was the most i had seen it down. s&p down by 26 the nasdaq off by 130. have a great weekend, everybody. we'll see you back here on monday morning "squawk on the street" begins right now. bye, guys. >> good friday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber live from separate locations futures are red. the bears can pick their poison today. retail sales down 16.4 china tensions, as the u.s. moves to cut huawei off from u.s. tech. some states that have opened like texas, showing record high daily case load. it was the huawei news that took the wind out of the sails of futures earlier this morning >> yeah. i'm not saying it's unexpected a lot of the chip companies i know have built in the fact they won't get huawei business. i think the thing that scared people and is scaring people is

that retaliation comment that mentions boeing. did not mention apple, but apple is acting terribly did not mention applied materials. had a great quarter, stock reversed badly it's a surprise. i don't understand what's happening with boeing. you have this -- you have the ceo, who is blasting the clients, then you have china who doesn't want boeing, and a queue for boeing planes that is dissolving i don't like anything i'm hearing about boeing nothing. >> you mentioned the editor for the global times, he does say based on what i know, if you block further, we can add you to the unreliable list, and he says qualcomm, cisco, apple as well as suspending the purchase of boeing planes. >> this is terrible. the china haters and china lovers should look at our retail

sales and say, you know what maybe we have to shut up a little bit here. maybe we're not as strong as we'd like and we should hold out until we're stronger i've been the hardest line on china. everybody knows that i'm harder than peter navarro. but this is not the time to cause some sort of trade war that escalates to the point where we have tariffs like 1930s. are we crazy look, i don't like it. i still say the wuhan virus, whatever this is not the time we're not strong you don't want to replace -- i don't know i'm discouraged. david, i'm discouraged >> i don't blame you i wonder whether, jim, we're going down this road, all you need to do is look at the headlines, look at the rhetoric from many countries including our own that says, hey, corporations, what you make in this country or what you make period stays here.

we don't let you sell it anywhere else. we'll husband the resources of whatever it is that you produce. that's starting to happen. that could be a dangerous sign >> i cannot disagree with you. aside from covid, it's the most bearish sign right now, if anything, we need cooperation. we have not figured out the disease, the retail sales number is going to produce literally millions of people to be unemployed we're taking on china right now? why don't we take them on six months from now. why right now? we need to sell things we need to do better, otherwise there's just going to be 11 companies left in the retail and restaurant group 11 only ones with strong balance sheets >> jim >> yes >> would you be surprised if we saw a tweet from the president sort of ratcheting up tension again or bringing up the idea, hey, the trade deal was great.

maybe we need to revisit it. we've seen this in the past. >> i think it could go the other way. he could say my great friend, president xi, knows that there are things that they're doing wrong. i think we could come together, but some business changes have to be made some companies have been allowed to come in and do their own non-joint venture. nvidia was able to close a deal. not an olive branch. not a carrot but not a howitzer this is a time where we can work together we'll sort out our problems. but this idea of huawei doing this, if you make these changes, we are willing to come to the table. you have to make the changes first. that's what the president -- what needs to be said given the fact that he already has some bad cops out there he needs to be more good cop,

even if for a second it makes us look like we're nice to the chinese. >> i'm quoting him from fox yesterday. there's many things we could do. we could cut off the whole relationship if you did, what would happen? you would save 5$500 billion that was the quote from yesterday. so if there's anything dovish on china today, next week, next month, that will be confusing to some >> i think the one thing i would s say, the president could say i want them to come to the table do more, i know they're doing stage one. i think this is -- you know what we want. we come both needing business. you keep paying the tariffs, and we will do business. you have to make huawei an independent company that doesn't do anything involved with high-tech but does lower tech.

we don't want huawei to be an instrument of the military no olive branch. but the president needs to say my great friend xi and i need to make a phone call. it's time for a phone call >> jim, you were the one who told becky this week to ask navarro about taiwan, now you have taiwan semi building a $12 billion plant in arizona >> kind of instinct on that one. i do think that that was a tremendous coup for the president. they are the best foundry maker, not intel. kind of interesting intel got in there. that's a big, big win. those factories are chock full of equipment if you go over the applied materials conference call, they were saying demand is strong they see a lot of business coming they think memory chips are strong that stock went from 52 to 56,

then 57, now all the way back because of this comment. those are -- we own the semiconductor capital equipment business that's one of the greatest intellectual property industries, we own it. we don't want that crimped this was a terrific thing we got this i don't think it was the right time to take on the chinese. this was a win against the chinese. w biggest out there. >> $12 billion, plant may be done by 2024 1,600 jobs here, the "journal's" reporting on this. do we know about subsidies, either state or federal subsidies? i wonder whether other companies, other u.s. companies may similarly ask for subsidies or some sort of a break here if they're considering building plants as well >> it's a great question i went to the israeli plant, israeli intel plant. i went on the sabbath, a saturday, there was no one there. that's why because they're not allowed to work.

the plant was still going full bore they don't employ a lot of people once they're open i went to the irish plant, ireland gave them tremendous breaks to get that plant to be competitive it wouldn't be bad -- we're paying people not to work. paying people to employ people doing this and that, sending out checks it would be great to give taiwan semimon money to do this. it's such a win. this was the wrong bay to have -- the president should recognize this was the day he should have been taking credit for this incredible win, talking about what incentives others can benefit and not have a -- the old huawei news, which most of the semiconductor companies new already. he hurt himself on this. time to call president xi. it is. this was a huge win. >> if they haven't kept track of the huawei story as it's moved along, i thought it was years

ago that we banned the ability of chips to be sold to huawei. it's been hard to keep track of it the company is still thriving, it appears, in terms of worldwide markets and market share. >> the united states is not against the core business that they do of handsets. it's the military stuff they do. it's largely, i believe, controlled by the prc. i said that to the government many times i've talked to these guys in the past >> prior to all the stuff we're talking about this morning, i do wonder how impressed you were that we held the 50-day on some of these major indices, and saw a nice bounce back as they tried to circle the wagons below 23k >> i know the vix is still too high, which means the volatility is back. this is a day where they'll take everything down off of retail sales and off of huawei, and they'll come back to covid stocks, the covid winners.

why? because their numbers are too low. i have wix on tonight. they help small to medium sized businesses make websites their business is as good as shopify. you want to watch shopify, twilio and wix they are the way to move from brick-and-mortar to the web. that's the most important thing in the world now given that you're nonessential. the government made -- the government's made so many companies nonessential so the only real choice they had to sell goods was to go etsy, shopify, wix, twilio watch those stocks they're the four that will go up >> is there a sense that -- walmart reports on tuesday, jim. >> monster >> i know. we have non-store up 8.4 on today's number but people are talking about a double digit comp for walmart. >> it could be

this is the break-out squauquar for food doug mcmillan is a great guy it's been a fantastic run for him. first he takes the wages up, cuts his own numbers to get the wages up because he needs to have people who stay at the stores walmarts i go to now, you see the same manager you used to, that never happened. the online strategy which is so fabulous they could do a plus 30 online strategy i'm not kidding. plus 30. this is the biggest store in the world. dominant store >> yeah. >> we'll have our eyes peeled for that even as we looked at some other categories today on the retail sales number. clothing down 79, furniture down 59 a lot to get to. we'll get industrial production after the break then we'll talk to the president of the nyse as they announce this limited

reopen of the trading floor for 26y th stacey cunningham is with us after the break. hey! lily from at&t here. i'm back and while most stores are open, i'm working from home and here to help. here's a tip: get half-off the amazing iphone 11 on at&t, america's fastest network for iphones. second tip: you can put googly eyes on your stuff to keep yourself company. uh for example, that's heraldo. he's my best friend. oh, sorry nancy, i forgot you were there. get the amazing iphone 11 for half-off on at&t, america's fastest network for iphones.

