stop following them. so it's a balancing act here it should put pressure on leaders to expedite the things we'll need to make reopening safer. the rapid testing is important >> thank you very much >> thank you >> thank you for bringing us up to date that will do it for us make sure you join us tomorrow becky and andrew will be here. right now. >> thank you >> time for "squawk on the street." good monday morning. i'm carl quintanilla with jim cramer and david faber coming to you live from separate locations. breath taking numbers to start the week futures are weak on what is shaping up to be the worst day for wti since the contract was created back in 1983 ahead of expiration ibm, netflix and coke coming at us this week we'll look for a deal to extend the small business loans, but crude will get the attention at the outset and you did say on twitter on friday that investors still had time to sell crude before this

week >> yeah. this is the expiration day so what happens is you -- actually it's tomorrow, but people are trying to prep it what happens is rusty braziel explains to me, the rollover from the may contract to june occurs tomorrow. the reason that happens is because the may futures price converges with cash and expiration so in other words, you're looking at what the real price is it's not the futures price so what happens is that imagine if you're producing at $32 a barrel, $33 a barrel like occidental, that's just -- you're hurting nobody can make any money at these prices rusty points out that after seeing this, the next month, it might go to zero and that's -- i think a lot of it is because where will you put it maybe keep it in the ground. it is extraordinary and jarring. and i think it's causing the decline. carl, what's so amazing, it was completely predictable that's why maybe the decline is--is really overdone if it's

based on oil if it's based on other factors, i don't know it looks like oil is bringing things down. this is just the way it works. gets to expiration, it collapses. next month it pumps up again there's a lot of companies that have done deals expecting prices to rise, not fall. >> yeah. i think that's fair to say the pressure, it will continue on this industry, as we know, jim. we are dealing, though, with a reduction in demand. is there any recalibration by the market, jim that is taking place here saying the reduction in demand will be even longer than we anticipated? does it feel to you simply like this is a reaction to something we have been dealing with for weeks now? >> no. i think as of friday i was predicting it, i think two or three weeks ago i would have thought maybe there's hope that there could be airline jet fuel demand

as we go along, even as we try to open the economy, i just don't hear a lot of people talking about robust driving, robust planes. if you open the economy a little, there's a reason why at least some of the fuel will be used, but i think the whole open the economy thing is predicated on the idea that there will be businesses reopened but not flying they haven't figured out how to make it if you fly, other than emirates, you feel safety. the big drag -- big, visible drag on the economy is no flights that people want to go on >> carl, it comes up oftentimes what will the world look like after, again, once we pass through this one thing that i get universally is my t & e budget will neveren what it was before

i will never put people on planes for simple meetings i can do them in a video conference manner, that will be more acceptable. you do wonder whether there's going to be a longer-term reduction in business travel or certainly one that's not going to respond quickly in terms of back to levels we saw in early 2019 >> convinced convinced. 500,000 jobs at home, carl, from adding the bank stocks last week put them together. 500,000 people working from home >> yep the g gottlieb is talking about the degree to which companies will not let employees gather in the workplace or travel outside of the workplace. united with q1 revenue down 17 year-on-year downgrade of boeing at citi, throwing in the towel, late they say, but based on problems that go beyond the challenging ae iio sector >> i looked at that piece.

they stuck through it, but there's a lot of research. if you sell food, they upgrade you. if you're involved with travel, they downgrade you there is -- this is not a time when i think the research has really excelled. couple of downgrades at disney okay maybe because it went up big on friday friday's market was a phony market, okay it was 300 points added in the last few minutes a lot of analysts are saying i got my chance to downgrade disney two guys downgrade it say don't forgot parks or football it was almost like they were waiting until they got to the 100s to do something wow, i got my chance i got my chance. those futures, whoever is buying stocks up, they gave everybody a chance to get out. so the analysts are taking advantage of it and telling everyone to go buy food

companies that we've never even -- you would never bring the stuff into your house until now. now you do did you see the procter upgrade? more people are trying to figure out what to do with their hair and shaving more because the mask and whatever. everything is a mess because whatever people are buying at the supermarket or drugstore, they're now buying at amazon so you upgrade amazon. they're buying the stuff the procter quarter was incredible i told somebody the other day you should buy procter why? it's the best time in the world procter ever had all the stuff is about being clean. >> yeah. though, david, morgan stanley says lock in profits on amazon jim mentions the disney downgrades two downgrades of gilead >> well, remdesivir, they have already anticipated people won't make money thursday night, a friend of mine from the street, he breaks a great story about remdesivir, it

made people excited, then they realized wait a second, they'll give away remdesivir, how much money will you make on that. you watch the shows this weekend, the show on saturday and sunday, then you see maybe it's another drug, not remdesivir then you realize why am i buying gilead the shows were incredible this weekend. don't know if you caught them. >> yeah. do try to catch them more than i used to. i feel as though frankly we have many of the same guests on during the course of our week that we see on the morning shows. >> not the morning shows what are you talking about >> you know, the shows yesterday, right the sunday -- >> no, you are hysterical. i'm talking about the president's shows! >> oh. those shows. >> he does the interplay with the cnn guy. you're an idiot! >> yeah. >> come on

>> i don't watch that show >> you have to put those shows on thee a they are dynamite. >> i'm trying to maintain sanity i'm choosing not to view -- >> you want to watch the 1984 ncaa finals? >> we're all looking forward to that michael jordan thing. >> he sweats a lot >> speaking of espn, carl mentioned those downgrades at disney, you talked about it as well, it's not as though we have not been talking about the challenges disney faces. so much of it is connected to the overall reopening of the economy that we are talking about, that we're waiting for, that is in the balance with how you deal with the virus. and comes back to large extent to the parks themselves. >> right >> when they'll open people typically book six to nine months in advance how will you do that today they're laying off 110,000 employees, almost all of them or many of them park related. then espn is another issue for disney, of course, we talked

about it, how long the cable companies will go without asking for some money back for no airing of sports, and lack of production, at the same time outweighed by the view of some by the incredible surge in disney plus viewership, giving everybody going rapidly through that library as disney goes, jim, does the nation go? >> that's an interesting question disney is kind of a microcosm of the nation you've got sports. they're talking about will they try to buy sunday night -- i think the notion of going out is fundamental america. shanghai is opening part cruises. i think that the cruise line business is alive and well, if you listen to the people who run the cruise lines but if you are trying to book one, maybe not

yeah i think it really is as disney goes -- i like that very much except the fact that disney plus is on fire i think netflix is doing so well i know people want to downgrade netflix, but look at zoom. there was no level where people won't buy zoom no level people won't buy maderna. i did a zoom boozy brunch yesterday with my family i enjoyed it tremendously. it's very -- it's become what you do >> yeah. i -- i think we're all in that boat it's been one lifeline to normalcy, is to see your friends in realtime while enjoying a drink. to david's point, jim, best case of a january 1st park reopening at ubs is -- i don't know if that was consensus were you thinking in that neighborhood end of the year before parks open at disney >> i was certainly hoping that could happen, but the more things go on, the more i realize short of a vaccine, everything

is difficult you can go and you can have social distancing, you can hope someone doesn't get close to you. costco has got it. maybe you can do some sort of opening like a costco does, which i feel is very safe. i don't think the whole -- i think the world is upside down i think a lot of people would regard going to a disney park as being something that was foolish right now. maybe things will look different then, but we need a vaccine. maybe j & j will have something so you can book in the spring of next year. >> we could be waiting a long time for a vaccine we all hope, of course, as quickly as possible. but has there ever been one for the common cold? no this is -- this is a unique undertaking that's being done leer there wasn't a success for sars. short of that, we have to figure something out. we can't keep our economy closed forever. we all know that you talk about disney, how long it would take. many families are talking about

what about the fall? what about return to school? what about colleges and universities which are an incredibly important part of our economy. they have to figure out a way to open there's going to have to be a way to open, whether it's with a huge increase in testing, hopefully oral antivirals that are successful we'll have to figure something out. we can't keep the economy closed for the next nine months >> you're totally right. we can't but i know the president says we'll open -- i saw people at the beaches in florida i said, geez, maybe i'm just being way too cautious those people look like they're having a great time. if i were to have a son going to tufts in september, i don't know, david, if i would necessarily book the hotel on the night you drop him off you know what i mean >> yeah, i do know what you mean there's a lot of people trying to figure that out these colleges and universities are in a difficult position. foreign students are an important part of their paying population, that becomes an issue as well. >> what a world.

