, jim and carl, the question becomes what will Human Behavior be . Will people be willing to return to the activities they had previous to when covid was with us that remains unclear as i know you believe as well, perhaps, jim, true behavior will not return to what it was until there was a vaccine, which could be many months right maybe years how many restaurants can take half the tables out and still make money regardless how much the government gives its not going to happen thats a way of life now, yum brands, theres a positive stimulating return to growth ubs note. But thats the flip side of what happens to the regular restaurants. I had rich alison on last night from dominos he talked about he never wanted it to happen, but basically the destruction of regular pizza parlors, where we sit down and have a pizza, they cant compete because they cant have the number of tables physical distancing is in many ways the death nail of restaurants the way the malls problems are the death nail of retail this wasnt supposed to happen its just going to accelerate. Its bad we should take a listen to what rich told you last night on mad money about some of the logistical changes dominos has made in the wake of the pandemic weve taken 60 years worth of Standard Operating Procedures and rewritten most of them in six weeks. Contactless delivery is a big part of that the pizza pedestal is an innovation our team came up so when we bring you your food, we dont have to sit it on the ground or unclean surfaces we it put it on top of a recyclable pizza pedestal so you can take your food in a contactless way. You cant beat that i put boxes out for a full day i dont know who touched them, whatever dominos i have total faith, this is in their dna. The pizza pedestal is good i feel like i can bring it into my house, its not going to cause pandemonium. Thats why dpz is doing so well. Since april began, the numbers are good the stock sold off yesterday, but thats because its been up a lot. Dominos has figured out a way to make it so you dont have to have a pizza wait on your doorstep for 24 hours, which is not a great way to eat pizza kind of reminds me of World Wrestling david, wwe is up this morning on 60 jump in sales, but their ceo says it will take several years for live attendance to return to pre covid levels and needam saying companies are calling wwe for best practices on talent safety protocols these guys have been two to three live shows per week for years, and they have figured out in some ways how to keep their people safe. Chipotle sure has chipotle had that problem with airborne food, and they created another way to deal with how their people interact with customers, interact with food. And it happens to be the perfect way for the era of covid thats one of the reasons why theyre doing so incredibly well i think the stock can go to 1,000. They have it so again im thinking about places where if i go to them, im not worried, versus a lot of other places where i go to them and i feel like im injecting risk. So i think were in this era of whats risky and whats not. A lot of these things are what you never thought was risky before a lot of the companies that are small and mediumsized business they require crowds to do well the antithesis of what we can have right now is a crowd. Think of that, that place is crowded. That place is crowded. As soon as you hear its crowded, you cant go there. This is incredible its the inverse of what retail is about the inverse of what a restaurant is about its a terrible time thats true at the same time, jim, its interesting listening to mr. Allison at dominos and thinking about the amount of innovation that is going to take place at companies that are quickly adapting to what they believe will be the new behaviors adapted by the general population business will lead here. Unfortunately perhaps not small and mediumsized yet, though in certain areas they might be able to innovation is taking place it may result in lower Profit Margins for some period of time for all the Things Companies need to do, but theyll do them and they are beginning to already attack these problems as they perceive the world is what it will be like for a long period of time you are so right. But i know we have to go, but the airlines have not done a thing. Theyve not done anything. Everybody has to adapt i want to go on a think of something, gary kelly, dont just stand there and take it and as cowen says, its not just the airlines, its the airports people need to feel safe before they ever get to the gate and get on the airlines. Guys, well take a break covid distributors, theyre called airports. Well get to verizon, amex, capital one, google, boeing and more when we get back. The president talked about georgias reopening yesterday at the briefing take a listen. I know a lot about economists, the answer is they have no idea i think i have as good an idea as anybody i think our economy will start to pick up substantially as soon as the states get open thats happening as we speak, its actually very exciting. People are just just thrilled to see it. Our country has to get back to work they want to get back to work. You see that, whether its a demonstration or just in talking to people. They will go to get back to work and theyll get back to work very fast. Well talk to the head of equinox later on this morning, jim, who is not opening. We talked to another Restaurant Owner yesterday who is not opening in georgia so, its going to be up to the individual owners. I wonder what you would do right now if cuomo relaxed restrictions what would you do with your two restaurants . Were keeping both well keep both open the more expensive one in red hook, were not sure what the plan is yet. Ill try to have a big Cinco De Mayo at bar san miguel with margarita boxes out front. Well try to do a lot of takeout. We hope it can cover our costs i did not get a ppp loan, applied for it i dont want one now, people say oh, you applied for it im committed to reopening but the answer is no im worried about droplets, people not Wearing Masks everyone should have to wear a mask not for themselves but because of others. Until everybody has a protocol which does the best, we pull out the tables, i dont know how you do it. Well lose money i can guarantee that i also know that we believe there will be a vaccine within a year and a half. We want to be the restaurants that survive through that period i know thats a longerterm period than wall street. When youre running a restaurant, its six years for bar san miguel, i want to be the only place open on that block a year and a half from now ppp loan, yes, if i got it without it, i dont care i think you have to say im here to win, ill sacrifice 18 months if i can get through it. Thats what you have to do its too dangerous even this week, after roche, there was a Boston Consulting Group guest on squawk today saying vaccines are a fiveyear process, you do not believe that i dont i think j j is shortening that time i dont know exactly what were going to get from pfizer, but pfizers very much involved. Moderna started human trials the fastest ever was ebola, five years. But these companies who would have thought we would have an atomic bomb in the time we did who would have thought we cured peel polio in the time we did nobody im taking the other side of the trade, i think betting against alex gorsky now is a big mistake. Theyre building plants to be able to have billions of doses why would you spend 2 250 millin building plants if you had to wait five years . Maybe every one of those maybe pfizer are just idiots, j j is a fool. Im not betting against american science. Its been a suckers bet the chinese want to bet against us, fine im a believer that a year and a half from now well have something that makes it so you want to go to bar san miguel and go inside and have, okay, not a kron corona but a modello its inconceivable to imagine well be on lockdown for 18 months, two years, or some parts of the population are, which is why its so interesting and important to watch what happens in these states that do begin to open what the behaviors are of people and the willingness to go out and start to engage in Economic Activity which were sorely missing. See what theyre willing to do we come back to this time and again, jim there is certainly a greater hope that we will have antivirals available, not just the remdesivir, which remains very much uncertain in terms of whether its effective, but much earlier in chorus, something that would equate to taking tamiflu to make your symptoms of the flu so much easier to deal with yes then the question will become will people be willing to feel like, okay, im all right to go out. At the same time, the 21 rate that was cited by Governor Cuomo in new york yesterday in term the terms of people who have been exposed to the virus, thats seen as a positive thing, its not near herd immunity, its getting closer to it the virus will continue to mutate to a certain extent, but some believe it will become less harmful. Theres a number of avenues you can go down to feel positive coming back to the overall theme, guys, we know so little antibodies, can you get it again . Fall really bad. I have to tell you, theres going to be a class of people who feel more immune now than the rest of us if you get that antibody, you might risk going out to a restaurant ill go anywhere. Anywhere you guys want to go wherever all right well have Hans Vestberg joining us litteater verizon reported earnings today. It did change and lower guidance for the year as a result of the Current Crisis Hans Vestberg is on the companys Conference Call now. He will join us in the second half of squawk on the street. We have mo cinba aer thworked lft so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. Markets trying to string together a few days of gains as data comes in from german business confidence, uk Business Sales were weak. Durable sales rewe weak, university of michigan at the top of the hour. Dont go anywhere. First up is this exquisite bowl of french onion dip. Im going to start the bidding at 5. Thank you, sir. Looking for 6. 