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get the connectivity your business needs. call today. comcast business. friday data has been tough to look at we've been talking all morning about retail sales, down 16.4

i will point out gary cohn says it reflects that people did shelter in place, they did what they were told to do now we'll get industrial production for that we go to rick santelli. >> industrial production goes back to 1919, over 100 years, capacity utilization wasn't added until 1967 we're waiting for our april read on both of those while we are waiting we acknowledge some of the numbers will be relevant, but the seasonal adjustments may take a while to catch on. the data is running slow let's go to the charts until we get it intraday of two-year note yields, acknowledging we trading down as low as 13 basis points 0.13 why is that significant? we never closed under 14 basis points thus far. if we look at ten-year, traded as low as 58 basis points.

54 is the all-time low yield close. 31 basis points, the intraday. here are the numbers, down 11.2 on industrial production i would say drumrol droll 11.2 down is the biggest in 101 years. we have never had a month over month charge thnge that large and on utilization rates, 16.9 going back to 1967, the prior all-time low utilization rate was 66.6, they probably rounded it out to 67 back then if we look at interest rates, you can see it, they have not moved much they moved up a little bit because all this news is totally expected finally, the dollar index, up a bit on the week. settled around 99.75 last week just down a bit today.

yesterday it was near 100.50 here's why i'll mentioning it. negative rates has been pushed against the fed and investors are still convinced it may happen but the pushing back by the federal reserve, jay powell for example has given some strength to the dollar. think about it if we're not going to negative rates or are trying to avoid them, that's a plus for you. back to you. >> thanks. the other big news is the new york stock exchange is set to partially reopen. the president of the nyse joins us this morning. i know you have a busy morning of interviews, stacey. thanks for coming to us first. >> thank you it's great to be back. it's nice not to be doing an interview on my laptop

we look forward to having you back, too. >> we want to get into the details of how you'll do this, but the first question is what led you to believe that may 26th will be the time >> there's a number of factors we've been closely monitoring since we closed the floor march 23rd we wanted to see how conditions in new york city are progressing and learn more about the virus we have learned a lot over the past two months. we've seen conditions in new york start to return we're looking at the overall impact on the economy and felt this was the right time to start making measured changes towards a path forward importantly, we are not on the other side of this pandemic. but we're not going to be for a long time. we need to start making measured -- taking measured steps to get us to a new norm that we'll have to live with for a while. >> all right in terms of the tales, it's a limited number of people on the floor. they will have to maintain distance don't take public transportation temperature checks when you walk in are you convinced all of this can be done without a large

number of cases in the building or with you hold it to zero? what's the target? >> the goal is not to eliminate any single positive case our country is still dealing with this pandemic there will be new cases. the plans we put in place are designed to prevent an outbreak, certainly to prevent an outbreak on the trading floor one thing we focussed on as we structured those plans is who is impacted most. that's an important message for all of us as we figure out how to reopen cities who is impacted most and help those people when you think about the trading floor community, there's a mix of people who work down here every day. some for independent small businesses with less than 20 people, and some much larger corporations while we're bringing back less than 15% of the overall people that work in this building, it's about 25% of the trading floor community, but it's heavily skewed towards those small businesses so they can get back to earning a living. >> stacey, jim cramer.

congratulations on reopening it's important for america >> thanks, jim >> can you tell me what it will be like -- i know you'll do physical distancing, which is terrific, and will people be required to wear masks people will be required to wear masks and people will be do be social distancing, and we'll have a zero tolerance policy we started with the independent floor broker communities they're representing orders for institutional clients around the world. we'll start with them, they largely aren't able to provide that services in a full way at all remotely the marketmakers who are typically standing around these posts, we'll keep them home at first. they're larger companies, and they can do most of what they're doing remotely by starting with the floor brokers that stand around the perimeter of the floor, it eliminates the need of walking

around the trading floor they can do more of their trading in their booths. that's where we're starting the initial reopening phase. it's important to recognize, this is phase one. there will be phase two, but it's not a straight path that's true for america, too we have to watch and learn there will be a bit of a learning curve as we look at how can we put these protections in place to limit overall outbreaks. >> most exciting part of the new york stock exchange is when there's an ipo, all the floor brokers are huddled together that won't happen anymore, huh >> we've been doing a lot of virtual celebrating. very quickly in march we started a series of virtual calls. the nyc community and our lis d ed community is an important part of who we are so we brought people in to see what was happening and what we see. we convened those virtual events in march once we started seeing

the brought break spreading. we've been exploring and having fun with how do we celebrate ipos virtually at some point in time people will come back in this building and party like we used to do, but for right now we'll use a mixed level of mediums for the foreseeable future >> you said in the press release announcing your plans to reopen that recent data demonstrated that the trading floor saves millions of dollars each day by making trading transactions efficient. so over the past few months have people suffered costs that they wouldn't have otherwise had to suffer >> yes, our fully electronic auctions still are highly efficient and better than other electronic auctions out there. but when you add the trading floor in, you see a much larger sized bids and offers. it makes those auctions more

efficient, and you see that price discovery process, when you layer on human judgment even better to the tune of roughly 5 $15 million a day. that's a savings for investors we're looking to reintroduce so they get that full benefit right now we're offering a partial service. it's still a good service but not as good as we can be that's what we're looking to reintroduce. >> finally, we're all going to have to sign a statement that we acknowledge the risks when we go back into the building to what degree does that protect the exchange from liability? what do you think businesses should demand in the way of liability protection >> the reason why we're requiring waivers as well is because of the restrictions we're putting in place and keep in mind most of the people on the trading floor don't work for the new york stock exchange. for us to say if you want to come back, you need to wear a mask, you need to social distance, you need to agree to the protections we put in place so we can continue to keep the

rest of the community safe our actions are really dependent on each other, and that's what that agreement is about for us, to make sure they understand, hey, we're choosing to come in here, and in order to get that access we'll agree to follow the new rules that are part of our new norm, at least for the short term this is not going away in the next couple of months. >> i think we're all eyes open on that. stacey, thanks for helping people understand. it's an important op-ed you wrote in the "journal" last night. we'll see you soon >> thanks, i hope so we have to take steps to get there. here's a look at futures, off the session lows the opening llbe in about 5 1/2 minutes.

