checks the programs are now starting to flow capital out you're hearing about businesses receiving the money. it's going to take some time to scale up a new program and put 3$350 billion out to small businesses across the country. you feel bad for the businesses that have to wait. on the other hand, you're starting to hear about it getting out there. i talked to one banker yesterday, she told me they have done 10 years worth of sba business in two weeks. that's a bad thing in terms of they got backed up and good that they got it accomplished 37,000 loans flowing through a pipeline that used to do 500 a year >> glenn, i want to thank you. we're out of time. it's great to see you. hope to see you back here again. that does it for us today. join us tomorrow, folks. right now it's time for "squawk on the street. >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim

cramer, david faber coming to you live from separate locations this morning it's risk off following those one-month highs from yesterday empire and retail sales for march were abysmal the worst on record. below expectations oil below 20 earnings from citi, goldman, bank of america showed the major banks are, as expected, bracing for a wave of defaults some more than others when you look at the percentage of the total loan book at jpm and city. >> jpm is the one that people decided wasn't that great. when i look at it, i think it had to do with tone. jpmorgan, the crucial lines were something that were uttered by jamie, which were, look, may is not realistic. it will be june, july. the problem with basing everything on that is that you don't realize these banks are much more -- much better prepared than we thought you have a citi that's down from its tangible book value, it's actual you'll have multiples that are incredibly low because people

feel the dividends are in question yet you have a tremendous amount of capital with these banks. i don't want to go against a market that decided the banks are no good. i will say that judging by what you have seen during this last 30 days, these numbers are better than expected i'm not saying buy them. i'm saying they are what they are. they're all going down i thought they were in each case better than what the stocks are indicatin indicating >> sorry i'm here we saw the reserve builds yesterday from jpm, of course, and from wells fargo seeing the same today. the question that went on, as we watched those stocks turn around, the bank stocks, the overall market up 3%, was how much more. this morning citi also adds to reserves they're at 20.8 billion.

2.91% of overall assets. goldman sachs has 930 million in reserves 3$3.2 billion reserve position. the investment bank had the second best quarter ever in terms of revenues. >> wasn't that weird >> yeah. 2.$2.18 billion in the investme bank and bank of america has 3.6 billion to its reserves. in consumer, of that 3.6, 2.3 was for consumer that was interesting >> the granularity is encouraging. brian moynihan at bank of america does remarkable work if you look at the state of washington, things have leveled out there. they went down, then they're okay the whole volume of everything, if you want to look at it, for bank of america is not terrible. bank of america makes a case for

state by state bank of america makes a case that we should open places i'm looking at these things through the eyes of what the governors are saying and what the president is saying. i was heartened by the state that did it right, though it was in conflict with the federal government at times, makes me feel like washington should be opened if you have more numbers that indicate things went down and then are back up, not all the way back to where they were and it turns out february was incredibly strong, then you can open things. isn't that the debate with these banks? it's not what the dividends are or what the -- what the bad loan qualifications are, but what do they look like in terms of giving you a signal that we can reopen the economy i'm saying they're not that bad. maybe you can make a case it shouldn't be so binary some parts of the economy should be reopened and maybe reopened next month >> jim, we used to look at loan book and slice it a bunch of different ways, exposure to

energy and housing will we start slicing loan books via exposure to states that have reopened exposure to washington >> i think that's going to be how we'll look at it for the overall economy and the stock market i didn't like wells fargo's oil and gas. i think they're the -- they're the riskiest -- i didn't like the wells fargo call at all. other than growing numbers about deposits, i got no assurity from wells. bank of america made me feel like the country is in a slowdown, it's a rerecession it's nota depression jpmorgan, they were the most touchy feely i wait to hear what wilf said. to me, jpmorgan was like, i don't know it's all right i like bank of america i know it doesn't matter i really like city, and that means nothing at all city is so far below tangible book value it cannot be explained other than the fact that we're going to be in

depression i don't think we're going to depression once again, i can see people saying, my god, kram ser cramero bullish. no, i see the stocks when you look at the make up of the quarters you have a reason to not want to jump off a cliff. i don't want to hang myself. i'm not hanging myself after listening to the banks there you go maybe wilf will hang himself he's over there. i love seeing another person it's an incredible thing he's distant from me he's probably on the 20-yard line, i'm in the end zone! but to see a person is hopeful it makes me feel like something could be the way it used to be wilf, you look great what else is new >> wilf is like two people, too. he's so tall he's got that going for him. >> plus he's on the phone. he's making calls. he's doing things! no mask! he's like the president, last time i'll compare them >> i would not view you as being

bullish now either i listen carefully to what you say. that's not what my takeaway has been >> some people say cramer is in asuit. what does that mean? i'm in an insane asylum? i'm jimmy chill. he used to live next door to me. i did go to gumby in 1999, i think he's referring to my halloween costume. >> it was nice to see eddie murphy rephrase that feels like a lifetime ago. you talk about reopening the state of washington, home to microsoft, the stock which is up 10% this year. so many other companies that are in high-tech conceivably providing software to small and medium-sized businesses, you can open up the state of washington, but it doesn't mean the companies that are based there are necessarily going to be doing particularly well as they watch so many of their customers struggle to pay bills.

>> right if i were the state of washington, i could say you could have contractors do a lot of work. they wear n95s you could open up the doctors, the dentists they know how to wear masks. you can make the case that people can gather in some way that does not make you feel like people will get sick the state of washington is ahead of everybody else. micha micha michael corbat, they had asia. there are some green chutes. people will hate me because washington is considered democrat, they will think i'm anti-trump there's good news, bad news. citi reminds me of cal fed in the '80s when the tangible book

value is twice what the stock was. the tangible book value was scrubbed by the government citi was owned by the government for a while. i don't want to jump off a bridge, but i don't want to have a party. >> all right those are two extreme outcomes >> right >> you're somewhere in the middle we'll talk a lot more about the banks today. we'll talk about these retail sales numbers, which are breath taking we have to get to the airlines and this $25 billion aid packag that's been agreed to in principle with treasury. we'll talk to doug parker later this hour. let's get to phil lebeau >> good morning. we'll talk about the aid package and why airline stocks are indicating they'll open higher i have to show you the new numbers from the tsa we track this every day. they tell you here's how many people were screened in terms of passengers and crew members at all the airports in the u.s. they hit a new all-time low yesterday. 87,000 that's how many people were screened at all of the airports in the united states

you have to wonder if it goes much lower than that 87,000 that's how much it was yesterday. i know you see 90,000 there. that was a couple days ago look at how the stocks are indicating they should be trading higher at the open in part because they have some certainty at least over the next couple of months when it comes to meeting their financial obligations, now that they have reached an agreement with the treasury department on these payroll grants we won't go down the road of all ten of these and how much they are getting from the treasury department we'll talk about the big three first off united it has not allowanced the final total, it is expected to be around 4.$4.9 billion that it will receive both in terms of a cash grant as well as a loan 30% of it will be made up in terms of a low interest loan to treasury delta, 5$5.8 billion american -- excuse me, delta was 5.8, america at 5.4 billion.

