twitter guy if there's something worse than blocking they can put in and by the way, andrew, you say you don't block people someone sent me a shot of you that you blocked them. so you do do it. you do do it once in a while you do do it, right? >> i don't think i blocked anyone in a very long time >> i'm going to send it. i want something worse but i'm not sure some kind of hand signal or something. anyway, we gotta go. >> that does it for us today make sure you join us tomorrow right now, time for "squawk on the street." >> good thursday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber the ceos of mcdonald's, dow, and service now, as stocks look to give back gains on this final day of april futures down 200 weekly jobless claims, 3.8 million. that's a total of 30 million in the last six weeks oil is up on reports we could see industry relief policy

announced, but the big story is surrounding big tech earnings like microsoft, facebook, and even comcast and qualcomm. >> it look like some of these companies were basically created for this moment if you didn't know, the microsoft quarter was just a thing of beauty a lot of that is because they'll have a product like teams or like azure that are incredibly strong linkedin doing very well facebook quarter was good, and boom, they say april is stabilization. one of the themes we're seeing in tech, or you have service now, we'll have bill mcdermott later today. they have an unbelievable quarter. maybe the best in the history of the company. so you're seeing companies that frankly not only do not have to make any excuses but are saying good things. you know, qualcomm, i'll say, secular trend, 5g, and then high-speed internet is one of the most lucrative parts of comcast. yes, of course, theme parks not going to happen, but they'll open up again. but high speed, it will never go

back you don't switch to low speed. even though the futures are indicating down, this was the best night for corporate earnings since the season began. >> and jim, you know, it's funny. you never go back is what you say. it does appear when you look at facebook or you look at alphabet or microsoft, this is pulling forward trends that were already under way. amazon, of course, is another example of that. so it becomes very difficult, i would think, for investors to really consider selling these companies that are able to play offense in an environment where so many companies are on the defensive. they're trying to protect their balance sheet. they're just worried about their very existence these companies are still seeing significant increases in sales and are able to play offense yes, they're pulling back a bit. facebook cut cap-x at least for this year to arrange a $14 billion to $16 billion, so that was about $2 billion, although they say they'll deploy the

additional $2 billion in tw2021 we talk so often about the broader market it's led by these names, it's dominated right now by these large cap names. >> they're much more nimble than you think. for the last few days of the week, the story was, here's some companies that aren't going under. the cruise ships aren't going under. the airlines, apache, the southwest deal the oil doubles quickly, halliburton doubles. we're trying to figure out what nordstroms is worth. there was a note that said liquidity wasn't as bad as you think. we seemed to have a big short squeeze last night i want to ask you, david, are there some hedge funds that were very short a lot of these names that do badly in a pandemic? and had to cover last night? did someone blow up? >> i don't know the answer, but it did feel like that. i was looking at some of the old media names i tend to focus on, and you saw the moves yesterday.

there was no real explanation for that other than perhaps short covering giving the beating many have taken. i don't know is the answer, but it did appear to be a large amount of short covering late in the day. >> you see royal caribbean up five and every oil company hitting it out of the park royal dutch, first time since world war ii, cut the dividend carl, one of the things i have seen this week is a recognition that perhaps we trough ed i know the number we hit this morning in employment isn't a trough number. the trend line is down, but we have seen a number of companies that one way or another are saying the worst is over and i know that that seems to be antithetical for a lot of people at home, but that's been the theme. >> it's a good point, jim. macy's is one good example, opening 68 stores on monday. we're going to hear from jeff gennett later on this morning. he does admit we don't know how customers are going to respond

to that. some of the stores might be looking at traffic that's one fifth of normal, but they're going to plow ahead anyway to your point about changes in operating leverage as these companies raise cash and lower costs, is right behind this upgrade of southwest today out of stifel, which argues in their mind they're going to come out of this stronger to their peers on a relative basis despite everything we know about how long it's going to take traffic to come back >> that deal, if you got in on that deal, the equity deal, wow. i think there are going to be others a lot of people were debating whether boeing is going to do an equity deal or not or straight loan but the secondary, so to speak, have been great places to be so i think we have to keep our eyes open if you're at home, keep your eyes open for when these companies want to get liquid, and remember the carnival deal at eight, and go look at the carnival cruise bookings they're good and look at the deals. if you think there's a vaccine, okay, if you think there's a vaccine, it's an interesting

call on travel and i think some people are starting to get a little sense of the idea after the remdesivir yesterday. maybe a year from now, life will be not great, but better than it is so let's book some things because it could be, let's just say, a more halcyon time, not necessarily great, but more halcyon. >> i want to ask you, jim, because we talked a lot about rem desafear yesterday for all the news, but now fauci on the "today" show this morning talking both about the treatment and this so-called operation warp speed, where they are looking to fast track development of a vaccine and manufacturing of the vaccine, even though we won't know the e efficacy for quite a while in fauci's view, this is sort of worth the cost given the ongoing damage to the economy. it's right in the bill gates school of thought that there's going to be some lost investment, but you'll make it up in gdp, essentially >> you get back, there's some

great books and articles written by doctors in the vietnam war. and in it, they said they used a lot of nonprotocol things to stem what they said were going to be certain death and things that no doctor would ever approve of in the united states. certainly not let's say the back bentures who would say you can't do that, that's not the protocol dr. fauci recognizes we're at war. he used the magic letters. he said this is like azt the back benchaers don't realiz there's a global war against this fauci does fauci recognizes sometimes you have to break the rules when the world is ending, at least when you could have social unrest on a scale that is not seen since the '30s i appreciate what he's doing which said i have been very negative, but we have something to build on. regeneron could be out of the cocktail we have to recognize it's war

time, and the people who are in the clinics and the professors, i think it's time for them to start realizing it is a war. it is not peace. >> well, jim, on that note, i think it's appropriate to bring in our first guest of many this morning, of course, who does have a view of the world economy and where things stand right now. he's jim fitterlilinfitterling, chairman and ceo of dow. nice to have you with us, jim. >> good morning, david >> let me just -- good morning let me start off with a broad question given your viewpoint and your geography, which is quite expansive, what are you seeing right now around the world sort of give me a quick take in terms of, is china going to come back quickly, europe, the u.s. what are you seeing? >> yeah, so david, we saw at the end of march and through the month of april china beginning to rebound the industrial sector, automotive, appliances are coming back. i would not say they're 100%

yet, but they're in the 70% to 80% back range the consumer demand downstream is a little bit uneven, but it is starting to come back traffic is back on the roads in cars which is a sign, i think, that we're going to see here, too, people feeling safer about taking cars than public transit. and in our offices and our labs, we're back to full strength, they're obviously taking a lot of distancing, ppe precautions, and you know, grab and go food service at our locations there we're starting to see that in europe, in the month of may i think we're going to see the auto industry come back. germany, austria, switzerland seem to be leading the way in coming back in europe. and we're starting to see states in the united states that have a significant impact on gdp such as michigan, starting to open up construction, and i think automotive is going to open up in mid-may so it is rolling through obviously, the curve is getting flatter, but it isn't declining

yet. so everybody is being cautious but going back in a safe way >> yeah. oil demand, of course, very important part overall in terms of your business i realize on the call you said you're not predicting yet in terms of oil demand coming back fully for the future here. but what are your expectations you have talked already to us in the past and others about how you have positioned the company to be ready for these lower oil prices to extend for some time >> well, one of the things that we do, so we don't just crack oil drivati atiderivatives, buta lot of flexibility we can move on the feed stock based on what's the lowest cost. and oil, obviously, has come down a lot and brought costs down with it, but ethane and propane in the u.s. gulf coast are still the cheapest crack and that's what we're continuing to

crack today. our flexibility allows us, if ethane gets tight, to move as much as 70% to propane and we can move to naptha is advantage. but one of the problems is with derivatives of naptha, c-4s, and the auto industry being slow, there's no place for the byproducts what everybody is doing is really trying to balance rates and operating rates with demand until we see the demand signal that people are getting back to work and the demand is coming back i think we'll navigate through it i do think we will get back onto an oil consumption trajectory that was like it was pre-covid the question is just how long does it take us to get there >> right which, of course, is the key question you're preparing for that. you talked about having as much as $12 billion in liquidity. you're also cutting cap-x. this has been a theme for compani companies, at least some we have

been talking at, by at least $750 million year over year. why is that the right number >> we're preserving cap-x to keep our companies running, and keeping up with the consumer demand that is strong. in our industrial solutions business, which goes into soaps and detergents and cleaning materials, they're very strong we're continuing to expand there. silicones downstream goes into a lot of those formulations as well as other things that help you make masks and gloves and other types of materials that will see strong demand we'll keep those projects going, but where we see the slowdown in the big industry, we'll push those projects out and we'll come back to that growth playbook when we start to see things get back to more normal pre-covid levels. so $750 million allows us to do the maintenance and keep our high-value projects going, and then we can defer the rest into next year or beyond when we see that demand come back.

