long as we have this demand curve being what it is there is simply no other choice, when you produceoil, you have two options. you can either use it as part of the demand or you can store it and storage is running out i mean, at some point, everyone is going to cut production until we turn the economy back on. >> you're actually going to the g-20 meeting i know you're going to lead a discussion there we appreciate it and we'll be watching, and please come back we will check with you >> take care >> all right thank you. take care as well. tgit i worried that was spelling something bad. thank god it's thursday. happy passover happy easter markets are solid this morning becky and andrew, we'll see you on monday. >> good thursday morning welcome to "squawk on the street." coming to you live from various

locations. it's an historic morning as the fed injects $2.3 million in loans into the american economy. powell has a live webcast in about an hour. we have the opec plus meeting to watch. jobless claims, 6 million for a second week. but your point a moment ago is the fed is helping to take a credit crunch off the table and all we need at this point is a break on the science >> the fed is not going to be the reason why we go into a depression they want to stop that they want to make it a recession. sometimes, i mean look, i was critical just a couple years ago when powell was talking about tightening when the economy was actually getting weaker. he is so far ahead of the curve that it will be studied. we will be studying this period, and we will say, unlike 1937, when the fed got tight and they threw us back into depression, we will say that jerome powell, after being a little unsure about how to handle things, decided to go out front and said we will make it so that if you want to make loans, we'll even

let you make mistakes. we'll keep you in business no matter what. hospitals, states, we will give you the money. small and medium sized businesses, if you get another $250 billion was they ran out of money for the great program, we're there for you. so powell is the man >> and as you said, we're going to talk to the treasury secretary in a couple moments. how do you think this is all matching up with the science fauci this morning saying fatalities could look more like 60,000 instead of 100k to 200k antibody tests could be, quote, days to weeks away in terms of having a large number available. >> i had someone who took the an antibody test yesterday. 15 minutes and boom. it really does matter. if it gets widespread, we're not going to return to the way we were we're going to have to wear masks. will we have to do as much social distancing? if you can go in and wave your

apple watch and it shows you have the right temperature and you don't have to wait in line because you're using contactless, wireless to be able to buy things, i think we're going to say, we really dodged machine gun bullets. doesn't mean we didn't dodge bullets, but machine gun bullets. if you feel as negative as you did yesterday, you have to be careful because i think we're trying to reopen business. i think we're shooting for may some people will think it's too soon but if dr. fauci blesses that, we're going to see a may opening in this economy, and that is what we need i think the stock market yesterday reflected some good news, but a may opening would be -- would be a wondrous thing. and it would make it so the small businesses have to get forbearance so they can reopen it would be terrific, and it's the first good news i have seen. let's say first news, confluence of news that made me say, there's light. there's light here look, no one wants to get the illness, but obviously, there's

a chance you're going to dodge it, and you're going to stay in business and david, i have to tell you, i feel better. i feel better today. >> yeah, well, listen, i mean, as you point out, of course, and as in the previous hour, steve and everybody else was pointing out, this is something we have never seen in terms of what the fed is doing this morning. along with, of course, something else we have never seen, actually, we saw it last week, 6.6 million unemployment claims, roughly the same as we got a week ago we're up, what, at 16 million over the last two weeks, three weeks. two weeks. but guys, yeah, i mean, just looking through all of the different markets that they are going after, jim, i know we're going to be speaking to the treasury secretary in about ten minutes or so. clearly want to get clarity from him as to whether this is addressing that need that i addressed to hi ee eed to him yd he surprisingly in some ways

offered a lot of answer to, which is what about these companies that are not investment grade that have a lot of employees, more than 500? now, in this case, the fed is saying $2.5 billion in revenues and below, 10,000 employees and below is where we're focused they're taking 8 to 1 leverage, $75 billion from the treasury, they're levering that up as well obviously, moving into the municipals market purchasing up to $500 billion in notes to provide liquidity for states and cities so hard hit here or, well actually, just says states and then moving into the high yield market, guys, too, which i think is important they say the preponderance of etf holdings will be of efts whose primary exposure is to investment grade corporates but the remainder is etfs whose primary investment is high yield corporate bonds. jim, carl, the fed is basically

buying anything and everything at this point, isn't it? >> yes, it wouldn't shock me, we have nordstrom did a deal yesterday. and it was -- it was some expensive money, candidly, and i say to myself, hey, treasury and fed, i guess you're ready to buy some nordstrom it really is there ain't no stopping them now. they just want to be there they don't want to be the reason things go badly. i think this is all preparation, david, for a may opening of the u.s. economy and it also makes it very clear, i think, that the $250 billion more that the small and medium sized business, it's going to be there. i agree with you about that one area that is on the cusp, but daf david, i feel much better about that are the oil companies going to go under not if the saudis are in there buying big stakes in oil companies and cutting back it's difficult for me to feel not, you know, it's hard not to feel better even as we know that

social distancing is going to make it so you have a costco situation. where the first half to the month was terrific and the second half to the month was bad. of course, starbucks today, where they cut numbers ge, these companies, david, i am worried about, but maybe they can -- look, the fed is open for business geez, this is so -- david, this is -- in the great depression, fdr wanted this, and they didn't get it that's why all the banks closed. this is like a bank holiday. >> fed is open for business. the next time that a theme park is open for business is much unclear and exactly how that's going to work, for example, or the next time that an arena is open for business, or a restaurant is open for business. i mean, we do talk a lot about that for obvious reasons it's still very much unclear when you say we're reopening the economy, what behavior is going to look like and how those kinds of businesses are going to respond effectively to try to get reopened it's certainly not going to happen like flicking a switch.

>> no. >> one would think, jim. >> carl, let me ask you, do you think there's a moment where we bifurcate the country and say look, these states have it under control, and we're going to open those, or are we go to bifurcate the american people and say these people are at risk and they shouldn't go, but these people who have already tested positive or already had the disease, we're actually counting on you to go out could it be one of those situations >> yeah. i don't know bill gates and becky's amazing interview this morning on "squawk box," seemed to suggest serology tests are really more academic than useful in his view his mission is to get a vaccine built at scale, 7 billion doses, which he still sees as being 18 months away. i saw some data this morning, jim, h&m in china, 89% of the stores are back open 89% are back open, and sales are down 79% year on year, so-so you're going to have this situation where the doors are

open, but whether it's because foot traffic is limited or consumer behavior has changed as this b of a call on starbucks suggested today, you're not going to see the crowds. >> you're right. we have to see where shanghai disney is, we have disney plus, and the numbers are extraordinary. thank you, wells fargo, for downgrading it the day before. we're worried about the customers and the customers have to feel more confident look, i listen to that amazing interview, but i come back and say, j & j i say j & j. i think they have something. i think they're going to be sooner than 18 months. and i think the abbott test is working well i don't think the scientists are going to let us down this is all a great backstop before a great company like j & j comes up with something. look, this disease turned out to be much harder than everybody thought, and they still don't even know how to win the icu now they're turning people over on their stomach they say that's a little better. we know the death toll is

insanely bad, but we also know we have companies like j & j that you have to bank with here. this is different from jonas salk, university of pittsburgh doctor who came up with the polio vaccine. these are big companies and they're really on the case >> and pfizer, the "wall street journal" today spent a lot of time talking about pfizer's various efforts as well in terms of something to treat the disease in a significant way that they hope to at least get moving by the summer >> very hopeful. i saw that >> and a vaccine and all the efforts pfizer is making as well real quickly because we're moving so fast, the municipal liquidity facility does include municipalities, counties, cities as well. for a minute, i said otherwise one other thought, carl, when it comes to the ppe program, the banks have been asking for a lot more disclosure, perhaps than even the sba wants or needs, but the banks somehow seem to want to protect themselves. that's what i have been hearing.

let's not forget this new main street lending program is also going to be using banks as well, which will obtain a 5% share of whatever -- of whatever they're loaning and then the remaining 95% will go to the fed's facility but you know, the banks here are an important component of this, and you want them to move as quickly as possible. i would say in hearing from a number of people who have applied under the ppe program, that they're surprised at just how much disclosure they have to give it's not just two pages. >> worrisome you know, you have to make this swift. you have to err on the side of people actually -- you have to depend -- you have to depend on some honesty here. and i know that's difficult because there's so many scams out there. i was surprised the grant isn't out there as much. the community banks. they're so overwhelmed everybody is overwhelmed who ever saw this onslaught of loans in the history of time so i know we have to give -- i

wish everyone would just show some forbearance, but the electric company doesn't want to, the insurance company doesn't want to. there are a lot of people who have to wake up and say i'm going to do what's right, i'm going to forbear, because that client is going to have the money. that's what i'm hoping for >> very much in the tune with the bennyoff blpledge we'll take a quick break the treasury secretary on the other side, as stocks continue to enjoy their best week in 11 years. and jump on yields at a three-week low don't go anywhere. rite shows right there. i wish my trading platform worked like that. well have you tried thinkorswim? this is totally customizable, so you focus only on what you want. okay, it's got screeners and watchlists. and you can even see how your predictions might affect the value of the stocks you're interested in. now this is what i'm talking about. yeah, it'll free up more time for your... uh, true crime shows? british baking competitions. hm. didn't peg you for a crumpet guy. focus on what matters to you with thinkorswim.

