Transcripts For CNBC Squawk On The Street 20240713

What some of the states are doing, they can open, but its very difficult some of the rules of some of the states are hard core when you look at them, you think ppp versus, geez, those are the rules . Took some ppp before were seeing it . I think its not going to be nearly as easy as people think i do wonder if our show were located in austin if we wouldnt be saying those crazy new yorkers, but we live here. We live in new jersey. I think that its going to be a little bit more difficult for a company to stay in business unless they have great Balance Sheets, and are able to ride the waves. Look at norwegian cruise its a city on a a foreignflagged city on the ocean. I see situations like that, im like be careful. Its not all roses when youre opening. Right additional headlines this morning about pending layoffs, reportedly pending layoffs for the airlines in october. Bankruptcy news, whether its hertz or a few other companies now. The markets looking past a lot of that. I think the market, there is a level of optimism about the opening that is justified. Until you hear something bad, were okay when you look at the projections that were getting about what will happen in june, or when you look at the incredible interview with dr. Fauci in the National Geographic, you really want to just say, you know what . Do some selling into this rally. Im a huge believer in dr. Fauci. The National Geographic article says the fall will be packed with punch if thats the case, you get a big run, we continue to run a little bit i dont know, mike wilson was talking about a terrific run you came back from the 18,000 dow level, but dont get too cute i think faucis for real if hes for real, the opening will go okay initially, and then we see i want to see. I dont want to i look at the atlantic piece today, wells fargo has to cut its dividend, it sends a chill through my spine. I lived through that already in 2010 and 2009. Dont be cocky trim the stocks that are dangerous here theres a real have and have not. Im not saying you have to go sell regeneron here. Im thinking that you have to sell some of the cyclicals at least. Anybody with a bad Balance Sheet. I know why people want to sell Disney Disney disney, david, they want to sell disney we talked about it. You know, weve been talking about it for weeks its getting a great deal attention over the past couple of days, with the downgrade yesterday and the New York Times piece outlining the challenges sure disney is listen, we said this i think we said this weeks ago. As disney goes, so goes the country to a certain extent. In terms of their ability to reopen the theme parks, the challenges theyll be facing obviously when we talk about media companies, the advertising in terms of where thats gone, whats the willingness of companies to spend there we talked a lot about espn you go through the portfolio and you obviously do hit a lot of different significant impediment s to them being close to anything to the numbers they once did not to mention the leadership change mr. Iger remains executive chairman jim, when we talk about the fall, its interesting a lot of us cant wait for it to come you want to know what it holds it doesnt appear there will be a willingness to close again we sort of are going to reopen and then just take what comes, including what unfortunately may be a lot of death. Wow well, theres a i think they want to spend. People want to spend they want to spend wisely. Look at the wayfair number the stock was down 12. Then repeat customers. People want to spend and go places im trying to think if they want to go to home depot, but the lines are so long at home depotment thdepot me that i dont know if i want to go plus you got your money. Theres a lot of stimulus. That can work. Warren buffett was talking about infest for the next couple of years. Im thinking about just be careful between now and the summer that you dont want i like the summers, great time to get around the barbecue you use the circles. Yep keep the circle. I want to be careful. Everyone is so bullish look at that i got a bull unless youre working in china china, i got two notes today, dupont, fabulous. Skyworks solution, fabulous. Did joe and i win in the end sorry. Maybe so. The u. S. Treasury will be selling 3 trillion worth of worth of treasuries, of bonds to finance what weve been doing here six times as much as weve sold in a quarter in a quarter. Q2 which will bring the year to 4. 5, three times last year we will rely heavily on poling data axios has a poll out today, percentage who viewed attending a gathering outside of the house as a large risk, 36 , down from 53 three weeks ago. Even Kevin Johnson told us on this show of starbucks a few days ago about the effort to reopen stores and the degree to which consumers will feel comfortable returning. Heres what he said. They want to know that whatever theyre going go do will not contribute to the further spread of the virus. They dont want to get sick. They want something safe they want to go someplace trusted, some place familiar, and someplace thats convenient. That is exactly what we are enabling, an experience oriented towards a safe, familiar, convenient experience for customers. As we do that, we know they will show up. We have a story on our website, jim, that 85 85 of companyowned will be open by the end of the week. A great number went out to the partners yesterday from starbucks that i got from kevin. Theyre talking about the protocols, what they need. I think theyll do this they can do contactless, they can do stores, whole stores where you dont need cash. A lot of my friends dont want to touch cash, cash is covid everything is covid. I do feel that the one thing he has david, you know this is the case, all right . Hes got a rock solid Balance Sheet. So everybody who goes under who is a Small Business person, he can put a starbucks, and it can be a walkthrough starbucks. I think starbucks, my travel trust owns it. I owned tyson yesterday. I think starbucks is terrific. You have to see who has the Balance Sheet. If they have the Balance Sheet, they can clean up. A lot of people are now looking at what the rules are, Small Business rules and theyre saying, listen, i give up. So those could be potential starbucks. Interesting yeah Balance Sheet is everything in this period. It will continue to be those companies that are able to to raise liquidity or to maintain significant amounts of cash are clearly in a far better position we have not talked as often about the bankruptcies that are occurring, whether it was j crew, hertz and its difficulty they pushed that out in an 8k, now talking about may 20th in terms of giving them a little bit more time. A couple more weeks to try to see what they can do at that company. Neiman marcus were awaiting a potential bankruptcy there thats been reported by many deals that have fallen apart you know, interesting that the deal where they were suing each other, they mutually consented to separate, part ways, and nobody paid anybody. Sycamore did not have to pay at all. That was surprising, spoke to a stronger case than many of us thought they had i guess Balance Sheet, if youre in decent shape, youre going to be able to look to the future. If you arent, youre focused so squarely on seeing whatever it is you can do and whatever leverage you can pull to live another day. Yeah. I think its simple. The guys who do have the Balance Sheet, theyre investable. You might say that when the smoke clears, theyre all thats left i think you have to start thinking like that when you look at home depot and what a juggernaut it is, only lowes can really compete against them a lot of companies in the hardware business dont have the credit im trying to figure out how does Planet Fitness survive . Everyone will say they can survive. No one will say, i cant survive, thats fools gold Planet Fitness, again, congregation, crowd. Any company that needs a crowd Planet Fitness is a great company. People have these fabulous franchises if you need a crowd, the government may not let you hav a crowd. Or the cdc the cdc didnt have a problem with tyson maybe the cdc, theres new franchises of the cdc. Maybe they sold you know, you can buy a cdc franchise. Would you like that . Yeah. Well, i those are two those are three letters we have not heard often in terms of trying to direct our nations response to the virus. You going to take a summer or going right to fall . Eah go buy a cdc franchise. Ill let you be the midwest distributor. Give me the franchise. Jim, well get to a bunch of the names you mentioned including a call on tyson today. Well talk about pfizer as they start dosing their first u. S. Participants in a vaccine trial, hopping on to what theyve done in germany meg tirrell will join us on that the new house is amazing. So much character. Original crown molding, walk in closets. We do have a ratt problem. Round and round with love well find a way, just give it time. At least geico makes bundling our home and Car Insurance easy. It does help us save. Round and round with love well find a way, just give it time. Round and round what comes around, goes around. For bundling made easy, go to geico. Com so were working 24 7 toected maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Welcome back to squawk on the street. Its an experimental vaccine that would treat the coronavirus. Pfizer in conjunction with another partner moving into human trials lets get to meg tirrell and see how far along this is at this point. Meg . Hi, david pfizer and bioentech have started dosing in the u. S. Of their covid19 vaccine theyre taking four different vaccine candidates into the clinic to find the best candidate to prevent this disease. This is the same technology that moderna is using called messenger rna. Theyll be dosing up to 360 healthy subjects in the u. S. Trial. The trial in germany began april 23rd they