increased another 25% and had over a 9% yield on this. >> a pete favorite for sometime. jon, what do you got for me? >> kw webb unusual activity hitting. occidental petroleum. >> joe >> verizon. >> thank you for watching. kelly evans picks up the coverage now. thank you, scott hi, everybody. we have a nice rally on wall street as the major averages recover almost all of yesterday's losses the dow on pace to close at the highest level since march 10th the s&p crossing above the 100-day moving average for the first time since february. it's up 48 points, across the board gains of 1.5%. and oil is getting a nice boost on signs of improving demand and surprise draw down in inventories. the energy sector is the top performer in the market right now. crude up about 3%, not a huge

move in size but the level $33 a barrel for that now july contract which we have rolled over to. this awaiting the results of the 20-year bond auction the first time of a 20-year auction since 1986 the treasury needs to issue a lot of debt to fund the coronavirus relief efforts we will have the latest in a moment first the latest on the markets with bob pisani. >> i'm encouraged by the action today because i see broadening of the market happening on monday, as well. let's show you when's up today and not just up but what's up. russell is outperforming and the transports i see banks outperforming and energy and industrials outperforming. this was laggards for a long, long time. one month let's look at where we are. this is starting to be a trend so energy stocks are

outperforming the s&p in the last month russell 2000 outperforming the s&p, transports. only thing lagging a little bit are the banks. still a disappointment and keeping an eye on that elsewhere to point out social media with a good day. facebook's knocking the cover off the ball making a big push to online shopping through facebook shop so that's kind of helping twitter and snap and even alphabet is moving to the upside yes, the rally still partly on the mega cap names, the fang names. i'm just picking a one-month period, facebook up almost 30% apple, alphabet strong, only microsoft and amazon modest and only in line with the s&p 500. back to you. >> only underperforming because they were never that bad to begin with and the theme to pick up on. thank you. as stocks rebounded sharply off the march lows the clear market wenters are growth stocks

russell growth edf outperformed in the last month and two months and year to date and growth up and value down 21% and the year ended today that's the biggest outperformance since 1999. and a latest bank of america fund survey shows the most crowded trade in the market is, yes, growth stocks and expectations at the highest level since 2007 so can the growth sprint last in what an interesting day to talk about this joining me is bill smeed and kim forrest. almost by accident we have a value guy and a growth girl. here to talk about this split. bill, i'll start with you. as bob highlighted, the value segment of the market outperforming today. i hate to ask because we talked so many times whether this is a turning point and the trends to reverse but is this a turning point and do you think it's a more significant shift towards

value under way? >> well, i've said many times in the last year to two years that i would not hold hi breath waiting for that turn. the exacerbation that you just -- that bob pisani referred to right before we came on is typical of a change point. at a change point the thing that had done great for the prior five to ten years goes ga-ga at the end and the thing that had done terrible for prior five to ten years does extra terrible at the end. so we have all of the pieces in place for the changeover to happen and by the way it only makes sense from a valuation standpoint when growth stocks were way out of favor at some point ten years ago they had a two-pronged thing working for them you have a cheapness to begin with and then momentum from the

success of the businesses. the same thing works in value also the only problem is these things usually get rectified when growth is a big winner by some severe crushing of growth stocks, aka 73, 74 so the problem is everybody that's playing the nice moves to the upside is begging for historical trouble. >> interesting before i continue this discussion we just got the results of the 20-year auction in if you'll wait a moment i want to get to rick santelli. this is the first since 1986 how did it go off? >> you know, i'm going to give it a "b" with an asterisk and then tell you why in a sec 20 billion, 20 years first auction in decades the dutch auction yield, everybody gets, 1.22%. it was pretty much spot on bid to cover 2.53.

