steph, quick, final trade. >> ulta. >> whoo! >> jim >> yeah, well, you know what, cisco. >> pete najarian >> netflix >> jim, you have a quicky for me >> tjx >> awesome having you. thank you, everybody kelly evans picks up the breaking news coverage right now. masterful how he squeezes all that in. scott, thank you hi, everybody. fed chair powell said the path ahead is highly uncertain. stocks are sharply lower as wall street starting to fear we need a new symbol to explain the new economic reality we are about to face plus the global supply chain in tatters in the wake of covid-19 and news that at least one major university on the east coast is hoping to have students on the campus in the fall as the nation's largest college system

is doing the opposite. we start with the selloff. dom? >> we are hovering just near the lows of the day so far as you can see, all around close to 2% below where they were just at the close yesterday the dow industrials to the downside the s&p, 2950 level, 4% below where we have been in the last couple of days watch that level seems to be near term resistance or slowing momentum in the markets around those levels. heat map is all red. industrials, financials and energy the underperformers two things to pay attention to consumer staples, the only s&p sector that's slightly positive on a one-week basis and technology it is the outperformer year to date and drifted slightly into negative territory. those sectors key to watch as these markets develop the way they are over the last couple of

days back over to you. >> thank you. fed chair powell taking cautious term with alarming stats of the u.s. right now. steve liesman has the headlines. steve? >> kelly, thanks yeah, a sobering speech from the fed chairman pretty down beat in the assessment of the outlook, highly uncertain and there are significant downside risk. he was asked -- he talked about his concerns for the future and talked about the idea that a liquidity problem over time can become a solvency problem. >> recovery make take sometime to gather momentum passage of time can turn liquidity problems into solvency problems fiscal support could be costly but worth it avoiding long-term damage and leaves us with a stronger recovery. this tradeoff is one for our elected representatives who wield powers of taxation and spending. >> on the issue of negative rates, which markets have been

anxious to hear about, it's not something we're looking at he notes there's consensus against negative rates on the employment, he thinks it will go up sharply and may peak and come down slowly and remain elevated over time powell said that the fed would use all of the tools to the fullest extent until the crisis passes but, kelly, i've been listening to fed chairs and chairmen for a long time and usually they say here's the problem with the economy here's the policy. and here's how it's going to end up okay in the end powell is not there yet. it's clear he does not believe that the policies are in place yet to say we have a positive outlook for the economy either the health, fiscal policies and may not the fed policies in place yet. >> the headline that grabbed me the most is 40% making $40,000 or less out of work in march

that was astonishing. >> it was a stunning statistic said by the chairman and it is going to be in a survey that the fed to put out tomorrow on household economics. and yeah it just shows how much we have seen this in other data. how much lower income americans have been hit hard by this and a funny way that you saw this and i don't mean funny but an odd way you saw it is the average wage ticked up and that's because so many low-income americans have dropped out of the workforce and furloughed or unemployed since the crisis began. >> a spookiest thing to think how many people that took to push the average wage higher thank you for the headlines. also noted hedge fund manager david tepper said moments ago he said this is the second most overvalued market he's seen behind 1999 on top of

the comments of the fed chair down beat earlier today. the question for investors is do they need to be prepared for a long winter heading into summer. and here to discuss are two guests matt, in terms of what the market's parsing, they have stan drukenmiller saying there is no way it's a v-shaped recovery. >> yeah. it's the right thing i think everybody realizes there's no way the stock market should be trading here based on what the economy looks like over the next couple of months and looking over the valley as they say but, you know, this is just another in a list of several people over the last couple of weeks, you have paul singer talking about it, warren buffett saying record levels of cash, not buying anything here jeff gunlach and down the list sam zell is another one. >> exactly. >> you get the smart people, i