$350 million of expenses, largely discretionary expense, as you can imagine, almost zero travel going on right now. people are working from home a lot of reduced expenses in operating facilities that we don't have people in today so that's how we're getting to those numbers. >> jim, you have been adamant that the dividend is safe. came on "mad money," said it's safe this morning, world dutch shell cut its dividend for the first time since world war ii. you have enough oil exposure should we be concerned if a royal dutch cuts it, dow could cut it >> well, oil has dropped 60%, jim, in the quarter. and that's a dramatic drop and so the cash pressures there are very different our prices dropped 10% in the first quarter, and we had pockets of very strong demand and good pricing in the quarter too, so we have a more

consumer-oriented downstream slate, and so to some extent, the lower oil costs help us because it's an input cost for us we have gone through all of our cash and liquidity scenarios today. today, we have $12 billion of liquidity. we have $3.6 billion of cash on-hand. we have $8 billion of committed lines that have been untapped. and so we've got several scenarios, including our worst case scenario that say we'll be able to support that dividend through the year our rating reliably, supporting the dividend, and any excess cash using to pay down dent, those are our top three priorities and what we'll focus on for the rest of the year. >> jim, you came on "mad money" when the stock was $26 you made a big buy of stock. most people didn't believe you, of course, were right i want to send your stock back to $50 given your cash position, it's time to shut the $100 a barrel

makes money kuwait saddam project. bite the bullet. enough is enough >> we would like to see $100 a barrel again, but more realistically, we would like to see a treatment and a vaccine for this covid virus so people would be more certain about going back to work, and we would be operating in an environment with a lot less fear we're working safely we're sharing those best practices with governments around the world we think it is safe to go back to work, and we're going to start to demonstrate that. and so that's really our first priority the health and safety of everyone >> jim, why do you think it's safe to go back to work? >> well, today we're operating with 14,000 people in our plants we were deemed essential by the governments around the world because we supply so many materials that are in need today. we have 14,000 people going into work every day to keep product moving they're doing it in a safe way they're wearing ppe, they're

distancing they're practicing good sanitation, good hygiene, and one of the most important things is we're screening when people come to work when you come in to one of the gates at dow or into an office building, the security guard will ask you several questions about how you feel, who you have been in contact with, have you been outside the country, have you been exposed to anybody, and then they'll take your temperature. and what we found is that we can screen people and keep people from coming in to work if they're not well and then we can also make sure that they get tested and get treatment. if someone has to stay home, we ask them to stay home for 14 days or until they pass the criteria to come back to work, and we continue to pay them through that time. this could happen to anybody and we need to make sure our practices reflect that in the way we treat people. >> okay, so you're an early actor here in terms of sort of putting in place those kinds of procedures you just discussed. how long do you think it's going

to take the rest of the world to do what you're doing and to really get people back to work >> i think they're going to come in gradually what we have seen is typically when people go back, they'll go back maybe with 20%, 25% of their workforce, wait a few weeks, get accustomed to how that's working, make sure there's no spike in any amounts of cases, and then bring the next wave in we're focusing mostly on getting back into the plants and into the labs, so we have 14,000 people coming in every day but we have more that can come in to the sites. and then when we get spaces where they're tighter like offices, that will probably come later. we want to make sure that we're taking care of the basic functions of the people that are working effectively from home can continue to do that. we're sharing those with governors and with task forces at the federal and state level,

not just here in the just, but around the world and we're giving them really good, almost osha quality types of practices that we use that they can put into their practices for other industries and we share them widely with customers. >> all right a road map for reopening jim, appreciate you taking some time thank you. jim fitterling, chairman and ceo of dow >> you guys stay safe. thank you. dow futures down about 300 here when we come back, we'll talk exclusively to the ceo of mcdonald's about the quarter, about comps, recovery in china and europe liquidity and lot more don't go away. sometimes the challenges of today's world make it tough to take care of yourself, that's why you can rely on nature's bounty... to give you the support you need... to stay motivated keep active and sleep well. add a little more health to your day...

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month of april still on track for the best month since '87 for the dow. '74 for the s&p. as we watch the ecb. claims, earnings with amonaz, apple, and visa tonight. we're back in a moment

welcome back opening bell about six minutes from now let's squeeze in a mad dash. costco is the name that jim's focused on

>> effective may 4th, you have to wear a mask if you go to costco now, costco, two things you need to know. one, the most lucrative retailer in history two, the most progressive. certainly for its employees, but also for its members costco employees required to wear face coverings and now we're asking the costco members do so too. we know some members may find this inconvenient or objectable, but under the circumstances, we believe the added safety if anybody think it's not the safe, they tell you it is, you need it. there's no more personal choice involved i think this will be the standard of care two weeks from now. i think we will not go anywhere without a mask i know you already don't we'll be wearing them and the only time we'll take them off is when we're on air. everyone walking around who is not wearing a mask is going to be considered a health hazard and costco is setting a standard, not the u.s. government it's not unusual they have done it before, they're doing it now >> you could argue in many ways

when we look back at this crisis it will be corporate america that actually was taking the lead, that was executing in certain ways far better than our government has been able to, item although, the prospect of wearing a mask everywhere you go, how long are we going to be doing that for >> until we stop killing people. because remember what this is about is protecting others, not yourself if it's just yourself, i understa understand you have every right to be selfish about yourself this is about being selfish about others costco is worried about others, not themselves they consider it a violation of all your civil liberties, the things i said, and are don't care because this is about a national health emergency. until we get this thing under control, we can't have the vice president of the u.s. go to the mayo clinic without a mask because that sets an example of recklessness that's not a seat belt i don't mind saying it, what are you going to do, come after me he's the head of the task force. this is the type of thing where costco is the leader and we'll look back and say the people who chose to be, let's say, civil libertarians about a mask, were people who were reckless not to

themselves but to others and i'm very serious about this, david. costco is going to be right. by the way, the others who don't do it, you're going to get sued and lose a lot of money becaus the judiciary is going to find against you in a class action suit, and you'll just have to pay a lot of money so even if you think that it's wrong, a violation of civil liberties, wait until the federal courts get involved. why didn't you listen to cramer and costco i'm not fooling around masks. >> interesting >> masks have them. >> elon musk might disagree to a certain extent, carl it was interesting listening to the tesla conference calls and his views in terms of the lockdown, so to speak, versus mark zuckerberg, who did not paint a particularly positive picture, at least for the near term in terms of his expectations of the virus. >> yeah. as musk said, this is fascist. this is not democratic this isn't freedom even though, guys, the question had nothing to do with policy or

our response to the epidemic the question was about year end liquidity. if you missed what musk said on the call last night, take a listen >> the extension of the shelter in place or frankly i would call it forcibly imprisoning people in their homes against all their constitutional rights, my opinion, and breaking people's freedoms in ways that are horrible and wrong and not why people came to america or built this country what the [ bleep ], excuse me. outrage. outrage. >> so jim, big debate this morning about whether or not this was a legitimate view >> well, i tell you what it was. it was a darn good quarter and i think when you compare ford to what tesla is doing,

