s&p 500, 37 points higher. and the nasdaq up about 118 points we can show you some crude which is pushing a lot of this if you want to buy it by the barrel, you can do it. i don't know if they're going to put up the screen. there it is, up about 11%. 26.64. tomorrow is a big day, we have the jobs numbers, guys join us. "squawk on the street" begins right now. >> good thursday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber lots to get to this morning. as andrew says, another dismal print on jobless claims. nearly 3.2 million for the week, but futures green, as the theme of stabilization in april continues in earnings from paypal, square, grubhub, and others oil is on pace for its best week ever, up more than 33% for the week now now above 26, and jim, aderna is going to be a talking point.

phase two trial of its vaccine candidate. where do you want to begin >> beginning of june, they're talking about phase three. i love the confidence. there was a time where if you did that, the fda would really call you out say basically, how dare you plan phase three? you have to get phase two done this is a sign once again that the level of fda meaning business is extraordinary. the time that it takes to do these things is being at a level that no one has ever seen. remember, mumps, the longest to fruition, four years this thing is happening so rapidly, and they're talking about scaling if it's good so there's reasons for optimism. i know moderna i was the first to interview them these guys are scientists. all right, and they're using amazon web services to basically, if you want to look at like what a bank robber would do, you have to keep turning until you get the right combo.

that's what amazon web services does for those so david will love this, an algorithmic play, and maybe that's the way of the world. i was thinking that the way we would go would be j & j or pfizer, but if moderna can do it, you know we're going higher. >> yeah, we're going to talk to meg tirrell in just a moment, but does this deserve to be a focal point? as fauci suggested, are they in the pole position? >> i think it is a focal point i know fauci, there's some new revelation about fauci i have been hearing about from the right, but fauci liked this. he's not supposed to like anything this is the second thing he's liked. the first one was the remdesivir he compared it to a.c.t. i have felt, not to get bullish on a vaccine, until fauci said get bullish, meaning that wait until next year. fauci is sticking his neck out here i think it's impressive that

he's sticking his neck out when you see these guys, i mean, this is their world. this is rna world, and i know that j & j is fabulous i know the pfizer guys are incredible, the oxford guysare great. but these guys are -- they are in pole position there's a fabled video go around about the kentucky derby with a lot of the different named horses the one that won is too scat alogical for tv, but let's say moderna. i'm surprised. i don't know what the odds are, david, but this thing is flying. >> yeah. well, i want to hear more about those odds from meg, carl, so i think she may be available let's bring her in >> yeah. let's do meg on that end, remdesivir looking at approval in japan morning, meg >> a lot of news coming.

moderna part of announcing its quartingly results, saying the fda did give the go ahead yesterday to begin the phase two trial. and also saying that they're finalizing the protocol for the phase three trial, which they now expect to begin in early summer they say based on these timelines, if all goes well, potential regulatory approval in 2021, the ceo on the call this morning talking about that acceleration of timelines. take a listen to what he said. >> today, we're very happy to announce that we received yesterday clearance from the fda to proceed with phase two. in just nine days from rna, the fda gives us a green light we plan to stop the pinnacle trial as soon as safely as possible >> so guys, the next thing we're waiting for is the read-out of the phase one trial. those results should be

available, we hope any time now, and that will be the first human trial data on a vaccine for covid-19 and just to remind you about these timelines, they only began that phase one trial in the middle of march. and as jim pointed out, they're already accelerating their timelines for beginning phase three. just in the end of april, they were forecasting that was going to start in the fall now they're saying the phase three could start at the beginning of the summer. these timelines are just getting incredibly compressed. and it's really amazing to watch. of course, this is a new technology, a new virus, and so there are going to be a lot of questions as this proceeds guys >> meg, i am aghast, we know that there are many vaccines out there. you have covered them. where once you start giving them to healthy people, things really go wrong and people, sometimes they used to say we have to give them for a year before we know something going wrong. this is the shortest timeframe is there concern that perhaps they are breaking the

long-standing rules of the fda that you should not give someone an illness, a healthy person an illness, that could kill them because it sounds like this is almost manhattan project in itself >> yes, that's a really good point, jim there have been instances before, specifically with dengue vaccines where giving the vaccine made the disease worse when people encountered it so that is a concern here. with vaccines, especially with the new technology i have been talking with a lot of people in the industry who say, yes, it's very exciting how fast this messenger rna technology can move, but don't count out the tried and true technologies from companies like johnson & johnson and merck, which we haven't heard as much about, but we had ken frazer on last week saying they're in the vaccine race as well and they're typically quieter about their communications we shouldn't count out those big companies because their timelines right now don't seem as fast. so there are definitely

concerns, and every time i talk with moderna or anybody else in the space, i ask how much time do we need to know that these vaccines are safe since it's a new technology they seem to think they can get that information within these time periods, but i think there are still questions, of course >> and meg, it's david as you pointed out, we had never dealt with timelines like this the market, obviously, and investors overall, not to mention all of humanity very focused on it. what about manufacturing you know, we heard from pfizer as well. maybe something sooner than we had thought, perhaps again, manufacturing at scale seems to be such an important part of this can mudoderna do that, can fie r pfizer do that are we talking to getting to the point where you have enough doses available for people around the world >> yeah, it's a hugely important

question and actually, in rick bright's whistleblower complaint, the barta director, who was removed from his job earlier this week, he detailed concerns about the supply of things like vials, syringes, and needles. all of these things you're going to be needing to supply vaccine to millions or even billions of people if and when we have a vaccine ready. so i have been checking with companies. is that a problem? are they worried about that inand these companies with huge manufacturing capacities say no, you know, based on our projections that we have given, we are able to provide pfizer, for example, hundreds of millions of doses next year. moderna has said with its new partner, they aim to be able to supply up to a billion doses per year however, we don't know how soon they could get to that threshold. you're asking such an important question you know, merck put it this way. they're being asked to shorten development timelines by unprecedented amounts, and increase manufacturing capacity by unprecedented amounts, all at the same time. so these are going to be huge

challenges we're going to watch them try to solve in real time >> moderna, i met them when they came to jpmorgan conference two years ago. you and i were there, meg. they were sitting on the sidelines. i went up to a guy, i didn't know he was a real guy, he said i'm with this thing, moderna this company, it reminds me, if i were pfizer, if i were j & j, butch and sundance, like who are these guys could you please tell people how this is a different sort of drug company? this is not a traditional drug company. this is a computer-driven company. >> certainly, moderna does use artificial intelligence machine learning to speed up their discovery process. we hear about this from a lot of different companies. all drug companies are using that in some way to speed up their discovery. moderna is a very interesting

kaerm company. they were founded with this idea that messenger rna would present an entirely new way of delivering medicines, essentially delivering genetic materials to the body to then have the body's own cells make the medicines in essence so it's an amazing technological idea, but critics point out this has never been approved before so that's important to remember. there's a ton of promise and excitement, but it needs to be proven >> yeah, i mean, look. j & j is great i was speaking to the scientist who is running the trial up at harvard, and the guy is such a heavyweight, made me feel like an idiot i don't know if he intended to perhaps. the guys at moderna, it's like a little shop. it would be unbelievable if the little shop -- these guys are david. and the goeother guys are dolit. i'm putting my money on david. david, are you putting your money on david >> always. always i still believe, jim >> you do? all right, well, this would be amazing. i got to tell you, meg, without

a proof that this thing thuwork, this would be something. i don't want people to get their hopes up, but this would be something. >> you have to hope it works >> i'm thinking of buying hertz. what do you think, david maybe a cruise ship? >> buy the bonds hertz bonds. sub-debt trading at 14 cents you can buy the senior debt at about 36 cents don't buy the stock, buy the bonds. >> play that instead of moderna is what you're telling me? >> yeah. >> all right, guys we're going to take a break. a lot to get to this morning including results from square, lyft, peloton, costco, viacom, etsy, fox, we'll get to all of that and talk about claims wchhi came in with rough print of more than 3 million people. back in a moment (soft music)

