Transcripts For CNBC Squawk Box 20240713

Above 24,000 keeping an eye on whats happening with this. The dow has been up. The First Time Since february. If the dow is up again for the fifth session, the first time that has happened since the middle of january. Crude oil has been a big concern. That is down 11. 5 to 11. 85 you are looking at energy being the best performing for april even despite these big swings we have other energy news back with bp out the energy giant reported a 67 slide. Ceo Bernard Looney that the company had a good quarter tough environment here to date it has just been historic and went negative for a while. Back to 12. Crazy. Which is relative how many acres do you have there. You could store oil. Could you put a tank in the ground or just fill the pool we could probably do both we could do a whole oil field here no one Takes Delivery you would think given the challenges that uber is having, they would be doing oil delivery the other thing i told you to buy with all that land is live cattle instead, we got a bunny youve plowed with kale we have a bunny maybe hell make a cameo the family got a bunny so rabbit stew . No. A gray bunny named cooper. Well introduce you somewhere along the way. We have earnings to do some big reports due this morning. Well be getting results from 3m, caterpillar, merck and pfizer well also hear from dr hortons, harley, Southwest Airlines on deck and a lot lot more ill pass it over to becky just looking through some of these pepsi earnings listen to a couple of these, guys they are looking at withdrawing their 2020 financial guidance. No surprise with that. A bold move. We are expecting to repurchase 2 billion of shares in 2020 thats not something you hear a lot of with calls saying, look, these companies should not be able to buy back stocks. Also said Foreign Exchange on the head wind too. Well continue to look through those on adjusted number at 1. 13 revenue per share. That stock up by about 51 cents. Continuing with some of what we err seeing an update on the pandemic and what has been happening there. The number of confirmed cases worldwide has topped 3 Million People 211,000 deaths among that. The United States has 988,000 confirmed cases. New york state has 292,000 of those cases. A report said japan could scrap the olympic game s if they can be held by next year those games have already been postponed until july of 2021 last night, several Major Airlines announced plans starting monday, all jetblue passenger will be required to wear face coverings. United and delta are requiring passengers and crew to wear face coverings aswell. The buy backs if you are a company that has not required any assistance. Lets say you had a 30 drop is it a smarter position if you are not going to come and ask for help if you are not in a position of laying people off. If at the same time, you are buying back stock, you are going to be a target in washington id go farther than that. All these companies that signed. To me, i agree with becky if you are going to buy back stock, the commitment has to be, a, you are not laying people off and not going to access the fed window by the way, thats the same story here another version of our allemployment act taking place. All of the private equity firms are sending all of this highyield debt. Hoping that theyll prop up the market they are being hold up too remember when you were a kid, a lot of guys signed that with invisible ink. Did you say dr. Horton, i love that because of dr you caught yourself. I did the other thing. I think all you want is companies that have a cushion. A Rainyday Fund so when stuff like this happens, they dont need help from the government. If you are going to get phelp from the government or pay higher tsa taxes where the government can step in and help you. You want the can companies to continue to do well and thrive if you want to raise taxes, go high as you want but dont do it on companies because they got caught on the coronavirus down turn. The reason people buy stocks over time that money goes up over time. If it becomes a stigma, then we have a problem and buybacks arent that different in the form of return to capital right you want a piece of the company for every time they buy back shares even though there should be a debate about taxes, it shouldnt happen now the issue is say it. You want to have that conversation i want to have that conversation and then we do, unfortunately. A good conversation to have lets talk about there was a Task Force Last night after a high hiatus President Trump said theyve provided a blueprint to the states to safely reopen. They expect 100,000 covid tests to be administered every day through the end of may we are continuing to rapidly expand and confident to have enough testing to begin the reopening process. We want to get our country open and the testing is not going to be a problem at all. In fact, it is going to be one of the great assets that we have the president said governors are happy with testing and many states are in good shape or at least trending in that direction. Talking about food with nathans, sorkin somebody sent me a really great receipt for braised rapid. I dont think your kids are up yet . They watched the other day. I can tell you a funny story about that early in the morning too we dont want to talk about rabbit stew. No. Braised rabbit lets talk nathans and the l. A. Lakers because these are two companies, the lakers being the latest to return money they received from the governments paycheck protection that was intended to help Small Businesses the lakers received a 4. 6 million loan but gave it back the team said, quote, weve repaid the loan so the Financial Support will be directed to those most in need nathans famous also returning funds. Returning 1. 2 million joining names like shake shack and ruths chris Steven Mnuchin is only intended to help companies that cant get money through normal channels like the stock market. And Big Companies will face severe consequences if they take the money they are not entitled to that will happen at 8 30 a. M. Eastern. One of the issues we talked about, is a job a job a job . When you look at some of the Companies Giving money back, the end result is that they are still furloughing a lot of employees. If this is an all employment act, you can choose to funle the money through companies or through Unemployment Insurance thats an interesting conversation Southwest Airlines out with quarterly numbers. At 15 cents per share. Smaller than the 41 cent loss. I cant imagine these numbers are meaningful to anybody at this point southwest has seen demand virtually disappear. Seeing revenue down 90 to 95 . In a headline that would draw more attention before the coronavirus outbreak it is removing bowings grounded max from its schedule and doing that through october 30. Can you add that to the boeing saga when we come back, more on squawk box. The top stories include news on Berkshire Hathaway, tesla and boeing looking at shares of the f 5 earnings gear helps Companies Work remotely that company doing quite well. We are back after this we hope you find our Digital Solutions helpful to bank safely from home. Deposit a check with your phone or tablet. Check balances, pay bills, transfer money and more. Send money to people you know and trust with zelle. Stay safe. Stay home. Together, well get through this. Pnc bank 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 this years Berkshire Hathaway Share Holders meeting will be different. Dubbed woodstock for capitalists. Generally, there are about 40,000 capitalists taking place six hours or longer this year, that meeting is going virtual. There will be only four or five people actually allowed. It will be streamed live via yahoo finance. This year, because of the pandemic, Charlie Munger will not be coming out from los angeles. It will be Warren Buffett along with greg abel taking questions. The vice chair of noninsurance happenings you can still ask questions if you are a share holder you can email questions to berkshirequestions cnbc we are taking takes. Well convene and look for questions coming out of this and ill be asking those questions of buffett and abel live on saturday andrew, you have seen a lot of questions . Ive been getting some great i have to say, ive been getting some fabulous questions in the past couple of days there was a series a while ago but this is starting to peak last weekend some coronavirus but some very interesting that are unrelated it will be interesting to see. Im trying to priorities them to get them to you, becky i appreciate it i can only imagine. Down think now is the time more than anything for socialism. Like that, andrew . Or different ones . No. No. No all my questions are just about how great the free market is you need those questions answered because of your sole searching. Im not sole searching. Im confident in my sole coming up, real estate fallout. As we head to break, some images c lepa pandemiict drive in theaters. Well be right back. We like to get an opportunity once in a while to talk real estate we were talking doctor horton i have found out, many people in that industry have referred to that as doctor horton for years. People are writing in. Talking real estate in florida and manhattan. The industry has been hard hit ultraluxury retail sales have remained strong. Extremely High End Properties in south florida have done well if you know anything about highend real estate, you know the Alexander Family this is Orin Alexander cofounder of the team. You specialize in these types of things we dont need to go into your clients. What is the most expensive piece of property youve sold. We are fortunate to hold the record for miami last year which was 50 million. New york, we have the most expensive apartment. London, we recently sold a townhouse for 86 million pounds. We cover the top end of the market in new york and miami for the last decade now. Huge sales in the last month, what has the trend been . We have heard people want to get the check out of the crowded new york city. Whether down to florida, palm peach or the hamptons. Is that a trend continuing to try to help people act on . Thats correct. Basically since march 1, weve been helping our clients relocate for the quarantine. We have a lot of highend places in the hamptons and florida, that is in miami that was a trend that started march 1 in the hamptons. Typically they rented started in june, now they just started that summer rental in march in south florida, we are seeing a lot of clients that have come down spending time in their home have a lot of new use of those homes. Clients are spending time in that home, appreciating that shelter and wanting to make it permanent. In south florida, weve seen four significant sales in the last 30 days in miami, two significant. One for 30 million, one for 49 million. Orin, youve heard the expression, the rich really are different than the rest of us. They really are. You point out that as bad as things have been in this pandemic where peoples net worth. The pandemic is bad because of all of the horrific Health Concerns but the market is someone we follow at cnbc. That has been affected rich people, they are numbers on piece of paper they dont really change a lot of behavior . They are still loaded. We are talking a very, very select market. We are not talking hundreds of people we are talking tens of people at these prices the tangible asset such as your home, it will hold your value. And you can use it. Exactly now especially this market has been on the upward trajectory now for two years. I hate to interrupt you you think now is the time that manhattan real estate starts bouncing but you think now it is at a level it gets a lot of interest it has been suffering the last couple of years now creating a lot of opportunity, creating the best buying opportunity weve seen since 9 11 people are realizing that and exciting to see a lot of transactions thank you we have to run lets do this again and check back dont look for any place for me. I dont thinks it is going to work andrew, maybe. Back to you. Thanks. When we come back, a crazy half hour for earnings just minutes away ll hear from four key components well be right back. 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. High protein. Low sugar. Tastes great high protein. Low sugar. So good. High protein. Low sugar. Mmm, birthday cake. And try pure protein shakes, with 24 vitamins and minerals. Good morning welcome back to squawk box. The dow looks like it will open up about 270 points higher the dnasdaq up about 97 points higher the s p up about 31 points higher as a result of that report yesterday around the vaccine out of oxford. If it works, they think theyll have a million of them available come september you look at the manhattan project, they are calling it we knew this would happen. We know more about monthlecular biology and sequencing the virus. We can do a lot nowadays also, opening things up in europe things are improving there thats why we were up yesterday. Why we are up 30 from the low a lot of things have gone back to spitting distance of within 25,000 on the dow. A year ago when it went through 25,000 the first time. We are not far from that caterpillar was up do you want to do 3m there first . Out with an adjusted value of 2. 16 cents the dow was looking at 2. 03 that company like every other company withdrawing guidance for the full fiscal year saying it is too hard to figure out how long the pandemic will last. Of course 3m has been in the spotlight because they make those n95 respirator masks they are proud in the fact that they think theyve been leading in working with response and also trying to do things Like Fighting fraud and price gouging working with distributors on those fronts the company also talking about how their own plan is being affected by the virus and what is happening they are reducing expenditures for the full year and spending close to 3 billion versus the 1. 