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welcome back to "squawk on the street." let's squeeze in a mad dash before we get to the treasury secary ton the other side of a quick break. eli lilly, i believe, is what you're focused on, jim >> you know, david, there are some stocks that are outperformed like mad. for instance, dollar general in the drug stock, it's eli lilly. it's levitated why? very interesting a lot of drugs are necessary and not elective the elective drug stocks have gotten hurt. this is a downgrade by morgan stanley because it's gotten too high well, there's something to watch, right some stocks have moved too much during this period, after a 50% retracement, and i just want everyone to be aware that not everything is a bargain at this point.

>> that's a good point we'll talk a bit more about stocks first, we'll talk with the treasury secretary get his take on the latest fed move extraordinary fed move this morning. a lot more "squawk on the street" coming right after this. when you look at the critical issues facing our world, what do you see? we see breakthrough medicines getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.

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if you're just joining us, it's been a remarkable day of fed liquidity. $2.3 trillion in loans being injected into the american economy, whether it's main street lending program, municipal support, corporate credit jim, we're going to hear from chair powell at 10:00 a.m. when he does this live web cast, and there will be q&a, so it's going to be interesting to hear him expand on the specifics of what they announced and maybe add some color to the minutes we got yesterday where there was a sense of urgency, no doubt >> what's great about this is there had been a feeling, is there going to be some sort of haggling over the next $250 billion that is needed in pay roll protection program. i now don't feel that, i'm not worried about it i say the money is going to be there. the holdup is just the giant backlog between an organization like the sba, very good organization they're analog, they have to go

digital. a huge number of loans requests that have gone to the big banks. the community banks, they're doing better they don't have as many customers. but i no longer -- i feel like the issue is forbearance we have to let everybody know, the president should come out, hopefully the treasury secretary, and say, listen, banks, everybody is in the chair. forbear. listen to what the fed said. the money is going to be there because we can't have as many stores being boarded up as a lot of us have been seeing i think this is a clarion call to say we're going back to work, america, so don't get off the train. it's coming. i like that. i think it's very important. >> yeah, you know, when you look at what the fed is willing to buy here, again, it's just remarkable, guys and i made the point about high yield bonds because have they actually ever done that? no we're talking about them buying corporate bonds, eligible

individual corporate bonds, a facility they're putting together may purchase bonds that at the time of purchase were issued by an eligible issuer remaining maturity of five years or less. eligible etfs. this facility again they're talking about, the secondary market corporate credit facility led by the federal reserve bank of new york, will lend on a recourse basis to a special purpose vehicle that will purchase in the secondary market corporate bonds. >> unbelievable. >> not just investment grade it's going to be high-yield bonds as well. it really is unbelievable, jim at the same time, you know, there's still parts of this economy, and we'll ask the treasury secretary, that may not be fully addressed yet not investment grade, more than 10,000 employees certainly comes to mind. >> we have to ask about the airlines phil lebeau is reminding me, don't forget about boeing. a major part of the economy there that is essential to the comeback but no doubt about it, i think that if i were the president on

the press conference today, i would say listen, we're open we're open it's time to go, time to do business so let's brin in treasury secretary steven mnuchin mr. secretary, thank you for come back on "squawk on the street." >> thank you we had some exciting news this morning, so i wanted to be back with you >> absolutely. now, do you think with this there's a possibility if the doctors let us, that we could be open for business in themonth of may >> i do, jim i think as soon as the president feels comfortable with the medical issues, we are making everything necessary that american companies and american workers can be open for business and that they have the liquidity they need to operate their business in the interim. >> can a small business person, ten person, 3 person, can they go to somebody and say listen, we applied, and look, there's a backlog. would you please give us a week? is there a way to have a give us a week thing going because small and medium sized

businesses, we know the money is there for them, we know there's no issues except for the fact it's an overwhelming number of loans? >> jim, you're correct, and you know, i want to thank the sba and the treasury and the banks that participated. it was remarkable. we got this up last friday some of the big banks have done a wonderful job. some have been a little slower the community banks have done an extraordinary job. and i want to encourage all small business that if they don't get a loan today, there will be money. that's why we went to gres, and we asked congress for another $250 billion to make sure every single small business has money. but i would say the big news for today is we have been working around the clock with the federal reserve. and these announcements, specifically now a new facility, the main street lending facility and the muni facility and upsizing the corporate bond facility, will create up to $2.3 trillion of liquidity. >> the area that i'm now

concerned about because i think you have the small and medium sized business down, and i know you'll protect them and the community banks. boeing, 1700 companies report to boeing a lot of them are small and medium sized business. whole states, states like kansas, and we haven't heard a thing about what they're doing to do, loans, loan guarantees, what you're going to do. the $17 billion in capital, and also the airlines if they're flying at 90%, that's the whole to me in the economy, as you protect small and medium sized don't we have to protect the industries that report in to boeing and the airlines? >> well, jim, as you know, we have been working around the clock, sba program, fed facilities, airlines we'll update the president this afternoon on where we are on our airline analysis we hope to get to a lot of the airlines starting tomorrow and over the weekend with preliminary information. and it is our objective to make sure, and i have said, this is not a bailout, but that airlines

have the liquidity to keep their workers in place so that's the next big thing we'll be rolling out >> mr. secretary, i have madam speaker on tonight, madam speaker pelosi, who was asking for even more money than what you're -- where you were, but the fed is willing to give even more money than she wants. can we take any sort of squabbling off the table given the fact that chairman powell basically said, listen, madam speaker, you're thinking too small? >> well, jim, let me just differentiate, because the fed facilities are lending facilities so those are facilities where we are providing loans. again, in the case of the sba facility, it's lending against the ppe loans, so making sure that the banks have the liquidity, but the loans will be paid off as part of the fiscal prac we did in the $2 trillion deal what we are asking the senate and the house for is another $250 billion

that's for the loans that will turn into grants so again, i just want to be clear. the fed programs are loans the congressional programs give us the ability to actually put money into the economy and make grants, whether it's hospitals, whether it's reimbursing states for covid expenses, and we need more money for small business. and the president has been very clear, he's happy to talk about other issues such as hospitals and states in the next bill. but we wanted to go and get money for the small business program, which again, enormous bipartisan support the same program we approved just making sure that all small businesses have enough money >> mr. secretary, it's david faber. yesterday, i had asked you about how you were going to deal with those noninvestment grade companies with more than 500 employees. and you had indicated something was coming soon. i would assume that's what we're seeing this morning from the fed. but there are still companies that are more than 10,000

employees that have more than $2.5 billion in revenues but are not investment grade do they benefit from this new move by the fed as well, or is there still more to come >> well, as i alluded to yesterday, we have been working around the clock with the fed on the main street program. and you'll see there's two components to it there's the ability for us to make with the fed new loans. there's also the ability for banks to do expanded loans, so adding on to existing loans. so these facilities, you know, will be flexible in meeting the needs of midmarket companies and to the extent that there's companies that are greater than 10,000 and don't fit into the corporate facility, we'll have discussions with the fed and take that into consideration but i really want to thank the fed. they have done an extraordinary job in rolling out all these new facilities and for all different types of asset classes, from main street

to municipalities, states and cities now know they'll have liquidity. this is an unprecedented move. >> it is as we pointed out, even moving into the high-yield bond market, which in terms of some of the etfs there truly amazing. you are still relying on the banks here, though, mr. secretary. and you know, the ppe program, you pointed out, some banks doing well, others make not as well i'm hearing the banks are demanding more disclosure perhaps than sba is asking for, because they're banks and they tend to do that. are you concerned at all when it comes to this main stream lending facility, you're using the banks there. time is of the essence, that the banks are just going to ask for too much information as well >> i really don't, and again, i think we created simplified streamlined. let me remind everybody, we're in day five of the sba program this is day five of a brand-new program. okay, where again, community

banks, midsized banks, i heard a story from someone in l.a. that their cleaners got money they were a small business, they got money immediately. they were thanking us. there are a lot of small businesses out there that this has been a life saver. and the banks have been overwhelmed. so the issue is they'll get to all of these customers and we want to make sure that customers know, whether they're charities, whether they're small businesses, if they didn't have accounts, the banks will get to all of them. >> mr. secretary, it's carl. obviously, the news today is a lot to absorb. however, we did have yellin on earlier in the week, who said in the long term, it wouldn't be a bad thing for congress to consider allowing the fed to expand its asset portfolio further. maybe even stocks. are there any discussions in trying to make that happen >> there are no discussions about that at the moment chair powell and i are committed to making sure we use whatever