are not the First Companies to get into human testing with a human candidate, but they are talking about massive numbers of manufacturing that theyre preparing now. Pfizer says it could have millions of doses available this year and hundreds of millions of doses available next year if all goes well. They are detailing multiple sites in the u. S. And in europe where theyll be doing that manufacturing. These kinds of timelines here are faster than anything in history. We talked with pfizers chief scientific officer this morning about how they plan to be sure about the safety and efficacy of this vaccine we think that we will have several thousand, 3,000, 4,000 participants and people at risk for the disease dosed in as we come to october we think if you combine that with preclinical studies, it has the potential to show good safety and probability of effectiveness in humans with the data we are talking about just five months from now having that data where they might apply for emergency use authorization, thats record speed. Back over to you thanks. Can i quickly ask you, i had emergent bio on last night, doing the same thing with johnson johnson. Again, frontloading things, having plans ready to make millions of doses. Highly unusual, to be building the factories or having the factories available while youre working on something that may not even work out . Yes the kinds of investment that is going in now at risk is something weve never seen before but of course all of these companies and researchers want to be ready if they are successful in this Vaccine Development to have the vaccine ready to go. Its yet another challenge well see down the line is manufacturing this at large enough scale to serve all of the people who would need a vaccine like this. Meg, its david just to try to put it in perspective, we talk about how quickly its all moving. These are human trials, these are for trying to establish safety and which compounds may be safest and potentially down the road most effective. What are they telling you in terms of their hopes for actually having something in hand that they could manufacture at scale well, they do expect that by october they will have these millions of doses ready, so when they get those results and those thousands of patients that the doctor was talking about, that theyll be able to seek that kind of emergency authorization to consider being able to use in the highest risk groups. Thats extremely fast. The fastest Vaccine Development weve ever seen in history was for mumps in the 1960s so these kinds of timelines, a lot of people dont believe they will be possible, but they are the timelines the Drug Companies are shooting for now im glad you mentioned that, mumps, four years, it was record nobody could believe they solved mumps. Polio took much longer what did you think of the regeneron release of the novel sars to antibody cocktail that advanced rapidly, maybe that could be used with remdesivir, not bad. I was just listening to the regeneron call earlier this morning, the chief scientific officer saying they set a record with their Ebola Program, that antibody program, the same technology theyre getting now from getting from the beginning to human trials in nine months, they broke that with sars antibodies in five months. The Ebola Program was found out to work, and that drug is now being reviewed by the fda. Theres a lot of hope for the regeneron company. Vaccine or else lets not kid each other vaccine or else. I think thats what matters. People have to recognize vaccines are everything to make sure we have a good economy. All right i think thats right. Go ahead no, thats all right. Finish up. I was just going to say, there has been some discussion of what happens if were not successful in developing a vaccine or if it takes longer. That is something we need to consider science is complicated, its difficult. We hope these timelines will be real, but everything will have to go right and go right the first time for us to get this vaccine so quickly yeah. Meg, thank you. We look forward to your future reporting as well. Meg tirrell on the efforts being made, most prominently right now by pfizer this morning in terms of developing a vaccine. Well have a market open in about nine minutes were looking higher this morning. Well also have a mad dash before we get to that market open after this. E for right now. And right now, is a time for action. So, for a second time were giving members a credit on their auto insurance. Because its the right thing to do. Were also giving Payment Relief options to eligible members so they can take care of things like groceries before they worry about their insurance or credit card bills. Right now is the time to take care of what matters most. Like weve done together, so many times before. Discover all the ways were helping members at usaa. Com coronavirus discover all the ways were helping members 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. Some optimism about americas plan to reopen state by state after yesterdays upside reversal. Futures are green. Well get ism Services Today disney tonight stetcoinawonhes squk t re ntues after a short break. These days, its anything but business as usual. Thats why working together is more important than ever. At t is committed to keeping you connected. So you can keep your patients cared for. Your customers served. Your students inspired. And your employees closer than ever. Our network is resilient. Our people are strong. Our job is to keep your business connected. Its what weve always done. Its what well always do. Our Retirement Plan with voya gives us confidence. Yeah, they help us with achievable steps along the way. So we can spend a bit now, knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Oooh, well. Im good at my condo. Oh. I love her condo. Nana throws the best parties. Well planned, well invested, well protected. Voya. Be confident to and through retirement. Welcome back to squawk on the street. Its a bitesized company now, a 32 billion market value dupont is the focus of your mad dash this is the ed breen dupont, a lot of people were betting on when ed came back that it could turn around. I think it is. Electronics and images, a 5g play, a cell phone play, a china play, the business is incredibly strong much stronger than people realize. China has come back. Theyre doing this deal with iff. Its going to boost a 7 billion dividend for them and create a company that people like transportation and industrial hobbled by auto. Safety and construction, they did a lot of tyvek gowns, gave a lot away but this is a good story it was something that was an afterthought they made it bitesized, but its a good story. Anybody who wants to be in industrial, im not crazy about the industrials, maybe look at that i see a lot of industrials being down and out caterpillar, well talk about ratheon soon i dont particularly like the group, but i do like what ed is doing with dupont. Interesting on industrials, jim, those who have a factory floor, who have an Assembly Line and are dealing with the new realities of social distancing, not to mention problems in supply chains because thats become an issue, i think i dont know what youre hearing, just keeping workers six feet away from each other and maintaining some level of efficiency is not easy to do no. This is one thing people have to understand there is no issue at facebook about social distancing. Theres no Assembly Line the productivity will be hurt so badly by social distancing tyson was on yesterday, who knows what kind of distancing they were doing. When you look at baxter raising the dividend by 11 , theres no social distancing. Social distancing will be the answer to why you have to sell certain stocks what is going to happen on a cruise line . Theres a gq article out about carnival the idea of carnival, you get together you meet, do things together its fun togetherness kills thats what we think now i want to see my wife this weekend. Havent seen her in a while. I dont know, n95, david is that the good one this is a 3m n95 this is great for mothers day this is a mothers day bonanza i got one for her. His and hers, n95, tough to come by very romantic my whole relationship is romantic, why shouldnt this be the same on mothers day nothing says love like an n95 mask, i think. Oh, my god. You cant get any hallmark cards. Thank you, david that should be it speaking of ravel, as you are, in terms of cruises and the like, and theres the opening bell lets get to that. Yep at the big board, the assistant chief electrician. At the nasdaq, ringing the bell remotely, black bod, a cloud servicing company. Talking about higher cost structures higher worker comp, you have to pay these people to come into a hazardous job, higher safety costs, just the ppe costs, the testing costs, and then inefficiencies coming from social distancing. On a cruise, its not inefficiency, but if youre trying to debone beef or pork it is. Tyson will tell you theyre doing everything right people go to tyson and they may get covid19 from their community. Theres lots of Different Reasons why you may not be able to make it safe. The issue for me is to make it safe, you kill the profitability. If youre investing in something, you dont want to sit there and think, okay, how dangerous is the company im investing in to its employees . I keep coming back to these haves and havenots. Then theres companies where you realize, wait a second, its a franchisebased company, not tyson, but a lot of Companies Like this, franchise based companies where the franchisees rely on bank financing, the bank is not interested in extending or they cant cover costs because theyre closed, you have a bad chain of events that will occur for a substantial part of the s p, and another part is just fantastic so particularly because were not trading well, theres a lot of companies with upside, downsides in others. Its difficult