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tv   Squawk on the Street  CNBC  April 1, 2020 9:00am-11:00am EDT

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of time or the draw down in earnings last month alone, it's as bad as it was, the highest investment grade issuance we've seen, about $265 initially >> all right jim, we have to end it there to get to cramer and the guys appreciate it. we'll have you back and talk more about this. i'll toss it back to andrew. i think we're finished >> we are finished thanks, guys we'll see everybody tomorrow cnbc's special coverage continues right now with the gang from "squawk on the street." good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber coming to you live from separate locations this morning futures weaker than we've seen in several sessions as the white house warns americans to brace for a very painful few weeks as it pertains to u.s. case load
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and the estimated number of deaths we will get ism today. adp is out several european banks are spending dividends jim, how much of this morning's action does reflect the grim picture that the white house set forth yesterday? >> it's difficult to imagine how, let's say, optimistic people were versus what the president said last night. i think many people in the stock market understood that the numbers were completely understated. you did leave the office saying, wow, that could be just terrible because they didn't caveat it as much as you might have thought they didn't say, all right, but we're doing great in this state, this state, this state they said look, this is the reality. i think the reality rolls back some of the 19.9% gain we had last week in the s&p then what's going to roll back the rest is if we have credit problems i'll defer to david. david knows behind the scene what day it is today today is the day you're supposed
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to pay your rent david, a lot of people won't make those payments, are they? >> no, a lot aren't. it's not just small and medium-sized businesses, plenty of larger companies are making decisions, at least again, according to some people i have spoken to, to not pay, or pay some did, but not all in the belief that there should be or will be forbearance or it will give them a negotiating position of some kind with whoever they're paying that rent to. that becomes an issue. it's one you've been highlighting for some time we've seen the weakness of course in the market in terms of cnbs, talking about credit there, and the reits and those that own so many of the office buildings or shopping malls or other things that require a rent payment so that they can then pay their shareholders or pay the dividends typically that they do as reits >> carl, i think the other thing we have to watch is the oil
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patch is falling apart whiting filed for bankruptcy today. >> i saw that. >> what happens is a lot of people are saying wait a second, this is the other -- this is the other bomb that is dropping. these are companies that have been the greatest employer whiting had fabulous -- midwest had the bakken assets. the bakken, you can't make money in the bakken. you can't make money in the eagle ford you can't make money anywhere, certainly in colorado. i think this is something we have to keep an eye on when we start seeing the layoffs, some of the layoffs will bounce back some of them are not coming back at all >> a lot of headlines around oil today, jim i'm sure you've seen sources on bloomberg, supply for the saudis at capacity now. tankers with no destination. the president called it a tax cut last night, but as b of a pointed out, gasoline
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consumption down 37 year-on-year we're not getting that consumer pop as we've talked about repeatedly >> it's ethereal it would be terrific if people were driving no one is going anywhere i think the flip side is better. the fact that no one is going anywhere means maybe we can get out of this faster it is true that what matters in terms of what was the best employment area, it was the permian, more importantly you want energy self-sufficiency you do not want to get us back into where the russians and the saudis want us, which is to be enslaved to them in terms of national security. i hope that the president and the treasury secretary worry about this issue because -- i know we had a senator on earlier on "squawk" talking about why are we supporting the saudis who are really trying to take away our energy self-sufficiency. something worth watching that could be a real casualty to this period that won't come back i think something that was really great about america that's happened in the last
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three years. >> yeah. i remember when we were talking about 10 million barrels a day feels like not that long ago now we're at 13 million. the numbers are stunning in terms of what this industry has been able to do. let's call it now over the last 10, 15 years really, and a continual upward move. i wonder if you think where we'll bottom here. i know it's an impossible question to answer on wti. you were talking yesterday about the fact that when you get to the permian, you know, and you're in the current month, it's like 10 bucks or something. >> yeah. >> is it possible we could see the futures hit those levels as well >> i think so. i think the fact that the permian is the largest area, they're only getting 10 bucks, why doesn't that reverberate i deal with tanker companies there's room in cushing, but they're holding it back for when
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oil trades between $5 and $10. this is a deflationary period, the likes of which we have not seen since the great depression. in the great depression, they were trying so hard to keep prices up. they were doing everything they could. they were killing animals to cre keep prices up, holding back crops. are we going to get to that? we should be thinking about that we see lumber going down but it's really oil. we can't afford oil to go down to $5 or $10 almost every company except for chevron is not ready for that. you do not want a big raft of bankruptcies scott sheffield, the man who told me we would get to 12 million a day, scott sheffield is the dean of the group, pioneer. he's talking about having seven companies left during this period, maybe ten companies. can you imagine? people keep saying consolidation. why would you buy a company that
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could be bankrupt soon we have to follow that with a level that's almost as important, david, as some of these companies that have really bad balance sheets like t-mobile in the new world >> listen, you asked about credit -- carl, when it comes to credit, there should be a focus on the fact that carnival cruise lines can raise $4 billion, this according to bloomberg, don't have it directly, at a 12% coupon now, that is a stunning interest rate, but nonetheless, the fact that a cruise line is able to access the capital markets should certainly be seen, i think, as a positive >> yeah, i guess so, but there's a piece called "lost at sea pandemic" today in the "wall street journal," the president of the holland american line sounds aggrieved aggrieved that he had a ship, the zaandam, that left march 7th from buenos aires, if you check
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the timeline, february 1st was diamond princess, that was the first case from hong kong. february 4th, ten cases. you tell me that this company, which sounds aggrieved, carnival cruise, they are aggrieved when one month -- one month they had to know exactly what was going on all aboard, no thanks! sold to you! >> jim, i think you responded to a twitter follower yesterday asking about cruise stocks, and your point was if you believe people are going to be standing in line and paying good money to get back on a boat, then go ahead and buy. that's clearly not where your head is. >> i think it's interesting. it's interesting, they never identify carnival when you read these articles holland american this is a real company you read this piece, and it comes out the same day as that fantastic -- i'm being facetious -- bond yield. i say frankly, a little shame.
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these were the precipitous -- there's been many more since then, but when you take -- when you leave march 7th from buenos aires, what did you think was going to happen? what did you think was going to happen you may feel that you're aggrieved, maybe you want money from u.s. treasury none of these companies pay u.s. taxes. none of them but i think that when this book -- when this era is written and the book is written, you're not going to look at the cruise lines as being good actors >> that may very well be the case yeah >> jim, draw a line from this grim aspect of what's happening to sort of the positive things, which we talked about for much of the week, that is the avid test, several thousand samples going around the country "squawk" had a doctor on today that will start employing those today. more testing news today. i saw yesterday 17 diagnostic
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companies have received emergency use authorizations from the fda in just the past couple of weeks. >> the abbott was a game changer. you're right i don't-- i'm reflecting more on the bond yield for being upset. what i do like -- and i really like -- is that we're now -- it's in the hands of the professionals. there's an amazing article in "the atlantic" which talks about how you were getting roche tests, they were going to quest, which pulled today its guidance. and the quest article -- the article about quest was basically there was a jam up, and one of the reasons why you keep hearing, you know what, i took a test, it didn't come back for days and days may have been related to how convoluted the chain was. now you can get your test and test and test. we also find out the reason the personal protective gear is in such short supply, every time you tested before you pretty much had to throw raway what yo had. i call that the midway in world
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war ii, that's the first time we had something against covid. the japanese beat us everywhere until midway i feel like this is the first victory we had and it should not be overlooked. testing, testing, testing is the real way we'll win this war. >> great piece by bill gates, which i'm sure you read, which basically has three suggestions, national shutdown, which i know you've talked about. >> yeah. >> testing at scale, and then amazingly talks about building capacity to make a vaccine at scale if and when it comes so you can quickly spool up and make a billion doses for countries around the world that need it. >> that was great. i have to hand it to twitter, ned siegel, jack dorsey doesn't come on, i didn't know about that piece until i saw it on twitter. see, we have -- i don't know if people recognized, alex gorsky, saying he can make -- when they get their vaccine, they can make a billion doses, which reminds
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me of what happened with polio polio, one day you're incredibly worried. your parents don't want you coming out, the next day you are eating a sugar cube, it has something in it, but you don't know it is, but it makes it so you don't get polio. gates said here's a game plan, but we're still not getting that national lockdown, which is a shame. i thought last night they would have talked about that then that would be it against covid. we have to take covid -- we have to make it so there are not people going to a hospital ship and cheering they're too close to each other. we have to obey -- when i get my bagel in the morning, it's like there's people there, i'm six feet away from them. hey, don't get closer. that's the way america has to be it's very unlike americans >> we're all learning how to relate to each other on the street to the degree we go out there. let's get to meg tirrell and get the latest numbers on the virus. >> carl, we're looking at that
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testing you guys were talking about. the u.s. did surpass 1 million americans tested this week, a key milestone that the administration had said could have been possible -- they were saying there was capacity to do that weeks ago, but we're just hitting that now we also have pending tests on the chart, only a few states report these, they do reveal backlogs particularly in states like california. if you look at that pie chart, commercial labs are doing the bulk of the testing in this country, mostly quest, labcorp, mayo clinic and others doing about 800,000 so far there's a few reasons why we're seeing these backlogs. you were talking about the shortages of personal protective equipment, there's also a shortage of supplies needed to run the test, the chemical reagents, the swabs. there's shortages of these supplies there's also a backlog generated in testing before these companies could really get the technology up and running.