authorities they have and whatever authorities we have we have gone to congress, as we said, for a very significant amount of money. we have over $450 billion that we can use to support these fed programs as you have said, the fed has now rolled this out to new asset classes. so chair powell and i are doing everything together to use their authorities and our authorities, and we have great confidence that this will create enormous liquidity in the market for small businesses, medium sized businesses, big businesses this is all about keeping americans working. >> mr. secretary, let's talk about that, bought i think there is, without a doubt, a level of cooperation between business and government that i have never seen and i think that the businesses want very much, they're taking these pledges. marc benioff last night, 90-day pledge, no layoffs how about we get the business people who have led us through this period, we get them together, they huddle, and they figure out how to open our

country for business because if we do that, we are going to save this year, and you know, mr. secretary, if we're closed for two months, who knows what that's going to mean for our country. >> well, jim, the president has made clear we're getting the best advice out there from small business, big business, everyone on how to reopen this economy. and i would just reemphasize from what i hear, the medical professionals, you know, there's new ideas every day. there's new treatments that are coming up. and you know, i know that at some point we will have a vaccine. i don't know when it will be, but i have great confidence in the medical professionals and the technology in the united states >> one last question i think the community banks, they're on overdrive and they're fabulous, really helping the 10, 15, 30 how is this wells fargo? i know the president had great skepticism about what they were up to, wasn't happy with how they ran the bank. all new team they're back they're not even going to take

the profit here. is wells going to help us? >> jim, i want to be careful talking about any one bank in particular given my role, but i would say we're following the situation with wells, and again, we know the new management team. i have known them before and we're pleased that they have expanded now their ppe program >> all right, terrific we're going to let you go, mr. secretary. >> thank you both. >> secretary steven mnuchin. every time you want to come on, mr. secretary, you're quem this is a good day thank you so much. >> thank you, jim. bye. >> carl. well, jim, i guess the question would be, gold here, 2%. and the rally we have had so far this week, how much of this has been sniffed out how much has been priced in given the early response in equities >> i think that yesterday, we started seeing some stocks bounce back where we thought they were going to go bankrupt and i think that what powell is

trying to do is make it so you don't think of the b word. don't think of bankruptcy. you can think of a slowdown. he's trying to do the u. the hedge funds were looking for the l. david, i have to tell you, they're booking flights outs of the pandemic islands david, this is too much liquidity to think that there aren't stocks worth owning >> that's probably the case. again, to your point, it takes off the table, perhaps, bankruptcy but it doesn't take off the table significant declines in earnings, which we are already seeing, which we're going to continue to see for some time to come and you know, the secretary talking about this idea of reopeni reopening. you're talking about it, but we don't know what that's going to look like. given we have never seen anything like this to begin with jim, you know, i wonder how the market reacts when earnings start coming in and when we get, well, there's not going to be any guidance

how can a company even give guidance in this environment >> maybe this is the end of guidance >> are they going to be willing to shrug it all off and say we'll get back to you in september or in the first quarter of 2021 and leave it there because we know you won't necessarily go out of business because the fed is doing everything it can and the treasury is doing everything it can. >> so starbucks, withdraws guidance says the numbers are going to be really crummy. says listen, don't worry we'll still do a buyback costco, because they make it so you feel safer there with social distancing, okay, that stock got hit. people were looking for a big number but david, there's a company that said things that frankly made me feel like steve tusa, i'm going to buy -- i don't know, i'll buy mezcal, if there's one restaurant or bar you could open, because here's ge reporting horrendous numbers. horrendous, kind of mind boggling, but the stock is up.

it's up 16 cents why isn't it at 6? what the hell? i don't know >> yeah, well, that's the question >> what the hell is that doing remember, because the $6 price target you know what, maybe the man, maybe the man -- well, he's been a little more positive lately,tusa, but this is a terrible number. i think he might say look, i told you not to be in this stock. but you know what? the stock is not down. i jug wish that the treasury secretary gave us more clarity on boeing and the airlines but boeing has been a red hot stock ever since goldman upgraded it. i don't know it's tough to fight the liquidity here >> no, there wasn't clarity on the airlines there was -- and he just sort of indicated, you know, those businesses that are more than 10,000 but not investment grade, that they'll get toit or they'll figure something out at the fed, but obviously, no clarity there either >> but did you see the

high-yield index it's up $4.50. i mean, he did everything -- the fed did everything but say listen, we're going to buy some penny stocks here. >> yeah. high yield, it's crazy yeah not buying stocks yet, i guess >> amazing >> he did say we might get more information on airlines later on today. and of course, we still have powell at the top of the hour for more on that today, we'll turn to steve liesman. morning, steve >> good morning, carl. i want to say my favorite part of the day was jim cramer immediately understanding the importance of this program or these programs the fed announced and how key they were to the outlook. the idea that there is going to be a main street lending program, that the fed is coming in, buying municipal bonds dave, there's one detail here. they're going to get involved in the clo market, which i know is your favorite, david faber, that

they're going to be involved in that they'll be involved in high yield. >> it's -- steve we pointed out high yield a number of times, but i'm glad you pointed out clos as well again, another very important part of the market in terms of liquidity for corporations and for, you know, they're in everywhere now, steve. right? they're basically, except for stocks, they seem to be in virtually every single asset clas, including the lending to municipalities too >> we should explain how this big way corporate america finances itself is you have banks. you can get a loan from the bank, you can create these clos. they're out there, too, but david, i thought we night do a bit of service journalism and talk about the main street lending program. you're going to be able to get four-year loans, open to companies with 10,000 or fewer workers. revenue of less than $2.5 billion. principle and interest is deferred for a year. you have to make certain commitments.

there's details about stock buybacks and compensation. those are going to apply banks keep a 5% share. you sell the remaining part of the loan back to the fed and you are still open because there were questions about this. you're still open to borrower who have taking ppe loans. you can get both of those there. i will say two things. they're not ready to launch it yit. the guidance i'm getting from the fed is they're hopefully in the next week or so, they will be able to actually launch it, get these things actually going. the other thing i think is important, maybe jim wants to write this down, is when you total up what the treasury has used of what's available to it from the cares oo s act, it's 1f 450. what does that tell you? it tells you there's still something like $250 billion potentially times ten or make that another $2.5 trillion that could be coming in addition to

lending from the fed, which is a long way of saying they ain't done yet >> no, and you know something, steve, thank you for those kind comments about realizing this thing is a blowout, but we started, the primary market corporate credit facilities are kind of lost in the shuffle, but this is something i would think boeing could go for. i mean, boeing doesn't necessarily need the government to take a stake in it. they could use that facility there would be a time, steve, when we would just be talking about that facility. there's so many facilities, but that's a great one for a company that is 50,000 people and more >> yeah, yeah. if i could just say one second, the issue was not with the fed do these things. they have the money, we didn't understand how they would do them there's this big restriction on the fed losing money it has literally taken the star trek moniker, boldly going where no central bank has gone before. and we're sitting here at this moment of incredible history where the objective, the goals,

the mission of a central bank has been changed dramatically in the face of this pandemic in ways that were never imagines several hundred years ago when central banks were first envisions or later amendments or even i think it's important to say, in 2008 when there was all this reluctance. the fed is going to try, i'm not saying it's going to succeed, to provide that critical bridge loan, jim, that will get us from here to there. they're going to finance the economy and hopefully they can get that done. i think there's still a lot of questions. >> on april 14th, jpmorgan reports. until this, i have said, okay, the new number is going to be horrible and the stock is going to get clocked maybe i should worry about the dividend now i say, you know what, geez, kind of interesting opportunity at ten times earnings. wells fargo, i said, oh, boy, what's charlie going to do with that dividend. can it really be maintained? you had 7%, now 6.5%

now i'm thinking, i don't know, wells fargo at seven times earnings isn't that interesting with the fed making sure wells fargo isn't going to get in trouble. i think one of the things that happened is we were so worried about bank earnings, i now say, wait a second, that might have been a one time only bad number. done worry, the fed is there seven times earnings, you might want to buy wells fargo. holy cow >> i'll leave that to you, but there is one characteristic of this financial crisis which is a company the coronavirus crisis, that maybe is not as well remarked the banks seem to be in good shape. there's a theoretical debate on whether the banks should get rid of the dividend, but i don't think there's a financial debate on whether they could pay them the banks, if dodd/frank did one thing right, it seems to have put the banks in a decent position to weather this crisis. i'm not sure how well that's remarked all the other stuff about the

earnings of the banks and that stuff, i leave that to you, but the capital ratios and the stuff i'm hearing from regulators is the banks are able to at least to this point weather what they have been hit with from this coronavirus effect >> steve, we talked about that a number of times actually many times over the last few weeks, in particular, their ability to withstand everything pulling down their revolvers and being in a much better position than the financial crisis, of course. remember, the banks were the ones who led us in last time, into the recession of 2008 >> right >> steve, i wanted to come back to you to get some historic perspective here i know we have never seen anything quite like this, but the fed is buying corporate bonds, levering their purchases of investment grade bonds of 10 to 1 levering their purchase of high yield bonds of 7 to 1. they won't buy more than 10% of any issuer we have never seen anything like this, even close, have we? not to mention 16.7 million people filing for unemployment