to bottom fish. A lot of companies are struggling with how to figure out how to maintain efficiency in their business with while keeping workers apart. Particularly on the Assembly Line if its a company that puts things together, its very difficult to have people six feet apart and maintain social distancing maybe you can do three feet, but can you do three feet . Is that allowed . No, its got to be six. Some people feel it has to be 13 look at ford, theyre selling a huge amount of trucks. Then he tells you theyre financing. Theyre giving them away someone might like the stock at 5 thinking this is robbing one of the top five stocks trading on robinhood i look at Balance Sheet. Apple raising money for next to nothing. Theres a company. The quarter was okay the they got 5g coming up. I want to be in that i want to be in microsoft. I want to buy those even right here then i look at the companies with the Assembly Lines, i say, wow. If i came in there, if we had a real osha, maybe osha gets backbone, its not possible. Theres that and theres that, jim, and theres the supply production component. David, some of these hertz headlines does not believes it will not need to acquire new vehicles for its fleet for the remainder of 2020. If you take out fleet sales, youll notice. Youre talking about 500,000 vehicles at hertz, which we have been talking about for a number of weeks as the company tries to figure out its options for creating more liquidity. It already has a lot of indebtedness that is backed up by the used cars but as the price of used cars has come down, that has created more problems. That has a significant amount of indebtedness this morning they say the forbearances and waivers described below thats in the 8k provide hertz with additional time through may 22nd earlier i said may 20th incorrectly, may 22, to engage in key discussions with stake holders with the goal of developing a financing strategy and structure that better reflects the Economic Impact of the covid19 Global Pandemic and the companys ongoing operating and financing requirements yeah, theyre not going to buy anymore cars the question is whether they can get enough money to continue to operate as they are now because their business has basically been shut down as a result of the lack of any travel going on in the United States right now, business, pleasure or anything else in between. Carl icahn, a large shareholder there. The company suffered from a revolving door in terms of management that has not helped it either. Its competitors, avis and enterprise, the private enterprise, which is the largest rental company in the country, not easy times but not having quite as difficult a go of it as hertz is incredible. How quickly some of these Companies Just got hammered. Norwegian is holding in there, doing an equity deal i think its just breath tatakig to see what happened with travel and leisure. I go back to that becky quick interview with Warren Buffett, he bailed on those airlines. Travel and leisure versus internet advertising versus staying home and ordering furniture, great suddenly everybody likes the oils because the analysts cant resist they have to recommend them. These are roach motels some of them well run. If you really need to own oil, just buy chevron if you have to buy one, just buy it they had a great quarter if you just are itching and itching, dont buy a bottom fish, buy chevron. Buy the best leave the reggedy others to the rest david . Right was about a reit would you buy a reit i like this alexandria reit 53 of their retail attendance paid rent in april. Dont know about may 90 of their commercial tennants paid rent in april i like alexandria, which is linked to drugs, moderna, those guys can do it im surprised you didnt bring up the big deal in your world, the huge deal. Yes we had an actual transaction, a deal, as you say portola pharmaceuticals, 1. 4 billion, alexion is buying that company. 18 bucks a share the premium is the likes of which weve seen in the past for Companies Like this, or companies that are in this case blood 129 jump in the stock price. And a deal which, of course, the likes of which we have not seen. We will not see many most of whats going on now in terms of advisory work from whether theyre bankers or lawyers has to did with restructuring, things of that nature perhaps at some point well see a wave of consolidation once theres more clarity in terms of the future as ive said, you need to have a plan in place if youre going to be doing a significant deal. You need to have if youre a ceo, a sense as to the next year or two thats difficult to have right now. Not to mention if its two ceos who dont know each other, they arent near each other physically in some fashion to have seen each other previously or sit outdoors maybe, to have a cocktail or lunch, its very difficult. Deals require still ceos to come together and meet. Its not an easy environment in which to make that happen. You know what go ahead, carl alan was telling us on the 11 00 a. M. Last week or two, they invested in some companies they dont expect to meet the ceo probably for several months. But the other thing i was going to mention, its not as large, but intel buying this urban mobility app for 900 million a headline about microsoft investing in poland. Its thin gruel, but its something. Nvidia, as if theres nothing going on other than happen by days, because its levered all the right markets. Data center, gaming, advanced micro making a comeback. I wish they would make a merger and broaden their portfolio. Theres just so much that is good that is totally mystifying to the person at home trying to figure out how is it possible that its millions and millions of unemployed people, and thousands of bankruptcies, maybe hundreds of thousands of bankruptcies, but i come back and say nvidia is levered to gaming thats what you do when you dont have anything to do. Companies are levered to things that are the new world amazon what are they doing wrong . Nothing. So what explains tesla, jim this sixmonth average market cap exceeds 100 billion. It will trigger the traufrnl to elons pay day up 4 this morning there are real animal spirits there. People know its back. Someone called me yesterday, wanted me to recommend or say about a solar company. I said just go buy tesla the german factory, i think, will be very big i think china is back. So tesla will sell a lot in china. They dont need to advertise i keep coming back to what is the the Corporate Structure of the regular auto company is so bad versus his company. He was right the leverage is huge because theres nothing other than other than love. Theres love of the car. And you love the car, you love the car. And i think it will go much higher in november, it was 200, 300s, cant fight the tape the car is too great anyone driving the car, loving the car says all right, yeah, for 700 bucks i want to be in it or they buy a fractional share at robinhood its a loved car by young people young people are investing yes, theyre defaulting on student loans, theyre taking their time, you get leeway late in student loans, but they want to buy stocks. Its beholden upon us to say heres the stocks doing great. Tesla is doing great they are they cleared the bombs in the german field, got the trees, they had people who didnt want them to cut the trees, theyre appeased then theyll build a factory in ten months the guy is unbelievable. Hes unbelievable. Theres him and everybody else yeah. 146 billion reasons why. 1 146 billion market cap. Stock up 89 this year i wonder when he collects this compensation, which is so closely tied to the increase of the stock price, hes not he says hes swearing off all worldly possessions, isnt he basically . Be curious to see what he chooses to do with that money. Thats different. Different kind of guy. Second day in a row we talked about gene wilders house, guys. Its for sale the nasdaq is a percent and a half away from going green for the year holy cow. Lets get to bob pisani happy tuesday its the reopening rally we fight about it every day. Is it going to be better than expected not . In the last two days its better than expected. Look at the sectors here energy, were in a breakout on energy i know that sounds ridiculous. Oil is up five days in a row the xle, the xop are on the verge of breaking out. Crazy. Jets, airline etf, also rebounding after a terrible day yesterday. Banks, retail. All up theres your rebound rally Consumer Staples are lagging ill point out the crowingers a krogers and the campbells of the world, theyre no longer market leaders where are we in the markets . Im calling it in the zone thats a fair characterization of it. The s p is in a 100point trading range. Either side of 2,800 the vix is stuck in the mid 30s for the last few weeks talking about a threeweek range. Volume is dropping off we had one of the lightest volume days of the year yesterday, its been dropping off for several weeks. Want to remind everyone, every Day Companies are pulling guidance we put the list up, aig, texas ro roadhouse today, u. S. Foods. That makes it difficult for companies to figure out what the correct multiple is for these companies. Probably the biggest problem facing the markets the ipo market is slowly opening up thats very good news. Were waiting for one on the nasdaq this is today. Gan limited, an internet Gambling Software provider their biggest customer is fanduel. They priced this at the high end of the range 8. 