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tests were coming at them in huge numbers that backlog started from the beginning, they're working to go through it now i'm also hearing there's a logistics slowdown with some companies that have to ship the samples to labs as there's fewer flights going on around the country. that can slow down the processing as well finally, dr. deborah birks last night saying some of the most recently approved tests are not being used from the beginning, labs got used to using technology, sending their samples to the same place, as the backlogs got created, they didn't switch. so there's a clunkiness in the system that is causing this issue. this also breaks down to a lot of variability on the state level. we have a map showing the levels of testing per capita in each state. it won't surprise anybody that new york is number one they have done the most tests per person in the state. but check out those gray states. that doesn't mean they're not doing any testing, but they're
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doing the least. texas, california, oklahoma. those states have the lowest per capita testing levels in the country. california has these gigantic backlogs even though we are hearing the curve might be bending there, that's not based on the number of cases doctors say the best gauge to use for what's bending the curve in california is hospitalizations and deaths, guys they are seeing some positive signs there. back over to you >> okay. meg, thank you for the update on all fronts coronavirus related at this point. let's get to phil lebeau now for auto sales, which i can imagine are not looking particularly good phil >> david, these will be some ugly numbers today starting with fiat chrysler, reporting first quarter sales, decline of 10.4%, that is weaker than the edmunds estimate, a decline of 7.1 there comparing that with the fourth quarter of last year, it was
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down 18% so we're clearly seeing the impact of march sales. basically the last three weeks of march is where we saw weak sales. fiat chrysler out, it's going to be offering zero percent financing over seven years, that's a new promotion that will begin now. no payments for 90 days. let's be honest here, what matters, april, may, june. april numbers will be worse than anybody predicted. may is not going to be much better we'll also be getting gm numbers later today. one other note, porsche out with its q1 sales, down 20.2% weakest numbers likely since around 2013, 2012 in terms of first quarter sales and that's how weak they'll be. back to you. >> yeah. phil, quickly, where do we stand in terms of manufacturing plants many dealerships across the country are closed as well >> all the manufacturing plants, there's not a single major
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manufacturing plant, final assembly plant working right now in the u.s they're all completely shut down you have no manufacturing going on in terms of dealerships, you'll hear this story out there, dealers saying you can still order online, you can still buy and we'll deliver to you, that's a drop in the bucket compared to what they usually do they're essentially shut down. some parts of the country they're open, there are not shelter in place orders, but generally speaking, the northeast, upper midwest, west coast, they're not operating right now. service bays are operating but not in terms of sales. >> phil, thank you phil lebeau reporting on those latest auto sales. we'll take a quick break on "squawk on the street. when we come back, we'll be hearing from the treasury secretary of the united states, stev mchennuin
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it's our pleasure to bring in steven mnuchin. mr. secretary, thank you very much for coming back to cnbc >> jim, it's great to be with you as usual >> all right so i was thrilled last night i got my u.s. department of treasury assistance for small business the paycheck protection program, 349 billion, we have to get everybody who has small businesses to look at that immediately. how do we do that? >> jim, as i said, this program is going to be up and running
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tomorrow i'm pleased that working with the sba, we'll be able to deliver it as you said, the paycheck protection program, you can take out a loan for up to eight weeks of payroll as well as overhead you hire the people back as long as you hire the people back, the loan is forgiven i would encourage every small business go to treasury.gov, there's a red banner on the top. click on it, you will get the information. and you can go to any sba lender, you can go to any fdic insured bank and any credit union, call your lender, see if they participate very much want people to sign up for this it's a great way to hire people back make sure you're getting paid if you have people at work. this will cover about 50% of the payroll of the private enterprises. >> i thought this was the single most important thing that's happened so far, including the overhead, which i thought was fantastic. let's talk about the next program. we started hearing bubbling up
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the notion that both parties would like to see a bond, perhaps some sort of infrastructure or anti-covid bond mr. secretary, you know the credit markets better than any treasury secretary that we've ever had, maybe secretary rubin, but you know that 30 years is a giveaway, 1.2% can we buy that? we want to buy covid war bonds will you give us that opportunity? >> jim, you can buy as many 30 years as you want. that's no problem. we'll be selling 20 years as well and let me just say, the borrowing on the short end of the curve is extremely attractive for us as well. so we're very focused on executing the existing plans and doing the government financing, which is being very well received >> can you give us a sense of the country is about to pay rent i -- we have the ceo of citi later on, michael corbat i'mconcerned people will say i
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don't have to pay my rent. the ripple effect could be as bad as what happened during the great recession according to some could you give us your sense of how tough it could be in the mortgage market? >> jim, let me say before i get to the mortgage market, with you are executing on these plans we have the sba plan, the plan of direct deposit, which will be up and running in another few weeks, that will get money into peoples accounts we also have the enhanced unemployment insurance so, hopefully workers, no fault of their own, who are not working because of this they'll get money in their pockets and to the extent that they have problems with mortgages, the fha has already come out and said they will forebear what that means is if people don't have jobs and people have hardship, they can forebear. if people have jobs, we expect those people to continue to pay mortgages. that will be dealt with on a
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bank by bank basis the most important thing is that fha loans, gse loans, fannie and freddie, the government will be giving people time to pay those loans. >> mr. secretary, david faber. jim referenced this in part in his question, i would love to follow up. the president recently tweeting about a big infrastructure effort, perhaps as much as $2 trillion is that a real effort? are you in negotiations at all within the house and the senate in terms of trying to get something, a phase four sort of plan >> the president is very interested in infrastructure this goes back to the campaign the president very much wants to rebuild the country. with interest rates low, that's something that is very important to him we have been discussing this for the last year, with the democrats and the republicans. i've had ongoing conversations with richard neil on this.
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we'll continue to have those conversations. so, we expect there will be more bills, and we think it is a great time now to invest in infrastructure >> mr. secretary, carl quintanilla. eamon javers reporting on how quickly plans are being made for a phase four stimulus package. his reporting suggesting that the emphases of the white house is on executing phase three. can you talk about that? >> again, let me say, the most important issue is execution on what we have we have a lot of money, we need to get that into hard working americans hands, we also have facilities that we're working closely with the fed that will inject a lot of money into the economy quickly. we need to get these things going in the next few weeks. having money that's sitting around and dribbi and distributr months does no good to hard working americans.
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i heard the small business program will be so popular we'll run out of our 350 billion if that's the case, that will be the top of the list for me to go back to congress on. it has huge bipartisan support, we want to protect small business we're also coming out with a main street lending program with the fed that will help mid-sized businesses, we'll be looking at programs for state and local governments. we had programs for large companies, for money markets to support money markets. i can assure you, jay powell and i are working around-the-clock at providing liquidity into the economy. >> thank you again for this. people don't understand the contrast between 2007, 2009, big banks get bailed out you're helping the base of the country. 85% of the workers can be covered ultimately by what you're doing as someone who is already filling this out, you have to fill it out. how about these big banks?