always say you look at politics, the old saying used to be follow the money. in the market follow the smart money and the smart money is avoiding the stock market if not selling it to be perfectly honest with you. it was a concern. >> and the president this morning rephrased it as the rich guys just take a look at this tweet. from a couple hours ago saying when the so-called rich guys speak negatively about the market, some are making a lot of money if it goes down and then questioned if that should be legal. i want to bring you in on an idea of not so much talking down the market but do these big names, the smart money, the rich guys sort to speak, do they have insight that the rest of us don't? >> i don't know if they do i'm always suspicious when hedge fund guys are coming out saying they're short or long because chances are they're positioned for their words to spread through the kinds of media. >> you would agree with the president on that, that, you

know, you don't know anyone's particular position is but with someone with money at stake they can move the market. >> i don't know a single person, literally a single person, bullish on the markets, certainly not at these levels and the market up 30% from the lows and only down 15% from the highs. clearly the pain trade is higher and i think when the fed removed the left tail essentially about six weeks ago the market was able to step back from the abyss and start pricing in not the 30% drop in 2020 earnings but the recovery that comes afterwards and it is interesting if you look at the market, it's draw down from the highs is 15% 2022 eps numbers are down about 15% from the highs and so the market actually, you know, if you believe in the shape of that recovery which i think those numbers are tie high but it's not completely illogical why the market has

come back from the abyss it comes down to the shape and the speed of the recovery and is it too fast? does it create a second wave turn into a "w"? that's where the conversation should be but 2500 on the s&p prices in a swoosh-like recovery and not at crazy levels in my opinion. >> matt, he's right. it is very rare to find people bullish on the market right now but a place you find them is a retail investors, frankly. looking at robin hood on the accounts, people buying the airlines, a lot of retail investors buying airlines. there's retail money going boo the stock market and not necessarily out of it so, you know, it's interesting to me, matt, it seems like a lot of the public is more confident on stocks than maybe the pros. >> i hate to say it but that's usually a negative sign for the market and we saw that certainly in late 1990s where they were

way more involved than today buying the tech stocks and but as the saying, is the pros tend to take the money at inflection points, they seem to be do the right thing and the individual investors the end to do the wrong things at the extreme so seeing the mart guys talking a book but who doesn't why would you say i love apple computer if you're short it? you know so i guess talking your own book is not the worst thing in the world and makes sense. and when these guys who are really smart and very successful investors are bearish and the public who tends to be the kind of a lambs led to slaughter buying it is usually not a good time to be aggressive on the buy side. >> one final remark here but there are two names in particular that surprised people in the bearishness and that's warren buffett and sam zell because they tend in warren buffett's case to be structurally long.

or in sam zell's case to really enjoy coming into distressed assets and not be backing away from them. what does that tell you if anything about the landscape right now? >> it tells -- what warren buffett basically said, maybe not in the exact words, is that because the fed removed the left tail he didn't have any really juicy bargains to buy because the fed backstopped the market so you can see that as a problem but you can also see that as a good thing because the fact that the fed did not allow those bargain basement kind of prices to come in and cause the bankruptcies that people like warren buffett or sam zell come in and swoop up that is what the fed was supposed to do and it did it successfully so i'm actually pretty pleased by the fact they didn't have anything to buy meaning that the fed did kind of a right amount in the right time frame. >> i think that's really well said interesting. interesting way to look at it. thank you both appreciate it. talking today about the marks, the fed and the economy.

we have some break news in the bond market. let's see if the string of record low rates continues rick >> well, there's not as many historic compliments here as there were with the last couple auctions it is 22 billion 30-year bonds 22 billion part is a record. the yield at the dutch auction, 1.342, not the lowest all-time yield at an auction. as a matter of fact, if you look over the last two auctions, in october we were at -- in march 1.32 and april the last auction before this at 1.325 so this is the third lowest yield ever and the auction, i gave it a c-minus. in terms of demand at 1:00 eastern. first of all, didn't price very well one issue market at 133. higher yield, lower price. we want a higher price looking at the met ricks all about average indirects a little

bit stronger and the 2.3 bid to cover down close to the 10 auction average still the weakest of 2019 with higher ones over the last five, six, seven month that is slipped recently r so a c-minus all-time record for this package in a may refunding back to you. >> still c-minus not as great demand as yesterday. thank you very much. coming up, dr. fauci cautioning schools against prematurely returning students to one my alma mater wants to push ahead. plus airline stocks tumble again today. the jets etf down another 4% the warning behind the slide. the job to connect companies with manufacturers worldwide and he says production moved out of china because of tariffs is 'ltebaing ck hel ll us why ahead. we're back in two.