when you look at the big three, they're getting close to what they were expecting to get, maybe a smidge less because this is essentially oversubscribed. all the airlines came to treasury and said we want a piece of the $25 billion. don't forget, we'll be talking with doug parker, chairman and ceo of american airlines you do not want to miss this exclusive interview coming up today on "squawk alley" at 11:00 a.m. really what you want to focus on with doug parker is not only the near-term and making sure they have the liquidity in place and the fact they're going to borrow more he already said that but the question is where is the bottom when do they start to see some bookings whether it's in june, july do they have any indication when they expect that to happen right now, guys, there's very little in the airline industry at least domestically in terms of when things start to improve, at least a lettittle bit. >> phil, to clarify for viewers, the no layoff agreement takes us

through the end of september is that correct? and the other thing is summer fares, which got ridiculously low, $90 round trip new york to orlando, i see some evidence that those fares are coming up for the coming months. >> it doesn't matter how low you go on these fares. we're in an environment now where people either can't travel because they're not allowed to by their company or they don't want to travel they decided, you know, in this environment i don't want to be out. why should i go to a particular destination if the restaurants are closed, if i'm not able to go out to the theaters sh s or theme parks. at some point it becomes ridiculous in terms of how low you go with the fares. all the airlines have said we believe there's a base that's where they are. they will probably come up from there. we won't see them skyrocket. >> phil, if you told me that something was different about the plane, i'm ready to travel

maybe ultraviolet light. maybe they pull out seats. my wrife and i want to take a trip we'll go to a place that we know is secluded that is a retreat. we have to go through milan airport. we don't like that can the planes be reconfigured so we don't just say, you know what, you're going right to the hospital when we land? >>. >> theoretically, could they pull out some seats? yes. will they do that? no here's what the airlines will do they'll do similar to what delta decided to do. delta is not putting anybody in the middle seats delta is boarding people in groups of five at a time they're trying to make it clear to people, social distancing is what you're going to have to practice when you are flying i expect all 9 airlithe airline move in that direction some people in the industry have discussed do we offer folks a mask when they get to the gate they can say, i may not always

wear a mask, but i'm deciding i'm going to wear a mask here or when they come into the airport, before they go through the tsa checkpoint those are all possibilities. it's all about making people feel more comfortable and ensuring their safety. by the way, all the airlines, they're wiping down these planes they're disinfecting these planes if they're not doing it on a nightly basis in terms of going through and disinfecting, they're close. they realize the importance of convincing the flying public that they've got to feel safe. >> the question i'm getting this morning in conversation, and you raised it already, and will with mr. parker, come september or october, when this money conceivably starts to run out, are they going to need more? giving those stunning numbers you're sharing with us, even the idea of it coming back slowly over time, it's easy to imagine they'll come back for more money. >> yes, in a word, yes

they will have to come back for more money it's all about how quickly travel comes back. at this rate they'll have to come back and ask for more money. we also could see payroll reductions in the fall if things don't improve. >> phil, we'll see you later this morning with doug parker. we have retail sales, empire and now industrial production. let's get to rick santelli >> yes industrial production for the month of march, we will capture some of the effects of the coronavirus on the economy what ihave not captured yet is what's coming with the numbers which are a bit slow let me go to the charts. we'll get to the numbers if you look at a two-day of two-year, i picked two days because it's important to see how much the markets have moved with context how the short end is compressed. basically in a macro way we move from 25 basis points down to 20 basis points as you move down the curve to tens, what you'll see is kind of

77, 66 much bigger move the long end is where the action has been if you look at 30-year, even more dramatic in terms of how rates have melted down and finally -- here we go on the data down 5.4, down 5.4 on industrial production and, of course, you know the last time we would comp this number january 1946 january of 1946. when it was down a little over 5.5. utilization rates plummeted to 72.7 and of course we still have more data to come with business inventories. dollar index is my last chart i want to go to. if you look at a two-day of the dollar index, wow, it's up about a penny. the dollar index rising here is just a barometer that the temperature of trying to procure dollars through this added volatility we've seen the last 24 hours will be difficult great stories on how emerging markets are trying to deal with it all in all, rates down, dollar

up does give us more heated temperature for the global economy today. carl, david, jim, back to the three of you >> all right we'll see you later on we want to get to meg tirrell this morning on a couple of stories. one is this report that remdesivir trial has been suspended in china but the big news this morning is about this new serology test out of abbott. >> yeah, carl. abbott is announcing it will start shipping this antibody test tomorrow in the united states this is a test to determine whether people have already had the infection. and it can test for those antibodies specifically testing for one antibody called ipg. they are looking to immediately ship 1 million tests in the u.s. and 4 million for april. they're hoping to ramp up to 20 million tests in the u.s. in june this is the third testing

platform that abbott launched for covid-19 it also has the rapid point of care test that can be done in 5 to 13 minutes. of course, you're hearing about all of the testing, being able to offer this different type of test may help a lot to learn about the infection and hopefully whether we have the antibodies though the science still has not fully answered that question >> i think the thing that haunts us -- no meg okay the thing i'm trying to figure out, david and carl, if you had it, does it matter maybe you can get it again one thing that's novel -- this thing has been ahead of us the whole way. it's been one step ahead of the pos posse. we're the posse. now we get the notion of whether

you had it maybe it doesn't matter maybe you can get it again we thought mortality would be low. mortality in new york is over 6% that's unheard of. we thought this thing, you could detect it when you fist got it we only discovered now that maybe we have tests that can detect it. we also discovered it's not well distributed because it's done by the states, the states are relying on the system of testing and no one is ready for the testing. i guess what i'm saying, every time we think they have this thing -- and i'll include johnson & johnson and talk about that on the mad dash, every time we think we have covid-19 it outsmarts us we have to start thinking as if it's a fluid enemy that is just beating us and beating us. hence why you have dr. fauci -- fauci knows this thing is triumphant so far. the president thinks he's triumphant over it we have to imagine it as a -- as an amorphus enemy

>> not to mention the false negatives that you lumped in there as well. which is carey you hear ant totally somebody tested negative numerous times only to wind up very sick very quickly and having it on the fifth time they were tested they found out that they had it that said, there is hope certainly for these antivirals they are moving along. some of them rather quickly. some are for people in the hospital to be infused i have been talking to people that we brought on who are working on an oral antiviral that conceivably and it moving quickly by the way through trials in the uk conservably could be something that treats people at home the moment they think they have symptoms >> that's the abbott home test

>> that could be a bridge to the vaccine. >> that's the equivalent to the at-home pregnancy test that we've been waiting for >> no, this would be to treat the virus. but you need to know you have it so we're talking -- you know, hopefully by the fall. >> if that's the case, then you can justify this move. if it's not the case and everythingkeeps beating us, th move will be backwards, all over stone age. no t-rex? >> no. >> no? >> think of the dinosaurs as a failure, but they lived for hundreds of millions of years. >> they're plastic, you can give them to your kids. they'll be around forever. do you think there will be a plastic figurine of faber 200 years from now destroyed from covid don't let it get you stay home. >> we'll take on a --

>> i'm here. i'm here apparently i'm not going anywhere you're home. your home is now the studio. jim, stay there. carl, stay there we'll be back with more. we're looking for a down open when the markets open in nine minutes after a strong rally yesterday. resqwkn e re" after this isn't just a department. it's a voice on the other end of the phone. a note to say you're on our mind. a willingness to come to you. the world and how we interact with each other is changing. but that will never change who we are at lexus. now, more than ever, you and your needs come first. find out what service options are available in your area at lexus.com/people first

futures are weak as bank earnings roll in for a second day and our first big economic data points forthe month of april roll in as well. industrial production, retail sales, empire, all weak. we'll get the opening bell in six minutes. poppy come quick! something big... has arrived. [ screaming ] ♪ tiny diamond is my name ♪ my whole body's made of glitter ♪ ♪ and i'll throw it in your face ♪ shbecause xfinity mobilehen ygives you more flexible data.. you can choose to share data between lines, mix with unlimited, or switch it up at any time. all on the most reliable wireless network.