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opening bell will happen in about -- less than a minute here busy morning as we look at retail sales we talked ed ted t ed ted to s of the nyse. oil, when you look at it, april

looked better than march >> that's the word i get from a lot of companies who come on ma'am ma'a "mad money." the third week of march may have been the worst week of business since the great depression in this country it's not gang busters, but april is better. that's an encouraging sign people will be looking a the what's happening with tech stocks and trying to take their cue, that's a mistake. david, got updates on nike reopening in europe and north america. now i see jcpenney is halted for news >> yeah. i think we all know what that news unfortunately is going to be for jcpenney. a bankruptcy filing is widely expected for the retailer. we've been following jcpenney's fortunes for years now they haven't been good we made the point that this crisis accelerated many things

that may have happened including a bankruptcy filing on the part of jcpenney, which is expected as early as today. you can go back to 2011, 2012 frankly, remember it when ron johnson, the man that bill ackman brought in to become the ceo of that company introduced his new strategy it was in january of 2012, appeared on the west side of manhattan, and it was downhill from there for jcpenney. that strategy failed, and the company never fully recovered or never did recover. you can see that period, '11 and '12, where the stock was and what happened since then it accelerated something that was likely to take place it is a bit different than the bankruptcies of j. crew and neiman marcus, two other well known retailers, both of which

were lbos. neiman marcus was a double lbo the debt of that company did not help in this difficult time. j. crew also but in the case of jcpenney it was more execution failure there that left them in this difficult position for many years. >> they had a loyal clientele under mike goldman they didn't have great numbers, it's true, but consistent numbers. the clientele loved the brands, the house brands which were equal to the quality of the name brands like vf offered it was kind of sticky. they had 95,000 people work for them, and you would go and they would have great bargains, they were one of those places that marked down, marked down ron johnson didn't like that strategy it was like he came in and just said to all of the regular customers, this isn't your store anymore. we'll attract new people that is a redo that you can't do in america

you can't do it. not with retail. it failed miserably. the company never recovered. they had no money to do a good e-commerce, they're history. 95,000 people. where do we put them, david? >> yeah. add many of them to the ranks. we don't know the specifics of any filing, so, jim, we don't know what a reorganization would look like. the stock has been trading for nothing. well below $1 for some time. it's about the bonds i have not gotten the latest numbers on the bonds again, this is not a surprise. but your point is an important one. when we talk about jcpenney, it's not about the stock price, it's about the employees who could lose their jobs. >> and also the mall, the empty place in the mall. one more thing you don't want to see when these malls open up the list of roadkill in the

malls is extraordinary it's a shame while we may not like the concept of the mall, there's a lot of them. and there's a lot of jobs in malls. the jobs are not jobs that you need to go to stanford and have a computer science degree. my parents -- one worked at gimbel's, the other worked at litz i'm not denigrating department stores, but they're not high skilled. i hopewe don't have bread lines. you know what i mean >> yes i see office depot announcing 13,000 job cuts over the next few years. maybe the most heartening headline in retail today was ikea saying that they're going to start to try to pick up some of this u.s. mall space, try to make some inroads. we know they use a lot of real estate >> i thought that was great. i didn't think anybody else caught it. there's so much mall space

people have been talking about and using it like a warehouse. ikea can be creative we need them we need anybody, other than simon properties, i don't know -- tanger, outlet malls, that was so reliable you look at tanger, and the strip malls that everybody liked so much. they got rid of their dividend why -- why -- these were titans. people don't realize they were titans federal reality is still hanging in there, they do mixed use. dom wood saw this coming the whole way. dom wood and david simon are the visionaries in a group that otherwise has washed away. >> simon did not give us rent numbers for may. you know, they may not have come in fully

>> one minute just to refresh, there's a sears at one end, a jcpenney at the other, in between a lot of gamestops and gaps, okay j. crew. >> right does that help >> right, there's not going to be anything. >> i'll be silent. >> you're hearing me >> well, we'll get webex in here and i'll find out what david is thinking i don't know >> restaurants -- this note today on qsr and yum, st eshgst takes them to buy. how much of your business can you minimize where the consumer spends inside. 95 on yum. we've seen -- you saw this 59-page memo out of mcdonald's

yesterday. cleaning the bathrooms every 30 minutes. limitations on water fountain use. it will get interesting. >> that made me want to go there. of course we have a synopsis i love mcdonald's. whatever you can do to make it so you can drive through wendy's has great drive-through. chipotle has the chipot-lanes. any restaurant you've been to in new york any restaurant you've been to in new york is not profitable in this new world if you look at what they want these restaurants to do -- it's like checking in to the icu. >> yeah. yeah jim, can you hear me now maybe you preferred not being able to hear me. >> did you answer any of my questions about the mall or was that just -- did you have

anything to say about it because i know -- >> i was i was. >> you were? i thought you were stunned >> i was sharing the fact that we don't know what the aren't roles look like, but i heard 25% of the people may have been paying rent in may >> how about starbucks saying that's not the price we're going to pay remember the days when the malls told you what to pay now it's, hey, guys, that price won't hold up. starbucks and chipotle have customers. what you need -- planet fitness i had them on last night these malls need customers the guys who can bring in customers, they have the upper hand in negotiations and i think it's going to be something to behold when the xwro gross margins soar for chipotle

and starbucks. you have to buy those stocks you have to. they're winners. >> interesting >> they definitely have the leverage >> buy them. >> they'll be able to stay and they are the ones who bring foot traffic into the mall. again, we've talked for years about the decline of the mall. once again, another trend that's been accelerated as has, by the way, jim, people getting bicycles in their homes, ala peloton. nine weeks to get one i hear >> heather gaines for our staff from "mad money," end of june maybe you can get it end of june. >> that stock up again part of your index >> the cramer covid index. that's not affected. the chinese can do whatever they want to us, so what. they can't stop us from using cycles at home

got me >> yes npd has fitness equipment sales up 130% in march exercise bikes up 170. free weights up 181. benches up 280% in a month >> incredible. >> people are working out at home >> there's about 50 planet fitnesses that opened. after the first three days, they're not only back to where they were, but in some cases accelerating people know that -- look, distance, okay, masks, exercise. that last one you can control in a way longer term, it has to be controlled i think people will be exercising like crazy to make it so that they're stronger against this thing it works how many things can you control? masks. and working out. >> and distance. >> yeah. >> on the health front, there's a bunch of things going on

suggestion from kellyanne conway that we'll get some vaccine update from the president in the rose garden. people were watching moderna earlier this morning i know you've been defending abbott, fda warned this test and accuracy concerns. what do we think about this stuff? >> i think it's up for debate, when the letter came out, i was going back and forth with abbott they were talking about some 85%, 90% successful. right when they were giving me the data from different hospitals, the fda came out. it doesn't matter what the fda is saying, that it just really is problematic, if it says you don't have it, you have to take another test but what abbott would say is the machine is not being used right. there's lots of people who feel that way but nyu made a strong case on our air saying this is a machine

that doesn't work. it may work, maybe it doesn't work right it could be 85% to 90% reliable, that's the acceptable rate of fail >> that's what gottlieb essentially said on air. the problem was not the test itself but how it was being used then you had -- in terms of vaccines, sanofi has been called to macron's office next week talking about the u.s. potentially getting a vaccine first. and nelson peltz saying he thought there was loads of value in the market because he did believe -- i believe in america, he said. we will get a vaccine. >> the level of confidence from the j & j people where they're putting up 2$250 million of plants so they can do billions, which is what you have to do is extraordinary to me. when you speak to them, it's not hubris, when you speak to the harvard professors, he's just