indirect 60.7. directs 14.7 primary dealers take 24.6% very quickly, drerirects are domestic players insurance companies. indirects are mostly foreign entities but here's what i did, a custom rick blend blended the 10 and 30-year auction for bid to cover, directs, indirects and primary dealers. here's the results of today for the actual 20-year auction you can see it's pretty good the reason for a "b" since it's the first auction it's hard to have a history because based o the blending of 10 and 30 that really jumped out, it was well contained. $2.53 were chasing it so i gave it a "b" based on history and have a feeling that it's successful in the 20-year because the 30-year bonds are the deliverable into this

contract kelly and the gang, back to you. >> i had a follow-up question. if treasury's issuing a ton of debt, part of the argument is why not make it as long term as possible i mean, why not issue really, really long-term debt? is there just not the opinion tight? >> makes perfect sense, right? here's the issue the issue is that it would take a long time to create the type of consistent demand everybody month for that type of unique auction. we know that 10 and 30-year bonds already are part of the proforma in the sector there's demand, history, steady eddies to have the 20-year in between the two is going to immediately create demand versus over a long-term creating that sector for a long-term bond is an anomaly than usage in the current environment by all the

financial dealings on a day-to-day basis. >> people are skittish in the marks. they mike consistency and don't want something too whacky. >> we could have a couple of 100-year bond auctions but i don't think it's a type of thing to have one every month and really that's what they need is steady eddie auctions. >> yes for the tons of issuance to see. this explosion thank you. we appreciate it rick santelli with the auction results of the 20-year for us. back to kim. we heard bill talking about how the market might be set up favoring value after the growth, couple what would your response be and why are you sticking with names like microsoft up 17% year to date >> sure. it's a simple sentence, right? success begets success investors are always trying to invest in a company that's going to grow and a lot of the companies that are in the value

sector, that screen as a value, are really not in a shape to grow just say banking you know if a 20-year bond is yielding 1.6, that net interest mar general doesn't look really good to somebody who's making money off of that. you know because it's hard to do. so i think a lot of the industries that have been found in value stocks just really have some fundamental issues with growth and investors want their money to grow and so they put them in stocks where they see growth has been and where there's a runway for them to grow and i think that really is a simple answer. >> sure. you also like micron, coca-cola and maybe don't think of as a growth and can come back to that bill, i want you to explain why a dollar would be better put in discovery or chevron or wells fargo right now. >> kim is right except that over

90 years of history you could have made the same argument in 1972 for the nifty fifty and the same argument for microsoft, cisco and intel in 1999. and the historical fact is that value has outperformed growth by 300 basis points a year on average over 90 years with half the time growth doing better than value and about half the time value doing better than growth and we have just finished up about a 10 or 12-year stretch, within of the longest in history where growth has done better:. the problem is if you have 500 experts in to talk on the other side from me on this subject you will have about 400 of them say exactly what kim said and i'm not criticizing her because she's probably a great growth stock picker and done fabulously it is just the history of value is you do well because you pay way less for the future of the

companies and right now that's an extreme differential. >> we are in the reasoning now i can feel the tension, kim. so please respond. and if you can, in context, mention why coca-cola falls into the stock basket and curious why that's a pick. >> sure. it's fundamentally this time is different. last 90 years we had the business cycle overproduction and, you know, companies would kind of fall into a recession because something would happen outside of the market but, you know, dry up demand and this time it is really different. companies so well positioned that they did not go in a recession whenever the trade war started because they were able to dial back what they were making they knew it was in the warehouse, they knew through crm what the demand was so the business cycle has kind of lengthened out to just being a little bit lumpy opposed to big waves, right, we saw whenever we

took economics 101 so why coke? i think they have some catalysts for growth and not necessarily a growth name but they have this catalyst for growth which is great management and thinking out of the box about what they can provide to their customers and they just have a great track record of doing that at least with fizzy drinks and teas and now moving into water so that's kind of the sparkling water stuff so that's the short story on that. but this time it really is different. we are not having the classic business cycles. >> i think that's fascinating. you know i'm a real macro person so, bill, you know, respond to that is it possible that some of the new kind of supply chain management systems, the high touch way that managers can get a look inside the business, is that moosmoothing out the busins cycle. >> think about this a little