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a lot of results to get to on this thursday morning. jim, you seem to have a special place in your heart for those who are still trying to short beyond meat or lyft or some of these others >> going against beyond meat is going against history. and not just because i had an unbelievable cheeseburger last

night that they gave me. the reason why there's a guy named dr. willet, the foremost nutritional and epidemiologist at harvard everybody is foremost in this era, but this guy actually was predicting a pandemic basically because of the food chain. and beyond meat is now an ethos. i played a tape about how mcdonald's said it's a bit of a hobby. ethan brown did not go for that. i think the more important thing is the starbucks relationship in china. i think they could make a deal with starbucks this is how powerful this concept is those who are betting against this because it has too much sodium, check the sausages, they don't. i really believe that what's happening in a lot like zoom, when it comes to staying at home, the tyson story, which obviously is abysmal, plus a sense that maybe the wet markets are part of the problem with the food chain, it's all going beyond meat's way.

what is beyond meat doing? they're cutting prices so the price of meat is going to go up, the regular meat, and the protein that skips the whole meat chapter is going to do well beyond meat is one of the most dangerous shorts in this market. >> you talked to ethan brown last night on "mad." here's what he said. >> we have reached the point where there's so many livestock on the earth's surface that we're running into challenges with keeping that system working and that supply chain is now as many in the industry themselves have said, is under enormous pressure i think we are reaching a tipping point. >> oh, yeah. look, before i became jimmy chill, i would have said, you know what, what really is wrong here, they'll never make it because what's happened is food service is kind of dead because of what's happened with the economy and what's happened with the shutdown the retail demand here is so strong he is trying hard to keep up with demand. now, i know my skeptical friend,

and notice i use air quotes, friend, my skeptical friend david faber will say, jim, it's still a very small company david, so was amazon, so was facebook so was alphabet. >> really? >> yeah. >> that monumental is the opportunity for this company >> i think that this food -- the total addressable market for food, i mean, for beef, for pork, for chicken, is monster, and i think that this is -- i think mcdonald's is dead wrong there's no hobby here. the hobby is going to end up being meat particularly if we hear more stories about the food chain i think the pandemic is saying start eating plant-based you may say that's pie in the sky, and you know what, pound sand it's real. the move is real >> is there a chance we run out of something like that, though is that in question or there's an endless amount of peas? >> endless david, endless remember, there's a glitch in

eating protein, and the glitch is that it goes through an industrial cow yeah i used to have a longhorn, david. i don't want anything going through that beast on my plate i'm getting fed up myself. i might go vegan >> have you sworn off meat have you are you going to do that >> i don't know. i had a t-bone on sunday it was pretty good >> tasted pretty good, didn't it >> i can swear off meat because i'm tired of the idea that when you go to a meat packing facility, the question is how much, how much covid is in the place? i'm tired of covid >> we're all tired of covid. >> yeah. so is smithfield foods which is going to reopen sioux falls after three weeks closed the world's biggest pork processor. the ag secretary yesterday did say he sees full capacity back in a week to ten days.

so there's going to be a fight about how much beyond meat can lower their prices and maintain margin as the meat industry tries to get back, but you're a believer we know that by now. >> i am, and the people behind this thing see what's going on there's less sodium. the sausages, by the way, which are quite good, now have less fat and less sodium than the regular sausage. so ethanbrown is constantly improving things he's doing everything he can, don't forget, impossible has gmos younger people do not like gmo this is going to be a very big company. is he tesla? no someone said, jim, he's not amazon, come on. i'm just saying, it just starts like this. you've got an evangelist an evangelist that makes real good stuff, and you have younger people who don't understand the concept of the industrial cow. they're looking at these cruise ships where they make the meat, oh, no, they're not cruise ships. they're plants and they're saying hey, you know

what, i see this stuff at my store, and when it becomes cheaper, which it is, it's going to come through the price of regular beef, i think the adoption is going to be strong yes, i am a believer i'm a believer in the stock. i am not a skeptic at one point i was skeptical, and then i got young i was so much older when i hated it i'm younger than that now, david. >> that was a song i know it was. jim, listen, i would remind people that when you become an evangelist on stocks, on certain stocks, oftentimes you end up being correct. shopify is a name you have been talking about for years and it's now the largest market cap company i believe out of canada. >> who created fang? w who was that fang guy? my head is so big, it can't get through the door >> i'm only a friend in air quotes, so really, i have no memory of ever sitting next to you. >> you told me you don't like anybody. until you said i don't really

like anybody, i thought i was your friend. >> once again, you're misquoting me out of context, incorrect >> all right yeah y have seen that done all right. >> mm-hmm. yeah we have ten minutes until we get an opening bell. we're also going to talk to greg hayes, the ceo of the old united technologies it's now raytheon. as well, rtx, the symbol there, reporting earnings we want to hear what mr. hayes creto say about theurnt environment. more "squawk on the street" coming right back. working day in, day out at&t is here providing support with advanced services for first responders and connecting temporary hospitals, mobile testing sites and emergency management centers because until their job is done it is essential we all have their backs it's what we've always done. it's what we'll always do.

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pnc bank very large movers premarket, viacom up 14 paypal up 10 peloton up 19. futures are green, but can they hold on this thursday? we'll find out when we get the opening bell in about seven minutes.

welcome back time for a mad dash. as we get you ready for the opening bell about four minutes from now. a lot of earnings to talk about this morning and the stocks, of course, related to them. let's start off with bristol myers for the mad dash >> david, bristol myers.

surprises. surprises all over the place key lines, eloquist, the anti stroke drug, much better what i do want to say about eloquist, which is the real driver here, a lot of people feel the driver is optivo, which is anticancer. eloquist is the superior stroke drug when my father had a stroke, there were many different stroke drugs at work. you had to choose from them. the one that is now becoming the standard and may get 100% of the market is eloquist that's the driver. people don't talk about it i can't wait to sit down with dr. caforio, the unsung genius he put together this great deal. you're going to find sellers they're all over the place, but this may be the least expensive. three times earnings because people don't believe in celgene that he bought and the fact that the company has a big patent cliff. i believe. i genuinely believe in bristol

myers. >> amongst the group, is it one of your favorite names, jim? >> indeed, it is because the group has so much game, i mean, it's hard. novartis is on the far turn, j & j, and then dr. fauci. there is really -- these companies are doing so much good, but bristol myers is not in the race for covid. it's not been their strength glaxosmithkline, j & j, pfizer, they're all in the hunt. bristol is just doing its thing. the merger is a good one those who are against the merger, i think you have to rethink. just like the people have to rethink the merger with allergen and abvy, now that you can go see your dermatologist these are two great combinations they're working. i approve. >> yeah, abvy and allergen likely to close tomorrow lilly is the best performer in the group amongst big pharma >> dave ricks is doing so much

right. quietly, indiana, stocks doubled. people didn't believe his ra drug people thought his diabetes franchise could be attacked. he's doing so much good, and by the way, he understands the system better than anyone. yes, people say who really represents pharma in a way that is quietly the smartest, and they always go to ricks. even though goreski is doing a great job at j & j, ricks is the gold standard because he's nonpromotional, really good. and very understanding of the system tremendous guy you would like him good guy >> i would i'm sure i would i listen to him whenever he comes on >> you would like him. he always says he doesn't really -- he wants to be - >> well, that tends to be the case with a lot of these people who you somehow convince of that not sure why you do or why you're successful in doing so. but we like to share, too. come on, jim

