good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber live from separate locations as we kick off another busy week of earnings and a jobs number on friday dow futures down about 200 reflecting in some part warren buffett's comments over the weekend about not seeing anything attractive in stocks and the president's comments on china last night oil is slightly red despite indications that gasoline demand ticked up this weekend, jim, as some states continue to get that

reopening process going. >> look, it does feel that there is a very self confident sense by governors that it's time. i think that the president is so oriented towards it's time, and the president is soed ed ed eet in having a vaccine by year's end, that there's an element of two different worlds here. there's the real world influenced by the president saying open it up, people want to do it, and the stock world influenced by warren buffett who said i sold the airlines because that industry has fundamentally changed. it's a big gulf. really the largest i've seen amazing. david? >> sorry, carl we've been talking about that for weeks.

the many phone calls that you or i will have with business leaders who are focused on maintaining their liquidity, focused on just being around to fight another day come the end of the year. the many ceos who join us on air who constantly talk about their businesses not coming back to the levels they were prior to the virus for maybe two or three years. now they may be underpromising on the hopes of overdelivers, even if you discount that there's been a disconnect for some time between what the economic landscape appears to potentially look like, though so much is unsettled and what the stock market suspecting. >> that's why i loved the interplay with becky and warren buffett this weekend and his discussion, candid discussion about the airlines if the airlines are fundamentally changed what that says -- in buffett's eyes, what that says is there's a lot of

industries fundamentally changed. i keep coming back to that moment when gary kelly said if there's nothing to go to, why should the airlines do well? if he said stick by the airlines, there's going to be a recovery, that might have influenced my thinking i thought he verified what dave and i are hearing, which is guys, if you think it's going to come back, you got it really wrong. maybe they're doing some under promising, but you layer it on with the president who was so, i believe, overpromising i'm not fake news, but i'm listening to every single ceo that really believes in the drug industry and that we can do vaccines to scale. i feel like buffett's overview on airlines makes me very concerned about the near-term. >> yeah. as a backdrop, buffett has a long history in having his

thinking evolve when it comes to the airline business usair back in the '90s left a sour taste in his mouth about that he came around to them over the last five years and he talked about a mistake. take a listen. >> the airline business -- i may be wrong, i hope i'm wrong, but i think it -- it changed in a very major way it's obviously changed in the fact that four companies are each going to borrow perhaps an average of at least 10 billion or 12 billion each, you have to pay that back out of earnings over some period of time you're 10 billion or $12 billio wos worse off if that happens. in some cases they are selling stock, selling the right to buy stock. that takes away from the upside down i don't know if two, three years

from now that as many people will fly as many passenger miles as they did last year. they may, they may not the future is much less clear to me about how the business will turn up through no fault of the airlines themselves. >> i thought that was devastating. remember, southwest air was able to sell 70 million shares at 28.50. united sold 39.35 at 6.50. those are critical levels. the fact that he went on to say there's no reason to own them, so what's the point of just selling some of them made me say i think they very much are a microcosm of a big chunk of the u.s. economy, not the world economy. i came away thinking the longer term story of comeback is very much in play that's not a lot of analysts

thinking even this morning only dow chemical and bank of america are talking about a longer-term decline. most analysts are trying to figure out if it's going to be a "v" or a "u" still the discussion warren buffett had suggests a very elongated "u" or an "l." he just gave you -- how about this, no hope near term. anybody agree with that? >> yeah. >> sounds accurate to me >> yeah. >> jim, the administration -- larry kudlow last week was positive on the prospects of a quicker recovery i have not heard that from many business leaders at all. "l"s, "u," nobody is really talking about a "v" anymore, are they

>> no, i would say there's a huge chunk of the s&p that is chugging along because they're either taking share from industry groups. there was a critical moment when buffett talked about the industry went away that's great for alphabet and facebook we listen to these drug companies and their quarters, their quarters are extraordinary. they have not even benefited from the idea that a lot of doctor's offices have been closed that will now reopen. so there's plenty of stocks to choose from. they are not a large part of the s&p. i thought that question that becky asked warren about, whether he's still sticking by the s&p, warren took it as yes versus any fund that takes a percentage or whatever but i think that just the s&p set up for -- it's more of an active index than people realize. they have good companies, but in a pandemic many companies in the s&p would cease to exist i think that's fair enough to

say. >> so, jim, when you assess sentiment this morning, is it about buffett? is it about wider delineation between a reopening and an economic normalization is it about the president's comments last night and just inflaming already existing fears of u.s./china trade tensions >> i was all for taking on the chinese when our economy was robust i think the communist party has bad actors, not the chinese. a lot of them love americans, but it's really important to recognize the president now seems to want to raise tariffs for the 30 million people unemployed that is 1932 i was happy that we raised tariffs when the economy was humming. i do believe the economy these again -- i don't know what happened in wuhan, nobody knows, but i don't want to take them on right now. the president acts as if the economy is doing great, or that

it's going to come right back. we have to be careful. o there are historical paradigms that are very bad when the economy is doing poorly and you raise taxes. that's not fake news, that's history. >> right the fact is the chinese economy is recovering, it's not as clear that the chinese consumer is willing to spend we're seeing that in the early numbers for regions and parts of the economy, now that much of it is reopened but they are coming back more quickly perhaps than we will. that's yet something else we'll be looking back at and wondering about, how quickly they were able to rebound versus how long it will take us to and the rest of the western world to a certain extent though there seems to be no doubt that many companies are focused on supply chains, and trying to figure that out. perhaps changing it in a way they even had not thought about during the height of the trade war with china >> it is interesting to see how many companies had these really

awful supply chains that are rooted through china and i'm glad we're speaking to marc benioff, the ceo of salesforce, so many products start in china or were routed through china and the president is saying get out of china it's going to be hard. china really hooked us now, look, most of our companies are about making as much money as possible and china was the cheapest producer. when you think about it, you think apple. that stock was doing very well until the president really went blister about china. pompeo's comments this weekend basically saying it's a vast international conspiracy by the chinese against the rest of us i don't think it's a vast international conspiracy i think the bats got too close in the wet markets if he wants to build a case to try to get it so people don't want to cooperate with the chinese -- again, that will cause a lot of problems with our companies. i don't want to represent

earnings per share versus patriotism, but we have to recognize what was said this weekend was chilling >> it's not just earnings per share, but this reuters report about the administration "turbo charging initiativesinitiatives back supply chains, it's all the things that made us want to get supply out of china the first place 30 years ago >> the questions were pretty good in the lincoln memorial -- what do you -- i don't know, the live show. there was a moment when someone asked about pills. look, the pills, many of them are not made in india, they are made in china. i wish the president were more targeted that is a supply chain that they have that they have really, really got their hooks in us but i do think that over the weekend, i said here it goes

this is escalating at a level that we didn't think was going to happen with 30 million people i know the president hates to be criticized in any way, shape or form but history says you have to wait until things are better. >> we have a lot to get to this morning. calls on disney, tesla, conoco, and that jobs number on friday we'll take a break be back in a moment. ♪ 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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visit xfinity.com/prepare. it's been a busy weekend of commentary when it comes to a potential vaccine for the coronavirus. oxford scientists said they hoped to get signals on efficacy by june. the president talked about it on fox last night >> we think we'll have a vaccine by the end of this year, and we're pushing very hard. you know, we're building supply lines now, we don't even have the final vaccine. johnson & johnson, if you look at johnson & johnson is doing it we have many companies that are close. i meet with the heads of them, i find it an interesting subject but it's so important. i think we'll have a vaccine by the end of the year. >> it does echo what you've said, that is that the commentary from these giants wouldn't be so positive if they