>> guys, we'll get to -- on a shorter-term basis, discussion of this extension in small business loans we'll look for headlines regarding mnuchin and pelosi we'll talk to randy garutti as they return all of the ppp loans they got to vegi credit to smaller businesses we'll be back in a minute. ♪ you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean.

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as we get set for what will be a down open 15 minutes from now when the markets open overall, let's head out to phil lebeau we got preliminary first quarter results from united. phil has more on that for us >> david, not surprising that you united, i think we'll see this from a number of airlines, they're saying let's get it out. get out the news right now the preliminary results for the first quarter, a pretax loss of 2$2.1 billion revenue down 17% in the first quarter. the company saying it expects to have the ability to borrow up to 4$4.5 billion from the treasury department this is that second bucket of money, that 25 billion that's been set aside for the airlines to borrow from treasury. it will cost united potentially up to 14.2 million stock warrants equal to 14.2 common shares of united

the company is also selling and then leasing back 22 aircraft to an asian leasing firm. this is all about giving the balance sheet some financial flexibility here they will be leasing those back after the sale speaking of doing something with your portfolio of planes, either selling it, deferring orders, keep an eye on boeing. premarket this stock is under pressure the citi note where they downgrade them to neutral talks a lot about the uncertainty that is ahead in terms of the order book for boeing. leasing firms are cutting their max orders you had a chinese leasing firm cutting their max order by 29 planes boeing resumes production up in the seattle area today and ramping it up gradually on the wide body line throughout the week we're entering an interesting couple of weeks here for boeing. you have the virtual annual meeting next week, and you also have the first quarter results being announced on wednesday of next week. people are going into this saying, okay, do we hear a deal

between boeing and the treasury department boeing says they are waiting for terms from the treasury department and boeing has not made up its mind on whether or not it borrows from the treasury department or if it does that in combination with the private market back to you. >> let me ask you, phil, when you look at the progression for that first quarter that they give you preannounced, i have to believe january and february were quite strong and march was disaster >> they were they were on pace for a record first quarter until march happened all the airlines practically were every time you talk with an airline executive they will tell you heading into march they expected the first quarter to be one of their strongest first quarters ever. typically the first quarter is not a great quarter for the airline industry, but they were expecting strong results so, it definitely -- they hit a brick wall come march. that is really you saw the impact of the transatlantic flights being canceled, then basically the domestic market quickly shutting down.

>> yeah. phil, we were talking earlier about when we're see the resumption of business travel in a significant way or whether it will be diminished because so many people have successfully worked from home or are reluctant to send somebody for a handshake meeting, so to speak not sure where you come down on that, but how does that play into the airlines view and whether they will need another bailout come the fall. >> that's the big question right now. look, when we talked to doug parker last week, he indicated slight optimism, very slight he made it clear things are terrible now he said, look, we actually are doing some work with potential business conventions in the fourth quarter does that mean it's business as usual? of course not. none of the airlines expect that the focus will be what happens after september 30th united has already come out and said, look, if we do not see an increase in demand whether it's on the leisure or business side, there will be the possibility of job cuts because they simply do not have

the business that they need in order to justify the level of employment and remember, they have to keep those jobs in place through september 30th, not just united but all the airlines as part of the agreement for taking the payroll grants from the treasury department >> it's a huge story today for us, phil, amazing to see the shares down in the premarket along with oil on this historic day. take a quick break here and the opening bell on the other side of this monday ahead of a busy earnings week. don't go away.

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welcome back to "squawk on the street." about seven minutes until we get started with what promises to be another eventful week of trading on wall street let's squeeze in a mad dash.

halliburton is a name jim is focused on >> it's rare that you see the term freefall when it comes to earnings halliburton in all had a good quarter. they adjusted 31 versus 23 did 5 billion in rev the problem is the future is so bleak that it's really hard to try to figure out how the company is going to become the old halliburton. this is a storied company that has done so well halliburton, baker hughes, schlumberger are the three biggest. this is worse than schlumberger because schlumberger has more international business schlumberger swore the dividend would be fine even as of last july there's an overwhelming sense that the permian is finished as a place of growth. and that everybody will have to cut back obviously there's a couple guys who do well there. pioneer is doing well.

eog. i'd like to hear from chevron. halliburton is the state of things the state of things is what was a great industry, an industry about energy independence, too, is finished now. i don't know what brings it back you have to have wholesale demand improvement because even if spli wupply was cut back, i what i have to believe is that supply cutback, is that occurring? you wouldn't be in such freefall >> right even with the supply cutbacks promised from opec, it's still not enough >> no. we're talking about 30 million barrels a day no longer needed essentially for the world economies? >> listen to what phil said. you have this mix of not a lot of jet fuel being used, not a lot of driving, the whole shutdown in places, and you look at the world the world has got the same

crisis that we have. so you just don't -- you are just using far less of this fuel i don't know rewere ta we were talking about whether or not everybody would come back to the office now that we have zoom, if you read dr. gottlieb's op-ed today, maybe things won't come back the way we believe in terms of car use my fabulous makeup person, pa trees, suggested drive-in movies >> right that would be nice >> that would be great they had mitch galfon earlier, he used to be a regular member of the set, the movie theaters are challenged, but you're looking for some -- some uptick in driving you're not going to find it. you're not going to find an uptick in airlines people don't want to go on an airplane they have to start adjusting

when do these companies start adjusting to the new world and try to get testing, try to make you feel that the person next to you will not sneeze on you and put you out of business. i know colleges are thing, david, just one solution, you take after the school -- let's say you have two people in a room so in the fall, one person goes, the other zooms. in the spring, that person goes who was zooming. that's -- these are the creative things -- people have to start thinking about creative things it's not going to return until we get a vaccine yes. ebola took five years, that was record timing. i'm not trying to be one of those people xwwho says we'll hv a vaccine tomorrow that won't happen. >> we're in need of a lot of creative solutions, business will have to lead that, which will be an important story for us to be covering for the months and potentially years ahead in terms of how you do that, and how all of these organizations

and businesses adjust to that world you're describing. or people go out and take their chances, jim that's the other side of it as well and you have a cohort that is an older cohort that simply will not be part of our functioning economy in the way they were previously >> if i'm 19, i want to go to milan, whoa. i guess i just feel like i got the antibodies if you're my age, i like to go somewhere. i really would i'm looking at a cruise, david a cruise in july, it goes from boston to -- all the way up to halifax. you and me, $8,000 for a cabin what do you think? you game talk to your wife. >> yea i'll take a pass right now on that >> hard pass >> not that i love you >> you wouldn't be in my room. i get to see my wife i saw her yesterday. she came by. it was a drive-by. it was fun >> i'm glad.