>> we do including greg hayes who you booked i don't want to take credit for that >> we're always happy to have mr. hayes on carl, as we get close to an opening bell here, of course, people need to keep in mind the unemployment claims this morning. i don't know, what's the full number we're up to at this point, carl? >> it's 33.5 million over i think seven weeks so you tack on another 3.169 million this week. there's the opening bell eric millen is the nyc facility supervisor at the nasdaq ringing the bell remotely. it's, again, limited a software provider celebrating its ipo. we have to talk some media viacom subs up 50. best month for streaming so far. this new deal with youtube that was a double-digit gainer premarket. >> yeah, the stock is opening up about 12% this morning of course, it has been nothing but pain for those shareholders as we know well and they know

well really, ever since the deal was announced and the cash flow numbers have come down this was a good quarter for viacom, at least based on the expectations as you point out, they did generate almost half a billion in free cash flow. very different than last quarter. the advertising, you have to take the super bowl out for the comparison, the same way you have to take it out for fox because fox had it this year in this quarter and when you do, ads looked okay i did speak to bob backus earlier this morning, the ceo of the company. we talked about the advertising market he said we'll see significant impact in the secondquatorer in advertisi advertising. he's hopeful the third and ninety-four fourth quarters aregoing to show up. may so far, his expectations are for june, the scatter market ads is looking better, certainly than it did for april. we're dealing with an unprecedented time here, in so many industries, the lack of up front. everybody would have their up front right now, booging their

advise tizing for much of the year that's not happening we're going to hear from the nfl on the fall schedule, but that's just the normal fall schedule. he did tell me they are in constant conversation with the nfl about what the season is going to potentially look like at this point, and he did tell me he believes the nfl is very much focused on playing. exactly what that's going to mean, well, we're going to have to wait to see does he expect more cord cutting? absolutely we have seen it. we continue to see it in terms of people signing off, going with the broadband, going with the youtube tv, which is on behind me. it's a big delay behind he as well, but they do sign a new carriage agreement with youtube in june, the viacom, key viacom networks will be available on that the fees are the same that they would be for the regular distributors so that is seen as a positive. and then overall, streaming. you mentioned it, carl pluto, their free platform, 24 million maus this is all domestic, and cbs

all access and showtime. they don't split it up for you, but 13.5 million that did look like a pretty good number as well so a positive response this morning to viacom's numbers. local ads continue to be hard hit. fox talked about it. viacom will talk about it. your local advertising restaurants, auto dealerships and the like, they're just not going to be there in terms of ads. certainly weren't there in april. probably not in may as well. >> all right remarkable fox, too, guys, which talked about ad revenue going down 50, but even as, jim, the nasdaq is now green for 2020 >> this is nothing short of incredible there are so clearly two markets. there are companies that are actually doing okay or actually -- i don't want to say benefitting because it sounds

too mercenary, but you take a stock like paypal. i mean, they're just doing much better because of the way people buy things during a pandemic i mean, it's really incredible when you look at an etsy, i have etsy on today. that stock is down four. it wouldn't shock me if it's up by the end of the day because it's about how great things have done since the pandemic started. it is a weird world that the nasdaq is filled with companies that are zoom-like, where you just get -- you just have such good numbers and so i think it's just two economies. there's the economy that does well and the economy -- and health care. and the economy that does poorly, and i think people who are looking at the stock market and think that we're nuts because the pandemic, remember, the stock market is made of companies like zoom and made of companies like paypal. made of companies like microsoft, of amazon, and these are companies that are doing

terrifically in this market. and then there's travel and leisure and industrial and retail and restaurant, and they're not doing well and obviously, we're not trading hair salons here, right? we're not trading locksmiths we're not trading little boutique coffee shops. so it is not -- it mystifies so many people, but it shouldn't if you just look at the makeup, and it's why the s&p is not a threatening index to be in, because they have a lot of companies that do poorly in a pandemic we saw about $13 trillion in winners in the s&p out of a total of about $27 trillion, so just keep in mind, the market is not made up of companies that fail under a pandemic. >> no, but we are a consumer-led economy. jim, and to the extent that the consumer is not there to participate in the full manner, that eventually trickles through to everything.

>> but our companies are worldwide. >> microsoft, customers a well good but they're international and david, if you want to know, mr. president, hold your ears. if you want to know how you really come with numbers here, you come through with numbers from china the technology stocks that do business in china, they are on fire so any time you hear that the trade people from our country are talking to the trade people from china, you may loathe the prc, but oh, man, the numbers that you're getting out of china, and then fang in general. facebook, not china, but it's made up for what you do when you're sitting at home amazon, how many things did you buy? i bought like socks and detergent during the intermissions. okay, it's incredible. netflix, what are you doing? what part of netflix are you watching this weekend? we're pathetic alphabet it's just great when you're at home and you're a kid and you're cheating on your school work with alphabet. these are the companies that are made for this environment. microsoft. i don't know

apple. >> look at peloton, guys peloton this morning, since the ipo, since the ipo, it's up 69%. over a similar period, s&p is essentially flat sales up 66%, jim. there was a time where people didn't believe that it was -- that the elitist character of the product could ever be shaken >> it's an ecosystem >> as we said yesterday, the market came right in its direction. >> they're talking about it as a treadmill, but this is one where heather gaines, who is key on my "mad money" team, put one on order. they're talking about late june. i mean, moderna is going to get its results before you can get anything from peloton. this thing is incredible the gyms -- how many gyms can open social distanced and wiped down how many people can go to lifetime you know about a & b, right? david, your kid -- is your kid going to be in a or b? that's the big thing people are

talking about. a goes to school, b stays at home you're going to have to go to a gym. when you go to the gym, you have to take a number or be assigned a number, and i don't know what you do if you own five planet fitness franchises what do you do you buy a peloton, and you just, i don't know, you crush it you crush everybody else peloton made for this environment. really good conference call, by the way. fabulous conference call >> it's funny, jim, we talked about how the crisis has accelerated the down move for so many businesses. retail, of course, being the key one we talked about. but in this case, it seems to have accelerated sort of the adoption that might have taken place over the next four to five years in really what may be four to five months >> and wait until they open back to where i bought my wife her peloton. the clothes are off, david, of my wife on peloton, not herself.

i made that kind of ill fated error last time on the show. i'm moving the peloton to the beach house where she is sequestered because of this quarantine i get to see my wife this weekend. i think it could be interesting. i remember what she looks like you know, dynamite are you allowed to say that about your wife? i think so >> that's a very nice thing to say. >> she's bringing the peloton, because you can't go to the gym. the gym is considered to be like an airplane. it's like a cruise ship. i have norwegian on tonight. that was a plug. >> that will be interesting to hear so many different numbers -- >> will you watch? >> i watch i watch. you know it's on all day long now it never stops, jim. yeah >> i'm sure. >> i'm always home to watch now. it's funny and to endlessly take use ll phone calls. but i did spend a lot of time yesterday afternoon as i know you did talking about some of

the earnings that came out, including t-mobile i watched mike seifert join sarah and wilf on the closing bell that stock is up sharply, along with so many media we mentioned viacom earlier. that was the best in the industry >> look at that stock. >> yeah. talking about a lot of positives at this point. >> legacy? >> well, some would say it is. he's no longer a part of the company. john ledger, but it's now mike seifert's company. he's saying all the right things on delivering on the energies of the deal that they waited so long to close, and on margins. we'll see whether they can actually deliver, jim, as he continues to say they will but the stock is responding very positively you see that this morning, with the overall tone as well back to media. fox is up 8.2% again sort of the positive commentary,

at least to a certain extent based on expectations from the call, in terms ofmarket, local is terrible, but they're seeing national. things are changing but they're not that bad, and this belief that football and sports is going to come back certainly football, which you're very focused on, we're very focused on bob backus from viacom said they're ready to engage with them whenever they want about doing a new deal, but that hasn't yet happened. >> the players will be sequestered in hotels. and it will be remarkable, fanless. a stock that's not moving up is raytheon, david. raytheon technologies. so we have to find outwhat's going on why don't we bring in the person who runs raytheon, the new raytheon, which is the part of the old united technologies and the old raytheon, and i thought the quarter was very good. i want to speak to greg hayes, ceo. greg, you're no stranger welcome back to "squawk on the street." >> thanks, guys.