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welcome back let's get the very latest in the coronavirus pandemic over to sue herera for the headlines. sue? >> thank you, kelly. good afternoon, everyone a top expert at the world health organization says the world has, quote, a long, long way to go end quote to get the coronavirus pandemic under control dr. mike ryan warns risks remain high even as many countries begin to reopen. johns hopkins has launched a

free online course to train contract tracers estimates say that the u.s. will need at least 100,000 tracers. new york will require all of its contact tracers to take that course. and washington, d.c. is extending the lockdown until june 8th mayor browser says that the city needs to improve testing and slow its infection rate before those restrictions can be eased. a lot more news conferences today. we'll monitor them and for more coronavirus coverage you can always going to cnbc.com back do you. >> thank you as colleges and universities look to reopen this fall dr. fauci is warning them not to about prematurely. >> the idea of having treatments available or a vaccine to facilitate the reentry of students into the fall term would be something that would be a bit of a bridge too far. >> california state university

meanwhile now says classes for the 480,000 students will take place mostly online this fall. my next guess is still hoping and planning to have in-person classes in the fall. for more, i'm joined by will dudley, president of my alma mater, washington and lee university it's an honor to have you here thank you so much. >> thank you for having me. >> i don't want to get you in any trouble here you say planning to do this in the fall but subject to what the health authorities and others say, what are the check boxes that can tell you? this is a very small campus. about 400 students a class a town of 6,000. rural part of virginia not a dense urban environment. what are the signals to you that this can work or might not >> yeah. i would say we haven't made a decision we are planning and we are -- our goal to have students on campus safely in the fall and we are doing everything in our power to increase the likelihood of that outcome but we'll

certainly be compliant with all government directives and all the public health guidance that's prevailing at the time. so, you know, we will continue to pay close attention to everything that we hear from the cdc and other public health authorities and make sure we're compliant with that but we have two priorities one is educational quality and as you just said we specialize in small classes average class size here is less than 15. 80% of the classes have fewer than 20 students students choose us because they have faculty that know and care about them and opportunities for leadership in extracurricular programs 30% of the students are varsity athletes as you were you were a lacrosse captain and magna cum laude student and

those were not incidental to the education but instrumental to the person you have become and that's the best outcome for them it's also continuity of employment is second priority. we are the largest employer in rock bridge county it is a large and not affluent area the jobs on the campus benefit directly the families of our employees and multiplier effect is critical for every business and family in the region we haven't laid anybody off. we don't want to so having students on the campus safely is best for the whole community. >> i know there's already been a revenue hit. like you have told, revenues in the current year lower by $6.5 million and this is with a huge endowment. other schools are in that privileged position and say it's earmarked for other purposes they can't just tap it at will

and affects the kinds of students because of scholarships and who choose this school in the fall i'm thinking of the dining halls, where students live and expand into hotels would the cam us the calendar be changed? one thing to keep students in the confined area and then going back and forth and interacting with the families, using planes and trains, the broader public and so forth how different might the college experience be? >> yeah. that's a great question. i have appointed a task force hard at work for the last month and will deliver me a comprehensive report and recommendations in early june and it is thinking through every dimension of campus life in the way that you just mentioned. we are looking at the calendar, we are thinking of whether we might come back a few weeks early to get us get the semester in before thanksgiving and