logically. target reported spectacular sales and a high percentage of the people come to the store to pick it up and even though they're doing fantastic on e-commerce and many of the people are coming to the store to pick it up, it is nowhere near as profitable as a mom with two kids wandering through and buying apparel at the store. so the problem everybody's got right here is it is always different this time. it's always somewhat different it always is and those are the most damning words in investing because it's the rhymes that matter, not how they're perfectly in line with the prior situations coke was trading at 60 times earnings at the end of '72 and i was buying it in '81 at 6 times earnings it went from a glamour growth

stock to the dumper. tech has a business cycle. >> okay. >> beware. >> okay. >> we're not saying keep the same baskets of stocks but look at it differently. that's what i'm saying, not saying the winners always win but growth is always going to win and you have to have the promise of growth. nobody wants to buy a stock. >> this is fascinating and great. thank you both weighing in on the value/growth die out dichotomy. the mega mansion is making a comeback amidst the pandemic. plus positive news for the airline sector sending stocks soaring over the past week is the sector at a turning opponent we'll debate that. this is decision tech. find a stock based on your interests or what's trending. get real-time insights in your customized view of the market. it's smarter trading technology for smarter trading decisions.

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and enough bandwidth to handle all your connected devices. voice solutions like remote call forwarding and readable voicemail. and safe, convenient installation. when every connection counts, you can count on us. get the connectivity your business needs. call today. comcast business. welcome back to "the exchange." mortgage applications falling last week but the real story is that the housing recovery appears to be underway and seems the mega mansion is making a comeback die yeah no olick is here and robert frank has a look at the start-ups. >> buyers are coming back to the housing market far faster than anticipated. mortgage applications to purchase a home specifically rose 6% last week from the previous week according to the mortgage bankers association but look at that "v.

purchase volume lower than a year ago which is a stunning recovery from just six weeks ago when purchase volume down 35% annually and government purchase apps which are fha, and generally lower income borrowers 5% higher than a year ago. the average on the 30-year fixed fell with 20% down and there's been a lot of buzz this week about rates potentially falling below 3% some lenders are already there for top tier borrowers. >> we had a big upgrade on the street today i think maybe evercore which is saying -- but how much -- what are the builders stocks been doing? >> reporter: they've been going up yesterday when the overall market was down you saw the home build builderers etf up on the day and led by taylor morrison and the

names with entry level homes and express homes line people are looking to get out to the suburbs and into new homes because there's just simply more of them for sale we have a very, very, very short supply of homes for sale. >> the ones in my neighborhood sitting there before coronavirus and just in the last weeks the buyers are flooding in diana, thanks. robert frank now for what's going on in the buying boom in the mega mansions. what can you tell us >> kelly, talking about flooding in, you have wealthy new yorkers looking to leave the city, buying the three "ps" of property, privacy and a pool estates on the market with price cuts now in hot demand this four acre waterfront spread just sold to a moving of $17 million. that comes with its own golf green. the stone mansion in new jersey

this is on the market for ten years. now at $36 million after a $30 million price cut. the owner turned down the renter in hopes of a sale and late hensley's estate in connecticut, that had a big price drop from $50 million to $16 million broker says he's had seven showings just in the past two months we will see if that sells, kelly. back do you. >> property, privacy and a pool? >> yep. >> learning something. makes sense. there's been a certainly boom in people building pools. a couple ones highlighted are super mega high-end estates and starting the move. what about the rest of them? do you think this can be a lasting trend? it was ten years like you said some properties sitting on the market and might be seeing demand now and do you think it's a lasting shift?

