Transcripts For CNBC Squawk On The Street 20240713

Basket size and looks at the issue of what happens when you are able to open and a lot of your competitors are not right i think Doug Mcmillan has the four stages of, lets say, the opposite of grief and acceptance its more like acceptance and euphoria at the beginning theyre stocking up. By the end theyre buying tvs. He laid out a course that i felt was very, very optimistic. But not that optimistic for anybody who competes with him. When you hear what hes winning in, its every category that the Small Business guys do its the bicycles. They have the good tvs going boutique games owns all of that now he owns video games now. There wasnt anything that i heard that did indicate that you go to walmart instead of a Small Business david, doug was very interested in the fact that you bought your pullup bar there, that you might have gone to a gym, but you took that order from a Small Business guy and you gave it to the king yes, i guess that is true the power tower, it wasnt cheap. But its difficult to find anything in which to do exercises at home as you both probably know. Everything was sold out. We talked about how this crisis will change behaviors and what this will look like as we get to the other side not just in the workplace but overall. Certainly how engrained is it going to be for people to go to walmart. Com or target. Com. You look at that, 141 comparable Digital Sales increase at target for the first quarter. Or walmart to the point youve been making, how much has traditional retail lost and will be losing more as they get to the other side of this given the changing behaviors. Obviously people like this idea of ordering and then coming to target and having a guy put it in your trunk you never have to touch anything youre at home rather than next day amazon, its right there its one of the ways to get goods. But what is the little guy doing . The little guy is closed sudden will you you have this new allegiance to target online. Some are worried that the apparel, they didnt make a lot of money on apparel. What Apparel Store thats closed can compete with someone who has good private label apparel for good prices when youre not going to work and needing good looking clothes. This is the moment for these stores it will never be this good again. What theyll do because of the way that nonessential stores had to close, they will be able to leverage the fact they sold food at target and theyre crushing it i know some people think this is not a good number. To me, they are building on this this is q2 he spent a fortune on making this work. Its working those who dont like the stock like the last time when he reported stock at 112, people didnt like the margins, it went to 106, then where did it go it went to the moon because who can compete against this if you want something that day . Maybe walmart . Thats it . Thats it. How do you like being deemed nonessential mcmillon talking about the level of hiring theyve done a lot of that hiring coming from people who worked at a hotel he said but also from other retailers. Jim, when you think about the costs that walmarts paying in covidrelated expenses, this number from target, which is not exactly comparable given the different timeframe, and given the less competition, whats to keep them from completely controlling pricing and categories where its hard to find goods any way nothing nothing. Special payments, youre getting employees who are compensated well costco, which probably has the best of the compensation, but very few people can keep up with these prices you cant. This may have ended up happening one day, but there were always Boutique Stores that could survive. Now those stores lost a base of customers. As you say, a base of workers. They were the people who might have known the customers the big guys won its not the fault of the government unless you think like i do that this nonessential tag seemed very wrong to me. But it happened. Its over. The big guys won fortunately theyre fun to shop at i like going to lowes i have a good lowes near me it used to be not great, then Marvin Ellison fixed it. He must have gone in there personally its so good. Walmart is a great place to shop now. I like it. I just bought a tv at target right in the trunk no touch no touch i like that. To what extent as well are these retailers in position given their size to take on the additional costs they have to make their stores safe and employees safe were looking at that 5 500 million commitment that target says extended benefits for team members and Safety Measures put in place, and home depot what was the number, 800 million yesterday . These are significant costs that not every retailer is in position to bear you want to put i once tried to buy a piece of plastic at lowes. I told marvin they werent that helpful, Marvin Ellison on mad money, and hes on tonight. But if you want to buy plastic, plexiglass, you are in control if youre walmart. The price you can get is probably the lowest imaginable if youre a retailer with four stores, i would rather go to one with plexiglass. Its about protecting me a fourstore guy trying to put in plexiglass will wipe out that months profits. This is scale winning. The people at home may not understand the changes these Companies Made for you are simply too expensive for the smaller guys to do one more reason why the smaller guys will be buried. They have to have an online presence, a facebook shop in order to be able to bring in some money the mcmillon interview covered the gamut. He talked about sporting, crafts, the hiring process in this pandemic and also talked about Liability Protection and what needs to be afforded to businesses as they do reopen take a quick listen to this. I think that debate should happen and some level of suppor should be provided nobody in this country wanted this to happen its a virus that has spread across every part of the country. We just need to Work Together to try and create a safe environment for businesses to come back online in every way. I think some form of Liability Protection for them is a piece of the puzzle. It sounds like this will be part of whatever mcconnell, schumer and pelosi can put together if theres to be a phase four rescue package. Mb docdonalds got sued yesterday, workers too close together this is a going to be a common refra refrain. This is going to be a remarkable personal injury bull market. That stock will probably have a 40 pe or a 50 pe. Those guys will make so much money. How did you know on february 23rd unless you were me and crazed that you would have to change the whole world because of something that happened that you cant see . The lawyers have to make it they have to try i dont know how they did the last couple of months, how else will they make the money i have to admit, the big guys to some degree, they were exceptional during this period they sold one thing that Doug Mcmillon said is they sold in two, three hours what they usually sold in two, three days for disinfectants, grocery staples, surface cleaners. The little guys could never do that at least they helped you as a consumer they brought prices down as a consumer you have to Love Companies that brought prices down, competed against each other for lower prices, against amazon, which we have not mentioned. If theyre going to get sued for doing what we want them to do, i think they do deserve protection david, you pro plaintiff bar there . Not talking . No. No i think youre right to point out it will be a point of contention in terms of phase four and whether you get it. The democrats are in support of a 3 trillion bill that will bring a lot of needed and necessary aid to the states, which are obviously yelling and screaming about huge budget shortfalls but this idea of extending a measure of protection to businesses when it comes to litigation is an important one its one that would be embraced by the republicans will we get there . Thats the key question in terms of additional aid being apportioned particularly for the states, guys, which continue to say if you dont get it to us, there are going to be a lot of layoffs coming in our work forces the states are pretty broke the hospitals are totally broke. I was speaking to mr. Sperling at mass gen. Hospitals werent allowed to do the surgeries they made a lot of money on, the socalled elective did you know brain cancer was elective in the end at mass gen . Brain cancer thats how badly this scourge that a lot of people seem to forget in the south impacted the north. There was a there was a big annual beach party in texas, not only did people congregate, but it was like they were trying to distribute covid people feel if youre under 30, covid is not a disease its something shoe read about i dont know yeah, youre talking about galveston . Yeah. I didnt want to mention it by name then everybody in galveston will hate me then well get into a logans run issue. You know that, right i remember that you do . I think you were a toddler the elective surgeries rely on the big profit margins, those disappeared, and many people put off things they need do for their own health so there is a question as to how many people will be negatively impacted by not dealing with those things there was a 30 decline in the number of cancer diagnoses in boston. Do you think cancer declined by 30 . No, they didnt go they were afraafraid big implications for huge medical giants like j j which is in the news for other reasons. Well get to that. A lot of airline news. Well cover what united told phil lebeau this morning and vaccines as we got that reality check there stat news. Ngoway. Usaa was made for right now. And right now, is a time for action. So, for a second time were giving members a credit on their auto insurance. Because its the right thing to do. Were also giving Payment Relief options to eligible members so they can take care of things like groceries before they worry about their insurance or credit card bills. Right now is the time to take care of what matters most. Like weve done together, so many times before. Discover all the ways were helping members at usaa. Com coronavirus will it be familiar streets . Or perhaps unknown roads . Wherever you may go, lexus will welcome you back with exceptional offers. Find a lexus for every road at lexus. Com. No payments for up to 90 days on all 2020 lexus models. Experience amazing at your lexus dealer. 