6 over there do i hear 7 . 7 in the front 7 going once. Going twice. Sold to the onion lover in the front row next up is lot number 17, a spinach and artichoke dip, beautifully set in a hollowedout loaf of sourdough bread. Dont get mad get e trade and get more than just trading investing. Banking. Guidance. Welcome back to squawk on the street. Time for a mad dash. We will take you to the opening bell all right. Heres a hint. It has a 1 1. 2 trillion market value, the stock is down 6. 4 for the year over to you, jim david, one thing ive always loved about doing the mad dash is pretty much every quarter i talk about katie, my favorite analyst on apple shes at morgan stanley, she has a good point here. She goes its set up well. Apple is set up well what is she talking about . New product cycle, multiple 5g launches coming. Shell talk about she says something that people have to recognize. Apple can put a mid to high single digit Dividend Increase the companies that have been doing Dividend Increases are suddenly getting a lot more pe multiple juice than ones that cant. So i think thats going to factor in. Apple has a giant cash hoard apple has been cut number, cut number, cut number for ages from analysts i like this call i think katie will be very right. Its credit quality is better than that of the u. S. Government at this point. Yeah. Someone asked me the other day, why do you like j j so much . Name me somebody else that is aaa besides batteries. These companies are able to have a lot of cash on hand and generate a lot of cash and are a continued focus given the difficult times were in and that are coming still. We talked a lot about the companies that have been able to sure up Balance Sheets, however they can have done it. Apple did not have to worry about that going into the crisis theyre not pulling down any revolver these companies that pull down a revolver and cut their dividend. Like kohls. I never took you to kohls shopping no. I probably never will yeah. That gets back to the conversation we were having towards the top of the show with retail its not just jcpenney or Neiman Marcus or macys, lazard has a lot of real estate there the gap saying its current cash position may not be enough its a general issue throughout. Yeah. Liquidity, liquidity, liquidity versus apple, the most liquid company on earth yeah. I see constellation got some new financing, caterpillar in a new revol revolver then the loss provisions over at amex, 2. 6 billion, puts to shame the 800 million of a year ago. Yeah. It puts in perspective the stress that people are going to be under and expectations in terms of their ability to pay their bills, doesnt it . By the way, verizon again, we will talk to Hans Vestberg, taking a larger provision for bad accounts thats the world were going to be in. Have how many Million People 26 Million People without a job at this point . Obviously the benefits are okay right now. But the concern is that they are not going to be able to continue to pay their bills, important bills they may be, whether credit card or wireless phone. David, ill tell you something that i think will be frightening for this country theres become a notion of voluntary pay. Ive been reading about how most people dont think that tenants will pay in may. Dont pay in may, go away . Theyre just not going to pay. Nobody will kick them out. Thats not the typical american way, dont pay your rent im hearing about it from many reits, Real Estate Investment trusts, my tenant is not paying. This is not way its been before maybe in the 30s. Thats the second order effects well probably talk about in late summer or early fall at the big board, the nyse assistant chief electrician. At the nasdaq, draftkings, which begins trading on the nasdaq today. We didnt really talk about the draft last night, given the pressures, the issues facing the entire planet. It will be a clue as to how we adapt and try to get back some things that we seem to have lost its almost like, boy, the commercial the advertisers knew it. Yum brands piece today, yum was well represented i think that there was an electricity about having something live and then the second is the Michael Jordan this weekend. We crave sports in this country, you put the game on when you go home and thats gone from the times radio has started, you put the game on if we showed the wall, the green wall, people who are tuning in to us before that never tuned in before, they will say what an unreal world wall street has do they not know people are suffering . These are companies that are big and are not nearly suffering as much as the store you have to try to do business with down the block if its open these companies are winners, they got to be public. The small and mediumsized businesses are not on that wall. Were not trading the pizza parlor were trading Dominos Pizza i want people to think, dont equate that. Were not heartless. These are the winners for heavens sake. I think viewers get that. I think they understand ive been on zoom, im ordering from amazon im using my ipad. I. T. , communication services, health care, people are being reminded daily what a huge portion of the s p those sectors are. Youre right. One thing we dont talk enough about and you have kids going to school, that whole world of school can i just say these teachers are heroes no teacher signed up to run a zoom class who these teachers are incredible they have had the pivot entirely with why they got into their profession congratulations teachers for figuring out how to run a zoom class. Unbelievable whats going on improvisation in this country is terrific we dont talk about it because, well, were so depressed about Everything Else, i guess yeah. No, there is there is a lot going on still that were able to do. Hard to imagine what it would have been like five years ago, ten years ago. What would they be doing . How would you teach people ten years ago . I dont know, jim i dont know its far for ideal, for the students and teachers. Everybody would much rather have their kids back in the classr m classroom. Its an issue we talked about. It has a lot to do with the overall economiment once you open up the schools again, other things come along with that. By the way, i focus on the University System in this country, by far the finest in the world, whether or not universities will be able to open up in the fall, the pressure theyre going to be under, yet another constituency thats seeing significant reduction in revenues as a result of no summer sessions, foreign students usually full payers not being able to attend. Chinese so many students will want to take gap years because they dont want to begin a freshman year remotely. That becomes an issue. The hospital system, getting that restarted with so many hospitals sitting somewhat empty and not taking elective surgeries now. So many parts of our economy need to get back online, but how were going to do it remains very much unclear. Going to red shirt your son because hes not going to be up there. Everybody is red shirting. Who knows i dont know everybody will be red shirted. Thats interesting. Back to sports, we had greg on yesterday from liberty media, they own the atlanta braves. Baseball should be going on. Usually in the background, but its nice to have the game on. Will they really be able to have a season it still remains unclear the commissioner may have some sort of a plan arizona doesnt seem to be it or particularly likely after listening to him you know, so many of these different sports that were waiting on including, of course, football, your first love, jim, whether or not those players that we watch get drafted last night will be able to take the field in the fall. Its just look, i dont want to get myself down. I think a lot of people are trying to rally and find ways to be able to have a zoom how many zoom cocktail parties are you invited to this weekend . Yes theres a bunch. I love the onion headline saying the browns drafted first just out of habit a lot of good stuff going on in sports its been a crazy, crazy week for commodities. This morning jeff curry has a note out one line is we entered the inflection phase where rebalancing has started. Could take four to eight weeks, they think, but given the nascent recoveries in europe, does that make sense at least . For ag, they see the window longer but for oil, thats it rusty braziel said how you can get to minus 37, but i think there will be rebalancing. Notice freeport cut its production for copper. Ive been waiting to see someone cut back as Companies Cut back, at least we have some support for commodity pricing and we would be less worried about deflation, which is something im worried about. We have pumped so much money, prices are still coming down its amazing you know, thats interesting that you say deflation if you read the elliott note, if you got through it from last week without wanting to just, well, you know, not be around anymore, they still are concerned that currencies and inflation could come at any moment, and people could lose confidence not so much about deflation. In germany it was deflation, deflation, deflation, then one day it was hyper inflation i understand the elliott model im shocked to see that the Commodity Companies just kept pumping and pumping. Maybe they finally realized we wont get a v, maybe they didnt think there would be anything its nice to see them adjust to the new world. A lot of companies are trying to hold on to the old world bad model. I see whiting has some is on the tape now talking about exiting chapter 11 in five months so were already getting some of those headlines crossing jim, the other thing is guidance and the small sample of mostly Chip Companies that are, in fact, giving you at least a broad range. Texan, seagate, now intel who well talk to later on this morning. Talk to bob swann about the fact that it