weren't close. >> j&j is spending a quarter billion dollars to build plants all over the world i feel confident they can conquer it it's the timeframe it's entirely possible that the president says we have a vaccine, but is it scalable? it would be unbelievable the shortest time that we've been able to do a vaccine from start to finish was mumps, that took four years. remember, polio took very, very long what i feel like is -- i think the drug companies are too optimistic i'm not a scientist. i feel like so many are trying but it's just historically, it's never been able to be done maybe this is the time they can speed things up because they have better technology but i think it's important to point out that the president is raising expectations to a level that i hope are not too high and i don't mean that to be

critical the scientists themselves, they're very excited about getting something to us next year but that's next year if i listen to the president, he makes it sound like football season would be great. so does the nfl. there's an unreal aspect maybe we're all just -- enough people have gotten sick that we should all just accept the fact we can play on, be tough, but i don't think it's that kind of situation. i think we have to wait to go to the next level and the idea of the vaccine being ready is different from whether it's scalable that's the big question. >> and, by the way, whether it's safe and effective is a more important point as well. the same -- we rely on the experts, we rely on people who we believe are in the best position to understand these things, and certainly that would be the most optimistic forecast that i've heard, the idea that it could be as soon as the end

of this year to your point, 12 months to 18 months would be a miracle in and of itself given the history of vaccines that said, we do have more people and more companies working on it with more advanced technology than was ever put against anything in the history of something like this that's all good. >> sure. >> what i come back to is what you hear time and again in terms of trying to get people back to normal behavior, this regimen of antivirals, remdesivir at one side of it if you end up in the hospital, but a host of others perhaps that could be applied much earlier in the virus that would e-mai cancel out the effef the virus, we're nowhere close with testing, both the antibodies, understanding who

has had it, and maybe contact tracing is the thing that gets us opened up >> right we'll talk about that with marc benioff. i think that the -- going back to the vaccine for a second, without the vaccine i doubt that we can return to normal life when will we know that it's effe effective? it's when everybody gets the vaccine. you have to think about smallpox there are more questions about vaccine than antivirals. i feel if you go back to what dr. fauci said comparing it to azt, it says, listen, that's how the aids epidemic, the beginning of the end was the azt that's going to be a long time

if dr. fauci said he's confident about a vaccine by the end of the year, then i'm confident that's who we all listen to. he can't be owned. i think that's really important. >> just buffett's praise for fauci over the weekend was remarkable, too. there was a great piece on cbs about that azt chapter and he recalled every one of his patients dying when he was a very young doctor, but whether it's a vaccine or a therapeutic regarding remdesivir, daniel o'day of gilead talked about the emergency use authorization and getting to patients. >> we intend to get that to patients in the early part of this next week, beginning to work with the government which will determine which cities are most vulnerable and where the patients are that need this medicine we donated the entire supply that we have within our supply

chain. we did that because we acknowledge and recognize human suffering, the human need here and want to make sure nothing gets in the way of this getting to patients. >> we have to hope -- >> that's a big deal >> have, very big. but you know what? when regeneron reports tomorrow, i want to hear their monoclonal antibody can be a cocktail remdesivir alone has not proven -- it can get you out of the hospital earlier i'm waiting for the test that says it's not a death sentence when you get on the ventilator we have not heard that yet >> we want to get back to the markets which appear poised to open lower when trading begins we have some key downgrades that we'll get to as well when "squawk on the street" comes right back when you take align,

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welcome back to "squawk on the street." airlines will be under pressure

this morning after warren buffett of berkshire hathaway says don't own them anymore. american airlines is your mad dash >> i want to talk about some things warren buffett said he is saying it is a changed industry barclays has a report out today that downgrades american from hold to sell they had been using a $20 price target and now down to $7. another thing is pension liabilities. 6 billion at american. i think this industry had started to look up then i see that kind of liability, plus obviously what they're borrowing from the government i say, yeah, warren buffett is right. it's the balance sheet it's not so much the fact that travel has been crushed, but the balance sheets have been changed. so you got a double-edged sword. you have very little demand and the balance sheets ballooning. yeah i could see this stock going to 7 in a heartbeat

>> yeah. right now as we said, so man companies are focused on preserving and maintaining their liquidity. making sure they have adequate access to capital when they need it to run their business some are getting to solvency that's a different aspect of the crisis >> yeah. bob crandall who i always loved from american, he talks about how the industry is not investable, how it should be a utility. i found myself thinking american -- these stocks were so great at one point after obama let them consolidate those days are over. what you're really looking at is questions by -- brian sullivan asked a money manager when would you fly? i debated flying with my wife this weekend in a socially distant fashion, we talked about how emirates will require a blood test or some sort of test before you get on a plane. i like that idea but it's also not that practical for all these different companies to do some sort of

abbott labs test walking in. it may just be unrealistic >> yeah. on that note, jim, as you're speaking about aviation broadly, dow jones reporting that ge aviations expanded its job cuts to cover 25% of its global work force. they were at 10% this is according to a memo that dow jones is citing. larry culp joined us last week, not tsugar coating the outlook. >> i have the memo, the article is right again, it's chilling ge is so challenged on so many fronts, with exception of health care, you can't right-size these businesses they are gigantic. it's very hard to figure out what the right level and table

of employment you have to have the analysts are not forgiving enough to a guy like larry culp who is doing his best. they're looking and saying, well, you know, nothing cooking there. >> yeah. we all had the -- i had it in my in-box there's the opening bell, carl >> yeah. at the big board, eric millan. at the nasdaq, youth inc, a network of non-profits helping downpeople in new yoryoung peop york city. headlines crossing now about hog processing capacity in this country. they say it's been cut in half as the virus closes slaughter houses you're seeing some infection rates, jim, in some of these towns with slaughter or proce processing facilities that rival large cities in states like maryland >> there was a fabulous book called "the jungle" at the turn

of the century talked about how immigrants were put in meat factories and treated with absolutely no health care concerns at all. is that happening here at tyson? i think tyson has a lot to answer for here. this is the kind of thing that if we had an upton sinclair, he might go to these places this sounds like what upton sinclair exposed at the turn of the century. somebody should be ashamed here, i think. >> it's largely about beef and pork because of the need for human hands to debone. it's not like chicken where it can be more mechanically done. they did miss, revenue was light. they secured an additional 1$1.5 billion loan i guess it's almost automatic on some of these things >> right should that many people be getting sick i know that the supply chain is really important, but i do

believe that at a certain point -- ethan brown of beyond meat reports this weak, i'm wondering -- and i know david is somewhat skeptical -- but is that where we have to go this tyson thing, let's call it what it is, it's an abomination, who are these poor people who work at these plants i bet it's the same people that worked there in the 1900s when "the jungle" was written i think these people are poorly represented. they're treated as if they're -- i don't know what kind of health care they're doing, but what is osha has anyone seen osha wasn't osha supposed to help people if we don't call them out, who will it is kind of shattering >> you want to go through a list of government agencies that are

mia? where's the cdc? remember them? >> the s.e.c. is coming back in the fall >> yeah. when it comes to tyson, one would have expected this to be a strong period for the company. the demand for their product is through the roof yet, as you point out, they've not been able to capitalize at all and having a lot of missteps >> my travel trust owns it, i'm ashamed i own it i thought this would be their time now i just want some enterprising journalist to go outside their plants, find out what's going on there. i think they have a lot to answer for maybe they'll say, listen, no, we don't the we're doing exactly what the government says. that's usually the answer these days, right? hey, the government. well, i guess so but we need this -- we need to go back to the upton sinclair days where we looked into these situations i would like tyson to come on. look -- maybe it's like