you'll recognize that deslaw is crushing it. they don't need any advertising. the y is doing incredibly well the man is certainly entitled to his own views. remember, though, i think that what's going to happen is the standard -- i don't want elon musk to be sued by employee because he recommended a course that is going to be out of sync one day with what the federal government does. i love the fact that elon musk has separate views he's got views which talk about the idea that we should be allowed to be put to work, something i completely agree with fasci fascism, i don't know. i mean, sometimes -- i don't think steve bannon -- excellent interview this morning -- would choose the word fascist. we tend to limit that to certain people i find fascist to be a bit extreme, but elon can be an extremist. >> yeah. no, he can, and maybe utilitarianism maybe we want to talk about the greatest number, although that

is still creates a debate, jim, because frankly, what is the greatest good for the greatest number when you shut the economy down is there going to be more suffering as a result of that than there will be from the virus? this is that balance we have been watching play out as our viewers hear the opening bell of the new york stock exchange. we get that shot of times square for the nasdaq as we open the final trading day of the month in the red, jim, right now, after what has been a furious rally overall. >> gains, david. geez, are we comparing this 1974 downfall of nixon. by the way, nixon created osha, then the president got rid of -- oh, i'm sorry. there still is an osha what are they doing? what does osha do? >> he also created the environmental protection agency. >> water, air. >> yeah. >> funny things. remember when they mattered, david? one thing that's interesting about this period, david, is you can see the air and the water is

cle cleaner. and the earth seems to be getting a little revenge, but these were really good agencies that both parties embraced for years. and reagan like and i thought reagan was true to the cause i find it interesting that osha has been deneutered at a time when you go to a meat pocking and processing plant and the reason osha was created to make it so people didn't get ill. you know, upton sinclair, these are all things that are the tradition of america that are being rolled back. i'm at times surprised because these are hard right-wing republican goldwater views nixon views that are being rolled back, and i don't know. as someone who found that president nixon was pretty good on these issues, it's interesting to see must be -- must be appalled that you could have these tyson food plants where people are just dropping like flies and the

answer is, get tough get tough. >> well, there has been a significant change in the republican party over the last 40 to 50 years, i think it's safe to say, in terms of the focus there. >> lord john russell >> yeah, as for our focus, i'll bridge it back to stocks we didn't talk much about the facebook quarter we mentioned it briefly at the top of the show along with microsoft. both of which are up facebook, though, the better performer, up over 6%. let's talk more about that quarter. you like to rate their conference calls i would assume you give it a pretty high rating we're still talking about a company or a stock whose pe is in the low 20s at this point they still have 3300 employees to your point, and we heard it a little bit yesterday at alphabet, which by the way, bought back $8.5 billion of stock in the quarter, something we didn't mention. but they gave even more voice to it, which is march, end of march like this, and then april,

things started to come back, didn't they? >> they really did just the one -- this stock was kind of just in a holding pattern that was up. until the cfo said we have seen signs of stability reflected in the first three weeks of april that was it, up 30 points. mark zuckerberg, anyone who reads this, you start thinking, was this the mark zuckerberg that congress was after? was this the mark zuckerberg that both parties seemed to be against? this was a very thoughtful, very good analysis of trying to stay in touch with each other and becoming a medium in a time of isolation that really works for people and that this was one of those examples we mentioned, carl, earlier, of what companies are seeing stabilization and things come back when we thought would be hurt badly because of advertising turn down. facebook is probably exhibit a this is a really, really good quarter, and you come back, you

say you know what, maybe this is what the company was meant to be not a controversial company but a company that was a uniter. maybe it took covid to be able to get its true form what a pollyanniea i have becom. >> it certainly did show the resilience of their model at this point we had focus in part of course on alphabet, on facebook, wondering what their advertising would look like. they did suffer. but it appears not nearly as much carl, a company that is perhaps suffering more, of course, is our own parent company, comcast. the stock is down 6% they added a very strong number of broadband subs. but 388,000 fewer video subs that was more than anticipated disconnected it's getting very close, video revenues to broadband revenues

are coming very close to each other now in the course of the quart quarter. but it's adver tizing, lack of sports programming, sky, the closure of the theme parks in japan initially and of course here in the u.s., that certainly did hit the quarter overall, carl >> yeah. some of the reporting on the conference call on which brian roberts, i guess, spent a little more time than usual some of the headlines, the peacock streaming service pacing ahead of expectations, as roberts said, no doubt our theme parks will reopen, and added, jim, he's heartened by what we're seeing in china where comcast is building a new park workers are back on site doing construction we expect to be open on time and on budget in 2021. it kind of feeds what we have been sort of threading together over the past few days, is that if you're in manufacturing or construction, you're going to get back to work faster than maybe if you're in some kind of retail business. >> right, and i think one of the big themes of this quarter we

haven't put together is that there was a handoff of the baton. the first month was bad in china. the middle of the next month was bad in china, and then boom, china turned around for you because china is in very good shape, and i know that steve bannon may be upset about that, and i don't blame him one bit, but the fact is if you look at what's happened in china, for every single business, you saw that it was a really great month. look no further than kevin johnson yesterday when he talked about starbucks. he's building new stores all over china and i think that a young china did very well. so anybody who has some chinese exposure, it turns out to be that they are the winners. >> we're going to talk to mcdonald's in a moment about china specifically, where 100% of stores, david, are now open, but at least on the conference call, the commentary is that the

traffic itself has been subdued. now, granted, in the u.s., it might be a slightly different picture given the effect of drive-through, which is a big factor in the u.s., but that's going to be a question >> yeah, and one we'll surgery certainly explore with him i thought it was interesting listening to kevin johnson in terms of what they're seeing in china and their expectations here are, and in particular, how much monitoring they were doing, again, listening to fitterling in terms of the road map of how his employees are going to work, kevin johnson and the monitoring they're doing to control the spread very fascinating to see the business leaders in how they're going about doing their work >> you know what, speaking of who is bringing in work, who is doing incredibly well, there's a company that frankly, if you didn't know any better, there is no pandemic. the numbers are this strong.

it's service now and we have to talk about this because it is an amazing moment for a company that has been doing well for a long time, but now it's doing even better let's bring in bill mcdermott for a cnbc exclusive how have you been? >> i have been well. good morning warmest wishes to you and your viewers. >> i have to tell you whrx i read your quarter, i have loved your company for ages, but there is -- this was your best quarter in history how is it possible when everyone is saying, you know what, look, we're not doing as badly as you thought, and we're still holding it together. that servicenow had its best quarter in history >> thank you very much, jim. we're humbled that we were able to help our customers out. you know, we had 11,000 employees work seamlessly from home we were one of the first companies to do that because we're already digitally transformed. but as you know, many other companies are in the midst of

digital transformation there will be 7.4 trillion invested in digital transformation in the next three years, and the company that's in the center of it all is servicenow that's because we are the work flow engine of the 21st century economy. if you think about web, mobile, social conversation tools, they all integrate into the servicenow workflow platform, as does all of the large systems of record in major enterprises. we make that work flow to create great experiences for employees and customers. it's never been more important than it is right now >> i know you're a total team player and you always do that. i know members of your team, who they're worshipful, but you don't like that, but that's the way they are, and one of the reasons they are is because you said you bought a rolodex that would be from s.a.p., that would be second to none. is that why you were up 48% year

over year in million dollar deals? 37 of them >> well, the team did a great job, jim our customers really need us now. i mean, just think about the complexity of the work from home scenario for many businesses what they now need to do, just think of a simple thing like accenture having 500,000 employees. how do you get the tools to them, like phones or computers as they work from home and set up home offices in an instant. you have supply chains involved. you have manufacturers involved. you have legal involved, hr involved, finance involved, all these functions have to come together and use a work flow workhorse to pull this off so i would just say that our customers are the real heroes here our teammates really worked hard throughout 24/7 to deliver. we had one scenario, lowe's, for

example, in the heart of the crisis, they wanted to put up essentially a control tower to take care of their people. and you know, over 300,000 people were on the servicenow workflow platform in less than 96 hours to get the job done so yeah, we did more than 37 deals over a million we now have 933 customers with a million or more average contract value per annum, and frankly, the company stays hungry we stay humble we stay customer focused, and i think that's going to help us go all the way. >> bill, i think obviously, marvin ellison is a great hero to us and what he's doing. he's digitizing a firm that wasn't digitized here's a firm that i think needs to save every penny, chevron they bring you in. what's the roi of when you bring in servicenow? >> it's so amazing this is the big idea any roi with servicenow will