in the last three weeks. >> right let me put that in some context. you guys will all remember 20008 when bernanke announced he was buying mortgage-backed securities all the kind of fed purists threw their hands in the air and said wait a second, your doing the things central banks aren't supposed to do, which is credit allocation the idea is the fed only buys treasuries it doesn't pick winners and losers in the economy. there was so much consternation about buying mortgage-backed securities the fed announced that three weeks ago, an additional $200 billion. that's now old hat the new thing, the thew new thing is that the fed is going in and going and buying all sorts of different assets. these are extraordinary circumstances. i think this is not a regular recession or anything like that. but the key has always been, david, as you have pointed out, who is going to give you that bridge loan? who's going to get you from here to there i think the fed is coming in and saying we have figures out

different specific constructs here where we can come in. i think, david, by the way, and it was only my quick reading of it, you have made a great point. i think they're going to be able to finance these letters of credit out there in other words, all the banks drawing down their lines of credit it looked to me that's something else the banks can put to the fed as well. >> okay. yeah revolvers. i don't know there's so much coming at us, steve, and we know you're going to be very focused on it all, and you know, a lot more in the fine print to come but thank you for everything so far. >> pleasure. >> steve liesman >> all right, guys >> i'm just trying to figure out what date they can open for business i'm thinking about the pfizer, what you said with pfizer. pfizer, very conservative company. they wouldn't put that out about perhaps a break here a lot of the doctors, i read a lot of these papers. they're way over my head the doctors continue to say, look, this thing is much more

intractable. a terrible article today, meaning sad article, about how icu means there could be things that are really wrong with you, but then i come back and i say, if dr. fauci takes one week ago, he said there could be 100,000 to 200,000 he takes the number down, it is a terrible illness but there may be people who say, you know what, with masks, with temperature, i am going out. and then maybe somebody says, you know hat, i'm going to ope up a place when they let me open up a place maybe some people say, you know what, there's so much loan money, i actually want to start a company. that's something i never thought i would say when this thing started going crazy. i mean, maybe people actually start businesses don't laugh. i have never seen this much money given away not bad. >> yeah, jim for those who missed it, the pfizer news, this rheumatoid arthritis drug they have, xeljanz, they're going to start trials in italy this week and hope to have results in july merkel is on the tape saying the decision on how to ease

restrictions in germany is going to be based on a study to be published next week, and as things stand right now, she adds, we do not need tougher restriction measures, but we know germany was very early. their chancellor is a kwauntdm chemist, and they put unified testing into place very early on i will say, also, jim, dates with becky this morning saying there are 20 compounds for a vaccine that looked promising. i hadn't seen a number that high before >> that, again, was terrific i feared that interview would be downbeat i came back thinking the scientists are working even harder than i thought. i know i thurink we need a manhattan project. we have a bunch of manhattan projects out there the more we read about this thing, we realize what the hell happened in new york verses other parts of the country and maybe the strain in new york is worse, but if you look at the california lockdown, i think the idea that they could be open in may, it's certainly a

possibility provided we all have masks, provided we have ppe. i think that we're going to need masks. i know the cdc initially was dead wrong you need to have points of contact be reduced in terms of how you get this illness but maybe, if you -- maybe we could have a situation like wuhan. i mean, they're open that's incredible to me that wuhan is open. >> you have -- how many providers on etsy now selling masks? 20,000 shops they got tweeted by the white house yesterday. >> like this style you know, did you see the one? i thought it was funny >> above 2700, they argued that the bulls had the taller chip stack. that was at a big crest. they said the 28.50 would be one to watch then again, if we get there, when do you revrert to your cash management

>> i don't know. i said no more selling and when that number -- think about the things that happened this morning you get that really horrible number you listen to rick santelli and then boom, it's like a 2 x 4 hits you the fed is saying that's past. here's the future. go open for business the president needs to give us -- it's so hard to give a date because it's really up to dr. fauci more than the president, but i feel like they can now convene the concept, the trend line of when we can open and i think it's -- this is the first time it made me feel like you may not have to wait two months two months is too long i know that the backlog, it's not -- david, you had some interesting questions, that they're asking more questions. i have not gotten anything from my bank yet. nothing. and we're really hoping because one of our places really needs it, but i felt so confident that the money is going to be there that i feel like the pressure is going to be on the banks to get this thing done. remember, the banks are digital, and the sba is analog.

so it is a bit of a backlog at the sba, but the community banks, i wish i had done community bank instead, i'm not going to name the bank that's not delivering for me yet, but community banks obviously are well ahead they really are. should have used a community bank >> let's get to rick santelli, get some thoughts on all the news we have absorbed in the past hour. morning, rick. >> good morning. you know what, let's do the news, but we can do it with the charts that are actually quite helpful. if you look at an intraday of 10, 10s pop. they should pop. we're throwing kitchen sink on top of kitchen sink at this, but it still didn't take out the highs of the week at sfathd, as you see on the next chart, which makes me a bit disappointed. here's the epicenter of everything everybody is talking about today. look at a two-day of the hyg if i did a one day, you wouldn't see the breadth of how aggressive this is 6%, darn close to 6% rally

last i looked for it before i jumped in front of the camera, you can see how aggressive this is there's two ways to look at this if this is just because we shut down the economy and they're moving into uncharted territory with etfs indirectly, okay, to protect investment grade, now noninvestment grade high yield corporate securities, fallen angels, maybe the oil patch. it's not a bad thing, but it could be a bad thing because if it lasts or outlasts the back side of the coronavirus plus x amount of time to get things back to somewhat normal, it isn't good this isn't good. keep going down further and further down the corporate credit structure, it's making some verynivorous. let's face it, in the oil patch, we want the oil industry in this country, which has been so great, not to get basically shut down because of what's going on between the saudis, the russians, and shutting down the economy. so i get it. but we really are moving into a slippery slope even the dollar index, look at the two-day.

getting hit hard i mean, there is a credit issue. there is this notion that sometime we have to decide how all of this is going to get paid for. i get it that now is gnaw that time, but hopefully jay powell today will give us some today will give us some information that on that point in time down the road, they'll handle mopping this up better than ben and janet did after the credit crisis david, back to you >> okay. rick, and ben, and janet, speaking of jerome, that is in powell, fed chairman he's going to be taking questions not just speaking but taking questions we'll carry it all live in the next hour of "squawk on the street." stay with us

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i think as soon as the president feels comfortable with the medical issues, we're making everything necessary that american workers can be open for business and they have the liquidity they need to operate their business in the interim. >> that's the treasury secretary with us a few moments ago on whether the economy can open in may. we're holding s&p 2800 oil up 27, we're less than so minutes away from fed chair powell don't go anywhere. yes. it's the first word of any new discovery.

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let's get to jim and stop trading. >> lot of people talking about if chipolte stock is up too high a slight cut in wells fargo. i think they're doing something. announcing a direct leave program. if you have an e gift card, you're going to donate and be able to donate money to direct relief that's an organization providing ppe and essential medical items to health care workers i think this is going to be good i think chipolte is going to be when this smoke clears the number one restaurant chain in the country. doing everything right i know we're going to give -- i know where we're going for lunch, andi know how much we'r going to give. this is some chain chipolte up even on a price

target down rate i say it goes to $1,000. >> wow jim, interesting i wonder what you made of -- we had conflicting calls on st starbuc starbucks. the damage they see in consumer behavior and appetite will be felt less in quick serve than some other chains. >> i thought they missed the point. the starbucks announcement was terrible nike and starbucks are the two ways to play china they opened in wuhan starbucks is lucking -- apparently and i think starbucks china is going to save the day here while they figure out social distancing. and they'll figure that out. kevin johnson knows how to do it he'll use my method, i bet, contactless. you just come in i got a lot of things cooking. i think starbucks is a buy because of china, not because of

the decline in america >> and jim, talking about a lot of things cooking, what are you feeling about the broader market as we watch the s&p up over 2 %. we've had an enormous rally from the recent lows. we're down 13% for the year. i think last 12 months we're only around 2 %. there are those who believe we will retest the lows even as we start toopen up the economy and even with all these extraordinary measures that the fed is taking, nonetheless, those who invest are going to be stunned by just the level of or the lack of earnings from so many corporations and we may retest do you think that's a possibility or are we too far from that now? >> i think that the news that we're getting today makes it so that you don't have to worry about the banks. if you don't have to worry about the banks, then you don't have to worry about credit. if you don't have to worry about credit, then t hard to see those lows that we saw the other day

with a nordstrom down big, kohl's even an occi, i know that's something. and i'm watching arimark surge there are things that are happening that make me feel like we're going to get through it. america opens for business if costco finishes up today and they have made it so business is terrible because you have to be a in a big line, only so many people in the store. disappointing second half of the month. if they're up, i think people will say you know what maybe i can't sell into earnings season like i wanted to. i know, that was my thought. >> jim, finally, thirty-seconds from the top of the hour but oil is up 7% norway is going to join this opec zoom call thoughts on crude? >> i think that when the saudis are shrewd enough to go in and buy billion dollar stakes in the oil companies, it's like inside