carnival, there's a perfectly innocent excuse. look, we followed the rules. maybe tyson is following the rules. maybe the rules should be changed and tyson is a good actor -- hard for me to believe, but i'm jimmy chill, i can understand it. >> you mentioned carnival. i'm sure you see these crossing now. plans to phase in north american service on august 1st. >> get some bargains there tough piece in gq coming out soon people want to cruise. they do. maybe they cruise in a way that's socially distant and cruises are a bargain. i'm not going to rail against anyone who wants to take a cruise provided that they are doing the same things that they do on airlines or whatever i just think, look, the government has not said no who am i to say you can't cruise i don't know i don't feel like -- you know, people want to cruise. when you speak to carnival, the business -- next year's business

looks good >> yeah. >> they haven't done anything rock here. >> speaking of travel, leisure and things people plan for around life events, going to a disney park is one of them thankfully we've done plenty of it thankfully with our kids. but this morning certainly a lot of talk around this downgrade of disney citing what they're calling a long and winding road. they have the stock at neutral no real surprises here in a sense. we talked about the challenges disney will face in terms of the theme parks, not to mention as well the espn network, the lack of sports, lack of advertising, studio being shut down in terms of production. disney plus the bright spot. but the numbers they put out there are stunning when you look at total revenues and what they're expecting now. they're low on the street now. they think things will take longer to come back.

i fwes thatguess that's the easy to discuss it. this year has seen 17.6 billion in 17.5 in fiscal year '21 and 21.3 in fiscal year '22. that gives you a sense of the reductio reductions fiscal year '22 will be a huge increase over '21, but maybe you want to wait if you see that coming to buy the stock. >> i read this, michael nathanson always does high quality work, he starts out by saying we've recommended it for a decade it's like what warren buffett said, the airlines are well managed, but in this environment they can't do well when i read this piece, david, i said let me think. is there a way to make it so you could open those theme parks becky quick talked about it this morning. i can't come up with a way you have to disinfect

constantly lines are bad. the great thing about disney is that they handle the crowds well well -- you can't really have crowds i don't know i thought this was a no way out very good downgrade. very well thought out. and i don't have answers if i'm iger, i say, well, i don't see anything wrong with this report. i just like to be more optimistic with the same set of facts. >> yeah. obviously furloughed most of their employees at the parks, so you could bring back the employees commensurate with the number of visitors to a certain extent then again people expect the parks to be pristine, which they always are in terms of cleanliness, so many other things it raises a lot of questions about staffing, costs, versus how many people will be walking through the front gates.

then you get to the networks, the media networks we've been talking about that for our own parent company as well, which the "wall street journal" reported there may be layoffs. by sports is a key component of disney in terms of espn. we know what's going on there. no sports being played the question is when are the cable distributors going to start to say, hey, why are we paying for this? why are our customers paying for this i've been hearing maybe come july, we know whether we'll have a football season, we know whether we're having a baseball season, we know whether there's going to be nba playoffs or when they'll be or not. college football that may be the key point at which you see not just the disconnects but the distributors saying come on, you have to make good on this, which will be another hit for those companies that have significant sports

networks >> aren't you surprised it hasn't happened? baseball is on >> a little bit. a little bit i've been hearing that it's a conversation, yet i have not really -- i've been talking to the senior management at some of the large media companies, it doesn't appear it's come to the point yet where any -- where the distributors are saying we're not going to pay you >> right >> it does seem like they're pushing it a little bit. you're right i would have expected it to a certain extent given that they're expensive, and not to mention the rsns, now owned by sinclair in a separate vehicle all of this happening and then no live sports then you get back to the teams, whether they're liable, the team owners who are in a position now where they've always been taking money out of their teams, now they have to start putting money in it's a negative carry for the partners of all these teams. there's a lot going on in the

sports world that is certainly worthy of paying some attention to >> i wish there were more public companies that -- this piece addresses it head on and tries to put numbers on it i think you're right carl, we know that sports programming is the programming that keeps the networks getting new people in and advertising. we have not even goneinto the idea that people don't know how to advertise anymore if there's no sports. sports is what you launch things with >> yep i was looking at some protocols the koreans are putting in place for their baseball season. if there's one positive test reportedly, the league shuts down for three weeks hypersensitivity to any individual player falling ill. that said, guys, in the next six weeks we'll get nascar, we'll get wrestling to some degree, we think. golf in june so sports in which social distancing is somewhat possible will start to get some air play.

>> well, i know that we're all crazed for live sports we saw that from the draft but football is the litmus test for me there's just so much on the line for football and because it's so expensive. we need to know -- the nfl is deeply committed to a regular season when a lot of people think it will be fanless and not starting on time, the nfl gives you a perspective like the president, don't worry about it. i don't know >> right jim, we're down 350, only microsoft in the green on the dow, just barely let's get to rick santelli on this monday. hi, rick >> good morning, carl. you know, as equities start to get tired but they had a nice big move from the lows, obviously april was a good month. may is different however treasuries, kind of the same still up a little bit in the long end, down a bit on the short end. that's been the way lately

if you look at a two-week chart of ten-year note yields, here's what i want you to pay attention to when markets give you tells of where they like to trade and they're comfortable, you make note you really make note when they move out of their comfort range. this two-week chart, 60 to 62 basis points we want to watch those high frequency areas as we move away from them or remain inside them. and if you look at the hyg, the high yield etf that the federal reserve said hey, i think we may buy that some day, everybody flocked there. they have not gone there yet there's a lot of debate as to whether they'll go there at all, meaning the central bank, the fed. that's a february 1st chart. we had a lot of volatility in february and march look how sideways that is. we would rather have that going higher than lower. that would be a risk-on and good for stocks

when we look at the dollar index, same notion we know anything near 100 is powerful over the macro view, but lately, you know, as it dips towards 99, we think it's coming off a bit, almost up to 103 not many weeks ago, also from a february 1st perspective, 99 to 100 is their comfort zone. it may remain there. you want to be on guard for the euro strength which could push down the dollar index. it's 57% of the dollar index many notions that shared debt has got to be coming to european union and ecb and christine lagarde has to work towards that end. if that is ever going to come it's going to be bullish for the euro, bearish for the dollar in the immediate short-term once it becomes implemented. finally our last chart this is bunds. obviously the bund yields were closed on friday, may day, but there's a detee deterioration te

the ecb needs that shared debt because they can'timplement th type of programs that the federal reserve implemented here carl, jim, david, back to you. >> thanks a lot. jim, we're being led lower by travel names off of the comments from buffett over the weekend. for all the -- i guess negative things buffett said, he did leave us on saturday with some of that traditional buffett optimism when it came to america at large here's what he said. >> we found that -- that nothing can stop america when you get down to it it's been true all along they've been interrupted with the scariest of scenarios when you had a war of one group of states fighting another group of states it may have been tested again in

the great depression, and it may be tested now to some degree but in the end, the answer is never bet against america. >> jim, how do we put that to work meaningfully? >> when you start comparing things to the war between the states or the civil war what that says is, you know, buckle your seat belt 500,000 people, some say 600,000 people killed. i know we addressed that that's not an investable situation. the union won the war, but the idea that that was invoked sent chills down my back. the depression, yes. the comparisons between the two -- well, depression is not as bad as the civil war. the republic both times was in question the republic clearly in question during the civil war because it was split. but the republic also, if you

look at the politics of the time, the center might not hold. it did hold. when he compares it to those two, what i say to myself is no wonder he didn't buy when the s&p cratered on march 23rd he didn't buy. he sold. obviously he didn't think this was the level. if it's the civil war comparison, obviously you're talking about dow down substantially. so, look, there wasn't -- america will win yeah, like, 1863, we had a real solid look that lincoln was going to prevail i don't know that's why there's a big monument, it turned out to be a beautiful stage. you know, go back and read some of those speeches. the republic was in peril. i hope it's not like that. started 1864 >> yeah.