give you a payback of at least five times the amount you invest in servicenow in any given year. so you'll usually see a payback for servicenow in less than six months, and you'll always see one at least in the first year of greater than 5x anything you pay to servicenow. the ceos i talk to now, and i do every day, they're focused on protecting their revenue, not so much growing it right now, it's protecting it. business continuity, keeping the operations going, and driving productivity, but they all want a fast time to value scenario, and that's what we do. we innovate, change business models, and do it swiftly. we're talking hours, days, a couple weeks, not years. >> man, nobody can sell like you, bill. but on that subject of -- on that subject of selling, you know, forward bookings is certainly one way investors try

to value your company. your sales guys, i would think, typically like to go face-to-face with the cto or whoever is making the decisions in terms of buying your services what are they doing now? are they just doing it all virtually? and is it working? >> this is a really important question, carl here's a situation people were concerned initially -- oh, that's david. sorry. i'm talking into a monitor, just so you know. i can't see anything david, how are you, my friend? >> i'm good, thanks. >> here's the situation. great to be with you again here's the situation everybody thought, well, if you have a direct sales motion, it's going to be more difficult in times like this to serve your customers. and just the opposite is true. think about every ceo who is home right now looking for a good meeting think about the management teams who are home right now looking for a good meeting so we're using zoom and other technologies to bring virtual executive briefing center

meetings together. and we can do it at a much higher volume than before. and now, we do all the outside in analysis for a company, in their industry, by solution, by persona, and we compose a solution that is really geared for them they can make a fast decision. and they can do it virtually all the paperwork is done virtually and it's done and dusted here's another example we had an event where we were going to bring 25,000 people together in orlando. that's our knowledge event, biggest event. we do it once a year 25,000 people. and we thought, wow, we have to move it to digital now and what's that going to look like we already have 50,000 people registered we expect to have 100,000 people registered that's a 4x improvement on the attendees for our knowledge event. so i think we're going to learn something from this. people are going to get much more comfortable working in a

virtual world. this social distancing is not going to go away anytime soon. and companies that aren't already digitally transformed and able to pull this off, they have a burning platform now. they have to lean in to this also, on the talent management side, talented people are going to expect companies to allow them to work from home and anywhere, not just for their personal wellness but also for productivity reasons this is a big idea for the modern economy >> bill mcdermott, servicenow. fantastic job. always great to see you. >> hey, jim, dave, thank you very much. thank you. >> carl, back to you >> dow is down 3 gift. let's get a check on the bond market with rick santelli. good morning, rick >> good morning, carl. we have breaking news. if you look at chicago pmi, just released for april comes in at 35.4 that's a bit less than expected but hard to calibrate numbers during this unique time period

in our economic history. that number happens to be the lowest level since march of 2009 let's go to the charts we know that the ecb and christine lagarde have had their meeting. press conference probably ongoing. what's the takeaway? not significant changes. and maybe the biggest issue of all there is will there be a euro bond coming will they upsize some of the relief they're putting forth right now sitting at 750 billion euros. the euro bond is the definitive issue for the day. let's look at our markets, considering the data initial jobless claims, of course, coming in at 3.839 million. if you look at intra day of tens, we briefly traded under 60 basis point. i know that most analysts out there, especially after yesterday's fed meeting, are all looking for yields to go up. there's deleveraging going on in hedge funds. it seems like it should be confunctional wisdom who wouldn't agree

i agree. it still feels as if we're going to test the all-time low yield close on march 9th if we look at what going on in boons, they traded as low a yield as minus 56, but actually, the stability of the bund right now is rather impressive most, we're expecting christine lagarde not to veer too much out of her lane. if you look at the euro versus the dollar, the same scenario presents itself there. here we are getting down to 108-ish and finding support, also very steady for the most part dollar index doing a smidge better the talk of the town is boeing's seven-part deal. they're on the low rungs of investment grade with all the major rating indices my source tells me these seven tranches could bring interest in the 15, maybe high as $20 billion camp even though it's investment grade, the spreads are rich at 550 over they might come down a bit

carl, jim, and david, back to you. >> all right we do want to touch on that boeing deal with jim in a few moments, rick. thank you. >> first, though, fresh off the conference call is the ceo of mcdonald's, chris kempczinski. welcome back good to have you as always >> yeah, thank you, carl great to be here >> everybody is curious about how things have been pacing since the beginning of april and sort of the headlines we're seeing are in some cases literally wait times at some of these international stores open, but other indications that even stores that are open in china are seeing subdued traffic what's really indicative of the overall trend? >> yeah, i think the difficult thing is it's really a country-by-country situation because each country's going through a different level of opening, each country has a different kind of consumer psychology so i think you're right. in the u.s., for example, we have seen the trends,

particularly in the latter half of april, really start to improve. and we feel good about what we're seeing in the u.s. europe, we're just eginning to open some markets in europe, as you know, we had four markets. the uk, spain, italy, and france, that were completely closed we're now just starting to open those. we are seeing strong demand there. i think, you know, what helps mcdonald's in a situation like this is we're a familiar brand, a known brand, but to your point on china, china is still down mid-teens. part of that is those restaurants were fully closed, so when you're fully closed and open back up, it's a little bit of a slower recovery but i think also in china, you're still seeing the consumer is hesitant there. so it's really tough to generalize lots of different scenarios playing out. >> one of the other themes that got threaded out of the call was a pronounced weakness in

breakfast. i'm assuming that's just in a dynamic of employment, right people not on their way to work, necessarily. to what degree is that being reflected, at least in u.s. comps right now? >> yeah, that's exactly right. as people are staying home, you don't see the normal morning routine of stopping and getting a cup of coffee. that is impacting our breakfast business we've been through this before in some sense in that we've closed 10,000 restaurants in the u.s. over the last couple years as part of our experience of the future program when we reopened the restaurants, what we've seen is breakfast is the part that takes a little bit longer to come back because the routines have been disrupted. but breakfast is a critically important business for us. and i'm confident that as we emerge out of that crisis, we'll get it back to the precrisis

levels in terms of percent of the mix. >> it's been a big week of commentary about the food supply chain here in this country are you seeing -- tyson with full page ads in the new york times, are you seeing ads on bacon or pork or bacon or all the above? >> yeah. the great thing about our suppliers is globally we have not had a single supply chain break. food packaging, other materials. we haven't had a single supply chain break throughout the crisis in all 40,000 of our restaurants. that said, the u.s. situation around meat actually north american situation is concerning we are monitoring it literally hour by hour right now we feel like we're in a good position, but there is concern there, and it's something that i think because we're mcdonald's, we have access to all of our suppliers, and we

have a special relationship with them which certainly our expectation is that mcdonald's, they will make sure they do everything they can to guarantee our supply >> chris, great to see you thank you for coming on. jim? >> hey, jim. >> ppp, a great program when it comes to smaller businesses, and you have great franchise e's are the ones hurting going to the program? >> so you're right we've got incredible group of franchi franchisee's most of them are small business owners the average number of restaurants is a handful our franchi franchisee's have. and it tends to be a family business that is handed down from one generation to the next. most of the franchisee's qualify for the ppp program. i know a lot of the franchisee's

are looking into that program and applying for it, and so i do think that it's a very good program. the intent of it was really to ensure that the stability of the labor force, if you look at mcdonald's, our head count is flat to where we were preco-vid. that speaks to some of the actions taken with the ppp programming. >>they're running pictures of the big mac and fries. >> sounds good >> one of the things that we're hearing is because of the way that safety has to be and what customers want, there's been a wholesale desire to get contact lists and to have delivery and maybe a remake of stores to make it so you can do more curb-side. what are the things you're going to adapt to the new world of contactless and the way