6 to 1. 8 billion theyll take cost reductions and minimizing impact and save as much money without laying off as many people. That cost savings will be 350 to 300 million in 2020. They are protecting the dividend 3m up by 2. 5 . If you do the math on that, seven times three, 20 points c caterpillar, results for 2020 will be impacted by global uncertainty due to the pandemic. This quarter, the Company Earned 1 d 1. 60 adjusted, which was below estimates. The current figure was 10. 64 billion versus 10. 92 billion transportation sales 9. 9 million basically as much as you need to know they did end First Quarter with 7 billion in cash Credit Facilities globally of 10. 5 billion. 75 of the companys primary production facilities continue to operate some of the facilities temporarily closed have now reopened andrew, southwest was earlier, right . Yep thats what well do right now Quarterly Results coming from southwest moments ago. The man who knows them by heart. Phil lebeau from chicago this morning. Well talk about the q 1 numbers. Everybody is focused on cash, liquidity, and fleet plans when it comes to the 737 max. Expectation of a loss of. 41 cents a share. Coming in with 4. 23 billion versus an estimate of 4. 43 billion. Looking at their liquidity as of last friday, 9. 3 billion cash on hand this year, southwest has raised or boosted its cash position to cash on hand by 6. 8 billion dont be surprised if we see more of this the cash burn is between 30 to 35 billion a day. Ahead of going reporting q1 results tomorrow, they do not expect it to be back on schedule before may 30. Prior to this, they were probably set somewhere in the september time frame they are not expecting before september 30 they go on to say we expect the max to be removed through october 30 in light of the current environment, we are in the process of revising our current order book with boeing and look at a sensible delivery schedule. Theyve already knocked down the number they expect to receive this year as well as how many they will take next year, if the plane is ungrounded by the faa this is one of the topics well focus on when we hear from gary kelly, chairman and ceo of Southwest Airlines this will be today at 9 30, when we talk with gary kelly, you can bet, there will be a lot of questions about the 737 max and especially what they are saying in this earnings report. Guys we have to send it over to becky now. Thanks andrew, thanks. I just want to bring up pepsi quickly. The company did report an adjusted number of 1. 07 a share. What these companies are going to do with cap ex and share and dividends and how strongly they will emerge from this. They are up about 1 the company says they have a strong Balance Sheet they are doubling down both on returns for dividends and buy backs from share shoeholders. They do expect a return of about 7. 5 billion for the year 2020 cash returns will be about 5. 5 billion and about 2 billion in Share Repurchases in the annualized dividend per share. They say because of the strong growth of their brands they say they have seen strong organic growth fr frito lay up earthquaker foods up 7 in organic growth they think theyll move up from this Even Stronger going to our guests this morning. Mike, lets start with you with thes have from the have notes on who will double down in the dividends and the buy backs, right . Sure. A company like pepsi is not really at the center of this debate it is a Grocery Company plus beverages. Not the sort of pins and needles decision i do think well have an earnings season. A lot will play out this morning. Companies that have assumed to be stable and resillent like pepsi and like the pharmaceutical companies the other things like industrials like 3m and caterpillar, the question is what do they see in the way of demand you mention 3m saying that will be a priority. That strikes me as news. Even they though are not as much as the others. What do you think well hear as far as the earnings it is interesting when you look at the pepsi 7 growth in the foods and snacks that is something built in here is a company that will do really well in a shelter at home environment. They are the huge company of snacks going to 3m and cat. We havent heard from other Industrial Companies cat has 12 of business in oil and gas. It is heavily focused in china what is infrastructure doing cat is down 20 year to date it is a duration at this point what is the duration of the slow down and if and when we get back how do Companies Like cat, 3m preserve their Balance Sheet, keep dividends and preserve their money on r d the winners here will be companies that not just keep their Balance Sheet but also increase what they are spending on r d on that front, the duration is very important. Maybe the news from caterpillar that many operations are back up and running. Maybe thats the news you take away from this press release too . A good point. This is globalization in play. Cat has businesses all over the world. While we are very focused here in the u. S. As to when we get back, other countries are starting to get back now well see other fits and starts but that allows investors to say, okay, what are pieces of the world opening up what industries are opening up 3m is in the autos and chemicals, in the consumer business it is a Global Company it is very hard to base valuation on this. We dont know what earnings are going to be. When pepsi pulls guidance, that will be a difficulty we have to cut through and say, i want to own these companies the next three to five years who has the Balance Sheet and the vision to say we are going to get stronger but it is going to be tough the next couple of quarters there are so many things going on this is where we have to parse through this information and make really good decisions from 3m, interesting that they are cutting their cap x down they say they are going to try to do this with as little impact on the Employee Base as possible but that makes you wonder if there are going to be layoffs. You start to think of the headlines about the Company Working so hard to get out those n95 masks. That raises the question every company will be facing they are getting hit hard in terms of revenue and a lot of them are forced to shut down in terms of hot potato at this point . It is the hottest if youve taken any government money 3m, they have been looking at their margins. Probably, this is a continuation i think there will be sensitivity everywhere the message will be one of sensitivity in this backdrop the listing the guidance is fascinating. First of all, everyone is going to do it they prefer to do it you want to have a year where you go to the street and say we are off the earnings treadmill, forget about it. We cant give you anything worth relying on well give it to you as a benefit and say we are free to structure on the business. That means survival. Raising the debt you can getting into the next few months deciding how much of this was raising a lot of debt and cutting back a lot of costs to stay afloat and how much was essentially a beneficial break from the earnings treadmill. Now, it is about the increment al move. People were scared enough. The market now is benefitting to the fact that they are asking when are they going to reopen and they are putting in that pricing early, to put it that way. We have numbers crossing now from merck a few of the headlines, they say the adjusted number they saw was 1. 50. The street had been looking for 1. 1. 34. They say they are looking at an adjusted number. The estimate was 5. 56 ahead of time not so much the numbers with what they are seeing they saw gargacil sales. Key pharmaceutical sales up overall. What is your quick read on that and in terms of what you think with the numbers overall for the Pharmaceuticals Companies . I think this is an area a lot of investors have hidden rightly so so do we we own merck i like the story of merck. It trades at 15 times earnings a 4 yield if you look at where these are, a lot of the Clinical Trials have been delayed. Merck has a great pipeline and Management Team and the dividend is growing you are seeing a pent up demand. Youve got the pipeline down the road you look at merck and pfizer coming down the road lets do pfizer, sir. 80 cents was the adjusted number that is above 73 cents revenue also above the Company Reported 12 billion and versus 11. 868 they gave guidance at 40. 5 the street is at 49. 329. The company is reaffirming, affirming 2020 guidance for revenue and also affirming guidance on adjusted earnings per share. So pfizer is up 2 on that news. Theyve got upjohn revenue and bio pharm are he have knew at this point, they believe they have and will maintain the ability to meet liquidity needs for the foreseeable future should pfizer be allowed to increase its revenue or have a Rainy Day Fund for the next pandemic and not do crazy things with their money i think Companies Need weve been talking about graham and dodge the past 100 years well, not quite. Does a lot of that change because Companies Got caught without a Rainy Day Fund in a Global Pandemic . Pfizer has been overpaying its dividend arguably based on operating cash flows for a while now. No, i dont think the stories should change. I also dont think we would necessarily want the economy we would have if every company was sitting there on cash and accumulating a rainy fund. Maybe the next has to change but i dont think pfizer is the kind of company that will come with that you know what, when nobody pg this out, but when theres no down side for anything, thats not capitalism either. And if everybody you know, you take risks because you know you can lose and you might win thats how risk works. If no one ever loses, then the whole system sort of you dont have the price discovery and youre building a foundation on balsa wood maybe. You know, joe, when you look at Companies Like pfizer, gilead, they are holding on to cash because a lot of drugs come up and really thats the only ammunition they have left because theyre spending all of this money on r and d and looking to build this pipeline when you look at drug companies, they keep a lot of carbon their Balance Sheet because they have to keep reinvesting in themselves at some point when these major blockbuster drugs, some of the drugs are 90 of their revenue when theyre at their peak pfizer, bristol, all of them go through periods of time when their pipe lines are weak, they trade at single digit multiples. Sarat, thank you for joining us mike,its great to see you. Thank you. Well talk to both of you soon andrew okay. When we come back, a lot more on squawk box. Thanks, becky. Well talk about the wild swings st the crude market in just the la few hours thats next right after the break. [horns honking] birthdays arent cancelled. Hope isnt quarantined. First words arent delayed. Caring isnt postponed. Courage isnt on hold. And love hasnt stopped. U. S. Bank thanks you for keeping all of our spirits strong. Weve donated millions to those in need and are always here for our customers and employees. Welcome back to squawk box this morning oil losses of chienging. Moout smith is director. Good morning, matt were trying to make sense of these numbers. We should show everybody where wti crude stands just this morning but, you know, we say it almost every time we talk about oil. In a normal world if you look at prices like this, youd think that equity markets would be falling. You would think everything would be falling apart it doesnt feel like thats happening. Can you explain why . Yeah. Sure, andrew if you look at whats happening in the july contract, were not seeing as big volatility were seeing actually looking higher this morning. What youve got again is this dislocation where you have this front month coming under a lot of pressure. The reason for that is simply because were pushing oen a string in terms of the demand side of the picture and the supply side. We have demand down unprecedented levels matt. Matt go on. Even if you go out to july the numbers are terrible not as terrible as they are now, but the economics of the whole complex doesnt work under any of these scenarios no, absolutely. So you look out to january contract for brent and youre still at 31 there thats simply a reflection that we have too much supply in the market and the expectation that theres going to be over supply the end of this year so what youve got really is a situation youre not only seeing on shore, you have the eia tomorrow, we have a decent bill, record inventories there were seeing off shore stress as well were seeing global invep tore ris on a floating basis, like 140 million barrels. Were seeing it across commodities as well. Were seeing it in unusual areas, too youre seeing it building up off the u. S. West coast. Youre seeing gasoline building up off of mexico simply because theres a lockdown there and theyre not consuming it there is a stress across the world. Were going to see prices continuing to come under pressure here until enough production comes off line to try to get closer to balance what is the signal to buy or is the signal to buy now given the blood in the street . I dont think so. I think thats possibly what you can see in terms of the equities we had bp come out with their results. Theyre slashing costs here. Cutting really that probability that ties them to 35 a barrel in terms of profitability so really i think theres more blood on the streets to come yet. Probably not yet from a commodity perspective but perhaps from an equity side, yeah okay. Matt, always good to see you stay safe and healthy out there. Becky, over to you. You, too. Okay andrew thank you very much. When we come back, much more on todays big market moves and the earnings reports that weve been going through all morning. Weve already heard from four dow components this morning and the morning is young. A little bit later this morning well be talking to treasury Steven Mnuchin. Hell be joining us at 8 30 eastern. Lots to talk about with the ppp, payment protection plan, what he sees out there squawk box will be right back. 