thanks, jim. >> all right, so what would have happened if you just kept united technologies aerospace by itself without merging with raytheon. would the discussion be with mnuchin, with jay powell >> look, the aerospace business is the legacy business, they're going to have a tough year we're going to see sales probably down 50% or so on the commercial aeroside. keep in mind, both of those businesses have a pretty solid defense portfolio as well, about 30% of their businesses. so we weren't going to go bankrupt if we stood on our own. we would have probably been close to break even for the year from an earnings standpoint, but we wouldn't have been looking to get a handout from the government it's good franchises the business doesn't go away, but it is a tough time in commercial aerospace, as everybody knows. >> can you talk about the defense side which i find very interesting because defense is holding up. you pick up the patriot missile, which has always had good sales

but the gross margins have been wanting. what can you do about that to make sure that you take unbelievable technology and start making more money with it? >> well, look, i think the key with the merger of raytheon and utx was technology merger as well as a talent merger. we come into this merger between the two companies with about $70 billion of defense backlog i think we have a good track record on utx side of driving cost reduction if you thing about the engine for the joint strike fighter, we built -- i think we just delivered the 500th fighter, and that engine cost has come down from $20 million to about $10 million and the margins have gone up. and we're going to bring that same discipline to all of the raytheon businesses. we have solid businesses some of them a little more challenged from a margin stand pnl standpoint, as you said, but as we think about the talent we bring together, we'll have the

opportunity to do more on supply chain to find savings there as well as bring more automation to factories. we have 195,000 employees across raytheon technologies and about 95,000 of those folks are working from home, but i have another 100,000 that are still showing up to work every day to build product and to support customers. and it's been a challenge to get everybody there, but we were trying to keep them safe, providing ppe, and i would just like to say thanks to all those folks for supporting the customers. this is tough, but over the long term, we'll take cost down and we'll get margins up across the business i think we've got -- i think you know, we've tried to simplify the organization the raytheon organization. we have a missiles and defense business and an intelligence and space business and those guys are both focused, laser focused on cost reduction, synergies, and margin improvement. >> let's go there. let's talk about commercial

aerospace. i have to believe that next quarter is just going to be plain awful. >> i wouldn't disabuse you of that notion, jim look, the first quarter, right, we had a really solid first quarter. commercial aftermarket was up 4% and that was in spite of the head winds you had on the 737 max not flying and some other things at collins. so a solid first quarter and if we think about like inductions into our overhaul shops, just to give you an example. you typically get 80 to 100 engines a month. it takes about 90 days to overhaul those, and we generate revenues as we overhaul the engines. for the month of april, that was 24 engines instead of the normal 80 to 100. so yeah, it's going to be tough. on the collins side, we repair many of the things around the world in our repair shops. that was down about 55%. so this is going to be a tough

quarter on commercial aero the good news is we see some light at the end of the turnal as we have spoken to the airlines they're starting to see some bookings out in the summer months and fall starting to pick up you'll see a recovery, but clearly, q2 is going to be very tough. >> yeah, i would imagine and greg, it's david a slow recovery. i wanted to go back to your comments about sort of the factory floor, the 100,000 employees you have coming in every day. outfitting them in ppe, as you said, but what about the efficiency of their work how do you socially distance when you're building an engine, and if you are, does that impact their ability to actually make that engine more quickly >> david, it's a good question what we have been doing, and again, engines are a little bit different because they go through a production line, but usually there's one technician working on an engine and it moves along the line, so it's

not as difficult to socially distance on the engine line. more difficult in some of our facilities where we're doing mass production of overhauled turban blades, for instance, where you have 500 people in a factory. what we had to do there is we stagger shifts so we have some people coming in first shift we added second and third shifts we have weekend shifts we're trying to where we can't socially distance, we're trying to stretch out the work week, if you will, to try to accommodate those people we have our own mask manufacturing setup in malaysia. anotherfactory here in the u.s we're taking about 100,000 masks a day for our folks. we have done a pretty good job of sourcing ppe, but we wanted to make sure we were self-sufficie self-sufficient. we have temperature stands, every employee who comes in today is getting their temperature checked. we'll look at testing, once the antibody tests have been sorted out, we'll probably be testing employees on a regular basis for

the antibodies so it's difficult. there's additional cost. we mentioned on the earnings call, probably about 8 cents to 10 cents of headwind, maybe a couple hundred million in costs because of that. that's not accounting for inefficiencies it's expensive, but at the end of the day, you have to support the customer we have to do this work. we have to deliver to keep the war fighters safe and keep the airplanes flying >> right you know, which comes back to the larger picture, of course. part of the reason -- well, part of the promise to shareholders of this deal was significant returns of capital to those shareholders you're putting that off a bit right now, aren't you? i believe the $18 to $20 billion you talked about last june, you're now saying is going to take place over four years versus three years why? >> why well, because revenue passenger traffic is 95% lower than what it was last june

it's pretty simple we came into this merger with about $8.5 billion in cash on the balance sheet. we have about $25 billion of debt we're in a solid position from a liquidity standpoint we took the board through this a week ago before we declared the dividend we took the dividend to $1.90 a share. that's up significantly from raytheon for 18% or so and as we had the conversation with the board, we went through a lot of different scenarios and said how bad can it be even in the worst case scenario, we still had adequate liquidity to fund the dividend for the next three years there's just so much unknown out there, i could not possibly recommend to the board to do share buybacks this year we still see good cash generation over the long term. but i think our commercial aero businesses for this year where we expected about $3 billion in positive cash flow will essentially be break even from a cash flow standpoint.

so that will recover over the next couple years. it will put us in a position to do share buyback we also have a lot of opportunity on the balance sheet if we want to borrow money in this environment, borrowing to do share buybac we're going to keep our p podder -- powder dry if the stock lags under intrinsic value, we'll be in the market but not this year >> how about china and china aero space >> we saw the same thing we saw in china as the u.s. that happened in january and february today we've started to see a recovery if you think about the global fleet. it's about 30,000 aircraft out there today. 55% of them are parked about 40% of the parked aircraft are co-vid related the beginning of the year it was about 15% parked china today, three months in,

they're park is only about 20% we've seen a return of passengers in china itself of course, we have not yet seen the international traffic return that may be some time. but i think t heartening that you see china as a reflection of the u.s. economy china is the second biggest passenger market after the u.s and i think the dynamics we see in china will probably play out here in the u.s. >> it's carl one quick question on the difference between balance of dividends and furloughs. do you expect companies to have a hard time maintaining dividend when they're letting people go >> that's a question we wrestled with when you're making decisions about having to reduce people's salaries, we took a furlough or 10% pay cut for all corporate

folks and all the folks on the commercial aero side, we're furloughing people as volumes decline, but we have an obligation to our investors, many of them who are our own employees to continue to pay a dividend we didn't take the dividend up a lot. i think it was 1% from an adjusted basis we thought it was important to signal the strength of our liquidity in spite of the difficult times. i've told employees we're going to try to save as many jobs as possible we have a couple thousand openings for engineers on the legacy defense side. we're moving folks over. we're moving production to some of the facilities in cedar rapids we're going to do everything we can to maintain employment we know there are going to be furloughs and layoffs as volume goes down. but at the same time i think it's important to signal the fact that we still believe in long-term value of the stock and

we won't buy back stock. we will support it with a dividend >> overall, because you're a terrific businessman who had insight into otus and climate alcohol companies. is there any chance that you think we may have bottomed, the country may have bottomed in the month of april >> certainly from a commercial aero space, i think you can't get much worse than down 95% if you look at tsa traffic, i think it's down to about 150,000 people going through versus about 2.3 to 2.7 million on a regular basis. i think that has bottomed. we've heard anecdotely you're going to probably see some pickup here in may and june as you get to the summer season the fact is people can only binge on netflix for so long and zoom is fun, but you can't

experience the eiffel tower from a zoom meeting and you can't take your kids to disney land on zoom people will start flying again and recover. i think april is obviously from a passenger assistant point low. that will play out in the aftermarket over the next six months or so and probably then seeing a recovery. i think the bigger issue is going to be on the oe side where today you have boeing and airbus cutting production, but nobody needs new aircraft when 55% of the fleet is parked. that's going to take longer to recover. you have to take the parked aircraft and put them back in service and then yol see demand on the oe side legacy otis is probably as recession resistance a business, a strong service business. i think judi marks will talk about that later today they made it very well through the '09 financial crisis carrier, again, they saw an

impact in the first quarter. they'll talk about that. but i think, again, the recovery will happen. but the ultimate, the bad bad news is the month of april, and i think everything will get better from there assuming we don't have a big resurgence in the number of cases and hospitalizations. >> all right well, that's excellent, and i have to tell you, gregg, i think that may be one of the reasons we're having such a good rally over the last couple weeks we heard from gregg, the new ceo of raytheon technologies it's always great to have you. thank you. >> thanks, guys, take care >> thanks, gregg jim, your point is good on the rally. nasdaq is green for the year dow is eyeing 24 k s&p 2890 oil is trying to hold 26 we're back in just a moment.