>> yeah. you're right not just the mega mansions the common denominator is space. people want a yard where the kids can play. they can go out and play and space interior, maybe an office, maybe more space for the rest of the family we have been through phase one of this which is just people leaving the city to rent now the big question, your question which we don't know the answer to yet is phase two which is how many people permanently leave new york city and move to the suburbs. we have had a flood of rentals the question now we're starting to see some buying but it's early and we'll see how many permanently leave the city with the kids given that the school year's coming up and they have to make a decision soon. >> great tonight thanks robert frank, we appreciate it. we have a market flash on the chinese stocks volatile this afternoon. deirdre bosa has more for us. >> hey, kelly. chinese adrs are taking a steep

fall on the senate headlines, a bill to delist chinese firms from u.s. exchanges was passed by unanimous consent not long ago. the bill would require companies to certify that they are not owned or controlled by a foreign government this is largely seen as aimed towards beijing. alibaba, and others down on 2% to 4% and underscores the anger of lawmakers towards china, the handling of covid-19 and what they say are inadequate financial disclosures. >> so i wonder, though, talking about declines of 1.5%, not major but talking about a delisting and then maybe in order to come back having to certify they're not owned or controlled by a foreign government seems like a huge headache and is meant to be. >> yeah. it absolutely is and, kelly, i think this is going to happen over time.

they have to see a number of quarters for this to happen so there could be a belief that chinese companies could find work arounds around this and still the implementation of this but they are coming off the highs and near the lows of the day. tencent down more than 4% and alibaba a huge billion-dollar market cap company so these are big drops for sizes of these stocks. >> yeah. true deirdre, thank you for the update. coming up, pharma companies trying to develop vaccines in a tenth of the usual time and manufacture them faster. the race for a covid care. sony approaching the streaming wars, that of arms dealer the ceo to tell us why selling content to everyone is profitable watch or listen to us live on the go on the cnbc app "the exchange" is back in a couple woman: my reputation was trashed online.

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welcome back let's get the very latest in the coronavirus pandemic sue? >> good afternoon, everyone. new york's governor cuomo today urging everyone to wear masks, adding that the reason first responders lower infection rates because the surgical masks work. >> how do nurses and doctors have a lower infection rate than the general population they're wearing the mask the mask works those surgical masks work. and it's in the data ford motor confirmed today it closed and then reopened less than 24 hours later its chicago assembly plant after two workers tested positive for the coronavirus. the company said the employees did not contract the virus while at work. you can head to cnbc.com for more on that story you are up to date

back to you. >> thank you sue herera. the drug industry is given a monumental task to develop a vaccine faster than ever and get it out to the public even faster while the science is moving along the manufacturing could be a big stumbling block. mega tirrell has a closer look meg? >> this is a huge challenge, manufacturing enough vaccine if the companies are successful in developing one, to potentially serve the entire world experts tell me we do not have the manufacturing capacity to get that done but work is under way now to try to make that happen and a big part of that is forging partnerships between companies. take a look at the ones already. johnson & johnson is working with bio solutions and plans to bring on more partners with the goal of manufacturing more than a billion doses of potential vaccine. moderna is working with lonza for a billion doses per year potentially. other collaborations like the university of oxford working with astra zeneca. pfizer and biontech and gsk and

sanofi what a lot of these partnerships depend on is a part of the market we almost never talk about, contract development and manufacturing organizations. this is a large and growing part of how our medicines get made. in 2018, pwc estimates $99 billion in revenue brought in and that's projected to grow to $160 billion by 2025 these are companies of bio solutions and like lonza there are many questions about what's going to happen with the manufacturing, particularly because a lot of these vaccines depend on technology that's never been deployed before and building the plane as they're flying it trying to figure out how to make it in large quantities the other question, of course, the supply chain and we saw it with testing and ventilators what are the weak points in the supply chain we asked the lonza ceo this morning. what keeps him up at night here's what he said.