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. Welcome back were keeping a close eye on efforts to develop a vaccine for covid19 as that race continues and intensifies, drugmakers are forming partnerships to combat the pandemic meg tirrell joins us now she has more on that story meg . Hi, david if these companies are successful in developing a safe and effective vaccine for covid19, the next challenge is going to be manufacturing it on this massive scale enough to potentially supply the world. In order to do that they are forging these partnerships look at what some of the Biggest Companies have done so far j j partnering with Emergent Bio Solutions and plans to get to a billion doses next year. Moderna and lonza partnering pfizer and bioentech getting together a lot of these companies are depending on a segment of the market we almost never hear about. Contract manufacturers this is a large and growing portion of how our medicines get made in 2018, pwc estimates they brought in about 99 million in revenue as an industry, but predict that will grow to 160 billion by 2025. These are Companies Like Emergent Bio Solutions and lonza. I was talking about these challenges, and they pointed out a couple of questions. One is that a lot of these vaccine technologies are brandnew. Theyll be building the scale as they figure out the technologies the second are supply chain concerns our ability to manufacture at scale is only as strong as the weakest link in the supply chain. We talked with lonzas ceo about what keeps him up at night this morning on squawk box. Heres what he told us what could go wrong and create some delays is having access to the equipment. We are building new plants, new manufacturing plants with specific treatment, and this is the main reason why we could be delayed in our plans though they do have funding from barta to moderna, almost a half billion, and moderna did that Stock Offering on monday of more than a billion dollars in stock which they say they will apply towards manufacture ing a distribution, the lonza ceo said they will still need more funding. Moderna, 1. 25 billion raised for that company yesterday in the markets itself as the stock shot up monday what do you make of sort of the focus on that eightpatient study . Are we seeing things that we typically wouldnt see in Drug Development because this is such a unique time and therefore we have to kind of give them a little more room, a little more wiggle room in terms of what theyre seeing we are definitely seeing things we wouldnt normally see. This situation is just fascinating. That small number, the eight patients, that is earlier than we would see for phase one data. Scott gottlieb this morning on squawk box brought up the timing of the operation warp speed press briefing on friday where the leader of that operation, who at the time was on modernas board, indicated he had seen data that made him even more confident we would have a vaccine by the end of 2020 so theres some speculation including cited by gottlieb this morning that moderna had to report the data out because there was that illusion made to it on friday maybe it was earlier than they normally would report. Guys, i did reach out to modernas ceo upon seeing this stat news article yesterday to get his take on it one of the points in the article was that it was a small number of patients, eight patients. He acknowledged that and he said they pointed that out as well. The other question thats come up a lot is why the National Institute of allergy and infection diseases, dr. Faucis organization, has not acknowledged the data. He pointed me to a tweet from Vice President pence who did say he talked with fauci about the data in a briefing and he was very excited about it. So, there are so many questions about this, guys its not a normal situation at all. Meg, i think the biggest problem and what offended most people was that a lot of younger Companies Like moderna do this, its a curious disease of premature explanation something that said they dont really deserve to be able to put out anything that was promotional, or be promotional, because they did blanket the airwaves i believe it would have been good for them to say you know what, i want to be clear to everybody, we need the money to go to the next level the fact that they didnt volunteer it a lot of people are mad we didnt pry it out of them sure, i like to ask these questions all these Young Companies what will you do for money . Typically they say, we cant talk about it or, you can imagine what we have to do i would have preferred if they provided that information too. But i think you just can explain to us that its not necessarily when they say 8 for 8 that they had to do that, but it would have been good when they did 8 for 8 which is way too small means nothing. For all we know, theyre all 23 years old and cherry picked, it would have been good for them to say, hey, our stock is up a lot. They are the largest now in that particular index remember, we have to fund our company, had they just done that people wouldnt begrudge them so much yeah. Though i dont understand all the financial disclosures, but if they could they have said in advance that they were planning on raising money through a stock sale based on the data i think theyre in a complicated position a lot of us were probing why havent we seen the phase one data yet when we knew they got the go ahead from the fda based on safety to start the phase two. Then they did report what they had, now theyre being criticized for reporting so little data. Its just very hard for these companies to know what to do one of the things that when youre in doubt, just tell just say we passed phase one there was no need to give more detail once you give some detail, you have to give all detail. Meg, thank you. Well be following it closely. Were back on squawk on the street. Ayitus derek, seems like your team is operating just fine remotely. Yeah, everything is running smoothly with the now platform. bling see, incident resolved. How did you. Gotta enjoy the small wins. You keep being you, derek. Keep being you. Lost steam going into the final minutes of trade but looks to get most of that back this morning. Futures indicate a 300point pop at the open. All right. Three minutes until we get to the opening bell lets squeeze in a mad dash. Analog devices on the radar today. Why . This is a 40 billion company, david i created this cramers covid index, it is trying to replace socalled s p 500 because theres so many Zombie Companies now in the s p 500 analog is a company that makes devices that go into everything, not just theyre not cell phone. Theyre not focused on that. They have a robust business that they do in medical equipment they also do a lot of lighting a lot of sound their chips go everywhere. Industrial chips they had an amazing quarter. A great supply chain, they could produce everything they need the diversification made it so they did far better than people think. Once again, heres a company, you would have expected them in a recession or depression that they would be doing badly. They have a great book of business, they had a fantastic quarter. Fantasti fantastic. Yeah. Important parts of the economy, no doubt about it. How Many Companies do you have in that covid index of yours theres a lot. A hundred its a hundred. Yeah. We wanted to look, the s p, we all know, is filled with companies that have incredibly high prices to multiples when we look at the earnings, nothing is there there are no earnings. Companies are cutting dividends. You heard some retailers yesterday, come on, theyre not going to make it david, ill go to you with the pier 1 Liquidation Sales and well things for our homes. Will nordstroms make it . Will kohls make it . I dont know but Analog Devices is set up for this moment. They are nessential, they produc essential chips. So we have to focus on them, not just retailers you didnt do hump day, david. No. Happy hump day this social distance does ruin the camaraderie, you know it doesnt ruin it. It changes it. Its an introverters paradise for you, david, right im not really an introvert its a complicated situation you can feel the love coming from me. You keeping your numbers for viacom here . Carl . Save us. Theres the opening bell. Interesting session here i wonder, you know, were looking at were sort of in no mans land seeing States Reopen, not knowing the impact on new cases. Overall new cases are down 45 from the highs 25 days ago thats a nationwide number i wonder if you think if this continues to work where we see a continued drift lower, does the emphases on a vaccine get lessened and we think more about therapeutics and testing totally i think youll get a cherry on top for the vaccine right now if this trend continues weve seen this trend in other countries. Were much more looking to see what happens two weeks from now. We still have a