customers eat it in the year of co-vid >> you're right. there's a lot of changes that we're making operationally we first started seeing those in china. the china team there did a lot of the early piloting on things like contactless in fact that's been something that's been spread globally. not just contactless gidelivery but if the restaurant is available for contactless take away i think you're hitting on an important point. how does the consumer want to interact with our brand going forward? we're fortunate in that we have a high level of drive through. but i think you're going to see delivery as a bigger part of the mix going forward. i think digital particularly mobile order pay and maybe the ability to go to curb side which we have across most of our major markets. i think you're probably going to

see those grow just as consumers come out of this, and there's going to be a change, i think, in terms of how consumers go about their daily lives, and the great thing about our system is we've got a lot of different ways a lot of different options, if you will, for customers in terms of how they want to interact with us. >> chris, it's funny you mention that drive through, delivery, curb side that makes sense to everybody, but we've been talking about your own efforts to redesign the dining experience for several years now with the restaurant of the future what does that mean for the long-term implications of dine-in? >> to be clear, dine-in is still going to be, i think, an important part of our business, but the experience of the future investment we've made not just in the u.s. but across all of our markets, that was more than just a dine-in that was investing in digital. that was investing in things

like digital drive through menu boards there was a comprehensive investment with experience around the future. i feel great we've gotten that investment largely behind us i think we're in a good position because our restaurant estate globally has been fully modernized so we have a much more flexibility through all these different order points there but dine-in is going to be a significant part of the business still. how significant? i think time will tell but i'm glad that we did the investments that we did in the dine-in. >> 6 .5 billion in new debt financing in the quarter i guess what does liquidity look like at this point, and can we -- when do we start talking about buybacks resuming, if at all. >> well, we came into this crisis in a really strong position our balance sheet was in a really good spot we were triple b plus. as the crisis hit out of

abundance of caution, we wanted to make sure we had full flexibility and so we went out and did data issuances, raised another 6 .5 billion we have another 3 billion revolve we haven't tapped yet. for us it's about making sure we have flexibility to meet all the needs of our stake holders and ensure franchisee's have liquidity, keep our people safe, and make sure we're able to fulfill shareholder's expectations i feel good about our liquiditya ways away. i would say we're not thinking about it in the next year plus as we get a -- better sense of what the world looks like. >> speaking of spending, you

reduced your cap ex by 1 billion. what investments are you putting off as a result? >> as we looked at different ways to ensure our liquidity, cap ex was one of those ways we were spending a lot in finishing off the experience of the future in the u.s. the prudent thing to do as the crisis hit is give our franchisee's more opportunity to do those over an extended period of time. a number of the projects have been pushed off to 2021. that represents, i'd say, the bulk of the $1 billion reduction in capital and then going forward we're going to continue with new unit development. there will be a pause in new unit development right now in 2020, but we expect to get back to new unit development in 2021.

>> chris, it's been interesting. we've seen in qsr much smaller players admittedly, but national brands try to make an effort to diversify into grocery you have a burger kit you sell direct to consumer and you can make your burgers at home. is that anything we can ever expect from mcdonald's >> we are focussed on being a restaurant company it's what's really been key to our business we do have a grocery business in coffee around the coffee business, but you should not look for us to do a broader push in terms of getting into the grocery business we're really focussed with our franchisee's on driving the restaurant experience. >> chris, how about plant-based? the time has come. i know it's hard to get to franchisee's involved. you have that canadian experiment, but wow, people love this

millennials, they're crazy for us what are we doing here >> i know this has been a favorite topic of yours, jim, i think over time you'll see plant based on the mcdonald's menu the question is about when our system operates best at scale. we don't do hobbies really well. and so when we bring plant-based on to the menu, we need to be confident there's a sufficient level of demand that really will allow it to stick on the menu. so that's going to be a country by country decision. i think there are going to be some countries that are further along on that than others, but i expect we'll have plant-based on the help you it's just a -- menu. it's a question of when. >> my vegan daughter would say hobby? how about ethos. when you talk to impossible, it's ethos at what point do we admit the

next generation are not hob yiss, they're idealists? >> well, you're right. part of our determination is not just sort of what we sell but also what we represent as a brand. i think we're really proud about what we've done around our sustainability commitment as a company. we've made a significant commitment around carbon reduction in line with the paris treaty we've done a number of things around improving packaging we were the first to get out of styrofoam. there's a number of different things that we need to do as part of our commitment to sustainability, but i think i would tell your daughter she can be confident mcdonald's is going to be leading the way in terms of helping us get to a more sustainable future, and again, i think plant-based is going to be part of that the question is just when. >> chris, we just had a big discussion with the ceo of dow

and with jim as well about employee safety and mask requirements for employeesand customers what's going to be standard? i see in asia, you sign a form before you go in and then you get your temperature taken thoughts on that, and then also thoughts on liability protection what's needed for big business >> right keeping our crews safe is mission critical you can't run a restaurant if you're not able to keep your crew safe. that's a huge focus. we've sourced 120 million masks that are already out in our system i think what you're referencing here is really the fact that the standards around ppe and what's going to be expected, it does vary country by country, and it varies even state by state, and so part of what we're trying to

do is really ensure that we've got the flexibility, but i think the other thing we're really doing is working with the health care experts we have a group of advisers working with us to give us recommendations so that we're not just sort of taking what a government might say, but we're also really looking at it through the lens of what do we think is required? i think it's safe to say there are going to be changes to how we run a restaurant to provide a safe environment some of it is a function of how quickly do we have antivirals and a vaccine? it's a really dynamic situation. but it will vary market by market, country by country >> finally, chris, before we let you go you know, in the old world every quarter people paid attention to through-put. how many customers could you shovel through a restaurant in a given hour service times.

obviously a huge metric for an engineering company like your own. how do we think about that number in the future >> i think those metrics are still going to be important metrics for us going forward for 65 years mcdonald's has been built around serving great-tasting food, fast at a good value i think those elements are going to continue to be critically important to our success the ultimate barometer of really our brands pull, if you will, or the strength of our brand is just how many people come into our restaurants. and so guest counts, traffic, the traditional metrics, i think they will continue to be important. it's obviously right now difficult to really point to those, because there's so much noise in the numbers, but i think as we get on the other side of this, those are going to still be important metrics >> chris, we're always grateful for your time. it's good seeing you again

>> thanks, guys. take care. jim, what's on mad tonight >> we have ju niper and a line i hate wearing this. my wife says i look so much older. it's embarrassing. it's necessary this is just an office >> jim, you've been tweeting photos of yourself with one, and now on tv. it's -- >> i was scared to death about co-vid no one thought -- people thought i was crazy. scared to death about don't want to wear a mask wear a mask. it's okay. >> we'll see you tonight mad money at 6 p.m let's get over to sara good morning, everyone if you're just joining us, thursday i'm sara eisen with carl quintanilla and david faber from

separate locations breaking news out of the federal reserve it relates to lending programs steve liesman has the details. steve? >> sara, thank you the federal reserve announcing it is expandingthe not yet but hopefully soon to be launched main street lending facility this is an important development. it's lowering the minimum size of the loan to 500,000 from $1 million and expanding the pool of businesses that will be eligible to borrow once this thing is open. for example, businesses with 15,000 employees are now eligible that's up from 10,000. also it has a higher revenue cap than before. it's also adding this third loan option it's really interesting for companies that have more debt. i don't know it's possible that maybe the oil companies have even too much debt for this or even the private equity companies it's a question that needs to be answered as to whether or not the main street lending facility

might now be open to some oil companies, maybe some private equity companies depending on their level of debt. yesterday i asked steve mnuchin about how much risk with the taxpayer's money is he willing to take on and address this question that the fed wasn't taking enough risk here's his answer. >> there are people who have said, you know, i should price this so that we lose all of our money. so that we support these markets. the $450 billion are not grants. they are money that i invest in these facilities to create credit support i think it's pretty clear if congress wanted me to lose all the money, that money would have been designed as subsidies and grants as opposed to credit support. >> the 450 he's talking about is dolled up into pieces. it's leveraged up 8 to 1 and

becomes $600 billion worth of lending. the question is should it have been ten to one or could it be higher than that could they take more risk and get more money out to people maybe lose a little more but maybe help more companies now? >> steve, it's david, i had a quick question it's interesting this continues to expand i mean, there was concern initially, of course, about those noninvestment grade companies that did have more than -- that had almost 10,000 employees or had a large revenue base and now it just keeps expanding at this point to try to i guess incorporate as many companies as possible whether big or small. >> it's absolutely right, david. i think what they're finding is you've got the ppp program over here, the paycheck protection program, that's for companies with 500 or fewer. now they've got this other program that the fed is going to do, but remember, these are loans, not grants.