was positive on the data center. It was positive on the pc. Mobile why not i happen to like bob very much he managed to turn the call into a call that made people want to sell i would sometimes like to be a call like with target yesterday, i would have liked to have spun that differently the fact is that intel is doing very well. When you see what lisa has to say, lisa sue will say listen, we have more competitive product, more product people want that stock will go up. If amd goes down on intel, thats the time to buy amd bob didnt handle that call right. Hes such a good guy but he made it sound like theres something wrong at intel. And there really isnt its doing very well thats thats kind of like what you said about cornell and target yesterday oh, geez. I wanted to give him i happen to like him very much. Here you have a model up 275 in digital. You figure out how to sell it. Hes killing it in his neighborhoods. Doing such a great job somehow the narrative came out hes under margin pressure that was such a buy. Buy . Im screaming at the set buy, buy, buy the way people are selling target, the next destination is 110. Even the ceos are like, oh, you know, i dont know yeah yeah i dont know tshirts i dont know you know, chips. These guys, look, i want to go in there and give them a shot of b12 or something hey, how are we doing . Not as good as selling lays potato chips its not easy, man its not easy conducting a Conference Call from your house, your basement. But you have to pretend youre coming through the tunnel there is not you have to cleaning the toilets every other day. Who wants to be doing that stuff . Well, i not me. I dont know. But you have to be more jacked you come on these calls and youre not jacked. Its like this is the nfl, for heavens sake. Dont come on and make me feel that youre doing badly. Show some enthusiasm for heavens sake. This is your moment. You only have four games a year. We got the nasdaq comp only down 5. 1 for the year it has been led, you mentioned apple and katie, alphabet, amazon, netflix certainly, good old f. A. N. G. This morning i notice some weakness in alphabet and facebook we talked oftentimes about the reliance that they have on small and mediumsized businesses amongst their advertisers, large corporations as well and whether they will see a significant deterioration in the ability of those customers to spend that said, jim, i dont know if you have run into this, the google decision to stop hiring and start cutting expenses, theres at least a cohort of investors there who are like what are the real margins at the search business . We may see what they really are. This could be even more profitable than we ever thought. For the first time weregoing to cut even during the financial crisis, google was hiring this is unusual. I thought this was so great when you go to a google facility, i mean, its kind of like, wow, i always wanted to belong to a nice country club. I cant believe the amenities. Google, its time for google to act like all the other companies. And be a little more spartan i think googles a fantastic thing. My travel trust owns it, its a huge win i love ruth porat, the cfo it would be great to see what its like if you cut a few expenses you dont have to live like a king at a company. Facebook, by the way, up huge off the india buy. You didnt even mention that no. I didnt mention that. What got lost in the news this week, david, regarding alphabet is this blog in which advertisers are going to have to start to disclose a lot of information about themselves in order to place an ad and that information will be visible to people on the site. Youll see an ad, you will be like who are those guys . That was a big change in the disclosure that google will be making yeah. A lot more transparency. Im glad you mentioned that. So many stories and things we would have spent time focusing on in terms of importance, going through the week here, you barely get to them thats an important change for them it will be interesting to see what the response is both from the advertisers and the people using the service. David, do you think that google is going to bid for sunday night football . I dont know, jim i think, you know, there had been belief that abc, part of disney, would be involved there. We were very focused on the nfl rights prior to the crisis because of the likes of viacom, have the financial wherewithal what about fox so many different questions there. I dont know whether or not they actually would step up for it. The feeling had been prior to this, that probably not. Yeah. Thats been my experience. Yeah. Its difficult to say. At this point, obviously we watched the draft last night you know, they have not moved forward with those negotiations. I know that there had been hope in some parts, certainly at viacom to get them done as quickly as possible, trying to put that question aside for them and say, hey, we got it done look at that david, you know how long its been since you mentioned viacom . You put the kibosh on it at 30 thats not a 2 for 1 split, david. You back that by the way, thats in the Oxford English dictionary, bakish is that yeah. Theres a good chart like when you come off k2 the wrong way. Its bounced well off the bottom yeah. Yeah super, dave. Super. I daved you. I have not daved you in ages you have not daved me in a while. Super dave, remember that guy . Yeah super dave osborne, the best . Are you kidding me that was great jim yeah. We have not touched on boeing bloomberg saying theyre pacing for layoffs next week, cutting 787 production the journal today that the virus is delaying the approval process for the max. David port nnoy, noted analyt says he wants to punch boeing in the face david portnoy, you dont know him . Punch boeing in the face . If it were a person like boeings a tough stock to own, i think thats what he you dont know his work . Hes an intelligent investor, buffett accolite. Hes the guy who rated your pizza. You got a high rating. Thats why were staying in business were going to be a parlor thats nice to laugh. Well talk to Hans Vestberg after this break verizon reporting earnings this morning, did lower its guidance. Lets hear what mr. Vestberg has to say not just about guidance and the virus, but the new normal were back after this. Derek, seems like your team is operating just fine remotely. Yeah, everything is running smoothly with the now platform. bling see, incident resolved. How did you. Gotta enjoy the small wins. You keep being you, derek. Keep being you. Jim, well shuffle some things around here as we wait for Hans Vestberg. Lets see whats on mad tonight first. One of the most talked about stocks is nordic tanker, and impossible foods beyond meat up 30 straight points theyre reporting next week. The food chain in our company is being destroyed except when it comes to plants. There you go something that is doing well in this country, plants dave thats a good one food supply is a good one. Well see you soon, jim. Well talk to Hans Vestberg of verizon on the earnings and guidance in a w mes. Femont 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. It didnt take us long to realize. We werent in the car business. At lexus, we were in the people business. We needed to be helpful. Respectful. And compassionate. To treat people like guests. Its what we all signed up for. And now when people need this most, we will do what weve always done. Take care of people first. The rest will follow. 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. We mentioned zoom video a few moments ago. Its going to join the nasdaq 100. Mike it bigger than micron and csx. Put it in the top third of the index. A while ago it would have been in the bottom fifth. 300 million customers maybe some upset because of the encryption problems. They have chinese servers. The man who runs the company as if its his own company. I invited him to our boozy brunch last sunday it was meant to be not ak accepted he said your, ill come. I love zoom. I love what hes doing hes enabling schools to be schools. Got to hand it to the guy. Good prices, too for those who want to look way ahead and look at what happens to the stock if a vaccine shows promise. The thesis is were not going to roll back entirely the progress of this company. People hate commuting there are kids who cant go to school at the same time as others it becomes to me necessity david . Actually, a good place to discuss verizon. Given everybody working remotely and using, of course, their Internet Connections broad band and their wireless phones. Lets bring in hans vesberg who has been here over the past few tough weeks. Were happy to have you back after the Company Reported the earnings i want to start off with your outlook and guidance its something ive asked you about in the previous conversations weve had. Youre finally able to share it. You did lower your expected adjusted eps growth to what could be negative 2 to as much as 2 . You noted significant head winds through 2020 give us specifics to what the specific head winds verizon is facing are first, a solid quarter given the covid19 rather gross earnings of 5 which included also a big increase over bad debt it was a good quarter. When we look into the Second Quarter, we actually framed up the last four weeks, whats happened of course, there are some things inflected by yourself. We had to keep america connected meaning were not disconnecting and the customer that has impacted by the covid19, if theyre consumers or s and bes, and that means well have customers in this moment who are not able to pay. Were not disconnecting them its impacting roaming charges, of course, went down theres nobody traveling and we also have a lower hand set or hardware distance at that moment because our customers are buying less hardware. That is making an impact in the Second Quarter right now what were encouraged is with the last week were seeing a good payment structure from our customers. Thats improved. We saw it coming down into the