students don't need to leave for break and come back. they'll just come here in august and stay straight through until the semester is done we are looking at how do we spread students out safely in the classrooms that's easier here because the average class size is 15 so -- but we need to think about the class hour schedule, think about our dining hall protocols, think about is it possible to conduct athletic practices safely, what can we do with music and theater performance? every element of campus life is scrutinized to make sure that we can be compliant with the prevailing social distancing expectations in the fall. >> one quick final question. i'm just curious what student reaction and demand has been like so far. did you have to increase the pool of accepted students? what was yield like as of may 1? are people you think waiting for a final decision here before choosing where they go >> yeah. demand for what we do is

fantastic. and i'm not at all surprised we have a fully enrolled class with the best academic quality and the most diverse of any in the history of the university. you know students and parents 100% of them are saying how much they want to be here. we have had one student even inquire about a gap year we're offering a quality residential education with financial aid that meets 100% of demonstrated need without lons and students and parents want that and we want them to be here safely and trying to do that. >> there's so much more i could say but we'll save that for perhaps the next time i get to visit in person and thank you again, president dudley, for joining me. >> we look forward to seeing you in person for a reunion. >> hopefully we can do that sooner that are later. >> okay. >> president dudley of washington and lee university. as other schools weigh the plans for the fall, the shift to online learning since the outbreak is having a huge impact

on educational publishers. mcgraw had a strong demand here to look at the path forward for education, seymour allen of mcgraw-hill. >> we have a catalog of digital products, all of the k-12 textbooks we used to call them, higher education textbooks, all of them have been moved online into our core platforms. mcgraw-hill connect and connect edge for the school group and also mcgraw-hill alex and as you said rightly people remember mcgraw-hill fondly for being around over 100 years as a textbook publisher now we see ourselves as a learning science company utilizing that content that we have developed over a century and now really integrating that

into the learning science platforms for a full and proper courseware solution for students online. >> i'm curious looking at places where the economy might be holding up better, is the company doing well or hit by what's going on with the pandemic? how are you investing for the future what is mcgraw-hill going to look like in five years? how accelerated has that been by virtual learning >> weinvest hundreds of millions a year in the digital platform development did beauty of digital platform delivery is that it works globally we have a robust business in the u.s. with the higher education and our k-12 companies we also work very effectively across the globe because the needs of educators are the same and what we have seen, kelly, in the last month or two is extraordinary as we push literally hundreds of thousands of students into a purely online

environment. we help thousands of instructors and institutions morph and evolve the courses into purely online delivery and we do that in a way that helps the student understand and develop their program and their learning through all of our assessment material that is really tar getted at the individual student. as sad as the pandemic is and it is tragic from around the world we are excited about the opportunity because it pushe and accelerates the chance for quality online education and that's key for us. >> yeah. simon allen, a pleasure to speak with you about this. thank you for joining us today. >> thank you very much. now to some news that we have just gotten in the last few minutes. uber is implementing new precautions of drivers and passengers amid coronavirus. deirdre? >> hey, kelly.

uber ceo and his team just finishing a call outlining the safety measures trying to figure out what ride sharing looks like in a socially distant world. have a listen to him. >> uber allocated $50 million to the purchase of supplies for drivers to use or make available in their cars. this includes millions of masks and face coverings, hand sanitizer and disinfectants and more than just supplies. keeping everyone safe means that everyone must take proper precautions. >> kelly, starting this monday, may 18th, drivers and delivery partners are going to be required to wear face masks and coverings in the u.s., canada, mexico, most large markets in europe and other countries worldwide. they have a system where they can actually verify at the start of the ride and throughout the ride of course, this comes as drivers

have been asking for more protections and their status continuing to be challenged. uber treats them as independent contractors but the california attorney general on cnbc this morning saying the law requires them to be treated as employees with the protection that is go with this. the crisis underlying the importance of this law, that debate going on. this is a step toward giving them more protections but still very far from making them full employees. kelly? >> yep a lot going on for yuber right now. thank you very much. you may be working from home but doesn't mean that your boss isn't watching you. airline stocks down. we'll tell you what's behind the declines. watch or listen to us live on the go on the cnbc app. "the exchange" is back in a couple