>> first time i saw her since the first week of march. looked good. had a mask on. it's like a bank robber coming to your house and it's your wife >> your point about -- i won't call them the elderly, but the non-young staying in is a problem for consumer spending. older people by sheer wealth accumulation account for an extremely large percentage of consumer spending in this country. i see mnuchin is on twitter saying i'm glad to see that shake shack will be returning the ppp loan money we'll talk to randy garutti later on this morning. this is another interesting wrinkle. here's a company that, you know, the guidelines were so vague in the early going, and the outcomes were so vague in the short-term that once they realized smaller chains were going to get locked out, you were talking about lotteries last week. >> right >> this was the right thing to do >> one of my favorite places,

when i go to salesforce's annual tremendous fun place, dreamforce, i always find there's a great restaurant next to it. i was so glad, they got 20 million. and it's owned by thomas lee, a successful private equity firm it's resilient that's one of the most outrageous things. can't thomas lee journal some money over to that it's a privatity e itequity ownd restaurant 20 million >> it chuck e. cheese. why shouldn't they be able to stay in business and employ people >> it's small to be a medium and small business program that's why >> right >> it wasn't supposed to be these places look, they can apply ruth chris can apply they have some franchises -- >> ruth chris got the money, didn't they? >> they got the money. i thought this was outrageous. i thought shake shack was

outrageous but a restaurant owned by a private equity company, how much of that 20 million could have gone to small businesses trying to stay alive instead of private equity firm thomas lee gets the money? who is the joke on here? i thought it was just outrageous >> private equity has been cut out of a number of the -- has been cut out to a certain extent from a number of programs as you know certainly the fed main street program has a leverage test that some of these companies may not be able to meet that are private equity owned i continue to hear, i'm curious what you're hearing, those businesses dealing with the big banks, it took a lot longer than if you were dealing with a smaller community bank the big banks took it on as if they were underwriting a loan, which even if you were high in the queue took way too long.

>> i had a community banker from summit text me and sigh why didn't you go with us? we think you had a much better shot i didn't i should have gone with community, they wouldn't have been as overwhelmed. but, yeah, i think it was meant for community banks. we can all laugh about the fact that fogo got it or ruth chris got it there should be another program for somebody who is big. this is meant for small people who will otherwise shutter yes, maybe fogo would shutter. it's owned by thomas lee and they have money away i think thesecretary wanted a good program i think there were outliers. there will always be outliers. i should have gone to community bank i know i should have >> mnuchin was on cnn yesterday

talking about the prospect for a deal to extend the program this iswhat he said yesterday. >> i'm hopeful that we can reach an agreement that the senate can pass this tomorrow, and that the house can take it up on tuesday, and wednesday we would be back up and running >> all right jim that would open the door for people who did get locked out of -- i guess what we'll call phase one of this program. >> that would be good. i know that my representative, velazquez from brooklyn, was outraged that certain large ones got it i hope -- there's a lot of small businesses that weren't aware of the program or got shut down one of the problems is -- let's say you're a small business and you're a restaurant. we know that you can't just -- it's not business as usual let's say you put half as many tables in, can you double the price? if you get the loan, you're trying to keep people employed, but then again, the economics of

running a restaurant now are forbidding there was unfortunately a trial of a restaurant in china where the air conditioner blew the droplets across the whole floor of the restaurant. ten people got sick from one person's sneeze. so, i mean, there's just a lot of variables here. i don't think we have thought it through yet. i don't think the cdc thought it through. i certainly don't think the restaurateurs -- i've tried to -- i can get it to work, i think. i think most people can get it to work. but the profitability will be really reduced and then a lot of people won't be able to pay their rent. >> speaking of not paying rent, jim, you have got -- you have retailers across this country that are also not paying rent. that continues to be a question. it wasn't just april where you hear different percentages and i've talked to a number of landlords, 30%, 40% perhaps,

depends on the tenant. but may, the expectation is fewer and fewer will pay, if any. that continues to be a real potential crisis point >> so right. one of the best is a shopping center called frt, one of the best well-run companies. what they did was shift from traditional apparel to experiential to restaurants. it was a brilliant idea. and frt, lifestyle, gyms it's downgraded to a sell because everything they shifted to is -- is in danger. experiential is now a curse word you look at the downgrades of all the different places that involve interactions or places where you go and congregate, federal reality did a brilliant shift, now that shift is not working. if you look at jcpenney, matt boss with a piece out today talking about how many malls are

dark, two big stores if penny starts closing stores malls are hurting, experiential hurting, amazon not hurting. amazon and shopify not hurting you have two winners and hundreds of losers hundreds of losers >> carl, e-commerce, to your point, it's been fittenefited. amazon up again today. you pointed this out many times, it will only cement its dominant position, the question is what the landscape will look like after this in terms of other potential competitors for it you're right e-commerce overall, depending on where you are, has been a great place to be if you have a really robust business there. >> yeah. look, i leave it out for 24 hours, that's what we try to do.

i go get it. the things i ordered by amazon are -- i know that my daughter is not happy i use a huge amount of waste but anything -- if there's -- if there's one thing that i need supplements, somebody says get zinc, i click and i get zinc, it comes here the idea of going to the local walgreens, i don't want to do that carl talked about if you are early, call myself whatever, things are just riskier than you thought. my wife pumped gas yesterday she said that's an uncomfortable experience many people were pumping gas at the same time. who would have ever thought three months ago these experiences would somehow be dangerous. >> jim, what do we make of the wynn ceo and this 23-page plan for how to open vegas, which has had, if you look at -- deaths

per state population, it's less than half of a percent but you're looking at 3 million people worried about work. casinos are so labor intensive to begin with. the level of cleaning he's describing is, i guess, ambitious. >> he's an amazing guy when i spoke to him recently, they didn't do any layoffs it's got a good yield. las vegas sands canceled its yield -- it's dividend i don't know i think there are people -- there are always be people who want to take a risk. in the same way you can book a cruise line for the fall i think that unless the government says, wynn, you can't open wynn will open and people will say i'll be very good at social distancing i will be as far away, maybe there's a couple of tables where there's only going to be three people it's limit three you want to gamble we have the nfl, maybe you want to gamble on the nfl i don't know if you can go to

the stadium, maybe they'll say we'll only put 20,000 in the stadium. matt maddox is a creative guy. they'll think of something they are very smart. they will think of something, a safe part of the casino for people who feel they need that kind of safety so i think there's an instance of someone who will be clever. matt maddox, he pays all his people and he comes up with a casino that is the casino where you can go and feel more comfortable. we need more people carl and david who i think will improvise and make it so we can still go to the places. but the profitability level will be lower and the unemployment in the country will be higher at least you'll say i go to wynn and i had a great time and i don't feel like i'm putting myself in danger >> yeah. between that and boeing, which phil mentioned a moment ago. germany opened some small stores today. we'll have plenty of case

studies to see who is doing this right or wrong >> south korea is another one we've been watching. germany also is an important test case, opening fairly soon as well. the question continues to be, jim, if you do open it, do they come if you're wynn, will people show up you hope they will there's also that question of, well, if you open it, you better be sure you don't have to close it that would really be a significant blow >> i think obviously they're betting on people driving. i still have not seen the level of confidence. the airlines have not done what they have to do. a lot of companies just keep thinking that things will get better but if you're the smart company, i have flown emirates. emirates makes me feel like there's testing. at least you get to the point where you feel safer these airlines will have to start offering something which