beginning of the pandemic and now we see a little bit better payment from those customers impacted by covid19 but its a bit early to say. We wanted to continue our guidance to as a transparency to our shareholders in a time where theres so much uncertainty. We moved down a little bit on our ets guidance but with a lot of right and you said on the call as well, that youll know more as we all will over the next 90 days and be able to report back at your next quarter in terms of the health of your Customer Base and how many are actually able to pay their bills youre hoping i guess we get clarity in the next 90 days . Yes absolutely we will know more the next 90 days at the same time we have a service that is so important for this contract. A moment for all our customers they are relying, having broad band work from home or education from home or connecting in different ways so longterm, we take the right position to affirm it might be painful, but longterm, well come stronger out from this, and i think the customers are feeling that when were working with them. Were going to know more about that Going Forward, but i think at verizon were coming out stronger from this right you did increase your capex. You said you felt it was a good time to have a Robust Network going into this difficult time, but i am curious as well about the rollout of 5g. We came into this year expecting it would be a significant cycle that you would get a lot of permitting to get cell sites in place and obviously the devices themselves would begin to be on sale has that upgrade cycle and 5g cycle slowed i know at t told us they were having some permitting problems. No. Actually, not. I mean, we divided our team early on one team working with the crisis one team working rolling out networks and one team working on the new normal how we will operate when the pandemic is over so on the second prong, and so far we are on plan with our 5g, the deployment on 5g nationwide. Our cities, and how many they want to do as well as on our fiber rollout. Our team has found innovative ways to work with the permitting with municipalities to continue to do it and were have very good connections with our supply chain intact at this moment. So far we havent had any problems were on plan. Theres a lot of unknown out there, but i have a lot of confidence in my team that they will continue to execute and on the hand set side, its going to be some 20 devices coming out this year so far we have launched three of them, and we believe were on plan to continue to release the other 17 this year so were still on plan we have challenges but were not letting up we take this time is of essence, and our customers are needing 5g and the capacity that will give them as well when Companies Used to combine in the cell phone space, and there were so many companies, there was always a moment for the superior operator oh to the go in and convince the customers, dont go with in this case, t mobile, go with us its a moment when you can grab them what are you doing to try to get the customers to go to you and not tmobile weve developed the last two years, a very flexible mobile with mix and match we have different unlimited offerings. We have an all digital brand we have yahoo mobile we work with tracfone. We go with the customer needs and well have the service for them we feel really good about our service, and up to our store closures, we had Good Progress with new customers, but we put the priority on our employees early on, and we reduced our footprint on stores dramatically down to 30 , and smaller footprint. So i would say we have a good momentum coming into this year, and we ran all the way up to the pandemic very well now were remapping that with a digital channel with our customers. So i feel good about how we can compete in this market with offerings we have and the network we have. And let me ask another thing. Im a comcast customer, but i also have fios im always surprised you dont do more with fios. Smaller gains each other why dont you go for broke with them first, we have our limited franchise on fios where we can deploy it which were doing. We have the same precaution here with our employees we are in the middle of march to not go into hold, to do installation our team has innovated so we can install fios, meaning the customer, we never need to go to the customer premises. At the same time we have a Digital Agent that can help install. Were ramping up to come to the same volume of installation without going into the home. This is the benefit of the pandemic you need to innovate, and our frontline employees are fantastic to find these ways of innovating them. So were going to continue to push for fios in the footprint we are we know thats the best service in the country well continue to serve our customers and continue to expand the footprint in the footprint we have. Yeah. Fios in a box. We were talking earlier on the program about innovation thats an example of it. I want to come back to 5g. I understand youre getting the herm permitting and spending the money you need to, but the hand set question people cant go to the stores and buy them its not clear where apple is going to be in terms of the transiti transition i dont understand why youre confident people are going to upgrade, especially given the economic pressures that people are under as well. As we said, we dont really know where the second half of this year will end up. Some of your comments might be relevant, but i think also when we see the improvements and performance improvements on 5g, i think that people will actually we also have an opportunity far digital channel. Were seeing our customers are start buying the phones and upgrades digitally thats a new normal. We have means to handle this im as confident as i can be at this moment. Right now were executing on the plan as it would be almost normal second half when it comes to hand set technology and usage on the network thats a hope there you mentioned the new normal a number of times. What are you doing to prepare for the environment that were going to all inhabit once we get on the other side of this virus . Whats going on different thats going to stay different for verizon and the customers and employees . I think were going to see a lot of new products geared for working from home. Education from home. In the time that would be impossible, will now be broken down the way were working in our office, et cetera. That will continue in the new normal so and we are ultimately Broad Band Services are essential in the structure in the new normal last question on advertising, you do have some visibility into it given your media businesses its not particularly good i know you indicated that. What are your expectations there in terms of advertising both as a huge spender when you market and as what youre seeing coming in for your media businesses we saw in the last four weeks that we measure down to advertising for obvious reason advertisers dont want to do it. Were probably going to see that for a while as the pandemic is overshadowing Everything Else, which is right, and you should do in these times. On the other hand, we are seeing an enormous up tick on our media asset when it comes to usage of yahoo finance, yahoo sports and our yahoo news so we have much a good basis for Going Forward when you come out from this but clearly a downturn now. Always appreciate you taking time and very much happy youve been able to share your insights over the last difficult weeks. Chairman and ceo of verizon. Carl all right. David, our thanks to jim hope he has a good weekend well see him tonight. A boozy party what do you say . Zoom in 2 00 tomorrow. Im going to do one. Ill wait for the invite. Drop by have a good weekend, jim. Good friday morning. Welcome to squawk on the week. Trying to hang on to the green here dow session high was up 202. The data has been week durables, uk retail sales and now lets get to Rick Santelli our final read for april on sentiment. Remember, our mid month read was 71 so it moved from 71 to the new final at 71. 8. That is the lowest final read since the end of 2011, december of 2011. And maybe one of the reasons the market is moving maybe some thought theyd see a little bit more of a bounce off the mid month read since this is april, it is catching corona economic effects. If we dig through it a bit the Current Conditions move from 72. 4 mid month to 74. 3, and our final read on the inflation numbers, oneyear inflation at 2. 1 same as mid month and 2. 5 ontw to five year the oneyear inflation rate has come down. At least in part, thats coronavirus related. Theres many deflationary pressures through the economy. Carl, back to you. Rick, thank you well keep our eye on that data as we look at georgia and try to gauge consumer reaction to their loosening of restrictions. The president is going to sign that aid measure passed by the house yesterday. 484 billion is now mnuchin and others talk about what comes next we find ourselves in this sort of new trading range. After the market has rebounded so strongly from those march lows after that deep selloff, weve been going back and forth, and you can see it in the flat action today also was on board for the gilead roller coaster ride yesterday. At one point just in speaking to traders and people about how much the market is pinning their hopes on this gilead remdesivir and the disappointing word according to w. H. O. From china that it was a flop which gilead says you know, sort of theres still hope for this drug theres so many other treatments out there. I wanted to bring some attention to maybe they dont get as much attention as the gilead remdesivir you have the antiinflammatory drug being tested. Regenerons cocktail of antibodies the plasma study across hospitals in this country led by the mayo clinic. Other antiinflammatory drugs and some smaller drugs as well from distributed bio and other from countries in japan and israel so that continues to fuel some hope, i think out there that we can, perhaps, open normally if we get some sort of good treatment against this disease in the meantime, youve got stimulus flowing and theres breaking news on that from the Federal Reserve. Adjusting rules around Bank Accounts and making some other headlines. Steve liesman with the details yes sara, from the medicine needed to attack the virus to the medicine thats being used to help the economy, the Federal Reserve releasing some data about the lending programs that it has launched, the emergency lending programs its launched for the virus, and this is part of a required disclosure under theed dodd frank rules when the fed uses emergency lending powers the fed is saying under the primary dealer Credit Facility its loaned 34. 