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- [female vo] restaurants forare facing a crisis.v. and they're counting on your takeout and delivery orders to make it through. grubhub. together we can help save the restaurants we love. jim, you got a packed show tonight. >> yes stocks in the market, we have etsy we have square, and get this we have nowhere weekrwegian crue they're not afraid to talk they did a big deal. frank delrio wants to talk guys, fabulous show. fabulous >> really good, jim.

yeah chopped a lot of good wood today. really quick, we have a minute here what did do the bulls need to do to prove they have the ball here as we once again rotate around 24 k, 2890 >> we need to see there would be some widens of the rally here, maybe it's not for retail, amazon, target and well mart for restaurants maybe we get darden and mcdonald's to move. we would love to see any pulse in the actual industrial market. i think raytheon might be giving you that and then i think we're okay. i think april, because it was so awful may be a trough. i'm going to say it. i know it's dangerous. maybe the airlines can rally wow. i said it. i said it. >> hey, you know, boirng's the top dow component for the

moment it makes sense with what we're seeing in the first hour we'll see you tonight. >> i just want -- boeing's 24 million may have been the bottom they got that 25 billion i think people felt they were going to have to be bailed out there was no bailout big. >> maybe we'll look back and think it was historic. jim, we'll see you at 6:00 p.m in the meantime, good morning, welcome to "squawk on the street." i'm carl quintanilla with david faber and sara eisen coming to you live from various locations. once again the bulls are trying to make a run. almost all the dow components are in the green despite another difficult print to look at on jobless claims more than 3 million people it takes the total to 33.5 million as it was said this morning on the "today show," the number we get tomorrow on jobs probably won't reflect the true number of pain given others who might still have work but fewer hours, lesser pay, that kind of thing >> it is shaping up to be an

ugly report for the month of april on jobs. let's get to steve liesman with more on the claims number today and what we can expect overall steve? >> yeah. thanks, sara the number 3.169 million, just a little bit of an aside here, creates a quandary for us how to round this number. all the numbers to the right of the decimal were the normal numbers we'd report. just add the three we're keeping it out as far as we can go. 3.169 million claims that's down higher than the estimate 22.6 million continuing claims that's a week older but it shows the people getting benefits. insured unemployment rate is those eligible for unemployment in the nation receiving it that's 15.5. we have a slightly different number from carl because we count an extra week, 33.8 million a study decline on the chart in the number of claims and yet, it remains orders of

magnitude higher than a normal week which we have 250,000 jobless claims take a look at the hardest hits by state, by the unemployment rate michigan followed by vermont, connecticut, pennsylvania and nevada which has been a huge problem there with the closure of the casinos the states with the fewest claims, some of these are doing much better. arizona, utah, wyoming perhaps then the rest of the nation, but look at florida at 2%. we believe that's almost entirely a problem of them processing and paying claims with their unemployment insurance system being really a national story i've seen some data that showed that just 43% of those who have filed have received claims or are being paid claims in florida. so they have a long way to go to actually get up with the rest of the nation they're 2% compared with 15.5%

i think there's three economic things to think about. you have the wave of unemployment from the shutdown you have an economic wave of people who are not making it businesses are not making it and then you're going to have another going back the other way which is perhaps some of the decline happening from the reopening. sara >> my question, steve, is you've heard this anecdotely. because of the cares act and there's new generosity in terms of what people are getting on filing unemployment claims on what they're getting if they're getting more than they would typically make, how fast can the return jobs come back and whether they do come back >> i think there's an argument that in some states for a brief period of time there will be an incentive to stay home i believe the unemployment claims run through july.

but it's only about half the country where they'll get more than they made but that's not going to be the thing that determines if people go back. do people want to go back to work in almost surely. are people going to be afraid for their jobs in a situation where there's going to be a lot of unemployed in the country so i think the wages may attenuate the length of it for some americans i think the biggest problem is going to be are stores open? do businesses open do customers decide to go? that's the problem we'll have, and by the way, it may turn out that having these extended benefits through july may end up having been the right call to give more people the aid and the been fits they need. >> yeah. let's hope so, steve i know you saw goldman's piece earlier in the week. because the benefits are so robust this year, they see disposable personal income positive for 2020. that's not what we certainly

were considering when this pandemic first broke out >>. >> no. what's interesting is the extent to which it's spent or is it saved? there's two factors. peep don't have an ability perhaps, people still employed, to spend as much as they did before those receiving benefits obviously are having other issues when it comes to their income the other issue is when we go through a shock like this, savings rates seem to escalate we saw a massive savings rate of 13%, 14% the story is not going to be the income story the story is going to be how much of people's income do they feel secure and safe enough to part with, and one of the lasting things we'll be watching is do people feel like in the new world on the other side of this, they want to go to bed at night with a bigger nest egg

than they had before >> steve liesman, steve, thank you very much. we'll see you soon >> pleasure. and want to bring up a few other threads. factoring into the market, because you see these crazy terrible unemployment numbers like we got and the market higher and that has been the story over the last few weeks. in fact, most days where we've gotten bad unemployment claims, the market has gone up in other words, investors are looking past the data which is considered old to the reopening of states and how the economy might look and get back. on that note, two encouraging pieces of news from china which people are looking at because they're so ahead of us in terms of the virus china exports data, surprise rise of 3.5% compared with the same month a year ago. economists looking for a fall of 15%. that shows some demand outside of china picking up but that china factories are getting back online, and then there's reports that the u.s. trade negotiator,

david, lighthizer, and the chinese vice premier are going to have a call potentially as soon as next week to talk about the implementation of phase one. and i think that was encouraging also for people who are watching the rhetoric between the u.s. and china and president trump threatening that china needs to make good on this trade deal for it to move forward the fact that those conversations might get back on the calendar, market usually likes that kind of stuff >> yeah. i mean, to that point, though, mike pompeo, the secretary of state, joined "squawk box" this morning. i'm sure you listened in as well, sara, continuing that line of arguments, saying that this is at the feet of the chinese. and that they did not do what they should have done in terms of communicating and a lot of other things talking about the intelligence, again. and just raising the stakes, it would seem in terms of what appears to be a potentially pitch battle between our country and china. >> yeah. yeah hammering the communist party of

china. definitely with the tough talk question is how much of that is just to gin up political will ahead of the election for electoral results as the president talked tough on china last time around, and how much is going to result in potentially new policy that investors would be afraid of like tariffs which could hurt growth in an already depressed environment. >> yeah. all right. we want to bring in our first ceo of the morning for us on squawk on the 10:00 "squawk on the street." teva pharmaceuticals stock very strong this morning, meg >> good morning. they reported their first quarter and reaffirmed their 2020 dwiend20 guidance joining us is the ceo of teva pharmaceuticals. i want to start on the 2020 outlook. tell us how you're seeing the business evolve over the course of the year. you said q2 might be tough, but

you're sensing a rebound for the rest of the year >> yes in the first quarter we had a big challenge with co-vid, and we were very happy that through hard work after our employees we were able to maintain continuity of the business and maintain supplies to patients we have them depending on our medicine every day it was a great achievement, and it resulted in good results in the first quarter. for the remainder of the year, we see maybe some reversal of some of the extra demand we saw in march but basically underlying, a strong business development and we are confident that we will see revenues in line with our guidance >> i want to ask you, also, about that increased demand you saw in the first quarter teva a huge supplier of ja nark medicines and the fda is reporting increased numbers of drug shortages, especially in drugs related to treatment of covid-19 and for teva-provided drugs it

lists tablets being tested for covid-19, azit ro my sin other drugs for answesthesianesa it look like allocation or -- propof propofol, there were shipping delays tell us what you're seeing around drugs like that >> yes first, it's correct. some of the icu medications have been in high demand, and some other products are higher demand in all the cases we have been dramatically increasing our outputs and manufacturing to secure supplies for all the patients who need these products there has also been some supplies but not dramatic in the distribution this is due to the fact that the reduction in air traffic led to less air cargo being available