has ultraviolet total wipe down, guarantees you take a blood test, maybe the abbott machines are going to be able to be up and running or ortho diagnostics. they have to start doing these things they keep acting as if people -- it will be normal. they have to improvise get smarter. then we'll do it but as long as they continue to think that maybe they can trick us into thinking that we'll be fine, they're not going to do it the first airline that makes it so you feel safe is the one we take to vegas. >> yeah. >> carl, there is still the question of testing. and, carl, you hear it, we hear it the governors yesterday making it clear, will there be enough testing in terms of opening a lot of these state economies to the extent that people feel comfortable again going back to work >> gottlieb on the "today" show

this morning, we're not there yet. this is regarding testing. not going to be there in may not going to be there in june. hopefully we'll be there by september. that's what scott is saying today about wide scale testing >> that would mean the nfl nfl. >> yeah. exactly. let's get to rick. good morning, rick >> good morning, carl. you know, so many things out today that are shocking but not unexpected the more i look at oil, look at the spread as we roll out of may. there's going to be more strange things whether it's every thursday watching what we know are going to be bad news on initial claims but there are certain things they could almost count on that nobody is paying enough attention to let's turn to europe let's look at year to date of the shots. that's a two-year in europe. it settled the end of last year at -- i'm sorry, right around -- this is our two-year, we settled at 157, down 137 at 20

now we go to europe. we see they're minus 70 where they settled right now they're around minus 69 so they went from basically unchanged in march, hovering why is this important? two-year shot is giving you a glimpse into the central bank. they have nowhere to go. so the fact that the shots look so much different than our two-year, why? we moved from 175, 150, down to 151, down to zero, to 25 range our central bank has had room to act. now, we can question as to how much more efficacy central banks will have, but we see they've pivoted the programs that we've seen many people over the weekend have said if you look at the national debt, you look at the proposed to the debt based on programs that the fed is unveiling, that in essence we're paying investors to march in place regarding the level of

equities that does make some sense. as we look at what's going on in our ten-year, if you start at the end of february, so march to date, what you'll see is that right around minus 54, all-time low on the 9th, the lowest trade since then has been 58 that chart should not instill confidence if we are looking for things to change for the better, we need yields to go up. if we look at the same chart for the dollar index, it was on the 9th of march that the dollar index made its 18-month low. you can see what the dollar has done both of those charts need to reverse. the recent move since the beginning of march, if it's going to give us the type of news that investors want tosee with our economy david, jim, carl, back to you. >> rick, well said jim, i wanted to turn to you while we have a moment to set the table on earnings. because there's some big players coming down the tape this week even though we got two more

pulling their guides in phillips and dupont today >> yeah. that dupont was very interesting. tusa upgraded it talking about how they're about to get the money from iff it was a sum of the parts. i tile will yactually liked the. it made sense. steve tusa from jpmorgan does quality work ed breen runs it people are not giving credit for the new iff david morris trust i think, wow, there's some real bargains out there because they'll own more than a half stake in a economy that doesn't have a lot of economic sensitivity. dupont has sensitivity did you see how the stocks reacted friday morning to the news about gilead? a lot of these industrials and a lot of -- let's use disney that was reacting to news perhaps that gilead had something. so this one seems to be, to me, not a dice roll. the dupont is a very interesting call

i liked it i thought tusa did a terrific job explaining it. if i were a hedge fund manager i would give it a shot there you are. >> all right guys, let's bring in bob pisani and see what's moving on this monday morning dow down 400 hey, bob >> rough open. 6/1 declining to advancing stocks rally running out of steam energy is the main problem rolling over into a new contract on oil nobody wants to take possession of oil it's that simple energy weak, but banks again weak today that's not a good sign after a rough week last week industrials, materials also on the weak side. retail also weak all sorts of reports of difficulties with the retailers over the weekend big cap gainers, a few of them. >> it's the ones you would expect amazon, netflix, walmart on the upside

a small group of mega cap stocks have done well in this environment. most others have not been particularly great here. how much more upside is there to the rally? i think the important thing is we recovered a large part of our losses 55% or so based on friday's close it's based on better treatment hopes and reopening timeline that's clear a problem i think we have here is that reopening is contingent on mass testing and on minimal re-infection there's a lot of what i call execution around mass testing and minimal re-infection last week the bank of america global fund manager survey, they said the biggest risk to the rally, we could fall back if we have a coronavirus second wave nearly 60% of respondents said that's the biggest risk to the market now i think they're right about that as far as earnings, 20% of the s&p will be reporting this week. the important thing is the dispersion of estimates are very, very high. they're all over the place here's what you want to focus on 80 companies in the s&p 500 have

suspended guidance 16% of the s&p won't provide guidance for the full year and we have another 20% that suspended dividends, another 60 that suspended buybacks. this is making it difficult to get the right number we call this the dispersion of analyst estimates is high. if somebody surprises us on the upside, provides any positive guidance, they will probably pop nicely here. the important thing elsewhere here, every day we look at companies pulling guidance, some new ones today, dupont, a dow component pulling guidance, lumber liliquidators, u.s. concrete and in europe, phillips, one of the big health technology companies, ph.d. hpe name campbell's soup came out and said our sales have been great, understandably they've been up a lot. they, too, said we do not have any idea -- their exact word is we're unable to predict with certainty the nature, timing or

magnitude of any changes in future sales or earnings attributable to coronavirus. they're not pulling guidance but they're saying we can't tell you what we'll be doing. this rally we've seen, very much big cap weighted s&p 500 the most -- the biggest stocks out there have had the smallest declines. and the smallest ones, the small caps have had the biggest declines overall just bear in mind here, small caps have really continued to get hammered guys, back to you. >> all right bob, thank you very much to your earlier point, merkel is on the tape now talking about ways in which to watch the risk of reinfection rates as they look to osloen and open shops today. we're back in a moment since 1926, nationwide has been on your side.

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let's get to jim in stop trading. >> something interesting here. phg, we heard about phillips the guidance not so good take a look at the stock and what's going on here is they're betting on possibles return -- hospitals returning to the way they were or a little more normal that means more surgeries they haven't been able to return. that shows a return to normalcy in the hospital and medical world. doctors and dentists haven't been able to work. elective sshlgs, no. look for stocks to do well, the companies shunted because of the hospital systems being overwhelmed by co-vid. i like the group i think it makes sense >> implications for j&j and medical products everywhere. >> exactly baxter, j&j, anybody that has an

artificial knee. the medical device was the one part that was weak for j&j abbott should do better. there's gradual winners that make sense in a world where before it was just choppify amazon and zoom. >> tonight we missed having you on friday. what are you going to do tonight? >> i got more emails you hate them, it's like are you okay yeah, i'm fine i took a day off, for heaven's sake robin hood, they're back and arvind, the new ceo of ibm he's been the big innovator for the cloud. i can't wait for the show. i'm back i'm not taking another day off for the duration, because it was like -- there wasn't a single one that didn't start with are you okay hey, i needed a day off. it was great >> the duration?