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. Earnings kicking into high gear we will run through the numbers and get you ready for the trading day ahead. Optimism over economic reopening. What the data is telling officials about whether now is the time to ease summer restrictions crudes collapse Storage Facilities are filled to the brim additional pressure on oil today. The second hour of squawk box begins right now good morning welcome back to squawk box right here on cnbc im Andrew Ross Sorkin along with becky quick and joe kernen. Take a look at equities reports. Busy morning dow opening up a little over 1 . Almost 1. 2 s p 500 up over 1 as well the nags dak looking to open up over 1 as well. The green Streak Continues oil, we just talked about it in the last ten minutes wti crude right about now at 11. 67 joe . Thanks, andrew. This is the busiest week of the earnings season, and several companies have reported results this morning already caterpillar, earnings and revenue falling short. The company also says its not providing full year guidance 3m beating the street on both the top and the pot tomorrow lines but also withdrawing guidance and a mixed quarter for southwest. The loss was smaller than expected but revenue missed the mark pfizer beat the street the latest results backing the full year financial view merck posted full year earnings in revenue finally a consumer name to watch, pepsico approaching estimates. Its withdrawing the forecast. They do see 2 billion in share buybacks heading into today, 25 of companies have reported. Earnings are now expected to fall 15 from the year ago quarter and of those that have reported, 30 have had earnings that missed estimates. For more on the markets and the uncertain season that we currently find ourselves in, were joined by Jonathan Golub and mike santoli, cnbc senior markets contributor. Golub jonathan, the current review and even the forecast were seeing, is that the most relevant issue to what the markets are keying off of at this point should it be you know, no, theres really two things going on here the first thing is, if you look at the fundamentals, if you look at the economics, the earnings, the way this is played out in other recessions compared to this, and then you look at how little the stock market has sold off, it really is a fight between the fundamentals which is saying the market shift much more and the fed who is effectively by buying up the bond market are pushing up stock prices and you have this disconnect between liquidity and the fundamentals mike, you are making the point that there are pandemic related thing. Whether its positive news about treatments, vaccines, reopenings weve been pushed down to these levels by something very specific so havent earnings and so havent the outlook. So i guess the cause of why were here to try to determine where we go from here. For sure. And i also think the mechanics right now in addition to, of course, everybody feeling more comfortable with the fed being able to provide liquidity. We got very, very kaine of over sold in a hurry at the lows. Theres a squeeze in the chase because you have a 5 pull back after a big rally about a week ago. Weve kind of nudged higher since then the positioning story is whats happening in the short term. Longer term we have to start asking when is the s p 500 going to get back to last years level of earnings and the stock market didnt look particularly cheap on last years earnings levels thats the debate that will come sooner or later. I do think the idea that the market to this point has been pricing in a near term r57d apid recovery doesnt hold up if you look at the kinds of companies that got us here, of course. The big volatility secular companies. That shifted around yesterday. Well see if it developed to earnings season where it is the more depressed and economically attuned companies that maybe get the benefit of a rotation here i think we have to see its a very noisy verne a environment and when you have every company saying we dont know and every investor says we dont know, its all about the incremental story line of the economy taking center stage. Let me just follow up on the comment that mike made historically it takes about ten quarters to get profits back to where they were at the peak. Thats 2 1 2 years if you look at this environment, it is substantially worse than what normal would what a typical recession would look like and yet the consensus estimates from wall street analysts have us getting back to peak earnings by the Third Quarter of 2021. It just doesnt make sense its just way too optimistic so the first thing is mike, i think what youre saying is probably the real key. If it takes us until 2022 before we get back to peak on the earnings, then the stock market is going to take a longer period of time to get back to that level. And then the second thing that you mentioned is whats moving whats actually, you know, doing well in the market is a really good signal. When the market has been selling off, the defensive shares in tech have been winning when the market is pushing ahead, those companies are not losing theyre kind of staying in line with the market. Its as if the investors are getting back in but theyre doing it without enthusiasm. Its almost like theyre wearing water wings or something when theyre getting back in the market and that to me is a sign that this thing probably is not going to hold. What do you think, sniek. I mean, i think its a Fair Assessment that you have not seen an outright riskseeking move right here. The market doesnt have enough to start to, i dont think, sniff out the character of what this actual real economic rebound is going to look like. To me, its all been kind of positioning, sloshing around one way or the other a day like yesterday where the top ten stocks in the s p 500 were down an average of 45 in the prior three months, thats just kind of people flipping the switch saying they were down too much, weve already got what were going to get out of microsoft, amazon and the rest lets see what works today so i think thats the process were hashing out, but i do think the question is where is the floor underneath it, perceived or real . Its probably at this point people are coming to the idea that the floor is perhaps higher than we traded at six weeks ago at the lows. So, john, do you ever when do you say, you know what, im looking at this as a rational, logical person and ive been denying what the market has been telling me when do you say, geez, maybe theres a lot of smart people, their composite of what theyre all thinking is what you end up seeing on that little number on the bottom right and you just say, you know what, ive just got to defer to what theyre saying and i just cant fight this do you ever come to that you know, joe, when im talking to Hedge Fund Investors and professional investors, im really seeing two camps. The first camp is the guys who are saying exactly what youre saying, which is at the end of the day the markets smarter than all of us and the market is telling us either that this is not going to be as bad as we think getting back to normal or that the fed has the markets back and ultimately you cant bet against that and theyre in. Then theres another group who are basically saying you see this with guys like Lee Cooperman and others and carl icahn and others who are saying, first start by looking at the fundamentals if you have a recession that is, you know, x times worse than normal, if you have an Unemployment Rate that is x times what it was in the last go round, if you have the draw back in earnings x times what it was in the last recession or two, and you say, what do i think the market should be down if i calibrate that and then you say, now, what is the market down . That disconnect doesnt make sense. Ultimately the fundamentals have to win thats really the debate thats happening, and im seeing almost a block from the hedge fund guys, an almost perfect split where half of them are in camp a and half in camp b. Well, i dont know. I always try to figure out what the consensus is even with villanova and georgetown years ago. Everybody working on one or the other. It works in sports and it works here if you dont think people have a worst Case Scenario baked into the cake with what weve seen after the past six weeks, jonathan, there are people who think we will never return to sitting in a restaurant next to each other without masks or eight feet there are people postulating this is the end of life as we know it. You dont think people have factored in a worst Case Scenario first, that argument, which is that were never getting back to normal what do you say youre saying the recession is who doesnt think this is going to be the worst recession ever when weve heard its going to be worst than the recession . I dont know if its going to be worst than the depression, if you were to mark to market the Unemployment Rate, it would be 15 , 17 , maybe more. Right what do you expect when you shut down the economy. For sure. 100 . Ill tell you those who think so. Reporter who doesnt think so is analysts who are projecting 2021 earnings of 173 to the s p which is higher than last year. I think its very hard to say everybody is doomsday right now. I think it is fair to say theres been a reserve of caution that has gotten burned off only very slowly in the last few weeks as the market has done well i would also say, yes, the markets smarter but the market was exactly at yesterdays closing level, you know, two years and three months ago so it doesnt mean its always going in the direction the economy, seeing it was in pretty good shape, i dont know if it was the greatest economy in the world, if it wasnt thrown off by higher Interest Rates, over heating, you know, the normal cause of a business cycle, if thats not what caused it, then how do you know that its not something that, you know, was artificially moved down and can, you know, bounce back the catalyst was artificial. Its the v versus u argument, and i dont know what some stocks are looking like vs, some are looking like ls. I dont know reporter thats right. Its a credit cycle. Right now its the credit cycle. And its the fed and Everything Else. Just the fed when the fed supports the market, you also have to realize that theyre trying to support the underlying economy and the wealth effect and Everything Else like they did in 2008. I dont think the fed i dont think the fed is looking to support the stock market here right. Theyre looking to make sure theres enough liquidity sloshing around that, you know, things people can raise capital and the market is going up, you know, in response to that it has to be something with the value of the stock market. Its continued to being looked at ultimately that does affect the value of the stocks. Thats another worry this could be like what happened in the 30s this could be the first break. We have a 50 , whatever, retracement. The dow could go to 12,000 thats always possible i think andrew thinks were headed there anyway, go ahead well, i dont think were headed there, joe. The only addition i wanted to make to the conversation you didnt see this rebound i think were ultimately going to be i think for some period of time i would imagine we would therefore be headed down the reason i say that, as everybody reopens, everyones very excited i talked to analysts, Hedge Fund Managers we know we know. Go ahead joe go ahead. All right. The thing the thing thats being complicated here is you can reopen but as weve discussed so many times, reopening may ultimately turn to closing. As weve talked about whether youre a department store, great. If youre social distancing, nobody wants to touch the merchandise, they may close. The restaurants may reopen and they may close later because they cant make a go of the business there will be a twostep process. The second step i would argue is not beingfactored into the conversation enough. Its a little surge for the next few months theyre going to have to rehire people so youre going to see less unemployment. Then you have to tell me whether you think those businesses can succeed the way they used to succeed before. Im hoping for the day where we hear a covid case where we say, oh, my god, theres a covid case oh, my god, i just heard of a covid case out and i thought that had gone. In a year or two you get the vaccine. Or herd immunity. Wouldnt that be fabulous thats what weve been arguing about. Weve got a lot more on squawk box ahead georgia slowly reopening the first state to do so were going to speak to a Small Business owner were asking what hes expecting and more importantly if customers are coming back. An old friend of squawk box will be with us. As we head to break, a look at some of the big names already reporting this morning a busy earnings this morning squawk retnsig aerhiur rhtft ts. D to any adventure. But when allergies and congestion strike, take allegrad. A nondrowsy antihistamine plus a powerful decongestant. So you can always say yes to putting your true colors on display. Say yes to allegrad. And sometimes, you can find yourself heading in a new direction. But when youre with fidelity, a partner who makes sure every step is clear, theres nothing to stop you from moving forward. A partner who makes sure every step is clear, 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. 