>> what could go wrong create some delays is having access to the equipment. we are building new plants, new manufacturing plants specific equipment and this is the main reason why we could be delayed in our timelines. >> the other thing he said he needs, kelly, is funding and that's even after moderna received half a billion dollars of the u.s. government and barta an enthis week did a $1.25 billion stock sale even with that, the lonza ceo said more funding is needed to get this done. >> where does it come from or top down push to make sure that the manufacturing is in place not just so that we can get it out quickly and i sense this so that the public can understand the vaccine, understand where it came from and understand kind of every step of the process along the way so that they trust it. >> that's so important the safety of these vaccines

will obviously have to be proven in big studies and people have to feel safe taking them and you bring up a good point. there are groups like the gates foundation talking about investing here and a problem i'm hearing is that governments aren't yet placing orders for vaccines because there's so many projects going on and at early stages they don't know where to place the bets and can't be placing the orders yet and without the money some companies can't invest in the manufacturing. catch-22. >> interesting we hope that the science moves along quickly and clarifying that for us. thank you, meg, with a closer look at the vaccine manufacturing will take. starting today all 50 states are partially back open for business we'll speak with the mayor of birmingham, alabama, about the reopening and if demand is back. the united ceo said things are not as bad as they once were is that a sign to get back in for investors?

>> speaking of positive, walmart ceo telling cnbc that spending is continuing and people are getting optimistic of going back to work. >> it's clear that people have been at home and they look around and they think, you know, i want to replace that lamp or replace that office desk and then they started to think about the outdoors getting into the backyard and front yard and needed to do some landscaping and seen those categories take off so right now people are starting to think about in some cases going back to work and seen the trends show up in the heal athnd beauty aids categories, footwear or is it? what if business as usual means putting people first... and understanding their needs? if that's your business. 365 days of every year, then business as usual is precisely what these times require. which is why your lexus dealer will do what we've always done. put you first. find out how we can service your individual needs at lexus.com/peoplefirst.

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exchange." rally across the board with the nasdaq up right now. 160 points let's get a check on the movers with dom chu dom? >> the bulls are in charge today at least for now we did see the gains yesterday evaporate into the closing bell. the dow was up 442 s&p up 58 and focusing on the s&p 500, 200-day moving average or average price is currently $29.99 not a speck of red on the screen so far the gains being led by energy, communication services and financials and the laggards consumer staples, real e state and health care. harl harley davidson to watch it's reopening the manufacturing plants with reduced capacity they will be producing more limited slates of models according to a report in "wall street journal" and then shares of medical products and

technology company becton dickinson after it said it would raise more capital selling the shares and we'll end on amazon.com trading at a new record high as you can see there making it worth $1.24 trillion back over to you. >> dom, you sound out of breath. >> it's been a pretty crazy afternoon so far. >> we appreciate it, sir thank you, dom chu. as of today all 50 states are either open or starting to reopen alabama's biggest city which is birmingham began a partial reopen last week this city also launched a new program that enlists recently unemployed workers to meet community needs. joining me is the mayor of birmingham, alabama. mayor, thank you for being here. >> thank you for having me on. >> so one of the interesting things that caught everybody's attention is you guys one point had a curfew and since done away

with what was the rationale behind that and how are you learning as the reopening process evolves about when's happening the most in all of that >> well, the first thing we did was have a 24-hour curfew, a shelter in place order because we wanted to make sure we were protecting the health of our community and of our residents when the state moved to reopen things, we thought it was premature and we wanted to make sure in alignment with things being open, retail, going to close at 10:00 p.m. then we felt that people needed to be at home at 10:00 to make sure that people weren't out participating in activities that would promote community spread i think since more things have been open what we wanted to do is do away with that and enact other things in place to make sure to protect people and so we now have a facial covering

ordinance so people are going to be out and practicing -- not practicing social distancing then the facial cover is place put in place. >> you said you were dragged into the reopening there's a lot of different reasons why. birmingham is more urban than the rest of alabama, it's a bl ring in a red state, as well the population is vulnerable to covid. xlan t explain the hesitancy there and are people coming back what's demand like >> the hesitancy is double in one hand we have 1 out of 5 people over 60 3 out of 4 people are black. unfortunately we have too many people with underlying health conditions and prexexisting conditions and if they catch the covid it is harder to recover. you add on top of that we are in an urban dense city. we have a highest population in the state of alabama and then you add on top of that