some of those speeches are pretty well known. >> yeah. >> on that note, jim, let's get to bob pisani and get a market look hi, bob. >> hi, happy monday. 2,800 on the s&p we were at 2,939 a short while ago. we're 5% off of the recent highs. i watched mr. buffett's comments, i'm surprised he didn't have any bargains out there. wasn't doing a lot of buying you can see the impact on the airline sectors. jets is the big etf there. that's down. energy is weak banks, retail. all of these had great rallies in the early part of last week they're the ones declining now utilties was the only thing in the green at the open, now it's in the red now the hard part starts for may. the rules of investing have not repealed, so it does matter. we're only 17% off of the highs now. the risks and things out there, we had massive fiscal monetary stimulus, hopes for treatment of a vaccine and reopening hopes.

those are sort of the risks we're seeing now the risks are clear. we talked about them on friday the reopening would go slower than expected. we saw talk over the weekend of long-term closures now in california, maybe 50% of the restaurants may not be able to stay in business even if there is a reopening the risks out there, if we put up the next full screen, they're quite real earnings revisions are real. the market is comfortable with a 25% decline for earnings in 2020 but not 35% or 40% we don't know if that's going to happen that's a real risk now and of course there's some issue about whether or not the fiscal stimulus will keep coming there. we heard discussions about how much aid there should be to states and local government is, and finally china tariffs. it's tough to get a handle around stock valuations and what we should do in may because of lack of guidance let's look at today. 114 companies have suspended guidance that's 25% of the s&p 500 has no

long-term guidance, and we're only 60% through earnings season that number will grow. 79 have suspended buybacks, 31 have suspended or cut the dividends, that's mostly in the consumer discretionary and energy space this makes it tough to figure out the right valuations and why we're still getting 400, 500-point moves in the dow on a daily basis. we are still getting companies withdrawing guidance today air canada, gatx, a transport company, national retail, one of the big reits, they also withdrew guidance. going to be tough figuring out valuations in may. carl, back to you. >> that's for sure thanks we'll take a break here. in just a couple of moments, cramer with benioff on reopening america. don't go anywhere. ♪

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can 2800 hold as the s&p heat map shows a sea of red? travel-related names getting hurt after buffett's comments this weekend in a couple of minutes, benioff with jim don't go away. it started with a few smaller bills. fifty dollars here. eighty dollars. a hundred dollars. i had good health insurance.

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let's get to jim in stop trading. >> goldman wants you to buy the oils again the way they're doing it is to say quality is on sale and they're highlighting conocophilips. they downgrade chevron but only because of how great the performance is from fixed buy to buy. the goldman stuff is interesting. have the oils gotten down enough, is it the bottom or not? and i know that mike worth, the terrific ceo at chevron said it's the bottom. i'm much more circumspect because i want to see demand, and i'd like to see supply ratcheted back russia brazil says there's about 1 million barrels coming off per day in the u.s., but we're still not seeing the decline it's hard to shut down a well. there's factors involved including transportation agreements to be able to ship. but you have conocophilips if you love oil >> gas buddy said demand on saturday was up one sixth,

taking you back to mid march has people are driving around. it's warmer. i mean, do you not believe at least, we're seeing a bottom in the month of may >> i do. i think that's why i mentioned it i feel that -- i don't really like the group at all, but i think if you did like the group, it's had a very big move off the bottom really big now you have to be very selective. because the market, the oil market really anticipated this the oil stocks started going up the same day the oil went to minus 37, and i believe that minus 37 was a complete anomaly, and now i feel that you know what this goldman once you buy them, but you have to be careful, because the balance has been incredible don't get carried away >> the other thing we didn't get to were elon musk tweets from friday and adam jonas today taking it from 440 to 8 -- 680

maybe exferrari, the fastest growing oem. >> i know there are people who show you, like irrational exuberance in green span, where he didn't do the right call. i go over what -- i think that elon is being very let's say critical of where they are i mean, i think he wants to have germany fly. he was very upset about what happened in california therefore, you would think that if the fascists, so to speak, as he said, don't change their way, then maybe tesla is expensive. i come back and think can you imagine you have a football season and ford and gm, they spent all that money on advertising and tesla doesn't need to advertise? because word of mouth. that's been the strongest why i like tesla so much i really like it sorry, elon, i think you're going to get your way in california eventually. >> well, his tweets were also interesting for any number of

other reasons including his decision to potentially sell almost all his worldly possessions, although he wants to be careful with gene wilder's house. make sure you sell it to the right person fascinating. >> isn't gene wilder great >> yeah. yes. young frankenstein, blazing saddles y. willie wonka. >> went from buy to hold right? >> we mentioned we talked a lot this morning about aviation for obvious reasons given buffett's comments and everything else we also mentioned briefly ge and that memo that was sent out by vice chair and president david joyce issued earlier today developing the employees they're developing a plan for permanent reductions to their global employee base that brings total reductions they anticipate to as much as 25%.

and we spoke last week, of course, with larry culp about the situation in aviation. he pulled no punches in describing how difficult things are. >> the first and most important step we take as a company in the face of this pandemic to make sure we come out on the other side a better, stronger ge is to embrace the reality of what we're seeing clearly the pressure is going to be no greater in the short-term and maybe over the median term for us than it will be in aviation, given the airlines are trying to conserve cash. parking planes, bringing flight schedules down postponing in some cases, orders of new planes. that hits us >> yeah. i mean, no shortage of challenges there for companies that were, again, in ge, we spent a lot of time talking about the remaking of the company that had been underway under the leadership of mr. culp and the fact they were starting to see some momentum, and then

well, like so many other companies, completely out of their hands the things they're now dealing with >> but they have 47 million. they did raise the cash. they're using a lot of cash. health care is good. but no, it is like buffett said, this is this event that people didn't ensure against, and look, i think that larry is going to come out okay. larry culp but i think this industry is not a 2021 story it just can't be too soon >> yeah. we'll watch that one it's a big story for us today. it's 10:00 good morning, everybody. welcome to "squawk on the street." i'm quintanilla with sara and jim and david. we're getting factory orders right now. let's get to rick santelli rick >> carl, we're going to have a date with history on both these numbers. on the march read on factory orders, down 10.3. this series started in march of '56.

the lowest ever month over month negative change was august of 2014 at minus 9.7. we beat that minus 10.3 if we take x transportation, that's down 3 .7 durable dpoods orders, they started in february of '92 in their current rendition. the smallest number, month over month was minus 14.4 we beat that minus 14.7, another date with history. and, of course, we look at the internals, extransportation down.4 capital orders nondefense proxy for capital spending down .1 my guess is that's going to get worse as time goes by. these are march finals it also means that minus 14.4 gets removed that was a mid march it gets replaced with minus 14.7 and if we look at orders, it switched to shipments, shipments are down .2.