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. Our continuing path forward series, cnbc small Business Owners across the nation, our goal is to try to learn from each other about how they are dealing with the coronavirus pandemic joining us right now is a georgia Small Business owner, bruce la vedevelop. Hes the national coalition, we met him 12 years ago i remember sitting with you in atlanta. Its very nice to see you. You had just reopened. Tell us a little bit about the experience thus far. Tell us what your experience has been and what other business small Business Owners are experiencing in your mall there. Yeah. Thanks for having me, andrew ill tell you, its been a rough ride no one has ever been true this ever in the life before. I can tell you that especially here in georgia the Small Business people are very excited to get back up and going and, you know, its kind of like i talked to one of my friends the other day. This is almost like when i hawked my credit cards, i pawned all of my silver for my wedding and i went for broke he says its that same type of feeling now where they werent able to open their businesses. Recall the financial crash we had in 09, were in a medical pandemic crash its a lot different thats why i believe were going to rebound very fast and very aggressive youre in the jewelry business tell us what its like are people Wearing Masks as they go in . How many people can go into the store at a time . How much has it cost you extra money in terms of getting the ppe, how easy or hard is that thank god, my wife, shes the boss thats why we do so well you know, shes running one at a time you know, we have the online presence, too. You know as well as i know in the last several years its been a challenge for a lot of small mom and pop Retail Operations as it relates to the online giant out there. Having a capability to do Online Shopping with ecommerce is a tremendous asset, especially for a lot of us and not so good for our other colleagues this is the cleanest place i think the new norm when you walk in and you smell a little bleach, its like, oh, this is a safe place its been scrubbed top to bottom, sideways, every pencil, pen i can see how the jewelry business can hopefully survive im looking at the level shopping center. Nail salon, shoe store, subway, cigar seller, Verizon Wireless are all of those retailers paying rent right now . Yeah. You know, its an interesting point, andrew. One thing, ive developed Shopping Centers also is that, you know, your Small Business owner pays the landlord, which essentially is folks like us, and then of course we, the landlord, has to pay the mortgage to the bank if theres a Bank Mortgage on there and hopefully, you know, the bankers for a lot of my friends out there are working with these landlords and of course these landlords working with these retailers because its a dominoing effect ill be honest with you, andrew, you know this as well as your book some of these bankers are friendly but a lot of them are like, wheres my money so we need to hurry up and get this thing going theres a lot of folks being damaged out there because of those dominoing relationships as relate to the renter, to the land lord, to the mortgage, which is the banker essentially. Im praying that they really work with these folks. What do you say to some of the other Business Owners in at lan stay specifically, we had one on last week, who said im not opening. The governor is telling me to open im not going to reopen. I cant get access to ppe and other materials and to comply with the rules and regulations im not in a position to do it and i dont think theres going to be demand for me even if i do open right now interesting point heres how i look at it. You want to be comfortable if the governor tells you the governor tells you to open as a sole proprietoproprietor, e to be totally comfortable. Heres an interesting thing. Gentleman, buddy of mine owns a flower shop. Another buddy owns his own dentistry where he has him, the hygeniest as well as the Administrative Assistant ill tell you, those establishments in my personal opinion are ten times cleaner and safer than some of the bigger Grocery Stores where, you know, i wont call their names that run in there, theres like people wall to wall running around crazy grabbing food its one of those judgment discretion calls where people have to be comfortable but ill tell you, were in an age where theres a lot of misinformation out there, andrew, all due respect. I always say follow the cdc guidelines and be careful about entertaining so much stuff on the internet because its i do get a lot of Text Messages and people sending all kinds of, you know, where did this come from they wrote this article. Who wrote it a source a source what . So i think thats a big culprit, too, thats really hurting a lot of different folks and putting a lot of stress and anxiety in making good, sound decisions in their ability to open their businesses okay. Bruce, its always good to see you. We wish you a lot of luck with the business hope you come back and keep us informed about how things are going. Stay healthy and safe out there. Just one thing about the business people. Yall hang in there. Were going to get through this. Just like when you first opened, were going to win through this. Gods got this and were going to win okay. Bruce level, thank you nice to see you. Thanks. Hey, becky, over to you. When we come back, airlines are making changes to their flying policy. Weve got the details next also, check out the futures this morning after a big day of gains yesterday with both the dow and the s p 500 up by 1 1 2 , you are seeing additional gains this morning. Up about 310 points. The nasdaq up by 300 the s p 500 up by 35 by the way, yesterday, the dow lcoin above 24,000 again. Wel ntue to monitor this squawk box will be right back. Feed a healthy lifestyle, with pure protein. High protein. Low sugar. Tastes great high protein. Low sugar. So good. High protein. Low sugar. Mmm, birthday cake. Pure protein. The best combination to help you stay fit. Many of lifes moments in thare being put on hold. Are staying at home, at carvana, we understand that, for some, getting a car just cant wait. To help, were giving our customers up to 90 days to make their first payment. Shop online from the comfort of your couch, and get your car with touchless delivery to keep you safe. And for even Greater Peace of mind, all carvana cars come with a sevenday return policy. So, if you need to keep moving, were here for you. At carvana the safer way to buy a car. Probably should have made n95 masks to the crews and pilots. It seems preposterous that the government didnt mandate this and that the airlines are saying that the airline unions, at least the Flight Attendant unions have been pushing for for so long. Travesty nonetheless, were talking about texaco just out in the last hour. The company beating estimates with organic sales up 8 withdrawing the full year outlook. Hugh johnston just spoke with our own sara eisen the difference between the two businesses, the Beverage Business we saw a clear surge in demand it seemed to be more household stocking, im not sure there was a lot of consumption behind the demand it was people hunkering down because they knew they would be sheltering in place for a while. For the foods and snack food business we saw elevated demand two big factors coming into play is n in breakfast. You can see hughs comments at 10 a. M. Eastern. Still to come on squawk box, the importance of Higher Education and the need to reopen campuses in the fall and whether thats likely at this point. What universities and colleges r planning to do what theyre planning not to do. Ivsipresident of brown unerty, Christina Paxson will join us when we come back welcome back to squawk box this morning more green arrows as business gets back to business, partially in europe, partially in the United States. Take a look at where we stand. Dow up 1. 3 . The nasdaq opening 1. 2 higher the s p 500 looking to open 1. 2 higher as well weve been talking about the story the past couple of weeks which has been oil wti right now, looking at wti crude at 11. 14 for the june contract thats down about 13 this morning look farther out of course the price is higher. Continuing concerns and questions about both demand side and where all of this supply is going to go. Becky . Andrew, thanks. Right now lets get to the worlds battle against the coronavirus and as the number of confirmed cases grow, doctors are joining lawyers and Financial Advisers in urging americans to have a living will to help medical providers make difficult decisions. Our Sharon Epperson joins us right now. She has more on this front sharon, good to see you. Reporter good to see you too, becky there are a lot of lawyers as well as Online Companies that have said they have seen a significant rise in the last few weeks in the number of people of all ages looking to create Estate Planning documents, but documents say its a living will as well as a Health Care Power of attorney that are documents truly critical for a patients care an advanced directive or living will lets you spell out your wishes for medical care whether you want to be intubated or resuscitated a health kcare power of attorney makes decisions for you if you become incapacitated we spoke with someone who said 27 of the people who enter her hospital have severe breathing problems and are unable to think. We all need to thoughtfully sit back and think about what should someone do to show their greatest respect to us and to our life when we enter the hospital we want to hear your voice through written wishes, health care proxy, written will and strong conversation with loved ones. Reporter you can find these documents online the National Hospice and Palliative Care organization has free advanced directives for each state on its website. There are also online Companies Like rocket lawyer, trust and will that can give you these forms for free and at reduced cost trust and will is providing Estate Planning services for Health Care Workers for free due to the coronavirus pandemic. Sharon, thank you its good advice gentleman folks, as you probably know, cnbc has partnered with acorns, the savings and investment app on the Wellness Initiative its called invest in you, ready, set, grow. In the meantime, as governors outline plans to reopen parts of their economies, colleges are trying to figure out was to reopen their campuses the president of Brown University says there is a way to do it but it wont be easy and stresses the importance of Higher Education to the u. S. Economy. Joining us to talk more about it is the president of brown, Christina Paxson thanks for being here today. Thanks very much for having me. Lets talk about what happened because colleges were some of the very first to close down, to send students home, to say they would not be coming back this year obviously its a difficult decision to make, but why are you convinced that this is what we need to do right now, reopen for the fall well, thanks. Very good question you know, when we closed in the spring didnt close but asked our students to go home and start remote learning, you know, it was one of the hardest decisions we ever made, but we felt it was right for the health and safety of our students were at a point where the Public Health system is improving. Were getting more testing the tracing ability is coming back online. So i think if we plan very, very carefully, we will have the opportunity to safely reopen our campuses in the fall and we have to try and no guarantees, but i think its essential for American Society and the economy to get us back on track president paxson, there are probably a lot of parents trying to figure out if its going to be, a, safe for their children but, b, worth the investment what happens if you go back to school, theyve made this payment that they give to you, if kids get sent home again to tell them theyre going to be learning from home are there any refunds sent out do you get back any refunds for room and board or the quality of education . We gave partial prorated refunds of room and board, which seemed like the right thing to do not tuition though because students are still learning. It may not be under ideal circumstances, but during this pandemic nobody is working under ideal circumstances and the value of their degrees i dont believe are diminished in any way. Again, if i was a parent considering sending my student there, my child there, i would be thinking, first of all, maybe its safer for kids who are younger because we havent seen as many cases for students, but what happens if they bring that back to me because theyre going to be meeting with other students around the country, around the globe and secondarily, why wouldnt i just go ahead and defer if my child is likely to get the full on Campus Experience that i would want if i were paying that tuition thats a good question. I think every family and every student is going to have to make this decision for themselves certainly if students are at elevated risk for health problems, they may not want to come back to campus. Thats probably the right decision for them, but i think that the students ive talked to are dying to get back to campus and the last thing they want is to spend another year sitting in their parents houses learning remotely so if the appropriate safeguards are in place, if we can get them there, if theyre confident we can maintain the adequate levels of safety, i think students will want to return thats what im hearing. Christina, its Andrew Sorkin here i mentioned your op ed in yesterdays program. It fascinated me a lot of people are looking at what youre doing or saying your plane to go do to try to figure out