it is 5:00 at cnbc and here is your "top five at 5. discussing the human cost of reopening and others saying the economic cost of staying close is too high. >> and revealing another $3 trillion stimulus plan nancy pelosi speaking about the proposal shut down through the fall drastic measures being taken at the nation's largest four-year

university system. retail post pandemic getting perhaps even grimmer as another department store set to announce bankruptcy taking on the fed. druckenmiller calling out the fed. it is wednesday, may 13. you are watching "worldwide exchange" here on cnbc good morning, good afternoon, good morning welcome. i'm brian sullivan thank you for spending your time with us here on cnbc it is a big news day from wall street to watch. futures are basically flat, slightly higher. it could change. it is early. the dow closing down another 450 points yesterday for the second straight day of losses

the nasdaq finally snapping a six-day win streak falling more than 2% on the day yesterday, futures basically flat now as well as investors continue to weigh comments from dr. fauci warning of a second outbreak this fall if states move too quickly to reopen >> my approach towards the possibility of a rebound and second wave in the fall is that, a, it is entirely conceivable and possible and, b, i would hope between now and then and given the possibility of testing, i hope if we do have the threat of a second wave, we'll be able to deal with it very effectively around the world, a mixed picture in asia and in europe taking in the latest uk gdp numbers showing a contraction.

that was not as bad as some of the worst estimates out there. we'll get more coming out of london in a bit. let us begin now in d.c. democrats unveiling a $3 trillion stimulus bill up to $6,000 per household per month extending. unemployment benefits through january and $175 billion for subsidizing rent and mortgage payments $1 trillion will go to state and local governments. saying the relief bill is, quote, a big ticket for a big problem. let's get back to frank holland for other headlines. >> good morning. gilead sciences struck a licensing agreement with five makers to make remdesivir in 127

countries not including u.s. companies will manufacture the drug for distribution for low income and lower middle countries and several higher income countries that face pandemic showing the impact the paepd is having on corporate budgets. cios are putting a priority on services that are, quote, mission critical data centers will see the biggest declines one bright spot is cloud services expected to rise 20%. the white house is calling forever the pension fund to stop investing in chinese companies citing national security threat. the thrift investment board and agency that manages the plan

prepares to shift to an index that includes chinese companies. that's the latest. over to you. now back to wall street and your money legendary investor stanley druckenmiller saying the v-shaped recovery is, quote, a fantasy. saying the ris-reward is maybe as bad as he's seen. be careful because, quote, the wildcard here is that the fed could shore up their purchases shore up could be puzzling and agressive. that will be a big one to markets and your money. ahead of fixed income at bmo asset management bright and early

janelle, i'll start with you i always think the credit market tells us more than equity. what is credit telling you and your team right now? >> we've been really closely watching credit markets here it has been interesting sints we saw the announcement of the fed facilities in march how quickly we have seen liquidity come back what was really interesting this week, yesterday, we saw the first wave of purchases in etfs. interesting that we saw those underperform and saw spreads tighter. the first time we have seen that dynamic in time. >> you wonder, the federal reserve came in and said, you know what, we are going to guarantee so much debt and the

credit markets out there they are buying bond etfs. is that a huge part of the equity rally we've seen that massive powell put >> you know, i think it is i like you, i like to read the credit markets before i start with the stock markets giving us a read now not that it is necessarily bad, it makes it tougher to give a true price discovery and propping up the credit side is just giving us a false read. >> you know janelle, i'm looking at bank stocks the average bank in america is down 12% nasdaq is actually higher. banks are performing much worse than almost every other major sector out there when you dig into the credit

markets, do you see anything that might be causing this nervousness on the equity side >> banks were prices way below where they should have been in this down turn there is a fear part is warranted on this issue. that manifests itself on the back domestically foreign banks are just the opposite >> '08 was a crisis. this could turn into a health and human crisis do you believe the worst of the credit risk that were so parent six weeks ago are gone >> if we look from the

fundamental perspective, we expect fundamentals have to flow through and earnings are likely to be that first period. what is really important is liquidity. the ability for markets to reopen, we are closing in on a trillion of primary market is e issuance this has been important. how do we assess that. we find of take three different approaches to it as we think about the value and credit market the first is how we have seen the spread in price cycles and what are the implied default rates current spreads suggest. the spread of 750 would suggest defaults are somewhere with a 40% recovery north of 12%.