information. they're going to cut back or they wouldn't have bought a billion dollars in shell a nice rigged market we have sec and stuff like that. >> details out of that meeting hoping to 10 million to 15 million barrel a day cut we'll find out getting the text of powell's -- >> the federal reserve chair will say the fed will act, quote, forcefully, proactively and aggressively we will also go onto say the fed will act, quote, until the fed is confident that we're on the road to recovery as to the recovery powell points out that the economy was strong going into this and he says there's every reason to believe that the rebound when it comes will be robust a couple other points he makes here that the fed is trying to provide a measure of relief and

stability to the economy and making sure people understand the parameters of what the fed does, the fed is using lending powers everything it's put together is lending not necessarily spending powers it doesn't have, pointing out the fed can only make loans to solvent entities. you want to hear about that because he's saying there are limitations so what the fed can do that's why some of the programs we've been talking about are structured the way they are. he talks about the acts the fed has taken already regarding going into several parts of the credit markets that were he says severely dysfunctioned he says there has been some improvement or generally improved in the markets where the fed has come in to try to provide stability. finally he makes a point of noting that the virus has left a tragic toll of illness and lost lives and concludes by thanking the health care workers and others on the front lines. carl >> all right

steve, this morning art carbon says the at least in tone and qualitatively what they've announced today reminded him at least of whatever it takes would you go there >> well, yeah. except for whatever it takes is a phrase with no meat on it. this is meat this is really the inside of that this is whatever it takes in action this is all of the stuff that is whatever it takes. they had come further down after that, but now the fed is going into these areas of corporate loans, high yield, municipal bonds. providing loans to main street through the banking system expanding its balance sheet with really no concern to the amount that it's being expanded there will be issues on the other side of that but my concern which is not time for this now, carl there will be a time when we say wait a second, the fed can do all this stuff in a lesser of a recession or another time when the politicians realize the fed

can be this piggie bank. we'll have this discussion later on right now this makes sense in the situation the economy could be in. >> with apologies, let's get to the fed chair. >> we face today is different in scope and character from those we've faced before the coronavirus has spread quickly around the world leaving a tragic and growing toll of illness and lost lives this is first and foremost a public health crisis, and the most important response is coming from those on the front lines in hospitals, emergency services, and care facilities. we watch in collective awe and gratitude as the dedicated individuals put themselves at risk in service to others and to our nation like other countries, we are taking forceful measures to control the spread of the virus. businesses have shuttered. workers are staying home and we have sus spended many basic social interactions.

people have been asked to put their lives own their livelihoods on hold at significant economic and personal cost. we are moving with alarming speed from 50 -year lows in unemployment to what will likely be high although temporary levels all of us are affected, but the burdens are falling most heavily on those least able to carry them it is worth remembering that the measures we're taking to contain the virus represent an essential investment in our individual and collective health. as a society we should do everything we can to provide relief to those who are suffering for the public good. the recently passed cares act is an important step in honoring that commitment providing 2.2 trillion in relief to those who have lost their jobs, to low and middle income households, to employers of all sizes, to hospitals and health care providers and to state and local governments. and there are reports of additional legislation in the works. the critical task of delivering

financial support directly to those most affected falls to our elected officials who use their powers of taxing and spending to make decisions about where we as a society should direct our collective resources the fed can also contribute in important ways by providing a measure of relief and stability during this period of constrained economic activity and by using our tools to ensure the recovery is as vigorous as possible to those ends, we have lowered interest rates to near zero in order to bring down borrowing costs and committed to keeping rates at this low level until we're confident the economy has weathered the storm and is on track to achieve our maximum employment and price stability goals. even more importantly, we have acted to safeguard financial markets to provide stability to the financial system and support the flow of credit in the economy. as a result of the economic dislocations caused by the

virus, some essential financial markets have begun to sink into dysfunction and many channels that households, businesses and state and local governments rely on for credit had simply stopped working. we acted forcefully to get our markets working again, and as a result, market conditions have generally improved many of the programs that we're undertaking to support the flow of credit rely on emergency lending powers that are available only in very unusual circumstances such as those we find ourselves in today and only with the consent of the secretary of the treasury. we are deploying these lending powers to an unprecedented extent enabled in large part by the financial backing from the congress and the treasury. we will continue to use these powers forcefully, proracktively and adepressiggressively until confident we're on the road to recovery i would stress these are lending powers, not spending powers. the fed is not authorized to grant money to particular beneficiaries.

the fed can only make secured loans with solid entities with the expect the loans are repaid. in the situation we face today, many borrows will benefit as will the overall economy there will be entities of various kinds that need direct fiscal support rather that be a loan they would struggle to repay. our emergency measures are reserved for truly rare circumstances such as those we face today when the economy is well on its way back to recovery, and private markets and institutions are once again able to perform their vital functions of channelling credit and supporting economic growth, we will put these emergency tools away none of us has the luxury of choosing our challenges. fate and history provide them for us our job is to meet the tests we are presented. at the fed, we're doing all we can to help shepard the economy through this difficult time. when the spread of the virus is under control, businesses will reopen

and people will come back to work there is every reason to believe that the economic rebound when it comes can be robust we entered this puturbulent timg on a strong footing. that should help the recovery. we are using our tools to help build a bridge from the solid economic foundation in which we entered the crisis i want to close by thanking the millions on the front lines. those working in health care, sanitation, transportation, grocery stores, warehouses, deliveries, security, including our own team at the federal reserve and countless others c day after day you've put yourself in harm's way to ensure we have access to the things we kn need and to help us through this difficult time thank you and david, i look forward to your questions.

>> i'm director of the center at brookings. i appreciate your remarks. i particularly want to enforce the point you made at the end. a lot of us have the luxury of working from home, but there are a lot of people who don't, and they are often forgotten in the past i think we all celebrate the work they're doing and the risk they're taking i have a number of questions of my own and some we've gotten from people who sent them in by email or via twitter in the past three weeks more than 15 million people have filed initial claims for unemployment benefits. that huge. we all know the second quarter is going to be awful, but i wonder if you could help us look ahead. you and your formidable team of economists, what do they see for the rest of this year? you talked about a robust recovery do you expect that this summer or fall or longer? >> we have terrific economists

with different specializations right across the fed it's really a great honor to work with them and if you ask them today what their expectation is for the economy over the course of the rest of this year, they will tell you that it really depends on the path of the coronavirus how quickly will it spread how quickly do we get it under control? how quickly are we able to reopen the economy with confidence people go back to work knowing it's safe. businesses reopen knowing it's safe these are not typical economic questions that economists are skilled at answering they'll tell you that. so i would say generally my expectation is that the second quarter will be a weak one that's because businesses are shut down. workers are either working from home or they're furloughed or laid off or they're just -- the businesses they work at is closed for the time being. so we expect to see a very low economic output, and big increases in initial claims for

unemployment and in unemployment during the second quarter. when the virus does run its course, and it's safe to go pack to work and safe for businesses to open, then we would expect there to be a fairly quick rebound as people do go back to work and start resuming normal levels of economic activity. i think most people expect that to happen in the second half of this year after the second quarter which ends on june 30th. to try to be precise about where that would be, it would -- i don't think that would be appropriate. i will say that it does depend on people staying home, staying healthy, doing everything we can to get the virus under control the more we do that, the sooner it will be safer to go back to work >> thank you so as you noted the fed has cut interest you've got hundreds of billions worth of treasury bonds and mortgages. you've launched an alphabet soup of lending programs including new ones today for state and local governments and mid sized

businesses you say could lend up to $2.3 trillion is there any limit to how much money the fed can create, how much it can lend without having some unwelcome side effects like inflation or acid price bubbles? >> i'll say the programs that we're using under the law, we do these with the consent as i mentioned with the consent of the treasurety secretary and backing. we're going it to provide as we're directed by the congress and we're using that fiscal backstop to absorb losses we have, and what we've been doing is looking for places that are very important to the real economy. things that really affect people's lives and economic output, and we're a credit to those parts of the economy has broken down. those are the ones i mentioned that's essentially what we're doing. we can keep doing that as long

as those needs arise our ability to do that is limited by the law we have to find unusual and existential circumstances. the treasury secretary has to agree and we're using this fiscal backstop. there's no limit on how much of it we can do other than it must meet the test under the law as amended by dodd frank. >> isn't there a risk that with all this money coming out of congress, the money lending that we'll end up with something that we don't like as in more inflation we like or acid price bubbles? >> you know, so inflation has been an interesting phenomenon back when 1 yea2 years ago whene fed was doing quantitative easing many feared the increase in the money supply as a result of quantitative easing would result in high inflation. not only did it not happen, the challenge is inflation has been below our target that is the globally the

challenge. it's been inflation below target and so honestly, it is not a first order concern for us today that too high inflation might be coming our way in the near term. far from it. there are certainly i would say these are programs that we're developing at a high rate of speed. we don't have the luxury of taking our time the way we usually do we're trying to get help quickly to the economy as it's needed. i worry that in hindsight it will -- you'll see we could have done things differently, but one thing i don't worry about is inflation right now. >> a numberof people wrote questions that go something like this think of somebody who works at a small restaurant she's lost her job the restaurant's closed for how long, really nobody knows. all the things you're doing, how have they helped people like her? the owners of that small restaurant and the millions of