50 thats good. A lot of interest in Online Sports gambling. That should be 10 00, 11 00 in the morning. On thursday, a china ipo kingsoft cloud, a China Internet Cloud Service provider the first china ipo since Luckin Coffee and all the problems they had. This after it was said chinas bookkeeping standards leave a lot to be desired. Thats on thursday may 6th, 2010, its the tenth anniversary of the flash crash remember that one . We had, of course, 1,000 point drop in the dow in minutes, came back causes are debated couple good things came out of this the sec basically required all the exchanges to regularly test and update their Trading Technology i think this was the major reason why we did not have any crashes during all of this crazy volatility in the last few months the holes, all the systems have been tested and upgraded more regularly. We had that consolidated audit trail. This massive database to trace everything, but thats still not fully implemented. Ten years since the flash crash. Back to you. Yeah, bob we were just some people on twitter were reflecting on where we all were on that day ten years ago. You with aaron on set. It came out, and i said these levels are too high. No, i dont want to buy p g. Then it was getting attractive at 3 40 i said buy p g it went from 90 to 45 for heavens sake. It was a nutty day we were running pictures of some riot in europe, as bob said, the machines didnt work so you had companies that were cut in half that were giving once in a lifetime bargain a lot of people bought p g on that its important to remember that was one of those days that turned a lot of people off to the stock market people just said if you can lose that money that fast, i want another asset. It brought a lot of money out of the market theres these events which have made people feel terribly about owning these paper assets. Just terrible. The one thing we have not gotten to yet is the evolution of the wework sag a as adam newman is suing softbank yeah. It was supposed to take place as part of the overall agreement when softbank took control of wework they pulled out of that as we reported they would. They did they were already sued by the special committee for wework so the special committee representing the nonshooftbank owners of the company. Now adam newman himself also suing saying we had a deal under which i was giving up control, my management, and in return, softbank, you were going to buy 3 billion of wework it was not a Public Company as everybody well knows weworks business, guys, as we might imagine, is going to have a very difficult time. It was going to be difficult enough without a recession, a significant recession where so many of its tenants, small, mediumsized businesses for example are not following through on leases. They have the leases with some of the bigger owners of buildings, does wework the question then becomes how much is wework paying or not paying to those landlords and how will they we were talking earlier about Assembly Lines if youre wework, you had a lot of people in these facilities, you have to adapt a different approach in terms of social distancing giving people more space in these facilities, if and when you can start getting them back in, which remains elusive, one would say in cities like new york and london where they are the largest single tenant. You have to go back to the zoom economy here we go people Want Companies are all so proud they got everybody to work at home i have cheg on tonight, amazing quarter. Theyre proud. Listen, we got everyone at home. If everyone can work at home and you can do a number like chegg, why do you need we work . Unless youre a startup. If youre a startup and you have to take off, you have to move out. Yeah, david, the world has changed because of how easy it is to work at home and how safe it is. If its not safe, people dont want to gamble they want to do takeout, contactless. People are not the economy is opening, but its opening more smartly than people think unless youre a yahoo and deciding i think all these rules are wrong and the state doesnt come down on you yeah. Carl, chegg is up 25 amazing that stock its like people are not going back to school, right . Its an online university. Right it is. Perfectly suited for this. Dan rosensweig said college is not a bargain, at 80,000 a year its not a bargain. If i have akid going to school in the fall, Expensive School up in new england, i would be horrified. David . Models like chegg and peloton established in a different world and the whole world changed right in their direction. Youve got to guy peloton you have to. My wife is going to take off the laundry because the gym is closed these things just lucked into it i have two different people this morning tell me they couldnt talk to me because they were on their darned peloton come on. Maybe they dont like you yeah, well, you know. Lets get to Rick Santelli with ism on the way. Good orning, rick. Reporter yes, ism on the way. Quickly we had the april final reads on the markets service pmi went from a preliminary of 27 to time read of 26. 7, the composite went from 27. 4 preliminary read to 27. These are really young indices only several years old but those are the lowest levels on record and if we look at whats going on with Interest Rates the curve on the long end is starting to act a little alive the fed is buying less with regard to qe look at the ten years for two weeks, 67 basis points, were knocking on the door if we get through there look for rates to go higher. The 30year is leading the curve and to that end, lets look at the note over bonds spread, if you look at it just since april 22nd, you can see its been inching up, its now 66 basis points and you zoom wider, thats the widest theyve been in three years, so what we want to Pay Attention to is the flattening starts with the long short end moving to the long end steepening is moving from the longest maturity down. And finally the dollar index is in what swsomewhat of a range b 99 and 100 if you look at the chart each successive low after the high is higher so we continue to look for a firming dollar index carl, jim, david, back to you and in chicago looking forward to pedaling a real bike in real landscape. Rick, see you in a little bit, Rick Santelli well take a break here. Obviously all but one dow component are in the green nasdaq needs 128 more points from here to go positive for 2020 were back in a minute limu emu doug [ siren ] give me your hand i can save you. Lots of money with Liberty Mutual we customize your Car Insurance so you only pay for what you need only pay for what you need. Liberty. Liberty. Liberty. Liberty. Later on to morning, shake shacks Randy Garutti on the quarter and indications they see some stabilization in their business in the meantime close to session highs here as the markets got a ceunutf the gate on this tuesday. Dont go away. I know that every single 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. Its time for jim and stop trading. A lot of stocks going up because of momentum and one going up because theyre playing offense is skyworks, skws. What theyre doing, they have all sorts of different applications, they do the zoom generation, but what i like about this, and i think the most bullish case you could make for this market they are for 59g company, they are the best play on 5g. They wouldnt have these kinds of orders, this is something you cant get from anyone but if apple werent building 5g, i have to presuppose because theyre in a lot of apple but thats very bullish and 5g is something that is an unstoppable force, clearly even covid cannot stop 5g particularly those of us in our zoom boozy brunches 5g makes zoom looks like i dont know, tv right it gives us i was going to say, we didnt really mention, you know, apple nearly 200 billion in cash, files this week to raise another 8. 5 billion, is that all about buybacks and dividends . Yeah. Some analysts felt they didnt announce enough of a buyback that was a great conference call, and it was really abomination that people hated. It was just unbelievably good, and i always say own apple, dont trade it the analysts who were not liking it, i think they looked at the stock, ooh, the stock is down. I better see something negative. They were able to do that with this quarter and the Service Revenues were great, the Balance Sheet is unbelievable and all the different accoutrements were great and they didnt have retail and it was still good not Many Companies can do that theres a lot of people who dont get that 5g is around the corner and that apple is going to be playing big. Hmm hasnt had a three handle since march 4th. Well watch that a good stock. What you have on it amsimo, makes the pulse occimeter. Chegg we talked about that, online everbridge another covid company, you want to know where your employees are and blast out things are wrong, you use them im trying to do companies not benefiting off of covid but happen to be in a situation where their products are selling well because of covid. No ones trying to benefit off of covid including the Vaccine Companies and the filesers you buy pfizer pfizer would give it away they want to be theyre good guys well, they want to give it away. Well see you tonight, jim. Thank you mad money 6 00 p. M. Welcome to squawk on the street. Im Carl Quintanilla with sara eisen and david faber. Lets get to ism numbers with rick reporter yes, thank you, carl our read on april, ism nonmanufacturing, the service sector, biggest swathe of the economy, 41. 8. 41. 8, the lowest read since april of 09 april of 09 when the market was of course at 43. 1. So these are lone numbers, march of 09 was 40. 1, to give you an idea where it fits in and also consider this. The absolute lowest ever was a few months prior to that so november of 08 at 37. 