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welcome back chi check out the airline stocks as the road to recoveryis longer. phil lebeau is here with more. phil >> when you look at the stocks and we are going to run through the individual ones in a little bit but they're hitting multi-year lows in some cases. the index on pace for its worst year over. so here's what's behind the selloff. you have lackluster q3 demand. that's the expectation at this point. international air transport association said you won't have a full recovery until 2023, maybe 2024 and that has everybody watching the liquidity of the airlines. some specific names in focus, american airlines, hit an all-time low again, you have do go back, you know, with some of these stocks before they even were starting to trade publicly and in american's case 2013 united, second worst s&p 500 stock year to date and then finally we have got

southwest. and it is at its lowest level since may of 2014. a lot of people are looking at the airlines saying are these guys dead in the water at least for the next quarter, maybe quarter and a half we aren't seeing any indication that that demand is going to be coming back as many were hoping in the third quarter. >> you know, phil, one of the things i keep thinking about is the remarks the other day and whether these airlines would all stay in business and you know it is some point i understand carnage has to happen before we get to that point but -- and all that sort of thing. >> when you get into consolidation with the airlines it is not just a matter of does it make sense financially for one airline to take out another. you get into the question of really down to four airlines in the united states occupying 80% of the people who are traveling. in a normal year

right now is a weird time but so you're looking and saying, who would the department of justice and d.o.t. sit there and say, yeah, this makes sense for united to take out american or delta to try to take out american or united or somebody else any combination that you throw out there people say, whoa, whoa, whoa that's too much consolidation. >> right but if you lose one going out of business and the same result? >> but let's keep in mind. going out of business in the minds of the general public is they're gone for good. take a united. if it goes out of business, never going to be around again they would go into a structured bankruptcy:. that's for more likely the planes restructure the debt in some fashion so that's the key thing to keep in mind when you look at the airlines. >> all right phil as always, very helpful and informative. we explain it. let's take a look at the dow dropping 500 points rye nougt.

continuing the selloff that began in earnest yesterday afternoon. american express, exxonmobil and walgreens among the stocks with the biggest declines in the dow there. the trade war made many companies move production out of china. the pandemic is having them re-evaluate the decision why some are moving back is ahead. woman: my reputation was trashed online. i felt completely helpless. my entire career and business were in jeopardy. i called reputation defender. vo: take control of your online reputation. get your free reputation report card at reputationdefender.com.

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and accessoriesphones for your mobile phone. like this device to increase volume on your cell phone. - ( phone ringing ) - get details on this state program call or visit welcome back to "the exchange." here's a check on the markets. dow down 500 points, 2% decline. the s&p down about the same amount the nasdaq interestingly enough which had yesterday been within 6% of the highs lost steam and then continues to shed that. down 2%. and we have companies

re-evaluating the decision to move supply chains, they moved them out of china but with the coronavirus pandemic slowing down things this vietnam and india some businesses are moving back into china. joining me is jason resnick. nathan, welcome. this is quite surprising the chinese economy was so hard hit and also because the relationship of the u.s. and china seems to get worse with every passing month. >> everyone in the supply chain is playing a crazy dance in terms of the past two years with the trade wars of america and china and in february with china being in complete lockdown with the coronavirus outbreak and now the supply chain is online and a trickle down effect in southeast asia to vietnam and india and those two are very slow. i was talking to a colleague in ho chi minh last night and saying it's going back to normal but for the last month it's been