how long is the duration >> the duration is until the vaccine, david >> jim, we'll see you at 6:00 on mod mon mad money. quick break and we're back in a moment

good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber. the boards are red after two weekly gains, oil in focus. earnings kick into second gear, and we'll also look for some signs of agreement in congress for the expansion of small business loans >> much-needed money into the

hands of small business owners let's stick with the market conversation and bring in this morning jonathan golub along with mark vitner the move in oil. $10 in front of the price of oil? we haven't seen that since the 90s. look at uso, the etf, the biggest oil etf, how much are retail investors hurt by this move >> first, i think there's two stories here on oil. the first one is there are some technical things going on with the futures contracts because they're expiring and rolling over tomorrow which makes this a little bit of an unreasonable read if you look out further into the june contract or even the contracts that go out a year, they're off, but they're not off nearly as much my concern, though, is that in general lower oil, it's not only about the energy sector which is

small. it's credits and banks and other sectors that lose money when the energy sectors can't pay their loans. >> i mention retail investor because last week people plowed $1.6 billion into that fund, the uso. obviously getting hit hard today. mark, given what jonathan said, the ripple effects of the move in oil for the american economy and the energy sector, are you surprised the market isn't down further? >> it's encouraging to see the markets holding up relatively well with this news. it's being hit on multiple fronts it's the weakness in the supply that led to refined product oversupply and there's nowhere to store the oil what concerns me, i know you look out at some of the contracts further out and they're higher, but i'm not so sure we're going to see enough improvement that they don't come down as well i'm really concerned this is going to usher in a much bigger wave of bankruptcies ultimately

we're going to have to have a consolidation of the energy industry it's going to result in some pretty significant job losses. it's going to hurt houston and texas. there are other things that are going right in texas, but really some of the higher cost oil producing regions of the united states, they may be in for some harsher adjustments. >> what kind of job losses what kind of income declines and how widespread do you think it's going to be, mark? >> well, fortunately we've already gone through a correction i mean, we went through a correction in the middle of the decade and when production rebounded later in the decade, we did it without adding a lot of workers. and so i think that in terms of layoffs, when you look at the entire energy complex because it's not just the folks that are employed in oil and energy extraction it's also in construction and manufacturing, the folks who make the equipment, we're probably in texas looking at job losses somewhere of 100 to

150,000 job losses near term from the cuts in energy. there's a knock on effects because it's not just that you also have technology companies that are year defining oil and finding the cheapest ways to get it out it's going to reverberate throughout the economy texas has a lot of things going right for it dallas is getting lots of big corporate head quarters relocations. i think texas is going to weather this storm okay, and it's not going to be a replay of the 1980s energy bust or even the 1990s bust, but we're going to have some tougher times in texas. >> jonathan, i want to talk a bit about the broader market i'm curious to the extent you're speaking to portfolio managers and people at your firm. i don't know if you're having the conversations i have people focussed on the economic dislocation, how severe it is, how much more is to come and yet a market that as of this morning, at least, before the open was only down 11 % this

year does that make sense to you and if so, what explains it? >> well, this is, frankly, this is the conversation we're having if you look at the fact that the unemployment rate probably right now is something close to 17% if it were to be mark to market given the weekly layoffs we've had and the fact that expectations are now for close to a 40% decline in profits in the second quarter and that number is probably too low, the first quarter is expected to be down 20 % in profits, and yet, you've only had three weeks of the quarter really affected by the shelter at home policies, this is going to be much larger than what we saw in the financial crisis, and you're right. you're looking at year to date losses 10% to 15% down, and that just doesn't seem to jive. the real answer is simply that the fed is buying up the market. they may not be buying equities directly but when they're buying

credit, they're effectively doing the same thing you have this disconnect between stock prices and the fundamentals in the short-run, the fed can clearly play this game as long as they want to in the longer run, you do have losses here that are going to have to be acknowledged and the market up side is going to be really limited if the market has been up this high. one last point we have right now on forward earnings in the market is trading at something like a 21 maybe even higher stock multiple, and that's because the stock prices have held up so well and the earnings are collapsing those are on consensus numbers that probably have further to go that means the market is too expensive given what's going on. >> right okay it may be too expensive, but when do we start to see a weakening market in response your point about the fed is well-taken many say that's the key reasons we've held up as well as we have is there a point at which this

goes longer? that we don't return the same level of economic activity we had in 2019 early on for two years or three years which some of our business leaders have been saying at least on our air? is it possible then that the market takes another down leg, jonathan, if that does come to be true? >> that's the story. you have to -- if we're trying to figure out what the market is going to do by wednesday, that's a tough game but if you look at how long it's going to take for the economy to recover and perhaps from market perspective, how long will it take for profits to recover, it takes the marge cap companies about twice as long to recover back to peak profits as it does for the economy. so if the economy takes two years, it could take three years or longer to get your profits back our estimate is that it's going to take three years. so basically, 2019 earnings of $165 on the s&p is what we're

going to get in 2022 and that means that all things being equal, we shouldn't get back to peak stock prices for the same amount of time. you're paying a multiple on those type of earnings and historically it's been ten quarters to get back to even, two and a half years, and this is obviously far worse than you've had historically. and i don't think the market or i don't think investors are thinking in terms of that if you look at on the horizon there will be a point where we have no choice, but to recalibrate along the long-term numbers? >> there is -- >> mark -- >> equities are a better play than everything else when you have a lower interest rate environment. that will help support the multiple a little bit. and the markets do look ahead. so i think that even -- i do agree that we haven't incorporated the long road back that we face

but i do think that the discussion has shifted to where we're now focusing act how the economy is going to recover. and so folks are beginning to pull some of that improvement forward. >> but mark, so that point, i mean, you have 80 s&p companies that suspended guidance. jonathan did a nice note on this on how analysts, how their models are biassed given that giant hole in corporate guidance at least when it comes to profitability. i mean, how are you filling that hole in your model >> well, i don't have a model that looks at earnings in that way, but i will tell you that t just the change in the direction of the discussion. we're very early we haven't started the recovery yet, but when you look at where the contraction is, the bulk of job losses are likely to occur in the months of april and may we're likely to see some incremental improvements in the economy beginning in june. we're not going to get back. i think we're probably going to

get back to two-thirds to three quarters of the speed we had previously the summer might be pretty robust because typically flu viruses don't transmit as well in the summer. hopefully that will behave similarly. in the summer we may see robust gains but we don't know what's going to happen in the fall. there's heightened uncertainties. uncertainty about the direction of the disease i have a hard time justifying how quickly the market came back, but the one thing that i think has changed in a meaningful way is that the bulk of that immediate hit now seems to be behind us. we've seen jobless claims come down a little bit and folks are beginning to focus on what the recovery is going to look like and they're trying to find their spots in the market as to what's going to be advantaged and what's going to be disadvantaged. >> if i can jump in and take the opposite side on this, i think that sometimes we confuse the direction of the virus with the direction of the economy

clearly the number of new cases and deaths is coming down, and hopefully it will be down to a very low number in coming weeks. but if you look at what corporations do in terms of their spending behavior, cap exspending after you've had a downturn, it just doesn't bounce back right away. companies are sitting with lots of spare capacity. companies that are in retail areas don't advertise as much as consumer brands because they need to repair their balance sheets and the ad spending tends to be the money that goes toward tech companies that have ad-based business models, and so you have retailers that don't know whether they want to take inventory going forward for the next couple of quarters, to the extent they can address that because they don't know if their malls are going to open. so yes, hopefully we'll be out

of our homes and people will be healthy, but this is going to take longer so this belief that we have that we're going to get this incredibly sharp v-shaped bounce in the third quarter during a period when things are still dislocated even if the health issues are behind us, recessions take a period of time to work through the system credit needs to be repaired. that process, history says is a bit longer than we think it is >> i don't disagree with any of that >> this is no ordinary recession. >> i think that -- >> good. >> my sense is we are going to get a bounce in the third quarter. i've been warning people it may look like a "v" because we came down sharply and will recover quickly. it's a double digit third quarter gdp, but after that it will look like a nike swoosh where it will take us a long time to get back to where we were previously. we'll see huge dislocations in