8, the lowest ever, this series goes back to 1997 so when you shut off the economy, pretty much what were seeing, whether it was the market, which only goes back several years or these indices, you shut off the economy, basically things go to levels we have never seen before and of course that makes any cap and future data that much more difficult. Carl, back to you. All right, rick, talk to you in a little while, Rick Santelli pretty remarkable price action so far this week, david, as we were testing 2,800 about this time yesterday 80 handles higher on the s p now and weve been pointing out if the nasdaq goes green for the year, thats going to reflect a remarkable either shift in sentiment or realization that the composition of the indices are maybe different than some people think yes, and last week we were close to that almost flat line on the comp. Before we had a number of down days but your points well taken, carl of course, when we look at the apples of the world and the alphabets and the microsofts and the amazons and the teslas, and we go through so many of these large cap companies, facebook as well, all of which by the way i just mentioned are up for the year amazon of course has been by far of the largest mega cap amazon and microsoft are well above where they began the year, but that certainly powerless the nasdaq more than anything else, given the combined market cap alone of the companies that i just mentioned, carl, and that is reflected in the performance of that, given that their businesses, unlike so many others, are not taking the hits. Their Balance Sheets are solid understates, they are extraordinarily strong and their business overall is fairly good, given how many of their workers are able to be productive at home and how much of their product is being used even more perhaps than it had been previously but i think you still look at a rally, guys, like today where you see dow as the best performing dow component, the chemical company, and p g and walmart as the worst performing dow component. You say the market is in a better mood and look at the almost 25 billion issued in the kom corporate debt market yesterday and amgen issuing billions in debt, and starbucks. Theres clearly a better feeling about the world, dominated the conversations we had with our sources, investors, strategists on and off the air and what continues to be an optimistic view, despite the horrendous data, rick just reported services, low, low numbers, comes back to looking forward, and looking toward the reopening, and there are important things happening on this front its confusing because everybodys going about it in different ways but when you have the governors, david and carl of new york and california talking about safe reopening, regionally in new york, in california, will start to see some Retail Operations open by this week, when you start to see soccer matches being played in germany, which is a big development, as well as some of the reopening there, and hong kong easing their social distancing measures, after theyve largely contained the virus, and now allowing gatherings of up to eight people, you put it all together and that seems to be what this market at least on the headline front is teeing off of, and thats what makes it different from a few months ago, when we were going into this lockdown, neverending in sight and you add in regeneron saying theyre going to start human trials by june of their monocroakal antibody cocktail, theres hope for and pfizer a record vaccine and you continue to see there is a bullish picture to be made, even if, you know, Warren Buffett and paul singer and Jeffrey Dunlap not buying it. Yes, theres plenty who arent buying and Something Else as well, sara, which is 68,000 debt, of course, and the fact is that the new cases and the deaths in the United States have not really gone down plateau is probably the best it appears right now and as im sure many of our viewers have seen, there are reports that expect in fact the deaths and new cases are going to rise substantially as more states open, which carl, leads us back to the question that so many have, are trying to understand, which is as you reopen, and as you continue to watch potentially the lethality increase or at least the deaths increase, how many peoples behavior is still going to be impacted and how many people will choose to actually reenter an opened economy . Yep, thats a perfect segue, david, as you know to Randy Garutti, ce oh of shake shack who joins us first on cnbc this morning coming off of the quarter talking about comps, meat supplies now a story as well randy, welcome back good to talk to you. You as well, carl, thanks for having us on the line that leaps out to me, anyway is this, since the low point during the last week of the quarter, companies experienced steady increases in domestic sales driven by growth in digital and the expansion of integrated delivery. To what degree can we put on top of that any kind of walkin or drivethrough or even at some point dinein . Theres been a good few stories having over the last six weeks, weve seen a steady curve up for us. Its really encouraging and id say its mostly thanks to our team weve created these drivethroughs at the shake shack that existed, never had a drivethrough. We created the driveup curbside lanes and shifted to over 80 last week of our sales is on our Digital Channels our own app and web channels on shake shack have tripled and the number of firsttimers has more than doubled so its really exciting because we know that those guests tend to be stickier than normal guests, and were working our way back towards dining room reopening. We dont have any shack dining rooms open today, even in those states like texas and georgia, where things are starting to reopen were going to take our time, make sure its safe for our team and continue to give people the opportunity. You walk up to a shack now on the window, you just take your phone, scan a qr code, menu pops up, you order and well bring it out to you its really cool contactless, really easy, seamless way to do it and i think thats been a contributor to growth. We have a long way to go but the trend is in the right direction. Hmm, so in states like georgia, where the door is open essentially to open if you want. Do you show that being a june phenomena, a q2 phenomena . I think well get there weve been talking every day with our leaders on the ground there, and watching what everyone else is doing most important thing for us is keeping our team and our guests safe youre starting to see some restaurants open, patios mostly there, having good distancing. We have great plans in place for our team when we choose to do that we havent announced when yet, likely in the next few weeks we are fortunate we have restaurants in hong kong, Mainland China, south korea, that have begun to reopen, begun to show us some of the things that have worked, some things that havent, and making sure that when we start to do that, we do it in the right way and well do this on our terms, not the states terms. Well make sure our team is well taken care of there. Randy, im old enough to remember when you started to expand basically out of big urban centers and new york specifically, the thinking was, oh, shacks operating margins operating leverage outside of big cities isnt what it will be i wonder, do you think that picture has now flipped because of the impact of social distancing are we going to see a reversal in performance between your big city markets and your smaller city markets well, we actually shared some data last night on our call that says kind of exactly that at the moment youre seeing some of the bigger centers specifically new york be some of the still hardest hit for shake shack. We are an urban brand and a brand that has these amazing location its been a little bit more resilient for us in those that are easier to drive up and more suburban, but heres how i believe about real estate, right, over time, great real estate is great real estate. I dont think thats going to change were going to continue to build those Community Gathering places so that when people gather again, theyre going to do it in places like shake shack. Theyre going to come to new york city. Were not all going to stop the great urban centers and locations in the world in the meantime its good to see that some of our other locations are the ones that have come up a little bit faster for us and teaching us some of the lessons about real estate moving forward. We announced last night were working on a new model were calling the shack track which will allow people to drive up or walk up to a walkup window and without having to enter the building if thats how they choose to do it, theyll be able to grab their bag, even if their car in some cases. Weve got a lot of work to do on this but it will be an exciting transition and open up for us now in a forever retail changed environment, weve got more cash on our Balance Sheet than weve ever had wefortressed that opportunity and it will help us thinking about what we can do moving forward as we come out of this randy, its david no shortage of challenges as well as you point out including potentially some shortages of supply of beef or at least that supply chain i think, getting a little bit messy what are you seeing right now is the cost of beef going oto be higher longer term or do you see this as a shorter term phenomena . David, most important is making sure that industry can work in a safe way thats whats got to happen first. Its been impressive to see the changes theyre trying to make we are fortunate shake shack today we have not been impacted in our supply chain. We use only hormone antibiotic free allnatural beef and the supply chain we have has not been impacted. However cost is up and up significantly in the last few weeks. Its something were watching daily. I think youll have some nearterm impact we dont know how long that will go for its important for us as weve transitioned our menu, we sell a lot of chicken now our chicken shack and chicken bites, a ton of vegetarian sroom burgers and fries. Were hedged against that but its something were watching close closely as you see supermarkets and other places start to put on limits our hope is that we can, that supply chain rebuilds into a safe and gives us the supply that we and everybody else needs in the longterm randy, its sara. You mentioned that you have a template going on with business in korea and china and hong