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welcome back to "squawk on the street." we'll try for a little normalcy here, jim, pretending that we're back in the old days it's a hump day, wednesday you and i would always like to remark on that for the mad dash, you're doing tesla. a name we used to talk about endlessly. >> david, it's time.

goldman sachs, david -- which happened to report today -- goldman sachs says buy tesla why? it's an industry leader in evs it's poised for long-term growth david, they love the balance sheet. it's got $6 billion in cash they have the edge, the model 3. it's shipping in volume. there's, i guess, 15% unemployment people want to snap these things up it has a battery efficiency. all in all, i think when -- when you're having about to go into a depression, when you have dramatic unemployment, what do you do you buy the stock of tesla doesn't that say it all? >> it does say it all. >> this is a blue chip >> apparently with a 1$130 billion market value up 70% this year on that note this does seem to be -- i don't want to call it the nifty fifty, there are a group of stocks in ascendance.

>> i was going to do that! we were trying to make an acronym, it turned out to be a 50-letter acronym. it was a whole scrabble board. netflix, david the race is to figure out how many new netflix customers they have is it 200,000? 500,000? "tiger king. when the president was asked about "tiger king" that was one of the best shows. didn't you think >> yes yes. >> was that better than last night with benioff and bloomin' brand and jean george? >> which show did you like best? i think "tiger king" shows you that netflix would blow away the quarter. >> i believe that could be the case i have not viewed it myself. we are getting deeper into the catalog. the question for all of these services, jim, they won't have a lot of -- they won't have a lot of content come the fall/winter

given the lack of production going on now that includes peacock, which is having its soft launch today, main launch taking place later this summer. not associated with the olympics as had originally been planned >> we need fresh content but you're thinking so far into the future come on, this is now >> stuck at home what are you going to do? complain you're stuck at home you're going to watch reruns pivotal goes to 490 on netflix a new street high. you were soliciting acronyms on twitter. i liked m.a.n.c.a.v.e. microsoft, amazon, netflix, comcast, amazon, verizon and electronic arts. >> i like that >> that is good. >> we talked about amazon yesterday. jeff bezos is worth 1$135 billion. and eric schmit formerly of

google talked about the degree to which we should be grateful for these services and the way they came along. >> the benefit of these corporations, which we love, in terms of the ability to communication, the ability to deal with health, the ability to get information is profound. i hope people will remember that >> we wouldn't be here today, for example. >> that's right. so let's be a little bit grateful that these companies got the capital, did the investment, built the tools that we're using now. >> fair? >> it's good and bad if you run a small business like a lot of people do, amazon is not your friend. every single one of these banks has a page which talks about the companies that basically compete with amazon. i don't think anyone would agree with eric schmidt about that i do think that tech -- apple

and alphabet when they came up with their contact tracing, which was dismissed instantly was a brilliant plan so make it so if you knew whether or not you got it from someone. i will put tech in b plus, unless you want to do benioff, bringing ppe from china. i don't think tech has distinguished itself i think tech has ascended itself i think when this period is over, amazon, walmart, they're going to be kings. everybody else will be out of business you can use those parking lots to get tested by abbott. >> when it comes to -- >> blah, blah, sorry >> sorry, guys >> i was going to say, david, we have a piece up on jcpenney, they are looking into bankruptcy protection they already closed 850 stores

>> yeah. that's -- that's suboptimal. they're in a lot of malls. simon properties, which downgraded yesterday and the stock was up 3 yesterday was a weird day. a lot of negative news and stocks went up a lot of people left confused. the futures were playing the role it is not like people sit there and say, you know what i want to buy the futures, take out simon prop tirertyproperties it doesn't work like that. everything moves up. like today, everything is moving down we're stuck in a binary world where the market is not that efficient. it's trying to be. jamie dimon said we're not going to open up in three weeks. we have a market that's binary now. i don't think the situation is as binary as the market is making it. >> he said severe recession and a number of other things the banks are taking it hard today. i'm looking at the sampling. >> didn't you think he was a downer he was a downer. >> yeah. he was a dimon downer a little bit.

perhaps being realistic in a way that maybe the broader market is unwilling to accept or just simply thinks the fed will always be there in some fashion to support every asset class >> when it comes to retail, jcpenney, it's not exactly a stranger to financial distress or the idea that it was going to meet that kind of distress >> if you believed in the call, you buy ulta ulta is down big ulta's competed against sephora. the thing that worked the best in jcpenney is sephora when you buy makeup, that presumes you're going somewhere. maybe you're doing selfies i think ulta is the winner if you're looking for someone to play off of what was the inevitable closing of jcpenney 100,000 people used to work there. remember that day you reported on the bonds, it was like one of the worst deals ever, you said that's just a dangerous piece of paper. you actually made a judgment

and i think that paper is worth what >> a lot less. hugely dilutive equity offering. this is a long time ago on jcp, which has been suffering since bill ackman. >> is bill sad is he still sad? >> i don't know. >> he didn't get the check -- he won't get the donald trump signed check >> no. >> he won't go to dollar general. he won't be doing that >> that's true >> dollar general has wipes. >> on the subject of amazon and facebook and google, guys, we did talk about amazon, of course, because of the strength certainly of its overall business aws is seen as more of a jewel as ever before but the advertising part of the business which has been growing dramatically and is an important profitable part of the business given the margins there and more

so with google and more so with facebook, i do wonder given the reliance on small and medium-sized businesses in terms of advertising what the hit will be for those companies in that area >> good point. i know facebook is saying things have not been strong if things get better, then facebook might be the one to buy. if you're pessimist, facebook is the one to sell. there was a fellow this morning on "squawk" who said we'll have a v. the third quarter will show growth the stock you buy is facebook. i'm not as bullish as that i find it hard to believe there's going to be a v. i think some companies like united health are saying things that make me feel better i also feel like when jamie dimon speaks a lot of people listen he's as powerful a voice as anyone in politics

that was the one that sent chills through my spine. he's a regular -- he's a straight shooter it would have been advantageous for him to say things will get better he didn't do it. that cast appall, and that is what follows today the conference call was bed. >> you're right by unh for sure, beat by 9 cents. they keep their full-year guide. oil is the other downer in the wake of that opec plus deal. a teenager once again. now the iea is saying that storage, we've been talking so much about at what point storage could reach capacity they're talking in the coming weeks. >> isn't it funny exxon did that big deal you say why do they do a big bond deal if oil is going to rebound? they knew. the companies to watch are these pipeline companies just dreamers. you take energy transfer, a gigantic one it yields 20%. is that sustainable? no i do not think it is

how about kinder morgan -- sorry. that's how itwas pronounced in washington yesterday can it work? i don't know these pipelines are owned by used to be rich people i say used to be when they bought them they were rich this is the group that crushed rich people. i think distribution will go down dramatically. it's something to watch. people started talking about wealth effect. these stocks are owned by the wealthy. they've been a disaster. >> guys, on the subject of oil and gas, a name we followed closely is occidental. they are paying that dividend in stock to berkshire it looks like berkshire has already registered it for sale >> no. >> 17.3 million shares, relates to the resale by the selling stockholders, affiliates of berkshire up to 17.3 million

shares of occidental they paid them in shares, they registered them and are selling them >> wow no bottom fish there no flounder? >> guess not >> mackerel? >> no. >> okay. flying fish? occidental is awful. i couldn't believe it bounced. exxon not so great only chevron it's chevron, diamondback, eog, parsley which is on today on "mad money" and pioneer. those are the only ones i trust here everyone else is in a scrum. i mentioned the ones who have good balance sheets and growth all the rest are just -- be my guest. including schlumberger, which i used to love can't like that group. remember esg >> yeah. >> these guys were failing that kept me out of them esg. what does that come up to? >> even more uninvestable.