these are going to be live loans there. there is a deferral. the terms are up to four-year loans. they are expandemicing -- expan it there's a question of whether or not the companies out there are going to be able to use it chair powell yesterday stepped to the microphone and said if you can't pay back this loan, this may not be the facility for you. and several times in that press conference, david, he kind of sounded like he was appealing to the treasury secretary or to congress to put even more money into get more business help. >> steve, does it come with any strings attached like keeping people on the job which is obviously critical part of the other stimulus program or the relief program from the federal government >> sara, i believe there are certain strings attached i don't want to misspeak, because they just laid the terms sheet on me. i think there are some strings attached that come from congress

that have to do with not lending to the trump administration. there may be some dividend and share buyback strings attached i'll send you an email own go on air and explain what strings are attached about ploichemployment i think there was something earlier about taking reasonable efforts to retain employees i don't think it's the same as ppp that says if you use x amount for the paycheck, then the loan is forgiven that's not in this this is a regular loan >> steve, thank you. let's bring in mike. as steve was reporting this, we've heard from the ecb president who made an appeal to fiscal authorities that you also need to help in fighting the economic weakness that the euro area economy would contract as much as 12% this year. how is that all factoring into the trade this morning >> i think it's an important

part of the context for what's going on in general. i think it was kind of the premise already of this rally we've had for five weeks that central banks are going to the extent of their powers basically. and you know, even if jay powell sounded net dovish for a longer period of time, i think a lot of it was in the assumptions of the market right now so not a negative, but just not necessarily an incremental new news, and maybe also provided a reminder when he's talking about this being an episode that creates an impaired economy over the medium term as opposed to short-term, maybe a stop and think moment for investors who have spent the last few days at least trying to rush to that point where it's kind of almost pricing in a relatively brief downturn or at least can try to start handicapping with the restart looks like this rally has been so much stronger than one might expect it's about the strongest rally ever after a major decline

now we're post fed, a new month of may really good earnings good headlines on drug development. and you wonder in the very short term if there's enough some of to take the rally further so it makes sense that we're backing off a little bit this morning. >> i think one of the key questions as it relates to that is how much can the federal reserve and the federal government really do to stem the decline? you get another 3.8 million americans filing for unemployment next week's job report is going to be ugly this is happening. the stimulus and the relief is happening at an unprecedented scale from the fed and government, but how much can it actually do to stem the tide of what we're about to see for the economy, and for the virus which we have no idea exactly what the path is going to look like once we start reopening? >> exactly no, i think that's the right focus. in other words, what the fed and what treasury are trying to do is try to bridge businesses and

consumers to that point where they don't have as big of a hit to their finances by the time things restart, but they have no influence over when we restart or what the strength of that recovery looks like. so that's why it's a matter of hopefulness that perhaps when you look at the programs for unemployment and the checks that went out to people, the idea that let's hold them harmless for this stretch of time, but how long is that stretch on time and is it going to be long enough to buffer the economy so all those things undetermined it's clear the market has been really eager to rush to a spot where we could start talking about hey, here are the businesses that don't seem very affected the nasdaq is outperforming after a couple of days of taking a backseat those companies seem like they're okay, and then, of course, it was a revival trade in the rest of the economy of the markets where people said maybe we've been too pessimistic about the pace of things i think that we don't know and the market is laying its bets along that spectrum each day

>> yeah. although there's an interesting play book right now out there. tom lee is a good example where the changes, the cost cutting y the changes in operating leverage in consumer discretionary, which seemed to be the most dangerous place to go, and his view makes the returns most interesting i wonder if you think that's too dangerous. >> i don't know about dangerous. i think it's -- it can be somewhat aggressive. obviously it depends on where you're looking within consumer discretionary. amazon is 40% of that sector at this point if you're looking outside of amazon, sure, i guess you can see if you were concerned this year that the big head wind for companies was going to be labor cost and profit margins, that's not the came right now it does relate to another storyline which i think is starting to get some pickup which is let's give everybody a reset. companies are going to basically find the right expense pace. we're letting everybody off that

sort of earnings management guidance, treadmill, and maybe that's a good thing. and we can just sort of pencil in whatever we want for 2021 i don't think the market got cheap even at the lows so you have to go through those exercises to say if the trajectory look okay, liquidity is massive we have negative real interest rates so equities can do okay in that kind of environment >> right on that point, that's sort of what jim paulson said this morning on squawk. when you consider the changes in the ten-year yield, from a year ago, when you consider the changes in central bank support, he said in his words, it's not a gross violation that you're within 15% of your all-time high >> i would say that's correct. it's not necessarily some kind of outlier result that we are only that far from an all-time high i would add that if you believe as history shows the market does best when things are really bad, getting less bad, and when we

get central bank support that is arguably in excess of what might be needed for the corporate sector which maybe that was a story of last year, and who knows. it might be this year. then that's when equities tend to be the beneficiaries. all those things working in favor, i don't know if that means it's the right price it wouldn't be an injustice because there's a wide range of potential outcomes >> you talk about the market and the s&p, but we seem to be dominated at this point by what five or six names. i add up microsoft and apple alone market cap, 2.6 trillion that's about 100 dow chemicals. >> it is it's extremely skewed and concentrated on the other hand, the story of the last few days has been people betting the field against the favorites. so it's if you look at the equal weight of s&p, it had the greatest outperformance over two days versus the market cap

weighted version since 2009. i think it's if you're bullish and the big guys go up and then too much relative to the other stuff, it's like the slinky is walking up the pairs it's like the big guy is walking up the stairs. that has been the story of this last little stretch of the rally. >> i mean, for this week, energy is up 11.5% to that point, and russell 2000 index of small caps is waking up >> right there's like this mean reversion trade that just kicked in because things got so stretched. and that can happen two ways it could happen by amazon, microsoft pulling back that's not been the way. this is just a relative story right now. and honestly, how does that happen it happens when there's a mass rush to cash and a bulge in money market funds and as the market kept rallying, people feel underinvested. that's why you've had this chasy market over the last few days.

i think at some point that culminat culminates we'll see where it settles out from here. >> i would only add the money has been rushing into bonds like it's been rushing into stocks. there's a caution point that the ten-year yield is below 6.8% not necessarily getting the memo we're going to v shape recovery or things are looking great. mike, thank you. we'll talk to you a lot later as well still to come on "squawk on the street," f-bombs and putting the pedal to the metal we'll break down another testeaings call from tesla and elon musk. stay with us - [narrator] at southern new hampshire university,

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tesla reporting earnings yesterday. stronger than anticipated, and, of course, elon musk delivered another colorful conference call let's get to phil with all the news for us. >> nothing like a good f-bomb to spice up a conference call we heard that from elon musk last night we'll talk about the comments in a moment the stock trading over 800 for the first time since february. surprise earnings pop. many people expecting a loss for the first quarter. and the bull narrative is what you're hearing from analysts this is elon musk on the conference call last night >> while other companies are cutting back on invest

we're pedal to the metal on the new products and expanding the company. >> there were no comments and no clarity at all in terms of the guidance for deliveries this year still remains at over 500,000 vehicles many people thought it might come down because of everything happening with coronavirus and the fact that the plant has been shut down since late march. elon musk did drop the f-bomb in reference to the shelter in place orders in california here's why he believes it's a real problem for his company and others >> if somebody wants to stay in their house, that's great. they should be allowed to stay in their house and they should not be compelled to leave, but to say they cannot leave their house and they will be arrest first down they do, this is fascist. this is not democratic this is not freedom. give people back their freedom

>> no indication when the production will continue in california >> it's interesting to juxtapose with that mark zuckerberg who last night made an unprompted comments he said i worry that reopening certain places too quickly will almost guarantee future outbreaks and longer term worse economic outcomes. i guess it's easier to work from home if you're working for facebook than if you're working for an auto maker like tesla >> it's a real challenge for the manufacturing companies. because as they bring people back in, not only are they worried about the health and safety of their workers but the productivity is not the same rate as before t not going to happen. especially in an auto plant where so many people work so closely together building a vehicle. if you have to spread them out so they're not interacting as

much, it slows down the productivity i'll be curious how that changes over the next several months >> all right tesla is up almost 5%. phil, thanks time for our etf spotlight today we're looking at the semi conductor index. up more than 15% for the month one of the group's biggest holdings is qualcomm reporting an earnings beat last night. the company saying it sees a 30% drop in iphone shipments compared to previous expectations for the next quarter. the stock was up last night after hours. down almost 2 %. an exclusive interview with the qualcomm ceo in the next hour. stay with us on "squawk on the street." the dow is down about 264 points the nasdaq was positive. it has lost a little bit of steam. down about a third of one percent. we'll be right back. since 1926, nationwide has been on your side.