too smart to speak to. jensen wong is too smart to speak to, he has the chip which tells you what you're thinking basically. i have to tell you that moderna and novovax, i think they're a little too promotional it worries me. j&j, pfizer, sanofi, not that promotional and best of all regeneron. regeneron is one of those coming up on the far turn we don't have horse racing anymore, but the final furlongs, it could win >> right but that's more of the monoclonal antibody, isn't it? >> they got both one is -- they just got an anti-cancer drug that i think may put -- give a run to k keytruda regeneron came on "mad money"

when i was begging for guests. you could be in something like that or in an index fund >> if you can be lucky enough to stick with a company like regeneron, you have a real ability to make serious money. but what about voss from novartis yesterday still talking about it being more than a year from now before we see a vaccine. >> it could be the people i talk to who know the business know that the mumps vaccine was four years 15 years for the polio vaccine vaccines take a long time, but the fda clearly is not going to ask you to wait and do phase one for this long, phase -- i'm involved with a drug trial now that i'm doing i think there's no side effects. it doesn't matter. takes three, four years. they're letting a lot of stuff go if you have something -- you have some spaghetti, they'll throw it on the wall it's devoid the great

depression i'm not saying that the fda -- >> right but you do need large-scale trials eventually. >> right that takes time. >> it's a small percentage if you're talking about inoculating billions of people you want a better idea in terms of the broader population. >> you're giving healthy people covid, right >> yeah. before we move on from here, the banks, i just wanted to get your take we talked about them yesterday wells fargo maybe some thought had bottomed given that it showed a little bit of life there. but overall, not much to say as we watch the broader market come back a bit from the lows >> it seemed like it had that warren buffett's buying them, or jamie is buying jpmorgan feel yesterday. like you will find out later what happened. i don't have an investment case for them i think you need that before you

buy anything this market is so good it's crazy >> definitely hard to keep it down back above 23,500 as we continue to watch headlines regarding retail and health at large there's 2,834. we'll talk to art cashin about these levels later this morning on "squawk alley." we'll take a quick break and be back in a moment ♪

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welcome back to "squawk on the street." want to look at the airline sectors. phil lebeau joins us now focus on whether or not those airlines can eliminate the middle seat and hope to have any sense of profitability phil >> the short answer is no, david. they're going to have to raise tickets or make some other adjustments. representative peter defazio saw these types of images on some flights on high volume routes like new york to san francisco or dallas to chicago, he said what's going on here these planes are full, there's no social distancing he sent a letter to the airplanes saying you know what planes should not be more than

60% full strip out the middle seat. this is what it would look like on a typical 737 if the middle seat was stripped out. you would have 67%, for, this how many seats would be filled look you'd have maybe 20 people in economy. another four in business class this is unsustainable. this is not a business model that even if you said well, we'll raise ticket prices, there's no amount of raising ticket prices people will pay in order for social distancing to work on a plane. that's why when you look at the airlines stocks, they're averaging about 17 passengers per plane right now. now, that's when it's filtered out over the whole system as of right now. the flight levels down 93 % in terms of how many people are flying right now in the united states and finally, keep in mind they are also burning through about $10 billion in cash. that's what they burned through in april it's come down a little bit in may. but guys, that's an

unsustainable business model if you strip out that middle row unless you do a substantial raise in ticket prices >>. >> yeah. the economics don't work at all as you've made the point, phil thank you. phil labeau. we mentioned jcpenny news was halted expected to be a bankruptcy filing got information on the bonds remember, that's where the action is. the unsecured bonds trading around $0.05 on the dollar now, it is unsecured but nonetheless, we'll wait and see when we actually get the news for you. re" mi uwkn e ua oth stetcongp. boston light, america's oldest lighthouse,

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can't take your eyes off of semi conductors this morning as the congress moves to isolate huawei even further. the dow now just 40 points in the flatline we're back in a minute this is decision tech.

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of knowing that essentials like prescriptions are on their way. every day, all across america, we deliver for you. and we always will. it's time for stop trading >> really disappointing numbers. vans down. they said they're going to keep the dividend the stock opens down almost 3 and then it roars up a couple pucks. if this stock goes up today, there's something going on we're not aware of

it was not a good quarter. and i like them. he'sgood >> interesting there has been some work on the largest dividend payers in terms of just dollars, to a large degree, they've kept the dividend there's been very little suspension or cuts >> it's uncredible the ben benchmark was saying let's not worry about the dividend obviously there's retailers that had no choice and had to eliminate it it's not as bad as people thought. carnival >> royal caribbean leading the s&p as we speak. >> isn't that something? >> another point, i wanted to get to you is crude. what if wti has a three handle once again what's that going to signal to investors? >> that there are about 70 companies that were going to go under that can live to fight

again. very bullish for all banks wells fargo which has a large oil portfolio. i'm not recommending but i'm telling people who were buying it that maybe they're buying it in part because oil going up takes a lot of pressure off them >> yeah. certainly one less problem we have to worry about. what's tonight >> one less problem is a way to look at it we have wix. we've got a private company that does bio degradables, and then we have draft kings. it's up 10 straight points it's the new stock market. got to see what -- >> on a week where all this drip, drip, drip about nba conference calls with adam silver, mlb getting things in line with the unions it's starting to feel like we're going to get something >> i think that's one of the reasons why the market's kind of feeling okay

is there are some parts of our lives that actually resemble our previous lives not a lot, but some. i say as i cook tonight. again. again. and again. >> anything good >> bbq'ing chicken i got some good bbq sauce. you know >> all right what can i say i bbq chicken tonight. cook steak, and then steak i had a can of tuna. >> it goes well with a bottle of tequila. it's friday night. >> pound it like -- drink the worm every day is exactly the same. okay every day is the same. and all you do is ask people about what book and netflix. maybe it's documentaries this weekend. world war ii in color. >> on the house parties with our favorite couple, we say did we talk about this last weekend it feels like we're having the same conversation again. >> as i was told jim, it's

tuesday. every day is tuesday >> it's tuesday. >> the worst day of the week >> it's wednesday. think schools are open in the fall it's thursday. hey, what do you think about schools opening in the fall? >> i'll see you on zoom, partner. >> we'll see you tonight, mad money 6:00 p.m good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and sara eisen the market has tried to repair some of the early pain as miserable data on retail sales and more with rick santelli now. >> yes carl, our march, march is right about when all the effects of coronavirus started. the next two numbers, business inventories and job openings and turnovers two months in arrears. business inventories down .2 i'm sure we'll see larger influences into next month, april. now, if we look at jolts, it moved from 7 million plus jobs just a whisker over 7 million

jobs to 6,191,000. it's better than expected, and i underscore that this is a march number now, let's get into may prel preliminary university of michigan this goes back to 1978 and a current read is 73 .7. 73.7 that's better than we were anticipating this is a bit shocking, actually i wouldn't have guessed it i prepared with the historic all time low numbers for the series, but certainly a nice surprise there. and it's impossible to say that it didn't experience the full effects of the coronavirus on the economy so on sentiment at least, it's not a terrific number, but it is higher than our last look. let's go through the internals, shall we current conditions, zoomed to 83.0 hard to understand that. expectations, they dropped to 67.7 from 70.1

on the inflation outlook, this totally makes sense. they've ramped up. ramped up significantly on the one-year outlook, 3% 3% and on the 5-to 10-year out look, 4 to 5%. if the president is trying to make as much of what we can within the country, especially things like pharmaceuticals and manufacturing as well potentially, i can't imagine that prices wouldn't go up down the road and it's something we're seeing the dynamic in the university of michigan the one-year is higher than the f five-year to ten-year. a lot of issues to think about >> that's a lot to process thanks for that. rick santelli joining us with the data the other big news is the commerce department working to isolate huawei from u.s. tech supply even further. it's taken the wind out of the sails of chip stocks we are joined with more.