if we are comfortable with in the current cycle. last is in the asset class we have seen because of the issue ens investment grade here. we think there is value even with the worst to come we have to be thoughtful in terms of taking that risk right now. >> you talk about a v-shaped recovery looking at the bond effects, that came roaring back one hopes the economy comes roaring back as well where do you see value on the equity side right now? >> a third of the market doesn't make company picking companies that make money, that have high margin low levels of debt it is a stock pickers market in the net flow's especially. in credit quality, underwriting

and rock solid balance sheets. they can't wind up with a balance sheet problem. you will get stocks very much on the cheap. >> great conversation here to start a wednesday morning. thank you both have a terrific day. be sure to catch fed chair's comments at 9:00 eastern this morning. >> that will be a fed one to watch. from shanghai to beijing, what our own eunice yoon had to go through to cover the shanghai disney opening for cnbc. shut down until 2021 the inkred and some might argue puzzling decision by 2 california colleges to close their doors even in the fall and back at work in alameda. what tesla plant workers tell cnbc stock futures are down 262

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good morning china introducing new restrictions after reporting new infection spikes including an alarm up tick in wuhan which of course is where the virus was first detected five months ago

eunice is with us after traveling to shanghai to cover the opening of disney. i saw the picture you tweeted from the plane, everybody being diligent wearing masks, which i believe is mandated. tell us about your trip. you said you were a bit nervous. how did it go? >> overall, it was okay. there were times i was feeling a bit anxious. for the most part, the government has put in place a lot of different health measures one thing in terms of the restrictions is that rail services has been suspended. this is after a surge of cases there which has prompted the

authorities to now say over the next 10 days, they plan to test all 11 million residents in the epicenter. unclear where they are going to get all the test kits but likely the government is going to priorities that since they want to in terms of reopening, this hasn't stopped the efforts for reopening for travel i can attest that they have in place several different temperature checks not only at the airport entrances but also when you get on to the plane, you have to go through two temperature checks one on your wrist, one on your forehead there are also very limited in flight services. you'll have to bring your own blanket or jacket if you are feeling cold they will serve a light meal for my train trip down to

shanghai, brian, the measures are very similar but, again, one of the things i found disconcerting about travel is at no point can you open a window people are taking their masks on and off to get a snack in the airport, you have to take your mask off at certain points to be identified by authorities there. >> listen, we've learned that breezes and being out is a win i do not advise that on an airport or 300-mile an hour train. i notice we'll have a big pick up of used car sales here. i think if people have to go back to work, where they used to travel on mass ransit, they'll

want to be in a car by themselves >> funny you mention that there was a period we were deciding going to shanghai disney, should we get in a car and drive the whole way. >> it would be a lot longer so we decided not to take that route. a lot of people are thinking now of getting into cars because you have that privacy and you don't have to be surrounded by anybody else >> how long is that drive from beijing to shanghai? >> way too long. way too long you wouldn't be able to do it in a timely enough fashion. >> the great comedian said, everything is within walking distance, if you have the time i would advise driving as well >> love to see your travel stuff. be well. stay tuned still ahead, on the edge of

bankruptcy joining us on the state of industry and while one store you know here in america could benefit from everybody else's woes >> announcer: today's big number, $2.59 trillion that's how much congress has allotted to coronavirus relief so far the house of representatives is considering a bill this week that would increase that figure by $3 trillion the united states postal service is here to deliver your mail and packages and the peace of mind of knowing that essentials like prescriptions are on their way. every day, all across america, we deliver for you. and we always will.

this news breaking late last night. california state university system the country's largest four-year university group is canceling all physical classes for the fall 2020 semester this comes in part after dr. fauci stressed the importance of a vaccine when it comes to getting testing education back on track >> if this were a situation where we had a vaccine, that would be the aenend of that iss. even at the top speed we are going, we don't see the vaccine

playing in the ability of individuals getting back to school this term what they really want to know is is that they are save. >> joining us now, our guest, cnbc contributor and somebody who has like seven kids some are now in college i want to get your take as a smart guy, father and tuition payer, does this move seem premature to you in any way? >> caller: it does seem premature to me. i realize you have to give people notice. it does seem way too early i think the problem is if a vaccine is what we are going to need and we may not have that 18 months, two years, we don't know, are we going to have all on line classes at all schools until then schools will have to figure out a way for kids to attend mostly