my guess that also is going to fair worse over time both the number series are the biggest month over month negative change we've ever seen. the response in the marketplace, counterintuitive ten-year note yields go up a basis point. obviously markets have the data points factored in jim, back to you >> thank you so much, rick thank you for all the stuff you do that explains this to us. joining me now, marc benioff with an incredibly important initiative i think this is one called work.com that is to me what -- if i were running a company, i would be sorely in need of because it puts it in perspective for your company marc, welcome. >> jim, thank you so much. i'm delighted to be with you this morning you know, jim, we've had so many conversations now, and our hearts remain with everyone who has gone through this traumatic situation with the virus over

the last several months. and as this has unfolded for us, what we've seen is three phases. we've talked about that on your show the first crisis phase we're in, it's really this 90-day phase when we've gotten everyone in our homes and we've taken shelter. that's when sales force actually has now purchased over 60 million pieces of ppe and distributed it to several hundred hospitals all over the world to help bolster our defenses against the virus but jim, during this crisis, we've learned something very important, which is that as we move into phase two, the virus is going to still be with us, but we're going to reopen this how are we going to reopen safely that's what's been on our mind at sales force that's why today we're introducing a new product line to help our customers reopen safely we think this is going to be a critical part of allowing our customers to get pack to work

and do it safely >> when i look at work.com, one of the things that strikes me is besides the demand center i like, it's a process there's a procedure. we've lacked -- company after company is anecdotal about what to do. and one of the things i think is really incredible is that if you were able to get public health involved with say, what google app were doing, contact tracing which is available, then we would actually know as employees who is sick, or without any privacy invaded, you were the first person your emergency response management section that really makes me feel like we could be taiwan taiwan being the single greatest country onnette when it comes to this you have a taiwan going on when it comes to work.com do i read that correctly >> when we go back to work, we have to bring in ppe not just to hospitals but work spaces. that's why we're talking about having masks in the workplace, for example. things we can do to reduce the

spread of the virus in the workplace, because when we get back to work, the virus is going to be there, but we want to mitigate our relationship with the virus so ppe will be important, and of course, we're going to have to maintain social distancing that will also be extremely important in the workplace that's going to be a critical part of getting back to work and of course, we'll be checking fevers before employees show up at the office. but we will also use information technology in a smart way to mitigate the virus that is we can do things to help people be safer at the office. an example is very much what you just said. we knew that the person that you are sitting next to yesterday called in today and they were tested positive for the virus. and when we talk to them, they said they met you, this employee, that employee, the other employee and we're calling all the employees back that's contact tracing the idea that we can talk to and inform and manage the relationships that we have with those who may have been affected and, of course, like you said, those employees will have to be

self-quarantined >> i think that we're going to try to get the accessibility of a key part of your plan. new resources. you got doctor daviding a us who is sensational dr. scott gottlieb will you be able to access those if you're a good client of sales force or is that videos and really just no one on one? >> that's live today on work.com we're capturing the best advice, best words from those doctors like you mentioned but also tremendous business organizations like the business round table and others who are telling and informing businesses here's a safe way that you can reopen those important elements of our community are critical and we want to bring everyone together in a place where they can talk and share this critical information as well so they will have a community.

they will have apps, and they will have advisers and we hope that the combination of these three things in work.com will give the ability for our customers to reopen safely >> all right one last question. i know you're on a council the president set up will you share this with the president? a lot of these things could be done by our country and could be valuable if everyone played? >> well, i think this is something every company is going to need who wants to be able to have a great relationship with their employees and their customers. we know that we're going to have to create these kind of new tools, next generation capabilities, but this is the beginning of a journey there's no finish line, jim, when it comes with battling down this virus and i think that work.com is kind of going to be a very critical part of entering phase two which is what i see happening over the next couple of months. >> all right thank you so much. good to get those at 1:00 a.m.

this morning i'm always happy to get woken up by you it's good if it's value able, and it always is marc benioff, the ceo of sales force. >> great to see you. >> jim, that was good stuff. i guess we're going to see more on mad tonight >> yeah. i can't wait to talk to marc i got some sleep after marc woke me, 45 minutes it was fantastic >> jim, thanks for sharing some of it. i can't wait to see more mad money, of course 6:00 p.m. eastern time guys, interesting session here as the low for the session was down 362 as we started a busy week, a lot headed our way over the next coming days whether it's earnings or data the jobs number on friday and so forth. >> yep jobs on friday it's going to be ugly when it comes to the numbers as far as what's setting the tone this morning, what you guys have been talking about, warren buffett, no question the caution he expressed, the microcosm of the selling the

airlines without knowing when revenues would come back and people would be back as far as the number of others from statements he made that may have been more subtle, our colleague has a great column on this this morning in the new york times jux have a posing what buffett said during '09 when he was buying when stocks were crashing versus now where he seemed more cautious saying they have to protect fort knox. worth a read potentially having an impact on psychology here, not just the airline but the markets overall. and the comments on china which continue to get tough from the president, from mike pompeo who pushed this idea that the virus may have come from a wuhan lab and the fact that we could be launching more tariffs and more trade tensions in the middle of what's already been a pretty dismal economy as we head into an electionwhich very well could be a referendum on who is trusted to be tougher on china, joe biden or donald trump? and we know where that goes in terms of rhetoric, at least.

the question is is there going to be a policy response? >> yeah. and to your point, there's not that much different between at least the two parties, it would seem, on their approach to china at this point, but it may be worrysomefor t wor worrysome for the world economy. there was one area where there was at least sort of bipartisan support in terms of trying to punish china or level the playing field as people say. but we've talked a lot about the impact this is going to have even without the rise in hostility, there are going to be companies that do believe they need to change their supply chain, even in a way, carl, they hadn't previously during the height of the hostility during the backand forth over trade >> it's remarkable i mean, three big stories today, david, regarding bringing back supply chains, the president promising a conclusive report on the origination of the virus,

and this dhs report, according to the ap, which says that china did, in fact, cover up the extent of the outbreak to stock up on medical supplies those are three big stories we'll keep our eye on. jim o'neill joins us this morning, asset management chairman it's great to see you, jim, welcome back >> thank you >> sara sort of laid out some of the reasons for this sentiment that stocks are expensive whether it's china tensions, whether it's the disconnect between an economy that's reopening versus an economy that's normalizing what do you make of all that >> yeah. to be honest, i haven't got a clue i read something a few days ago that you yet again after 40 years, following the markets, they remain as mesmerizing and fascinating as always.

and i can see the same bearish case that it seems to me the overwhelming number of experienced market cparticipants think is going to happen, but i also, and here i suspect i might differ a bit i can see the cases to why the markets recovered and why the bearish trail might be wrong there's a lot of huge unknowns about what's going to happen it depends on a lot of policies still to happen. i remind you when this all first started in january, it was just as big if not bigger concerns. this would be definitely similar in terms of economics and markets. to what happened with sars as difficult as that may be, i don't think it is entirely impossible >> interesting

to the degree you're turning to, you would turn to a more bullish case, is it based around unlimited support from central banks, robust fiscal support, or is it just behind the sense that economic activity probably can't get any slower than it was in april, and will be looking at at least sequential gains in activity in the quarters ahead >> i think it's -- i'll take them possibly in reverse order i think it's almost definitely the case, the absolute worst of global economic growth has put in some form in the past two weeks. as i'm frequently fond of saying on this program and many others, over the past decade about 0% of gdp has come from the u.s. and china, 80% china seen the worst of its

decline back in march. and while some of the stories about italy and spain and all these places -- they were horrific, beyond huge generators of global gdp growth bear that in mind, and if you look at how so many countries are now coming out of the lockdown, it's being done. we'll have some of the economists, whether it's the states or many parts of europe i think we probably will start to sequentially come away from this horrific trough that we'll be in in the second quarter. that's, of course, assuming there's not some kind of second dramatic -- and then thirdly -- >> right >> you said we've had enormous policy stimulus, particularly in the states, much bigger than we had in '08