>> this is the most uninvestable group i've come across they found too much oil. there's no place to put the oil. apache was the worst performer in the first quarter it bounced big it's time to sell apache i think it's time to sell occi it's time to sell any oil and gas pipeline they are all dangerous these things do trade together on etfs. sell, sell, sell sorry. sorry. sorry. >> despite the yield on some of those names, jim, speaking of yield, once again we have a very large name in this case it's procter. upping the dividend again by 6%. moving the earnings up to friday, which is earlier than expected that comes on the heels of the other move by j & j yesterday with a similar percentage increase >> i would buy procter here.

j and j w j&j was a remarkable thing before they announced the earnings, they announced the dividend one thing that's happening this earnings period, can you raise your dividend? buy. will your dividend be cut? sell i listened to the wells fargo call wilf and i -- wilfred frost, he and i had difference i felt the dividend-that shchari c scharf gave me very little confidence about the dividend, gave my confidence about little. procter announced a dividend early. what does that say they get the zeitgeist of the moment if you can pay a dividend and increase it, that's a stock to own. if you have to cut the dividend, no thank you there it is. that's theearnings season in a nutshell >> yeah. yeah jim, speaking of wilf, let's get across the room. i know he's been listening to some of these calls. what have you got?

>> also just mention on the dividend before i get to the script, bank of america's chairman and ceo brian moynihan saying even if in terms of the payout ratio it's going from 25% to 30% up to 40%, they discussed it with the board, they have three, four times cover for the dividend and i thought that the cfo of wells also clearly confirmed commitment to the dividend on "closing bell" yesterday as well let's get to the key factor that we've been comparing against all of the banks of where they stand relative to each other in terms of provisions for bad loans. here we have their quarterly provisions in dollar terms also perhaps more importantly to compare them how they stand in terms of their total reserves relative to their total loans. citi the biggest increase this quarter, and the biggest level their call starts soon some key factors out of other calls this is for q1 as at the end of the quarter, could rise from here. i'll come back to that point at the end.

it would be worse if not for the government stimulus measures the stand-out areas of concern so far have been within the consumer credit cards, within commercial, it's been real estate, retail, and energy goldman sachs by the way, on this measure would be about 2 2.5% they're not a major lender yet we're talking about hundreds of millions of writedowns for them. if you're hoping for goldman sachs overall earnings to benefit from low lending and high exposure to trading, it didn't really play out the bottom line there being even with a good business mix, caution dominates volatility during this quarter. i spoke to the cfo, one stand-out comment he said, q1 was about techal katechnicals, environments he said we're past that because of those stimulus measures q2 is about focusing on the fundamentals it will lead to layoffs and credit losses, but company specifics will come through in a way they didn't in q1. on that note f we lo, if we loo

big banks year-to-date, you are seeing differentiation investment banks performing better than the lenders. within the lenders there's performance difference based on whether you think they're safer or not i'll come back to what i heard on the call, the cfo of bank of america said in terms of your question about what it's likely to be the reserve build in the future, if we thought we were going to have to add more reserves in the fut xhure we wod have put it into this quarter. that's a different theme compared to jpmorgan and wells fargo yesterday. >> the line in the goldman sachs release, significant net losses across debt securities and equity investments reflected significant market net losses for investments in public equities, and significant gains in private equities. is private equity in trouble >> that's a big question goldman sachs, you're referring to their formerly business schooled investing and lending which they spread out across different business lines, and some writedowns there.

is private equity in trouble clearly you don't have to market if you're a private equity company. it's not like they have to take their losses in the way the banks are taking their losses this quarter clearly private equity values will fall in the same way that public equity is, just not a day-to-day business. i think that, jim this is not answering your question really, but it raises a significant point about these writedowns we're seeing from the banks. they're huge numbers and painting the forecast that the banks think significant numbers of companies and individuals may go bankrupt in the months ahead. that said, they are not cash charges. they are writedowns that they book for this earnings and if in six months or 12 months the economy is looking better again, they unwind it and book a big profit in a later quarter. that's an important balance to factor in. at the moment, we're seeing a massive earnings writedown for the banks. are we yet seeing a big asset balance sheet writedown? we don't know the answer to that

question yet the share price, jim, continues to suggest the latter. if we look at the year-to-date performances for the big banks, a happenedfndful of them are approaching year-to-date declines approaching 50% that suggests a dire, long-term outlook, not just a bad quarterly earnings performance >> wow >> jim, i mean, that comment by moynihan, if we thought we had do it, we would have done it this quarter is interesting. people were looking at city and jpm at 2.9% of their loan book, 2.3 and say they might be closer to the end of this process, that would be net bullish relative to peers. is that view misguided >> no. boy, these stocks are so hated i felt that we're further along. but they are all swamped by the ppp, and those small business loans could be a problem i think when i look at what the loan book is, i thought bank of america had a good loan book i didn't think it was that bad

people think we're going into recession. it doesn't matter what they say. if they go into recession, people don't want to own these stocks when they have to talk about the dividend, people presume maybe the dividend is in trouble i don't want to make light of the situation. the bank stocks are trading on what the bankers are saying is irrelevant and we're back in a 2007 situation i don't thinkwe are, but that' not what the market's judgment is >> you know, jim, to your question on private equity, it is an interesting time for private equity overall clearly they are focused on their portfolios of existing businesses they have been notably left out of many of the aid programs available thus far at least in terms of the c.a.r.e.s. act, in terms of the fed's main street lending facility and so the question will be do they reek qquity tiz their businesses with dry powder or

how do they go about dealing with weakness that they're seeing in businesses in the portfolios that they have. it does bear watching. overall private equity and private companies. we don't talk about it often yesterday we were spending time talking about wework and what would appear to be a pretty bleak future for that company. airbnb is another one worth mentioning it wasn't that long ago, it was a $40 billion value or so, expected to come public the end of this year >> yep >> now, jim, they just borrowed another $1 billion but you can imagine those values are nowhere near what they once were because people are not traveling, and they don't particularly want to stay in an airbnb right now if they don't know that -- who was there before them. >> no. look this is a clorox wipe situation, it's a boat situation. i listened to carnival cruise yesterday, i was like are you

kidding me i doubt the cdc will let you go. they have people stranded all over the place the travel and leisure situation is just very, very grim. on the private equity, it's interesting. just three months ago, if you talked to younger people, they didn't want to go into investment banking they didn't want to go to facebook or google they wanted to go into private equity these are often the equivalent of the shoe shine boys buying stocks private equity is what i'm worried about, they're incredibly levered all over the oil market. >> yeah, jim we're hovering just above session lows early in the session. oil is back above 20 let's get to bob pisani this morning. hey, bob >> good morning. happy wednesday. we are in the same problem areas we have been in the past couple of months. energy is the weak point again banks. russell 2000, small caps, industrials. consumer staples doing generally better along with health care.

we have seen this this movie many times look at the weak sectors the markets are telling you what the problems are it's emerging today. energy is 40%, 50% off the highs. banks, 40% the russell. this is the same thing i put up. industrials, up. industrial consumer staples are outperforming down 7%. and health care down 7%. the market is telling you what it doesn't like. where are we right now in the downturn february 20th and march 23rd, i call that the panic phase. we were down 34% we turned around the next day, march 24th, now 27% off the lows and now, the frustration phase where the markets are going to be choppy? look at today. look at the news you heard wolf talking about the bank loan losses high reserves out there. you heard the march retail sales. the worst on record down 8.7%. 18-year lows on oil. does this sound like great news in the next month? there's a reason the markets are

down today bear in mind this is the frustration phase. the guys were talking about dividends. johnson & johnson surprising everyone with a raise and proshlt a procter & gamble those are anomalies. we've seen darden, ford, nordstrom, delta, boeing, the list is going to get longer. there are a lot of lists being circulated on wall street about companies whose cash flow has dropped and prices have dropped dramatically and dividends are sky high you should see the lists kohl's, for example, nearly a 15% dividend yield schlumberger 13% halliburton is right up there as well ethan allen. many of the retailers are up there. hotel companies like host hotels up airlines are smaller but still elevated you'll notice something about this it tends to fall into a

particular group it's not across the board. so it's retailers, energy, hotels and airlines. guys, they're talking about roughly a 10% decline in dividends right now for the year, but again, concentrated in particular sectors david, back to you >> all right bob, thank you bob pisani as we look at an s&p that is as bob said, hovering near the lows of the session 2776. below 2800 again a lot more squawk on the right coming right back. people know aflac... aflac! ...but not what they do. so we're answering their questions. aflac is auto insurance, right?

