Quarter. The sharpest decline since 2008. Now more than 30 Million People have applied for Unemployment Benefits in just the last six weeks. As states are ramping up to reopen, what can be done to safely jumpstart this economy . Joining me now is omede mall lick, thank you so much for joining us. Hope youre staying safe and strong in this shutdown. Thanks. Same to you, maria. Maria isnt it unbelievable that even as we are in this shutdown, we are seeing states across the country reopen this weekend, yet the markets have done exactly what theyre supposed to do, provide liquidity. Boeing offering, 25 billion bond offering from boeing went incredibly well. The company has been push being back on government, we dont want any help, we dont want any Financial Assistance because we dont want the government telling us how to run our business, and they go to the markets, and it worked beautifully. What does that tell you . Its just amazing where we are. You asked me what was going to slow down the market, and i said maybe stop being geopolitical. I think it was the end of december. It was an act of god. A pandemic. And so now you have quandaries for every big business like youre mentioning boeing as to what to they do. Do they take government assistance . We all know government money is not free. It comes with strings. And so boeing made the decision, which is another stock and company weve talked about a lot together, to say, no, im going to access the Capital Markets n this case the bond market. Im going to stay independent. Thats the right answer, i think, for Large Businesses like boeing rather than some of the misuse of like the ppp that weve seen Public Companies do. Maria yeah. Were going to talk about the ppp as well. I want to get your take on that because Small Business needs help and needs help now, and some of the issues and structure around the Payment Protection Program were just not clear for certain banks, and we had all sorts of messups with that ppp. But youve got to say thats a lot of money. Do you think its going to work . Im going to talk to Robert Kaplan in a minute about this, all this money being thrown at the economy, all this cash flooding the economy. Do you think its going to work and take us out of this recession sooner rather than later . Maria, its a great question because right now what we have very clearly are two economies. Weve got the market that just had its best month since 1987, over 6 trillion of liquidity being pumped into the system, and youre seeing the beneficiaries of that is the stock market. As we talked about in december, which im referring to again, where else are investors going to go with Interest Rates at zero . They went to cash for a little bit, but if theyre going to dip their toe back in, the Public Markets are going to play. You know i focus on the private markets. There its not as good of a story. We have marks on private companies off anywhere from 3570 in the private market. So the Public Markets are doing just fine, but the real economy looks atrocious. Every metric there doesnt seem to be getting the benefit of what were talking about. You just mentioned the gdp number. Unemployment, 30 Million People. And Consumer Spending was down 7 this past month, and as weve also discussed, you know, our economy, gdp, is 70 consumer. Thats really going to hurt the regular folk, so we have to focus very, very heavily on programs like ppp maria look, you keep calling this an act of god, but the president and the administration is investigating china. And it looks like this was an accident that came out of the wuhan lab. Their highest level iv superlab where they study coronavirus, and somehow it got out. So theres this investigation underway, a lot of bills in congress right now to get out manufacturing out of china. You know in the middle of this crisis were focused on the prescription drugs we need. 70 of those active ingredients are made in china. They want to get the supply chain back here. That may be one of the elements that goes into another stimulus package out of congress, a fourth stimulus package. What do you think about that, the two largest economies u. S. And china at odds in terms of what the goals are . Maria, i could talk to you about this topic for hours, as you know, we have talked about it a lot. I hate the catalyst for this reassessment or reevaluation of the american chinese relationship took something so unfortunate, but its a great point. Im going to put my lawyer hat back on. Liability can be imputed for gross negligence. The chinese may have committed gross negligence, and then there was clearly some sort of intent to disguise what was going on by restricting travel internally but allowing people to leave the country. So that begs the question, what does some kind of decoupling look like between the United States and china, and everything needs to be on the table. I couldnt agree more. Some of those, i think, are going to be policies that need to be implemented to create economic incentives for our multinationals to divest their Manufacturing Base from china. You go back to gdp. 70 of our gdp is consumer now because weve outsourced