kong, starbucks and nike what are you seeing there in terms of whats working and whats not as the consumer comes back its been really encouraging, sara they have led obviously being the first and having gon through i think successes and failures youve seen in each country we have shacks throughout asia. Places like japan are still closed places like singapore that had controlled it, now have had a pop are open but doing takeout and delivery in the same way but most encouraging has been our hong kong business, Mainland China business and shanghai and korea. People come n distance, take their time its been a really gentle build back weve seen and our partners there, think about things that were hearing now. If i told you three months ago that a team member would be taking your temperature when you walked into a restaurant, you wouldnt believe that could be possible yet in china theyve been doing it for months these are some of the lessons were starting to learn and also learning to take it slow le lets not rush this as a company and country and locally. Theres no reason to rush back keep people distanced starting with our team and give people ways to experience great food at a great value without going too fast are you saying well take our temperatures going into shake hack in this country we havent made that decision yet but youre starting to see that in a lot of places. A lot of retail owners are doing that well see whether that makes sense or not i think what will be most important is keeping people distant and having physical markers on the ground, ables separated from each other, were thinking about all things like that making sure everybody is safe so randy, its david again. Trying to imagine what my local shake on 77th street will look like you just renovated it, by the way, when you come back. I can imagine what, tables further apart, people lined up outside for quite some time . People out there taking their temperatures and taking their orders when we renovated we did it with none of this in mind and turns out to be the right thing, in the back door all the delivery and courier drivers become a significantly growing part of our business can enter separately, grab their food and exit, not having to be connected to anyone else who will have a separate line for those of you who want to stay, those tables will be far distanced and i think were some far away, away from that but mostly the idea will be that you preorder, and that you walk by that line outside and youll see that qr code, hit it, order, and well come out and you know, yell for david, well text you first and if you dont get that text, well come find you and bring you your food and make sure that you can get out of the house as often as possible and get some good food. Randy, were in the period its getting warmer, people are feeling better about the weather and the ability to transact business outdoors but are you guys in a mode now where you are thinking about the fall when it gets cold, when we have to start working inside and the worries wed see a second spike in terms of infection absolutely. Weve been working through this in march, when its been cold. We had a pretty cold spring in the northeast, actually, so well be careful its all part of the reason why we have to take it slow, guys and make sure were ready if we see a spike again. So many of the lessons weve learned can be taken with us one of my greatest fears is that the company as a world we dont take all these things were learning into the future as were talking about as a company weve been leading with hope and optimism and dealing with the real situation of challenge sales in our company and making sure that whatever we do, we can fortress this company to come out of it stronger our hope is that everyone can get healthy again, start gathering because we are going to need restaurants, small, large, and every type to bring the fabric of our communities back, try to do that in the best way we can at shake shack. Amen to that, randy quickly, on the decision to return the ppp funds you kind of became the posterchild for big, bad business Public Companies taking the loans that were supposed to go to Small Business and now that youve returned it youve accessed capital how do you are he flekt on the experience and how youre able to manage the brand . Weve been the posterchild for the company that started that conversation. We were the first to say this hasnt gone right. The very people who need that money are not getting it well be the first to stand up and tell you well return it so many people reached out and were thankful of that. We were part of a National Conversation that needed to happen were proud of that. Our brand is stronger than that and weve had inboxes full of people say thanks. Three friends yesterday who owned small Restaurant Companies around the country tell me i finally got my ppp loan. Im a small independent operator, and i think we helped lead that conversation that was really important we were fortunate following that, our shareholders stepped up and sate current and new shareholders we want to be a part of this, we believe in shake shack and getting the cash in the bank to withstand any level of this is an important thing and i think weve shown that in the last few weeks lets hope there are more Success Stories if we can call it success where for some of the small firms liquidity is not a front burner issue randy, its good to talk to you again. Thanks talk to you soon thank you, guys take care. Randy garutti as we head to break, dont miss an exclusive interview with the ceo of kroger, Rodney Mcmullen on the state of the grocery industry, food shortages, how hes taking care of his front line workers tomorrow 10 00 a. M. Eastern time quk ckn montn o sawon the street. [narrator] at Southern New Hampshire university, were committed to making college more affordable. Thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Across america, Business Owners are figuring things out. Finding new ways to serve customers. Connect employees. And work with partners. Comcast business is right there with you. With a network that helps give you speed, reliability and security. And enough bandwidth to handle all your connected devices. Voice Solutions Like remote Call Forwarding and readable voicemail. And safe, convenient installation. When every connection counts, you can count on us. Get the connectivity your business needs. Call today. Comcast business. Welcome back emergency hospitals have been granted a near 2 billion aid package from the fed but they still remain far from sturdy emergency footing. Canceling highpriced elective surgeries during the outbreak, shifting a lot if not all of the resources to fighting the covid19 virus brian bragnolatti joins us now, the ceo of Atlantic Health system here in the northeast and also former chairman of the American Hospital association. Brian, good to have you back on the program. Before we get to the virus and testing and so many other things, let me ask about the financial footing of your hospital system, and others around the country as we pointed out, elective surgeries which have a far higher profit margin have been postponed for some time. Are you getting back to doing any of that at this point and is 2 billion or roughly going to be enough to sort of steady your companys future dave, thanks for having me back appreciate the opportunity maybe just to give you some context and answer specific questions were starting to see light at the end of the tunnel in the surge area. Our peak was around april 9th to the 14th, it was more of a plateau. Were down in covid cases by about 48 since that time, but we still have almost 500 patients in our hospital with covid. But whats been interesting, during this whole period of time, which gets to the economic question, is that we have also still been taking care of patients who also do not have covid, and you know, during that period of time weve birthed a thousand babies in our hospitals, and weve cared for the emergency types of care that need to take place and weve also had our physician offices open and although were at about 60 of the volume there, and most of those are telehealth visits so when you wrap all that together, and you think about the financial impact, you know, we had a tough march we expect to have a tough april, and were hoping to begin to see some recovery in may and june, but let me get a little more specific about that. You got two dynamics going on as it relates to Financial Performance of hospitals and Health Systems those of us that add high volume to the Covid Patients have really had increased expense in almost 50 of the cost of that and we only are getting a premium from the government and payers about 20 so that in and of itself creates a financial dilemma, and then the loss ofelective revenue ha been anywhere between 30 and 40 of our total revenue, so when you put those two things together, you can see how youve got a disconnect and that really is how we see it i got to tell you, in my role at the American Hospital association when i talk to my colleagues across the country, many of whom have not had high covid patient activity, but they are experiencing the shutdowns, their revenue picture is quite bleak. Is the government assistance thats available going to be enough then to potentially tie over these hospital systems, brian . So if you think about it in terms of a business, you think about liquidity first, right, so the First Tranche of funding that came from the government went to all hospitals, and it was done just to get money out quickly to deal with the liquidity issues and i think that that was helpful. Those of us in the surge areas felt that it was unfair because we also had the added expense of an impact taking care of those patients so the second tranche of money in the c. A. R. E. S. Act addressed that, and you can see recently that new jersey has received about 1. 