locked down. >> what is going on in vietnam and and yeah that places -- mexico is a big beneficiary of people moving out of china do they want to leave the newer countries? what is going on here? >> i think two sided number one is everyone in asia they have to understand how to contain covid-19 that's really first and foremost the most important factor here and, too, on the back end a lot of brands are importing from asia and in particular from china trying to understand the future consumer sentiment really feel like when products are made in china are people going to be against manufacturing in china and buying products from china because of the outbreak? there was definitely trickle down effects of consumers to understand where the products were made and a whole push or transparency in the supply chain for five years. >> right so now i mean, the thing is these supply chains i imagine you can't move them on a dime and a huge problem to go outside of china

are they just finding it is easier with everything going on from coronavirus to, you know, disputes between leadership of both countries that it's still just easier to keep their supply base in china? >> you know, the fact of the matter is china is manufacturing hubble of the world and looking from a raw material resource standpoint even when the products are produced in mexico or south america the raw materials come from china and you have to evaluate and understand the supply chain to see the effect in terms of which way the supply chain's heading i think a lot of brands right now reverted some prust back to china because of the impact of covid-19 in india and vietnam but i think at the end of the day the past two years they transitioned production out of china and bringing it back -- some of it back and interesting to see the future of production for the large fortune 1,000. >> yeah. which industries and kinds of companies in particular are you following here the ones that might be kind of

going back into china and perhaps staying there longer than we would have thought considering with the tariffs and trade disputes. >> i would say a lot of fashion items, accessories, some industrial, some automotive. and electronics. especially with the tariffs, electronic manufacturing trying the move out of china. right now champiina is back onle and full steam back in china. >> all right i guess those are the -- may be a good thing say for consumers it is negating the price increases they might have seen otherwise. nathan, thank you. we appreciate you joining us with this new information. meantime as more states reopen the economies georgia's a first to have everything back open to the public let's get to courtney reagan with a check on the shopping traffic is actually like

courtney >> data of mobile phones aggregated shows as time pass shoppers are starting do go back to the reopened georgia malls. so this data shows that since announcing the partial reopening april 24 mall traffic in 27 malls in the state did more than double week over week, up over 56% but still 86% less traffic than at this time last year. separately i spoke to american eagle chief commercial officer with interesting things to say about the 200-plus stores it reopened and shoppers are doing less looking and more purchasing and the retailer is converting at a high rate in the closures the online business strong and still does continue that same strength. back over to you. >> i wonder, too, we were talking about even in new jersey they're going to allow now nonessential stores to do pickup we talked to jan niffen of a

drive-in, drive-up experience for more locations so there's on the one hand, hey, the shop, go back to the shopping mall and you have it to yourself and then this idea that going to the mall in the future may be a very, vir different kind of experience. >> yeah. drive-new shopping adobe with data with buy online and pick up in the store is up 200% from march to april and the stores building this out for years could be in a sweeter spot if they fulfill that without delay and frustration and see how well it works and dopted. >> absolutely. thank you. we appreciate it. >> thank you. fed chair powell reiterating the views on negative interest rates earlier today saying it's not what the fed is considering right now. whether they consider it in the future and what that means for the economy is still ahead. the names cashing in on the wellness trend, the bullish calls of the d a nt.ayreex right.

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welcome back to "the exchange." let's get to the calls today bullish this time. you will see the trend ww known as weight watchers, a buy rating at a $32 price tar get. they're saying that covid-19 has unlocked the durable trend of wellness and the digital platform is a price friendly price point, an easy accessibility and could boost the company's growth the shares on the back of the call trading you were about 4.5% next jnp most bullish on the street of peloton bumping the price target to 59 and the market outperform saying subscriptions are growing faster than expected and will continue to with high quality content, growing community and convenience. the shares are down almost 4% today to just under $45. and finally, jd.com upgraded to

a buy from neutral and hiking the price target by $21 to $58 a share saying jd benefits from online pharmacy as government reforms move customers from hospitals and medical centers and see online shopping as a lasting trend to benefit jd. currently up 1.5% to just under $48. there you go the wellness trend. still ahead, from big tech to nationwide insurance, people are working where from home and working productivity how the company may be watching you work at nt. that's why working together is more important than ever. at&t is committed to keeping you connected. so you can keep your patients cared for. your customers served. your students inspired. and your employees closer than ever. our network is resilient. our people are strong. our job is to keep your business connected .