business fixed investment. we have idled capacity but we are going to see some improvements when we go from having 90% of restaurants shut and movie theaters shut and we go to 60%, there will be some improvement and then we'll go to 50% we'll see some incremental improvements in the economy. i think that the market's going to have a tough time pricing that and my general sense, i'm not a stock market guy i'm an economist, but a general sense is we may have gotten ahead of that. i really have a hard time seeing how we get past three quarters speed as to where we were previously, and there's going to be income loss in the economy. fiscal policy, monetary policy have done a good job of plugging some of that immediate loss to income, but they can't replace it there's no way we have enough resources to replace the income. and so that's going to put a governor on economic growth going forward that will last at

least through 2021 2022 is too far out for me to think about right now. >> it's a good debate, and i think it's one every single person is having right now jonathan, what's the upshot? if you say the market is too expensive. it sounds like you're worried about the credit industry and banks. where should investors go right now for safety or for some positioning? >> yeah. i mean, if we look at what's likely to happen from an earnings perspective, the cyclical parts of the market, so this is the discretionary sector, these are retailers and autos and home builders and the like if you take out the internet retailers, they're trending right now as if they're going to have zero profit growth in the second quarter the same thing for the industrial sectors, materials and energy, and i think they're going to continue to feel a lot of pain. tech as much as they're going to

feel some pain, they're holding up substantially better than other areas of the economy and areas that are noncyclical these are staples and many health care companies and the like i think it's a script we've seen for quite a while. it's growth companies. it's stable defensive names and staying away from cyclicals which includes the banks it's still the play book the only one area within the noncyclical group that i think probably has a harder time are reits. those are areas where people are not paying their rents in many cases and i think -- and they're not all the same many of those names i think are going to be under pressure even though traditionally they're a defensive group. >> jonathan, mark, thank you both good discussion. >> thanks. >> thank you dow down 350 here.

all 11 sectors are lower to start the week later on in the hour, do not miss the ceo of shake shack returning the ppp loan we'll be right back. stay with us i know that every single time that i suit up, there is a chance that that's the last time. 300 miles an hour, thats where i feel normal. i might be crazy but i'm not stupid. having an annuity tells me that i'm protected. during turbulent times, consider protected lifetime income from an annuity as part of your retirement plan. this can help you cover your essential monthly expenses. learn more at protectedincome.org .

welcome back let's get to our etf spotlight we're watching the energy sector ticker xle under pressure with u.s. prices plunging for the

price of oil brian sullivan has more color on this massive drop we're seeing in crude good morning, brian. >> good morning. well, it's rolled over a bit remember this may contract, i don't want to get wonky on the contract weeds, but the may contract is flipping over. on my screens i see $23. there's the current month contract again, it expires tomorrow 1090 down 40% there's funky stuff going on with heavy shorts. look at june, michael jordan not number ten it's 23. you got 28 for july as well. i'm not saying it's good nobody is. i will say this. if you put up the xop or big oil stocks they're down a couple percent, but they're not collapsing as i tweeted out, the action in oil stocks is not entirely horrible no new oil stocks are making

multiyear lows or 52 -week lows. even with the contract down 40% there are zero lows being made a silver lining on a monday we all need, you could say the oil stocks are not collapsing like that front month contract. more oil is on the way from the middle east. we should be getting a few million more barrels by ship load in the next couple weeks. we need that >> yeah. right. there is a lot of talk about surging inventories and running out of room to store this crude. what have you heard on that? >> you got a closet or a bathtub or something i mean, an oil producer might ask to put a barrel in there if you do i'm being partially facetious. everybody is asking when are we going to run out of storage? nobody knows people are finding creative new ways to store things all the ships off sea, we know that, we've been talking about

the tank rates a lot of the tanker stocks have done good. you're paying a lot of money to fill your ship up with my oil and just anchor it off the coast of galveston for an undetermined amount of time until the price goes up. the irony about oil, it's funny. we pay to extract it from the ground and now we're theoretically paying to put it back in the ground into the petroleum reserve and other places i think the best case might be to leave it in the ground, but that's not what's happening. >> no. all of it pitting pressure on crude. wti $10.81 down 41% energy stocks are lower, but nothing severe like that down about 2% to 3% as a group the entire market is down 1% for the s&p. we'll take a quickre bak stay with us on cnbc

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>> oh, it's unbelievably hard. as i've been experiencing all over again i guess one of the reasons is that i mean, i guess it's good we only go through these extraordinary crises on relatively rare occasion it's been over ten years now since the financial crisis and that's a long time to try to remember some of the lessons but the emotions are the saying. we're hard wired to react in a certain way, and when there's a crisis, when fear is sweeping everybody we know, the impulse is frees up. that's what's happened to me it really took a tremendous amount of self-discipline to get over that and do some investing. but it's hard. >> jeff j when it comes to really hard, i would imagine it's also tough right now to figure out if you're potentially going to lose your job or if you're concerned about your company you're working for or

your salary, hard in general to understand what your spending habits should be what's the psychology around that right now in terms of the average consumer what are they doing and what are they doing wrong >> well, you're right. a lot of our financial decisions that are often irrational are about stress and uncertainty it's really heightened there's a lot of interesting research that shows under the moments of stress and uncertainty, we can think about stress as a yin-yang, working together to make each other worse, maybe more like yoko and john lennon. we can try to minimize that and take a big picture think about how our spending connects to our values and our identity is this something that we need something we think we need or something that we really want and in a way we want to marie kon do our spending. do i buy vitamins or cruise tickets? it's important to get bigg

perspective. catching you're breath with help us make better decisions in these stressful times. >> aren't people better off not spending at all during these kinds of times >> it would be great if they can, but we have to spend. one of the challenges is particularly if you think about the $1200 checks some people are getting, all the stress and uncertainty manifests itself in mental accounting. we treat money differently depending upon how we feel about it money from our job, we think about as serious we spend it on bills and important things money we think of as a lottery winning, we spend on silly stuff like more lottery tickets. if we think of all of our money as earned as important money, we'll be in a better position to think about what money we should spend it on. what we should save and what we should put toward bills and necessities. there's a lot of different ways to do that if you find yourself sort of

spending too much on discretionary spending, you can hide some of your money. you can treat this $1200 payment as three monthly $400 payments you can instead of thinking of it as a lump sum which we treat as prize membership, we can think of it as an increase in salary that sort of thing helps us distinguish between the important spending and fun ones. people have to buy food, medicine, necessities. it's that frivolous spending we want to avoid. >> and jim, back to the market for a moment you know, you advise people to rebalance throughout and as the market came down to a portion more backed toward potentially equities, but what about now with the s&p down a little less than 12% this year despite what would appear to be numbers we have not seen the likes of in, i don't know, almost what is it 90 years in terms of unemployment

levels >> i think it is time to see if you need to rebalance. i oversee a charitable endowment. we're having a meeting today for that purpose we did rebalance a few weeks ago when we were buying. now we've moved alignment, and it's time to lighten up a little bit on equities after this roughly 28% move in a very few weeks. i'm not saying the market is going up or down i'm saying what it's done and the future discipline strategy and target, it may be time to do that i know people who only rebalance once a year. if you can ignore this, that's probably fine over the long-term, but if you are trying to maintain a constant percentage allocation, you have moves, now is the time to look >> also today on the spending front, i was thinking about this this weekend i realized wow, i'm not spending

any money. there's nothing -- i'm not going to the theater i'm not going to the movies or restaurants. and so maybe i can loosen up the pursestrings a little bit on other things, because spending is kind of like investing. it's when consumers need to spend, from a macro economics point of view that they all freeze i think if people can afford it, i'm not saying doing anything reckless, but if there are things you want or need, this is a great time to do it. if you get all the checks, if they stash it away, it's not going to help for economics. i think it's not just selfish to spend sometimes. consumer spending is what keeps the economy running. >> no doubt. it's what keeps us going or at least had been keeping us going. guys, have to leave it there short today. appreciate both of you joining us, jim and jeff >> thank you >> great to chat with you. let's get to sue and get a news update.