lot of cases if we got you something out of the hospital faster than a remdesivir cocktail and you take off the table, say, the people who are 65 and under, as opposed to just 30 and under, you say, you know what . This is a disease for older and preexisting and for the unlucky. I dont want to say that because so many people got sick, its a terrible thing its not front and center unless theres a spike. Its just not. Instead we think about how much money the Federal Reserve pumped into this economy. Its incredible. We have not yet talked about powell and mnuchin yesterday but to your point on reopening, connecticut is the first new york tristate to start opening hair salons, outdoor dining. Upper michigan will start Yellowstone National park and disney springs, today is the day. Weve been talking about it for a couple weeks today is when you will be able to go to walt disney world, maybe not ride a ride but get some pizza and go shopping people do that. When theyre lining up to get into a casino, dont you have to go buy the stock of Penn National gaming . People line up for things you never thauought they would linep for. They will line up for hair cuts. When Planet Fitness opened up, people were unsure if they would come back. They provide paper towels and disinfectant, people come right back are people fearless or stupid . I dont know i know four weeks ago these would have been unthinkable things we did go to the abyss now we have to understand that theres still a lot of Stores Closed and lots of companies that cant do any selling. So we keep defaulting to walmart. Target is down today target will go down four, when Brian Cornell is on tomorrow it will go up five. These big retailers have the run of the joint the little guys, as they open up, i hope they have customers yeah. You know, jim, ive heard that we see the pictures, i dont know if you caught tillman yesterday when he was on power lunch. Landrys is his company. Landrys, they have sort of highend and the casinos listen to what he said its not about necessarily figuring out how to reconfigure your restaurant, hes still talking about people not showing up its not just a social distancing, believe it or not, that has not been as big an issue as 15 to 20 of america is unemployed. 15 to 20 are scared of losing their job or holding on to their money, 15 to 20 are damn scared of going out in public yet. Were really not turning away the business at this point, but the business isnt there wow jim, thats a little bit different than the world youre discussing now hes a straightforward guy yeah, he has that big payroll, too but ill give you the other side of the equation that people come on air that we know. Look at the marcus lemoniss company, camping world holdings. You get a camper, you dont have to worry about staying in a hotel room it was interested with robert kapl kaplan, the Federal Reserve official, talked about staying in hotels as somehow brave yes. I think there is an element of the lost job, but that cuts in walmarts favor, right the lost job cuts in walmarts and Dollar Generals favor the scare factor is for people who are 50 and over. Obviously from the places we see, like people on the beaches and lined up for bars, these are people who i think basically feel like theyre not rolling the dice so theres a lot of different businesses that are doing better but fertitta is right, he comes on and says my businesses are hurting. A Talent Survey came out and said people at restaurants, down 60 year over year thats just people who dont want to risk it. They would rather go to chipotle and take it out. But if were going to sequester older demographics from economic activity, we dont need to tell you what percentage of consumerspending comes from older people they are the people with the money. The baby boomers like to spend. They like to go out. They feel like eternal youth, the disease has proven that they dont have eternal lungs the fear factor there is still very high. They have taken a tremendous amount of money out on the market i think a lot of it is the boomers who said who needs this when the dow went from 28,000 to 18,000 this is too crazy a place to put money. Theres enough people who realize maybe that was a big mistake. But, yes, you cant lose the whole you cant lose everybody from the baby boomers and still think that business could be good. Especially because they made the money, theyre not afraid of losing their job because they may be retiring. You get extra if youre 65 and over at some of these stores make a little extra money. Interesting to hear James Quincey this morning saying the Economic Impact of all of this is just starting its its midmay right now come august one well talk more about what happens when stimulus checks and unemployment run out. Come october 1st, when these airlines are free to start making permanent layoffs, what happens then summer is a bit of a bridge, we still dont know whats on the other side of that bridge. No, and thats a key consideration. With the s p down 8. 3 as of this very moment for the year, there are those who seem to believe, guys, that the economy will rebound more sharply than most of the people i think we speak to believe given what carl just said, youll have a large amount of people unemployed at the end of the year, that consumer spending, which drives our economy, is still not going to be there in the way it had been previously in this year or in 2019. I dont know 20 gets a pass, but is 21 going to be the same as 19 will we be waiting to 22 or 23 look, i think that one of the things that we have to Start Talking about is what were looking at what has nothing to do with the economy. The economy is not the economy, its not facebook, its not google, its not amazon. Thats the new economy we are not trading luncheonettes or pizza parlors were not trading the 70 of the economy, were trading 30 of the economy. There was a health care recession, thats ending as the elective surgeries, the botox generation comes back. We are not trading in things that got hurt. We never realized how different the stock economy is in 1929 the stock economy fell apart. In 2020 the stock economy soared its just incredible they say the stock market is not the economy, and we seem to get reminded about that fact every day. As for airlines, you have southwest yesterday talking about load factors going up. Same thing out of delta. Then the new head of United Airlines with phil lebeau this morning talking about continued optimism on a small bounce, and this partnership with the airline and Cleveland Clinic and clorox to try to convince fliers that the cleanliness is priority number one take a listen. Were confident well get through the other side we have to get through the crisis, get through to a full recovery we like everyone were confident the virus will be defeated there will be a recovery while its too early to say we see the light at the end of the tunnel yet, its certainly a lot less dark in here than a few months ago it was hard to be come on. How could it be darker they were flying planes where there were two people on them. You get down to one person then theres routes that are too filled one of the major areas where they make big money is travel and leisure coopted by zoom and another is travel and leisure so when you get there youre quarantined. If you want to take the week off in america and then you go to a country where youre quarantined for two weeks, where is your vacation a lot of the great routes that they have, i think theyre still not coming back. Doesnt matter, treasury owns a lot of them any way. Didnt treasury replace Warren Buffett . Just kidding buffett doesnt seem to be buying much of anything. No what do you think of that . Yesterday mnuchin indicated they fully expected boeing to need help, but then he said the help the bond market has gotten from the feds actions, even though they had not done much in it in terms of intervening were enough to get that 25 billion deal done. Interesting hearing him say that they expected they would have to help boeing. I think that was the bottom i remember greg smith talking about how we didnt need the government that was tremendously important. You had that Carnival Cruise not needing big pe, then you had boeing doing the deal. After that the discussion was wow, i see what will happen. They wont let 2007 happen theyll expand the money supply at the same pace they did over a fiveyear period, theyll do it in three weeks they wont let anybody fail, its going to be the 70 of the Small Business and theyll piece it together with the ppp i think ppp is great, but if youre getting ppp in a deblasio world, were not allowed to open great, we pay employees, thank you secretary mnuchin, now the next thing, we would like to open thats got to be pushed out thats great. Im reading i said people in the south, you have to be fearless or stupid people say hold on, no, its just people dont know anyone who got sick that doesnt make them brilliant. I think you can read the paper every day or the 24 how yesterday that the cdc said in our country, 24,000 people got this thing yesterday i know about the flattening curve, but we dont have 24,000 people getting sick of some illness every day. I would love to think its over. It would be great. I dont want to wear this n95, its very hot. It has this thing, you cant get through there because in the clean room, the semiconductors, thats what its for i wear it. I wear it because i dont want to give somebody whatever the hell i have. One thing the government did wrong is they didnt think during the first three days when you were asymptomatic that you could make anyone sick but thats when you were super spreader i hope the south doesnt run into super spreaders, but they should go back and read the biogen article, they had their convention and everybody got it. If biogen had the convention in a southern town we would be speaking differently, they didnt we might. We might have were watching closely but it appears the openings will go ahead. I hope so we want that we dont want anyone to get sick the case count may rise but we have seemed to have made the decision in those parts of the country. Real quickly, not a lot of deals to talk about here dont have an update for you on grubhub and uber, the one deal out there at least things have gotten quiet there not clear if it means its getting close or they have been unable to agree on price what we are seeing more of is deals falling apart. Yesterday it was this advent that was supposed to take private forescout. Today advent gets sued by four scou forescout. They said why are you saying were not going through because of the pandemic . It was carved out in the agreement. So they say, hey, forescout is bringing an action for specific performance in delaware saying you guys, it was a 1 1. 