in person. education isn't the same otherwise. >> no. it is not. we understand the goal the problem is when a school says, we will interview the chancellor today and hear from him tomorrow they say they want to prevent the spread and they say, okay, that is good unless the state is locked down, it is not as if students will be sitting in their homes they'll be out and about as well it is not as if the risk is removed. >> right, you have to look at what is the country factual. if they think all the kids are going to be staying at home in their bedrooms and never leaving the house for the nefrmt six months, no they are going to go out and be in close contact with their family, all of whom will be presumably not locked down and

not going out. maybe all the electric tore halls, maybe those are online but other classes have to be in person if you look at studies, if you are a super highly motivated kid, you can make the online stuff work but not all kids are like that. >> we have gotten a lot of good data, united states data, european data which shows thankfully, the fatality rate for people 25 and lower is exceptionally low. that is the good news. but this is going to change education in california for years to come, right when you make this decision, a lot of kids aren't going to come to pay for education on zoom classes. there is a massive knock on

effect here. the california state system does provide a lot of education for underprivileged students as well there will be an economic fall outhere. >> caller: again, if you are a top scoring, high-yielding kid from a high socio economic background, this might work but you want to keep kids motivated to go to schools this seems awfully premature and i don't think it is viable >> we are going to find out. jim jimmy p, we'll get more answers.

don't miss our one-on-one with the chancellor of the california state university system here tomorrow coming up, the harsh reality of the pandemic forcing one south carolina restauranteur to make some tough decisions. that's coming next on cnbc so, no more tossing and turning... or trouble falling asleep. because only tempur-pedic uses proprietary tempur® material... that continuously adapts and responds to your body, to relieve pressure... so you get deep, uninterrupted sleep. all night. every night. the tempur-pedic summer of sleep starts now, with all tempur-pedic mattresses on sale, and savings up to $500 on adjustable sets.

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big technology stocks rebound finally done, one investor says the markets aren't making a lot of sense right now. $3 trillion is how much the democrats want to spend in another round of stimulus. 18 pages long, what else is in the bill >> and jc penny in a race to survive amid plummeting sales. this is "worldwide exchange" on cnbc good morning and welcome back, everybody. thank you for joining us here on a wednesday. wednesday? 5:30 a.m futures right now, we'll call them flat to be again rouse. down 56 points on the dow. it is early. things could certainly turn.

after the dow did fall 450 points yesterday second straight day of losses. important to your money. nasdaq cooling off more than 2% yesterday and snapping a 6% increase it was more than 4% from its record high. a little off that. still watch the nasdaq today investors hearing two things that may have given them a little pause dr. fauci warning of a second outbreak in the fall, if we move too quickly to reopen. noted hedge fund billionaire saying the risk in his mind for stocks is just not there leading the market's down turn it may be the reflection of the economy here not just hurting our economy

the uk getting hit hard too. crossing there about an hour ago with reaction from karen tso >> the reaction in wall street this morning we see across the board. take a look at all of the red behind me, that tells you how weak the sentiment is. the benchmark down 1.5%. core markets have been clear underperformers this morning that data in the 5.8% slump not helping the sentiment for the uk we have a new phase for those who cannot work from home allowed to go back to the work force. mostly construction jobs we can see the red amid a spike of infections among countries that have emerged from lockdown. new advice and hope we may residence respect summer here

with some cross-border travel. staying in hotels, going to beaches may be allowed with some of those with the same covid-19 risk profile we have seen some guidance may keep the lockdowns against nonessential travel until about mid-june tui there, the german travel operator is hoping from july can resume some of those holiday plans for clients. back to you, brian >> karen, thank you. let's go now from london to d.c. house democrats unveiled a $3 trillion, 18-page spending bill including $6,000 per month extra stimulus per household and an extra $1 trillion for government some say this is d.o.a

what is in the plan that we need to know about, eamon >> it is 1,815 pages to be exact. starting with the aid to state and local government in this bill, it is $1 trillion in funding for those state governments. a second round of direct payments to americans after that first round in the last stimulus bill, there is $200 trillion in hazard pay for essential workers and $75 billion there for testing and contact tracing. that is something the speaker of the house has set is important to getting this pandemic behind us finally $175 billion in-housing

for mortgage and rent for american workers nancy pelosi was on mad money last night and laid out her view of where this goes from here here is what she said. >> this is a negotiation we think this is what is necessary to meet the needs of the american people. state and local. testing, testing, testing. and putting money in the pockets of the american people all of these have a proof nans in the former bills that passed in a bipartisan way. all are supported by democrats and republicans across the country. >> brian, at the same time, nancy pelosi is talking about this bill, republicans in the senate are talking about taking a pause in order to see just how much that previous round of stimulus aid to the country helps the economy. they are saying they haven't digested all of that yet and