and some of the short-term restrictions on exports that some countries implemented led to temporary delays. i would like to say all governments at the end of the day have been positive toward securing the full value chain being open for medical products worldwide. >> is that something you're still encountering, the difficulty with the air travel and transporting products where they need to go? >> it is still a challenge, but i think we've overcome it. the price of transportation has gone up. we have increased our volumes on these specific products. and it's working out quite well. and, of course, we have a situation here where we are like you said, we're the world's biggest manufacturer of pharmaceutical products of medicines, the biggest supplier in the u.s. of medicines i think overall, we're very happy that all our facilities are operating at full capacity

and we've overcome the majority of the logistical challenges we've been seeing. >> wanted to ask you about hydroxychloroquine i know you're one of the big manufacturers of it. it's been somewhat controversial here there was so much demand and it was being used in so many places at the outset and the fda put out a warning. i'm wondering about the demand and what happens to the pills or doses of that medication you previously donated to governments like the u.s. to help fight this. >> i won't able to tell you in short-term what's happened to the product we donated i wouldn't be able to give an answer we were responding to a demand we saw we did our best to secure this short-term from our different manufacturing sites where we produce the product. i think we were successful in supplying the product, and then, of course, the clinical outcomes

and how it's used or not, that's something that's being determine bid the health care professionals. >> wanted to also ask you about the second wave which we're all expecting, dr. fauci thinks it's inevitably coming. and what we're hearing is that hospitals and health care workers and governments need to prepare by stocking up on medications like antibodies or other treatments you use are you seeing that happening? are they taking necessary precautions to stock up? >> i think it's early to say the demand right now is more related to the current level of covid-19 patients in many hospitals in the u.s and we've been working very hard also through our distributor to secure that whenever we had regional shortages, we would support the states and hospitals to make sure they would get products as soon as possible

overall, i think right now we see an okay supply situation there are some shortages, but i think we are overcoming most of that of course, it's important that we all increase manufacturing of these products so that we are prepared for a potential second wave let's hope it doesn't happen and some of the precautions we've taken in society will be effective so we do not see a major second wave. >> there's been a lot of talk of late about securing our supply chain for pharmaceuticals and various drugs from raw materials right up to production in the united states. given you're the largest producer in the world and i know you source raw materials from china. you have manufacturing there and manufacturing in india and europe, would it be a significant hindrance to your business if, in fact, there was some move to try to make sure that manufacturing moved back to the u.s. >> i think it's a historical

fact that raw materials has moved out of the u.s. over the last ten or 20 years due to comparative forces between the key manufacturers today, china and india. we have a lot of manufacturing still in europe for historic reasons that we've maintained, also israel. but it's true that the most competitive place today is china, india they have benefits on labor cost, in the concerns on health and safety and so on, and if it was to be moved back to the u.s., it would have to be some preferential treatment of products that were manufactured partly or wholly in the u.s. and that would be possible to do gradually. it would not be possible to do overnight. it would be a gradual process, and given the current circumstances, it would lead to higher cost of api and raw materials and ultimately of the finished products. >> are you being pressured or encouraged strongly by the u.s. government to try to bring your

manufacturing in the end back to the united states or into the united states for your medicines that you supply here >> no. that's not the case. but it is -- i would say it's an old political question it's a political decision. it's not a decision that we as a company, we -- or that the industry as such will take we are simply reacting to the conditions in the marketplace, and if there is a preferential treatment of products produced in the u.s., then, of course, we will adjust to that, and that will bring more manufacturing back to the u.s. but as i said before, the conditions for manufacturing api and raw materials in the u.s. are such that the cost levels of that are higher, and, of course, we'll be more than willing to do it, but it would only be possible if there's a preferential treatment for those products >> i want to follow up on the

preparation for the second wave. you noted most people are still dealing with the first wave, but it's imperative that you increase manufacturing now of the products to be ready are you observing kind of still a last-minute kind of dealing with what we have now and a failure to plan ahead, but it sounds like you are trying to plan ahead with increasing manufacturing. one of the things that's remarkable about this situation is it seems like everybody is playing catchup and trying to last-minute make sure we have what we need what are you sensing from the government in terms of the attempting to plan ahead it sounds like maybe you're taking that initiative not because governments are. >> it's interesting. everybody was surprised by covid-19 it's fair to say everybody in the whole world. including teva and all health care systems and politicians now, of course, we're not surprised anymore. we know it's there we know from historic evidence of previous pandemics that there's a risk of a second wave. and that, of course, means that

we have a responsibility to patients to prepare for that that's what we're doing. we can only prepare on the products that we manufacturer. we cannot prepare for everything we don't manufacture everything. we do manufacture more pharmaceutical products than anybody else and we're looking at all the products that are relevant in the treatment of covid-19, and making sure that we increase manufacturing of those as we speak. >> right and finally, i want to ask you about the impacts on other medicines. as a result of what's happening with covid-19, we know from a lot of companies that some clinical trial development programs are getting delayed at the end of all this, what kind of delay doyou expect we're going to see in new medicines getting to market outside of covid-19 because of the pandemic >> yeah. i think there's going to be some delay long-term. of course, you have to keep in mind that developing a new drug takes 10 to 15 years and that

means that three months' delay on your clinical trial recruitment is not really a catastrophe. we have very interesting phase three program with regeneron, pain medication in phase three we expect it to continue, but we also have new clinical trials we were about to start, and that's been stopped for now so i think the length of the lockdown is really what drives whether we'll see big delays or not. if we get a lockdown with the effective duration of the three to six months, then it will be a marginal long-term effect on new product development. >> all right thank you so much for being with us carl, back to you. all right. meg, thank you we are getting neiman marcus joining j. crew and filing for bankruptcy protection. >> this was pretty expected that

this was coming relatively soon. neiman marcus was on a watch list for a number of months well before this crisis, but they're now officially filing for chapter 11 bankruptcy in a texas court. the ceo says that before the co-vid crisis they were on the path to getting back to long-term profitability, but the crisis turned things upside down in his opinion, at least neiman marcus plans to eliminate 4 billion of the $5.1 billion in debt they secured a $675 million debtor and possession loan here. it does not look like there's a mass store closure program undertaken they have 43 stores which have been closed most of them, at least are still closed, during this crisis. but they plan to reemerge from the bankruptcy in the fall of 2020 back over to you yeah kourtney, it's david i think it's coronet to point out for people, and listen, this is a difficult period for any retailer, but both j. crew and

neiman marcus were leveraged buyouts. neiman marcus went lbo to lbo. that does a great deal of debt and pressure to their balance sheets in a difficult time >> exactly that's a great point yes, since 2013 neiman marcus has been owned by the private equity group that still owns it. and just like j. crew, sort of this lbo and really saddled the companies with debt. it's not as if there were no sales this certainly not the sales levels as before, but they had massive debt loads they were always going to be fighting against that had been one of the big crushing factors for many of the retail bankruptcies we saw actually in the years following the financial crisis so if they were able to make it through the crisis, and then they were bought out by private equity or had some involvement, it was the debt loads that were too big to bear as the retail landscape has changed dramatically >> yeah.

just to name names, the owners here were arie management and the canadian plan investment board. before that was tpg. clearly a long history of private equity i'm wondering about the next steps. is it still out there that they could be a target for a buyout i mean, hudson's bay is always mentioned. we talked to the president of sacks. i guess the question is for the hudson bay, really a commercial real estate company, they can't be doing well right now. i don't know whether they have the capacity to buy neemen at this point >> exactly and hudson bay not long ago got rid of lauren taylor, and thousand now that company -- now that company is facing the same fate you know, i guess anything is possible i don't think it looks like a hot deal landscape right now in retail

i'm not sure anyone is going to want to swoop in and go after this the company says they intend to restructure, take the opportunity to take down the debt, maybe renegotiate leases there are some benefits to filing perhaps that's what happens. but anything is possible i just haven't heard a lot of deal talk in the retail space as of late. >> and i mean, they have 14,000 employees. i guess they get furloughed? >> exactly just like almost every other retail employee. >> thank you very much on the neemen marcus filing today we're tracking the moves on wti crude, on pace for the best weeks ever. the comeback for oil continues biggest energy etfs in the morning are in the green this morning, i should say. about 2% to 3% higher. still among the worse performers this year. programming note as we head to break.