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those one-month highs getting wound back as breadth is negative march industrial production worst since 1946 march retail sales are the worst on record year on year a lot more "squawk on the street" continues in a moment. life isn't a straight line. and sometimes, you can find yourself heading in a new direction. but when you're with fidelity, a partner who makes sure every step is clear, there's nothing to stop you from moving forward. confident financial plans, calming financial plans, complete financial plans. they're all possible with a cfp® professional.

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trading. >> sometimes you get down. it's difficult to fathom where we are with this disease my hope is j&j producing up to 900 million coronavirus vaccine doses if trials go well we need to challenge -- what is ahead of everybody that's the one to watch, and if we get anything that tells us that this thing is ahead of schedule, then people are going to want to own stock so i don't want to be cheer leader no pom poms. it's a difficult time. but j&j is the hope right here it's up to alex in some ways >> yeah. you had him on last night. i ask you to reflect on that and talk about tonight >> glax sew, a french company and british company. they tend not to be together,

but they are everybody wants a vaccine. without a vaccine, all the things we talk about, social distancing, which is now physical distance. we want masks and testing. but i think what we really want is a vaccine if you can get a vaccine which many people think is impossible for three to five years, life might return to the way that it was. matt gallagher is the biggest realist when it comes to where things are going car jn c carvana is on fire need to see vaccine. a lot of things are in the balance. it can be beleaguering to watch the bank stocks go down. but i can't cheer lead it at all. >> jim -- >> three to five years, jim, for a vaccine? >> the bears are saying three to five years and a lot of the bears have a lot of street

credit a lot of people think this can come back in various forms and it's crafty. i hate to demonize it, make it too human, but it is confidenty i -- crafty illness >> we'll see you tonight good wednesday morning, everybody. i'm carl quintanilla with sara eisen and david faber. we're getting business inventories. we'll get to rick santelli for that >> it is february numbers. it's on the older side, but nonetheless, we need to keep track. inventories down four tenths of one percent. that's the weakest drop on a month over month basis from august of '09. national association of home builders housing index we'll aim for cherry blossoms. we have snow here in chicago >> i'll take this, rick. definitely builder sentiment in the single family housing market is down 42

points in april to 30 on the national association of home builders wells fargo index anything above 50 is positive. not only was this the first negative read since june of 2 4 2014, it was also the largest within-movant drop in the history of the survey which dates back to 1985 the expectation was for a drop to 55. the survey was conducted from april 1st to 13th. it's the most current read we have on the builders to date of the index's three components, current sales conditions dropped 43 points. sales expectations in the next six months fell to 36 and buyer traffic decreased 43 points to 13 home building was strengthened and new home sales in march hit thehighest level in 13 years construction was deemed an essential business by the federal government during the coronavirus pandemic although, certain states new york, new jersey, pennsylvania, washington, michigan and vermont have shut down most operations

sentiment fell across all regions but most sharply in the northeast and the midwest. back to you guys thank you very much. let's get back to the broader markets here dow session low. down about 600 points. joining us on the phone line this morning is lori cavasina and dan suzuki thank you for joining us >> good morning. >> good morning. >> lori, we knew this period would come we knew that once we got into april we'd start seeing economic metrics that more fully reflected what happened in the latter half of march how surprised do you expect equities to be in the coming weeks when we get more of these? >> well, it's interesting. the chatter with people i was talking to yesterday internally and clients, no one really understood why the market had been rallying so much, and that's really been the conversation over the past week is kind of what were the buyers looking at so i think whoever it was that was actually doing this buying over the last week or so, they

are surprised by this data frankly, i think a lot of investors have been expecting us to retest the lows i think it's a mixed bag in terms of who is surprised and who isn't. >> so are you looking for a retest of the lows or how much do you think this 50% retracement needs to be unwound given some of the data rolling in >> the way i put it is i am keeping an open mind about whether or not we saw the bottom on march 23rd, but i'm not convinced. and one of the reasons why i haven't quite been convinced is i don't think we ever got clear capitulation my favorite stat you look at retail investors, bears up to about 52 % financial crisis they regularly hit 60% and got up to 70%. i think that will go down in history as something more akin to the financial crisis as opposed to just sort of a growth scare which is where the 50% psps measures top out at.

>> dan, we saw a school of macro desks who expected us to go back and retest some of the lows, but they were taken aback by the speed and you could see creativity of the fed. to a lesser extent, congress how much of that lessens the case for a complete retest >> i think that all the stimulus helps and they're doing the right things but i think the bottom line here is as lori mentioned, you haven't seen the things in place that would imply market bottom here and i think there's some confusion going on in what you should focus on. i think that when you look for a bottom, you just look for some signs the economy is getting better or it starts getting less bad. we're so far away from that with profits and all the indicators crashing to the downside we need to see signs even in the high frequently indicators that those things are inflecting the other way. we're far from that right now. and this idea we're getting this

buying opportunity of a decade or of a lifetime, it seems farfetched when the market, it's hard to argue the market is -- the problem going into this the market was assigning the highest multiple in two decades on peak earnings late in the business cycle informal when you combine that and say what's the potential downside you have to take the multiple level down to a normal level, let's say 15 times and the implied earnings anybody who followed cyclical companies knows you don't want to value on peak earnings. take the earnings numbers down and combine it, it implies there's still a lot more downside potential in the market you talked about stimulus. right? but stimulus talks about is it an attempt to get the economy back to normal both the economy looked normal six months from now? six months from now, eight

months from now? my guess looking at where china is that we're going to be 85 % of capacity by then. if you tell me -- if you told people forget the net quarter or next six months, that six months from now regardless of what happens now how bad the data is the economy is going to be running at a sustainably 15 % lower run rate, that's basically a recession in itself. there's going to be second and third order effects that are going to be accelerating the new daily case feed and infection rate is slowing. >> just listening to both you and dan, lori, i think there's obviously consensus that there's a lot more bad news coming whether it's on the virus or economy or earnings or the market so you've got this consensus trade saying we're going to retest the lows. it's no wonder we've seen a 25% rally. that's the pain trade. isn't it >> yeah.