>> jim, want to ask you your perspective, not just former ahead of asset management, but you advised the british government on health care. and i think worked on antibiotics in particular. for every bearish headline, it feels like there's a bullish headline and today's is roche with an antibiotic test at 99% specificity. more accurate than the other tests. i'm wondering what you make of the advances from the global pharmaceutical giants on treatment and testing and vaccines and how quickly it can bring us back. >> well, one of the other of the few positives in all of this, and by the way, linked to what you just said, this popular notion that globalization is over, i think it's not completely without any foundation, but most of it is. a lot of the best examples links to what you've just said the global pharmaceutical industry is -- the numbers are

demonstrating a degree of agili agility, speed and cooperation that in my limited experience, as a result of -- you wouldn't have thought was imaginable. and the least of the other 100 vaccines that are being -- to my knowledge, at least ten of them have hope. two separate ones here in the uk, and a number elsewhere, and as you just mentioned about roche, all sorts of treatments with astonishing speed and that in itself, is obviously probably going to result in some kind of effective treatment quicker than would typically be the case it also raises in my mind that that's the kind of ingenuity that modern human beings are capable of, and it's true

whether it's the heads of private businesses it's certainly true when it comes to fiscal and monetary policy makers. i find my mind thinking this weekend that perhaps a number of countries, not so applicable to the u.s. but elsewhere, might finally result in some broader idea of policy than just inflation so-called nominal gdp talkers, for example i wouldn't be surprised if that started to happen. because many of the policy ma r make makers, we need them to try to commit themselves to ensuring that we get a strong v-shaped recovery all those things are not impossible obviously i can easily see all the reasons as to why so many people are bearish and i think it's very delicately balanced i terms in terms of -- today actually is a big day for the s&p given the big recovery in

how we got up close to 3,000 last week and then it failed straight away the bears come back for restoring everything you can hope for, but if we end up in positive territory, i think that -- i think it's delicately balanced and i'm trying to keep a very open mind. >> well, i wonder how -- i mean, you mentioned globalization is not dead when it comes to the global pharmaceutical industry and some of the work being done behind the scenes from the doctors on coordinating. at the same time, protectionism is rising. it's not just the u.s. playing the blame game with china on the virus. we heard comments from the uk as well do you think all this results in some policy action you think it's right to think back and go back to history backs at smoot hol lee and looked a what happened when you launched tariffs in the middle of an economic recession >> that's where you get your extreme bears, and i worry that

donald trump and those close to him seem to be digging themselves a very big hole about this china stunts that they're going to -- they might see some political advantage, but it doesn't make a lot of sense to me other than some shortsighted politics i also read something a couple weeks ago about this whatever china did, and it's pretty clear they did at least a couple of things wrong you know, why is it so on saysive -- obsessively important that the u.s. keeps banging on what they did wrong. it's pretty clear the 2008 crisis was cause d by a mammoth valuation in the united states and last time i looked i didn't see any following country trying to blame the united states and

paying for the carnage that caused for the world, and most people wanted the u.s. to get out of it and back to normal so i don't really understand why it's so appealing for the u.s. to go down this path, but it's very unhelpful just as we're talking. i'm not sure how much you focussed on it on the show, there was an interesting voluntary initiative being driven essentially down the welcome trust, the policy that sponsored a review which is essentially getting other global governments to try and volunteer funding to come up with the 8 billion to $10 billion money to accelerate that development and treatments and diagnostics that should have happened two weeks ago at the g-20 meeting. but of the u.s.'s stance on the w.h.o., nothing actually happened and the contrast between that

and 2008 and the leadership the united states played through george bush officially in 2008 is astonishing, and frankly, that is part of the bear case, and it's very disturbing and i really don't understand why it's so logical for the u.s. to go down this path it's not in the u.s.'s -- interest at all. >> as you're talking, jim, peter navarro is on fox saying buy american for medical products will soon be required. whether it's that. whether it's supply chain issues with our own meat processors this this country, is your head anywhere close to considering inflation a major problem? >> there's also ultimately the key issue for this -- all that's in place the idea that comes with every time we have some kind of global shock, people jump to the view that globalization is over

at the end of the day, particularly with technology and the internet, human beings basically want the best they can get as consumers, and usually the most affordable price. and given that the u.s. economy for most of my lifetime, i was going to say adult lifetime, but the whole of my lifetime has essentially been driven by the u.s. consumer wanting to acquire and spend and enjoy when it comes to anywhere around the world at the most affordable price unless this die america is going to translate into everything being at least as cheap, that doesn't make -- it's great rhetoric, but it doesn't really make a huge amount of sense, and again, just getting out of this crisis right at this moment, the best vaccine developments is not coming from inside the united states it's coming from outside the united states. so what is the u.s. going to do about that

if somebody else has the magic vaccines to solve this problem, the u.s. isn't going to want to use them i can't imagine that's true. >> right jim, it's good insight major questions. we're nowhere close to answering. look forward to talking to you again soon >> good luck, guys nice to see you all. >> warren buffett holding a virtual meeting. it was done virtually over the weekend. we have the highlights and a break down of some of the bigge biggest headlines. >> the show went on, but it was a little different than we usually expect none of the crowds of the 40,000 or so shareholders who are usually there to watch all this. warren buffett took the stage in fact he was joined on stage by vice chairman of berkshire, and he went on with his message. it was pretty positive saying you should never bet america he even put those words on the

screen to make sure he emphasized them. however, saying never bet against america is not a call for average investors to go ahead and plow money into the stock market buffett said he doesn't know what's going to happen over the next month or year even over the next five years and that's a message he was holding onto himself just talking about what he's doing with his own money right now berkshire's cash position is $137 billion that's up from the end of last year that's because he says right now in situationslike this, cash i king >> we want to be in a position at berkshire, well, you remember the streetcar name desire? that's before many view. but she said she didn't want him. she said that, she's depending on the kindness of strangers, and we don't want to be

dependent on the kindness of friends even, because there are times when money almost stops. and we had one of those, interestingly enough, of course, in 2008 and 2009 but right around the day or two leading up to march 23rd, we came very close, but fortunately we had a federal reserve who knew what to do. >> in fact, the federal reserve, buffett credits the federal reserve with the quick actions as a way of stabilizing the markets. he said that's part of the reason that more companies haven't come knocking at berkshire's door they can get prices and financing in the markets at a better level than they would have gotten, than they would have come if they had come to

berkshire. that's different than in 2008 and 2009 maybe the biggest news coming out this weekend was the news that berkshire has sold the 10% stakes that picked up in all four of the major airlines over the last few years we knew there were some sales but what was newsworthy is they sold every share they had, 10% across the board for united, american, delta and southwest. and here's why he explained on that >> the airline business, i may be wrong, and i hope i am, but i think it changed in a major way, and it's obviously changed in the fact that their four companies are each going to borrow perhaps an average of at least 10 or 12 billion each. you have to pay that back out of earnings out of some period of time you're 10 or $12 billion worse off. in some cases they're having to

sell stock or sell the right to buy a stock at these prices, and that takes away from the up side and i don't know whether it's two or three years from now that as many people will fly as many passenger miles as they did last year they may and they may not. but the future is much less clear to me an how the business will turn out as a result of no fault of the airlines themselves >> he did not think this was the fault of the airline companies he said all four of the ceos are excellent. he also said all four of the companies are well-run companies. he just said hz assessment of the business overall changed that's why we went ahead with these moves. back to you. >> a sharp reaction in the share prices for the airlines. i wonder if it's too much to

extrapolate given how important airlines are for the economy and how travel demand is key for the k economy, whether this is a bearish statement on how our economy can bounce back. >> it could be, but i think the airlines are in a particularly difficult situation. just the thought of travel when you have people who aren't even going to work at this point, you're not going to see business travel, and that makes up not only 45% of the overall volume for airlines or had been up to this point it's 55% of the profit levels, too. and i think it's going to be a while before people feel comfortable. you're going to have to see this play out and see if not only the consumer is willing to start -- but if businesses are willing to put their employees on some of the trips. that may be what you see playing out. the stocks are not off as far as they were early this morning at one point i looked and all four of the airlines were down by about 4 % the other issue is what kind of