9 billion deal, by the way the companys market value now about half that, 9 900 million rather than containing a standard material adverse provision, the merger agreement here executed after covid19 was declared a Global Public Health Emergency allocated the risk of any impact from a pandemic to advent theyre going to court that is what were seeing more of jim, you brought it up many times. Will there be other deals in companies that have been severely impacted that try to get out of them . We will see. There has to be there has to be. That retail world is so hard, right . Why dont people buy one of the great shortages we have is space for amazon im waiting for amazon to buy up one of these zombie retail chains so they can have the Distribution Centers that target and walmart have, which is the brickandmortar stores, which are amazing. Yep a lot of speculation about what they might have their targets on, jim. 2,964 here we have the ndx up 8 for the year, basically within 3 of an alltime high on the nasdaq, and a 20year bond auction today lets get to Rick Santelli absolutely. There is a 20year today first time in decades. Lets look at week to date of tens we prepare and try to handicap how it will go we escalated up a bit from the mid 60s to the low 70s but all in all, the tenyear is half and half. Half the rest of the world just enamored to get a positive yield. The other half comes here on a flight to safety with Major Concerns about how all this may turn out if you look at a 3 1 2 year of another combination on the yield curve, 30s to 10s, its steep. In 3 1 2 years, its as steep as it has been. When you look at the 20year, the reason i wanted to bring up how the long maturities are distancing themselves with the 30year the most aggressive, the 20year is smack in the middle the yield will come in today in the low 1. 20s. Thats how its trading before it gets its coupon at 1 00 eastern. Ill cover that auction. Im sure demand will be good, especially considering its a longer dated instrument. Finally 3. 5 billion pounds of threeyear notes were auctioned at a slightly negative yield in the uk pound versus dollar since march 1st. Doesnt make much sense to go into negative yields considering all the information out there, but its amazing, if weakening the currency is one issue to lower an instrument, it doesnt have an effect on the pound at this point in time jim, carl, david, back to you. Rick, about izzy dat busy d. Were not that far from the 200day moving average of 2,999. Crossing that would be the First Time Since march 5th todays the first day that all 50 states have at least a partial reopen as a result of the coronavirus. And markets continue to ride this wave of optimism on the return of economic activity. Dow is up 343. You downloaded the Td Ameritrade mobile app so you can quickly check the markets . Yeah, actually im taking one last look at my dashboard before we board. Excellent. And you have thinkorswim mobile so i can finish analyzing the risk on this position. You two are all set. Have a great flight. Thanks. Well see ya. Ah, theyre getting so smart. Choose the app that fits your investing style. 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. Reports this morning that u. S. Authorities have arrested two men accused of helping carlos ghosn escape japan. We have more on that this morning. Hey, phil. Hey, carl, remember when this happened in december, this was the story long before coronavirus basically dominated everything from the middle of february on . Well, this morning the u. S. Authorities have arrested peter taylor, 26 years old and another, 60 years old. They both are in the boston area they are awaiting extradition hearings they were arrested at the request of the japanese government theyve not been charged by the u. S. Government. The u. S. Has simply picked them up and theyre facing an extradition hearing because arrest warrants were issued in japan for both men along with Peter Taylors father, Michael Taylor, although we dont know if Michael Taylor has been arrested at this point all accused of helping carlos ghosn escape the country, avoid immigration checks which he was not supposed to do so that is the latest in a story that, guys, it gripped our attention, and everybody at the time said how could they do this how could they get away with this now the japanese authorities are saying these two people should not get away with it and theyre facing an extradition hearing. Phil, well look for details on the story we all remember that press conference ghosn gave. Well take a quick break more wh m itjiand david in a moment dont go anywhere. Tempurpedics mission is to give you truly transformative sleep. So, no more tossing and turning. Because only tempurpedic adapts and responds to your body. So you get deep, uninterrupted sleep. During the tempurpedic summer of sleep, all tempurpedic mattresses are on sale and right now, is a time for action. So, for a second time were giving members a credit on their auto insurance. Because its the right thing to do. Were also giving Payment Relief options to eligible members so they can take care of things like groceries before they worry about their insurance or credit card bills. Right now is the time to take care of what matters most. Like weve done together, so many times before. Discover all the ways were helping members at usaa. Com coronavirus lets get to jim and stop trading. There are restaurants doing well, notably olive garden, only down 26 last week oppenheimer says its the best house in full Service Dining base target to 90. When you talk about restaurants that are sitdown, theyre the only one thats going to have a boom everyone else is trying to figure out how to sit people there will be a couple restaurants that survive in that casual dining but almost all of them wont make it interesting, jim. You see any parallels between large fast casual getting bigger at the sense of independence as the walmarts are getting bigger at the sense of Small Business retail absolutely. I think unless you deliver and have a great takeout like wing stop, i think you cant make it work if you have 11 tables, youre only going to have four tables the bar isnt going to be there. Thats where the money is. Its hard for any restaurant thats not a chain to make it. You cant tell distributors what price youll take when youre small. Right and then you have lowes tonight. I guess youll delve into this 11 comp number. Everyone is going to lowes its remarkable. Marvin ellison said it was going to take a couple years he said dont get excited. He said one day ill come on tv, hell be on mad money and talk about how its back. Its so back its incredible. The stock was up big at the beginning of the day theres been profit taking for the retailers and then they roared later on. Dont sell it. Dont be silly look at the line yum cramer has. Man, i was looking at it saying youre annoying me, you are. Get big or go home. Really . Get big or go home. Sheyrl sandberg oh, shes going to drop by. Its like carson shes going to drop by like don rickles . Yeah. Im going to put it on the couch after its over. I have to make room. Shes in town. Ill put her on. Just scoot down the couch we never got to the memo from facebook limiting 25 capacity when people go back to the office well, theyre making so much money i guess they can work anywhere they want they can work for the four seasons for the rest of their lives. Room service putting it out thats the lineup we cant wait. Well, you know, always try to best david, thats the game. Right . Youre doing it youre doing it. Stop it youre my partner. Youre my partner. Youre just not next to me i cant go like this, and you cant go like this like you used to like jim, thats right, jim. I can try, though all right. Im done with you today. Wow someday soon, guys. Well see you tonight. Mad money, 6 00 p. M. Eastern time good wednesday morning, everybody. Welcome to squawk on the street. Im Carl Quintanilla with david faber and sara eisen coming to you live from separate locations. What a strange last i guess couple hours of trade if you count going into the close yesterday and the open so far this morning were basically back above 24500 as we continue to get at least more commentary about positive linearity out of the airlines. And lowes and target, more discretion y Discretionary Spending reopening news also continues to drive it. Georgia, hospitalizations for covid19 now below 1,000 people. Weve seen a 34 decrease in georgia hospitalization since may first. The data look at there fl the Positivity Rate including miami county with the higher number cases is 1. 