5 billion through the middle of april. And thats a facility for a primary dealers to get loans up to 90 days under the commercial paper facility it has loaned about 250 million and under the money market facility, 51 billion. The Federal Reserve saying it doesnt anticipate losses from this thats part of the reporting requirement. And in one of the programs its earned so far 5 million of interest which one was that that was the pvcs. This is part of the new disclosure when this fed uses the Emergency Powers got to report to congress. The fed yesterday told us that under the care act programs its administering were getting disclosures of the names, the amount of loans every 30 days. Steve liesman steve, thank you also seeing a headline the fed can allow customers to make unlimited transfer and withdrawals from their savings account, removing the sixmonth rule carl all right sara, well keep our eye on that obviously a lot going on even as were talking about those prospective treatments, the fda out with a statement warning against the use of hydroxychloroquine well watch that joining us david haro who manages oakmark funds. Good to talk to you. Happy friday to you from chilly, cloudy wisconsin yes same weather here. I wonder if you could talk about just the range were in and theres been so much discussion of 2800, 2820. We obviously got denied yesterday. Its hard to know if thats because valuations are at a two decade high or because we got some random headline that was net negative on gilead why do you think that number seems to be increasingly important . Well, as a longterm kind of Value Investor, i dont focus on these daytoday movements and Technical Levels i will say the u. S. Markets had a relatively stronger recovery than whats been happening oversees, europe in particular and i think there are areas where that are still extremely oversold, and this is where the investor focus should be on, places where theres good global businesses, good global franchises but share prices are down 30 to 50 year to date the day today changes in the u. S. Make for good play by play, but we really try to focus on buying the best quality businesses at the lowest price and where the market has let fear overrun any sense of basic valuation parameters and so to that degree, i think these markets still offer lots of value if you look at the right places and those right places involve sectors like like if you look at the european financials as an example. Theyre down anywhere from 35 to 50 year to date. Yesterday a company like credit swiss reported earnings. This is a company thats well diversified from both products and geography. It has a good, solid sound Balance Sheet. Theres other european financials likethat are trading 30, 35 of price tangible book value. And they are very, very strongly protected given the strength on their Balance Sheet, and theyve been ignored and almost used as shorting tools by investors, by traders but real investors have an opportunity here for when they recover, when these types of businesses recover, theyre not going to be up 20 or 30 . Theyre going to be up 50 , 120 when the recovery does come, and i think these are the types of situations investors should be looking at. They should be looking forward as opposed to just looking in the Rearview Mirror david, i know youve been beating that drum on the european banks for a while now its interesting you picked up a few names in some more heated spaces like Energy Energy Exploration Production company eog and booking holding in the hospitality sector. Why are you going for those riskiertype names well, in the travel space in particular, we like those businesses that are asset light and strong Balance Sheets. And a company like booking, for instance, is very asset light. And it has the financial strength and Balance Sheet to make it through this eventually travel returns. We, of course, dont know at what type of a level or speed this return occurs but travel will return and so we look for Companies Like a booking and International Portfolios we own trip, the Biggest Online travel agency in china so there are ways you can play a return to travel in a more assetlight lower risk manner. And a company like booking or trip are two examples of this. What about energy yeah. International portfolios are really just exposed to one Canadian Producer in all this. And we do believe that todays price of energy is actually quite unrealistic. Six, nine, 12, 18 months from now its unlikely that these low prices will be maintained. Now, over the medium and longterm, its hard to be an oil bull, given the supply conditions and the demand conditions but in the short and medium term, we think there are places where you could advantage yourself by looking at select Energy Companies that have good lowcost exposure, exposure to gas and good exposure to the market meaning getting their product to the market but you have to be very selective. And you have to be i was going to say Balance Sheet when you talk about these opportunities, are you talking about equities specifically or credit or to what degree to stock pickers need to be worried about delusion down the road people are having to sparse various qualities of the capital structure. Yeah. You really have to look at this period of economic instability, Balance Sheet has to be almost the first and foremost Balance Sheet and cash flow generation during the next three, four, five months has to be the key focus of any investor because first and foremost, the company has to make it through the period then you have to look at the Business Model and as the recovery begins to take shape, and there will be some recovery, and as the who will be the winners . Who is positioned to take advantage of a recovering Global Economy . These are the things we try to measure and take a look at when valuing businesses and you know, the market is even shorterterm than normal if the market used to be focussed on the next couple of quarters, today the market seems to be focussed, the stock market, that is, on the next couple days or the next couple weeks. And if youre a real longterm oriented investor, you can take advantage of this. Right now were out of favor, but it will come back and people will begin to consider valuation and price. And this is something theyre not considering today. But to get to that stage, you need to make sure youre invested in businesses that are soundly financed and have the Business Model that will allow success for when the recovery begins its easy to blame the market for being short sided but they have huge swaths of a vacuum of corporate guidance where companies arent giving us any clue huge binary outcomes on things coming in the next couple days like how consumers in georgia respond to relaxations its hard to get around that, isnt it we do have some clues you can look at china. It isnt a place where you get the most accurate data from, but china was kind of first in this and first out. We can kind of look over at china and see how Consumer Behavior is happening and. In the auto sector we see february in china was down and march down 45 , and in april we can see this data, its far more constructive with sales maybe some of our premium producers only down 0 to 10 we can see as we come out in china. We can see some better Consumer Behavior a lot of the firms have restaurants occupancy and people are returning to restaurants and buying cars in china so every place is going to be a little different, of course. Consumer behavior is not so monolithic, but we do know that as time passes, and we get through the Health Portion of this crisis, this will also begin to ease up the economic portion of the crisis. But its going to take some time, but as investors, we know that our business valuations arent just the next couple quarters. Its the next year, the year after, and all the way to perpetuity so we have to consider everything and not just the couple of weeks or quarters where its very difficult. One of the reasons why youre not getting the guidance we all want is because no one really knows whats going to happen in the very shortterm. Thats where Value Investor play a role. I hope the weather improves over the weekend. See you soon thank you vefor having me. Take care. Back to david faber with news yeah. I have breaking news at t is having the annual meeting virtually. I did want to share news that we did just get from the companys chairman and ceo he will be stepping down as the ceo of at t on july 1st to be taken over in that role by don stanky, the man who is currently number two at at t, overseeing warner media john stanky will become the ceo of at t on the first of july stephenson retiring after 13 years as the companys ceo he will remain as the executive chairman of the board of directors until january of 2021. And, again, the companys president , chief operating officer will become the ceo effective july 1st and also a member of the board of directors. Not unexpected in many ways. Stephenson was expected to step down during the course of this year obviously nobody knew we would be in the midst of the crisis we are right now. One question had been whether stanky would be deemed to be the gentleman or lady to take over for him, but the board has decided to move in that