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forecasters predict april sales fell 53% from year ago levels but april is likely to mark the bottom for auto sales. macy's plans on opening 68 stores monday in states that have loosened the restrictions another 50 locations are scheduled to reopen on may 11th and the ceo expects to have all stores back open in six weeks. however, in massachusetts a walmart has been closed after 23 workers tested positive for the coronavirus. local officials say all 400 employees must be tested before that store can reopen. as always, for more on our coronavirus coverage, you can head to cnbc.com sara, back to you. >> all right sue herera, thank you. ceo of kellogg is just moments away after the first company posted a very strong quarter of sales as americans stock up on packaged goods at eithr grocery stores we'll be right back. fty dollars. eighty dollars.

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how the u.s. handled the reopening of the economy could tell us whether the lows have been put in for the market find out more on trading nation. more "squawk on the street" coming up. when the world gets complicated,

a lot goes through your mind. with fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. that's the clarity you get with fidelity wealth management. welcome back to "squawk on the street." a lot of talk this morning rick santelli mentioned it on his report in the last hour about boeing and a potential bond deal there. i have some color from people who are obviously in the market,

involved in putting together what might be one of the largest financings we have seen since this crisis began. let me give you color here we spoke to dave calhoun yesterday, the company's ceo he didn't commit on where the company was focussed for raising liquidity, whether it would consider some government programs that are available or go solely in the bond market if they should choose the bond market solely, it appears they're going to be well-met i am told by people familiar with the situation that demand for the paper that would come at the five-year, seven-year, ten-year, 20-year, 30-year, and 40-year maturities could add up to as much as $75 billion. boeing is not going to go to the market for $75 billion i'm told they were looking for what could have been up to as much as $20 billion in capital ha they would be raising in the bond market.

but perhaps given the significant demand, they may, in fact, even increase that if they're looking for making sure liquidity is off the table is a question, perhaps boeing and mr. calhoun will choose to say we'll come for 25 billion. it appears they will be able to get really whatever they would want at this point at those maturity levels in fact the pricing that i'm hearing right now is somewhere between treasuries plus 500 basis points or let's call it between 4.75 and 5% yield on the benchmark maturity for the company and they have access to durations across the board it would appear at this point. so sara and carl, right now it would appear boeing in a very strong position in terms of it looking at the market and how much it wants to raise and doing so, frankly, at a price that is quite reasonable one would say, let's call it 5% of ten-year

money. maybe a bit less and looking at 5, 10, 7, 30, 40 year maturity with enormous demand >> you know what's interesting it's boeing today. it was delta a few days ago. carnival a few days ago. these companies were caught right in the middle of the storm from the pandemic and all companies mentioned as being recipients or potential resilients of government relief. all of them speak to the fact that the credit market is so much healthier than it was in that mid march period where the market was selling off and we saw some real blockages in terms of bond market all of these ceos need to write thank you notes to the chairman of the federal reserve who hasn't even stepped into the corporate bond market yet but through signaling they were going to expand their program to

try to keep borrowers borrowing and lenders lending by entering the corporate bond market are able to do that and able to raise much-needed cash and get access to liquidity during this tough time i think it really speaks to what the federal reserve has been doing to try to get the system moving >> no doubt. boeing raised what, i think it was 6 billion. here we're talking about a far larger amount of money for a far larger company at least 20 billion or they were looking for up to 20 they could go higher than that if you're dave calhoun, it's an interesting decision in terms of do you want to take it off the table in terms of everybody questioning your liquidity take 25 billion, perhaps, if you could get it at these prices that they're talking about and not have to worry about potentially coming back at some point to the marketplace for additional funds you know, yesterday he was talking about not being able to get back to previous levels for perhaps as long as three years,

maybe even longer than that. but toyour point, sara, the bond market is wide open you obviously have been talking about where the ten-year currently is in terms of the yield continuing to come down near the lows. but still, being able to borrow at all those maturities. let's call it around 500 basis points on average. the ten-year level would be seen as a victory and again, i'm told as high as $75 billion in potential demand right now, at least, for whatever they decide and carl, they're going to have to make their decision today we should know more about this as the day goes on >> yeah. all right. i did say s&p formally rated the unsecured triple b minus as for the equity, $89 on march 18th, now $143 at liquidity concerns are pushed to the side for a bit a lot of discussion this week about the food supply in this

country. it's true processing plants hold all the cards but if ranchers and farmers go bankrupt, we'll have less meat jane has more on that today. >> reporter: i'm at underwood family farms with all the talk about the meatpackers and they're problems, they're enjoying huge margins. there's a lot of consolidations. ranchers complained they control the market and with plant closures, they're still getting margins of $1,000 per head this week where there are no margins is the last step before the packing plants, the feed plants like this one some of these feed lots cannot sell any of their animals. these are where animals go for the last six months of their lives. the national slaugter is going to be down 36 % this week from a year ago because of plant closures to only 450,000 cattle. this company is losing 300 to $400 per head.

>> the issue is the kalcattle continue to put on pounds every day. if we can't get them slaughtered in a timely fashion, they get too big on us. >> and when kalgt get too big, it costs more to feed them and more to slaughter them and you the consumer end up with a huge fred flinstone brodinosaur steak basically they're saying the aid to the feed lots is capped at a point where many of them may go bankrupt we'll eventually perhaps have a meat shortage, though right now we have a glut back to you. >> jane wells, thank you coming up, we're going to continue the conversation about foods, ceo of kelloggs fresh off the rngsestseain rul we'll be right back. ♪

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with the pandemic changing the american onsumer's eating habits, packaged food stocks like kelloggs have been on a tear since the middle of march the stock up 16% since march 22nd kellogg's ceo joins us now fresh off the earnings call. steve cahillane, thank you for joining us strong sales over the past quarter. especially over the past month tell us a little bit about what you saw from the consumer. >> thanks, sara. thanks for having me first, i'd like to start by talking about what the most important priorities are for us, and that is how we can deliver in the marketplace keeping our people safe is and has been the number one priority getting food to the marketplace in the most efficient and effective way possible

allowing us to perform in the marketplace. and then finally giving back to communities which is incredibly important. and that's allows us to keep our factories running really flat out around the world 24 hours a day, seven days a week breaking production records each and every day. i couldn't be more proud of our supply chain team and what they've been able to do. what our suppliers have been able to do in getting us the raw materials and what our customers have been able to do in terms of keeping their customers, consumers safe, operating in this incredibly different environment. what we've seen is companies like ours are really being sought out by consumers as obviously shelter at home. they look at brands they trust they look at affordable foods that are convenient. and so we have seen an incredible rise in demand, but it all happens because our people are safe. they're able to operate. our customers are leaning in with us.