hey, carl. a hawkish communist paper is quoting government sources tonight as saying that china is ready to launch countermeasures against the u.s. if the trump administration does go ahead with that plan and block the sale of u.s. chips from global suppliers to the chinese tech giant huawei the commerce department said it was going to tweak an export rule that would prevent the sale and shipment of those chips to huawei, and the editor in chief at the global times who is quite well-connected and known to be with government officials tweeted the new measures could include activating china's so-called unreliable entity list, restricting or investigating u.s. companies, and suspending the purchase of boeing airplanes and tonight, the paper added that the investigations would be endless, quote, like swords

hanging over their heads now, despite those threats, the rest of the state media has generally been talking up how china has been making good on its promises with the trade deal that china has been buying up soybeans and easing surn tariffs on products from the united states it's been importing u.s. blue berries and barly and the foreign ministry also had a calmer tone today when the ministry was responding to a question about president trump's comment that the u.s. could cut off the whole relationship with china, the foreign ministry said that it hopes that the u.s. would meet china halfway on trade. so what's also -- i think what's important here to remember, guys, is that even -- as much as there's this threat and this rhetoric that's going around, these companies not only provide a lot of important technology to chinese companies, but also they

employ a lot of people and right now a lot of the discussion, especially heading to the national people's congress which is going to take place next week is about how china wants to maintain the employment picture here, and is very concerned about the number of jobless so that's another reason why the chinese or that the u.s. might have more leverage than maybe the chinese would like to admit. at least the chinese over at the global times >> and there's also this question about how quickly china's actually coming back online i mean, we got an encouraging update from another u.s. corporation saying 100% of their stores in china and south korea are open are people coming? are they going back to restaurants? is activity picking up as normal and i wonder how the government is looking at that and trying to push that to help china here

>> yeah. the government is definitely pushing that and trying to reopen even though we have been having these mini cluster outbreaks that have been going on for the past week or so. but yeah, the stores, people are going to the stores. they are heading to the restaurants. there are more measures in place for the most part, the basic ones is there are temperature checks people have to register their i.d. there's a government mandated health code or you have to show a bar code that tells the store or the restaurant that -- where you've been for the past 14 days so there are these new prevention measures in place to try to get people more confident to go out and shop and dine out. >> it's going to be interesting to see how many of those we can replicate in a society like this one over here. thank you for that from beijing on the huawei news let's bring in david bailen and mark mahaney to talk about

the news on tech thank you for being with us. >> pleasure. >> good morning. >> mark, i don't know if you can address the huawei news specifically, but i did see a survey out of evercore that asked about top concerns for stocks and number one was a second wave of cases number two was valuation number three was u.s./china tensions how much are you weighing china versus everything else we have to worry about >> okay. of those three issues i think at least four, consumer tech, outside of hardware companies, i think china tensions are probably the least important and we're -- i'm very struck by the data point we got this morning from retail. and there's one number to keep in mind. it's 22% i think this is really key we just got a monster data point. so retail sales as whole in the country declined 22 %. you know what grew 22% online retail sales.

it is a tale of dramatically different worlds going on. hopefully we don't have another wave, but the longer that people are forced to stay j shelter in place, the stronger the tail wind is going to be for online retail there's a clear couple of structural winners we're focussed on. of course, amazon and shop fie at the top of the list. >> we talked a couple weeks ago yoen your general point was there's a once in a lifetime opportunity to snag a bunch of new customers as long as the experience is satisfactory and we keep asking if you think it is story in enough to the point where when things reopen they stay to this model rather than going back to traditional ones >> i'm sure there will be a reverse to main street i'm shopping i'm sure there will be some of that i think you give companies very good executing companies, they wouldn't have the market caps in the histories they have if they didn't execute well.

if you give that kind of opportunity, that kind of runway to companies like shopify but especially amazon, i doubt they blow it. so far it seems like they're able to reasonably meet most consumer demand. so my guess is that especially if they're spending that other great data point about amazon, the interesting one is 4 billion they're spending in the june quarter just to ensure safety, security of their workers and the delivery systems et cetera i think they'll close the door, close the window on offline retailers. fortunately or unfortunately, they're both characteristics there. >> david, nearly every day this week, and today it was huawei, there was a new tension between the u.s. and china president trump even this week threatening to cut off the relationship there how seriously as an investor do you take the threats as far as they could hit economic growth at a vulnerable point, or do you chock it up to we're having an

election and we need someone to blame for the mierj crisis the u.s. is in >> well, i think we've seen the point that's being made. the fact that we're talking about this and not talking about the driving opening up in the united states, 25 % increase in the miles driven in the last two weeks as the economy in the united states opens up and because we're looking at china, we would look at it a relatively small risk. the actions taken only affect a small portion of the economy now. what we're watching is the return of the consumer we were just talking about that. are they going to be buying more next month are they going to take deferred purchases? areas like consumer durables, dishwashers and refrigerators and do their home improvements our answer is yes. we expect a sharp comeback in that area. this is very different than the 2008 and 2009 recession. 60% of the people unemployed are

in leaisure, retail. we expect a sharp rise over the next three or four months. that's the real story. to answer your question, i think china is a distraction for political purposes more than it is an economic story we have to keep focussed on whether or not people are going to get back to work, and we think they will. in the third quarter we want to see half the people unemployed over the last six weeks get back to work. that would be a significant first step on the way to a better economy in 2021 >> but that does sort of leave the question open still on what consumer demand is going to look like it would be better to get some of the furloughed jobs back online, but what are you expecting given sharp declines in categories like apparel and others i get this was april and people were sheltering in place and we expected this, and that's good they weren't going out, but how

quickly does consumer demand come back for an economy that's bit on that? >> well, you're going to have different parts of consumer demand come back at different times. the ones that require going to a store and trying something on are going to come back more slowly what we're looking at is the sum total of what people buy right? and they have deferred over the course of the last eight weeks some major purchases housing, automobiles, large appliances, and things like that as well as their clothing. and it's the sum total of that that we think can come back more sharply than people expect housing is a great example of this you had a spring season that was missed but when you look at the last couple weeks, you can already see the recovery in people's interest, especially among boomers and millennials. they're going to come back to the housing market so i think we have to take a look at the sectors and those that can come back more easily and more quickly will do so, and we expect a sharp rise in q3