the cases continue toen crease we had 197 new cases and 14 people died in 14 days and when you add that together, clearly we have to do things in a different from the other cities within the state of alabama. as it relates to the other part of your question, i believe that as elected officials we cannot predict consumer behavior because there's still fear and anxiety of people coming out i think what we have to do is find more creative, innovative ways to ease some of that fear by closing down a street and instead of people eating inside possibly they could eat outside of the restaurant. i think we have to come up with creative ways like that to make sure we decrease that fear and anxiety. >> macks sen you also or we mentioned in the program that you have to rehire furloughed workers birmingham is an industrial

city so how's that program work where you take furloughed workers and what are they doing for the city and how long do you anticipate that could continue? >> it's to support the employers with 14 days of cash flow and so through a public/private partnership we raised $2.4 million to support small businesses within our city that program supported 90 businesses and laser focused for legacy businesses and minority businesses and in addition to that, the b-ham strong supported the workers laid off we have hired about 144, 145 people who are being paid anywhere between $13 and $22 an hour to support the covid-related issues so this is a ready to work program for those hourly employees who are laid off but also supports the community work we need in response to the covid-19

emergency. >> kind of helps restore confidence so people aren't so overwhelmed by the crisis. mayor woodfin, good luck we are sorry that the coronavirus is so hard on your city and watching to' what other efforts you have to take but thank you for joining me today. >> thank you so much. still ahead, as theaters are closed and people streaming more from the couch, apple tv paid sony big bucks for tom hanks' newest flick the ceo joins us to talk about that and the future of the movie industry "the exchange" is back if two. - [narrator] at southern new hampshire university,

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welcome back when it comes to streaming wars sony entertainment took a different route than most competitors and chose not to launch a service instead becoming something leek an arms dealer to the industry selling

content to everybody, to the highest bidder today they proved how lucrative that can be striking a deal with apple tv for the new tom hanks movie. with us is julia boorstin with ceo tony vincaquera. julia? >> thank you so much, kelly. tony thank you for talking for talking to us today. >> hi. how are you doing today? >> good. so interesting to have you come talk to us on the heels of this big deal to sell a movie that was intended for theatrical release in june to apple tv plus i'm wonderling why you didn't just delay the release as sony and so many other studios have why did you decide to sell it to streaming, instead >> there's tremendous unknowns of how many people allowed into theaters and the percentage of seats that will be allowed to be filled and when theaters did open there's a tremendous logjam

of films and it's a really difficult process to date films and we have this opportunity and we -- this is not a practice that we expect to see happen many times but we'll see a few times we are completely dedicated to the theatrical world but this is an opportunity that arose and we took it. >> you did reschedule a number of big films to next year but tell us about the outlook for movie going. are you concerned that audiences just won't be ready to get back to theaters this fall? do you think that audiences will return more typical numbers next year >> i think that we think that theaters will provide safe environment for people to go back to theaters will take a little while i think for people to have the energy and enthusiasm to go back to theaters but we believe it will happen look at what's happening when

the beaches are opening around the country. people are flocking to them. maybe not in the safest, best way, but the people are anxious to betget back to the normal lis and we think that theaters will return in a strong way with restrictions. >> it sounds like you think maybe not until next year. >> it's hard to tell there are so many variables at work here. not only on the theatrical experience but production experience which is another big variable that has many, many constituents who will have an opinion about how productions will begin and how -- as you mentioned how theaters will reopen. >> speaking of production, how much has your content pipeline impacted by the production shutdown almost everywhere and when do you think you'll get productions up and running again? >> well, you know, we're completely shut down we have 50 tv shows on air in