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yesterday the bank of england said, you know what? the banks over there, they should halt paying their divide dividends. i understand we stopped the buybacks do we need to stop paying dividend the at our banks? >> i assume they want to make loans to help american business. that is their priority i'm sure that's where they're going to be focused on putting their capital. as i spoke to every single one of these bankers, good news is our banks are in good shape. they're out there lending. they want to snoupport the marks and small business >> i know you can't reveal who is a necessary entity versus who isn't. we have two different travel entities out there we have the cruise ships, by the way, that don't pay u.s. taxes i think that's of interest to you and the airlines that do are you ready to take stakes in the airlines, which will keep them alive because when this is over, we need strong airlines
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but do we need strong cruise ships? >> well, jim, let me say that the way the program works with congress is it's very specific there are limited industries that i can deal with direct, the airlines, the passenger airlines, the cargo airlines, and national security companies. those are the only areas and contractors that we can deal with direct. we have begun to have those discussions. we posted applications for the airlines we'll be sitting down with them. again, it's very critical. anything they take, they will have to maintain, all of their employees. we're working on that quickly. we do not have the ability under the congressional programs to do anything with cruise ships direct we do have the ability to do broad-based programs with the fed where everybody is treated equally. >> mr. secretary, i guess it's david faber again. on the airlines, what are your expectation there's in terms of willingness to potentially take
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or allow the government to take equity stakes? there's concern among the employees they won't do that and jobs will be lost and time is of the essence given those incredible numbers being so low. >> time is definitely of the essence. let me comment, you look very comfortable in your home there i don't want you guys get too used to this i want to see you back in the studio let me say, time is of the essence. we'll be doing this very quickly. these are going to be optional programs we're not forcing airlines to do these deals. we'll make these available to the airlines, if they want to take them, they'll take them i think as you know, didn't airli different airlines are different credits. we've been clear they'll be compensated for anything they do >> i want to follow up on my previous question about potential infrastructure bills
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you said there will be more bills, were you referring to infrastructure bills or more bills dealing with the relief that this economy needs? >> the president has been very clear. he's prepared to do whatever needs to be done to make sure american workers and american business is protected. this is a unique situation, an issue because of a medical issue, we're fighting a war on this virus, which we will win, we have shut down parts of the economy, the president is determined that we will protect american workers, american business we have a lot of money to do that if we need more programs or more money, we'll be going back to congress and asking for that >> mr. secretary, i think that it's very explicit how you do the loan i thank you for making it so really, just to read it and click and get it what i want to know, how do we get the word out to people who
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have one and two people at their -- i know you're focused on the business that's ten people i know you're focused on the business three people. when i read this, i was shocked at how -- you give us overhead protection how do we in the media get the word out because there's tremendous negativity abouts what what's going on in the covid world. i think this is something i have never seen before or something that people may not know they can apply to what do we do to make sure people know this is a way to keep your job during this period >> you have to keep talking about it and get everybody to sign up. i want to thank all the people at the sba and treasury who have been working 24 hours. the fact we've been able to get up a new program in less than a week is extraordinary. this not only covers small businesses but independent contractors. as well as self-employed and sole proprietors it will take an extra week for
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us to get that up and running that will be up and running next friday i want to thank everyone in the government who delivered on our commitment to get this up and running tomorrow >> mr. secretary, concerned about the job creation that was the permian, the job creation that was something called our energy independence. can we let this happen can we let oil go to $10 and wipe out our own independence and wipe out an energy that i know you think is important for job creation can we just stand by and let that happen? >> well, jim, you know, we talked about getting approval from congress of buying oil at these prices, filling up our strategic reserves we'll continue to ask congress for that approval. and i know the president has had calls with both saudi arabia and russia to talk about this. the president is absolutely determined to protect our energy independence and our ability to
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continue in this industry, which is a very important industry for our workers. >> mr. secretary, you mentioned to jim the fed's main street lending program. can you give us a little more sense as to when it's going to be fully implemented what your conversations with chairman powell focus on just a bit more there in terms of allowing us to understand what could be an enormous impact from that program. >> both the fed and treasury has a team of people, we're meeting on this every day. it's a very big priority it's something we're focused on, the design, we want to make sure that mid market companies have access to liquidity. and, again, i can't comment on the exact timing, let me say it will hopefully be soon again, all these programs, we want to get up and running so that they're available to american business and american workers quickly.
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that's our objective and we'll be delivering on that shortly. >> mr. secretary, one last one i know that the treasury seems to be a little bit adverse, as was -- when i asked secretary geithner about it, giving us a chance, americans to buy a specifically labeled bond that would help small business. why not have a mnuchin bond, a president trump bond -- i don't care, a crush covid bond, why not give us something that is like the war americans want to contribute, and if you had a small business bond that would allow it so even businesses could begin when this is over, make new businesses, give them loans, i think it would be embraced by democrats, republicans, provided it has infrastructure in it i know if you got behind it, sir, it would happen >> jim, we'll continue to work with you on that as i said, our focus is making sure these programs get up and running. we have $6 trillion to put into
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the economy. that should create a lot of liquidity, a lot of help for small businesses, american workers. as we deliver on that liquidity, it's going to create a lot of help that's really our focus. as i said, we'll be working with the president on infrastructure and other areas to continue to work with congress on. >> mr. secretary, thank you very much for calling in. thank you so much for doing what you said would do and more for small business, that's 85% of our country. always great to talk to you. >> jim, i hope you guys keep on talking about the small business loans all day. go to treasury.gov, get the information, call your lenders, sign up. >> we sure will. carl and david >> jim, very interesting, of course, that is such an important program, you brought it up many times the secretary bringing it up constantly so people know how to connect, so if they're not being contacted by their bank, they reach out, and clearly indicating that there's more money behind the 350 if the
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program gets fully subscribed to you pointed this out many times, it's a key to keeping employment levels in small businesses >> yeah. >> the loans are forgiven if you keep the employees >> i think first of all, we didn't know about the overhead one of the big worries i had, how about the lighting bill, the insurance bill taken care of. then i also thought it would be too obtuse, if you go in and click on it, it's a couple clicks then some people are criticizing me on twitter, which is the main thing, that's why i became the -- you know, that it's only because i have a banker -- i don't have a banker. i couldn't even get a loan from jpmorgan give me a break. you can fill this out and get a loan you do have to call the bank it's not just certain people get it this is for everybody. it is so the opposite. when we think about 2007 and 2009, did we think about who got
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the bail out and who didn't get prosecuted this is a license to be able to keep people. and i know a lot of small business people are saying, i guess i have to go don't go just go to the site. get the money. they're giving it to you keep hiring. start new businesses that's what will happen when we get out to the other side. it can't just be costco, walmart and amazon it can't be. we have to do better than that that's what i'm hoping the program does i love this program. >> yeah. jim, you've been pretty consistent on that i noticed today, palo alto networks joins the club of not laying off employees during the pandemic caterpillar with some pay raise initiatives. comcast devoting 500 million to employees who are impacted and senior management giving up the remainder of their salaries for the rest of the year a lot of this will come from the top down >> it's important. the small business loan program will be up and running on
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friday, not tomorrow i want to make sure everybody knows, it's friday but this is a different world. we have people like -- i had palo alto on last night, i said this does not help earnings per share if you have to lay off anybody. i know the orders can't be as good it was somewhat facetious, obviously in the old world all we cared about was earnings per share. in the new world, you can call it the benioff world, because he's out there trying to get everybody to take this pledge, we're trying to think about what happens after covid. after covid we have a world where people will still have a job. i know it's so terrible to look at these employment numbers and see how bad they'll be everybody is chipping. everybody is chipping away when you see these forgiveness plans, when you see these companies who could lay off people are not, you have a world that may be the kind of world that benioff from the ceo of sales force says, which is that business is the greatest force
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for social change. there are businesses that i urge, take the pledge not to lay people off we will remember you on the other side there is something going on in the country that is ethereal, different. i know we're perplexed, there is such gloom but there is another thing happening in capitalism, which just turns out it's not what i thought it would be. >> we can hope that's the case it's a subject we discussed a great deal before the crisis hit in terms of esg, but overall the changing nature of capitalism and whether or not shareholder privacy would hold so many things will be changed as a result of this in terms of behavior, in terms of corporate america as you say, and so many other areas that we don't even really yet have a handle on. >> so let's see. let's take advantage of this
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moment and joining us on the phone is citi's ceo, mike corbat thank you for joining us >> thanks for having me this morning. >> will you take the pledge, sir? will you take the pledge to not have any layoffs i would normally think that given the fact that things are tougher, citi would. the old citi would lay off people right now >> well, jim, we -- we instituted our own pledge a while back, that we have not been laying people off we actually announced a few weeks ago that about 75,000 of my colleagues would be receiving a check, helping them with the challenging times right now. we have given anyone who needs it in our company paid time off, sick or challenged family situations we've expanded benefits. we have obviously been expanding the utilization of our foundation in the community. so we're -- we're pledge plus at this time. >> there are a lot of people, particularly seniors, who rely on dividends for income.