and look, i think dan brought up an interesting point on valuation. our guess for 2020 earnings is 125. our guess for next year is 153 when we look at the numbers we think you could have made the argument if you were in the right neighborhood a few weeks ago, they don't look cheap anymore. on 2020 number, it's a 20 times multiple i think it made sense the rally we have. i think you got good news on the virus. we saw some plateauing the stimulus helps and matters but did we have sort of that valuation sign of relief and has it played out? i think that's probably what we're dealing with now we're confronted with as dan mentioned the second and third derivative impacts the skeletons starting to come out of the closet. i think it's concerning yesterday and today we're not seeing the banks trade up. we're really seeing that investors have managed to be surprised to the downside somehow. and that may be a combination of

what's gone on in the quarter. that may be a combination of outlooks that's telling me that we've sort of exhausted that valuation opportunity the market thought it had for a little while. >> it's a really good point about the banks, dan, and just in terms of the data, we've gotten so many bad numbers just this morning diana reported the housing number which was really worse than expected. pretty shocking. industrial production, retail sales. numbers that we couldn't have even imagined we've been seeing and they look a lot worse than they did during the great recession. the market reaction has been pretty interesting if you look at all those shocking jobless claims numbers over the last few weeks showing 17 million americans filing for unemployment benefits. most of those were up days in the markets. how do you make sense of the disconnect there >> yeah. i think right now there's -- given that we're in unchartered waters, i think the market is left concerned with the magnitude of the downdraft and

more concerned about the duration of how long this lasts. i think that's where the bigger debate is. you can almost see any number is reported and you're not going to see the market react much from here because basically the consensus is the economy is going to be operating as close to zero as it can be until we can start to get the economy getting back to normal so it's less about the magnitude and more about the duration. and that's why i think there's some -- there's risk because i think right now the only data the market is looking at and focussed on is high frequently data which you can throw out the window and more importantly, the extra rates and the fatality rates and things like that. i think the issue with concentrating simply on the co-vid related is that as i mentioned before, those are actually going to start to peak out and slow but those second and third order

derivatives are accelerating as that happens, on some level, the catalyst for the recession doesn't matter because you start to see the second and third order effects with lingering effects and multiple effects on each other talking about cap excuts, layoffs, business closures and defaults those are long tails on them as they start to quick in and accelerate, it almost doesn't matter people talk about animal spirits when the economy is booming but those animal spirits work in the opposite direction as you enter recession. and that's the concern i think it's going to last longer and then you're going to be able to see those data points less crazy levels than you see today, but you'll get some real idea of the other side of this >> yeah. and if i could just -- >> that's a good point, dan. as you're talking -- go ahead, lori >> sorry i wanted to jump in on the duration point i think dan makes a good point there. when we surveyed investors a

couple weeks ago we found they felt we were going to get back to normal in terms of life and business activity the second or third quarter of this year two data points this morning that made me wonder if that assumption is being tested and disappointed one mayor blauz owe apparently said on another network we might get back to normal in september. that was i think a little out of sync with investor expectations to me. and i believe one of the companies that reported this morning said something about the possibility of a recession lasting to 2021. i don't think that's investor's radar. we need to watch that discussion closely. that's where we're starting to get incremental bad news we weren't hearing about a couple weeks ago. >> yeah. as you're saying this, lori and dan, the goldman sachs cfo saying while we feel comfortable maintaining our dividend, we are re-examining forward spending plans dan, to your point about

the second order effects one last thing, lori, and i don't mean to place more value on it than it deserves but why did the vix get below the 50-day faster than it took during the financial crisis and is it really suggesting a spike, a reemergence of the volatility later in the summer? >> i think everything is just moving so much faster than what we've seen in past crises. part of that's just the influence of the system traders, the funds on the street. this is just unfolding so much more quickly i think we're seeing it to the downside and the up side but i would absolutely not rule out further volatility spikes into the summer months i think one thing -- it seems like every time we figure out what the market is focussed on today, it turns out that the narrative changes a little bit i thought jim was making good points earlier about the vaccine. now that we've gotten plateauing in the viruses, you'll start to see the vaccine, the treatment discussion that's going to become more in focus, and there's a lot of

uncertainty i think that could contribute to more volatility. >> lori, dan, very good discussion thank you for that see you soon sara >> big hour still ahead for you. world bank president david mallpass joins us in about a half hour, and later the managing director of imf n'go anywhere. we're back in just two minutes

welcome back we want to explore now the topic of aid to small businesses around the country given the various programs available to them and the question as to whether the funds are actually getting to those in need and for that we bring in davided toson, an investor and adviser to over 30 small businesses across the u.s you commented last week on the programs that were available to companies like the ones you advise you gave the program so far a c minus or maybe a d plus one week ago. have your grades improved since then >> no. in fact, it might not even pass the class. washington d.c. is debating whose signature gets to be at the bottom of the check. time is running out. this week small businesses reported 28 hkt of them, 28% of

them said they will not make it to the end of the month. meanwhile we have a massive disconnect between what's happening in washington d.c. and what's being said in washington d.c. and what's happening on main street in middle america. i'll give you an example with the ppp. they said 75% of that money had to be used for payroll if they'd only ask small business, they would have found out that 50% of small business expense is for payroll the rest goes to other uses. so why are they being asked to take on this debt burden when they can't use it for the things that keep them open? 30% of small businesses have said they're not going to apply to the ppp why? because of the red tape. they don't trust the government and the program doesn't line up with their expenses. look, apple might be sitting on $200 billion of cash but that's not how it works in middle america most small businesses have two wee

wee weeks' supply of cash. they can't issue stock we have big business advising the u.s. government an how to handle small business. it's not working >> yeah. well, you -- i know you're aware of about 31 companies that have applied. how many have gotten the funds they need that you're aware of >> great question. one. and i cantell you this all of them applied on day one on the friday it was available, one has their cash and that's why -- >> what's the problem? >> the sba is reporting how many loans have been approved but they are not reporting interestingly, how many companies have cash. and that's the reason why. they don't have the cash >> you know, professor, i'm also aware of something perhaps unexpected there's been an increase in unemployment benefits. you need a certain amount of staff members to be able to actually apply for some of these loans or grants. and i'm aware of some businesses that have lost employees who

would rather take the higher unemployment benefit even though it may not last that long because it represents more than they were making at the companies and then the companies are not eligible is that something you're hearing? >> oh, exactly and that's the perverse thing that's happening again, it's why no one in washington d.c. or in manhattan bo bothered to asked what's happening in middle america. if you make around $50,000 a year or less you're better off taking unemployment benefits that's insane. now you have employees making this difficult choice. would i rather be laid off do i want to quit? companies are facing the situation they say i have a ppp loan which doesn't really work for me maybe i'm better off laying off my employees they want to be laid off to see what happens and then what happens at the end of the eight weeks? what's going to happen at the end of the eight weeks is there's a cliff. and no one has thought about that cliff while washington d.c. is arguing about who is responsible, whether it's the governors or imf or the world health

organization, no one has told small business what happens at the end of the eight weeks >> standing, david, this is the bank's fault or the policy makers in washington's fault when it comes to fast tracking those loans into the hands of small business owners? >> i've heard of bankers in america working tirelessly to make the loans they're working on the weekends and doing everything they can. the problem is the banks remember what happened in 2008 when they made guaranteed loans and in the obama administration they came back in the justice department, started going through with a fine tooth comb looking to see what loans are not eligible for guarantee the banks are faced with a situation where they want to help their customers and want to help kmeamerica and get us backn their feet, but they can't risk the fact that the risky loans may not be guaranteed so they're

taking their time. >> well, what about the fed's role here? and, you know, again, the main street lending program, the $600 billion they're going to potentially ensure credit flows to businesses. has that gotten started yet in any real way >> well, the fed has done a good job of making sure there's liquidity in the system, but the fed shot all their bullets over the last three or four years keeping interest rates down to basically near zero. the fact that when we really had a crisis, all the fed could do is drop the rates basically from 3% to 1% that didn't make any difference. in 2008 the fed could make a massive cut in interest rates. that made a difference they're shooting blanks now. they can create liquidity but nothing with interest rates now. >> your thoughts are based on everything you're saying a lot of the money is not going to get where it's needed and the companies will continue to face dire consequences as a result? >> no. it's not going to get there on

time that's the issue i mean, when you said as i said earlier, 28 % of companies saying they're not going to make it to the end of the month 64% of businesses think if they can't reopen and get business to normal within three months they're out of business. the problem is that we don't have the time to go through all these processes about making sure the guarantees will happen. whose signature is at the bottom of the page. we have to get the money to the businesses right away or we're going to wipe out a generation of small businesses. >> professor, appreciate you joining us again thank you. sticking with the banks. we'll get to the etf spotlight will fred frost has some of the highlights from the bank conference calls >> let's kick off with the estimates for potential bad loans. it's been the key focus for the quarter. there they are for you in dollar terms and percentages of total

loans outstanding. yesterday despite getting the impressively scary numbers, jpmorgan and wells fargo were up before their analyst goals there's the intrachart you can see it sold off significantly during the course of yesterday when the analyst started. that happened because we heard from the cfo of j.pmorgan that the build for the -- relative to what we booked in q1 here is the cfo of bank of america being a bit more optimistic on his call today >> in terms of your question about hey, what's the likely reserve bill in the future if we thought we were going to have to add more reserve build in the future, we would have put it into this quarter now, when we get to the end of the second quarter, we may have a different view of the future and so we may release reserves, or we may increase reserves.