various platforms in the u.s., virtually every platform in the u.s. and we have about 60 other international productions on the air. some of those international productions have already begun in germany and a few other places so primarily nonscripted have began production so we are starting to see following of that side of the business. in the u.s., there are a number of constituents who will have to agree to go back to work and the conversations are happening right now and, look, i'm hoping that by september we'll be able to see late august, early september to see some productions get back to work there are some places around the world where productions will begin a little earlier czech slovakia with a tv show filming. a tv show filming in germany and hoping to get back up and running and a few other places that things could happen more quickly. >> one thing we're trying to

understand is how the movie industry could be really permanently changed by coronavirus and the resulting impacts and one thing i'm curious is this idea of simultaneous release between at-home -- movies released at home and theaters or shortening the window of released in theaters and then available on demand this is a big debate of amc and universal. where do you stand on this do you want to do simultaneous release? >> no. we think that theatrical release is vitally important to the film industry and to generating the most revenue and profit. you know we just had not seen models where that kind of a release schedule will benefit the profitability and the efficacy of major productions we haven't seen the way forward that that could work we are completely committed to the theatrical business at this point. >> certainly a fascinating time

and we will have to see when that business does come. tony, thank you so much for talking to us and we hope you'll talk to us again. >> absolutely, julia thank you for your time. >> my thanks to both of you. coming up, we're sticking with entertainment goldman sachs making a big call on the music industry. which names benefit. take a look at the internet etf. another all-time high today. led by the likes of facebook, expe expedia and twitter. we're back after this. expanding your range of choices. many dealers now offer optional pick-up & delivery and at-home maintenance, as well as online shopping with home delivery and special finance arrangements. so, whether you visit your local dealer or prefer the comfort of home you can count on the very highest level of service. get 0% apr financing up to 36 months on most models, and 90-day first-payment deferral on any model.

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exchange." the show must go on, eventually, according to goldman sachs they're making a bullish call on the music industry today, saying despite a 25% drop in global music industry and a 75% drop in live events because of coronavirus, this industry will bounce back over the next couple of years goldman sees up to $142 billion in revenues, which is four times last year's number by the end of the decade this due to secular growth of paid streaming, demand for content, new licensing opportunities, and positive regulatory developments. the analyst said record companies like universal and sony will be big winners benefit. they prefer spotify and tencent in that space. spotify is still hedging its bets on the music industry, striking a $100 million bill with joe rogen podcast with exclusive rights to the massively popular joe rogen experience the shares spiked yesterday and are continuing to climb today. they're up another 7% to hit an all-time high. still ahead, some positive news out of the airlines over the past few days. united, delta, and southwest all saying there's been a slight

uptick in demand es this mark a real turning point for the industry and can the stocks recover their previous highs a bull/bear debate is next and we're less than ten minutes away from the fed's april minutes. that's coming up in "power lunch. stay with us we're back in two. these days, it's anything but business as usual. 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.ired. and your employees closer than ever. our network is resilient. our people are strong. our job is to keep your business connected . it's what we've always done. it's what we'll always do.

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memorial day weekend is normally the start of a busy travel season for the airlines, but not this year. the new ceo of united joins "squawk box" this morning for his thoughts on when demand will return >> obviously, while we're in the worst financial crisis in the history of aviation, the opportunity to get to the other side is really bright. and while it's too early to say we see the light at the end of

the tunnel yet, it's certainly a lot less dark in here than it was a few months ago we don't know what demand will be in the fourth quarter and the first quarter. no one knows what the recovery is going to look like. >> and united is one of the worst airline stocks this year, underperforming its peers by more than 70%. for more, i'm joined by brendan naglenski. it's nice to have you both here. brandon, let me start with you and where you think the airline sector can start to price in the kind of recovery that we're seeing in other parts of the stock market >> yeah, good afternoon, kelly, and thanks for having us back on again. >> look, i know everyone is excited when we hear news about vaccines or people getting back to traveling and i know southwest and a few others have said, look, we're coming off the bottom, maybe revenue is not down 95, it's only down 90 to 85%. but the big issue here is not what's going to happen the next few quarters, but where does travel demand go in 2021