direction. Dont forget, elliot management just by a percentage, quite small overall percentage ownership has had an influential role at the company to some extent, and i have a statement from their partners saying they support john stanky as the companys next ceo they say theyve been engaged with the company throughout the search process, that service a robust one including a range of highly qualified outside candidates they look forward to working with him as he begins his term as ceo stephenson changing at t dramatically over the course of the 13 years that he has overseen the company with significant acquisitions the likes of which we know well. Direct tv which has certainly not been the best of deals given the decline in subscribers there, and, of course, topped by the acquisition of time warner which took quite some time to get done given the opposition of the federal government to it the trial they had to go through to get the deal done which cost them valuable time, but moving away from the wireless business to a certain extent as the core business at the company, mr. Stephensons strategy focussed on that. Now it will be john stankys company to run wanted to get that out there i dont believe the release is out yet, but they had this virtual annual meeting and mr. Stephenson shared the news during the course of the meeting itself with everybody who was following along virtually. A huge deal the stock has been jumpy but holding on to the gains. He remade the company. It looks more different than when he took over. What do we know about mr. Stanky, his background and assent to take over this media conglomera conglomerate hes a longtime telecom executive. Of course, he did get a great deal of attention when he took over the warner brother assets we sat down for an interview in the fall, i guess, when i went out to l. A. When they introduced hbo max which soon will be available roughly a month from now, i believe or less, they will be introducing the service to a public that is certainly looking for any opportunity to consume things at home but hes been running that there have been a lot of questions in terms of his leadership style, i think its fair to say. But hes a no nonsense guy and he was always seen as the potential heir apparent, but when elliot came in and started making noise to a certain extent, there was an expectation, perhaps, that it would mean a more difficult ascension for mr. Stankey. You heard the statement from elliot they are supportive, and well see. This is an unusual time to say the least, to take the reigns of one of the countrys Major Companies at this point. We just spoke to the ceo of verizon talking about the wireless industry. Wireless is the least of the concerns at at t, frankly. Its much more been on the continued erosion of the sub base of direct tv, and think about warner media right now facing the problems a lot of Media Companies do a lack of advertising. A lack of sports on some of their key networks hbo, however, perhaps a power house, but hbo max, that introduce, thats a key for this company, no doubt about it the coronavirus prices, the Company Recently came out with earnings, detailed more about how theyre being affected, committed to the dividend, but its an interesting time to take over a company like this where not only do they does he have to navigate through the crisis, but also potentially changed landscape for business and for media, and just the way consumers behave yeah. No doubt theres benefits to it, of course well, in terms of the need for as much robust broad band as you can possibly get into the home and 5g wireless to the extent that is going to be able to replace it in some fashion consuming as much content as we all are given were stuck at home at this point at the same time there are continued questions about the satellite direct broadcast satellite business whether theres potentially value that can be created in some fashion despite the fact that it generates a decent amount of cash flow and the wireless business. Again, coming back to hans who we spoke to at verizon, how many people are going to be unable to pay their bill for the shortterm how long is that going on for . How long is it going to impair the company . At t has a large debt load that has certainly been a key question also for the company in terms of how it manages that and how its able to continue to pay the dividend and focus on cap ex, and Everything Else needs to its continued to say its fine financially. That has always been an overriding question to some extent, but this clears up any questions about leadership at the company. Again, mr. Stephenson, the longtime ceo who will remain on as executive chairman until january of 2021. Remarkable we have more visibility on management since they did pull their guide on wednesday. David, thanks. Well take a quick break more squawk on the street continuein mens aomt. Since 1926, nationwide has been on your side. Weve been there in person, during trying times. Today, being on your side means staying home. Nationwide office of customer advocacy. But we can still support you and the heroes who are with you. Were giving refunds on Auto Insurance premiums, assisting customers with financial hardships, and our foundation is contributing millions of dollars to charities helping with covid19 relief. Keeping our promise to be on your side. Featuring the Emmy Awardwinning voice remote. Access to your favorite apps, including netflix, prime video, youtube and hulu. All without changing passwords and inputs. The most 4k content and movies and shows on any screen. The best Entertainment Experience all in one place. Dow up four points lets get the latest on the coronavirus outbreak we have details. Good morning. Good morning, everyone michigans governor has extended her states stay at home order until may 15th some businesses will be allowed to reopen including landscapers and plant nurseries. More Outdoor Activities will be allowed like golfing and motorized boating. One out of every four American Adults say someone in their household has lost a job because of the pandemic. Thats according to a new poll by the associated press. However, more than three quarters of those polled say they believe the jobs will return the International Monetary fund and the World Trade Organization are urging nations not to restrict exports of food and medical supplies they say moves can be counterproductive and could limit food production. A string of throw sures of Meat Processing plants is raising concerns about food shortages. U. S. Beef production last week fell 24 from just a month ago levels by one estimates. Pork production is down some 25 and poultry is 10 lower find more on our coverage by heading to cnbc. Com. Sara, back to you. Energy the only sector thats positive with the group etf ticker xle up 2 as weve seen a volatile week for oil where we saw the futures contract for the current month fall below zero for the first time ever. Joining us is the founder of Energy Futures initiative, the former u. S. Energy secretary thank you for joining us good to see you again. Good morning. The damage is done. A 70 drop for the price of oil. How do you think about how dire it is right now for the u. S. Energy industry . We should make the Distinction Energy is not just oil. We also have some drops in electricity demand, for example, but certainly far less dramatic compared to the oil sector in particular where we probably have a drop by a third in demand now, i do think that as the economy starts coming back, theres no reason to think that most of that demand, at least, will come back there are uncertainties. Will people shy away from Public Transportation will there be a shying away from flying as much as there was . But basically, i think theres every reason to expect a comeback in demand but, of course, for the oil industry, theres also the secular reality that over some period of time, the Energy Transition to a much lower carbon world will continue, and thats why we also see at the same time we have the Oil Companies obviously worried about the shortterm issues, the large Oil Companies are also very actively preparing kind of new Business Models for the time in one, two, three decades from now where we will see a much lower Carbon Economy in that reality, in that future, can the u. S. Be Energy Independent . Well, first of all, i have to say that i think the term Energy Independence is not exactly used in my view in the right way. That is, even if we were to have a net zero imports of energy required, we would still be very coupled to the world energy system, and certainly up to now, we see that right now theres a big fluctuation with west texas, the oil index, but the reality is we remain very strongly coupled to Global Energy prices. Those mean our economy is strongly coupled to how that goes i find the use of that term Energy Independence a little bit misleading in that context now, clearly please go ahead. Im trying to figure out the short term pine versus long time mnuchin is apparently considering a lending for companies in need of assistance. Is that something the country should do, bail out the shale industry i might say the government is already taking some steps. For example, the department of energy right now is evaluating bids for use of the unused space in the Strategic Petroleum reserve. So that will help if you like, take oil off the market. It may not be the full solution, but thats an example of whats already going on i think its, however, worth remembering, that the issues with the oil sector were there well before the coronavirus came as you know, the investor community, for example, was expressing its strong opinion that the producers really had to start getting cash flow as opposed to running on debt, on inexpensive debt so i think there was already a major restructuring going on, and i think as we come out of the virus, ones going to have to disentangle what are the impacts of the virus and the demand destruction in the shortterm, versus