if its doable for them and what it means to educate and not just in Higher Education, but k through 12 given some of the stringent requirements youre planning to put in place the question i was going to ask you is about testing part of your whole plan is about testing. How are you going to get access to those tests how much is that going to cost you . Do you think what youre going to be able to do is going to be scaleable across the entire education complex . Thats a really good point because testing is essential if we dont have access, and when i say we, i dont just mean brown, i mean higher he h jeer t large, doesnt have access to relatively inexpensive, Rapid Testing it will be very difficult to bring students back i think that should be a National Priority for colleges and universities. Have you already gotten access to tests . No. Were working on that. Do you have a plan in place with abbott or with somebody whos going to get those tests to you we dont have a plan in place yet. Were exploring a number of different options and the other thing thats interesting to note is that the testing technologies evolve every week. Reports have come out about great innovations and rapid saliva testing which promises to be cheaper and less invasive so, you know, were looking at different options, but i think we know that we have to wait until the technology and the science moves a little bit farther before we can have a final plan. Youve also said that Civil Liberties in this case maybe be damned were going to run an app similar to whats going on in many countries in asia in this private community that is brown to effectively have your tests on your phone and effectively do Contact Tracing digitally. What was the response in terms of what students have told you so far that wasnt quite what i said what i said is we would have to have between faculty, students and administrators serious conversation about how much people are willing to give up to stay healthy and thats something well be talking with our students about over the summer. Clearly if they dont buy into it, theyll leave their phones in their dorm rooms when they go out. We cant force someone to do tracing, but i think its an essential component of Public Health and our students if they understand that by doing that theyre keeping themselves and their community safe, i think theyll buy into it. Thats my hope. What are you going to do about bars what are you going to do about bars in providence and house parties . Bars in providence, thats really up to the governor. I know that the state of rhode island is planning for a reopen and theyre thinking very carefully about what kind of density they can have in restaurants and bars and other venues so we have a Close Partnership with the state and i think that will be really helpful as we plan our reopen. But theres no you cant control people who are going to go off campus. Of course i cant. What are you going to do about people who go to a house party . No, cant control that. I think what we need to do is have a really good Public Education campaign and make sure our students understand the risks and the dangers. We now have about 320 students living in Residence Halls and hundreds of students in the Providence Community things are going well. Theyre socially distancing, being responsible. We havent had any problems to my knowledge so if we can scale that up, do the education we need, we might be able to get there and i say might because theres a caveat on all of this. If we dont feel like we can open safely, we wont. President paxson, how do you continue social distancing once the full student body comes back and returns . I mean, would you still have people who would have roommates . Maybe roommates they dont know their freshman year . Would you still be sitting side by side in a lecture hall . Would you try and space that out . How would it work . So these are things were sorting out right now, and i think the points you raise are really good, that depending on the conditions that are in evidence in september, how much social distancing is still needed is going to be really important to look at it may be that we have to dedense phi our campus and have every student in a single room maybe. Maybe not. Well figure that out as we go forward. I think its probably very likely that large lecture classes will still be done in sort of flipped mode where our students watch the lecture on their screen and then they have small discussion groups where they talk about the material in some ways thats a great educational experience anyway. So well have to make accommodations in how we teach and were going to have to make sure we protect our faculty and our staff. Theyre the ones at highest risk of serious risk. Christina paxson again is the president of Brown University. Thank you for your time. Thank you very much great. Coming up, a roundup of this mornings biggest earnings movers but first as we head to break, check out the biggest dow winners right now in a market that is up almost 300 points stay ted iss quk x. Un on the outside. May looe but inside every etf. There are untold hours of careful construction. Infinite what ifs . And contingency plans. Creating funds that help target gaps in client portfolios. Tap untapped potential. And strengthen confidence in you. Flexshares. Powered by over a century of investment expertise before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Merck Beat Estimates on the top and bottom line. It did withdraw full year estimates. Pfizer also Beat Estimates on the top and bottom line. Unlike merck it reaffirmed the full year. And a slowdown in heavy equipment demand resulted in caterpillar missing both earnings and revenue estimates for the First Quarter. Caterpillar joining the ranks of the 2020 guidance due to the pandemic coming up when we return, a lot more on squawk box. Tom mckenzie, Kevin Stevens will talk to us about the Critical Data officials are using to make the call as we head to break take a look at oil pcerit ris gh now. Well be back. And. Lets get started. music fades in hey hi welcome back to squawk box this morning coronavirus deaths in new york state now dropped to its lowest in almost a month over the weekend. Governor andrew cuomo planning for a phased in reopening beginning with construction and manufacturing as soon as may 15th thats the good news the state has tapped mckenzie to help develop the economic reopening plan joining me is kevin steeter whos joining us now almost regularly with updates on where things stand kevin, given your work with the state of new york, wed love to understand where you think things really do stand, what this phased in approach looks like and when new york city in particular can get back to some semblance of normal. Well, first and foremost, andrew, thanks for having me back i have to say i watched the last segment with great interest given my daughter is a student at brown the reason i mention that, the way it gives you the choices and tradeoffs associated with the question of how to reopening im not going to get into the whys and wherefores of what the governor says. Thats his call. Were working with a number of states across the country. And in each case what the decision comes down to is how do you reconcile and harmonize the saving of lives with the safeguarding of livelihoods. Both parts of that is are part of this decision its starting with whats happening with cases whats happening with hospitalization. Then it moves from there into a real sense of do we have in place what we need to ensure that we can retain a control over this dreadful virus do we have the testing, Contact Tracing, isolation, those are the factors being held up. On the economic side many people have said there is this reality of the depression thats being related that its so fast that it poses a threat that is very severe therefore, the sequencing of how you bring back parts of the economy that are essential and jobs that cannot be done from home dont forget, 70 of the work force has to go to a workplace to do what they are paid to do they cannot do that from home. Its reconciling that. Kevin, one of the things i want to try to reconcile a little bit is the fact that its almost impossible to believe that we are going to have enough ppe, that were going to have enough testing, enough antibody testing, enough all of the steps that were talking about, that were going to get most of that in time to quote, unquote, reopen the way you would in an ideal scenario theres a lot of people saying were hurting and were willing to take a risk, maybe a health risk we wouldnt have taken. We think that risk is worth it relative to the economic pain were taking we can debate that whole idea and what the right approach is, but the question id ask you is as you think about that and you think about these reopening and phasein steps, when you say like people want to open a restaurant yes, a lot of people, by the way, their job is in a restaurant, but if the restaurants only 50 open, youre only going to have, i imagine, only 50 of the staff. Well, were not going to be living in a Perfect World for quite some time to come, andrew. Therefore, i think waiting for an ideal moment is a tough wait for anyone to take its a question of how you think about the portfolio of measures about to take place. The role of ppe, the role of testing, role of Contact Tracing and doing it in a way that allows the economy to get back to work is clearly a tough call. This is not a land of easy decisions, yes, no its a very nuanced decision its a very difficult decision to make that choice you have to look at the economic side. Thats why when you give the example of a restaurant, 1 3 is up for furlough. Thats more than weve seen so far. Of that, 40 of most of those at risk work in restaurants, hospitality or nonfood retail thats a huge group of people. To bring that group back, youre right. We have to think about social distancing in the restaurant context. How do you manage people the way you think about putting plastic off to seal people off and isolate them so you dont have large groups all of that needs to be done why does it need to be done . Its not just a question of being able to reopen, its a question of people being confident to go back its not a yes no answer different Restaurant Owners make a different call as to when to rae open and how to reopen as we look across the country, theyre faced with that in very large environments where they need to think about how do they ensure theres enough testing, enough Contact Tracing in place to be confident they wont reopen again and shut again. The real test of leadership is now coming that test of leadership is to brianne economy back up. Its easier to shut down than it is to bring it back up hey, kevin. You mentioned that your daughter attends Brown University and you were watching the interview with the president of Brown University very closely. With the understanding that you may not even if things reopen, you may not be able to stay there the kids maybe get sent home again. Brown university, tuition 55,000, a little bit more than that is it worth it if your kid is learning online by the end of the semester shes learning online. Is it worth the tuition i think its worth the tuition because at the end of the day shes getting an incredible education from a wonderful institution. You should look at the kind of support theyre providing to make the best of the online experience is it the same of course its not, but for my daughter and for many other people who are in the same position, theyre still getting together its amazing to watch what theyre doing. She wants to get back on campus. And she, i think, has a sense of the tradeoffs associated with that decision that you were talking about, you know, what it would be like to be in a group environment. How do you think about the risk of being infected. Thats what all of these students are going to have to weigh out and their parents, too. Were having those conversations but i can tell you, she wants to go back. Kevin, we want to thank you for joining us this morning. Appreciate your time. Thank you. Your perspective as always. Look forward to seeing you. Likewise, stay well thanks, andrew, thanks becky thank you. When we come back, kyle bass talks about managing stocks and his own state of texas. And Steven Mnuchin joins us for the discussion about the Payroll Protection Program and dont forget about the Berkshire Hathaway shareholder meeting. They can eil tmao berkshirequestions cnbc. Com well be right back. I came across sofi and it was the best decision of my life. I feel cared about as a member. Were getting a super competitive Interest Rate on our money. Were able to invest through the same exact platform. I really liked that they didnt have any hidden or extra fees. Sofi has brought me peace of mind. Truly thank you for helping me prepare for whatever the future has in store. Breaking news. Earnings season is underway. Four dow components reporting results this morning, and the futures are up big we can see the dows first fiveday winning streak since mid january. The same time, oil is getting slammed once again big price swings for crude throughout the morning plus, the race to get hundreds of billions of dollars to suffering Small Businesses. Treasury secretary Steven Mnuchin joins us on the round two rollout of the governments paycheck Protection Program. The final hour of squawk box begins right now well be back tomorrow good morning, im joe kernen along with becky quick and Andrew Ross Sorkin it sounded so final, andrew. Right . Were planning on being here. Final hour today. Okay. Final hour today im joe kernen along with becky quick and i know youre worried. Yeah, were going to be here tomorrow becky quick and Andrew Ross Sorkin u. S. Equities up 300 points so far on the session pretty strong. Pretty solid coming after yesterday and in the face of this crazy selloff that were seeing in oil. I havent looked at it its coming back a little. Down near 10 earlier in the premarket session well take a quick look hopefully. It says were going to 10. 