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welcome back to "the

exchange." apple is breaking with other big tech companies saying workers returning to the global offices will be doing so in phases phase one is already under way with workers that can work from home and face challenges back in the office already with phase two in july. apple has offices in u.s. my josh rosen cities and they say return to work timelines are fluid and following local and state stay-at-home orders but for those companies who do remain working from home many search for ways to track employee productivity while offices are closed eric chemi has a look at the path forward for both employers and workers. >> the reason why all companies can be confident in letting employees work from home is because the bosses are tracking their workers. we spoke with a technology firm that monitors employee work habits their business is up 600% in the last few months as companies want to keep a watchful eye on

the workers. >> we use ai tools to massage that into a realtime score that you see as does your boss and the ceo and the vp of sales and the chief revenue officer. everyone is seeing the productivity. >> they give managers a core to quantify employee productivity based on email, phone calls and time spent on documents. vonage says that the product led to a 30% increase in productivity here's one of the executives. >> just gives you more intelligent conversation it's left of a micromanage field because you oar doing the behaviors you typically do anywhere. >> while some workers may love skipping the commute and staying in their home just know that their managers are paying very close attention. kelly? >> that's why we're in the office no, kidding. do did employees know they're

being monitored? would that information alone boost productivity by 35%? maybe they should be asking. >> in the case of vonage the employees know and part of the metrics they have. they said we want th companies to tell their employees they're not required to, they don't have to, but they encourage the employees to find out, so they can work together and it's just another metric, ideally, that the manager and the employee can have to say, hey, were you productive did you hityour metrics, did you hit your targets we look to see if we were tw actually doing the work or not >> eric, thanks very much. eric chemi still ahead, president trump arguing for negative interest rates, while fed chair jay powell remains steadfastly against them who's right? the great rate debate is next. coming up on "power lunch," cleveland fed president loretta mester will weigh in on in an exclusive interview. ick ound for that. "the exchange" will be right back

fed chair jay powell rejecting the idea of negative interest rates one day after president trump said he supports it powell explained why during a webcast with the peterson institute for international economics. >> the committee's view on negative rates really has not changed. this is not something that we're looking at we chose not to implement negative rates during the global financial crisis and the recovery, and instead we relied, as you pointed out on forward guidance and asset purchases, when we were at -- near the zero bound. and we've said that we continue to relying on those tools, which are tried and they are now a part of our tool kit

>> joining me with their reaction now are diane swonk, the chief economist at grant thornton and david zwervos with jeffries so david, you heard those remarks and took that as, negative rates could happen. what is it about his denials that has you thinking and going into the question and thinking, this could really be coming? >> there's been a lot of talk about, you know, you guys have had ken rogoff on a few times. he penned a piece about how rates should be at negative 3% in the front end we've seen lakota with some blog pieces as well arguing the same thing. this debate has been there for a while and the actors are all the same and that is exactly what you would have expected powell to say he said nothing different than the party line, we didn't like it before, we don't like it now. but what was very interesting, he used the word for now in one

of his responses he said, there are some people that are fans of it, but for now the committee is not looking for now is a very interesting set of words coming from a fed official it's not something off the table completely and if i'm remembering, it was rick santelli in a somewhat heated debate with steve liesman was arguing, yes, the door was not shut today, not clamped tight, is what he said and i agree with him and i think a lot of people expected it to be more clamped tight and it wasn't. so this was a move away from what i thought would have been an outright denial of, this is not happening, forever ever. using the word for now is very tricky, or very interesting. >> diane, the other thing here is this is a fed that we've heard them pivot before. even when they've declared across the board, you know, like back in the end of 2018, you know, that they were going to continue to keep raising the fed funds rate when they, in fact,