role the government is going to play and what that role means to existing shareholders. those are questions that have yet to be answered >> becky, thank you. great stuff again. we're watching all weekend let's bring in gordon baa thune on warren buffett's moves or not airlines. as someone is an industry veteran, do you agree with the assessment here? >> well, absolutely. i think he's probably understating the problem in that the supply chains of boeing goes around a little and there are a lot of other public companies depending on boeing business to make their target earnings and their expectations for their shareholders so we're not only going to have a depression on airline investors and the airlines themselves but all those people that are the component makers and equities are going to suffer that's going to temper not only the business viability, but

you've also got what warren mentioned as the confidence factor you're in a 250 seat tube sitting next to whom and what do they have? so do you feel you have a vaccine that's going to immunize you, you'll never feel the comfort you have you have a huge backlog of airplane parts so boeing doesn't need to make anymore airplanes because they can't afford the ones they've already sold, and number two, you've got a creeping so you can't make it happen confidence issue that people have to have before they go it's just not -- it's just a next three years are going to be bleak. >> so what are you saying? it's going to take three years to see what? the demand for airline travel that we saw in to 19 -- 2019 >> i pulled that three years out of my tail end i'm just knowing that fear is an

unreasonable thing, and there's a lot of unreasonable fears. you can see it with some of the bizarre behavior people go to great lengths to say stanitized the economy was hitting on all cylinders before this. the airline was expanding new routes and new opportunities for business and all of a sudden that just got shut down. and until -- up until the governments and of course the constituents, the people, need to get back on airplanes, and feel they're going to be safe doing it, it's never going to happen to the extent that it has in the past. and i don't know how long that takes. you'd have to be a personal meter. your guess would be as good as mine i know it's a year or two before there are no more covid-19 picked up, flying someplace. that really set us back. >> i got to say, it's even more bearish hearing this from you

because you're always a defender of this industry and of these companies. i know you probably would agree with buffett, it's not a fault of their own i wonder how unique the airline industry is and some of the operational challenges and financial and political considerations versus other industries that have been hit and other parts of our economy that are suffering as a result of this pandemic >> well, as warren mentioned, there's four big boys and all run by smart people. part of the plan going forward has been what are we doing in the case of a black swan event like this covid-19 and their fleet and how it matures whether the leases expire or they can sell them, all that fleet ability to remove that data off your balance sheet, it's important. so you see lots of airplanes parked you're going to see greater returns. you're going to try to manage that fixed cost which is horrible and, we have only until

september 30th has the government bailed out the employees. so september 30th, all that free money that's been paying their salaries were doing nothing, essentially the past few months, is going to disappear. and so that's going to be catastrophic i mean, to a lot of families but swim upstream and go into who made the parts and how many spirit corporation in kansas makes the slots. they don't have a customer until they get orders for that airplane and who is going to be buying airplanes in the near-term i don't see a really rapid up tick in equities and the airlines i really feel sorry for my friends stuck in this time it's through no fault of their own, but this is -- like i said, more of a black swan event than i think i've ever faced in my life >> yeah. i think a lot of people obviously agree with you, gordon kran dal was on earlier this morning. he did say that flight, commercial flight is a national

imperative, that it needs to be ensured by a nation to make sure it exists, and i just wonder if you see us going to more of a dubai like model where it's state supported and fair structure looks different because of the regulation that would follow >> you know, i have the upmost respect for bob krajds, but i'm talking about human nature it's not the government. if some politician says it's okay, carl, what do they know? you want to see the covid-19 is gone you can get on and get a common cold anywhere, but until you reach the airlines, just like on a subway, or taking an uber to eat dinner, it's not going to be the same of course, the cost of the airline, it's not the cost of the tickets. it's really come down given the really smart competition and the way they've grown. so that ability to go where you

want to go and get back the same night is going to be even faired as well as your own desire to go in the first place bob's right, but i don't think the government can fix this. it's not a government issue. >> no. but to carl's question, and it's david, are we -- i mean, listening to you for the last five minutes, it sounds like we may get to a point where the government has to make a decision as to whether nationalize almost the airlines. do you see that as a real possibility? do some of these become like amtrak or for some period of time become wards of the state until the environment changes enough that they can be profitable companies again >> i think there's always that possibility. that's pretty draconian. amtrak never made a nickel if you want to drive into that part of the income stream, i think just to have the airline take it over, they're not going to run it any better than the people that run it today what it is, is they get a confidence factor in our

economy. that you are going to get the order for the seats. all the things around the world go back to work, and once you go ba back to work, you have to fly because business is 45% of the traffic. that's going to happen the government is saying we're going to own you ensures it's going to be a national drain on our economy. >> quickly, gordon, we're seeing a little bit different share price reaction southwest is only down 7.5%. the others down more than 9% they're not all created equal. they have different balance sheets some of them are more indebted than others and have different exposures in terms of the routes would you differentiate your prognosis based on the different carriers >> the worldwide boys, and i count southwest as worldwide they're joining the club they've got the territories

covered. they really made the investment on the equipment and the expansion. and i think that's poor. i mean, if you could go back to your grandmother's day when there are only three car makers in the united states, that was planety f plenty it gives you lots of opportunities to go anywhere in the world. i think they're going to go where the money is if traffic to london picks up, they'll put more capacity in there c but they'll have to follow the traffic the traffic is not going to dictate what's going to be the best route the people who want to fly that route are going to decide, and they vote with their wall let and feet i think they're prepared i see long lines of parked airplanes and i know how much they cost. when you have that much fixed cost, it's grueling. and of course, they can borrow money, but it's a fixed term as warren points out.

so real solution into remaining the confidence that the vaccinations will stop you from getting infected no matter if you're on the subway or airplane once that happens, then it's back to open season and people will go swimming >> we pray for those days. gordon, thank you. >> thank you good luck. let's get to sue herera for a news update. >> hello here's what's happening at this hour confirmed cases worldwide of the coronavirus are now above 3.5 million. even as concerns about undercounting persists europe's center for disease prevention and control says the eu has passed the peak of the pandemic as commuters go back to work with enhanced safety procedures at train stations in italy and other countries. jay crew has filed for bankruptcy it is the first major retailer

to do so amidst the pandemic the company had been struggling under a heavy debt load and falling sales before the pandemic j crew will continue to say stan business and will reopen stores as soon as it's safe and in colorado, paul kerri came out of retirement to fly to new york and fight the pandemic. he caught covid-19 and died of the disease a month after going to new york. he was a paramedic and firefighter for 30 years in aurora colorado. he was 66 years old. as always, for more on the coronavirus coverage here at cnbc, you can always go to cnbc.com sara, back to you. sue, thank you let's hit our etf spotlight. today a look at the communications services sector xlc is the etf it's down this year but outperforming the overall market one of the group's top holdings, disney downgraded to neutral

from buy the firm citing economic pressures stemming from the outbreak the earnings are due out after the bell tomorrow. overall market, down about half a percent. energy, technology and consumer discretionary positive so is the nasdaq dow is down 200. making ulop st ground. we're going to take a quick commercial break stay with us ♪