people like her in that position >> so she sounds very typical of what many people are unfortunately enduring at the moment and i would say the most important thing that she can do is to stay home and stay healthy. the more people do that, the sooner wewill get control of the spread of the virus, the sooner we'll be able to go back to work. it's also important, by the way, that our health care authorities develop a plan for that to happen in a careful way that doesn't result in another outbreak and then we have to go back to square one so in the near term, the biggest relief that she will get is probably going to be from the expanded unemployment insurance under the cares act. which i think added $600 per week for people's unemployment insurance. she'll probably find that it's hard to get access to that right away because there's so many newly unemployed people that there are backups at the

unemployment offices but that money is -- she's entitled to that money and will get that money. it may take a few weeks longer than it should what's the fed's role? our role as i mentioned in my remarks is really to try to provide some stability and some relief during this period when the economy is partly shut down. that involves keeping interest rates low if she has a mortgage or credit card debt, she'll feel lower interest payments from that we've used our tools to keep the financial markets functioning. that's going to avoid significant further damage to the economy. and really, the most important thing we can do is while providing stability during this period, will be to support a robust recovery when it does come that's really what our tools are most important for >> you mentioned that congress has done quite a bit you mentioned you don't do taxes and spending congress does. but everyone, including members of congress, look to you for

advice in your judgment, do we have to do a lot more on the fiscal policy front to respond to the crisis >> so i'll stress we don't as you know, we don't we're not responsible for fiscal policy. we don't give advice to congress on fiscal policy i will say in many cases what people really need is direct fiscal support rather than a loan what we can do is loans. there's a big need for mfiscal policy i do think i hear many voices on both sides of capitol hill and in both parties talking now about further support. i do think that's likely to be appropriate. they will have to decide as elected officials what that might be, but you already hear, for example, further funding for the small business aba loans and also more direct funding for states and hospitals again, not our job, but i would

be -- i would see that as more likely than not to be needed >>and a good idea? >> yes absolutely i would say broadly, people are undertaking these sacrifices for the common good. we need to make them whole to the extent we have the ability to make them whole yrktsz we should do that their business isn't closed because of anything they did wrong. they didn't lose their job because of anything they did wrong. this is what the great fiscal power of the united states is for, to protect people as best we can from the hardships they're facing >> congress has allocated in the cares act money to backstop funding. today you used 195 billion of that for the various programs you announced this morning what are your priorities for the rest of that money how do you think about how you'll use it? >> our priority for all of it is the same and that is what's happened is

in our big complicated economy and financial markets and banking system, we rely on those who have funds to lend through various channels to those who are borrowing. and what happened when the spread of the coronavirus around the globe became clear is investors all over the world really struggled to assess what that meant for the economy and so they pulled back from other kinds of investment and really went to the safest short-term investments like t bills. the result is many parts of the capital markets and lending more broadly stopped functioning. and that is exactly the situation that our emergency powers are meant to address. so we have moved in, and as i mentioned, our priority are those areas of the markets that are most fundamental to supporting the real economy. those -- and you see the programs we've announced i think nine

different facilities and those really are the priority areas where we thought that help was needed as we identify other areas, we won't hesitate to move into those areas. in addition, we may find that some of the programs we've announced need adjusting and need to be larger or didn't need to be as large as we thought or need to be changed we're going to be watching all of that and very much willing to adapt. >> there is i think a consensus from a decade ago that banks were allowed to deplete their capital by paying dividends for too long several banks have suspended stock buybacks to preserve their capital. i'm curious why they haven't been directed to suspend d dividends.

>> businesses dispurse money by dividends. it's a way of saying the owners may have better use for the funds than the business does it's a perfectly normal thing in our capitalist system. and our largest financial institutions do about 70% of those distributions through share repurchases. all of our eight largest most systemically important institutions have stopped this through that channel as have a large number of regional banks that account for a big part of the banking system that's a good thing. they haven't stopped dividends, and in my way of thinking, i don't think that's something that needs to be done at this point. i think our banks are highly capitalized. far more highly capitalized with more high quality capital than they were before the financial crisis and you know, we'll be watching to see how things evolve i don't think that step is appropriate at this time >> i see one of the things that

distinguishes this period which is pretty extraordinary is what's going on in the mortgage market it's hard for people to buy and refinance. there's questions about the mortgage servicers do you think there are steps that need to be taken by the government to make sure that a mortgage crisis doesn't make the economic recovery slower than need be? >> well, so a couple things. first, i think the cares act provides a moratorium on payments for some time for some mortgage holders but the mortgage market is at the center of our economy and important for the real economy that's why we bought so many mortgage backed securities at such an historically aggressive pace over the last few weeks we feel like that market which is where a lot of individual home and other mortgages wind up

is now functioning more prop properly we're watching carefully the situation with the mortgage servicers. and i will tell you that we certainly have our eyes on that as a key market that does support households and consumer spending, really, which is,of course, 70% of the economy we'll be watching that carefully. >> cahair powell, i understand steve mnuchin said he thought the u.s. economy might be ready to reopen by the end of may. as soon as the president feels comfortable with the public health stuff does that seem right to you? >> this is not a judgment that is assigned to the fed to make and that's a judgment that has to be made i think starting with health officials i think it's time to have a serious public conversation and a lot of analysis about that we need to have a plan nationally for reopening the

economy. we all want it to happen as quickly as possible. we all want to avoid a false start where we partially reopen and it results in a spike in coronavirus cases, and then we have to go back again to go to square one we all want to avoid that. we're not experts on that at the fed. i would rely on the medical experts principally and then that's a decision for really other parts of government. >> i'd like to think a little bit about the other side here. what are you going to look at when you skds whether it's time to begin to maybe tighten? >> as you've noted over the years, we tend to move gradually and predictably. i think we'll be looking to see certainly that the economy is well on the path to recovery we'll be in no hurry to pull back on our asset purchases or

on the programs. they're tentatively scheduled t stop lending on september 30th if they have to go longer than that, they will. i think the thing we'll be looking for is to make sure the economy is really on a solid footing before we start pull back when we start pulling back, we do so gradually. if you think about the way we ended quantitative easing back in 2013/2014, we did it over the course of a full year. you can fully appreciate and expect we'll follow that play book of well telegraphed gradual moves and we won't start them until it's time which would be a time at which we are confident that the economy is on a solid footing again. >> a number of people have asked whether you think you'll rely on a cap on short-term interest rates, a yield curve control kind of thing when we come out of this thing.

have you considered that >> so we -- we've done a lot of thinking about what monetary policy might look like over the coming month for now, though, two things. first, we think our monetary policy is just in the right place. we've got rates at zero, and we've said we'll hold them close to zero, that is, until we are sure the economy has weathered the storm and is on the way to recovery that's where it should be. the principal focus is not adjusting what we see as appropriate stance of monetary policy the principal focus is on lending programs and making sure that credit does flow in the economy. we saw what happens when the credit system breaks, it can really put greater damage in the economy. we're doing everything we can to avoid that, and we'll continue to do that so credit is flowing. households, businesses, state and local governments as requested by congress, and that's really the main focus

now. all of those things that about monetary policy, of course, we're thinking carefully about what it might look like in the future, but they're not something we're currently thinking would be appropriate. >> are you at all worried about federal reserve which is, after all, unelected officials making decisions about who can borrow and who can't and what credit rating is eligible for your loans and where you're not going to lend? >> this is an area where in the -- during the global financial crisis that ended in 2010, the fed made those decisions but with some consultation with the treasury department one of dodd frank's innovations was to say we can only use the extraordinary powers with the consent of the treasury secretary. decisions of this magnitude, there should be some accountability for those who are elected by the public. we are not elected by the

public and that is the administration in the form of the treasury secretary. i think that's actually a healthy thing that there be some connection to elected officials. i think that's a wise move on the part of dodd frank we're not -- we don't make -- the second thing is we don't make decisions about individual firms. we're only allowed to have programs of broad eligibility. meaning classes of borrowers any borrower that meets the eligibility requirements for one of these facilities can take part of the facility we're not going to be picking this firm but not that firm. it's broad eligibility there won't be that. i'd also say there are overlapping spheres here that the fed has complete authority over monetary policy treasury does fiscal policy with congress but financial stability is something where we both have a stake and both have authorities that the treasury secretary

chairs the financial stability oversight council. we work closely with them. that's been a productive relationship >> finally, i wonder if you could speculate a little bit about how the economy will be different when we come out of this we'll have a lot more debt that's for sure. do you think that we'll be -- our way of life will change? do you have thoughts on that >> you know, our main focus is on the near term that's our intense focus, but these are great questions. my guess is that behavior will change it won't change quickly. people will start to go back to movies, to theaters and start to travel and they'll gain confidence that it's okay to do so that process can be a fairly short one, but i think it will be at the beginning it will certainly be gradual and tentative. will there be longer run changes

in our behavior? i don't know that's a great question. we'll have to see. >> and i think a lot of people are scared now this is not something that any of us have lived through in our lifetimes, a pandemic like this that's caused the economy to stop and people to be afraid of interacting with their neighbors. i think people want to know that our leaders, people like you, are confident that you can get through this i want to give you this opportunity if you'd like to reassure people about what lies ahead. >> thank you i would say this is and is going to be a difficult time people are getting sick. their loved ones are getting sick people are being furloughed and laid off people are seeing great businesses shuttered i wouldn't want to say anything that diminishes the suffering that people are feeling at all it's going to be a tough time.