9 . And the moderna news shows you, and that was a dramatic close, is medical information continues to be a major marketmoving driver here. People look at the Economic Data and think, well, why is the market so cheerful in the face of dismal Economic Data that doesnt look set to turn around any time soon . It really is the vaccine and the treatment and the reopening data that is in the drivers seat with this market, david, and the only other thing i would add is we heard from chair powell not news, but a continuation of the theme that the fed is there, the credit mark is very much open more new issuance for corporations, and because of that rush of liquidity in a 7 trillion Balance Sheet, the positive news tends to be more reinforced in the market when it comes to medical news. Thats why we saw the best day for stocks on monday and why stocks are able to climb this worry and the questions and the skepticism brought on by moderna. That had them looking at it and how im talking to folks in the market about the advances and why we continue to follow them to carefully yeah. And the credit markets, your point about them is welltaken as well. I mean, the fed has not really done much except talked about interveening to some extent, but that was enough. Were talking when you talk to capital markets, bankers, we can see as much as 2 trillion in Investment Grade issuance before the year ends. Now, there is also a rush to get out in part because there is an expectation that pricing may change as we get sort of into the summer but well see. But weve counted up the deals, and they keep coming fast and furiously for the companies that issue straight debt and for those who cant, youre seeing a lot of convertible preferrers, counted off as equity on a companys Balance Sheet as opposed to debt but gets them perhaps out of nearterm trouble. And thats the key right . Liquidity first and then theyll worry about solvency after that. Thats where the fiscal conversation comes in. Thats front and center. It doesnt look as sure of a bet as the fed stimulus. I mean, secretary mnuchin sounding more optimistic and the republicans dont seem like theyre in a rush. I mean, Senate Leader mcconnell saying theyre looking at options but theyre not in a rush to put out the next phase of relief. And i think thats going to be the question when it comes to solvency Goldman Sachs said the market is banking on some type of extra money getting put in from the government to help bridge the economy into the reopening whether thats state and local relief, more potential stimulus in the form of checks or consumer relief. That thats in the market, he said, and so the republican watch the republicans carefully on this. A lot of them have mostly dismissed the heros act from the democrats as a wish list for them, but yet to put out anything concrete as far as moving the needle forward on what and how big the next size of stimulus is going to be its something the fed chair has pushed for without endorsing legislation and i think treasury was more cautious on going there. Yeah. I know goldman has been looking at the percentage of rent paid in april its not that far big of a drop considering what weve been through, but a lot of it is because of the stimulus support to households. Some tried to frame the hearing yesterday as mnuchin arguing for further reopening and powell arguing for more policy support. Its probably a little simplistic, but it does seem like mnuchin representing the executive branch was saying hey, lets continue to do what some of the states are already doing. Absolutely. And the white house line, and the hey, lets wait on stimulus to see what we need and when we need it. And then theres the retail earnings theyre out there. Theres a number of big winners. Target, lowes, both out with results this morning walmarts ceo was on squawk box earlier heres mcmillen on some of the recent buying trends walmart has seen since the start of the outbreak. Its clear that people have been at home and they look around and they think, you know, i want to replace that lamp or i want to replace that office desk, and then they started thinking about the outdoors as they got into the backyard and the front yard and realized they needed to do landscaping weve certainly seen those categories take off. Right now people are starting to think about in some cases going back to work, and weve seen the trends in the health and beauty aids categories and footwear ubs retail analyst Michael Lassar along with the ceo of the National Retail federation join us now matt, trying to figure out here as far as investors are concerned, whether these shifts that Doug Mcmillen is talking about and the numbers from target and lowes and home depot yesterday, whether its permanent or if it goes away once States Reopen in a meaningful way sara, david, carl, good to see you. I think thats the big question. I think one thing we know for sure that we can see is this Rapid Transformation in retail, this accelerated innovation as you see new methods for fulfillment, new ways of customer engagement, the way we rethink logistics. All the things i think will continue, and the trends will accelerate we just dont know to what degree i think as we think about how we get the rest of the economy to reopen, talking to Retail Industry leaders to other programs, you heard doug, marvin, i was in touch with them this morning listen, theyre optimistic they found a way, the economic First Responders to serve their communities, their customers to do it while safely protecting their employees and everyone in their stores and thats a road map for how we go forward, and i think thats where we all want to go. Michael lassar, whos the winner i would argue theres going to be several winners and a lot of other players in the Retail Sector as trends unfold over the next couple of years with that being said, theres been about three years of transformation in retail in just three months so who is going to be the winner its going to be the leading player like home depot, lowes, walmart and target are going to be on that list as well. Those who can supply the so omnichannel needs of consumers those well positioned to offer good value and those who are really agile in this environment, because one characterization of whats happening right now is things are changing fast. As a retailer, they need to respond quickly, and stay ahead of the competition you guys have quite a headline here at ubs, expecting 100,000 Retail Stores will close . How do you get at that number . That seems shocking and likely to have a major negative Ripple Effect across this economy absolutely. Major Ripple Effects across commercial real estate, employment, technology, the way we get at that number is by taking where ecommerce penetration is today, around 15 , 16 of retail sales and projecting out where thats likely to be over the next five years at around 25 . And the way the math works is for every 1 increase in ecommerce penetration, it would equate to about 10,000 Retail Stores closing so as i said before, weve seen this compressed period of the transformation pull forward. We need to get to 25 ecommerce penetration even before that fiveyear period is up just given the Behavioral Changes that have been occurring over the last few months. Matt, youve applauded the work that the fed and treasury have done, the main Street Lending program, other things the treasury has done to put money behind the feds efforts, but youve also said in a may first letter, that you wanted them to do more. More to support a broader swath of retailers further down the credit spectrum, for example, with a variety of the different programs at their disposal have they been able to do that are your members getting the credit support they potentially need at the rates they can afford well, david, and you and i have talked about this a couple times. We are encouraged, especially by the comments that secretary mnuchin made yesterday about a willingness to think about their funds to take some losses in the portfolio which would indicate theyre going to extend themselves further and we understand theres a desire to be thoughtful and balanced they have to stand the programs up the right way they worked very diligently to do that. They pushed out an enormous amount of relief in a short period of time, and we think theres more that can be and should be done while they have that money, the 450 billion, our view is that money wasnt give ton them to go bury in the backyard under a rock and return investments. That was given to them provided for by congress to be put to work across the economy to save jobs, to keep American Families working. So we were encouraged, and he spoke positively going back to the comments about what happens in the future of retail, the transformation will continue and there will be winners and losers the math is the math thats true, but some of those assumptions, you know, retail sales have grown almost 4 for five years and the 100,000 store assumption is only 2 growth. And dollar per dollar transfer, when you talk to target and walmart and lowes and the companies that are doing new fulfillment, its not a net zero sum proposition that stores go away simply because customers behave differently and theres no guarantee its going to be 25 . We dont know. It could be 20 and you might need 1,000 more stores there are a lot of unen thoughs, but directionally were headed in the right place and its going to accelerate and we need the support to preserve the jobs and help American Families right, but you really dont think the Behavioral