what were going to be significant structural changes in the industry, probably leading to less production in the United States the production as you know went up very, very dramatically to, like, 13 Million Barrels a day, and im not sure that was really sustainable in the longterm secretary, i want to change the discussion for a moment to the Nuclear Threat initiative of which i believe youre still the president. Its come up in a number of conversations ive had people concerned were so focussed as we should be on the virus, but worrying our enemies and perhaps either others with not particularly good intentions can take advantage of us through Cyber Security or concern about the prevalence or potential for Nuclear Weapons. Youre focussed on that at the Nuclear Threat initiative. Is it something youre concerned about . Absolutely. And the virus, for obvious reasons gets attention, and despite the name Nuclear Threat initiative, i should say we have a very Large Program on bio security and pandemic preparedness, and, in fact, last fall we published together with Johns Hopkins and the Intelligence Unit a major report on gloebd pandemic preparedness. Unfortunately it proved to be prescient in evaluating Global Pandemic to be dismal to be honest nuclear, and i might add another major future disruption to society, climate change. Both of those are weve lost a lot of focus in the public discussion now, on nuclear in particular, theres there are major things happening right now that need to be decided that are being put on the back burner in terms of public discussion the most clear example of that is the last vestige of major architecture this country as built over many decades, including in the reagan administration, its called the new start treaty it puts limits on Nuclear Weapons and Delivery Systems very importantly, it provides the last remaining boots on the ground Verification Program for the United States and russia in terms of the Nuclear Weapons stockpile. A reminder the United States and russia still possess more than 90 of the worlds Nuclear Weapons. That means many thousands of Nuclear Weapons. Well, the new start treaty will expire in february unless the essentially automatic fiveyear extension happens. Our view is strongly, the view of many including in the military, that the new start treaty is to our advantage the russians have announced they are prepared to sign it. No preconditions that is to sign an extension which requires merely President Trump and president putin agree to that. Frankly, i think its mysterious the United States has not taken the same step. Theres an example that unless something happens in the next months, six months, eight months, that we will have lost a very, very important llt of strategic stability with Nuclear Weapons, and that threat, as you basically said, that threat is if anything now, exacerbated even compared to the last few decades, by the risks of Cyber Security because our command and control systems are not invulnerable to being cyber attacked so theres so much to do here, and it would not be to our countrys advantage to sit back and not keep thinking about this we opened a whole can of worms on that we could do a whole show on, but we cant. Thank you for joining us thank you the markets are shooting for three straight positive days the majors are on track for their first silong week in three. Were back after the break every Financial Plan needs a cfp® professional confident Financial Plans, calming Financial Plans, complete Financial Plans. Theyre all possible with a cfp® professional. Find yours at letsmakeaplan. Org. Is it time to rain in on market augs . One strategist makes the case on trading nation more squawk on the street coming up. Georgia starts phase one of the reopening today. Despite giving the green light to gyms, barbers and massage therapists open, many are choosing not too equinox is one of them we have the executive director of equinox good to see you. Thanks for having me. Tell us what is your decision about georgia . I think you have to take a step back at look at the context of how were operating during the closure. We closed in mid march, and mid march we focussed on protecting our employees. And so you need to the Fitness Industry and hospitality at large, retail or anything, any industry where you have zero revenue, most industries have stopped paying employees we took a different approach i think it speaks to how were thinking about georgia as well we have about 65 of our employees still on the payroll that includes the Group Fitness instructors and personal trainers we decided first were going to protect our people that was an easy decision. Then we made the tough decisions around reducing not only to special spending as we moved through that c we started focusing on engaging our community and supporting our community. A lot of that was through digital efforts. I wanted to share that first weve been working on our reopening plan and identified a task force to work on a comprehensive plan with our own team of medical experts. So when you look at the Global Pandemic, its really a localized issue. As we look to reopen, well be working with our team of medical experts to determine whats best as well as for local government officials. In the case of georgia, where were permitted to open today, weve chosen not to because while were eager to open and a lot of our riders are eager to come back as well as our team at soul cycle, we also have a responsibility to continue to embrace our high standards and not rush to open so were going to take a wait and see approach and well do this in all of the cities that we operate whether its the u. S. , canada or london were going to work with local Health Officials and also work with our own team of experts to determine when its best to open and creating the safest environment for our teams, our safest environments for our community of members or riders as it may be we need to create confidence with them that its okay to come into our clubs and our studios thats interesting. I neen, harvey, weve seen examples where its been evident your Customer Base can be vocal about all kinds of things. Weve seen episodes of that in the past it sounds like youre saying youre going to work on your own practices, but youll wait to hear from them about whether or not theyre interested in coming back, and youre not hearing that yet is that true well, were definitely going to were already talking to them, and they are a vocal community. We appreciate that its a it reflects on how we engage and how passionate they are about our brands we just did a survey this week of some equinox members. 70 said theyll come back when we open. 70 for using it when we closed. We know theres a strong desire for our community to engage. And they trust it. They know were going to take our high standards to another level and be thoughtful and protecting them and our employees and weve got advanced things were doing and basic things were doing, but were also talking to our community. We have to consider all of our stake holders to make the right decision for everybody involved. Harvey, its sara outside of georgia how are you managing through this economic shutdown are you still paying your employees . Are you still paying your rent so hi, sara good to speak with you obviously we are a larger u. S. Company but with operations in canada and the uk. And we continue to pay approximately 60 or twothirds of our employees im very proud of that once again, its so unique, and thats how we think our employees are the heart of who we are and what we do. And protecting them and taking care of them i cant tell you how many emails and texts ive received from employees saying thank you that i can still pay my rent. Thank you. I can still take care of my sick parent at home who was sick prior to covid19 and i didnt know how i was going to do that. We made the easy decision and continue to do that. In the first couple weeks of closure in march, we paid them in full. We said wed keep everybody on Health Care Coverage throughout the pandemic and then starting april we went to a reduced compensation. It was minimal but it was reduced so we could keep as many employees on the payroll as possible i dont think theres anybody else doing Something Like that thats been critically important to who we are and our future success. In terms of the essential spending, obviously we have had to make some tough decisions it was easy decision around employees but it was a tougher decision where not to spend money. And so i think its out there that were not paying rent we have great relationships with our landlords. They want to see us around for a long time. We are an important tenant because of the anchor or nature whether its equinox or soul cycle. Most of our landlords agree with what were doing in terms of taking care of our people and are working with us for the future in terms of what we do about the rent issue harvey, without a vaccine for a while, can you foresee a future where we have packed gyms as we had before this crisis broke out . Well, for what we do, were never packed we serve our community a different way. I think theres going to be even a stronger flight to quality i think that speaks well to our already high standards were going to regulate how many people can come in our clubs or studios or classes and well do that largely through technology our app will be set up in a way where we will control how many people can be in a club at any given time same thing in scheduling clas s classes, and then were going to control the physical distancing and encourage to continue to control social distancing. But were going to do were going to do temperature checks were going to have a Health Declaration before people come back so our community collaborates with us in taking the appropriate standards or precautions that they should not just what were doing. Weve identified innovative techniques in terms of electrostatic sprays well use that are prove ton