the quality of our loan book won't change that much that doesn't change that much in a quarter. >> we've been focussed on prime and super prime customers. the impacts to us of all the inputs is going to be different. and you know, i guess that's -- i guess that's what all the information i would want to give you about, like, one input or another. >> that hasn't helped the share price today. bank of america the worst performer of the banks have reported today currently down 6.6 %. goldman sachs a relative outperformer day one.7 -- .7% broad index down significantly 4.5% for the week as a whole we're looking at down 10 % now for the banking index. >> yeah. i think that's sort of where some of the bullish arguments on the overall market start to fall apart. we've seen this tremendous bounce and people are looking

toward the opening day for the economy and the flattening of the curve on the virus and the fed swooping in with trillions and trillions and yet, the banks are still pretty deep in this bear market. what does that tell us about whether we can actually recover here >> absolutely. i think if and when we reopen the economy, perhaps a month or two later than the market is expecting it will be piecemeal at best, and that's why they're having to increase provisions for potential bad loans. they think some people won't meet the gains a few of the banks approaching the 50% decline. it paints a picture of what investors feel is the outlook for the banks. >> thank you american airlines ceo doug hr er joining us in just unde anour. stay with us we're back in just a moment. ♪

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let's get an update on covid-19 >> confirmed cases of coronavirus around the world have gone above 2 million. this is even as the growth rate of new cases has slowed. about 30% of all reported cases are here in the u.s. the coronavirus test that uses saliva is being rolled out as a testing site in new jersey making it the first in the country. the most current tests require a swab of the patient's throat or nose the test was developed at rutger's university. 27 major league baseball teams

agreed to participate in a study of coronavirus antibody testing. it's designed to measure whether team employees have been exposed to the virus rather than if they currently have it. the tsa says a new record low of travelers yesterday and down 96.2% travelers from the same day last year a kentucky family is breathing a sigh of relief after their 101-year-old virginia harris survived coronavirus. she says it was just not her time carl, back to you. all right. thank you very much. session lows are pretty close. s&p down about 80 handles and the ten-year at a low.

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let's get to the founder of -- joshua, good to see you. >> thanks for having me. >> curious to know what you make of what the market has done over the past few weeks was this about removing some solvency scenarios off the table, and now we're back to this grind of really trying to figure out duration of this economic cessation >> you know, look, i think that's correct the fed has inserted liquidity into the market. they're trying to prop up businesses that need help. they're trying to bail out companies that need some help. get people back to work, and i think that's very important. and i think, look, you know, the shape of the recovery is a question mark here and a lot of your guests talk

about the shape and the letter we're all trying to figure that out. >> what's your best guess at this point and how much of the obvious play books whether or not you're bearish on things that require human to human contact, how much of those are played out what kind of opportunity is left there? >> well, look, i think it's definitely upward sloping. i think the question is how long it takes for people to get back to work and what that looks like you talked about human to human element in certain sectors there's different letters for certain sectors. i think when you think about theme parks, sporting events, things like that, retail where you have to have face to face contact, i think they'll probably take longer to recover, but there's going to be bifurcation in the market. you need to pick your spots as an investor. >> and some of the spots you looked at include charter and

northr northrup you want to talk about your thinking on those two names? >> sure. i talk about charter in the book that's an investment i've been involved in for a little over eight years when the new ceo got there. and i think what we've realized through this crisis is that the residential broad band network is very important. and we're all running on our residential broad band networkings right now. it's become a critical infrastructur infrastructure charter is growing broad band subscribers. when you think about the way we act and spend our time, a lot of it is online for work or entertainment. they have a long runway ahead. i think overall the market in general is i'd say bearish on cable because they're confused about what's happening with the video subscriber landscape while a company like charter may be losing video subscribers and last year they lost about 400,000, they gained 1.3

broadband subscribers. like charter a lot here. you have to focus on balance sheet, and despite the fact that charter has 4 .3 times leverage, they have access to capital. they just did a deal yesterday raising about 3.3% that's amazing in this market. and i think if you look at their cash flow generation, they'll do about 20 billion or more free cash flow in the next three years and they only have $10 billion of debt during the next three years. look for them -- >> all that one reason why the stock is performing relatively well flat for the year. before the crisis, we spent a lot of time talking when it came to charter and others who provide cable services the threat from 5g eventually being able to actually provide a broadband service wirelessly into the home. that's still out there, even if it had been delayed in some ways

as a result of what we're dealing with right now >> right so spent a lot of time on 5g we're hearing about this five years ago. i think the issue is what do the standards look like? you talked about the delay as well it really is overbuilding the existing cable structure and requires engineers and people on the ground to build that infrastructure and i think overbuilding never really is a good value proposition for verizon or at&t. you certainly saw it with google fiber in kansas where years ago and google who has unlimited liquidity and they could hire the best people, they couldn't replicate what cable was doing let's say 5g internet existed today. one, how does it work? it can be cumbersome i've seen a lot of videos and how it's tested and how it works. then it has to be a good value proposition for the customer it has to come at a cheaper price and be a better product. so i think 5g, the way it's going to really work is it's going to be great for autonomous

driving. it's going to be great for smart cities but in the near-term, i don't see it as a replacement for the traditional cable business >> josh, one of your tips and strategies in your investing like prose points out a lot of the turns were generated coming out of the financial crisis by buying out of favor businesses w wondering how far you're willing to take that strategy right now. arnold donald joined us yesterday and said 2021 books were looking strong. is that the kind of out of favor business investors should be looking at >> for me, i would look at a company like anaptive. they have an amazing ceo tied to autonomous driving tied to active safety. a lot of features in the automobile where active is aligned many years ago were like

to haves and now they're must haves. i think a company like a carnival which i'm not involved with right now, think about the human factor are people going to be willing to go on cruises and what does it look like >>. >> did i lose you? i think i lost sound >> joshua, thank you >> i think i lost sound. >> a thousand or of the little book of investing. appreciate it very much. i want to get to news involving the jedi contract that was awarded by the department of defense to microsoft but is disputed by amazon that's going on? >> well, that's right. the pentagon's inspector general has released the review of that contract which you said is being

disputed by amazon it found that awarding the contract to a single company was consistent with applicable law and acquisition standards. in addition, the ig found that awarding it to just one company could have resulted in more favorable standards for the dod including a better price even though we know the price tag buzz $10 billion on the political influence question, the pentagon's ig found that dod personnel were not pressured in the decision-making process. however, the ig said it was not able to conduct a thorough and full review of political interveerns because several key dod witnesses were not allowed to speak to the ig, prevented from speaking to the ig by the administration so from the evidence it was able to review, no pressure however, a full investigation was not able to be conducted now, it is unclear what this means for amazon

we're still reaching out to the company to see if they intend to continue with their protest of the awarding of this contract. amazon had also said there were several metrics by which the contract was awarded which it did not agree with we'll continue digging through the report to see exactly what else is in it and bring you updates we hear from the company. >> all right thank you. world bank president david malpass on the other side of this break stay with us issues facing our world, what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.