vers versus q2. we're at the center of the storm, only a week after some of the states have reopened and we're already seeing changes in behavior while we're not wildly optimistic about the total speed of getting back to normal because we think the virus really does have to run its course and it definitely has not done so, but over time as we learn to manage our lives in the life of a pandemic, we can see a material return to some portion of normal and we're going to we think see that over the course of the next two months >> interesting that's going to require some thought about what kind of policy needs to get consumers and businesses to a point where they can and have jobs to go back to. that's why we'll watch this house vote so closely today. david, mark, we appreciate it very much. >> thank you >> thank you, carl >> talk to you soon. guys, let's touch on jcpenny quick. this disclosure that they have filed says they do have a grace period of five days, sara, to make this interest payment which

would constitute an event of default nature they've entered into the grace period. that continues to be secured or considered. there will be no bankruptcy filing today >> no. >> no, which is actually somewhat of a surprise given some of the reports. >> yeah, exactly on may 14th, they did make a $17 million interest payment that was due and payable on may 7 th. they had that grace period we operated given the reporting of others there might be a filing today from jcpenny. the stock has been halted. i was hearing earlier this week from people working on it that, in fact, it could be next week but for whatever reason, they did make a $17 million interest payment according to this filing with respect to their senior secured term loan credit facility and, again, they had taken that grace period they used it and made the payment nothing more at this point other

than they continue to tell us that they had entered into that to evaluate strategic alternatives, none of which have been implemented at this time and which continue to be considered we'll monitor this we'll see what happens next week, carl, and sara but they did make a payment. their unsecured bonds are trading at pennies on the dollar, and the stock was halted down well, halted at $0.17. so we still think the expectation and the outcome here we seem to know, but not today >> yeah. let's bring in kourtney reagan to talk more about this as the xrt has gone green good morning to you. >> hi, good morning. yeah, we got the retail sales numbers today with the department store number down in april from march also down sharply year over year jcpenny obviously a part of that they started to open up some of their stores but, of course, we

all were wondering if and when a bankruptcy filing might be coming as you have been going over here, it looks as if jcpenny has made the $17 million interest payment. so it did not default on that. there was, however, another $12 million interest payment that the retailer had missed in about mid april. so i'm still waiting on some more clarity about what's happening there. just because we don't have this filing, this official bankruptcy filing from jcpenny doesn't mean they're not scrambling behind the scenes as david was talking about and we may potentially hear it soon it's important to point out they did make the $17 million payment. you might also remember there was a bit of a squikirmish with sephora. se forra was reluctant to continue this contract relationship with jcpenny amid everything else going on

there was court battles in state and federal court. ultimately both of the parties came to an agreement to continue working together, though, we weren't privy of the details that at least got dropped but if jcpenny files for bankruptcy and has a store closure program, many of these contract terms may still get further mended >>. >> the thing that's important to point out that jcpenny has been in a long downward spiral even going into this pandemic, and like j. crew and neiman marcus had big problems with debt and with bringing customers back and was not one of the retailers that was doing well. and so in terms of the whole claiming of the victim from the crisis, so far we're still seeing the losers being hit the hardest. the other thing i would say is look at the xrt, the retail etf. it's seen a turn around. i would pin that on consumer confident numbers we got at the top of the hour.

it showed surprising confidence from consumers university of michigan, confidence numbers 7 3.7 better than expected the 68 was the consensus i think that also points to the fact that april, you know, the idea that the april retail sales that we got today which were so poor could potentially be the bottom right, the fact that there are green chutes as stores start to reopen as states start to reopen and you saw that in the confidence numbers >> yeah. i mean, obviously confidence numbers better than expected but certainly well off the numbers we saw before all of this crisis hit. we all know what the employment picture looks like right now we'll see what happens as you point out when the stores begin to reopen and some of the furloughed employees come back to the stores, and how that may shake out also, because they're consumers too. they're employees of the stores, but if they're employed, you would imagine that would give them more confidence to come back and spend their own dollars in their own stores as well.

>> kourtney, thanks. kourtney reagan on jcpenny and all things retail related. moving on now, north carolina republican senator richard burr stepping down as the chairman of the senate intelligence committee noochlt this comes as the fbi seized his cell phone as part of a criminal investigation into possible insider trading in fact let's bring in jim stewart of the new york times who knows his way through insider trading having reported on it for a number of years. give us your take on the burr case as we're aware of it thus far. >> i've been writing about insider trading for so many years and the cases continue to astonish me. on the face of it, this looks really bad it's not just that he dumped a lot of his stock shortly after being briefed on the threat by the virus to the economy

but his brother-in-law also dumped shares, apparently, at about the same time. that's why the cell phone is going to be so important if they find that cell phone records that he called the brother or the brother called him, that they had a conversation just before the brother sold, that is very incriminating. and the other cases, it's bad enough to engage in insider trading in the first place, but to then tip other people, not only is that turning it into a conspiracy, but you're creating potential witnesses against you. i mean, the brother-in-law is going to be questioned by the fbi. and either he's going to have to be honest and possibly incriminate burr, or lie and that's a crime in and of itself. and in nine out of ten people, these people cooperate but in fairness to burr, there are two things we don't know we don't know what information he learned as chairman. and we don't know the precise timing of when he learned that

and when he then traded. >> right was it -- i mean, that's my question, jim. are we going to know whether it was really material, not public information that he had? i would assume they will argue otherwise that it was just sort of a compilation of what was already available to the public to some extent >> right they have already argued that. and every defendant in an insider trading case argues that they usually say well, i read it in the wall street journal or there were rumors or information was out there, and we know there was public information about the virus. but that is not -- that almost never works. juries, judges, that gets discarded if you can show there was specifics, potent, material information that they learned, and then that that appears to have triggered the trade i mean, that information about the virus was floating around for a long time. so why did burr act on the day he did that's what we'll have to explain. and again, i think what the

information is will tell us a lot and the timing of that information. now, there was the recording of him in which he briefed north carolina business leaders that the situation was far worse than publicly known now, that does suggest that he did learn something fairly significant while chairman of the intelligence committee we still don't know yet what that is. but that is not going to be hard to find out. i mean, other people will agree as well, there are going to be plenty of witnesses who will be able to tell the fbi exactly what members of the intelligence committee learned and when >> does the number of trades that he undertook have meaning at all i think it was 33 separate trades does the volume as well lend more to the case that might be made against him >> absolutely. this is all circumstantial evidence that adds up to, again, look, the looks on the face of

it, very suspicious case i mean, he was not a regular and frequent trader. and then all of a sudden he decides to make these 33 sales and it's not like he sold some things and bought others why this decision at that particular time when that is not consistent behavior? and by the way, the other thing i find astonishing is burr of all people is intimately familiar with the law that banned insider trading by members of congress, because he was one of three senators who voted against the bill only three voted against it. he was saying well, it's already covered by insider trading law so he certainly can't pretend that he did not know that there was -- that it was illegal >> but jim, just the fact that that law came to late, it feels like we've had these conversations before and there's been this type of behavior congress gets all sense of briefings. why are they allowed to trade

stocks >> that's a good question. you know, and i think there have been some recent proposals in the wake of this, and he's not the only one who is under examination for having dumped shares when confidential word was going around about the virus. i think that's a perfectly good question i was wondering that about myself today i can't imagine that the average member of congress is a very good stock picker anyway maybe they'd all be a lot better off if they were in mutual funds which is not the end of the world. i am not allowed to own individual stock as a journalist at the times. >> neither are we. >> and nor are you why shouldn't members of congress be subject to similar restrictions where issues are renewed? i would have no problem with that and i think probably most of them, they'd be better off if the temptation was taken away from them.