there for, it is too early to move forward with any additional stimulus >> the gop saying this is doa and there is no way this is going to go through. you put out an initial offer, republicans come back. two questions. is it likely we will get some kind of second stimulus? it may not be this plan but something will emerge through. two, i've got to imagine something us in the bluer states like and that is the repeal on the cap of reductions. that has been a big issue for years now. >> that has been in some of the expensive, high tax states, most of those blue states that was the reduction removed in the last round of tax cuts. in this bill, that is replaced so homeowners and state and

local taxpayers would be able to take that reduction under this plan as you say, this plan is not going anywhere it is the opening bid of negotiation. i think you do get to some kind of bill even though they are talking about pause at the white house and not talking about doing anything ever again. talking about that this crisis is getting worse and getting worse quickly. there is a sense of urgency among both parties here. >> thank you take care. lockdowns slamming the retailers. smaller players hit hard jc pennie jcpenney the latest to ask for $450 million would require them to hit

certain goals to obtain the full loan in the event it is unable to recover this summer going to the fall should they fail, it will join a growing list of retailers. some of those include houston based stage stores, j. crew, neiman marcus and more joining me now, sw advisors stacey good to chat with you. i've been calling this a hospitality recession, really it is hospitality and small retailers. do you see anyway of survival for jcpenney >> this is not a shock here. the inevitable is accelerated. i think they exist in a smaller

format, maybe 150 stores i think the department store space in general, may we see that going forward maybe macy's looks like 200 and not 600 going down the line. those are the all-important anchors for the malls. the nature of retailers will change as we see these outdated formats as they are forced to shrink themselves due to coronavirus. >> and not just the stores but the brands that are prominent in those you mentioned. maybe ralph laurens and others >> that's the thing here you think about all these brands, ralph lauren, under armor. all of these have huge expose you're to the wholesale channel, department stores or even

kohl's these guys have 40% of their business inside of these doors and they just disappear. you can't transition to dct or direct or on line faline fast eh all of these brands that have worked so hard to get out of the off price channel will run back in to get rid of inventory, which is incredibly damaging to these brands >> when i hear that, i think about the stores that buy up all of that inventory. stores like tj maxx. i got to imagine when we return to stores, this is going to be like a lottery win for tj maxx and ross stores. >> it will when you think about tj maxx, they've done so well despite the fact that all the good brands have said, listen, we don't want

to be associated with you. now they turn around and are saying, please take us back. under armor said their removal from the space will be slower. tjx has said, we'll give you pennies on the dollar and turn around and sell that at a pretty good margin here they are a winner in this space. >> i have to imagine there is one upside for apparel this multimillion used clothes industry things like the real real. what will happen to that industry, stacey >> that's a big question mark here if you think about anything, i call the intimate purchase apparel or handbags, all you

think about is germs those business models will definitely be under pressure you think about going into a store and trying on new clothes. some brands are not even allowing people to try on clothes in the store others are putting clothes in the back room for 48 hours, i don't know, to shake off the germs. you think about that and the message and the second-hand market that's just a nonstarter i think for many consumers right now >> tough time for that industry right now. we are watching tj maxx. best to you and the family the harsh reality facing hospitality, the owner of the legendary restaurants in south carolina and across the south will join us with tough decisions he and his team have

to make right now. we stay on t sllhema business story for you. we are back right after this jimmy's gotten used to his whole room smelling like sweaty odors.

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>> cleveland fed president says she expects the effects of covid-19 to be most severe in the second quarter expecting many to contract during that period she joins us on cnbc for an interview at 2:30 p.m. eastern time after getting more than 25,000 complaints on the matter last month the dot warned airlines they must offer refunds, not just vouchers for flights that reschedule or change in california, alameda county agreeing to tesla opening if it agrees to safety conditions elon musk has been a vocal critic to lockdowns. saying several health precautions are being taken

including temperature checks and face covering requirements this comes after elon musk threatened to move that factory to another state. >> that state would be texas speaking of california, the governor laying out some new rules for restaurants in a bid to resume some operations. following operations of several in the south where restaurants have been reopening in the last few weeks. going to our guest, general manager of several groups you know in the southeast. husk and the legendary mckrady's which is the first stop when you get off the plane in charleston. i'm a big fan of your team and restaurants. thinking about being able to book one of your tables now