Changes that perhaps have taken place during this period will be cemented and that the bigger will not just continue to get even bigger than this, reliant in part on their ability to deliver digitally . I do think that some of this will be very sticky and this behavior will persist. We dont know how much we dont know will it be 25 or 30 that moves online . Will it be 20 that moves online in a permanent or nearly permanent way . And so thats why the innovation is so critical thats why the execution is at such a premium and having thoughtful leaders, you were talking to jim cramer a minute ago about the work that Marvin Ellison has done and marvin said we dont have an ecommerce strategy, but watch this space, and youve seen them transform, brian and doug as well, at target and walmart so i think certainly there will be winners and losers here, and the acceleration in the gap between who wins and who loses is going to be pretty dramatic, and thats why theres a premium on thoughtful leadership, on the right kinds of investments and right strategies the things that when walmart bought jet, that was in 2016 when target bought shift, that was in 2017. So some of the things that are coming home now in terms of performance, this wasnt an investment they made two months ago. These are years ago and thinking longterm, and the companies that did that, that had the strategies in place are going to be winners theres no question about that i agree with michael on that part, but we dont know to what extent, and we dont know how others can keep up thats why we need to get relief to those in the nearterm and we need to reopen the economy in a thoughtful, safe way, and we cant do it, and retail leaders have shown us theres a way to make it happen michael lasser, matt shea, thank you both thank you, nice to see you. Want to get more on these arrests reportedly of two men who were accused of helping carlos ghosn escape japan. Phil has more on that. Carl, a clarification earlier reported the names of two people arrested in boston. We want to make sure were correct on these it was Michael Taylor, age 59 and his son peter taylor, age 26 who have been arrested by u. S. Authorities in boston that happened yesterday at the request of the japanese government they now face potential extradition to japan where they are going to face potential charges over in japan. We earlier reported that george zayak also suspected of helping them out, has been arrested. But we should clarify we have no information that he has been arrested so again, Michael Taylor and his son peter taylor both arrested in boston. They face a first hearing in court this morning guys, back to you. All right phil, thank you for that well take a quick break here. Dow is basically gotten all the losses from yet back up to almost 400 the ceo of air lease is joining us in a few moments. Oil approaching 34 and the vix at 28. Back in a minute tempurpedics mission is to give you truly transformative sleep. So, no more tossing and turning. Because only tempurpedic adapts and responds to your body. So you get deep, uninterrupted sleep. During the tempurpedic summer of sleep, all tempurpedic mattresses are on sale during the tempurpedic summer of sleep, 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. Welcome back dow is up 380 points lets get to phil who joins us with a special guest phil sara, lets bring in the ceo of air lease corp. John, you are at the heart of seeing whats happening with the Airline Industry give us a perspective in terms of a, how bad is it right now for airlines around the world, and are you optimistic in terms of what youre seeing as far as an up tick in modest up tick in demand sure. Phil, i would liken the industry to someone going into the hospital emergency ward, having emergency surgery and now moving to a Critical Care recovery phase. About 26,000 jets comprised the western fleet today. Andof that, about 60 are grounded 62 are grounded today but having said that, i think the airlines now are very much focusing on their liquidity and cash management. Now announcements over the past couple weeks for sure, flights are increasing passenger load is creeping up globally now its all about the recovery and how fast, how to induce passengers to get on aircraft and make them feel more comfortable. Thats the entire focus of the industry right now with about twothirds of the worlds commercial airplanes parked, how soon do you see them come back, or is there a chance that older ones wont be brought back a couple comments there its hard to speculate were not speculating how long, however, to your point, theres about 3500 of those units which are about 20 years of age or older. And so its fair to say that probably most of those aircraft will not come back what were seeing on a global scale is on a much larger scale, what weve seen before and that the airlines are going to focus on operating their youngest most fuel efficient fleets. Youve already seen major airlines, american, delta, now its major retirements of major aircraft the older 747 s, a lot of wide bodies, the old 380s thats taking massive capacity out of the marketplace from your perspective, a couple things, good news, airlines are under huge financial stress, and in times of financial stress, they very much turn to leasing aircraft so they dont have to finance it themselves and we can provide the aircraft for them. Number two, huge environmental pressures continue and that means that the airlines are going to continue to focus on getting the youngest most technologically advanced aircraft some of the bailouts in france are depending upon air france refleeting and continuing to modernize the splefleet. That bodes well for us that plus the shift toward leasing. So its hard to say how long for us we do see that green chute both in the forward outlook and particularly in asia, now 65 of the flights are returning to china domestically. John, one of the things that youre hearing about and weve talked about this in the past. You have people like representatives saying the middle seats should be blocked other people are saying hey, commercial airlines, they should just strip out that middle seat completely is that even feasible to block out the middle seat longterm and physically could they strip the middle seat even if they wanted the short answer is its not economically feasible longterm. I understand thats human reaction for sitting too close together, and the second thing is it would be almost impossible to strip out the middle seat those seats are called triplets and triples. Theyre built as a threeseat unit so you would have to reseat the entire fleet economically over the longterm, it doesnt make sense to block out those middle seats now, as an interim measure, yes, i think youll see airlines attempting to block the middle seats. Other airlines like delta saying that its going to add more flights when 60 of the load factor is reached. Thats still not enough. The Industry Needs about 77 load factor to break even. So longterm its not sustainable. Shortterm, i think youre going to see the measures until passengers start returning and or we see more confidence in a vaccine that will prevent this virus from happening john, a lot of aviation geeks are curious as to the thought process that goes into exiting an entire flight like delta did with the triple 7. Can you explain how they decide if thats the one that needs to go its a lot of what ive been saying a lot of them are 200 models which are well beyond 10, 15 years of age theyre not as fuel efficient as aircraft age, they have higher maintenance costs. You look at the totality of the fleet and say to yourself, does it make sense to continue operating that aircraft at this time you look at the longterm economics. Its not surprising that, in fact, delta would ground the older 777, 200s. John, about a week ago, the ceo of boeing was on the today show. He said look, he could see when asked this question, he could see one of the u. S. Airlines going out of business. Whats your sense of a, is that likely, and b, is it also possible that we could see some consolidation, perhaps more mergers within the u. S. Of Certain Airlines its hard to speculate. Im not completely sure about that im sure thats davids feeling, but globally for sure, well see some more Airline Bankruptcies air lease corporation, weve avoided the last couple large ones, including one in australia and bianca, but globally well see some as well as mergers and consolidations how many of your customers have said we cant make our lease payment on this particular aircraft, and when do you expect the lease payments to pick back up yeah. As we discussed in our last earnings call, just under half of our customers weve given deferral requests. Most of our customers have asked for lease rate relief. Weve given partial lease deferrals. For several months weve given an Airline Relief on some of the payments most of them are scheduled to be repaid back by the end of the year fairly shortterm. Some are going beyond the end of the year into next year. But so far these are actually referrals that weve been we and all the rest of the leasing industry, in fact, have been providing our customers. All eyes are watching on that, and were confident over time that with the accommodations weve been able to make, well help the Airline Industry recover. John pleuger, ceo of air lease corp. Joining us exclusively today giving us perspective on what were seeing not only with the airlines in the u. S. But around the world. Phil, thank you lets hit our etf spotlight. Today the nasdaq, ibb on the move higher. This is hot, up 7 since the start of the month, but one of the groups biggest holdings, moderna extending yesterdays losses on concerns about the companys monday announcement regarding the covid19 vaccine candidate. According to stat news, some experts say moderna did not provide data critical to assessing the vaccine. Stocks down another 3 its still up more than 250 for the year were going to take a quick commercial break here on squawk on the street. Stay with us were looking at a market up 50 points. Almost 2 , 1. 