7 billion of those funds and well learn later today exactly how much we get here at the Atlantic Health system but those are clearly really important, and we want to thank the government and thank our government officials for getting those monies, but theyre not going to be anywhere near enough brian, real quick, because we may have the president joining us, what are you seeing when it comes to the virus itself, obviously given your prepopped ran preponderance of the hospitals in the new York Metro Area are things quieting down significantly, and is that your expectation for the remainder of the month . They are quieting down significantly. Here in new jersey that is my expectation because were still following strict social distancing in all of those activities other parts of the country well see in a week or two whats happened after those have been released but make no mistake, the thing that is still our achilles heel in this whole area of covid is testing. It was a problem at the beginning. It is a problem today, and its going to be a problem Going Forward as we anticipate seeing an upsurge of these cases potentially again in the fall, and weve got to make sure that were getting that right are we still not there on testing . Absolutely not. We are nowhere near where we need to be, and you can see that here in new jersey, where our governor again has been very vocal about the need to do more testing. Hes talking about doing, you know, thousands and thousands of additional tests which i completely agree with, but in order to do that, we got to have the materials, and weve got to have the testing platforms, and weve got to have the ability to turn those tests in very short order, and here at atlantic, were working really hard to get all of those platforms that we need, so we can do pointofcare testing, not just in our hospitals, but also in our physician offices and again, were getting great support from the governor, but we need the federal government to continue to put its shoulder behind this, because ultimately thats what its going to take brian, appreciate your update this morning thank you for joining us thank you so much lets hit our etf spotlight. Today a look at the banking sector, kbe, participating in todays rally on pace to break a threeday losing streak helped in part by higher yields and the overall market citigroup and bank of america among the names leading the group higher today a quick note as we head to break we have an exclusive interview this afternoon you do not want to miss the vice chair of the Federal Reserve, Richard Clarida, 3 00 p. M. Eastern time, post fed meeting after some new Economic Data paints a pretty ugly picture of the economy in the u. S. Well be right back. Ersect hinmore than 300 pots evy origher in the s p right now, theres over a million Walmart Associates doing their best to keep our nation going, while keeping us safe. Weve given masks to all our people and were helping our customers practice social distancing in stores. Weve implemented shorter hours, so we can sanitize our stores from top to bottom while also restocking our products. But if anything, these days have reminded us why we do what we do. Because despite everything thats changed, one thing hasnt, and thats our devotion to you and our communities. Were working together, instore and online, through pickup and delivery, to make sure you can still get the essentials you need. And as we move forward, know that our First Priority will always be to keep you and our associates safe. To 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. Good morning everyone. Welcome back heres what we know at this hour new york state is reporting more than 1,700 previously undisclosed deaths at Nursing Homes and adult care facilities. This includes people believed to have died of covid19 before they could be tested the report shows 22 facility that each had at least 40 deaths a second walmart in massachusetts has closed because of a coronavirus outbreak. The store in quincy closed yesterday after one employee died and ten others tested positive walmart says all employees at the store will be tested and a deep cleaning is under way the International Trade Group Representing Airlines Says leaving the middle seats empty would make most carriers unprofitable the Group Recommends masks or face coverings becoming mandatory on all flights all this comes as governments around the world discuss virus Safety Measures for air travel as always get more coronavirus coverage going to cnbc. Com carl, back to you. Sue, thank you very much. Well take a quick break here obviously about 1. 5 gains here for the major indices. Dow is holding on to 24k 2880 on the s p, as they try to etr r e gains toghefoth were back in a minute its a challenging market. Edward jones is well aware of that. Which is why were ready to listen. And ready to help you find opportunity. So. Lets talk. Edward jones. Its time for investing to feel individual. There are times when our need to connect really matters. 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. Lets turn back to the Market Action this morning we are seeing gains across the board. Chevron is leading with energy outperforming but all sectors are higher Morgan Stanley Wealth Management lisa shalett and deutsche banks alan ruskin joining us now lisa, what are you telling your clients almost going to the flat line for 2020 given all the risks and economic headwinds we face, what should they be doing . Our strategy has been to you know, move away from the indexes, which we think are excessively concentrated and super expensive tech names that we all know, and really if they want to play the market here to go after pockets of value and you know, areas that were still left behind from the february march selloff so that would include areas like financials, like industrials, like small caps, like materials, like energy and those are the areas that were encouraging folks to be stock pickers, not etf index buyers a lot of the areas at least the areas underperformed, its really been growth over value in this comeback, highlighted by the nasdaq so what turns the tide look, i think the cycle will turn the tide. Ultimately you know, the value names were, had their performance exacerbated by the sudden stop recession, as the economy reopens from our perspective, you know, thats where your operating leverage is the greatest and where its not fully priced if you look at the nasdaq, you look at you know, the top names in that index, theyre all the household names. Theyre not super leveraged to a reopening of the economy because in many ways their businesses never closed so were looking at, you know, where is the derivative, where is the margin of improvement and its really in those more cyclical sectors, more exposed sectors where theres value, and theres opportunity for material gains from here. Alan, where is the market in terms of expectations on how fast reopening happens, and how fast growth comes back is q3 positive growth still the consensus . I think it is i think theres a sense that were not going to actually recover all the losses until at least the end of 2021, so thats a Long Time Coming we are, in fact, thinking that were only going to recover all the losses that weve cleared over the last quarter or so and still incurring by sometime in 2022, so theres a long lost part ahead in terms of recovery and the market i think anticipates that, so i think the tension you have is really about, you know, how quickly can you recover. Of course, this is a question you ask, but i think its more can the Central Banks support markets and risky assets for a lengthy period of time thats i think the big question now. And is the equity market telling you yes, they can . The equity market i think is telling you, yes, they can, for the time being i think the problems probably arise if you have some sort of second wave, and you have this period of time of optimism dashed i think thats when the equity market will be vulnerable again, but until then, you know, whilst we are in the phase of reopening, the s p will have a hard time to get to 3,000. Its meat solid, low earlier in march, and its not necessarily going to break down until we see exactly what the the virus is. Alan, one of the headlines earlier this morning was this german court that seemed to call into question some of the ecbs qe initiatives to what degree is europe and their ability to provide stimulus going to be hobbled by these layers of multinational politics yes, i mean this one came completely at a surprise the german Institutional Court and the european seem to be at lag lagerheads here. I think they are at constraints in terms of monetary financing it does appear the ecb is much more constrained generally than the Federal Reserve in terms of a variety of governdifferent ac, and not the least negative rate. There is a perception theres latent denomination risk as it were italian bonds are clearly trading at yields that are way above what you get at the core of europe, thats, you know, deeply problematic, so i think people are looking at alternatives the dollar by default wins out very well there but i think the yen is the one thats picking up a little bit of steam that has been given out effectively by the euro and the negativity related to the euros redenomination risk. Lisa, it leads me to a broader question about global baskets. Is europe somehow farther down the ladder than u. S. , or how do you fold in various continents ability to implement mitigation . Is the u. S. In a worst house than a neighborhood . I dont know that i would be in that camp entirely. Clearly we know how the world is viewed, the u. S. Market over the last 11 years, and in this business cycle, you know, as the best shirt in the laundry as they say but i think a lot of the advantages of the u. S. Had during this past cycle, whether it was, you know, relative growth rates, albeit 2 is better