good morning here's what we know at this hour the restaurant industry has lost two-thirds of its work force that is according to a new study by the national restaurant association about 60% of restaurant owners said the federal relief programs are not enough to let them keep employees on the payroll that survey estimates u.s. restaurants lost $30 billion in march and they are on track to lose $50 billion in april. the daily death toll in spain has fallen to the lowest level in a month 399 people died of the virus since yesterday. however, reported cases have gone above 200,000 only the u.s. has more confirmed coronavirus infections italy is beginning to reopen some stores today including book shops like this one in rome which is opening the doors for the first time in two months germany has also begun letting smaller shops reopen the government still hemds germans wear masks when shopping some are still going maskless.

just north of san francisco an entire town is being tested for the coronavirus. samples are being collected from all 1600 residents to learn how widespread covid-19 is in this small town the study is the first of its kind in the united states. as always, for more on the coronavirus coverage at cnbc, you can go to cnbc.com sara, back to you. all right. sue, thank you dow is down about 368. the ceo of cummins on the other side of this break - [announcer] if you've tried college but never finished,

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let's get to seema this morning. >> good morning. facing a shortage of n 95 masks health care professionals are turning to airpurifying respirators. cummins is announcing the filters.

tom linebarger joins me this morning. >> good morning. >> tell us more about this partnership with 3m and how fast you can retool your manufacturing facility to speed up production on these devices >> yes thank you for that we are working at top speed to get repositioned to be able to make these filters the good news is that a lot of the technologies and capabilities we have for making industrial filtration appear to be applicable to this application even though it's a medical and health-related application. we're pleased about that we're relying heavily on 3m to help us with testing and final approvals who is already in the industry but we have a lot of technology that's relevant. our employees have been working for a little over a month now to get ready to do this, and we're really excited to be announcing this partnership, and we expect to be in production next week. >> now, president trump has invoked the defense production

act, tom, on a number of companies, encouraging them to produce medical supplies and equipment. what's your dialogue been like with washington and vice president pence who used to be the governor of the state you're head quartered in, around trying to leverage your engineering talent to make these respirators? >> well, we have been working really since the beginning of the crisis we started in january, actually, because we have quite a few operations in china, trying to find ways to contribute to the effort to protect employees and communities. and so our employees all over the world have been involved in that effort. and so we've been doing that for quite a few months now in china we were involved in the acquisition and distribution of masks and now here in the u.s. we're involved in a number of other ways but the most important one we're talking about today is applying our filtration technology both to powered air respirators but also to n 95 masks where we've

applied some of our other filtration policy and we've given it to other mask maker who is are testing it for n 95 masks as well. in both cases we've been working for some time to provide these and then, of course, we'll collaborate with state, local, federal, as necessary to help in the effort we are working with as many partners as we can to get into production safely as many places as we can. >> it's great to see you shift resources toward this effort i'm wondering overview of your company right you, how many factories are up and running versus how many would normally be right now and what's happening to the workers in places where they're not >> that's a great question and of course across the world it's a different situation since we are in so many locations, the situation in terms of facility closure and operations is very different

but the vast majority of our operations are impacted in some way. either have closed partially opened or producing at a very limited amount and that's just purely to make sure that we can operate safely, even thoughessential operations, because we provide engines for trucks which as you know are critical for delivering food and medicines and things like that. we need to keep some operations open, including service operations to trucks make sure they can see on the road we're trying to limit the operations in the places where the virus is most contagious so our communities are most at risk we have a lot of plants closed all the plants in southern indiana are closed most of our office people in the u.s. are working from home, more than 08% of -- 80% of our people are working from home. we've had most of them operating. in china most of our operations

are operating slowly again different phases in different parts of the world >> yeah. and that's important to note given the exposure you have not just to china but the hubei province where you have pants. given the number of plants closed, how would you quantify the impact of covid-19 on your business, especially as we tend to look at the consumer-facing sectors like travel and restaurants and the severe impact it's had on their business how would you sum it up for cummins and the industrial sector >> i think industrial sector, cummins is representative of a lot of manufacturing companies for the impact of this pandemic. it's significant we're closed or partially open in many places what we're working on now is trying to figure out ways to open again and get the economy going, but in a safe way we have to figure out how to operate our plants differently that means maintaining social distancing that means tracking how the disease spreads in our community and to our operations if

necessary. testing. ppe, all other kinds of deployments to ensure that our employees have confidence that when they come back to work, they can do it in a safe manner. so a lot of our attention is focussed on that the impact on our sales will be dramatic we don't know it fully yet but we will see a dramatic impact on sales. we will see a dramatic impact on our work force, and you may have heard, we announced a reduction in salaries for all of our salary workers of about 20% across the range, and, of course, many of us at the senior levels reduced by more that was just a sacrifice we all had to take given the circumstances, and what we hope to see is as we find ways to come back to work safely, we can get started again and help boost the economy again. i do think the manufacturing sector is a place where we can figure out with new procedures and new safety operations, we can figure out a way to get back to work safely as the disease

begins to go past the peak and infection rates go down. >> where does manufacturing stand in terms of industries that can reopen quickly? if you get the word from a local governor that it's time to reopen, how quickly can you get back online? how quickly can you bring the jobs back, and can you bring all of them back that you had before >> in terms of speed, i think we are working to position ourselves so that we can be faster i guess the general comments i'd make about that is it takes investment in thinking through the safety procedures you have at your facility in order to open quickly i think announcing by a governor while helpful, will not make it safe for your workers. it's very important that every manufacturer, every service operations thinks through how am i going to open safely and social distancing in a

manufacturing facility, is not easy to implement. it has to be not only on the operations but in the break rooms, in the entrances, everything has to be thought through, and then there needs to be safety procedures related to what equipment you wear, whether you need to wear masks because you're going to come in contact with people. all these procedures need to think about ahead of time, not after the employees are there. and then the second thing to help is making sure you understand where your supply chain is a lot of supply chains have been impacted, and what that means is you may not have supplies to produce the parts that you're supposed to produce. we have been spending a lot of effort understanding where our suppliers are now, and are they ready to operate so all these things need to be done before really you bring employees back into the workplace. a lot of our work right now is ensuring that when it is safe to operate, we can go quickly >> yes, social security kaifd faber. interesting to hear you talk about how you're planning when

you'd be able to reopen. a couple questions what you're describing sounds potentially like it's going to add significant cost to the business i wonder if you can comment on that, and testing which we hear so often about do you feel like if you were to get the word, there's enough testing available that you could do it so that you would feel and your employees would feel as though they're safe? >> both are really good questions. and i i would say that the planning part, we are not only planning for ourselves we're trying to share all the pl planning analysis that we've done, all the best practices we dr developed. we're sharing it with local governments. we're trying to make sure everyone has access to that. just like the filtration efforts, we're trying to make sure it's not just for us. we're trying to get the whole economy going again. and i would say that as we think through our next steps, we want to make sure that everyone is

safe and that has to include testing. and the testing situation in every country is different and every location is different. so in some parts of our operations globally, we think it's adequate testing and other parts there's not. we think it's an essential part of the community opening safely. we might be able to get enough testing for our factories, but the truth is in order to make sure our workers are safe, we really need enough testing for the entire community we are trying to also help in the efforts to build testing capacity for the whole communities that surround our facilities >> yeah. it's a big part of the equation when we talk about the gradual reopening of the economy tom, we'll leave the conversation there we really appreciate your time today. tom linebarger >> thank you very much for having me on >> of course see in a seema, thank you.