7 on the s p 500 383 points higher on the dow this is decision tech. Find a stock based on your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. Confident financial plans, calming financial plans, complete financial plans. Theyre all possible with a cfp® professional. Find yours at letsmakeaplan. Org. President s been active on twitter, threatening to withhold funding to states. Now rights about the g 7, im considering rescheduling the g 7 on the same or similar date in washington d. C. At camp david. The other members are also beginning their comeback it would be a great sign to all normalization. This was scheduled for june 10th through 12th thats a few weeks away. In march the white house said they would move to a video conference, maybe backtracking on that . That would be something if they were able to get other countries involved to come as soon as june, but the data continues to slowly look better. Not just in the United States but around the world i saw somewhere that looking at some of the European Countries that have reopened, the transmission rate is lower so we have to see. Its still early, but obviously thats a positive sign is all the International Gatherings have been shut down. Its hard to know. So much could happen in the next month. Yep lets get a virus update with sue herera at hq hello good morning heres what we know at this hour likely voters in swing states have sharply different views on the pandemic a new Cnbc Change Research Poll shows 93 of democrats expect a second wave of infections but only 21 of republicans share that view. You can go to cnbc. Com for the full story and to see which president ial candidate the swing state voters prefer. The oscars arent until next february, but some of the events organizers are already considering postponing it. Its reported it may be pushed back though its not been formally proposed. In britain, another honor for the 100yearold war veteran who raised 40 million to help fight the pandemic by walking laps in his garden he has already been promoted to honorary colonel, but now hes been knighted. Moore says it hasnt changed him. Im still tom moore its nice i think sir thomas sounds very nice, but tom hasnt changed. Makes you get teary david, back to you okay. Yeah that was a nice way to end that segment. Thank you, sue keeping an eye on shares of auto makers with plants beginning to open up you can see how ford and gm are doing. Tesla, thats 151 billion market value on the other side of this break, well talk to the former ceo of ford as of this morning, all 50 states have at least partially reopened their doors were taking a closer look at how states are faring as they find a balance between reopening the local economies and protecting their Citizens Health since reopening on may first, lets check out ohio its seen a 61 increase in cases and a 45 increase in hospitalizations an average of 83 new patients per day. Testing is also increasing a big part of the story, 107 with 10 of tests returning positive week over week. However, cases in ohio are down 14 . How about michigan since reopening on may 7 th, cases are up only 16 an average of 552 cases per day. Testing increased to 81 with 12 of tests returning positive week over week cases have increased 21 in that state. Carl all right as Everybody Knows by now, auto production largely back in detroit for the First Time Since the outbreak we want to bring in mark fields this morning, former ford ceo, now a seniored a v Senior Adviser at tpg global. Nice to see you it seems like used car pricing is holding up. People want personal space when they commute to work or anywhere else it sounds like you dont believe some of the forecasts were going to be down 25 for the year no. Im a bit more optimistic. Im optimistic for a couple reasons. In the shortterm, as you mentioned, first, i think people are the spring selling season is the biggest selling season in the car industry i think the coronavirus probably deferred it. It didnt extinguish it. You saw the results in april which were better than expected. The industry was down about 40 . Trucks were actually doing relatively well. And also theres very jennous deals out there by the auto makers, and more longer term, i think beyond the next couple of months, i think people are going to put a priority on hygiene in having their own personal vehicle, almost thinking of it as personal ppe, if you will and when you combine that with people not wanting to make take mass transit, less taking airplanes, i think that bodes well, and i also think one of the first indications that well have on that is this summer when people are looking to take their vacations or travel, i think youre going to see vehicle miles travel go up significantly across the country with people not deciding to take planes and maybe taking a vacation within a days drive of where they live yeah. I mean, certainly International Travel is a nonstarter its going to be sort of an American Vacation season for sure but i wonder, though, i mean, when i talk to people who are interested in car buying, the first thing they talk about is the incentives and its certainly permeating the advertising. Do you think those are going to be around for a while . I think youre starting to see it moderate, particularly on the truck side you have manufacturers like General Motors when you look at the inventory they have at the dealers, its getting tight. The reason is they were still recovering from the strike they had last fall. So the dealers didnt have a whole lot of inventory now thats less. I think youll see a pullback on that to a certain degree when it comes to cars, theres plenty of cars when it comes to small suvs, theres plenty of viability there. I think youll see manufactures continue to offer good deals the most important thing for them is to get the plants up and running when they build a vehicle and ship it from the yard, they recognize the revenue. It brings the cash in. I think youll see them for quite some time, but it will depend on the segment. Mark, its david. What about production itself im curious as to your thoughts on how people are going to work in the plants, whether they can work closely together, if thats not an issue supplies of ppe which i guess the auto makers need to provide and even the supply chain itself, all of this i would think could add up to more expensive costs. When you look at the challenges, i think the industry is doing a terrific job bringing up the industry. Right now at the same time theres about 200 product programs that the manufacturing is starting to get going right now. That is huge i mean, even when you launch just one product, its a big deal for the oem as well as the supply base. I think youll see a couple things the oem will face deshrining productive when the workers come into the plant and the new Health Protocols in place, and the new dividers and the way they have to work and even ways in which they change shifts or hand tools to each other, they have to get used to that the analogy is think about the first time you went recently to a supermarket down here in florida, publix, you have to go down the oneway aisles and you have to social distancing to get into the store youre a little bit confused at first. I think thats why the oems are gradually starting production. The line rates on the line will be slower. But the other challenge they face is within the supply base and it falls within two things first, the liquidity challenge for the smaller suppliers. Because if you think about it, their receivables have all drawn down over the last two months. Now theyre starting up production they have to front up the cost for the people and the materials. Theyre going to have money going out for two months and no money coming in. So thats one challenge the auto makers have to watch out for the second is mexico 40 of the parts for vehicles assembled here in the u. S. Come from mexico. And you know, you have to wonder not so much about the big mexican suppliers but the smaller ones, whether theyll have the ppe available, whether theyll have the social protocols, hygienic protocols in the plants or the testing available. I think youll see some fits and starts but the industry i think is taking a rational and gradual approach which i think is prudent. So mark, its sara. I get youre calling for a cyclical rebound here off pent up demand and reopening, but what about the structural problems that were plaguing this industry and also making their stocks not the best investments going into the crisis even before the pandemic, the fact that tesla was trouncing them in market tap, the technological changes, the questions about car ownership and ride sharing what happens to all of that . Well, i think sara, its a good question. Put it into perspective. The profitability of the major auto makers, were still healthy. Were coming off of five years of 17 Million Units industries which is a record. But i think what this pandemic will do in my view its going to prove to auto makers that you can start to reset or reframe the business, and ask the tough questions of what product lines, regions to be in, should we pool resources with competitors for some of the future technologies . And i