but if the government continues to give people the support they need that includes us, congress, other parts of government, and if people stay home and stay healthy until it's appropriate to go back to work, and if the health care policy experts devise a plan for a good way to go back to work and reopen the economy, if we do all those things, there's every reason to think that we can be back on the road to a recovery fairly quickly. and that that can be a robust recovery i think actually thought the chairman said it well the other day when he said if we do those things, you'll be looking back on this, and you won't see much -- only modest effects, i think he said on the economy from that event. i think that can be the case if we do the things that i mentioned. >> well, as they say, from your lips to god's ears chairman powell, thank you for your time today. i thank everybody for watching

and the very good questions we received and we wish you all a very safe next few weeks as you continue the important job of steering our economy through this terrible storm thank you very much. >> thank you, david, and thanks, john and our thanks to david and fed chair powell for a remarkable live web cast complete with q and a. q 2 as expected likely to be weak not taking the bait on inflation saying it's not a first order concern for us today far from it. saying further support is likely to be appropriate both potentially by the fed and then at congress for fiscal measures. saying that's what the great fiscal power of the u.s. is for. and then saying bank dividends, i don't think that step is appropriate at this point in time your thoughts? >> you're hitting the high

points i want to give a topical assessment of what happened. very important in several respects chair powell was giving policy there in the form of forward guidance to me, the key answers were the questions of how long does this go on? how much more will you do? when will you withdraw it? what's going on there is the fed is announcing this morning a program of $2.3 trillion that's one policy. another policy is forward guidance telling the market how long this will be in effect. how much more you'll see highlighted. some of the comments he made carl, there's no limit on how much we can do as long as it meets the test of the law. that tells the market we ain't done yet going on further, when will you withdraw this? he goes onto say let me find this we're well on the path to recovery we will be in no hurry we'll make sure the economy is on solid footing before we pull back we'll follow the old financial

crisis play book to do well telegraphed moves in advance powell using that time period to lay out another essential leg of the stool of fed policy. low interest rates tons, trillions of dollars of loans to the economy and very important forward guidance that tells markets this thing is going to be around for a while and it's not going away quickly. >> david >> steve, when he talked about reopening the economy, i thought it was interesting, and carl, of course, saying we need a plan. we heard from secretary mnuchin in an answer to jim's question indicating there were thoughts now turning to when and how. the fed chair didn't offer a lot in terms of his thoughts about how you do it, but he indicated he hopes it's being focussed on. >> i thought it was very

important what he said it was a little bit of a phone call to the president there right there. we need a plan for the rebound i thought that was critical. i also think he made an important distinction between the economists and what they're doing, and what the epidemiologis epidemiologists, how much more important that is. that he can bet on a second half rebound, but he can't call it. it's up to the doctors and the health officials they can only deal with the plan that's dealt to them he did think about whether or not we're going to change our behavior, but the fed has to deal with the programs give ton him by public health officials and deal with the reality of this virus it's really forced, david, people to be into expert places. i mean, you know the guys on wall street out there trying to look at contagion rates and hospitalization rates. these are areas of expertise that are critical to the investment outlook that well

outside anybody's area they ever thought they'd have to deal with >> without a doubt and in many ways unknowable, because they also rely on human behavior, on people following the protocols that have been put in place right now >> right >> and it's just very, very difficult to truly know. and even if we do manage as we all hope to contain this outbreak soon, there's always the possibility that it will happen again that we are not in a position necessarily certainly not going to have a vaccine for some time. what will the economic impact be then when you have a recurrence in certain areas will you go to shut down again will we be better suited to keeping the economy open if, in fact, we get a recurrence? so there are so many questions as you point out, steve. >> yeah. david, i want to give you the one quote that was another bit of a memo to the president from powell he said we don't -- we need to have a plan for reopening the economy. we all want to avoid a false

start. i think that was a very important comment that you're alluding to right there that was said it could be really worse if we came back and we had to go back and do it again. so i think that's powell maybe talking to the president and saying, take your time there, mr. president. let's not blow the initial opening of this. >> to that point, steve, there's a piece up now that the economic task force at the white house will include mnuchin, kudlow and others that the announcement of that task force focussed on the economy could be announced very soon according to a senior administration official. if you missed any piece of the powell web cast over the past half hour, take a listen some essential financial markets have sank into dysfunction and channels households, rely on for credit has stopped working.

reacted forcefully to get our arguments working again and as a result market conditions have generally improved >> all right rick santelli, your thoughts as well on this >> well, i tell you what, carl it's a tough one for me. because there's no arguing with the fact that the fed is the only entity in my opinion, especially in an election year that's able to deal with this in the way it necessitates considering how much of the economy is shuttered this cessation of activity, the knowledge that we're probably not going to get very good earnings listen, if there's an earnings surprise this earnings season, it's that there are earnings that's the prize with regard to the markets, there has been little market movement since the announcement prior to this really interesting back and forth with david and chairman powell. interest rates aren't nearly as high as i thought they would be. the dollar index isn't hit as hard as i thought it could be,

and i think maybe the reasons are very large the reason is because the market fully expects all the players you're talking about trying to handicap and use the same models in finance they used for mort mortality rates, none of the models are giving us accurate results, but in the end there's a very big confidence in investors domestically globally that people like chairman powell, central banks and governments are going to do whatever they can to stop this in its tracks and buy their economies time i think that's the assumption that's embedded. until we see that assumption either taken away or in this case today enhanced, that's the only real relevant i think information we're going to see the markets give us, and the fact they're trading kind of steady with the last couple days efforts with the equity market to do better, that's what the in the equity market and the investor's minds that the programs and what steve liesman accurately brought up,

the finality of when the programs are up, the forward guidance embedded in there is still at this point enough to overwhelm the notion there's going to be very little economic activity in the very near future >> right on a day literally at the same time we got jobless claims above 6 million for a second week. mi mike, embedded are more headlines out of opec. the cut discussing could be as big as 20 million barrels a day. for a moment the s&p was having the best week since the 70s and the dow the best week since 1938 >> yeah. i mean, obviously the real push higher, i think in the markets this morning came when it was revealed that the fed would also be backstopping the high yield debt market. energy going up also works in that direction if you think about what really was getting priced in when the market was rushing to those lows, it was a high probability. this echo effect of the shutdown

being wear and tear on corporate balance sheet. unchecked insolvencies i think in stages the fed has essentially cushioned against that likelihood. and the stock market is pricing out some of those bad scenarios along all the fronts that to me would be the read i think we were set up before we got the fed news today for maybe a digestion phase. we had a big rally of the week you talk about so it makes sense, i think, that you're essentially kind of going up the curve of having some confidence that businesses can be bridged through this period, and that's to me most of what's happening. the way the stock market reacted. on the way down, kept remarking it doesn't really obeying or really paying much attention to the obvious places to stop and take a breather on the way down.

it was really a liquidation. now an equal and opposite move to regain about half the declines it's been remarkable in both ways just because the range of outcomes was so side and on one end so scary that it does cause that rebound effect >> all right both in the short-term and near-term. short-term range of outcomes, let's turn to brian sullivan and ask if you're hearing numbers like the kinds being cited about production cuts. >> i have not heard 20 million, carl those are big numbers. and maybe it's being floated by the russians out there to show some good will, perhaps. i mean, the numbers, there was a piece published on cnbc.coming a gaited from the research out there. opec, our own numbers. you're probably looking at maybe 11 to 12 million barrels a day when all is said and done. here's why the russians said they'll get 1 .5 milli .5 million barrels a day that's about 14% of their

production everyone made it clear they want proportionate production cuts. let's round it up to 15% if everybody, the u.s., canada, norway, opec, g-20, if they all cut 15%, you're probably looking at about 12 million barrels a day. maybe more i think this is just truly amazing. the fact that we're talking about a production cut that the world has never seen in terms of size and scope, yes, oil is up, but it's up to 27 and change it started the year at 60. we're 30 million barrels a day over supply. this is not a rescue of oil and gas. this is to buy one thing and that is time slow the tank fill before everything is filled with oil and there's literally nowhere to put it >> david, it's brian we had -- brian, it's david.