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you have a yield of 5.1% yesterday the european banks suspended their dividends. do you have plans to do that or can we count on the dividend i know we can't count on the buyback anymore. >> yeah. we -- a group of us, the eight large banks in the u.s. made the decision a few weeks ago we would be suspending buybacks if you look at the u.s. banking system in particular, amongst the largest banks, buybacks is the vast majority of the capital return to shareholders we did that to be in sync with the challenge of the crisis that is going on. to make sure that all of us coming in and in strong capital and liquidity positions could maintain that stance there's structural nuances between the u.s. and europe that are different. one is that the european banks pay an annual dividend, there's a window in which to declare we pay quarterly dividends if you look at the ka tacapital
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levels, the earnings of the u.s. banks, they come into this from a different position from our perspective, our dividend is sound. we plan on continuing to pay it. >> michael, i keep reading these articles today in the "new york times," outbreak sets off stampede by companies to tap credit. i read the companies involved in the mortgage market are asking for forbearance. i read a piece this morning saying these combination, the revolvers, the mortgage market could be worse than 2007 to 2009 i'm -- i know and you know me outside of work, occasionally given to hyperbole, but is that hyperbole? is it something we should be more worried about than we are, which is this colossal edifice coming down because of forbearance? >> i think one is that to really set the table here, this is a public health crisis that has
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manifested itself into an economic crisis. i heard you talk about it a number of times. the testing and vaccines are core to getting us back on track. certainly from a u.s. perspective, from a broader global perspective, the worst thing we can have is uncertainty. in these times, people have been rising to the challenge and the acts of kindness and acts of giving that i've seen have truly been extraordinary, there's no doubt in my mind, like other things before, we'll get through this i think it's up to the system to try to chart that way. you had secretary mnuchin on, i would start out by saying the actions of our government, of the administration, of the treasury, of the federal reserve have been extraordinary. as banks, our role is to -- is to -- or our roles are to do a couple things. one, make sure we're here supporting customers and clients, which we're doing as you talk about credit, the bank policy institute put out a
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piece last night saying that banks in the u.s. lent about 0 $400 billion in the first quarter of the year. citi was over 50 million of that in terms of supporting our clients. sure, we've seen revolver draws. but it has not been necessarily outsized we've seen the bond markets functioning well we had a record month of 2$260 billion of record issuance high yield issues getting done companies view this and the uncertainty as a place where it's prudent to build liquidity. programs we've put in place, the programs the government have put in place and other bachgs are the banks are there to do that >> mr. corbat, it's david faber. on this subject of capital adequacy and liquidity, can you give us a sense of what your modeling looks like given the
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revolvers being pulled down? you mentioned 50 million in the first quarter in terms of new lending, we know there will be some bankruptcies. people will be unable to pay things like their credit cards what are your models looking like in terms of capital adequacy, reserve cushion. you seem to be painting a positive picture, is that the way you feel right now given all the unknowns that are yet to come >> as you say, david, there are a lot of unknowns. but you have seen over the last several years the stress testing that's gone on in the system the severity of the scenarios that the banks are run and held to in terms of capital and liquidity adequacy and i think we feel like we're coming into this from a position of strength. clearly the system will be challenged as your own people say, our people say, we'll see spikes in unemployment i think the responsibility of
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the system is to try and turn that -- those spikes as quickly as possible. going back to secretary mnuchin's comments, i think the 3$350 billion that we need to gt asap into small business hands is critical as part of that. and i think from our perspective, you know, we're here, we're open, we're lending. and we're also making sure that our customers and clients have the ability to take advantage of these government programs. i think an important nuance that we've got to be mindful of here, though, is that there's liquidity and there's the extension of credit. both things have to be operating properly and i think a lot of what we've seen is -- is government and regulatores responding to liquidity. the second leg of this is we have to be focused on making sure we get credit into the right hands to make sure these
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businesses and people have a chance >> mr. corbat, my travel trust has owned citi for ages. it was a huge winner, now it's down like all of the bank stocks tangible book value, $70 completely scrubbed. stock at 39. can't buy back stock, which might be a great buy does this signal something we don't know does the decline in stock signal that the nonperformers will spike? the disconnect is palatable. >> as i said, we go into this from a position of sound capital and liquidity, balance sheet as you say, it's been scrubbed but there's a lot of uncertainties out there. around rising unemployment, around business challenges, i think people look and they say it's not necessarily city specific, but they say the banks are there, they have exposure to the businesses, they have exposure to the people we don't know where this will go
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going back to my point of uncertainty. again, i think the banks come into this from a position of strength, and we have a very important role to play here, not just in terms of our day-to-day jobs of supporting our customers and clients, which we do, but being that sound intermediary between fiscal and monetary and the real economy and making sure that all these extraordinary actions, not just here in the u.s., but around the world, they can be brought to bear and brought to life for our economies and the people in them >> michael, it's carl. your point about liquidity and extension of credit in the short-term is obviously the most important thing. once case load in this country returns to a so-called manageable level, how does small business lending and consumer lending structurally change? what would you say to small business owners who are worried about getting a loan a year from now having taken on debt and lived through the episode we're
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in >> i think, one, to secretary mnuchin's point that provided this money is used around what's outlined, it won't be ballooning their debt and we're all hoping through testing, through social distancing and the other best practices that are going on that we can bend this curve quickly and, you know, in the cares program, you effectively get 2 1/2 months of coverage we're hoping we can bend this curve and to get these businesses back on their feet or keep them on their feet to be able to come out the other side of this so they're not ballooned up with debt or having challenges interms of debt service into the future. and then they can make their decisions in terms of how they want to invest in capex and grow their business >> mr. corbat, david faber again. one thing we hopefully look forward to, of course, getting on the other side of this. and one of the key questions is
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how are behaviors going to change in a significant way. as the leader of a large organization with scores of employees, i assume working from home, not to mention a lot of retail frontage in terms of your branches, how do you see citi and in general general the changes that are taking place now affecting behavior in the future in terms of your work force, both on trading desks or bankers, and the people in the branches >> well, we all went into this with lots of contingency plans i don't think many or any of us really imagined the day where we would have the vast majority of our people working from home as of today, we've got over 160,000 of our 200,000 employees working from home. at various percentages around the world, but roughly 80% of our people, and we didn't
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imagine that and i think a couple things really come out of this. one is that we can do it we stood this up very quickly and i think we were fortunate, if you would call it that in terms of having been in this public health crisis in asia early on, i see it coming west and had the ability to experiment and try different things so that as it came here we were as prepared as we could be i think it changes things from a social aspect in terms of potentially how people interact, and what meetings or other things are like. maybe in particular at certain times of the year, maybe some of your more contagious seasons, i think it changes the way businesses and people contingency plan as an example from a human aspect, i grew up in a family with two depression era world war ii parents, and our pantry was always stocked in the and
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maybe going forward the pantry is just going to be a lot fuller in a number of homes around the world as people think about things differently >> michael, you remember the canned peaches and canned pears from delmonte? weren't they terrible? we didn't know at the time it was so bad we had the treasury secretary on he's talking about this great page he created where on friday we can apply for loans and we talk about bankers how does it work let's say citi is my banker and i have a dry cleaner it's consistent. i don't have any inventory that's why it's a good business. do i go to my branch do i call? what do i do to be sure that i get my money >> well, one is we instituted several weeks back for small business basically available any time support nights, weekends for our small businesses and i think one thing that
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critical in terms of the implementation of what's gotten to be known as the payroll protection act is we've got the ability to do it digitally we don't want to have people having to come out making sure that we've got the digital interface set up so people can apply online. we can get the documentation that we need online for the vast majority of these loans and we can turn this money and get it into small business hands as quickly as we can. from our perspective, we are working around the clock to make sure our port is set up and not skrus our business but any business that wants to come to us for help and access to the program, that we're up and running to be able to do that. >> you're a family guy i know your wife and kids. what's it like when you get up in the morning? do you think about the mall that might close or the loans that are in trouble? do you think about co-vid and your family and what do you do about the way? are you separated from your family what's life like for a big banker right now in an era that
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we've never seen before? >> so i'm fortunate that i'm with my wife i am with my son and my daughter-in-law. my daughter and her husband live abroad, and they're fine and being sheltered in place with her husband's family world head quarters is set up in something that's a little bit bigger than a closet initially we had to skirmish to get wi-fi and bandwidth sufficient to support all of us. but the day starts clearly with the family, but it's thinking about our people our 200,000 people and how do we keep them out of harm's way. how do we do everything we can to support our customers and clients? and what are the things that we can be doing to be able to do that and obviously, trying to make sure that we're in the long run making the right decisions for our shareholders in terms of how we run the bank and making sure we're supporting the communities