so much of it to china. Only 20 of manufacturing is here domestically. We need to up that number. Its no longer just about all the millions of jobs that we lost over the last 20 years or the social infringements that that communist party puts on its own people and tries to export through its her cant limb. Her cantingism. Its also a National Security threat to the United States when these important pharmaceutical Companies Make everything over there and they have us over a barrel. Its about creating economic incentives, tariffs, giving tax breaks for United States businesses that manufacture at home. And, listen, im not against globalization, but there are plenty of other developing countries like vietnam that we can diversify our supply chain to. Martha thank you so much. Thank you. Very nice to see you, maria. Dont go anywhere, Robert Kaplan, the head of the dallas Federal Reserve, my special guest, coming up next. You think of people in a place. But when you have the chase mobile app, your bank can be virtually any place. So, when you get a check. You can deposit it from here. And you can see your transactions and check your balance from here. You can save for an emergency from here. Or pay bills from here. So when someone asks you, wheres your bank . You can tell them heres my bank. Or heres my bank. Or, heres my bank. Because if you download and use the chase mobile app, your bank is virtually any place. Visit chase. Com mobile. Its a great escape. So many Great Stories from amazing people. It makes me want to be better. It changes your perspective. It makes you a different person. See what listening to audible can do for you. From anyone else. So why accept it from your allergy pills . Flonase relieves your worst symptoms which most pills dont. Get allinone allergy relief for 24 hours, with flonase. Show me what youre made of. So we showed it our people, sourcing and distributing more fresh food than anyone. Our drivers helping grocers restock their shelves. How were helping restaurants open popup markets. And encouraging all americans to take out to give back. Adversity came to town. So we looked it in the eye. And it wont be us. That blinks first. Maria welcome back. The Federal Reserve in focus this week, the central bank announcing that it is expanding the scope of the 600 billion main treat lending program. Larger businesses are now going to be allowed to participate and minimum loan amounts also be scaled back. The central bank pledged to keep rates near zero. Robert cab land is the president kaplan is the president of the dallas Federal Reserve and a Voting Member of the fomc this year. Thanks so much for being here. Good to see you, maria. Maria youve talked about this program being a bridge, a lending bridge. Tell us about it and what has been the result so far. So weve gone out as the fed for comments, weve gotten at least a couple of thousand comments. And as you mentioned in your introduction, weve lowered the minimum loan size. Weve also increased the ability for somewhat larger businesses to get this, 15,000 employees or less are, 5 billion revenues or less. Having said all that, its a loan program. Its not a stimulus, its a loan. And you still have to meet a coverage test, it has to be viewed as a passable loan by the bank. The bank has to retain a share of it. And so it will, it will help a range of companies, but its a loan, and its for those who are creditworthy and deemed by their banks to be creditworthy. So in that regard, theres limits to who it will help. If youve got a solvency issue or youre in, at risk of bankruptcy or true or restructuring or default, this is probable not a program youre going to be able to access because of all the various tests. Maria so there are a lot of relief packages out there. Obviously, your relief package at the Federal Reserve is what were talking about, but theres also relief in the ppp coming out of the white house. Assess where we are, robert. Youre talking about 7 trillion plus of stimulus being thrown at this economy, and you also had said in the past that were talking about a severe contraction in the Second Quarter. You told me on morn ifings with maria on friday we could see contraction as high as 30 . Is this going to be enough, all of this money thrown at the economy in relief, Financial Aid and stimulus packages . Yes. We think were going to see in the Second Quarter annualized a contraction as much as 30 . Were going to grow, believe, in the Third Quarter and the fourth quarter. Some of the things that have been done, mainly the things by the fed, are loan programs. So i would call those relief rather than stimulus. And you mentioned ppp program, corporate bonds, money market functioning, the main street program, now the muni program that weve announced, and those will help provide a debt bridge for those who have, had an interruption in revenue. In addition, as has been said, were going to need stimulus, i. E. , grants and other things that stimulate the economy thatll have to be done by the fiscal authorities. But were optimistic at the fed that weve, were restoring good market function, were trying to build a bridge to