kill covid19 we have new hand sanitizers that have higher alcohol content and are also proven to kill covid19, but all of this is working with our team of Health Experts who are advising us on the actions we are going to take whats most important is creating a healthy and safe environment for our employees and for our members. And well take whatever precautions we need to do to achieve that harvey, its david faber. Given that youre saying there, i would assume its very difficult, but you have to be thinking what are our numbers going to really look like in terms of customers who perhaps are willing to pay for that kind of environment but customers who may choose this is not going to be for me. Do you have any idea of what your roles are going to look like in terms of members come when you do reopen fully david, theres so much unknown here its hard to answer that question. Ill go back to what i said before about 74 of our members say theyre going to come back when we reopen one of the things we did in terms of protecting and supporting our community we havent billed our members since february and put on freeze at no cost, although when you typically freeze theres a Fee Associated with it we believe over time most of our members will come back, but we need to address their concerns and fears. Were not going to once again rush we do believe that there will be challenges between now and vaccine or when other therapies are available that people feel more comfortable we also believe when we get on the other side of that there will be more demand for who we are as equinox or soul cycle than ever before because there will be a flight to quality from the consumer a flight to quality from the talent and that speaks well to where were going. The future has never been brighter, but there is an interim period, we dont know how long the interim period is going to be, where its going to be challenging and the lots of unknowns weve proven that we can adapt quickly and well continue to adapt. A perfect example of adapting what weve done with our virtual personal trainers. We didnt have it before we closed and we have 65 of trainers engaging with their clients in personal training and we have 3,000 trainers well continue to adapt as we need to but theres a lot of unknown in the coming weeks and coming months. Finally, harvey, is it too simplistic to argue that a gym might come back before a room full of bikes where you take a class . Look, i think it depends on how you operate, and so part of that is i think in our environment as equinox, we can do things that others maybe cant afford or wont think about doing. I talked about some of the advanced practices were doing basic things which goes without saying in terms of the type of cleaning and what have you, but i think we can control the environment there and i also think we can control the environment in the studio. At soul cycle a typical studio might house 60 people at capacity that studio will have 20 people in it for a period of time so well regulate once again the number of people, the density of our clubs and our classes to create a safe environment and make sure our teams and members and riders feel safe we need to build that confidence in them and thats what were committed to doing harvey, appreciate you coming on and sharing that with us. Always good to talk to you Harvey Spevak of the Equinox Group as we keep our eyes on georgia and, david, now our eyes on the president s twitter account as he comments on Randall Stephenson great news the ceo of heavily indicted at t which presides over cnn was forced out and goes on to say hopefully the replacement will be much better. Yeah. I am yeah i guess hes focused on that interesting. Of course, as we have said this is not a surprise that mr. Stephenson is stepping down. Hes given every indication this would be his last year at the helm of at t and john stankey was presumed to be the frontrunner to take over and will be taking over the job of ceo come july 1st of this year and im sure that many of the shareholders share the president s sentiments, carl, he will be better than his replacement so to speak in terms of creating more shareholder value. David, theres a history here, right . President trumps department of justice tried to block the merger of that ts buyout of warner media wasnt success of time warner and part of the argument the company had was that president was interfering i mean this has been a longrunning thing. It has. Its interesting because mr. Stephensons politics are not exactly to the left. I think i can say that but nonetheless, the president has been focused on this company in part because of its ownership of cnn he was focused on time warner prior to that. And as you say, sara, it was a very much unexpected opposition from the department of justice given the nature of the deal was a vertical merger, not a horizontal one, that they would oppose it. Ultimately they went to court, judge leon ruling in favor of the company, allowing them to proceed with the deal putses the amount of time that it took certainly hobbled at t in terms of its integration with time warner and something they look back on i think with regret in terms of how long it took. Youre right, there is no shortage of antipathy from the president for any of his enemies as he sees cnn as one. Mr. Stankey will now have to deal with that as well at t shares still higher up about 0. 2 with Many Americans having to work from home, what changes should they be expecting when they return to the office jane wells has been looking into that story for us. Good morning, jane. Hey, sara when we have to go back to work, i talked to a couple of office designers about what may change. Youre going to see video of what cnbc headquarters looks like right now as most people work from home designers are starting to talk to clients about whats next in the short term you may see teams divided of employees which come in on different days, sitting at different desks, more space per worker, one way foot traffic, the high wall cubicles will come out, communal hangouts go out and what about the Conference Room . I would say that Conference Rooms are probably off limits for a while. I think even though we might be under one roof were probably still going to be doing zoom meetings and what about the bathrooms . So maybe you can open the door with your elbow and have touchless soap dispensers, touchless sinks for washing, even handsfree towel dispensers and then you come to the toilet stall. Traditionally not handsfree. Theres ways that you can open even toilet partitions with your foot, thinking through what things are cleanable, where you use grout and where you dont. There are ways that we can start thinking through even incorporating voice activation to open doors and the like that will make it an easy experience. Toyota said in its Conference Call its going to put plexiglass from bathroom sinks and discourage people from using the elevator and we may sees the return of the operator that touches the buttons for you. That is wild and a lot of thought being given to that. Thank you. Well send it to Rick Santelli over in chicago good morning good morning. Thank you, sara. I would like to welcome jane sorensen, president elect of the National Pork producers council. Lets get right into it. Not only do we lose restaurants in the pork business, but now plants, processing plants are closing due to Coronavirus Infections and were seeing potential shortages of pork. Tell us whats going on . Yeah. You hit the nail on the head, rick we are definitely in extreme peril right now as u. S. Hog farmers, weve lost 25 of our market to restaurant closures and unfortunately due to covid19 and worker absenteeism were losing packing capacity too. Hogs are backing up on our farms and we are bleeding money. Were losing so much kapt. Our swine economists tell us were about to lose about 5 billion as an industry collectively for the rest of this year and that for a hog farmer means about 37 per head, which is a lot of money. Lot of fear going on right now. What are your suggestions in the big picture, how to get these things back online much is absenteeism due to fear of coronavirus which we all can understand i hear the governor has some plans for tests. How is that going to go . You know, weve seen a tremendous amount of resources go into keeping the plants open, keeping them open and that line speed going. A lot of ppes, lot of dividers, lot of extra communication, hazard bonuses i know the governor here in the state of iowa has done a tremendous job in to mitigating that risk, but its a big concern for u. S. Hog farmers right now in terms of what that closure means to us and backing up our pigs. Very quickly, even though phase one is done with china, obviously coronavirus has changed many things. What about the export market finish us off about the potential to save industry through exports . Yeah. I mean covid19 has an impact around the entire globe right now and our exports unfortunately are slowing down the u. S. Is dependent on an export market. In mexico, for example, stayathome orders and labor related trade logistics are slowing down exports in china we have such a phenomenal opportunity to export more pork into china. All right listen, jen, were out of time and have a hard break. We will get you back after we get more information on this thank you for your thoughts on the future of pork and, carl, back to you. All right rick, thank you very much. Rick santelli. Good friday morning, everybody welcome to squawk alley. Im Carl Quintanilla and Morgan Brennan and jon fortt coming to you live from various locations, narrow range today, the dow going back and forth between the green and the red, shooting for three Straight Days up, although well be looking at its first down week in about three big news of the morning, though, david faber brought us about an hour ago Randall Stephenson of at t will retire on july 1, remain executive chair until january and john stankey wil