83 becky . All right, joe. Lets start with a look at the economy this morning, and for that we get over to steve liesman. Hes been running the numbers with the latest cnbc fed survey. He joins us with the results of that right now steve, its good to see you. Reporter good morning, becky. Respondents to the cnbc fed survey, which we took late last week, shows that it will be a long road back to recovery for the u. S. Economy and the congress and the Federal Reserve both have a lot more work, trillions dollars more work to be done. Lets look at the forecast first for the all important Unemployment Rate. Now at 4. 4 . Its seen rocketing up to a peak of around 19 and that doesnt happen until august 2020 these are average responses from the 36 respondents goes down to 11 by the end of this year and stays up 7 by the end of next year so still double where it was before the coronavirus pandemic hit. How much more work is there to do so the feds Balance Sheet, it needs to grow by another or expected to grow by another 3. 4 trillion that would bring it up near 10 trillion Congress Already has appropriated 2. 5 trillion. They expect them to appropriate another 2 trillion to fight the pandemic we asked our respondents to grade different financial leaders in this crisis jay powell getting an a minus. Steve mnuchin, who you have coming up, you can ask him about this grade gets a b plus John Williams whose new york fed is running a lot of these programs gets a b. President trump, c minus d plus depends how you grade it here from a group that largely has supported the president quite a bit. His economic Approval Rating has regularly for this group been above or around 60 . Its now plunged to down below 50 and his chances of reelection also down below 50 . I dont know if its a style issue or a substance issue but, guys, the main message from this, it will be a long road back and theyre looking for the fed and congress to be doing a lot more here. Becky . All right, steve. Thank you. Joe . Thanks, beck. Lets check the futures again. Were moving into earnings season real heart of it and, you know, weve got some dow components today were also in the midst of gradually reopening parts of the economy around the country joining us to talk about so many different things, a lot of stuff about china has come out since last time we spoke to this gentleman. Kyle bass, founder of haymon Capital Management kyle, its good to see you where are you . I know that this is something you want to highlight. Youre in a are you in a business i am. Im in a 100yearold building in athens, texas, in a cafe by the name of cherry low cafe. Run by a couple of very nice ladies that weve known in our families for many years. This cafe is set to reopen this saturday as per the governors orders in texas allowing businesses to begin to reopen. So are you there for a reason what comment on how were going to reopen the country and are we going to go too fast . Are we going to go too slow . Should we have such a division based on party lines on how we do this . Clearly this is a nonpartisan argument for our country. You know, the fact that anyones playing partisan politics deciding how to handle the health and welfare of our country is a bit silly i think, look, from my perspective when you get into the service economy, you get into restaurants, you get into any of the airlines or things like that, i dont believe people are going to immediately go back to where we once were. I think its going to take a lot of time. For instance, this little cafe has been instructed to open with eight feet of distance between tables and its not that big so you wont have many tables in here, but, you know, i think that at 25 of capacity, eight feet between tables. When you think about you and your family, we all know that the virus is still here. The virus is still going to be here until we get to some point where we have drugs that are actually efficacious against this insidious virus at some point in time hopefully we get to a vaccine. As you know, there are many viruses out there that dont have vaccines. This virus carries some of the properties of those that cant be immunized against. Yeah. Well see. Im hoping that that doesnt happen so i think last time you were on we were in the throes of really the most, i dont know, disconcerting time in this crisis and you actually broached the possibility of closing down the stock market for a while until things were in better shape. And im really glad we didnt, but im ready to close it down, kyle, now that weve gained about 35, 40 whatever it is now that weve bounced back, now im worried well retest the low. Think about if we did that again. We would not feel nearly as, i dont know, hopeful if we had closed it down are you surprised that weve had this bounce . Im surprised im surprised at the size of the bounce when you look at our economy and the fact that we have, you know, as steve was just talking about, 20 unemployment and in the center of the fairway of where we think it will be by the end of the year, in a Perfect World maybe well be back to 7and 10 unemployment maybe were going to see permanent works in the state the fed has come in and done everything it possibly could and then some. The feds buying junk bonds. The feds buying clos. The feds buying everything but equities theyre taking a page out of the bojs playbook the boj in japan today owns more than 75 of every listed etf in japan. The boj is a top five holder of the Ten Largest Companies in japan. You know, at some point in time lets hope the fed doesnt get there, but with the Balance Sheet moving from call it 3. 5 trillion to somewhere between 8 and 11 trillion, lets say 9 or 10, the fed has gone full tilt on this one. Youre a china hawk, too, kyle and, you know, weve talked about that a lot in the past do you foresee a smooth transition for our country to not having supply chain and that were dependent on so many things from china . Is that something that we can actually do and something that makes you happy that were going to try and do at this point . Yeah, look, guys. There are many things that we did right in protecting the National Security of our country. For instance, we never let chip manufacturers get acquired by the Chinese Government or chinese, quote, private enterprises, but one thing we did, kind of allow the frog to boil slowly was we allowed our generic and prescription medicines to be manufactured in china, and i think, again, that was a big National Security slip and i think were going to reverse those things but i think the Bigger Picture is this isnt just a power grab. This is an ideological competition between marxist socialist marxist lennonist socialism and democracies. And if you look at the chinese, quote, media or propaganda outlets in the last few weeks, they are stressing even this morning some of the chinese tabloids are stressing that their systems better than ours and that they have it, lets just say, figured it out better than western democracy does. I think that we give china too much credit. We on cnbc and in the community accept the fact that they say theyre the worlds second largest economy. We must remember that the 800 pound gorilla in the room is china has a closed capital account. Theyre a bit of a tempting village. Less than 1 of the worlds Global Transactions that are cross border settle in the chinese currency and they purport to be 15 of global gdp because we happily convert their r g based gdp into dollars they dont have any dollars. They dont haveenough dollars to open their capital account. If they did their currency would drop i think 40 or 50 and their economy wouldnt be the second largest economy, it would be the largest economy. Their achilles heel is they have an insayingsal need for dollars. They can transact for the rest of the world they are not as strong as they think they are. Its all a facade it just looks good, right . I just think its important that theyve projected this narrative of strength and what they do by basically getting wall street financiers to buy in, they give us special access. They give blackrock special access they give ray dalio special access when you realize that there are u. S. Businesses that have been trying to get their profits out of china since q4 2016 and they havent been able to get their money out because china wont let the dollars out. What do they do . They hire lobbyists in the u. S. Who know xi jinping and the rest of the people and they cant get their money out. I worry that all of the money thats flying into china through the msci and through institutional invest , i just worry that it wont be able to come out hey, kyle, thanks for throwing t joe kyle, question for you, which is you were talking about the location youre in with the social distancing in place and the reopen, does it work i mean, does the model work . You know, i think that i think you will see it. Americans arent used to being, lets say, sequestered in their homes. I think we all have some sort of cabin fever going on after being locked up for a couple of months i think weve all enjoyed being with our families a little bit more its been found time for those of us that have teenagers, but i think people are ready to start going back i just worry that, you know, the reason why we decided to go under these strict stay at home orders was just so that hospital beds in the u. S. Wouldnt be overwhelmed, icus wouldnt be overwhelmed and that we wouldnt have run out of ventilators. Weve done this flattening of the curve. Here we are getting stir crazy, ready to go back to work, ready to go back to business its such a difficult question to answer for the governors or for the president to decide. Right. Well, if we go back now, the curve may not flatten. I think it will start working, but i also think kyle, im asking a different question i apologize. The question im asking is the shop that youre in today, if social distancing is required by Health Experts, forget about whether people want to come. The human spirit, we all want to go there we all want to get ice cream, cake, Everything Else. If Health Experts and the government effectively restrict shops like this from having more than 25 or 50 of the total Customer Base in the store at any one time or if Department Stores have to space everybody out or however its going to get done, my question is that store, i assume they have to pay rent to somebody, they have employees they have to pay, does the economic model for them even work thats the question. Not at 25 . If it doesnt work and this goes on for any period of time, then you have a different problem. You can get people back to work temporarily until you cant. Yeah. Its a good point. At 25 capacity, it doesnt work at 50 capacity many of the restaurants and businesses like this dont work. Its just a i think its a bridge to the future and hopefully the idea is that we can get back to some sense of normalcy unfortunately, that may not be that might not work because the virus is still going to be around until we figure out something some way to find some drugs that are efficacious against it or vaccinate against it lets hope the oxford researchers are right. Because it wont work at this level. Right a lot of people working on it a piece in the journal today, people have been asking for a manhattan type project and if that is in the works, i dont think its been reported until today. Nobody knows obviously the future the worst Case Scenario future, kyle, is horrible, and i refuse to i know its out there. I just hope that were able to deal with this using the greatest minds that we have. Hope springs eternal the worst Case Scenario is almost unacceptable, right again, the economic and financial realities, what were going through right now and the fact that our economys been closed for a couple of months right. They are much larger than the markets telling you today. I think were going to have a very long grind here trying to get these people back to work and trying to make sure that the people that 50 plus percent of americans that have less than 800 in their Checking Account we need to make sure that americans get money into their Checking Account every two weeks or the social fabric of our country will start to get stretched. Thats another worry. Thats what i worry about in the longer run, not just the stuff not just businesses reopening at 25 of capacity we need to really be focused on this at the fed and the treasury and it seems like they are focused on it. I hope the partisan politicking doesnt slow this down. Kyle, thanks. Thank you. Like where you are lets do it again at some point. Lets not be dont be a stranger well see you again soon. Thanks, guys. Okay coming up when we return, treasury secretary Steven Mnuchin on the second round of Small Business aid out of washington were going to talk to him all about it as we head to a break, check out shares of Southwest Airlines it missed on the top line but posted a smaller than expected loss for the First Quarter were going to get a live update from our own phil lebeau later at 9 30 a. M. , southwest ceo gary re r hell join squawk on t stetfoa first on cnbc. Youre watching squawk right here on cnbc ever since weve gone mobile on the now platform, somethings gotten into the office. I hear you. Feels like theres no barriers between departments now. Servicenow. The smarter way to workflow. 