individuals, Small Businesses, maybe midsized businesses to get through this period. And then were going to need stimulus as we get into the fall and into next year because were going to have an Unemployment Rate at the end of this year as high as 810 , and were going to need to work that down and stimulate growth. Maria yeah. I mean, youre talking about a situation where weve really seen the consumer take a body blow. I mean, Consumer Spending has stopped, businesses shut down altogether. What is it going to take to get that back . It doesnt sound like this is going to be a snapback situation in terms of the fourth quarter. This is going to be a slow and gradual comeback because consumers have to also be ready to go out in crowded stores, restaurants, etc. So when do you think the consumer comes back . Yeah. So it is, as you and i have talked before, as we headed into this period, we had a solid economy. But it was powered, as you said, by the consumer. Fixed investment was sluggish, manufacturing had been sluggish, but the consumers 70 of the economy. Now weve got to find ways to stimulate the consumer. In the short return run, we need in the short run, we need to make sure those who are unemployed, which is a substantial amount, we have to sustain them through this period. And then were going to have to grow Small Businesses are going to have to get back to hiring, businesses generally are going to have to get back to hiring. We want to minimize job losses, and were going to need stimulus to make sure those who are otherwise unemployed get back to work. And with that, youve got the behavioral issue which you referred to where consumers are not going to feel safe doing some of the things they used to do; going to restaurants, flying, going to large entertainment events. And this is where the Health Care Part of the policy testing, contact tracing, obviously, if there can be drugs or vaccines those are going to be essential to making the consumer ultimately get comfortable getting back to doing the things he or she was doing several months ago. Maria yeah. Ive got a number of industries that have talked about in terms of being the leadership poised to come back first. Like construction or agriculture. Are there industries that you could name that you think could be first to reopen . Were talking about reopenings across the country this weekend, but what would be the easiest industry to start getting back to business . Well, so we already is have some industries that have been running. Manufacturing, for example, Food Manufacturing companies have already been running. They have models for how to run in a safe way. They have a whole series of restrictions, so were hopefully if hopeful manufacturing will get back. Obviously, retail will open, but its just a question of how comfortable are the consumers to get back. The hardest ones to open will be those that require crowds, individual contact, and those will be slower. Maria robert, want to ask you about rates, want to ask you about the Balance Sheet on the fed, and ive got to touch on the price of oil, another major issue. Lets take a short break, and weve got a lot more with Robert Kaplan, the president and ceo at the dallas fed. Stay with us. Im your mother in law. And i like to question your every move. Like this left turn. Its the next one. You always drive this slow . How did you make someone i love . That must be why youre always so late. I do not speed. And thats saving me cash with drivewise. My son, he did say that you were the safe option. And thats the nicest thing you ever said to me. So get allstate. Stop bossing. Where good drivers save 40 for avoiding mayhem, like me. This is my sons favorite color, you should try it. [mayhem] you always drive like an old lady . [tina] youre an old lady. Staying connected your way youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. Maria were back with the president and ceo at the dallas fed, Robert Kaplan. Ive got a report in front of me from cornerstone macro, and they say Interest Rates are going to stay at these levels until 2023. Does that sound right to you . Its possible. I think Interest Rates are going to stay low until weve reached our full employment price stability objectives. And as i mentioned, its going to take some time to get back down to full employment in light of this crisis. Maria are there inflationary worries in that scenario with rates so low . I think in the short run were more likely to have disinflation, and therell be deflation their pressures. In the longer run, once we get back to full employment with the size of the fed Balance Sheet, a substantial amount of stimulus, you need to at least worry that there might be inflationary pressures. But i think thats, thats for down the road. In the short run, in the next year or two, were more likely to see disinflation than inflation. Maria isnt it interesting that it was just, what, a year ago that we were talking about unwinding the Federal Reserves Balance Sheet. How big is the Balance Sheet at this point, robert, and whats your vision . Do you have visibility in terms of how you start winding that down at some point . Yes. Listen, in the near term the fed Balance Sheet is more likely to get bigger. Its already in excess of 6 trillion. And were going to need, were going to need to keep buying weve got these special programs that we stood up which i hope we will begin to phase out at the appropriate time. But then you will have our large asset purchase programs, quantitative easing that well be likely to do while rates are at zero because were going to want to stimulate the economy in order to drive the Unemployment Rate down so we can get to full employment. More what do you say to those maria what do you say to those people who say, look, youve used all you can use, you used the big bazooka, if you will, there arent any other tools to relieve or stimulate this economy if we do see another leg down . So i would say i think weve shown in this crisis that, at least in terms of lending authorities and using our Balance Sheet, the fed has a broad range of tools that weve used and that we can use, and theyre very potent. The one thing id caution though is most of what the fed does, has done i would call relief. Its not stimulus. Stimulus has to come from fiscal authorities, not from the fed. The fed is a lender. And so thats the caution, is to to the extent were going to get more stimulus to help the economy grow faster, thats going to have to come from congress, the treasury and fiscal authorities. Maria so what about the oil sec or . Thats one area that has pushed back on any stimulus from the government, and yet i spoke with the ceo of chevron which has a fantastic Balance Sheet, but there are a lot of smaller oil companies, Shale Companies that are the job creators in this country. But with oil prices where they are, we are worried that they may not make it out of this. Whats your take on the present state of oil and the impact to really what was the growth area of the economy for so many years, robert . So weve got dramatic oversupply to the point where theres so much oversupply, were getting to the point theres no place to store it. Which is why youre seeing these strange movements in oil prices. There are going to be a number of companies that are going to fail, going to be restructured or go bankrupt. Were already seeing it. Youll see a substantial amount of production shut in, were already seeing that. Youll see that here and globally. We think u. S. Production will decline. It reached a peak of 12. 8 Million Barrels a day at the end of 19. By the end of this year, itll be closer to 10. 8 Million Barrels a day, so were in a decline by 2 Million Barrels a day. Some of that is necessary. Youre going to have a consolidated industry, a number of Service Providers will also fail. The industry will still be alive and well and vibrant, but for players that were leveraged going into this, this is going to be a challenge. And the key is, is to have enough of an industry swact so that when intact so that when demand returns, which it will, we will work off this excess supply by the end of 2021, 22, and well resume growth and, ultimately, production. Maria all right. Cautionary tale this for those indebted companies, for sure. Robert, its good to see you this weekend. Thank you, sir. Good to see you, maria. Maria we will see you soon, Robert Kaplan. Dont to go anywhere, more wall street right after this. Need help like never before and wells fargo employees are finding ways to do our part. By helping people stay in their homes, through mortgage Payment Relief efforts. Helping local businesses in their vital role in the american economy. And helping hundreds of local organizations provide food and other critical needs. When you need us, wells fargo is here to help. 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. Founder of times square churchid told mike evans. Number one New York Times bestselling author, mike evans, has written an astonishing book on it, called. For the full prophesy by David Wilkerson and the book by mike evans go to www. Foz. Org maria welcome back. Thatll do it for this week. Weve got a whole bunch of big earnings next week. Do join us every friday for wall street, 9 p. M. Eastern on friday night for another edition. Meanwhile, this weekend on Fox News Channel for sunday morning futures live sunday is morning at 10 a. M. Eastern. My special guest, texas senator ted cruz, South Carolina senator Lindsey Graham my special guest as well as the above of florida, ron desantis. A. M. 10 a. M. Eastern. Start smart every weekday, 69 a. M. Eastern for mornings with maria, right here on fox business. Thatll do it for us for thiswe. Thank you for watching, have a great rest of the weekend, everybody. Ill see you again next time. Gerry hello, and welcome to the wall street journal at large. More of the familiar bad news but also some good news this week, three months into our struggle with the coronavirus. Total confirmed cases have topped one million, deaths over 60,000 and still rising. But there was encouraging medical news on a number of fronts. One biotech company, bill idea, announced a drug gilead, announced rem remdesivir has shn Real Progress on
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