sounds like heaven are any of your restaurants open >> good morning, brian currently, none of our restaurants are open we operate in three states with tennessee, georgia and south carolina unique with these states, they were some of the last to close and first to open. we were actually one of the earlier restaurants to close our restaurants. we were challenged with the safety of our staff and had a moral responsibility to close these and now we feel the same pressure to reopen at the time, none of our restaurants are open georgia is using open as of laft week at capacity of 10 people

every 500 square feet. and in tennessee, dining on patios only. charleston changed just to in-house, dining so currently, we are not open. >> is that because you simply can't ensure the safe tity of t workers and guests is it because you just can't make money at this number of tables all of the above or something else, david? >> really, all of the above. we are challenged with the ppp relief fund because -- this is the situation we are in today. when i go to work today, vi to decide if we are going to hire back between 300 to 400 people in the next two weeks. the reason for that, our restaurants are not open i would have to hire back 300 to

400 people in the next two weeks to satisfy the forgiveness of the ppp funds that we were successful in getting. the challenge is i've got to hire people back knowing my businesses are not open or if they are open in the next few weeks, we are at limited capacity and seating there for, we just don't need the whole team the challenge is we have to make a decision, do we move forward and hire everybody back so that we can receive the forgiveness which ends next month -- >> then you loose more money on one hand, if i'm hearing you right, the idea was good it has helped you get the money but now some of those are the

s sip you lagss you may not open soon >> we can't open at this capacity people don't want to dine right now. people are hesitant. in georgia, people are still not flocking to restaurants even though they have that option people are scared. we are scared. we have to go back and bring people back to work in an unsafe environment. i can barely get sufficient hand sanitizer for my home. how am i going to sanitize and protect my staff and guests in a restaurant we can't get the product we can barely get the masks. we have no method of securing the safety of our staff. that really concerns us. >> david, we've got to leave it there.

i want to get you back on soon because you are telling the real world stories. i hope a lot of leaders are listening to we need to make some tweaks. we'll get an update from you we are back on "worldwide exchange" after this take allegra-d... a non-drowsy antihistamine plus a powerful decongestant. so you can always say "yes" to putting your true colors on display. say "yes" to allegra-d.

welcome back you've got to watch the banks. a bit of worry the xlf down big the offering bank stock off 11% this month versus 2% for the dow. let's bring in our guest jeff, what is going on with the banks? i know what is not going on, they are not getting buyers or equities >> yes i got you loud and clear >> jeff, did you hear that

long-winded question what is going on with the banks, buddy. why are stocks so beaten up. >> good morning. great to see you the xlf, let's look at that. down three times the tul s&p 500. it has been beaten up. three reasons why the financials are so challenged. certainly seeing a rough current. we have seen the president talk about negative interest rates. a lot of concern on the horizon for these banks. they are concerned about potential doe faul potential defaults in the wake of the pandemic. so xlf, you can argue it is a buy. we do not own banks. we sold banks in march in our rotation model banks right now are a little too nasty to touch >> are they telling a bigger stoest sst

story? >> a great point i don't necessarily agree with that narrative, i think the banks are a little anomaly look at the s&p 500 the way it snapped back from that march 23 low. banks have not participated. there is a reason. looking at wells fargo warren bauf et is trimming a lot of fat just like he did with the airlines >> the ige, this is real world stuff. do you like it because it has the biggest players in the industry 50 that may not survive? >> ige natural resources this isn't about my gut. this is technical strength we rely on wealth to get us better understanding for our models two beat up sectors showing the relative strength. complete polar opposite right

now, sully >> good stuff there, jeff. founder kkm final from chicago get back to your fortnite game there, jeff. that does it for us here on "worldwide exchange. dow futures are up 46 inpots we'll see you tomorrow squawk picking it up after this. have a great day

good morning reopening america. california outlining steps to reopen more businesses but many of the state's colleges are preparing for a fall semester of remote learning. fed chair powell speaking about the hints of next steps.

and breaking overnight, progress in the talks between tesla and alameda county that could mean the end to the fight to reopen alameda. wednesday may 13, 2020 "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. some green arrows after a lot of red yet. yesterday, the dow closes down by 457 points. a decline of 27,000 and change amid a lot of financials that kind of rolled over in the afternoon. jp morgan, citigroup and others down we saw nike and disney down.

you also