and the best that we can guess is really down 20% from where we were in 2019, and maybe that doesn't even happen as fast as next year, because we need to have places to go to restaurants at 50% capacity, wearing a face mask at disney, are these things that are going to be really fun that you want to spend a lot of money with your family to go travel to. you know, some carrier s have said, we're not going to book the middle seat, airfare will have to go up. these airline stocks are down 50% to 60%, but you have to look at the debt balance. americans will come out of this, if they survive, with conservatively probably $35 billion of debt. delta, united, somewhere around $20 billion. pension liabilities will approach $10 billion for some of these companies, as well if you look at historical valuations and most likely compressed earnings next year, the valuations are already kind of there >> you know, one of the debates, joe, that we've been having and hearing different points of view on is whether the airlines are going to see consolidation, bankruptcies

i mean, what the options really are here as our phil lebeau said, it's unlikely that regulators would want us to go from four major airlines to fewers than that right now. so what does that leave everybody? >> yeah, i think it depends on the extent to which the revenue environment comes back if you end up with just a structurally reduced revenue environment, because corporate travelers aren't flying as much, i think you're going to need consolidation. this was an industry with relatively thin profit margins to begin with and a lot of capital intensity. so you can't assume that if revenues end up being 70% of what they were for a multi-year period, that there won't be consolidation. there pretty much has to be. and i think it really depends on how quickly pricing and demand comes back in the fourth quarter. the issue is, i think, a lot less about liquidity and when american, to a lesser extent, united just says, the hole that

we've dug is too deep. because they can run a ton of cash against their loyalty programs but you would emerge from that essentially competitively disadvantaged to a southwest and so i think that's really what we're worried about, what makes american and united to a lesser extent kind of uninvestable at this point is, if the revenue environment takes longer to come back, at some point the board may say, we can raise additional cash, but what's the point we need to start over. >> so i want to sneak in one word to each of you really quickly. joe, that being said, who could consolidate? >> yeah, well, southwest has the liquidity, the firepower, and probably the political capital to be a consolidator so if you look at their network, the two holes in that network are in the pacific northwest and in the new york area >> jetblue and alaska, yep >> right, right. and so i think beyond that, it

would be, you know, the others, delta, any other airline that was in a financial position to consolidate would try to find a partner. >> okay. joe, i know you talked when we were talking about the boeing max crisis, how southwest might need to do something strategic it could certainly do that for a lot less now so real quickly, brandon, back to you, that both of you have been extremely cautious in investing in the airlines, citing these massive debt loads. so what happens next what are the other alternatives? this -- what's going to happen to the industry? >> well, i would take it even a step further southwest, i've got to hand it to them. they run the best airline probably in the world and ran it with no debt very modest investments over the years. and that's really playing true now, because we actually think that they could get to the other side of this say edo get some travel demand back by next year, with almost no net debt and they're going to be in the driver seat, even potentially take load factors down, make some pressures even

without m&a. this will be a pretty difficult landscape with an american that will come out of this with $35 billion. >> that's unbelievable i know exactly what you're saying no net debt versus some of those incredible loads thank you, both, very illuminating brian naglinski talking about what maybe not to do in the airline space. the fed minutes are here now let's get over to "power lunch." tyler mathisen >> all right, kelly, thank you very much. we'll see you back here on "power lunch" in just a moment welcome, folks, to "power lunch," to the kitchen i'm tyler mathisen stocks are snapping back after yesterday's late-day sell-off. the dow now back into positive territory for the month of may joining the s&p and nasdaq in that category. now, the market volatility this week partially fueled by dueling headlines over moderna's possible vaccine for coronavirus. the founder and chairman of moderna will join us on the timing of their recent trial