turned around and cut rates. it seemed preposterous the president was calling for it and then it happened we're used to about-faces already. do you think negative rates something that should be on the table and what would that achieve? >> i don't think it should be on the table. and i actually think powell was pretty clear about how unanimous the current federal reserve is every one of the participants said this is not what they think is the best thing, particularly for this unique crisis and i think that's really important. we saw patrick harper talk earlier last week about how negative rates can't reopen businesses that are already shuttered. this is not the right tool for this particular crisis and the threshold to use negative rates is very, very high the fed went through a year-long process of which i've been to many of the meetings of, and the fed k-- and ken rogoff was at that those meetings and the fed really did evolve. in the fall of 2018, i was at the meeting where chairman powell said, hey, we've considered negative rates.

that's something we're looking at so it's evolved to the fact that they looked at it, looked at the efficacy, looked at the mixed effects it's had abroad and the unintended consequences, and said, this is certainly not only top of our list. and particularly for this crisis, this fed has been unanimous that this is not the best outcome for triggering and curing what ails us with the coronavirus. so i do think the fed has evolved on and they've thought about it >> and it's interesting, dave. because you've said, the fed has evolved, but it can keep evolving, joking about a chair rogoff or a chair lakota, who has been open to it. we might hear more about negative rates, especially now that it has the president's support. what is -- is this just because the market wants it and they've learned, hey, if they want something bad enough, they can get it or do you really think this would serve the financial system and the economy? >> look, there's two debates here what should they do and what will they do and you know me, kelly i'm much more about what i think

they're going to do than what they should do my opinion on what they should do is, you know, just like everybody else's it's not the most -- it's not the important thing. the important thing is thinking about how this committee will evolve and i do think, with the president pushing it so hard, there's an evolution, i mean, if he is the next president, and that's a big if, who will be the next chair and thinking about that over the long run is an important thing for the equity markets and long-dated fixed income investors who may have to hedge a fed that pivots if powell is not there in a year and a half and also, who the next governors are. marvin goodfriend, the late, great, marvin goodfriend was a big advocate of deep negative interest rates he ran into -- he, unfortunately, ran into some problems with confirmation, as well but, again, i think we have to think about how the makeup of the committee evolves over a long horizon, not just over the next month, two months, or three months and i do think, you had alan blinder on, the vice chair when i used to be back at the fed,

way, way back in the early '90s, another lifetime ago, and he actually said, i kind of like negative rates, which is sort of funny that he said, i don't think it's happened, but i kind of like it the academics all kind of settle on liking this >> okay. not all of them, but a lot of them and it's practitioners that tend to be very nervous about them, because it eats into their spreads. it's their livelihood. >> absolutely. and i think those are legitimate concerns diane, i'll give you the last one. i see your face blampnching and please elaborate on what you think is more likely here with the fed. >> you know, you never say never, but negative rates would be the absolute last thing they do right now and even a year from now, the composition of the fed isn't going to change that much a year from now that's what the market is looking at six months from now that's what the market is looking at over the longer haul. if the fed were to bow to the will of the president, as this fed did not, i think they had the credibility to do what they

did, because they did not. if they were to have a chair that did that, you would have a heck of a rebellion among the president. this is not a single-led fed it is a committee that goes for it and the unanimous nature in which they rejected it really matters. >> you got it all in and we appreciate you both we hope to continue the great rate debate, so to speak that does it for "the exchange." i'll join tyler mathsten for "power lunch" now. hi, tyler. >> kelly, thank you very much, and we will see you at "power lunch" over here in a moment not actually over here, in my kitchen, but on the "power lunch" set i'm tyler mathisen welcome, everybody our breaking news coverage of the markets and the coronavirus continues right now. well, stocks, you know what they're doing, they're sinking, for the second day in a row, the dow down around 500. that as fears about the long-term damage to the economy takes center stage that's what's hanging over the market yesterday's testimony in front of the senate may have been catalyt cata