burr would have been better off if he had simply been in some big fund now, that said, i think he would still have a problem, even if he just owned big mutual funds or etfs if he learned of confidential information about the collapse of the economy and dumped all his etf, that's still a problem under the existing law. >> yeah. understood jim, thank you >> and it undermines confidence in the integrity of the system when you have lawmakers going to washington and using it to line their -- information to line their own pockets as opposed to trying to help their constituents it's no wonder it's illegal, and anyway, to stop it i think is good >> well, we will follow the case closely as we know you will, and will be available to us to help us understand it jim, have a great weekend. >> you too >> thank you

jim stewart. time now to hit our etf spotlight for the day. today we are looking at retail ticker xrt erasing losses from earlier in the session still on pace for the first negative week in six retail sales tumbling by record 16.4% in april a mid may reading of sentiment coming in better than expected helped turn around the names it's a mixed picture amazon, walmart, home depot and costco, there you can see walmart and home depot are higher amazon down about a per sencent a quick break. stay with us as the turn around in retail helped the overall market awes ll bouncing well off the lows we'll be right back. these days, it's anything but business as usual.

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welcome back here's what we know at this hour connecticut's governor discussing plans to reopen his state on "squawk box" this morning. the first phase begins next wednesday. he says further easing, though, depends on people staying vigilant >> we take a look. we'll see. we'll have two or three weeks. we'll see whether people follow the social protocols whether at the restaurant, way waiters wearing masks and gloves, sanitizing between meals if it looks like it's working pretty well, june 20th is our next phase in california more than 1,000 pastors have signed a pledge to reopen their churches

on may 31st, even without government approval. pastors said churches are essential to their communities over 2400 confirmed infections in mexico the country is facing the most difficult moment in the pandemic the surge comes just days before mexico plans to reopen key industries and that includes the auto assembly industry as always, you can get more on our coronavirus coverage by heading over to cnbc.com carl back to you. e. >> markets made a move toward the flat line. an increase in stakes of restaurants like bloomin and jack in the box. back in a moment this is a tempur-pedic mattress. and its mission is to give you truly transformative sleep.

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stocks continue to trade lower on pace for the worst week in about two months. this is after a warning of unprecedented economic downturn from fed chair jay powell earlier in the week. former philadelphia federal reserve president joins us now good to have you here on board we just got further confirmation of how deep this recession is with retail sales down sharply, 16%. factory, industrial production, down by the most on record how do you look at the month of april? do you see it as a bottom? >> i hope so depending on how the openings go and other things, i think it's highly likely april will be the worst month we see may not be much better, but hopefully we're near the bottom in one form or another but at the end of the day, this is about science and not about monetary policy or fiscal

policy this is about how the science progresses to make people feel comfortable coming out and participating in the economy again. >> where go do you come down on how crucial it is to reopen the economy right now? because the economic costs for people's health and their livelihoods is just going to get too great where it outweighs some of the costs of tracking the infections >> well, i think this is a very tough call i think we do need to begin opening up the economy i think there are ways if we take some care, we can do it, and continue to make progress on the public health side but the total shutting down of the economy has been very expensive. not just in economic terms but in health and safety for people who don't have the virus the procedures that haven't been done in hospitals because of the

virus. the people who may have died at home because they couldn't get into a hospital. there are all sorts of costs we're bearing. as an economist, i'm looking for cost benefit analysis. we've been sadly short of that it seems like the efforts to begin opening up parts of the country and sections of the economy on a careful basis is a wise step to be taken. >> as an economist, how do you forecast what comes next in terms of how fast growth and jobs can come back >> it's really hard. we've never really been in this situation before i like to think that jobs in a natural sense will want to come back, but we've also got policies in place that are going to make that more difficult. i mean, we've got 60% of the people who are getting unemployment insurance are making more money on unemployment than they are

working. that's not going to speed job recovery if we're not careful. we've got to be careful about our policy choices in this matter if we want the economy to respond quickly. and not have policies that sort of slow that response. but, again, i say we don't have much experience with this kind of shot, and so there's a lot of uncertainty and a lot of downside to this, and there's some up side, but we have to be careful. >> charles, there was some commentary among the fed speaker this is week that the shutdown that we've experienced over the last two months in the words of one was a card that you only play once. if we get a second wave or a spike in the winter time, is it your belief we can do this again, or do you have to power through it >> that depends a lot on the science of where we are in terms of testing where we are in terms of

antibodies, vaccines and other things if this returns later, you know, we'll have to see where we stand. it's really hard to know it's certainly going to be difficult on the economy if you have to go into this mode again. i certainly would think public officials would try to do everything they could to avoid that but it certainly hopefully will be in a different situation medically and on the science side to make those choices a little more obvious or easier to make let's hope not >> china is the other big story this morning kudlow is on the tape right now saying that cutting the corporate tax rate in half for companies that move protection back to the united states is something to look at i wonder, i mean, we're all for repatriating supply chains, but is the labor force ready to address that kind of new employment, and what could inflation look like if that were

to happen? >> obviously jobs went to china and other places, not just china. partly to lower cost of production and lower the cost of supply chains and bringing savings to the u.s. consumer on products that were brought in. that was a good thing in general. if you bring them back, then obviously or force companies to bring them back or provide incentives to bring them back, it will cost you something, whether it's in terms of the tax cut. if there's a tax cut on bringing jobs back, that's obviously offsetting the higher labor costs firms might engage in, but i'm -- i'm really i guess uncomfortable with the increasing tendency to want to manipulate the economy out of washington with tax rates and incentives and twists and turns and policies that try to change relative prices.

whether it be for labor versus capital or for other things. financial assets different interest rates different borrowing costs. different types of companies i think the government is not very good at setting those relative prices. i think we have to be very careful. we're in a period where government, whether it be congress or the fiscal authorities, administration, and the fed have moved much heavier into interventions in our economy, and you know, the track record of washington getting those things right is not stellar by any stretch of the imagination. i'm a little worried about that tendency that we can control everything so precisely to get the outcomes we want >> it's fair, but don't you think, charles, that there's been an intense focus and urgency to do something after so much of our medical supply chain is linked to china at a time where we need it most where so

much of the ppe, the masks and face shields and equipment we desperately need, we had to get from china don't you think there's a need to change that given what we've faced? >> well, i mean, i think there is a legitimate discussion to have about to what extent has some of this -- outsourcing whether it's in drugs or protective gear or other things that we have come to rely on china, if it's the right policy, but i think we need to be careful how we do that, and it needs to be highly selective if the congress thinks that's important. but -- so i think that's worth a rethink, but i'm not optimistic that we can manage it precisely. >> got it. charles plosser, good to hear from you >> nice talking to you, sara all right. take a look at shares of facebook the company did announce a small

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dow down 78 points s&p is down 10 what's helping fuel momentum energy shares continue to bounce oil prices at the highest level in weeks retail had a turn around after better than expected confidence numbers. later today, new tensions with china as the u.s. moves to curb more huawei exports. kyle bass on closing bell today. he's been very critical of china. arroontot person you want he fm a day like today. we'll be right back on "squawk on the street. 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. you have the support of a, probiotic to putting your true colors on display. and the gastroenterologists who developed it. align helps to soothe your occasional digestive upsets twenty-four seven. so where you go, the pro goes.