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. First off 3m with expectations on the top and bottom line. It withdrew its guidance for the full fiscal year it says its prioritizing its dividend interesting decision next, caterpillar on our list. The heavy equipment maker missing profit and revenue expectations for its First Quarter. Cat is not providing anymore 2020 guidance. The two other dow components from this morning, merck and pfizer, beating the top and bottom lines expectations there but cutting its 2020 forecast. Pfizer also beat revenue and ets estimates. For more on everything weve seen this morning, want to bring in senior markets commentator mike santoli what are we supposed to take away from these numbers, mike . Reporter well, andrew, obviously the First Quarter the specifics of it, exactly, are we beating by a penny, missing by a penny, that gain is kind of moot right now i think were getting at what a baseline core earnings potential is for a lot of those cyclical companies, the industrials what their Balance Sheet position is out, how much staying power they have for a company like 3m. For me, the gain now is this market braced for Something Like a worst Case Scenario over a month ago. We already got to a point where it seemed like it was going to be very negative in terms of earnings to come and now maybe were pulling forward a moment when it could be okay again. The stable Companies Like merck and pfizer have given credit for being stable and not being where the real pain is the interesting part is whether you see a sell the nice and on the other hand, maybe theres an opportunity to say the industrial cyclical side isnt bad. The real test in terms of the overall Market Dynamic comes this evening with alphabet when youre talking about a big, elite, clamor megacap stocks they have been carrying it and have valuations refreshed again. Then i think youre going to get an idea if money is going to flow. Thats my question to you, mike whats your expectation . To the extent that google or alphabet is a great bellwether because youll see if advertising is dried up. Interestingly, its not value as if its a bellwether for the economy. There is a cyclical aspect where some investors havent appreciated. We have reports that they were going to kind of retrench a little bit more, cut a lot more spending i think you have to see there whether, in fact, they have anything to say in a bigger way about advertising demand for the next few quarters. On the whole, i think the market is really feeding off just exactly how much pessimism built up six weeks ago the idea that the fed has given all of this help, hey, we might into the need all of the help. Capital markets are reopened. Companies are issuing junk bonds. Everything has been thrown at this market to try to keep it floating up in this area so now i do think company by company well have to decide whether individual stocks have gone too far or gotten too beaten up. Thats the back and forth here okay. Mike santoli appreciate it. See what happens later today coming up, the government refilled an emergency Lending Program for Small Businesses yesterdays rollout was marked by some glitches just ahead were going to speak with treasury secretary Steven Mnuchin on what the Trump Administration is doing to try to fix those problems. Futures right now are at some of the best levels weve seen this lming. Up aost 350 points on the dow. Squawk box will be rate back 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. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. Dont get mad get e trade and start trading the best Entertainment Experience. S xfinity x1. Welcome back to squawk box. Futures up 355, 356 points s p indicated up 38 and change nasdaq is indicated up just about 93 fthere is a new report that says Trolls World Tour has racked up nearly 10 revenue is more than universal received for the universal fivemonth run in theaters Nbc Universal ceo jeff shell said the revenues exceeded expectations Nbc Universal is the Parent Company of this network. I dont know if you saw it, we rented it the night it came out in our house were always looking for new content. It was great, but its really interesting to see how huge of a demand that you can get and what it means for these companies, particularly when you take out the theaters out of this im not suggesting anybody is going to say straight to home for any of this stuff, but it probably could lead to changes down the road in how this stuff is structured and when things get rolled out in the theaters and how that relationship works from here. Im embarrassed to say i havent be heres the question. Go ahead. You paid 20 bucks yup we didnt have to because we got it for free. How many watched . There were six of us who watched it for 20 bucks. Rate. See, this is the great conundrum. If you had gone to the movie theater, it would have been 15 bucks a ticket, maybe even 20 in new york city. Right. Even if you had to split it what was the movie supposed to do in theaters this is what im not sure. Im trying to do the math its hard. See, i dont think this goes straight to home though and skips the theater. They say they want to bring that out in the theater and see what happens with it. Its just there are such strict rules that regulate how these things work, the relationship, the contracts with the theaters. I just wonder if thats all going to have to be rethought in an environment where you may not see packed studios the same way. If you do release in a theater, if you cant have people sitting in every seat, how do you possibly come up with the revenue numbers that you had been anticipating when you made these things with these huge budgets, too did you have drive in theaters, becky or andrew . Yes yes. Love them. I loved them, too. Yup. And youve seen the resurgence the ones that are still around yeah. They are sold out and people are bringing blankets and sitting in front of their cars theyre social distancing. Great return. And people are doing curbside from the concession stand. Theyre coming up in masks to the just an idea, but it looks like god, that brought me right back. Im not sure the audio is so great with that thing you stick on your window though. No, but it was so much fun. I remember seeing e. T. In a drive in movie theater. Yeah, huge memories i hope that comes back for the summer. Has anyone looked at peacock . Have you been on peacock have you i have not. Not on the comcast system. Youre not . Im on spectrum. You should have thought all of this stuff, through, sorkin, when you were renting that estate im on a spectrum system and theyre doing a good job so far the signal is working so im happy. All right so oh, time to go i guess weve got the treasury secretary. It is right. When we come back, treasury second Steven Mnuchin will be joining us live on the hundreds of billions of dollars just injected into the paycheck Protection Program Small Businesses trying to make sure they are not left out in round two. Right now as we head to a break, take a look at some of the biggest premarket gainers for the s p 500. Stay tuned, well be right back. Welcome back to squawk box. Futures some of the best levels this morning up 350 points on the dow s p up 38 and change nasdaq indicated up about 88 oil is down 10 and change, the wti. Shares of cvs health are rising. The Company Announcing plans to expand coronavirus testing to nearly 1,000 sites across the United States by the end of may. Cvs has plans to process up to 1. 5 million tests per month depending on availability of supplies and lab capacity. All right the paycheck Protection Program or the ppp resumed yesterday with a new influx of 310 billion from the federal government that is intended for Small Businesses for more on this right now, lets welcome treasury secretary Steven Mnuchin mr. Secretary, thank you for joining us today. Good morning. Its good to be with you. Good to talk to you you know, i was hoping we could start with a little bit of a dive into how you see this program, whats happened there has been a lot of outrage out there as people found out some Big Companies had applied, things like ruth christ steakhouse, auto dealers getting money in this program and there have been reports in the media about big banks putting those Big Companies in line in front of Small Businesses. Youve come out and said this was intended for Small Businesses that dont have access to the public markets, but i just wondered if youve had a change in your thinking on how this should be used as this whole situation evolves as the markets kind of firmed up a bit or if this was something you thought from the very getgo and you think some of the Big Companies and big banks are in the wrong and were bad actors in the situation. How did this evolve . Well, let me first say, i really think the program has been an incredible success its impacted over 30 million workers so far by the time we get through this funding i think it will have impacted over 60 million workers, which as ive said before is about half the private work force supporting Small Businesses that was always the president and congresss intention and thats what were delivering on. I think it is unfortunate that theres a small number of companies that have created a lot of publicity that took loans. I think it was inappropriate for the companies to take the loans. It was clear there was a certification. We dont think that they ever should have been allowed to. We put out an faq clarifying the certification and saying that if they paid back the loans in two weeks so that we could reprocess that money, they would have no liability, otherwise they would have liability and i must say im encouraged by the number of people that paid them back. I never thought in a million years the Los Angeles Lakers would have taken a 4. 6 million loan thats outrageous. Im glad they returned it or they would have had liability. Im going to be putting out an announcement this morning that for any loan over 2 million the sba will be doing a full review of that loan before there is loan forgiveness so we will make sure that what was the intent for taxpayers is fulfilled here but let me just say, again, the program, overwhelming success. 1 million loans so far are for companies under 10 people. What do you think the impact has been in terms of trying to keep people employed have there been people who have gone and had to fail for unemployment or you think this program has saved a lot of people from actually having to do that and kept them in their workplace . I think it saved a lot of people and i think for those people on unemployment its going to bring a lot of people back matter of fact, were having a Small Business event at the white house today where unlike the lakers stories, were going to hear stories of great Small Businesses who this really saved their business and i can tell you, you know, the number of emails i get from people who send on the stories of a legitimate Small Business that was about to close their doors that is either keeping their people on or rehiring people or businesses that have to close their doors because through no fault of their own the city shut down business is going to bring back those people so as we reopen, these companies will have the liquidity to pay their workers. It occurs to me that not every part of the country is dealing with this equally. There were a lot of states that closed down later than others and there are obviously others that are opening up quite a bit earlier. Are any of these funds going to be directed to the areas that are most hard hit to make sure that the businesses that are forced to close for a couple of months already and could consider to see a long closure, would those businesses be prioritized . Were absolutely working on that we want to make sure that this money is getting to where it should be. Let me say, im highly encouraged that the average loan size is coming down. Matter of fact, the average loan size in the back log is less than 100,000 im also encouraged, im on a call every day where we have over 100 cdfis making loans. We think were going to increase that to 400. Particularly in communities that have been hardest hit, we make sure theyre going to get that money. Were going to do what we need to do to make sure everybody is treated fairly in this program mr. Secretary, what do you tell people, look, some of these companies maybe should or shouldnt have tried to get this money, but do you blame the banks, the banks that issued these loans to them given the rules that you had spelled out or were the rules themselves not clear enough the rules were very clear, but let me also say the certification was a certification by the borrower, and one of the things we did is we wanted to make it very easy the banks were really middlemen here the banks were not required to do the diligence i really fault the borrowers who made these certifications. Now there were some banks early on who put things up on their website and prioritized their customers. We immediately told them that was wrong. They took it down. So, you know, i want to be very clear. Its the borrowers who have criminal liability if they made this certification and its not true and as i said, were going to do a full audit of every loan over 2 million this was a Program Designed for Small Businesses, it was not a program that was designed for Public Companies that had liquidity. Again, the certification was very clear in saying that if people had other sources of liquidity, they could not take this loan. Mr. Secretary, what do you say about those Larger Companies that may be returning those loans but the true effect of it is theyre going to continue to furlough employees to the degree that this is an employment for all program, you know, shake shack is not necessarily going to now put people back on the payrolls, whereas, had they had access to some of these loans if you felt they were properly eligible, despite