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are reopening but how far down the road are we? steve liesman has the numbers. >> carl, we're able to use realtime data to track the reopening or in this case the continued closure of america we're finding very little impact this is the roadback barometer of the reopening of america. we're looking at three metrics specifically the first is yelp store closings compared to a week ago the latest data shows 14% more stores closed and that's in every single state there were no reopenings 107% is the average number of infections relative to the long-run average we're running higher we are testing more. the number of infections we're finding remains above the long run average. finally, traffic as a percentage of normal traffic and it is still running just 22% let's zero in on the store

closings state level data from yelp the stores closed 0 to 8 %, those stores compared to a week ago up to greater than 22% what's a worry is the red states they're red because they're energy states. oklahoma and rr rr, what that suggests maybe is that you have another round of store closures, perhaps for economic reasons whereas the first round of store closings might have been because of the co-vid crisis, there may be another round for economic reasons. you can see that in the energy states three elements of the road back. first state governments lifting restrictions we've seen some of that. second do businesses feel safe enough to open third, do customers do carl, we're able to track in realtime if they open it, will they come? and so far not a lot is open and not a lot of people have vent e

ventured out >> it's a good way to look at it keep us posted let's hit insurance. usaa returning another $280 million to the members totaling $800 million in dividends with fewer drivers on the road because of the coronavirus joining us to discuss this, and other ways insurance is battling this, wayne peacock. first, how insurable is an event like this? a pandemic >> well, let's come back to what we do every day which is personal lines and serving members who have auto insurance, homeowner's insurance and their renter's products. i think those coverages are straightforward and we're well prepared to serve there. i think what's interesting right now is that all of the data that you would use to determine how often folks would crash and how much those cost, the crashes cost, are thrown out the window given the demand shock and all the stay at home orders that are

resident around the country. >> so that's why you've decided to return this money, this auto insurance to your members? is it making a big difference? >> it is we are built to help our members. we serve every day and work hard to serve well in times of great need what we've seen through the middle of march through today is that our members are not driving because of stay at home. the result of that is we'll have fewer costs to serve those auto products this year, and we're able, capable, and willing to deliver some of that early to them in the form of distributions. so we did that a couple of weeks ago for two months at 20%. about $520 million and last week we announced that we'll do it for a third month. it brings it to about $800 million that we'll be returning back to ussa members part of our broader mission to helping when folks need us most. about 700,000 of our members

have accessed programs across insurance and banking to defer payments or suspend interest, to suspend fees and not cancel policies during this really tough time and we're really prepared to continue to do what we have to to help our members at this time >> well, wayne, you mentioned it it is a really tough time. so we're always looking for good news i would guess there is some based on the accident rates, and fewer deaths on the road i mean, what do the numbers look like and what are your expectations in terms of when america gets back to more work are things going to increase commensurately >> well, it's interesting, david. i think on average it's been about 40% to 50% fewer accidents for us over the last few weeks the numbers vary a bit week to week the last cup l weeks we've soon an uptick in the rates. not because stores are reopening as steve liesman was talking

about a few minutes ago, but i think there's either a cabin fever or string fever in the air, and we're noting if you drive around, there are more cars on the road and we're seeing that statistically in our accident rates as well just really in the last two weeks. it will be interesting over the next few weeks as states reopen and relax those orders, what the driving patterns might be, and how quickly we do or don't get back to normal >> wayne, your company came under criticism in the news a few weeks ago when the government stimulus checks started being mailed to americans and your primary members are veterans and military personnel were you actually withholding those stimulus checks from those members to help them pay off debt >> well, i think what we all know is that these programs came down very quickly. the right thing to do to get money in the hands of everyone in america who needs it, i think to the letter of the law, the

process that we used made sense. but it certainly wasn't the right thing to do. and when we became aware of it, when i became aware of it, we got it right it took us about 24 hours to make that change, and i think one of the lessons in the pandemic is you make the best decisions you can every day, and you adjust and adapt quickly, and we did that in about 24 hours. >> wayne, on traffic patterns, one last question on that as well some of these mobility trackers we're getting out of dwogoogle o walking and driving is ticking up a little bit. mass transit looks more l-shaped i wonder if you think you might be looking at a step function in long-term motor vehicle traffic versus buses and trains? >> well, you know, it's one of the great things for today we're trying to make good decisions today and then pressure test and scenario plan for the future i think some very interesting macro trends to consider, will

urban dwellers move to the suburbs because they want more space and escaping concerns from the virus. will folks go back to driving their own car as opposed to using uber or sharing rides? will the concern about mass transit say there's more be more focus on driving personal cars, all i think very interesting questions with a very wide range of outcomes associated with it we're studying all of those and scenario planning for a future through and then post-pandemic >> finally, you know, wayne, how do you think how many losses you're going to face across property and casualty as a result of this pandemic and do you think it would be appropriate for congress to act to step in and help your industry during this tough time? >> well, here's what i would tell you we built usaa to take care of members and to be there when they need us most and we ethically every day act to do the right thing and pay what we

owe and i think we have an upstanding industry broadly and i think the markets will function really, really well i think you're seeing already all of the major carriers made some decisions to return premiums back to members, recognizing that they haven't driven as much as everyone expected this year and then i think we have to step back from auto insurance and recognize although mother nature may be in one side dealing with the pandemic, she isn't really connected well with the weather and we've already had a very tough tornado season through the springtime with the expectations that there will be a tough hurricane season as well for all of us, managing this group of risks, managing them really well, connecting them back to future premiums, is what the insurance industry is all about. it's got a very long history of understanding risks and pricing it well and i think we're she strong advocates of having the markets function and function the way they have in the past.

>> wayne, thanks for joining us, from usaa. >> thank you all very much stay safe. >> you too >> we have the s&p off the lowe's of tlows down about 1.5%. the nasdaq is up led by the likes of amazon, netflix more "squawk on the street" right after this

earnings from ride sharing rivals lyft and uber could provide an important read on consumer activity and the economy. find out more on tradingnation.cnbc.com more "squawk on the street" coming up.

welcome back to "squawk on the street." i'm eric chemi stocks are trading lower to start the week with most sectors in the red real estate stocks are among the worst performers today even as parts of the united states begin reopening shopping center operators remain the big laggards within real estate. companies like vornado, federal realty and kimco are all down at least 3% today these retail reits have underperformed the broader real estate sector which itself is under performing the s&p 500 by 4% in 2020 sara, i'll send it back to you >> eric chimmy, thank you. we're going to take a quick commercial break checking on some of the winners, f.a.a.n.g. doing well also coming up on the "closing

bell" we'll talk to tyson food's cfo on what was a dismal quarter. of course the potential meat shortages in this country, plant closings and the president invoking the defense production ac cinupat we'll be right back. ♪

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are we risking lives to reopen the economy elon muy has more on that this morning. >> the entire meat industry is facing a worse case scenario how do you keep operating even in the middle of the outbreak the trump administration can

mandate the processing plants remain open even as the cdc finds 4900 meat and bopoultry across the country have tested positive one of the hot spots is on maryland's eastern shore and it's home to purdue farms. maryland's governor has called the outbreak a threat to the nation's food supply and local mayor jake day said profits shouldn't come before public health. >> we want that momentum back, the wind to once again be at our sails, but we can't do it at the expense of someone's life. we can't do it at the expense of someone's grandparent's life we have a sense of obligation to protect our workers. >> pure due farmers told us, quote, we remain focused on the health and safety of our people. even within this new hot spot

some residents are starting to push back against the lockdown orders just this weekend there was a rally to reopen local businesses carl, the good news here is that a new drive-through testing site is now open in the area and the cdc is on the ground back to you. >> elon muy with the story that's happening around the country, the natural process trying to figure out how to reopen market. thanks. good morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt coming to you live from various location ps market does want to test 2800. we got 2797 this morning, bounced off of that as we continue to look at various reopening scenarios, buffet's comments on saturday regarding stocks and the airlines and then renewed u.s./china tensions as well. >> we are going to begin this morning focused on the markets joys chang, jpmorgan's chair of global research, joys us now joyce, good morning. >> good morning, gre