a big show continues this morning. we'll talk with the world bank president in a little bit along with the imf managing correct georgieva as headlines are flying from the imf regarding debt forgiveness around the world. the two-year yldie at a fresh three-year low back in a moment shouldn't you pay less when you use less data? now you can.

because xfinity mobile gives you more flexible data. you can choose to share data between lines, mix with unlimited, or switch it up at any time. all on the most reliable wireless network. which means you can save money without compromising on coverage. get more flexible data, the most reliable network, and more savings. plus, get $200 off when you buy an eligible phone. that's simple, easy, awesome. go to xfinitymobile.com today. with us on the world bank group's response to the covid-19 pandemic, president of the world bank, president malpass, g goodo see you. usually we'd be sitting in the middle of the imf where bankers

get together to hash out the world's problems where is the coordination right now? is it happening? >> hello good morning and yeah, that would be fun to do it that way, but this is working fine the coordination is happening in video conferences. so we just had one this morning with the g-20 group. and then yesterday there was one of the g7 finance ministers. i think it's very good coordination, though, it's more by video >> i mean, i guess i'm thinking to president trump yesterday announcing he's suspending funding for the world health organization for what he says is severely mismanaging the crisis, starting from covid-19 in china. and just separate countries going their own ways in terms of fiscal stimulus and support. monetary sim yu monetary stimulus and support. it feels different than other periods in history when weather

the world got together, especially in dealing with a health crisis. do you wish we'd seen more of that >> there is a lot of coordination the world bank now by the end of april we'll have 100 programs in 100 countries with health emergency programs where there can be bulk purchasing and financing by other operations. there's good coordination on that we do a needs assessment that involves many parts of the international community, and with regard to your point about what individual countries are doing, i think that's to be supported. meaning, the u.s. is doing things that it wants to do in the u.s. that are effective and in europe that they're trying to find effective measures. so my sense is there's good coordination we saw that today in the g-20 communique where the 20 largest economies in the world called

for debt moratorium for bilateral official debt, and that's $165 billion of debt that we'll have through the end of the year before any payments are due on it. so that's very good coordination, and it included china. so i want to add that in you know, it's really a global effort to help the poorest countries. >> as you are trying to help the developing world in the poorest countries, are you relying on the chinese data on the pandemic do you trust that information? >> you know what i've tried to focus on the problems that i can deal with and so those are getting a lot of programs that have broad menu of actual equipment, personal protection equipment that can be used in hospitals by nurses, by the front line health care providers. so that's been our big focus, and then what we're going to be

doing, the world bankwill be doing $160 billion of financing over the next 15 months for the economic rebuilding that needs to be done of course, more money is needed for developing countries the other multilateral development banks are putting in what looks like $80 billion. we'll have a total of $240 billion from those institutions and the imf is also doing several initiatives that will be very helpful so i think we're -- the world effort is focussed on trying to get to a very broad response to co-vid >> how is the developing world doing with this pandemic and are you worried at all about a surge in places with crowded cities and difficult access to clean drinking water and crowded

slums and health care systems that are not up to the task? give us a sense of what you're seeing and what you expect there. >> i'm glad you focussed on that this is a huge problem that the world recession will be deep and that especially impacts poorer countries and many of the cities in poor countries are overcrowded, don't have good transit facilities, and that itself is bad with covid. so we're trying to work on that, but it becomes a country by country support effort i was just looking this morning at nigeria efforts and the efforts that we'll be taking in nigeria. many of the very pope lus countries need extra support right now and they also need programs and i'm glad you said, clean water, access to electricity, sanitation, these are all critical problems that i think some progress can be made

on, but the big worry is that we're moving backward right now because of the global recession. >> how long at the bank do you guys see this recession lasting? we know it's going to be deep and severe, but i think the question is how long it takes to get out of it? >> some part of that depends on the developed world. you know, the u.s. is the -- the world's biggest economy and can be critical in the global growth outlook. europe itself is important japan and china, of course, are important in this mix. and so, the thing that would help the developing world the most is strong growth in the developed world. that means the working capital for small businesses -- i'm worried that as the central banks have a mismatch of their maturity, it doesn't provide the

working capital at the short end for growth by small businesses, which is one of the critical job engines. we're trying to do that in the developing world through the ifc. that's part of the world banks, the international finance corporation is providing directly working capital lines of credit to keep small businesses open so they can be ready for a recovery >> as you know, so many of those developing nations, especially in asia, depend on a strong china. has china contained the virus? >> i don't know about the virus. i know they've -- i can't comment on that. but one thing i do take note of that's going on in the world, is in many previous crises, the currencies have moved a lot, have been one of the weak points, but in this particular crisis, the major currencies have been steadier than in the past and i think that's a very

good sign. one of the things i worked on when i was in the u.s. administration was the stability -- the importance of the stability of currencies and that's been in the communiques of the g-20 and the imf communiques. and so far that's been a source of some small part of stability in this crisis and i welcome that >> i wonder if your views have changed at all since going from the administration to the world bank, which is so much more globally focussed. there's this realization now that we're so department on the global supply chain and on china for critical things like pharmaceuticals, medical equipment and supply, and whether that should be changed what's your view on that, and has it evolved >> these are very important questions of how extended do you want your supply chains to be, and how interrelated to

countries around the world what systems do you want to have be vital from your security standpoint, from your supply line standpoint. and so i think the world needs to think about what's the most effective system to be efficient from an economic standpoint, and also to be balanced from a security standpoint. so at the world bank, one of the things that we -- that i stress is the importance of trade facilitation and the ability of supply chains to adjust to the changing circumstances that means countries have to allow a dynamic process for their supply chains, because sometimes, you know, special interest try to stop that kind of change. and so, we have to let markets actually function, even during the crisis now, and be ready for the rebound phase on the next side

>> should the u.s. relax some of the tariffs in place against china and other countries in the middle of this global recession? >> i don't know about that but i'm -- i -- i favor markets that function and are open and that invite new suppliers when those can be brought in and i think there is value clearly in having suppliers close to home. but i think there's also very great value in having -- china having had growth over the last 20 years or so, really starting in 1978. it's been one of the gainers in the world, in terms of alleviating poverty, and that also is welcome. and i noted earlier, china's participating in this debt moratorium on debt service, and they're one of the biggest

creditors in the world now and so, it's very welcome for the world to see china participating in that. >> david malpass, thank you for joining us >> thank you >> we appreciate the update on the efforts from the world bank. >> nice to be on thanks all right. meantime, sarah, the sell off remains in place here, dow down about 600. when we come back we'll talk to american airlines doug parker print this historic agreement inciple with the treasury for aid in the airline industry. back in a moment

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stocks moving lower today with as you can see every sector in negative territory outperforming the market slightly is the communications services sector, some of the leaders are gaming stocks, activation blizzard. we see electronic arts outperforming, hovering between positive and negative territory up about half a percent. a move in netflix today, trading at highs amid a flurry of positive commentary. giving the stock a new street high price target 490. netflix was already on a tear, up 15% this week you can see it's up almost 4% now. carl, back to you. >> thank you very much morning, welcome to "squawk alley. as we watch the sell off take off some of the one month highs we got yesterday data rolling in showing a fuller

impact of the covid-19 crisis during the month of march. retail sales, industrial production and banks not helping. we're going to start with fill lebo and the ceo of american airlines, doug parker. good morning. >> good morning. let's bring in doug from the headquarters of american airlines in fort worth, texas. you reached an agreement in principle with the treasury department on the payroll grants for $5.8 billion how much will this tide you over to make sure that the payroll can be met, so to speak? >> it's great news for america, our customers and team, and the industry the last time i talked to you we were in the middle of negotiating this, and we went through some tough times in getting through it, but we're just elated to have that behind us it's incredibly important given where demand for air travel is right now and we're extr