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that we're in. and kind of knowing that those communities need to be there and to be healthy, in order for us to be healthy. so i think it's really in the round. it goes back to i think what you were talking about before in terms of finding the right balance between all your different constituencies, and i've got to say from a city perspective, my colleagues have been incredible in terms of the resilience and people doing just extraordinary things to help other people, to help our customers and clients, and, again, i think we're seeing just great examples of human nature and really who we are and i'm very encouraged by that. >> michael, your point about your family members and dpegs era family members is so vivid i wonder in the early days when we got a sense of how serious this was going to be, just a
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month or two ago, there were anecdotal stories about bank branches running out of $100 bills, demand for cash what's happened with deposits lately >> well, carl, i would say we've tried to strike the right balance. we've tried to make sure that there's money in our atms constantly we want to make sure our screens are getting cleaned and disinfected constantly we want to make sure that our branches are open. we may not have every branch open, but we've got our branch employees at work, and at the same time, we want to make sure that they're safe. that there's enough distance between them and the people that they're serving such that we don't put them in harm's way, and so we have operated really uninterrupted through this and again, we've really been trying to also drive people remotely and to make sure they take advantage of all the
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digital things that are out there. so remote check deposit. we upped limits in terms of the use of zelle and the way people with transfer money, and we're always open to make sure people have access to their cash when they want it >> mr. corbat, earlier you said that the system, meaning the financial system, is going to be challenged i wonder, what are you watching closely? whether it's an increase in infections, or something in the financial markets to try to determine when that challenge is going to peak and when we're going to sort of be on the other side of it >> you know, i think one of the lessons here is that in this, and i think it's an important lesson for life. that you can't go to where this is when we look at the virus, if we simply judged where we are today, by nature we're behind it and i think what we've tried to
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do is really look and try and get to this or get ahead of it and i think the expectations being put out there is that it's likely in the u.s. to get worse before it gets better. i would say another important thing is that not everything is equal in this. meaning that geography perspectives, around the world, the cure rate or the recidivism of this will be at different pace based on social practices, on many testing or other things. and we've got to understand that's going to be the case in the united states. maybe new york is going to be at the front end of this in terms of peaking and hopefully rolling over, but we're going to have to take a more nationalist approach and so clearly, we're watching the virus. we're watching the pace of acceleration, deacceleraticelerd we're seeing some early signs of deceleration, and hopefully as
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it rolls over, it does so quickly. we have to be mindful. we've seen it in places like asia i had calls this morning we're seeing importing where cases are going up as people are starting to move again we've got to be mindful of that. i think from an economic perspective, employment is clearly going to be a big thing that we're going to watch, and again, i just think some of the vulnerabilities of the u.s. economy around some of the challenge sectors, and i saw a statistic in one of our reports right now that said 75% of the people and 90% of the gdp in the united states right now is either at stay at home or social distancing and so to me it comes down to how quickly can we turn this how quickly can we get the testing and get uncertainty out? and how quickly can we get people back to work and back to
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living normal lives as part of this own those are the things that we're obviously watching very closely. >> all right michael, very important to point out the citi foundation committed to find $15 million to fund covid-19 relief globally. i want to thank you for coming on the show and giving us the much-needed perspective and optimistic perspective you always share >> thank you stay healthy >> that's michael corbat he runs citi do we have sara? >> we do great interview. thank you very much. here i am. top of the hour, everyone. welcome and good morning good wednesday morning to you. i'm sara eisen with the gang, carl quintanilla, jim cramer and david faber. we are from separate locations as we're putting social distancing to work we kick off the second quarter with declines for the market
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coming off the worst first quarter for the dow ever the worst quarter for stocks since the depths of the financial crisis more than 3% dow down a few hundred points. bonds are in demand. the safe haven bonds with yields falling, especially the ten-year and 30-year and the dollar is stronger we have economic data break right now. ism manufacturing just crossing. rick santelli with the numbers >> yes 49 .1. once again, not a horrible number and i know, we've said this about all the numbers. whether it was claims or adp this morning which was done 27 or this numberwe expected in the low 40s at 49.1. well, listen, they can say what they want. the number is better than expected to put knit perspective. 47. was december 49.1, you can see the numbers are not that bad they will get worse, obviously 50.1 in the rear-view mirror
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does not get revised let's look at new numbers. prices paid dropped. deflationary period, it's funny how that seems to be more realtime than many of the other components that's 37.4 versus 45.9. finally employment that's at 43.8 versus 46.9 on construction spending and also remember this is a february number i'm sorry. yeah february number. and there aren't that many negative months in construction spending this is down 1.3 and down 1.3 comps to minus 3.2. that's october of 2018 like i said, not that many negative numbers in this series. so that construction number really reflecting kind of the hit that you would suspect would be into the construction business, of course, and housing. even though interest rates seem to be helping it out on the interest rate front, of course, we continue to drop a bit. we're at 60 basis points on the
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ten-year the all time forever yield close is 54 basis points we'll continue to monitor. carl, back to you. >> all right rick, thank you very much. rick santelli. first half hour of trading under our belts on this wednesday. dow down 739 session low 835 to the downside. let's bring in dollar tree's ceo to talk about this unprecedented shift of household, especially meal budgets but all kinds of household budgets moving away from out of home to grocery. it's good to have you with us. thanks for the time today. >> thank you thanks for having me on today. >> we can only imagine the volume increases you've seen, but can you talk about overall what this past couple of weeks have looked like and are you beginning to see any easing in the shortages of some key either disinfecting supplies or paper supplies that we're all familiar with by now? >> good questions, and thank you. let me just start off by first a
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shoutout to our teams at dollar tree and family dollar associates that have risen to the occasion on something that's hard to plan for, and as we've really managed this thing in realtime, have responded in great ways in their communities and with their neighbors and i think what you've caught on, the essential size of the business we use words like unprecedented but clearly the customer was shocked very quickly to get the things she needs into her home to protect, clean, hand sanitizer. and now when you think of all the kids out of school, there's at least ten more meals being done at home than there were before, so the impact to the food business as well. i would say this our supply chain that be stressed clearly as our trucks show up to stores we probably have enough for a day or a day and a half. more is coming and we called out and have a billion dollars in the pipeline somewhere our vendor partners have ramped
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up it's coming. it's just that t not going to be enough for the next few weeks but there is enough coming overall. and so we're working very hard with our supply chain own our distribution centers we have 24 around the country. working seven days a week to get product to the stores. >> i don't want to make your peak traffic hours any busier than they are, but what advice do you give to shopper who is want to know when the best time is to arrive at the store and hopefully just come in just after that delivery of certain categories >> well, good point. we did call out for our senior population for anybody at risk the first hour we would like to dedicate to those folks and kudos to folks who have responded to that. i think as folks are shopping, listen, the levels on the shelf are going to get better and better as we go through this i was in a store last week, and our customer who seemed to be a bit in a panic, you know, our
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store manager said listen, we have two you can take today. we have more coming next week on the truck. i see that already and just that conversation reduced the angst of that particular customer. so i think as our levels across the country and we won't be the only retailer that sees an influx of more goods, people will have confidence that they can go and shop any day of the week in more times but this will be a build process over the next several weeks. >> gary, it's jim. gary, i'm a little confused and perpl perplexed. when you were on last, dollar tree was good. family dollar not good the last week of march you were minus 14.3 for dollar tree family dollar starting to get better what went wrong at core dollar tree because dollar general reported some pretty good numbers and minus 19.4 is not like you >> well, keep in mind, jim, we really caught an to a positive comp on the quarter which was a
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7 plus comp for dollar tree. what we called out was the change in foot traffic that we saw in the last seven days that we want to make sure everyone saw. so i don't think anything was wrong. i think what we saw the customer respond to at dollar tree was we have the essential items she needs, paper towels, cleaning, hand sanitizers. we certainly saw that spike that got us to that plus 7% i think we have a reduction in traffic. there's two things one of them with that kind of spike in demand, we just ran out in some stores i think secondly, appropriately, customers are taking this shelter in place seriously and that's some of the reduction in foot traffic. i think at family dollar we have a broader expanse of consumables that people need we have more in store. we have more in the supply chain. and that's some of the difference between the banners right now. and listen, people are very focussed on taking care of their foams. we have a holiday coming up