don't miss richmond fed president with us on the closing 'lbe at 3:00 p.m wel right back. stay with us on "squawk on the street." - [narrator] at southern new hampshire university,

we're committed to making college more affordable. that's why we're keeping our tuition the same through the year 2021. - [student] i knew snhu was the place for me when i saw how affordable it was. - [narrator] find your degree at snhu.edu. featuring the emmy award-winning voice remote. access to your favorite apps, including netflix, prime video, youtube and hulu. all without changing passwords and inputs. the most 4k content and movies and shows on any screen. the best entertainment experience all in one place. shares of carvana tumbling siting the covid-19 as an unexpected detour. joining us to discuss what he's seeing in the business, ernie garcia, carvana ceo. the stock is getting hit hard,

even though the analyst reaction is favorable was it that the expectations were higher because of your online nature of the business than what you actually saw >> i think it's hard to know exactly what's driving the stock. we try to stay focussed on the business in the late first quarter we saw sales drop by 70%, 80% we were still able to grow at about 40% in the first quarter things have been going great so far in the second. we're pleased with how we're hanging in there, for sure >> what about the fact that you do have this online business and can deliver cars to your doorstep do you expect that to give you an edge to help turn the numbers around >> definitely. i think as i said across the industry sales dropped dramatically i think many people aren't thinking as much about buying cars we've seen that across retail and in the automotive industry and people are more interested on buying things a way that's safe online. for the last seven years we've

given customers a great experience where they can go online, buy the car, speak to customer advocates, get a low price and broad selection. that same business model serves this time well customers can buy a car in a way that's safe. we've seen the number of people expressing a interest in buying cars double online i think we're likely to be a ben for ri of the trend. >> don't think you've seen a profit since ipoing in 2017. there was concern about your cash levels. you were able to raise money in the markets. bring us up to speed on where that stands. >> sure. we have about a billion dollars of liquidity we've been building a business that's grown it's roughly doubled six years in a row it's grown quickly as consumers have moved from buying cars at dealerships to buying them online our expectation is this new world will likely accelerate the trends so we've been investing in the business to give customers the experience across the country.

today we're excited to be announcing we're opening 100 new markets to provide this service in other locations as there's been so much demand for it recently >> we talked about the model early on in the public life. now that we're dealing with conversations that involve potential dealer consolidation, to what degree does that become a tail wind for you? how can you leverage that? >> this is an enormous industry. there's 40 million transactions per year the largest 100 players in the automotive retail industry combined, t a fragmented business i think in general, in businesses where e-commerce takes hold, there tends to be a lot more consolidation i think we're incredibly well positioned for that. we have a business that delivers great experience to customers. it's very scaleable. it's tailor made

we think things will take care of themselves. >> what can you tell us about the used car market right now? how weak is it how much is that potentially helping your volume in. >> so the used car market in general is definitely down there a couple ways to look at it on the retail side, it's soft. year over year sales over the last several weeks have been down probably on the order of 40% give or take we've been up 20% or 30% we've benefitted from the trends of moving online pricing, in the wholesale, prices are down by 12% april was the biggest decrease in used car values that's been seen that's impacts we're trying to make sure we take advantage of that by buying cars at lower prices and deliver them to customers at lower prices. >> what typically happens to the

market in recession? >> generally, we saw new car sales drop by approximately a third. and nused sales by a third. this has been obviously a much more dramatic situation that's impacted supply chains i think potentially this could be a more dramatic event across the board. although, we're seeing signs of steady recovery over the last couple weeks it's hard to say how it will play out >> thank you for joining us, ernie. good to see you. >> thank you appreciate it. >> on the market on earnings with the stock down a little less than 4% >> all right yeah we'll watch that we'll watch the markets continue to test and test here. just south of 24 ,000. a lot going on don't go anywhere.

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good morning here's what's happening at this hour in india, eight have died and nearly 1,000 people are ill after a gas leak from a chemical plant. the lg polymer's plant was repairing to restart after coronavirus restrictions were eased there. police say nearly 100 people have been hospitalized and nearly 3,000 have been evacuated from the village near that plant. back here at home, residents of a portland, oregon nursing home are being moved the other locations after that facility had the license suspended. at least 28 people have there have died of covid-19 and additional 117 have tested positive in oklahoma city who mcdonald's employees were shot after two people were told they could not use the dining area to eat their meals. an argument broke out and one of the customers pulled out a gun and fired. both employees are expected to survive. the customers have been arrested i'll be back in another

hour sara, back to you. all right. sue, thank you stocks up more than 1% only consumer staples are in the red. everyone else is positive. led by financials today in the market the nasdaq is up 1.25% going flat on the year a quick commercial break re."onheh us on "squawk t stet ♪ ♪ ♪ ♪ ♪ ♪

the lasting impact of the

coronavirus on the global economy could be years warns one expert more "squawk on the street" coming up.

jobless claims, earnings and oil all taking center stage as the markets are trying to hold 24,000 uber tonight anglo with other big names. more "squawk on the street" continues in a moment. these days staying connected is more important than ever.

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for more information on how you can stay connected, visit xfinity.com/prepare. dow and s&p are trying to hold onto gains for the weekend here, david. interesting sector action this morning. financials up more than 3% energy almost 3. and then industrials and materials better than 1.5. definitely a cyclical bet

outpacing the gains in health care >> yeah. stills and the dow obviously led by boeing which is up almost 5%. you know, we pointed out so many times, carl, in the last week or so as the nasdaq has come close to the flatline for the year it's more or less hugging it right now. how extraordinary that is. a month ago if you told anybody that the nasdaq would be flat for the year, i think they would have thought otherwise, given the 33 million unemployment claims, gdp numbers looking down i'm sure you saw the deutsche bank estimate, sara, in terms of what they see for gdp in the world and u.s. microsoft is up for the year apple is up for the year facebook is up for the year. many of them substantially >> yeah. and from that record high that the nasdaq hit back in february, it's only off less than 9% that's from a record after being flat on the year, to put it in perspective, s&p 50 5

50015 -- s&p 500, 15%. the leaves the s&p down 10% for the year the big cap tech names investors flocked to during this crisis and held up proved to themselves during this, to the crisis and recession from microsoft, facebook, netflix, even apple to some extent. i think that's part of the reason you have to talk about the nasdaq's outperform. papal is trading at a record high after very strong results there are pockets of strength in this market. it's a theme cramer has talked about so many times of companies holding up, are even doing well, versus the small business economies. versus the smaller companies finding it hard to compete the retailers which were in bad shape. it's a tale of who corporate americas thes have and have notes in

terms of how they're weathering this from access to capital markets and also just in general how they're dealing with this huge revenue dropoff. >> yeah. i mean, anything that relies directly on a consumer coming in and buying something, obviously, is in deep trouble and, or anything related to travel and leisure as we've said many times is also desperately looking for liquid in some fashion as long as they can try to get it. this morning we saw when it comes to retail, neiman marcus, the latest large retail tore file for bankruptcy. let's get to rick santelli who has a special guest for us this morning as well. >> thank you, david. it like to welcome carlos gi gutierrez, former secretary of commerce under president bush. thank you for joining me today >> thank you thank you for having me, rick. >> all right put on your commerce secretary

hat here so we had initial jobless claims today a whisker under 3.2 million. if you look at all the numbers going back to the 20th of march, cumulative running totals, 33.5 million claims running 22.65 millions how do you look at the numbers acknowledging the cessation? >> it's a horrifying number, obviously, rick. what concerns me is we look at the total number, and the expectation, of course, is that those jobs will come back. my concern is that not all of those jobs will come back. some restaurants are open at half capacity. hotels will not be at full occupancy. you know, the economy will not be running at 100% for quite a while. so we should expect some of the