think some of the ways theyve moved really fast like, for example, ford and gm converting their plants over to do ventilators literally in a nano second in terms of the Auto Industry, maybe it will give them more confidence to move quicker and innovate and push the boundaries further in terms of getting their businesses structurally sound going forward. I think its going to be a positive in general, but again, keep in mind the industry is significantly healthier going into this crisis than it was back in the great financial crisis talk about irony. Finally, mark, the president is going to go to ford tomorrow and was asked at a Cabinet Meeting yesterday if he would wear a mask take a listen. I dont know. I havent even thought of it it depends i mean, in certain areas i would. In certain areas i dont but i will certainly look at it. It depends on what situation am i standing right next to everybody or am i spread out and also, you look, you know, is something a hospital is it a ward what is it, exactly . Im going to a plant so well see where its appropriate, i would do it, certainly questions really not about the mask or not, mark, but the relationship that the auto makers have with the white house. He has smacked mary bar around a couple times in the last couple months how would you characterize it . I think the president understands the importance of the Auto Industry to the more than economy and the American People first off, it contributes about 4 of the gdp so if the economy is going to be doing well, the Auto Industry has to do well i think he recognizes that secondly, i think its positive hes coming to visit an automotive plant and a ford plant to demonstrate that this industry is alive and kicking but more importantly, its also taking proactive actions to help society and to help us through this crisis. Its a little bit unfortunate that the story right now is around whether hes going to wear a mask or not versus look at the wonderful things that ford did at the plant to change over to making ventilators but overall, i think the president very truly understands the importance of the Auto Industry to the american economy, and the support of that is absolutely necessary going forward. Yeah. Especially in a state like michigan thats for sure. Mark, its going to be fascinating to watch tomorrow. Always great seeing you. Thanks for the help. Thank you with the dow up just about 400 points, coming up later on closing bell, an interview with kelly king at 4 00 p. M. Weve also got anna wintor on the show, shes going to talk about fashion. High fashion in the age of pandemic and a new partnership with amazon and designers more squawk on the street when we come back close enough or nothing. Mercedesbenz suvs were engineered with only one mission in mind. To be the best. In the category, in the industry, in the world. Now, get 0 apr financing up to 36 months on most models and 90day firstpayment deferral on any model. Mercedesbenz. The best or nothing. Zoom is not the only recently listed company to see ofs stock takef. We debate some of the biggest winners on trading nation. More squawk on the street coming up. S p 2975 that 200day moving average not very far at 2999 its been talked about as a key test for several months now. Hasnt crossed above it since march 5th. Were back in just a moment. 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 to squawk on the street. Stocks are higher today with every sector up led by energy and industrials. Communication services are also outperforming the Broader Market facebook and twitter are two of the leaders in the sector with facebook hitting alltime highs today. Media Companies Like dish and discover also higher today and live nation up 5 . The stock got crushed in the lockdown as events were cancelled but optimism around reopening has fulled a rally in the last few days, live nation is up 18 this week. Sarah, ill send it to you. Eric, thank you lets look at the Broader Markets. The dow, weve got 29 out of 30 dow stocks higher right now. A more than 400 point rally. Home depot the only one in the red. Nsdaq up almost 2 . Dot go anywhere, squawk on the street continues in just two minutes. Lets get to Rick Santelli and the exchange, hey, rick. Good morning. And thank you, carl. Id like to welcome professo ken rogoff, thank you for joining me, these are trying times, of course. Indeed, thank you for having me listen, todays a big day we reintroducing after decades of absence a 20year bond but it underscores the notion of debt last thursday, the feds Balance Sheet was approaching 7 trillion, i believe the exact amount was 6. 3 trillion on their Balance Sheet. And we learned when we had treasury secretary Steve Mnuchin on, the cares act, only 8 to 9 has been spent and were hearing for the need for more. As a man and a great economist whos written much about debt, even with the coronavirus issues are we ahead of ourselves . Are we over the skis on debt were only two months into this, and its probably going to get a lot worse. I think we have to support americans, we have to support the economy. I dont know where this is going. But were down 25 or 30 , were hoping were coming back now, i dont know how much. And this isnt quite the time to worry about that i mean, there are costs, there are longrun costs to having debt way higher than it was. But what were going through right now, it doesnt really get a lot worse than this. So i think we should plunge ahead. But, you know, its not an excuse for bad policy. You want to have sensible policy, restructure in the economy going forward. Believe me, i am with you there. I dont want to sound as if we dont need to help these businesses we shut off the main circuit breaker, i understand that but we havent spent on some of the programs that have been allocated to i guess is my point. The focus is getting more than using whats already been appropriated its very hard to turn up government this fast i remember in 2008, people in the Obama Administration getting the 2 going, they had trouble getting the 2 going but there are plenty things to spend money on, like giving to state and local governments, but plenty of the programs we cant do overnight we wish we could. We want to make sure we do our best job but instead of taking the worse Case Scenario approach, which many are, lets take an optimistic approach like the equity markets understanding the equity markets in the economy rhyme but theyre not necessarily the same should we do better and should science and medicine help us sooner rather than later you and i both know the appropriated money most likely is not going to be used, its going to be used and im saying as rating agencies watch this global explosion of debt, how do you think they are going to be looking at some of these numbers at this point in time . I think the United States is in a unique position because the dollar rules the Global Financial system a lot of other countries are going to run into troubling with the rating agencies quickly. And not just the rating agencies, the markets. At the moment the u. S. Can borrow you mentioned at the outset 20 years. Yeah, borrow long and that reduces some of the risk its not a free lunch, but i dont think were ready to start stop serving lunch. I understand. I understand now, when we look specifically at todays 20 billion of 20 year bonds, the yields look like theyre going to be somewhere in the 120s i guess my big issue is, ultimately, are we going to get enough bank for the buck with regard to this debt, of course, to continue to be able to find buyers around the globe as we end up competing not only with corporate issues but other global issueance yeah, well that is a question going forward. That is a risk that we take. The dollar accounts for roughly half of all the debt in markets of advanced economies of government debt. And were expanding it faster than anyone else and i think both history and model show it can get fragile when it gets up there, but i think its a Reasonable Risk at the moment looking at the two sides of it. But we want to have good policy and running up debt shouldnt get in the way of good policy. But the fact that we can borrow certainly shouldnt be an excuse for bad policy and theres a limit to how fast things can get done in washington, its very political. I dont think debt is the issue so much as struggling over whats the way forward how much restructuring is needed, how are we making a longterm shift towards inequality i have to tell you at the end of this, taxes are going to go up for wealthy or higher income people, not right away but that was inevitable it was probably true before this and its probably more true than ever. You should know more than anybody that growth certainly suffers when its coming under a pile of debt professor, thank you for joining me today carl, back to you. Thank you rick, thank you very much. Good morning, everybody, welcome to squawk alley im Carl Quintanilla with jon fortt, Morgan Brennan coming to you live on this wednesday from various locations. Pretty good market day as we get losses back from tuesday, all 11 sectors are higher on this day where all 50 states in america have some level of reopening markets on pace for their best week in about six weeks. And, of course, a big day for retail earnings out of target and lowes. For that we start with courtney regul reag reagan. The split between essential and nonessential in these numbers is probably not surprising if you were essential you probably picked up sales others lost but we did hear from two essential retrailers, lets start with target. They posted full results this morning including comp sales of 10. 8 . Online sales gre