than flatlining, relative rates on the tenyear treasury or you know, relative strength of the currency, i think that those arguments have kind of run their course, if you will and were now at a point where, you know, its hard to make the case that the u. S. Is somehow going to recover to a place that is stronger, better, faster than any other country on the planet. I think its truly, truly remains to be seen certainly the fed is throwing record amounts of stimulus at this thing you look at the combination of, you know, fed monetary Balance Sheet expansion and what folks in washington are doing and youre talking about 45 of gdp but at the end of the day, youve got to pay for that someday. And the relative yield advantages in the u. S. Treasury market arent what they used to be on the tenyear tenner, so were not preferring a wild degree the u. S. Market to other markets where theres a lot more value. Theres certainly higher dividend yields and we think the prospects of recovery from this thing are equal. I dont know that the u. S. Has any advantage in conquering this virus. Theres no evidence of that. Hmm alan, i mean clearly a lot of hopes and a lot being done by the fed. What about fiscal . How much, to what extent is the market now banking on another relief package for congress and how badly do you think our economy needs that the longer this goes on yes, well, the economy needs all the help it can get but theres usually a price to be paid at some point in time, so on the fiscal piece of it, i think the kind of questions that i get mostly revolve around sustainability, and while this is intact all asset markets but the dollar in particular, and the onset youd give if the external accounts in the u. S. Deteriorate rapidly as well, in response to the fiscal to savings, we know the private sector is not acting as an offset to the government sector, and if the external sector deteriorates and current accounts deteriorates, you can rest assured the dollar is also going to start to slide. For me as a longer term metric in terms of potential dollar weakness, how the external accounts respond to the fiscal side is going to be very, very important, and i think it will be a general message for the economy as a whole as to whether these external deficits, Public Sector deficits are sustainable or not treasury borrowing a record 3 trillion this quarter is one of the headlines lisa sh alett, alan ruskin thank you for joining us, great discussion thank you thank you we have the s p up 1. 4 . The nasdaq up 1. 55 , not that far off from flat on the year, about 1. 4 is the decline overall for that index, as we have a lot more squawk on the street straight ahead for you could there be bigger implications for warren buff lets call on airlines on the broader travel industry . Adats on tringnation. Cnbc. Com more squawk on the street coming up. Second day of gains here as stocks focus more on the reopening of the economy than the risks for now. All sectors are higher, oil up for a fifth consecutive day, as redoron leads the w. Mo squawk on the street in just a moment. Welcome back to squawk on the street. Im eric chummi. Every sector is trading higher today building off yesterdays gains. Energy one of the leading sectors as oil prices are rising for a fifth straight day among the Energy Stocks making big moves are concho resources, Pioneer Natural Resources and conoco phillips. Marathon Petroleum Initially jumped in premarket trading after posting a smaller than expected quarterly loss. The company took a 12 billion impairment charge and announced a slate of costcutting measures sara, ill send it back to you eric, thank you a quick reminder as we head to break, Richard Clarida later today on closing bell 3 00 p. M. Eastern the dow u30potsisp 0 in were back in two minutes. upbeat music we did it crowd cheering [narrator] wherever you start, snhu is where you can finish. crowd clapping crowd cheering here we go. 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Matthew is president and ceo of whitman family development, a, commercial real estate form that manages a million feet of retail space in bal harbour are they open . Good morning. Thank you. Were not quite open yet we are awaiting word from our county mayor as you may know, the rest of the state opened starting monday dade, broward, and palm beach were wisely excluded by Governor Ron Desantis because of the covid19 rates in south florida are a little bit different than the rest of the state. How are you thinking about what reopening is going to look and feel like for consumers . You know, i think consumers are really answer to get back to a sense of some kind of normalcy and familiar iity. Our concern first and foremost is our customers and employees that is certainly first. We have been, i guess, inspired by some of the news that we are getti getting. The department of Homeland Security had guidance on a study they performed midapril they released it during the Coronavirus Task force meeting where the focus became how much clorox people should be inje injecting in themselves. And the data lost was the study found sunlight, humidity, and temperature have an impact on this virus outdoor parks, places, Outdoor Shopping Centers have a way to fight back that we certainly intend to put to good use. Matthew, retail was a tough business even before this pandemic broke out traffic was a problem, as people go online and totally change their shopping habits. How much harder do you think its going to be post pandemic when they have all been nervous, in their homes, and ordering online you know, i think there is a lot of ingenuity and innovation from Small Businesses and some of the International Businesses that are retailers and restaurants at bal harbour shops. Because we have a fully unenclosed fresh air outdoor center, one of the things we are doing is working with our restaurant residents who wisely and understandably get they need to limit their Indoor Seating capacities but because we have a fairly large outdoor area typically used for moving people around, we have the ability to grow the outdoor seating areas. We hope we might get to a point where any spaces that need to be given up in an indoor space to create necessary social distance can be created in an outdoor space. For the public, who is coming out after being in their homes and spaces all these months, we will perhaps enjoy a gardenlike setting which maybe wont be so bad. Yeah, matthew you are pointing to the cabin fever that the country obviously has. I wonder, though, if you think some of the activity will be driven by people trying to order things online, looking at really long delivery times, canceled orders and even at the margin, its not saying a lot it might make people just appreciate the experience of going somewhere, finding what you need, and taking it home right away i wonder if you think that might be a bit on of a dynamic i think it is a dynamic many of our restaurants and i think many restaurants across the country didnt really have a takeout model. It wasnt something that they did. They were forced to be creative and innovative many of them, if not most of them, are doing that we envision they will do that even after they reopen their dining rooms there was a source revenue probably not budgeted at the beginning of the year. Similarly, for customers who have gone used to browsing online perhaps in a way they didnt used to, will have the ability for customers to continue to do that. Rather than having to wait days or weeks to get that merchandise, they can drive up to the Shopping Center, stay in their cars and have that merchandise delivered right out to them. So, again, i do think that the resiliency and the innovation of people both customers, retailers, restauranteurs is whats going to get us through this i still wonder how many of them paid rent in april and how many do you expect will pay rent in may well, thats the question question i think for landlords of every stripe. Those in the hospitality business, retailbusiness we will not look back fondly on the month of april and may our tenants are going through a tough time we have thrived based on our relationship with those tenants. We reached out to each one proactively. Many heard from us before we heard from them. We said how can we help . There are a number who cant afford to pay. We dont want to see these hard working men and women go out of business there are others who probably cant pay but what are suffering a significant cash flow interruption for those tenants we are talking about deferring those payments until later when their cash flow has increased. As you know, we launched a year, year and a half ago to an expansion of our Shopping Center by about 50 we have used this as an opportunity as we try to help tenants who need it to say, hey, listen, were partners here. We would love to see commitment to our expansion in the future it is further along now than it would have been without this coronavirus. There is some good news in all of this. Really quickly, whenever i have been to bal harbour, there are a lot of tourists there. How dependent are you with International Travel ground to a halt thats a good question. We have an adil to International Tourists it is hard for them to get here. I think time unfortunately will have to tell the good news, though, miami is increasingly home to a lot of people who typically wouldnt be here now who would be using those airplanes to get to other places the entire state Just Announced yesterday its about 750 million or more in the whole in terms of where it should be relative to sales taxes. So this is going to be a climb out that wont happen overnight. Thank you for joining us. We appreciate your time. Good luck on the reopening wouldnt we all like to be quarantined in miami right now exactly sara, thanks walk to squawk alley, everybody, on this tuesday morning. Im Carl Quintanilla session high here up 377 o