jobs regrettably, to go away so the idea that we would go back to a 3.5% unemployment rate, i don't believe t real -- it's realistic, and it's going to be a long, long hall to get back to that level so not all of those jobs are viable jobs. >> now, mr. secretary, i guess my question would be acknowledging what you've just stated and it's very similar to many of the administration, being realistic, mr. fink expressed similar viewpoints is there anything that could be done to ease the transition above and beyond ppp and some of the current programs >> well, you know, i think that technology is playing a lot bigger role, especially in the covid-19 era, and i think it's going to continue. so we need to be thinking a bit long-term and how do we retrain

some of the folks. obviously attracting foreign investment is key. i know the administration is doing a lot to bring back manufacturing, especially from china, from other countries. that can add, but there's nothing like preparing workers for what's coming, and i do think that we have made a leap in terms of technology we've gone to a new level during this co-vid era, because these technology tools have helped us. and -- but they will also take some jobs. and preparing people for that new economy, it sounds like it's long-term, and i know people want immediacy, but we're going to have to deal with that, and this is the time when it's staring us right in the face >> now, you described the potential to have some growth in manufacturing. the president in his administration are turbo

charging the notion of trying to extricate some of the supply chains out of china. we're not the only country india's trying to do this. japan is trying to do this will that, indeed, be an extra bump with regard to trying to reset up and i know there may be pricing and inflation implications, but ultimately won't that help? won't that create a demand for that sector? >> that will have an impact. the manufacturing facilities that will most likely come back or will leave china or those that were in the china as an export hub or just manufacturing in order to export it will be tougher for those plants that are there to serve the chinese market now, there's some discussion about the administration putting in place a ban on government procurement of pharmaceutical products imported from china

that would require even though they're made by u.s. companies, that would require those companies to relocate, and part of the regulation of the executive order could be that they relocate to the u.s that would bring back manufacturing, but, of course, those are supply chains that take a longer lead time. it won't happen next month it takes years in some cases but yes, that will also have an impact in some cases the manufacturing will lead from china, and as you say, india is making a big play for that they've opened up their industrial states. the states that already have experience with industrialization, and they're opening up land rights to foreign investors, something that's very new incentives so that's an opportunity for companies in china, vietnam, japan, korea, australia, new

zealand. tha they're all part of this prosperity partnership that's designed to take manufacturing out of china so what started as a trade war designed to reduce our deficit, designed to change china's behavior toward ipr, i believe it's turning into policy and that policy is the coupling. and we're seeing signs of it so pharmaceuticals, other ppe, there's discussion about limiting imports from china that go to our electrical grid. i'm sure that there's discussion going on about a global ban of huawei exports so we're going to be seeing a lot more steps designed to decouple our economy and to reduce our reliance from china so what became a little bit of a tactical squirmish, a tactical

war, i believe is now becoming a strategy and becoming sort of a doctrine of decoupling >> excellent commerce secretary, thank you very much, former commerce secretary, for your thoughts today. i would like to have you i would like to have you back. you weres the youngest ceo of kellogg named in 1999. i want to talk about those supply chain next time. >> i would love to always a pleasure. thanks. >> all right rick santelli, thank you quick note as we head to break later today on the "closing bell," don't miss former treasure secretary jack lew, 4:00 p.m. eastern time, and we'll talk about this market and these economic data points we're getting. stay with us as the market holds on to its gains. ♪ 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.

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interesting days here for movie theater chains in the state of texas where restrictions are beginning to loosen let's bring in tim, the founder, executive chairman and former ceo of alamo draft house it's good to have you on the program. good morning. >> good morning. good to be here. >> i'm a huge fan of the chain i think you play an important role in the future of film in this country, but whatis the strategy right now for you in terms of reopening in states like texas >> well, i mean we're certainly going to reopen, but it was -- the schedule was a little abrupt for us when we reopen we're going to be doing it in the absolute safest possible way and that requires a lot of new equipment, lot of new procedures we're rethinking our menu,

thinking about our staff, making sure that they're safe when they come to work, so we're not ready to open yet, we're still in the lab working out all the processes, but our benchmark we want people to feel safer than a supermarket when they come into the theater and that's what we're gunning for. >> does that feel like something that could happen this year or not? >> sure. everybody's day and your perception of the world changes every single day, right, so we will get open when we feel that we can do it safely, both for our guests and staff i don't have any date in mind, but i anticipate for sure it's going to be this year. >> now you have this new vod service which includes film for rent and purchase. i mean, i see that and i get a little worried like maybe you're pivoting the model to a point where the physical theaters become secondary

can you explain what your strategy is there? >> that's not where we're heading with this. so i am, you know, absolutely -- i've invested my entire life and my entire -- everything i've ever earned into the theater business and i continue to do so our vision is we're going to come out of this and going to expand on the theater fronts given that our theaters are closed that's allowed me to have a little bit of focus and the interesting thing about being a movie theater and a part of the movie business is, our job in the past has been done when the movies leave the theaters and so what we've basically built is a cur rags engine. the movies we're passioned about and champion throughout the year you don't always get out to the theater to see every single movie you want once movies are available post-theatrical for people to go and see them on our recommendation it kind of continues the dialog we have with our guests about

the movies we love >> our sister company, tim, universal, launched trolls world tour kind of in a bold move digitally instead of going through the movie theaters it created a little rift with chains like amc and led to some questions about whether this would be a new business model, especially with the numbers looking very strong for that digital debut. how do you react to that >> well, i'm not -- i guess i'm not reactionary to that. we've had lots of conversations with the studios and they are committed to movie theaters. we're just in a very strange time, and, you know, i can't necessarily say that's a reflection of things to come you also have to bear in mind that theaters closed maybe just a week or so before "trolls 2" came out and a lot of the marketing was for the theatrical campaign you have to take any data about "trolls 2" with a grain of salt

and i am a firm believer in the future of movie theaters but i like to watch movies all over the place. i watch movies at home and at the theater and so i think once we're back up and running we are going to have a great supply of product from the studios the sky is not falling >> do you think it's going to be hard to convince people that it's safe? i mean just anecdotically before this whole crisis i always feel like people are coughing the whole time during movies in a movie theater. how are you going to avoid stuff like that and the distancing and the whole protocol >> you know, obviously it's going to be a certain segment of the population that is -- not wanting to go out and, you know, we're following the guidelines of the cdc also and, you know, right now i think it's still a time where people need to cluster at home, but there will

come a time in the future where it is safe i can't say when that is, but we will, as a country, as a society, get past this eventually and that's where i put my focus whether or not -- certainly there's going to be a certain amount of people that want to go out to a socially distanced safe environment before there's a vaccine but that's an interim phase and i'm not focusing long-term on the interim phase, i'm focusing on the idea that in a normal society when we're past covid, people want to get out of the house and socialize and be with people and i believe that we will have a return to normalcy, not just for cinemas but for society. >> finally, when we get to that point, do you think the idea of the multiplex takesa hit does the market pivot to models more like yours?

>> well, i mean i am a multiplex, so, you know, we have multiple screens at the alamo. our -- what's unique about us is a couple things is we serve food and drink and we show a pretty broad array of movies, classics, foreign, independent and all the studio blockbusters. i'm -- i got into this business because i'm a -- i love all kinds of movies. i would love to see a more diverse slate of movies everywhere i'm definitely in an all ships rise point of view from that standpoint yeah, i think it would be great if more theaters were doing what we do. i want all theaters to offer a great experience >> yeah. it's going to be interesting to see how all this shapes and colors the creative process out of hollywood and all sorts of areas where film is generated. tim, it's fascinating.

i think we're in for an interesting ride regarding film and movie theaters and hope to talk to you again soon thanks. >> thank you very much >> yeah. tim league of alamo draft house. welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt coming to you live from various locations today. interesting market action as we pivot around dow 24k and the high s&p 2800s as we get earnings to work with, jobless claims, jon, once again are no good at 3 million plus china exports good in april. we'll see if that holds up as the rest of the world does cancel orders for all the things that china makes. >> yeah. that's a great look at what the market is looking like overall on the micro end i'm looking at paypal up 12.5% after earnings, a particular bright spot is that paypal said that in april, business really did rebound 20