creating this environment that nobody could have predicted a few short weeks ago. >> nobody could have predicted 45% growth in consumption for eggo waffles in the month of march. the question that investors have and you must be trying to figure out is how long lasting is this kind of bump and the return to growth for businesses like cereal or frozen foods which were so weak before this crisis, and now have some life, but as the economies start to reopen, we wonder if you can still continue to grow in those kind of categories in. >> yeah. it's an important question, and one that we're spending a lot of time studying. and so what we do know is people are obviously not only buying our products in much greater rates but they're also consuming them so it started with a real pantry load, but the food is being eaten. and it's being eaten in ways that are leading people to reappraise the category, to

discover the category, and so if you start with ready to eat cereal, one of the interesting things we're seeing is increased penetration across all demographics, across all cohorts, and we're also seeing consumption increase in different occasions. and so one of the number one occasions that cereal is growing in is cereal for dinner. and so it's growing at breakfast. at double digits but it's growing as a dinner replacement as well and a smack. we're seeing growth kroesacrossl occasions. our strongest most loved brands are growing the most how much of this sticks? obviously it's an important question but we're working very hard to not only make this an accident where people are eating more of our foods, but having a purposeful program where people will stay with our brands as things get back to normal. now, when they get back to normal and how quickly it happens, it's going to be staged nobody really knows, but we can expect that people will be eating more meals at home for

quite some period of time. >> is there any way to tell whether people are eating cereal, whether it's for breakfast or dinner because they want to or because they have to? >> well, most of our data suggests because they want to. now, they're at home because they have to so it's a bit of an intricate question but when they're at home, they're eating cereal multiple times a day and doing it because they want to so they're home because they have to be and they're eating cereal because they want to and they're rediscovering the joy they have in cereal, the appreciation for how convenient it is some of the things that we're picking up are how easy it is to clean up and so people are making a lot more meals at home, and they're doing more dishes. they have time to do that, but they also look for things that are convenient that require less cleanup. another thing we're picking up is it satisfies the desire of the entire household

kids love it parents love it. it makes the whole family happy. and so i know in my household, it's hard to find something that everybody likes. all my children like broccoli. i don't. but everybody loves cereal >> although, steve, i don't know i don't want to speak for sara, but what she might have been getting at is over the longer term, strain on household budgets, there's been some data points out of restaurants where they're seeing stimulus checks now being used in the month of april. i guess what does that mean for pricing over the medium term, and the longevity of say premium products versus cheaper options? >> yeah. you know, it's obviously as i mentioned, watching the unemployment figures climb to the levels that they are is just heart breaking right? and so my personal thoughts and prayers go out to everybody who is going through these trying times, and we're studying as a company what happens during

recession environments it's obviously what we're in when household budgetsbecome very strained. and one of the things that people go to is what's economical and cereal tends to be, and our snack business, our frozen food business, you mentioned eggo, all tend to be affordable at home foods, and so one of the things we've learned in past recessions is companies and brands that hunker down and don't invest in their brands through brand marketing and innovation especially, don't win. but if you continue to delight your customers and innovate despite tough environments and really focus on the affordable nature of your food offering, and ready to eat cereal is an incredibly affordable meal solution, it's a winning -- it's a winning hand and so it's a terrible crisis that we're going through, but we're going to be there for our communities. and our foods are going to be there as very affordable solutions for all families all families in the united states and around the world.

>> so why did you reaffirm guidance why did you keep it the same despite 8 % organic revenue growth >> our environment is uncertain as you know, and we're one of the few companies that actually affirmed guidance versus withdrawn guidance i understand why companies they are withdrawing guidance, because the future is uncertain. we have a firm guidance because the first half of the year, you know, our sales are quite strong and we're not sure how long that continues an at what rate it continues. we have a degree of confidence in our business, but we also know that the second half will not look like the first half and we're deferring investments we would have made in the first half of the year to the second half in the first half we have very high sales, lower investments. in the second half we may have lesser sales and higher

investments. we have emerging markets where we have, you know, significant businesses that are also uncertain and so we think it's the prudent approach to affirm guidance, not do anything other than that, and make sure we have the financial flexibility to do the things necessary to continue to build a stronger business so that when this is all over, our business is stronger than it was when we went into the pandemic >> you just mentioned deferring some investments how have plans changed, marketing, for instance? how much are you pulling back on advertising where you would have normally done, potentially delayed any product announcements or new innovations? how have the plans change? >> yeah. so it changed dramatically, obviously. for us and for everybody, really one of the investments that significantly has gone up is our investment in, you know, new safety procedures, tpe equipment, bonuses for our frontline workers, benefits for our frontline workers, so that

was a significant investment in the first quarter. it will be a more significant investment in the second quarter. our first quarter brand investments were actually up year off year because the pandemic hit so late and we were, you know -- our business underlying business was very strong in fact we would have had the best top line performance that we've had in a number of years, even before this, based on the investments that we've been making in our business the second quarter likely will be lesser because it's a supply market we're supplying everything that we possibly can and we're deferring some investment to the second half when we anticipate it will become more of a balance between supply and demand type of marketplace the first half will be a first quarter that was normal up until really the last two weeks of march, a second quarter that will be dramatically different, and really characterized by more supply driven, less demand driven, hence less commercial activities and commercial

investment and a second half which we aim to make a little more normal. again, there's so much uncertainty in the marketplace that we feel like we should get credit for at least affirming guidance and not withdrawing guidance that's in the context of how much uncertainty there is in the world today. >> is i think you are getting credit your stock is up 3.5%. thanks for joining us. >> thank you, guys, very much. stay safe. appreciate it. >> ceo of kellogg, carl. we've always done breakfast for dinner including cereal, not just during these times. >> right now you have company dow is down about 215 as boeing is in the lead up 3% when we come back we will get to former ecb chiefea jn claude trichet. don't go away. ♪ ♪ ♪

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let's get to rick santelli with jean-claude trichet hey, rick. >> thank you, carl yes, i would like to welcome former ecb president jean-claude trichet. mr. trichet, i thank you for joining me we've been waiting with bated breath and let's get into it eurozone gdp contracts at 3.8% the fastest shrinkage on record going back to mid '90s france down 5.8% that's the worst deterioration in gdp since 1949. of course we see that there is nothing showing up on the euro bond from christine lagarde. what do you see regarding the economy and how do you think christine lagarde and the ecb have been proceeding >> of course the economy is shrinking and this is the consequence of the confinement as we say, so nothing is

surprising and we have to expect even more contraction and i would say everywhere, frankly speaking, perhaps from the asian countries. second remark, the ecb has confirmed its own total determination. i was recomputing what christine was saying with regards to the purchase of securities and until the end of the year, 1 trillion euro purchase program. there was total flexibility in the use of the pandemic emergency purchase program, which this flexibility is very, very important in the president juncture and there has been also a number of additional elements that were also important, in particular the famous targeted long-term refinancing, which is now at the level of minus 1% for

new lending, the interest rates that the banks are refinancing with last point, the attitude of the governments and thens t the mese is clear, that the present blockade on the financing of the recovery program, which should be very, very important, the present of the commission mentioned a 1 trillion euro recovery program, whatever the amount, it would be very big, but it has to be decide upon whatever the final thing, it might be euro bonds or another way of finance, this recovery program, i would say the important thing is that it is decided and it is not yet the case, but i would urge myself

and christine lagarde was really, really clear on that, the european government, the heads of state and ministers, to decide upon that >> we only have a minute left, sir. we have to answer this quickly many believe that the chances of the euro surviving have gone down a bit, considering there is no euro bond/corona bond it seems the dutch and germans aren't happy with it your final thought whether those countries are going to at some point concede the notion that shared debt is what's going to ultimately save the eurozone and potentially the euro your final thoughts? >> first, there is not only the euro bonds to finance joint, collegial recovery program you could do that also through the budget of the commission you could do that through some borrowing of the commission itself that isn't why i say let's not

be blocked on the euro bonds the euro bonds are not the only way to finance what is needed, and i am confident that they can deliver, but it has to be done as soon as possible. >> excellent jean-claude trichet, i thank you for joining me stay safe. carl kiquintanilla, back to you >> thanks. rick santelli. good morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt coming to you live from various locations. moderate losses on the dow down about 1% off of session lows which was down about 378 earnings are the big story whether mcdonald's or twitter or facebook or microsoft, tesla, comcast, our parent, morgan, and we're starting to try to dig out some trends here one is obviously signs of hopeful stabilization in the month of april while looking at efforts to rein in spending and in the case of boeing,