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that should clear things up. welcome back to "squawk on the street."

back to courtney reagan who joins us with vf's president and ceo. >> thank you so much for being with us today on our earnings day. we know the results were which t expected going through what we have really with covid around the world and you have a global business i want to talk about your business segments. u.s. wholesale is only about a quarter of the business and you've reduced your exposure to some of these mid tier department stores and areas that are in trouble but as we talk through headlines about the possibility of a jc penney bankruptcy, neiman marcus has filed, how will that impact your business as well going forward >> thank you for having me here today. so vf and our brands are in a strong position. the u.s. wholesale business is less than 25% of our total revenue and our exposure to the

department store mid tier channel is less than 4% of our total revenue. we've been taking, you know, a lot of actions over the last three years to reshape our portfolio and put ourselves in a position to be able to connect more directly with consumers in a time like this, those moves are proving to be extremely successful a great example of our engagement would be our vans business today which continues to sell at great strength, great connectivity, but we've taken an approach about less of driving revenue and more engagement and building affinity. great example, if you were to go on our websites today you would see the vans shoebox challenge which is about really, you know, motivating people, consumers, to take their vans shoebox, something you would typically throw away, how about you turn

that into a piece of art and share that with your vans community as a way of engaging and building great loyalty. >> you talk about your portfolio of brands and we know that m&a has been a big strategic point for you and on the call today you said it will continue to be. it looks like your occupational work business is still at least in the process of trying to be sold off, but what about purchasing could this be a good environment to buy something for relatively cheap? >> m&a, we've been very clear in our october investor day last year that m&a remains the number one priority for capital allocation this could be a very unique time to find assets that would align wet our financial, strategic and ownership criteria, but we're very focused today on the organic strength of our portfolio in building a strong foundation by which to grow and emerge from this crisis even stronger >> so you have a business that

is global. we know stores were closed in asia and europe and the u.s. but at least some of the stores in asia and europe are coming back online what have you learned about the consumer reaction as we reopen following this crisis and how does that inform what might happen here in the united states >> our diversified model really lends itself as a position of strength today our china business, all of our stores are open. we're a little over 40% open in europe and we're preparing to open here in the united states it's that early learning from china, understanding what that store format needs to be, you know, be -- how to allow proper distancing and comfort and protecting our consumers and ensuring our staff are safe, but providing a great experience we are seeing an increase, a really nice increase in task

o traffic is down significantly from last year week by week improvement with a strong conversion gives us great confidence we're well positioned and we'll continue to see acceleration in our asia business that will inform europe and america as those markets continue to open >> it's sara eisen a question on use of cash. people were relieved that you did not cut the dividend and that it sounds like you have plenty of cash what was it like in the past few weeks? i think you were able to tap the debt markets to raise more money. give us an update on the position and how you're thinking about the dividend if we do continue to see weakness in the coming months. >> sure. we entered this crisis with a f fortress balance sheet and a strong financial position. we took the position to further shore up our cash liquidity.

we have access to near term $5 billion worth of cash. we wanted to take that particular issue off the table we wanted to ensure our shareholders that the investment, our dividend would remain intact so we could focus on the investments we're making against the growth of our business and really allowing our iconic brand portfolio to connect with consumers and drive that digital connectivity. >> sir, it's david faber speaking of digital connectivity i think you said on the call roughly half of your business today is direct to consumer. given the changes that are happening quickly in terms of the way people conduct their lives right now, how do you see that increasing over time? how much of vf's business will be direct to consumer let's say a year from now? >> central to our strategy is

this ability to become more consumer minded and retail centric and invest in our direct to consumer and digital capabilities and we've moved from about 35% of our total revenue two years ago to 50% today. you know, those investments are paying off extremely well. we see the increase in digital activity, you know, helping our brands continue to see growth. our america's digital business in the month of april was up 80%. a real testament to our digital and technology team providing the capability, providing the stability, and, you know, really helping our brands, brands like the vans and the north face, dickeys connect with consumers and provide the connectivity to engage, but as we bring you through the funnel getting you to that conversion point if that's where you're at >> steve, it's courtney.

i want to talk to you about inventory and your planning. of course the stores got shut with very little notice around the world very quickly, both those you own and your wholesale partners inventory elevated, understandably do you have to drastically reduce the prices to sell it is it moving to an off price channel? can it be reflowed into another season >> one of the greatest strengths of our vf platform is our supply chain and our operation and financial disciplines. we moved very quickly to assess our on-hand inventories within our system but within our wholesale partners and quickly moved to right size our forward inventory purchases and focus on utilizing, you know, those core and seasonal style that we have on hand, marry those with the proper amount of newness, so as we move into the important fall

holiday season that our brands have the right amount of newness, couple days with the right amount of core product, to service that consumer. >> and steve, quickly, before we let you go we know that vans have been particularly popular with the teen segment for some is time but going back to school kind of a question mark right now and what that's going to look like. what's the expected impact on the vans business? >> our vans business has been strong, you know, really, you know, since vf acquired the vans business we've seen since 2004 a compounded annual growth rate of vans at 18%. and our business across the full 12 months of the year is pretty even back to school is important but not critical and as we shift to connect with consumers with where they are, providing them interesting new ways to engage, we continue to see strong growth across both our progression and

classic footwear lines, apparel is up, and it really does play into this new casual trend work-from-home environment that we're all living in. >> steve, chairman and ceo of vf corp, thank you for joining us this morning. >> thank you. >> carl, back over to you. >> thank you so much good friday morning, everybody welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt coming to you live from various locations. markets tried to rally, but down 137 points big morning for a historic data once again retail sales, the worst month in its history. industrial production, worst in 101 years. the huawei news as the commerce department looks to further isolate huawei from u.s. tech supply, eamon javers is watching that with all the headlines that kudlow has given us on corporate taxes and the china trade deal as well. >> yeah, that's right, carl. look, the department of commerce

is concerned here that huawei has been doing basically an end run around existing regulations to what they're doing this morning and announcing some new regulations to prevent them from getting access to u.s. technology here's the way it's going to work according to the department of commerce this morning they say foreign firms using u.s. chip making equipment will require a license to supply those chips to huawei and huawei is likely going to need a license to continue to use technology tied to the united states they're concerned about certain technology being used in the manufacturing process that's u.s. technology being huawei getting access to that because of some concerns about existing companies that have deals in process to buy some of this equipment or use some of this equipment there's going to be a 120-day delay for products that are already in development, that is, there's a little window if you have stuff that's in the works right now. beyond that, there will be these restrictions in place and they say that huawei will need thes