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easter i think folks are not focussed on that like they typically would. and that's some of what dollar tree is seeing right now i would say. we're in unchartered waters but i'm convinced dollar tree has always responded when we've had other events and effects on our business we know that we sell everything for a dollar. our customers know that. they'll be back as soon as they get out of shelter in place when the right time comes around. >> but i think just to follow up, gary, it's sara, on that point about some of the negative numbers in this report, can you give us more color on what people are actually spending on? are they buying anything except for absolutely essential goods like sanitizers or goods are all discretionary items falling at this point? >> it's a good point people are focussed on the essentials as they should be with what they have to stretch their budgets to but it's interesting
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customers with kids at home are much more buying anything related to education we have those at dollar tree our crafts section is going through the roof at dollar tree as folks are trying to find ways of entertaining. same thing at family dollar. in addition, at family dollar we have lots of items you can go outdoors with. my sense is as families get together, you know, they're gathering around and grilling out when possible and using it the grills and chairs to keep their social distancing outdoors so people are navigating this in different ways they're home much more they have to stretch their budget, but i think as we go through this, they're finding the right way to maintain their neighbors within some social distance their families are obviously at home so the shock right now is to the customer i don't think any of us thought at the beginning of march we'd be here. i think folks are navigating the new reality, and i think over
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time folks will figure out how they continue to do the things that create both family and neighbor events at the right social distance. >> finally, gary, two questions. one, what is it like trying to hire 25,000 workers amid all these safety concerns. and two, when do you imagine yourselves or your peers starting to reinstate guidance they've pulled in the past couple weeks >> let me start with the hiring. we're hiring 25,000 folks for all of our 15,000 stores and all the communities that we operate in we have the 24 distribution centers that were also in need so we operate oftentimes in these neighborhoods that have had a loss of jobs waiters, hotels, we are seeing some of those folks show go online, go to dollar tree or
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familydollar.com and find the applications and find the store or distribution next to you. i want to call out obviously like other folks we've paid a premium to our folks of $2, and today we're announcing we're going to extend that up through april 18th as well what was a $30 million investment when she announced it this was another $15 million for all our folks we're paying a premium to as we go forward. forward guidance, i think we have to see how the customer responds over the next eight to ten weeks, my crystal ball is no bigger than anybody else i know we can be serving our neighbors and communities with our stores we have what they need the supply chain is working. the essentials we have will be in store then we'll have to see when do we get back to selling i think a broad mix of items across our stores both discretionary and what has to be essential goods
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so our focus right now is very simple we're here our priority is to fill up our stores, get our supply chain working the way we need, take care of our folks, keep them safe, and have a safe working environment. you won't get -- we'll get back around to guidance when we have the right viewpoint where the customer is somewhere past april, i would guess >> i mean, the customer is likely to be in a lot more pain than they are right now, gary. some pretty steep warnings of recession in this country. i tend to think of dollar stores as retailers that do well during good times and bad just remind us, how you gear up for recession and what you're expecting it to look like in this country this time >> good point. if you go back to 2008, 2009 crisis, it's a different element than we're working with right now. but both dollar tree and family dollar, people come for the
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right reasons. we had great value we were convenient the things they're looking for to stretch their budgets, we delivered on both banners if you go back to that particular time, had a wonderful up tick in both traffic and sales. that's what we're focussed on. if we can get all the items we know in the store, people will come find us and so that's what we're focussed on as we look forward into april and beyond. i want to make sure our stores are stocked with the right items. our customers will navigate this in the best way they can we will have more folks, unfortunately, i think, that will need to come to us to stretch their budgets. so that's -- in our short-term, that's what we're thinking about and how we accommodate our customers going forward. >> gary, appreciate your time. on a busy week thank you very much. ceo of dollar tree we'll see you soon >> thank you >> david >> it is a momentous day for
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sprint and t mobile. almost a full two years after announcing their intent to merge, closing a deal today and becoming one it's also a momentous day for our next guest, mike sooef effort, taking over officially as the ceo of the combined company today. john lodger has been the long-time ceo of t mobile. mr. sievert, thank you for joining me >> thanks for having me. >> 43 billion, that was the number on april 27th, i think it was when you originally announced this bill, 2018. 43 billion in synergies. 26 billion from the network side is that number still the same? is that which was the driving force still in play as the key number >> can you believe it? you said the date.
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april 28th of 2018 this has been such a journey yes, that's still the number we've had eight quarters of block buster results during this nothing has changed. this is about bringing together the two companies and the uniquely positioned assets of the two to unlock the potential of massive scale and invest the synergies from that massive scale into creating the best 5g network. the network portion is 26 billion in our forecast over the long haul. all the potential that we saw when we announced this continues to be what we see in it. that's why we pursued it so ambitiously during the long pendency of this deal. >> yeah. well, of course, a lot has changed very recently in terms of the landscape for the u.s. economy. you did focus so much -- well, you and john legere and others
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in arguing for why this deal should be aproved on 5g, on your ability to bring it throughout the country, offer speeds which we have not seen how much of the current economic crisis is going to impact the ability to bring 5g to the country and perhaps even more importantly, the ability of people to actually buy the new hand sets they're going to need to access this service >> well, in many ways what it pacts first and foremost is the importance of what we do one thing we've learned or certainly has been reinforced for us is that the service we bring to the american public is essential. as we're social distanced, the technology that brings us together is more important to us than ever, and consumers will prioritize spending in this category if they need to this crisis is going to be short-lived. but we'll return to some sort of normal after it. what that normal looks like, though, nobody knows it's certainly going to be a different normal than the one we had before entering the crisis
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if that normal, is the normal where more americans are under cuffer economic circumstances and have tighter budgets and have to make more choices? we're going to be here to serve them we're going to be here perhaps as the best positioned player to serve them if you have a tight budget, you want value that's what the new t mobile thesis has always been about breaking down that tradeoff that customers have been forced to make in this category since the beginning of time. do you want better value or the best network pick one this merger is about creating a company that says very emphatically, you can have both. and i think in the circumstances that we'll most likely find ourselves in economically when this crisis abates, that's a message that will be very important for the american public >> mike, how quickly can you put back that you now own in your network to deliver the 5g speeds that obviously are one of the keys to why regulators approved
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the deal >> very quickly. our teams have had a long time during this merger to plan the net work we will start lighting up 5g on what was sprint's spectrum almost immediately and we'll keep you informed as we do that that will start to benefit consumer who is came from both sides of this business immediately. and that's one of the -- i guess benefits of the long pending merger we'll be able to start bringing the benefits you asked if the crisis will affect that. it might it might in permitting and other things as governments are around the country local municipalities are operating at less than their usual capacity but it won't slow us down. we've been classified by the department of homeland services and the administration as essential services we are allowed to continue operating. we've determined we can do that safely
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much of the work tower by tower happens by crews, individual crews of one person. sometimes it's three, four, or five people that arrive in separate cars, work outdoors and work at a safe distance from each other so we're planning to proceed it's essential for the american public we get this network built and we determined we can do it safely other than some issues around permitting and things like that, we don't see a slowdown in our ability to bring this network to bear >> but what about a slowdown in sales? i mean, you've got like all your competitors, 80% or so of your company-owned stores are closed. i would have to imagine that's impacting sales or is that being made up for online >> it certainly is on march 17th, we issued an ak saying we felt that the impacts of the crisis would be material, and they will be what i'll say is that they'll be material but short-lived remember, yes, we've got -- i get to perform at a combined now about 75% of our stores closed
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and that has an impact, of course a major one on sales but so does the rest of the industry and in the grand scheme of things if it's a few weeks or some low single digit of months where we're prioritizing the safety of our customers and our people, that's something we're well-positioned to get through this is a recurring revenue business where people have an ongoing subscription and we're the value player in this market. so we're here to serve them. we think over the long haul while there may be a short-term material impact, nothing in our thesis is unchanged. and the potential in the merger is as exciting as ever >> mike, jim glad you called in >> hi, jim >> i'm trying to figure out, john legere always made me so excited about you guys and he did have kind of a different style. we'll say that one of the things that i'm trying to figure out is if i'm a sprint customer, why should i necessarily go with t mobile
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what kind of proposition are you giving me that makes it so i shouldn't go to verizon? >> well, it's about having the best network and the best value. it's about not having to pick. you know, this market as i was telling david, has always made people pick. verizon claims to have the best network. that's something that they're going to be scrambling to try to talk about as we build the world's best 5g network with the combined assets with this company. what we'll be able to offer is the best value and the best network simultaneously that's unprecedented in this industry >> well, also you talk about the best value, but if you do that, then you've got to buy from huawei they're the cheapest we all know it but some of us question whether buying from huawei means huawei hears for the communityists, hear everything we say it wouldn't put the past them.