we went to 12.6 million barrels a day? >> yeah. and david, i think what's amazing about watching the u.s. side of the story, we don't have an opec or a national producer that somebody can say hey, shut the taps off we have 9,000 producers in total. there's no way to get everybody on the same page the president tried to get the big ones at the white house last friday what's going to happen, david? i know you know this space very well there's a natural drain rate right? i drink your milk shake. eventually you suck all the oil out. if you don't put new wells into production, our production numbers are going to go down naturally. so will the u.s. be part of any deal to cut? no but through natural attrition, billions in capital spending cuts, the u.s. decline rate will happen i think the saudis were probably very happy to see exxon's huge capital spending cut projections. what that says effectively is

they're cutting but it's just not like everyone got into a room or a virtual room together and made a deal. >> yeah. like so many big announcements this week. it feels like it's a long time ago, but it was only a couple days ago that they took a $10 billion out. brian, thank you in the update on oil steve, we want to get back to you on this momentous day. we heard from the fed chair powell we got at around 8:30, this extraordinary announcement from the fed. 600 billion in loans for the main street lending program. they're levering treasuries 75,000,000,008 to 1. municipal bond assistance, the liquidity -- levering treasuries $35. 14 to 1. and something we pointed out a number of times. also moving into the corporate bond market, $75 billion from

treasury when they buy high yield, it's only 7 to 1. so much to keep track of this morning involving the fed. >> who is better than you at it, david? i mean, i actually had a couple questions i had. one was for sully. the first one was this whole issue of how and in what form will the oil and energy companies be able to come to the fed window is unclear? it's something that we know a bunch of senators want to be able to make them available to do that. big questionin the oil business, were those companies that were failing even before coronavirus came along oil prices were already down there were already issues with their debt and now they're in much worst shape that's a big question we're following. second question was for you, david, does clo backing mean that private equity owned b businesses are now going to be able to go to the fed's window the third thing i want to point out is powell saying that as

we've done, we won't hesitate to move into other areas where they may find it's needed i don't know you're the expert on private equity, but that's a big issue as to wlovrnt whether or not some of the companies that aren't so obviously popular in terms of receiving aid our poll showed hospitals, small businesses, restaurants. the public is behind that. you get into airlines, oil companies, boeing, that's where the public support for that kind of relief trails off >> yeah. well, as you know, steve, private equity was notably left out in many ways of the relief pack, the cares back coming from congress, because they said even if one business has fewer than 500 employees or this one or that one, we add them up their employee ranks were far above 500 for most of the big private equity firms far above it there's still not dealing with

the businesses that are 10,000 employees and above or $2.5 well in revenue and above and are not investment grade now, they're being helped and energy is being helped as well by what's going into the high yield market by the ability of the fed now to buy high yield bonds and stabilize in that area that's important as well in clos, collateralized loan obligations banks make loans and they are put altogether and sent out to investors as they are secured. that becomes important as well steve, there are ways they are potentially going to be able to aid the companies without the direct lending that we're seeing in some other areas. >> all right here's what we'll do i'll read the term sheet you call your pe buddies and we'll figure out what they're eligible for and how much. that's a key area. one other point, there was somebody who in the last crisis

called himself a reluctant hedge -- i think you probably know him i think what i hear from powell is he was reluctant to come in and do all this stuff, but once you flip the switch, i think he's all in. when i hear him say this is what the great fiscal power of the united states is for to protect the people, the people undertaking the sacrifices for the common good, we should make them whole. i don't think there's any doubt that somebody wrote me a note that said they're doing a run around on the federal reserve act. i think they're going to go as far as they feel they legally can here to inject as much money as possible to stabilize the system >> meanwhile, we're getting some news in the ongoing short-term battle between mcconnell and schumer employeety. pelosi >> no deal in the united states

senate mcconnell pushing to add an additional $250 billion to the paycheck protection program for small businesses democrats blocking that move this morning, they need unanimous need unanimous consen the floor to get this done because there's few senators around democrats saying what we want is a bigger program an additional $250 billion for states, localities, hospitals, all sorts of other entity ies, the democrs envision a bigger program, don't want to pass just what's called a clean bill focused solely on the small business issue they've stepped up to block that no deal, no replenishment of that fund today. we'll see where this goes. this is enormously politically popular, but in one form or another whether in a small bill or larger bill, this plussing up of that small business fund is going to get done at some point

from congress. >> yeah. eamon, your point also on twitter was that, you know, the discussions we were having watching the democratic primaries, andrew yang and m.m.t. as a notion are beginning to get baked into some politicians' strategic world view >> so interesting to watch this happen you see andrew yang on twitter now talking about the direct payments to americans. he would like to see those continued during the length of this crisis. remember, he campaigned on this idea of $1,000 check to americans generally. that idea was in the outer edges of the solar system during the presidential campaign. andrew yang made a lot of gains for it theoretically during the course of the campaign but was with always viewed as an outlier. now i think americans and american politicians are getting much comfier with the idea of sending checks directly to americans and i think that affects our politics in terms of what happens on the other end of this does the idea of universal basic

income become something that's in sort of the mainstream debate even if it doesn't get done. is it moved more central to the focal point of the debate, whereas a couple months ago, this was viewed as the edges of reality in terms of what was politically possible in this country. all of a sudden that's changing, carl. >> it's remarkable, rick, the puzzles that the markets are having to solve in real time,s here in the term public crisis, the near term economic puzzle crisis and these long-term pilars, notions of what the government owes you are going to be changing and discussed for months to come. >> yeah. you know, i see exactly what you're saying, but i'm not sure i agree with how it turns out. i think in the here and now, many are giving the big policy makers all the room they need, all the runway they need, but i certainly disagree with the comment that on the backside of

this, this is going to make m.m.t. and all of that closer, maybe checks from the government, something that's a reality. no we're not giving anything anything here. we are compensating for the great cessation of the economy the economy is closed and we're doing everything we can via policy in the gray of charters to try to dance in place and make sure everyone is compensated in a fair way. when we get on the backside of this, the discussions quickly are going to turn to the deficits we've racked up not that we shouldn't have racked it up, but this notion of ongoing checks to people is not going to survive as a matter of fact, i think the size of the deficit and the thought process on the backside of this will actually go the other way. >> i think a lot of people can see where you're coming from where does it leave us going into what we know will be a long weekend? we used to talk about carona

fridays being net bearish. >> we had the down fridays and sunday futures it seems like we've interrupted that what it does, though, it has people ask is that enough for now in terms of this rally if we regained half of what was lost in the entire move lower and also, as i was saying before, if you priced in this kind of really headlong rush toward a corporate balance sheet crisis and economic shutdown, you've priced that out again and we're at a logical point to kind of calm down a little bit here. you have to ask what now has to get better on a relatively quick way in terms of the health stuff and the pathway toward reopening? what's priced into that? i think the market looks fine. what's interesting going on right now is within the market, all the big safe secular growth stocks are getting sold, tech underperforming, nasdaq underperforming and picking up the beaten up stuff priced for

extinction and levered that's one of the themes going on maybe at an index level, it might be a good area to pause but a lot happening belowthe surface. >> the one security that the fed doesn't appear to buy is a stock. >> yeah. >> i guess at this point they're buying high yield bonds, which i kind of thought we would never see, but again we are in extraordinary times. high yield sometimes is seen as a proxy fort equity markets and the high yield index is up dramatically this morning. may be a number of people shorting it as well. to your point that area seems to be benefiting. >> absolutely. high yield is right adjacent to equities along the capital structure and on the spectrum of assets that people view and so they get reprised. stocks got reprised along with corporate credit and high yield. it makes sense that stocks would be a net beneficiary, not even necessary to entertain the idea

of the fed buying stocks i'm sure they're reluctant to do that right now, again, it seems like this is probably enough, at least to cushion against some of the worst fears. i don't think it does anything for growth, right. so that becomes the equation you have to figure out next, is the nature of the comeback and the rebound and the corporate profit situation. that's not today's business. >> yeah. although it will quickly become our business once we get the q2 earnings reports in the coming days a good discussion out of the powell webcast dow session high was up 564. currently up 427 and "squawk alley" will start in just a few nus. the now platform, something's gotten into the office. i hear you. feels like there's no barriers between departments now. do you think everyone appreciates it? i do.

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. good thursday morning. welcome to "squawk alley." coming to you live from various locations today. just a historic opening session here for markets on this thursday as we watch all kinds of data come in. university of michigan in claims, watching congress and trying to put together an addition to these sba loans. the fed, with $2 trillion in additional or liquidity measures announced, and then this webcast with fed chair powell talking about everything from the fed's future moves to inflation to bank dividends jon fortt, for a moment there, actually i think still, dow is on pace for its best week in several decades. >> all relatively speaking to where it has been. i'm looking at stats over where certain stocks are relative to where they were three months ago. a few names interestingly are higher over the past three months

microsoft being one of them, up 1.7% some other larger names people would recognize include amazon which is about 7% higher over the past three months. there's some interesting things going on here based on expectations people are braced or were braced for the worst. you have to wonder whether we're correctly braced right now, but the markets, of course, continue to trade and any one day you can't put too much stock in, right, morgan. >> yeah. that's right, jon. it is pretty incredible just to see what has bounced this week bob pisani and mike santoli touched on this throughout the morning, the fact that we have seen the mini rallies, these stocks are still trading at such incredibly depressed valuations versus a month ago, whether in retail, whether it is in the airlines, some of these other hard-hit names that have basically in some cases seen revenue dwindle down to near nothing righ