whatever liquidity you think they might have, they may decide as a business decision not to bring people back, whereas, the Smaller Companies who have access will bring people back knowing that theyd get the loan ultimately forgiven and would keep people in their jobs again, let me just be clear the purpose of this program was not social welfare for big business the purpose of this program was to help Small Business its a Small Business program and it was meant for Small Businesses that didnt have liquidity. Now there are a lot of big businesses who are doing the right thing and keeping their people on the payroll. Some of them are cutting their payroll a little bit in terms of not paying people as much, but theres plenty of businesses that have been impacted by this that are doing the right thing for their employees. And, again, every business has to decide what they want to do every Business Owner has to decide you know, if youre a private equity firm, if you are a Venture Capital firm and you want to support your companies and you want to support your employees, i would expect most of them that have the liquidity will support it. Obviously there are businesses that were terribly impacted by this where people cant do that. But, you know, i want to comment many businesses are doing the right thing for their employees and this business, this Small Business, again, weve impacted 30 million workers that would not have otherwise been able to be paid because 50 of our economy is truly Small Businesses. And, mr. Secretary, the other question i get asked all the time, im curious if you do too, how this bailout differs or is similar to the t. A. R. P. Bailouts after 2008 and whether taxpayers ultimately are going to get paid back as they did after 2008 . Given the grants that are involved and the loan forgivenesses that are involved, can you imagine a scenario where taxpayers actually get their money back in the traditional sense of people paying these loans back and getting interest for it well, this is a completely different situation than the financial crisis i mean, this is a situation business had nothing to do with this this was the fact that the silent killer, this virus showed up in the economy, that we had to close down major parts of our economy for Health Reasons and, really, the businesses had nothing to do with this. So this was not bad Business Decisions like in the financial crisis this was not over levered real estate in this program theres a very significant part of these programs that are grants, as in the ppp. Theres enhanced Unemployment Insurance, which is meant to protect workers that got laid off by companies theres our direct deposits. Were over 100 million payments of direct deposits and checks and now sending prepaid debit cards and we want to get those out to people. This is unprecedented liquidity being pumped into the system now there is a component of this where we can work with the fed, which is an investment to support lending facilities we made loans. Were in the process of making loans to airlines, National Securities on those i do expect well get paid back, but a big component of this is an investment in the u. S. Economy and u. S. Workers to support them through this difficult time that they had nothing to do with mr. Secretary, lets talk a little bit about the states and municipalities that are also struggling and have said that they need the money. We spoke with new Jersey Governor Phil Murphy who said he had some productive conversations with you over the weekend about what that money can and cant be used for. Lets just use new jersey as an example. They say theyre going to run out of cash in four to six weeks if they cant use some of that federal money for other things than what they feel like theyre allowed to right now where does that stand . How should these states and municipalities be thinking about this. Ive had multiple conversations with phil and im glad he characterized them as productive as you know, there was a chunk of money, its now all been sent out, to the states and the cities to cover them for coronavirus expenses and, again, weve been dleer to the extent people have to use police to enforce coronavirus issues, public safety, things like that, that they could allocate that money to the coronavirus issues, but that this was not about lost revenues, and thats the way the bill was written weve also worked with the Federal Reserve. I think you saw yesterday, expanding the Federal Reserve facility to states and cities for liquidity problems because we know just as we push back tax revenues, they did, which well deal with liquidity situation. And i think as you know the president said that well have a debate in congress, in the house and the senate, to consider this issue going forward, but, you know, there are issues this isnt going to be just a federal bailout of the states. On the other hand, this will be an ongoing discussion. Mr. Secretary, theres been a raucous debate about whether the Federal Reserve should buy stocks what do you think . Im not going to specifically comment on what the Federal Reserve should or shouldnt do in the future, but i would say i think thats highly unlikely let me ask you a different question its about buying stocks but in a different way. Its actually corporations buying back their own stock. Theres also been a raucous debate about buybacks, companies that bought back their stock over the past couple of years and didnt have a Rainy Day Fund for this moment. Do you have a view on that pepsico today said they were actually going to buy back stock. Weve heard from other companies saying they plan to buy back stock. Well, i would think in this period of time most companies are announcing that theyre cutting their dividend and theyre cutting their buyback programs because they are investing in their business,an i think thats the right thing to do. Now there may be a few times where, you know, companies are performing so well even through this that they have excess capital that theyre looking at capital allocation, but i would expect that thats a very, very small part of the situations and i think as you know weve put restrictions on any of these direct Government Programs so if were making direct loans to airlines or National Securities or were making direct loans in the main street program, there are restrictions on compensation and share buy ba buybacks so we think thats the appropriate thing to do. Mr. Secretary, just quickly going back to the issue with the states i understand that some of these states have gotten a little piggish. Ive heard about the president of the senate in illinois asking for i think 10 billion to bail out the pension fund thats been underfunded for decades there. That seems ridiculous. What do you think personally about whether the states should be allowed to use those funds from the lost revenue in terms of keeping teachers on, firemen, policemen on the job as we continue to look at these states that have been shut down and hit the hardest . Is that fair in your choice . I realize thats not the way the bill was written but would you advocate for the states to use the bill that way . As you said, i think states that were mismanaged, this shouldnt be a bailout of states that were mismanaged because of a coronavirus. I would also say states that had specifically large expenses as a result of the coronavirus, like new york and new jersey, i think it was the right thing that the federal government gave them money for the coronavirus expenses the issue about lost revenues is something that needs to be debated and discussed in the house and the senate i think, you know, every single one of these bills weve done has been done on an overwhelming bipartisan support in the senate the last two times you had a 960 vote or by unanimous consent which was, again, everybody supporting it these will be discussions well be having with both the house and the Senate Secretary mnuchin, i want to thank you for your time today. We do appreciate it. Thank you. All right. Coming up, in depth looks at some of the Biggest Companies reporting Quarterly Results this morning. Heres one to get you started. Pepsico, the snack and beverage giant beat on the top and bottom lines for the First Quarter. Joined other companies in withdrawing its outlook. Pepsi said it still expects to buy back 2 billion worth of shares this year and pay 5. 5 iddsion in diven god bless them stay tuned squawk box will be right back. Welcome back the futures are building on the gains weve seen over the last four trading sessions. Weve seen a lot of action on squawk box with some big quarterly reports and a lot of volatility in oil. Lets start things off now with meg tirrell. Good morning good morning. Three huge earnings reports from pharma companies, novartis, merck and pfizer beats for the First Quarter for all of these companies, but in terms of their guidance, kind of a split. Both no vavartis and pfizer remained the same, merck cut its guidance if you look across the companies, some main themes emerging for how covid19 is affecting the pharma business. First of all, all the companies pointing out that customers, patients stocked up on medicines before the stayathome orders, so you did see a boost for some companies in terms of just ordering ahead on medicines for the First Quarter. Also the companies laying out what theyre expecting for the rest of the year merck saying they expect a peak for the pandemic in the Second Quarter for the u. S. And europe. Pfizer saying in the second half they expect to see physicians visits picking back up so vaccines and things administered in the Doctors Office picking back up all of these Companies Working hard on the pandemic treatments and vaccines now over to phil lets talk about Southwest Airlines reporting its first loss since 2011. When you look at the numbers, we knew it would be terrible given what was happening in march. The loss less than what was expected coming in at a loss of 15 cents a share compared to an expectation of a loss of 41 cents a share. Revenue far below what was expected at 4. 23 billion lets talk about liquidity and cash on hands. Thats what its all about when you look at Southwest Airlines they ended the First Quarter with 5 5. 5 billion in cash on hand as of last friday, they had 9 93 billion cash on hand they will need it. Theyre expecting to have a q2 cash burn of 30 million to 35 million a day. Other news from the company, its pulling the 737 max off of the schedule until october 30th. When you read the release, its clear, they have no estimate in terms of when theyll be flying the max again. Dont forget, gary kelly coming up at 9 30 on squawk on the street. You do not want to miss this first on cnbc interview. Brian, over to you all right, phil lebeau thank you very much. Oil is under pressure. Everybody is saying its storage, lack of storage causing oil to go down thats correct theres two other things to watch today. Its not just storage. Number one, the cme changed their margin requirements a little bit in other words, i dont want to get too wonky, if oil goes below 10 a barrel it could trigger margin calls, 1,000 barrel contracts, that could accelerate selling, cause more margin calls. You get the picture. Yesterday, s p and dow jones rolled completely out of the june contract to july, just like the uso etf. So two things at play here, margin calls and this rolling out of the june contract, which could cause oil to go negative of that im positive joe . Thank you, brian. Lets get to cnbc headquarters, jim cramer is listening in we dont have a lot of time, jim. I know youve been talking about oil and oil stocks yeah. I think theres been a big divergence the oil stocks are going up, and th this, wti, is really of no value. A handful of contracts trading at minus 37 my oil expert told me that you should disregard these this is more of a financial problem with actually a lot of it with that ridiculous uso, that etf the oil stocks have been going up because theres a rally in natural gas. A lot of these companies have natural gas, particularly the western natural gas price. I think theres reason for a roth capital to upgrade diamondback. Theres a trade here i know last night on twitter i was trashed because i said this is a trade, but were getting a bounce in a lot of things that had not been working and a selloff of things that are working. Yeah there will be a bounce here because oil is up, not down. You have to look at that back on twitter jimmy chill is back. Yeah. We have to go tonight you have nucor and centene. Well be watching. lseyou on squawk on the street in a couple minutes. Squawk on the street will be right back final check on markets this morning. Lets show you where things stand. About a half hour before the market open. Dow looks like it will open up big. About 383 points higher. S p 500 up about 42 points higher the nasdaq up about 95 points higher right about now lets show you the tenyear note looking at actually, showing you wti crude, 11. 76. Then finally lets show you the tenyear note, where that stands now. Tenyear at 0. 638. Its a big morning for everybody. Make sure you join us tomorrow that was a fascinating conversation with the treasury secretary. Becky and joe, see you guys tomorrow squawk on the street begins right now. Good Tuesday Morning welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber coming to you live from various locations. Stocks are taking aim at what would be the third 1 gain in a row as we get our first real parade of earnings with caterpillar, merck, pfizer, pepsico and more well talk to southwest and 3m later this morning oil bouncing off of 10 as some big players roll their june contracts into july. Markets clearly looking closely at some of these reopenings, it does raise the question of how precarious t