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those companies are supposed to be dedicating to spying. what do you do when the lowest cost producer of equipment is huawei, but they may not be such a great actor? >> well, our biggest suppliers are nokia and another. we're planning to expand our 5g network with our existing suppliers. and with our existing suppliers, we have a synergy pool on the network side that we see line of sight to $26 billion in synergies. just from the network side $43 billion overall. this merger as we're planning it with our current partners is something that will unlock the potential of massive scale finally positioning us at a scale comparable to at&t and verizon, but with obviously a culture and a brand and a value proposition that is so much more attractive >> mike, the new company still
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owned by t moebl's long-term parent and soft bank soft bank is talking about selling some of their stakes sooner than may have been anticipated. >> you know, you'll have to ask them that. we're delighted to have soft bank as a parent company along with deutsche and telecom. today we welcomed people to our board of directors i think we're going to make a great team you'll have to ask them about their long-term plans. i see huge potential for us with deutsche telecom and soft bank and here in north america with tmus to build some interesting collaborations and cross oceanic synergies. i really like the potential of this as we can collaborate with partners at a global scale now so we're very excited to have
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them as a part of the family >> does the sprint brand go away quickly here >> the main brand will be t-mobile we're not going to make big changes. think about the summer time frame as when we unify and market with all of our stores and all of our advertising and all our offers in a more unified way. mid summer we haven't picked a date yet that's always been our intention. that doesn't mean the sprint brand will go away completely. we haven't made those decisions. the sprint brand has an incredible legacy. but we believe that right now in wireless it makes all the sense in the world to unify under the t mobile brand the company is called t-mobile and the flag ship is t-mobile. >> i look forward to many future appearance by you. we hope as mr. ledger used to join us.
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final question, something we used to talk about often before the current crisis how will 5g impact people at home especially now given all the streaming we're doing? do you believe you'll have a competitive product in 5g wireless into the home that competes with right now the cable that i am using to connect to the internet? >> well, first of all, david, t great to talk to you, and i'd love to come back and talk more. you followed this merger so well it seems like you've broken every major story including the fact that i would become ceo so thank you for following the company so closely yes, you know, 5g obviously, it's more important now than ever because what we're really realizing during social distancing is these connections are more important than ever and remember, our competitors have 5g strategies that are so different from what new t-mobile can do verizon used to talk about
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sporadic places around the country. we intend to cover 99% of the country. not just with low band 5g like stand alone t-mobile but with broad and rich 5g that's transformational 90% of americans will have -- this is game changing and it's one of the reasons we worked so hard to bring this out >> we look forward to obviously following your efforts and talking to you in the future and certainly appreciate you joining us on this momentous day. your first as ceo and obviously the first with the combined sprint and t-mobile. 23 months after you guys announced it mike, thank you for joining us >> thanks, guys. it sounds like you have good guests tonight on mad. >> nestle, cisco, what they're
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doing to deal with the crisis, web ex, rest med i'm interested in what mick is going to say he has machines that maybe -- build plow shares. that's what they do. they can make vents, ventilators out of their cpap machines and pbh. manny is never afraid to come on we know department stores are in trouble, but we have to figure out if they're selling the regular stuff. i can't wait until tonight i'm also on halftime and mayeds vin at 10:00 i can't tell >> looking forward to all your appearances. dow down 625 points off the worst levels of the session. time for a spotlight looking at the first trust dow jones internet etf
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ticker fdn coming off the worst quarter since the fourth quarter of 2018. it's down a little less than 3%. amazon, facebook, and netflix are the top three holdings of this one they're currently all trading lower but less than the overall market we're going to take a quick break and continue to monitor this market action for you all sectors are lower in the s&p 500. real estate getting hit the hardest. down more than 7%. financials, utilities and industrials getting hit. president trump warns the nation to brace for a painful few weeks. we'll be right back.
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s&p 500 on this wednesday, let's get the latest on the coronavirus. >> good morning. global cases are now more than 883,000 and the death toll has now gone above 44,000. in the u.s. the death toll is above 4,000. spain recorded a record 864 deaths since yesterday the country's death toll is above 9,000. new cases fell a possible sign the lockdown is working. and thousands of brazilians have been protesting their president's handling of the pandemic by banging on pots. he's one of the only world leaders to think it does less
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harm than -- calling the virus the big education challenge of our time masks being handed out for free in some stores. russia is spending medical supplies to the u.s. video from the russian defense ministry shows a loaded military plane talking off from moscow early this morning for more coronavirus, head to cnbc.com frank, thank you let's turn back to the market action this morning. first day of the second quarter. dow down less than 600 points. we were down more than 800 at the lows s&p is down a little less than 3% joining us is diane swank of grant thorton and meghan shoe of wilmington trust it's not an economic question, but when you have white house officials telling americans to prepare for 100,000 to as many as 240,000 deaths in this country, i mean, it's hard to
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separate sort of the humanity and society cost to all of this with the markets and the economy. how should people be taking the headlines? >> it really is tough. i think thinking about these numbers, we know that the 100,000 to 200,000 or 100,000 alone is more than the wars since vietnam and the casualties we lost as a country since then alone over decades and we're talking about losing that many people in months it's truly heart breaking. and we've seen the december administration to the economy also be equally swift and heart breaking and that's what we're trying to come to terms with right now, knowing that tomorrow's jobless claims are likely to top 9 million. these kind of numbers never even popped into our radar screen ever there's no precedent for understanding and framing this but it is important to still try to stand on the faultline we're standing on and try to see not only what we're going through but how to get to the other side, and when we do, how much
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of a rebound in economic growth can we expect? >> i think it's an impossible task we just don't know it is unprecedented and we don't know what it's going to look like so how do you craft an investment strategy? >> well, diversification is the biggest point. we're in unchartered territory and we can look at historic drawdowns and historic analogs for different parts of this crisis, but there really is no precedent for it and when we think about our portfolio, we are taking a 9-to 12-month outlook we think there could be some further pain in the meantime it means building a portfolio that is diversified as i said and has exposure to different types of environments. we are still constructive on more growth-oriented type of stocks we don't want to be totally out
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of value that is probably going to see a strong balance when we get to that bottom. it's about protecting your portfolio, making sure you don't get too defensive because some of the biggest gains that we're likely to see over the next year will probably come in the first few days of the bottoming. we just don't think we're at the bottom yet >> clarity on the labor statistics we'll get adp today, we're getting granular about when the surveys were, what they reflect in terms of high frequency data how sensitive is the market to the numbers right now and going into jobs friday >> for me the numbers are less than than number the unemployment claims that more than 13 million job losses in the last two weeks alone, and
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that's only the ones people apply for the unemployment for the survey ended on the week of march 12th anyone who worked an hour that week was considered on the payrolls whatever the number is, i'm looking for more than 100,000. but even those numbers are guesses at this time the losses we experienced which the survey showed in the small business sector are reflected in what they assume about birth and death rates of new firms this is something that we've asked the bureau of labor and statistics about they're weighing whether or not to change the methods and reestimate that either this month or next month, and it will be laid out in the report if they did i went to a former bls commissioner to ask what the chances of that happening are. and the way they responded to us, there's a chance they could change that number of firms particularly birthrates go down when -- i hate the use this kind of words in a crisis, but it is how they refer to it
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particularly the birthrates of new firms go down as everything seizes that's one thing that could suppress the numbers even more and get to a closer reality of what was going on in restaurants during this period of time >> did you just say -- how many millions of unemployment claims do you expect out of tomorrow's number >> over 9 million. >> over 9 million? tomorrow >> yes >> how many of those do you -- how many of those do you think are furloughed in other words, with the hope of coming back and some short-term relief here in the form of expanded unshurns ainsurance an many are just lost jobs? >> that's an excellent question. they weren't in the numbers yet. and what we were seeing coming out of states like california, this is the week where everybody shut down and you were seeing unemployment claims. we think 1 million from
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california alone from that week. so it's not hard to get to those numbers given the numbers we're seeing at the state and local level. the furloughed workers didn't go in until they passed the legislation that expanded unemployment insurance to gig workers and furloughed workers and provided some enhancements and checks for the workers so they wouldn't be able to apply for unemployment insurance yet. these numbers, not only were the websites overwhelmed by the volume so they were undercounting but many of the people who now qualify for unemployment insurance were not counted in last week's data. >> yeah. and the state's ability to handle various claims as governor cuomo said yesterday, it varies depending on what state you live in. meghan, i wonder we talked to the dollar tree ceo a few moments ago about when they might reinstate guidance he said probably sometime past