after we return, the ceo of shake shack. e rui wh aerusft thbreak. k, seems like your teams operating just fine remotely. yeah, everything is running smoothly with the now platform. (bling) see, incident resolved. how did you... gotta enjoy the small wins. you keep being you, derek. keep being you.

tech earnings coming off this week with pretty ugly numbers anticipated. the one top investor sees opportunity in cloud names find out which ones on trading nation more "squawk on the street" coming up. these days, it's anything but business as usual.

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welcome back shake shack is returning the $10 million government loan. joining us this morning on zoom is the ceo of shake shack, randy garutti. randy, good morning, thanks for coming on. >> thank you, carl i appreciate it. >> the letter that you and danny wrote is eye-opening you talk about a sigh of relief when the cares act was passed. and you made the gamble to apply for the loan then you come back and say some parts are new inexcusable. can you describe the evolution you and danny and the board had when it came to whether or not shake shack fit the mission? >> you have to go back to the premise that what we've all learned is there is no business that is unsinkable not shake shack, not your favorite pizza shop. when we learned about this loan and learned we could keep people

off the unemployment line, we took the opportunity i think what we watched play out in the last couple weeks is what's wrong with it and where it hasn't gone right is the people who seem to need it aren't getting it. i don't think any company like ours understood that was part of this as soon as we did understand that and we had the opportunity to take care of our company for the long-term, we have other access to capital. we did that. and i'll giver an example. i was texting with a buddy of mine in seattle who has three small restaurants who applied and hasn't gotten. we're returning our 10 million so guys like him can get the money they need, and so that this industry can rise together. and we have to do this together. we're all in this thing together and that's our goal. and in the meantime, shake shack is fortunate we're a public company we're able to do a capital raise. we've ensured our long-term stability. now it's time to help our friends in the industry do the

same >> ma newspapnuchin tweeted abos morning as you know by now it's unclear whether the money can be reallocated short of congress passing expansion of funding. >> our understanding is by giving it back, which we'll do, it will go back into the pot and our hope, and we've done this and we've talked to everyone we can about this, is that it goes to those most in need. and if you look at our letter and the things we said, our goal is to just bring more awareness to hey, this was a great thing let's make the next one a lot better and let's get it in the hands of the people who need it most and we've got to fix some things in the way this has played out so those people can get it in the meantime, our employees are out there taking care of our communities, taking care of each other, trying to be safe and they are no less valuable than anyone else's employees and our goal has always been to take care of them for the long-term. i hope that this -- that our

role in this can be to give our $10 million back to others and hope the next round of this program is really good and really gets to the heart of what this country needs which is that all of us, small and big, can rise up again and get back to business when the time >> randy, it's sara and great that you came around to this i just don't understand why you went there to begin with i mean you're at $1.7 billion market cap company with more than $100 million in cash reserves why did you think that you wanted to qualify for a small business loan to begin with? you had other ways of tapping the market as a major company? >> that's fair and as we look at this, that notion was one simple reason, keep as many of our team members employed as possible that's why we're opening restaurants. every day we open restaurants our sales are deeply impacted and we want to provide as many

jobs as we can. when we saw that opportunity as everyone began to understand what was possible with this loan, it gave us an eye to do that as the weeks played out and we understood it wasn't going the right way and we were able to backstop shake shack's future with an equity transaction on friday, it gives us the opportunity to lead here and to make sure that everyone understand we did everything we could with what we understood all for the take of our people and none of us knows where this goes or how long this lasts. all of us, as business leaders, have an opportunity and responsibility to take care of our teams so that we can withstand this no matter the tenure we hope that we can do that and the good news we started to unfurlough our employees, we announced to our team yesterday we're giving a 10% raise to all of our hourly team members and guaranteeing a 10% bonus to our -- all of our managers in the shack during the upcoming quarter, regardless of where

their sales fall and that's now we're in a position to do that and proud to do that for our teams. >> randy, it's david shake shack would seem to fall into as well the parameters for the fed's main street lending program, i think, right? i mean fewer than 10,000 workers, revenues less than $2.5 billion. is that something you're interested in or would potentially try to access? >> david, we've looked at it it could be a good avenue for us i want to make sure before we doing that there, we understand that as of friday with the capital raise we did, we're in a very strong cash position, actually the strongest position we've been in, so we can weather this storm. main street lending and other things we'll look at we're going to do it now with the great understanding and the learning we've had over the last few weeks to ensure that the right companies get it first look, our family of chefs and restaurateurs and the good guys,

shaquille o'neal, shake shack, we find your local baker and coffee shop. the bigger we get, the smaller we have to act that has been our mantra at shake shack. we have to support the small guys we'll keep looking at all opportunities and get through the tough time and position ourselves with strength coming out of pit -- of it. >> randy, jpmorgan has another letter out as well this morning and they say the entire process in their words was extraordinarily manual and complex, more than 2,000 of our people working in shifts 24 hours a day for two weeks. is your main complaint in terms of policy prescription that this was under funded or too complicated or both? >> i would say it's under funded what we want to make sure we get in the next round are the right parameters the small businesses who don't

have a jpmorgan relationship or something else can get to any bank they need and can get that sba loan and then we're trying to get the extension of the amount of time as it's written the restaurants only have a few months to prove they can keep their people this virus is taking different attacks in different cities. we're hoping for a message people can have a longer amount of time, we think a minimum of six upon at least for these companies, to get their people back and get back to normalcy after the cities have said it's safe to reopen that's a lot of time there's no reason not to do that >> it's a heck of a move, randy, getting talked about a lot today. thanks for coming on and clarifying the letter which people should read we'll see you soon. >> thanks, guys. we're in this together and i appreciate all your support. take care. >> randy garutti of shake shack. a correction this morning, we

stated that fogodechow is owned by thl but they told it to rohingya capital sara >> all right carl, still ahead, goldman sachs analyst heath terry at the top of the hour with the nasdaq going positive and the s&p climbing back from some earlier losses now down only a little more than half a percent the dow down a full percent. walmart trading at all-time his. few others in the chip makers as well we'll be right back. 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

taking a look at where we stand across the major markets we've seen improvement here over the last half hour s&p only down a half a percent

it was down a percent a while ago. the dow down 14 points consumer discretionary a sector that has popped into the green, though the lower oil prices with energy the worst performing sector cnbc is back in just a moment. (upbeat music)

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- [narrator] finish your degree at snhu.edu. welcome back i'm eric chem my stocks trading lower with nearly every s&p 500 sector down so far today. consumer discretionary up fractionally ooultss and real estate are the worst sectors today. among the stocks dragging real estate lower are shopping center and mall