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april. i wonder where you are on s&p 500 eps for the year, and when you think we can get enough guidance back to start putting reliable models back together. >> yeah. the models from an earnings perspective are greatly impeded by the lack of guidance, and specifically the lack of time frame. we don't know how long this is going to last. we're at about $140 for s&p earnings for this year, closer to 165 for next year and when i think when we look at that, it's probably likely, again, that part of the bounce that i think we've seen is pricing in a bit of the light switch scenario, if you will and i don't think we're going to see the economy switching on like a light probably going to be more gradual. we might have more guidance earlier, and better activity out of some of those retail stores like dollar tree than we might have for some of the airlines or our mass gatherings. people are going to take long
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tore get comfortable with that type of thing. you know, you can look at certain analogs historically, 9/11 is probably a pretty good indication or at least a good comparison for something like the airlines in terms of the fear factor. that took about a year to recover passenger traffic after 9/11 different pockets moving ahead of others and specifically different regions. the response from the mitigation effort has been localized. i would expect the ramping back up process to also be localized. >> meghan, tell us what you're adding and subtracting right now. >> this is a great opportunity to be upgrading the quality of your portfolio, and again, looking auloo looking out, we've taken down some of the cash-strapped businesses like airlines, hotels, like financials that are
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specifically really -- their business is geared toward financing of deals and things of that j insurance companies we've been adding to more diversitied, larger banks. actually added to some larger industrial conglomerates we see industrial activity picking up over the next 12 months but probably rocky in the meantime i think this is a really good opportunity to be picking out technology names that maybe have been a little pricier. still, perhaps, a little pricier than the rest of the market but at more affordable levels and we see technology as being longer term that will resume. companies will realize they need to have supply chains that are more diversified and maybe bring some activity back to the u.s. where they have more control but to do that, they'll need to automate technology will be a big part of that story over the next five or ten years. >> finally, diane, we're out of time
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meghan, thank you. good to see you both >> thank you >> be well let's get to phil who has been bringing us auto sales all morning for the quarter. hey, phil. >> we have the q-1 number from general motors sales falling 7.1% in the first quarter. clearly coronavirus and the impact it's had during the month of march weighed down total sales. by the way, that's a greater than expected decline. edmonds was expecting a decline of about 4 % and for perspective comparing q1 versus the first quarter they fell off 16% from the first quarter compared to the fourth quarter. we'll get the total sales rate for the industry later today or tomorrow curious if we see the lowest rate since 2012. i've had a number of people say to me when do things potentially
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start to improve or do they bottom out in april and may? you'll notice heavy advertising from the auto makers sometime this late spring, i bet, where they're going to say look, zero% financing for seven years. no payments for 90 or 120 days they'll start the programs and heavy advertising once they get a sense that you will start to see people be able to leave their homes again. and that dealerships can open up again. we likely won't see that in may, april, and probably not in the first part of may. but then at some point you'll start to see the advertisements kick in for all of the auto makers and dealerships >> huge implications for media as well. advertising is a huge deal especially from the auto makers. phil on gm's numbers phil, thank you. we are holding on to the s&p 2500 a short break and 'lwel be back in just a moment don't go away. ♪
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freddie mac. borrows can miss payments for up to a year and the payments are tacked on to the end of the loan we've heard from one mortgage ceo who said they got 8,000 calls last sunday from borrowers. are you starting to get a read on how many borrowers are going to ask for forbearance >> we are, and i want to caveat the numbers are rough and preliminary. if you talk to me in two days, they'll probably be different. with that in mind, my estimate now for fanny and freddie's book, we're hearing of a take up of about 1% of their book. april looks like it will be approximately 3 00,000 loans for overall market that translates approximately into 700,000 loans. we're thinking closer to may we'll see closer to a million. by may a little more than 2 million. this is between 3% and 5% of the
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market i want to emphasize we're not seeing the worst case scenarios of 35% takeup. closer to 1% and the lenders i'm talking to are telling me 70% to 80% of their calls are people who aren't yet facing a hardship but want to know their options >> those are some incredible numbers. now, the cares act specifically states borrowers do not have to prove any financial hardship no documentation of anything it seems like the potential for fraud here is pretty immeasurable, is it not? >> there's a concern there we're operating on the honor system we are asking and putting together a script for servicers. this is supposed to be limited to if you've lost your job, lost income please if you haven't lost your job, continue paying the service and capacity and industry is down by 25%, 30% we have to triage this like everything else. if viewers are listening and
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trying to hold liquidity, if you can pay your mortgage, do so we need to focus on those who can't. >> if the numbers get bigger, we've seen a quarter of homeowners, about 12.5 million households could seek forbearance. servicers could owe about $100 million to investors is the mortgage industry equipped to handle this? we've seen nothing for the servicers who are going to have to pay all this. >> great question. i think if this is only two or three months, in a worst case scenario, 25%, i think most of the servicing industry could make it that time. if this goes beyond two or three months and we get worse, that's going to be strain and certainly we're going to see firms get into liquidity trouble >> mark, i want to ask what you're hearing about the mortgage backed security market. the fed obviously stepping in in a major way last week. but when they withdraw, there
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are somesigns and chatter we'r hearing about that market really tightening up. what do you hear about liquidity and how it's functioning >> we are seeing that. and there's a lot of stress in that market before the fed stepped market before the fed stepped in. different segments are performing differently the specified pools aren't performing with the liquid market the broader tba market the spreads have come down unfortunately some of that still isn't being passed to borrowers, the feds are wide as far as what ends up for the borrower many of which we're trying to streamline and deal with, but i think you've seen more stability in recent days for the nbs market than you did last week. headed in the right direction. >> forbearance is available for government backed loans. about 48% are not government backed those are in bank portfolios or
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private label. what happens to those borrowers? >> that's up to the lender but we've had conversations with the bigger lender. we got out there to set standards and congress essentially codified what we've started to do, we worked with fha. so while the government loans are not the overall market, my sense is probably 95% of the market are following similar circumstances. we're trying to put guidelines out there, trying to get everybody to offer the same terms so that for borrowers when you call you get treated the same regardless of what loan you have as you know, many lenders offer a suite of loans and they want to give a consistent experience to their borrowers regardless of a loan product. >> i spoke yesterday with the ceo of caliber home loans, he was the head of citi mortgage during sub prime crisis. he's saying it's possible we could see more delinquencies
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than we saw during sub prime, do you think that's possible and it could translate to foreclosures or it's not going to happen the way it did in sub prime? >> i think in some markets it's possible the truth is, sub prime really didn't as much go away as it went to fha. so you have a lot of fha boar regulatory ri borrowers that i think could be at risk. we're told the inquiries they're getting are coming from bo borrowers who have never been delinquent and have good credit. so if this goes on two or three months we see a pop back in the economy, people hired back to their old jobs this is something the industry can get through
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without too much stress but if this goes on for six months or more you'll continue see a lot of stress. the place to look right now is the fha market with the quality credit to the borrowers they'll be the first canary in the coal mines as to what implications will be. >> we've been talking about t taking fanny and freddy out, how is that going to change the picture you have of bringing them out of conservativeship >> i think as you know, i'm almost a year on the job, next week will make a year for me, it's been an interesting year, but i think a consistent theme i have raised over that year is we have a number of structural deficiencies in our mortgage market including fanny and freddy, and this has illustrated where some of the flaws are. we put out a request for
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information on nonbank capital liquidity. we were timely on that, ahead of the game, but i think there are parts of the system that need to be strengthened as we go forward. it's been my view that an exit from conservativeship is going to require a large capital raised by fanny and freddy, i believedthat's a 2021, 2022 event. >> mark director of the fhfa, thank you so much. david, back to you >> diana, thank you. and thank you for bringing him to us as well. we'll take a break on "squawk on the street." stay with us it's a challenging market.
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edward jones is well aware of that. which is why we're ready to listen. and ready to help you find opportunity. so. let's talk. edward jones. it's time for investing to feel individual. when you take align, you have the support of a probiotic and the gastroenterologists who developed it. align naturally helps to soothe your occasional digestive upsets 24/7. so where you go the pro goes. go with align, the pros in digestive health.
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s&p holding onto 2500 this morning, dow low was down 895. and we're above that oil holding even though inventory is up way more than expected we'll take a quick break and be right back in just a moment. don't go anywhere.
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when you look at the critical issues facing our world, what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility.
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emerson. consider it solved. welcome back to the show
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every s&p 500 sector as you can see trading lower this morning as the selloff continues financials amongst the worst performer so far today every stock is in negative territory today with declines. also keep a close eye on many of the regional banks, weakness driven in part by a narrowing of the difference between longer term and shorter term interest rates or a so called flattening of the yield curve banks like these tend to perform better when the rate differential is wider apart, that's worth paying attention to as the fed becomes more active trying to prop up the economy given the coronavirus concerns carl, i'll send it back to you guys in your home office back to you. good wednesday morning, everybody. coming to you live from separate locations.

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