>> from the fox studios in new york city, this is maria bart row''s -- bart bartiromo's "wall street." maria: happy weekend, everybody, i'm maria bartiromo. thanks for joining me this weekend. coming up in just a few moments, we've got the president and ceo of the dallas federal reserve, robert kaplan, to talk about the central bank expanding efforts to help businesses and workers during the covid-19 crisis and assessing the economy today. we're expecting we are in a recession right now. but first, u.s. equities had their best month in decades in the month of april. however, the coronavirus pandemic continues to wreak havoc on the broader economy. u.s.u.s. gdp shrank in the fourh

quarter. the sharpest decline since 2008. now more than 30 million people have applied for unemployment benefits in just the last six weeks. as states are ramping up to reopen, what can be done to safely jump-start this economy? joining me now is omede mall lick, thank you so much for joining us. hope you're staying safe and strong in this shutdown. >> thanks. same to you, maria. maria: isn't it unbelievable that even as we are in this shutdown, we are seeing states across the country reopen this weekend, yet the markets have done exactly what they're supposed to do, provide liquidity. boeing offering, $25 billion bond offering from boeing went incredibly well. the company has been push being back on government, we don't want any help, we don't want any financial assistance because we don't want the government telling us how to run our

business, and they go to the markets, and it worked beautifully. what does that tell you? >> it's just amazing where we are. you asked me what was going to slow down the market, and i said maybe stop being geopolitical. i think it was the end of december. it was an act of god. a pandemic. and so now you have quandaries for every big business like you're mentioning boeing as to what to they do. do they take government assistance? we all know government money is not free. it comes with strings. and so boeing made the decision, which is another stock and company we've talked about a lot together, to say, no, i'm going to access the capital markets n this case the bond market. i'm going to stay independent. that's the right answer, i think, for large businesses like boeing rather than some of the misuse of like the ppp that we've seen public companies do. maria: yeah. we're going to talk about the ppp as well. i want to get your take on that because small business needs help and needs help now, and

some of the issues and structure around the payment protection program were just not clear for certain banks, and we had all sorts of mess-ups with that ppp. but you've got to say that's a lot of money. do you think it's going to work? i'm going to talk to robert kaplan in a minute about this, all this money being thrown at the economy, all this cash flooding the economy. do you think it's going to work and take us out of this recession sooner rather than later? >> maria, it's a great question because right now what we have very clearly are two economies. we've got the market that just had its best month since 1987, over $6 trillion of liquidity being pumped into the system, and you're seeing the beneficiaries of that is the stock market. as we talked about in december, which i'm referring to again, where else are investors going to go with interest rates at zero? they went to cash for a little bit, but if they're going to dip their toe back in, the public

markets are going to play. you know i focus on the private markets. there it's not as good of a story. we have marks on private companies off anywhere from 35-70% in the private market. so the public markets are doing just fine, but the real economy looks atrocious. every metric there doesn't seem to be getting the benefit of what we're talking about. you just mentioned the gdp number. unemployment, 30 million people. and consumer spending was down 7% this past month, and as we've also discussed, you know, our economy, gdp, is 70% consumer. that's really going to hurt the regular folk, so we have to focus very, very heavily on programs like ppp -- maria: look, you keep calling this an act of god, but the president and the administration is investigating china. and it looks like this was an accident that came out of the wuhan lab. their highest level iv superlab where they study coronavirus,

and somehow it got out. so there's this investigation underway, a lot of bills in congress right now to get out manufacturing out of china. you know in the middle of this crisis we're focused on the prescription drugs we need. 70% of those active ingredients are made in china. they want to get the supply chain back here. that may be one of the elements that goes into another stimulus package out of congress, a fourth stimulus package. what do you think about that, the two largest economies -- u.s. and china -- at odds in terms of what the goals are? >> maria, i could talk to you about this topic for hours, as you know, we have talked about it a lot. i hate the catalyst for this reassessment or reevaluation of the american/chinese relationship took something so unfortunate, but it's a great point. i'm going to put my lawyer hat back on. liability can be imputed for gross negligence. the chinese may have committed

gross negligence, and then there was clearly some sort of intent to disguise what was going on by restricting travel internally but allowing people to leave the country. so that begs the question, what does some kind of decoupling look like between the united states and china, and everything needs to be on the table. i couldn't agree more. some of those, i think, are going to be policies that need to be implemented to create economic incentives for our multi-nationals to divest their manufacturing base from china. you go back to gdp. 70% of our gdp is consumer now because we've outsourced so much of it to china. only 20% of manufacturing is here domestically. we need to up that number. it's no longer just about all the millions of jobs that we lost over the last 20 years or the social infringements that that communist party puts on its own people and tries to export through its her cant limb. -- her cantingism. it's also a national security threat to the united states when these important pharmaceutical

companies make everything over there and they have us over a barrel. it's about creating economic incentives, tariffs, giving tax breaks for united states businesses that manufacture at home. and, listen, i'm not against globalization, but there are plenty of other developing countries like vietnam that we can diversify our supply chain to. martha: thank you so much. >> thank you. very nice to see you, maria. >> don't go anywhere, robert kaplan, the head of the dallas federal reserve, my special guest, coming up next. stay with i'm your mother in law. and i like to question your every move. like this left turn. it's the next one. you always drive this slow? how did you make someone i love? that must be why you're always so late. i do not speed. and that's saving me cash with drivewise. [mayhem] you always drive like an old lady? [tina] you're an old lady. me too. me too. and if you're a small business, we're with you. standing by you every step of the way. bye bye.

♪ ♪ maria: welcome back. the federal reserve in focus this week, the central bank announcing that it is expanding the scope of the $600 billion main treat lending program. larger businesses are now going to be allowed to participate and minimum loan amounts also be scaled back. the central bank pledged to keep rates near zero.

robert cab land is the president -- kaplan is the president of the dallas federal reserve and a voting member of the fomc this year. thanks so much for being here. >> good to see you, maria. maria: you've talked about this program being a bridge, a lending bridge. tell us about it and what has been the result so far. >> so we've gone out as the fed for comments, we've gotten at least a couple of thousand comments. and as you mentioned in your introduction, we've lowered the minimum loan size. we've also increased the ability for somewhat larger businesses to get this, 15,000 employees or less are, $5 billion revenues or less. having said all that, it's a loan program. it's not a stimulus, it's a loan. and you still have to meet a coverage test, it has to be viewed as a passable loan by the bank. the bank has to retain a share of it.

and so it will, it will help a range of companies, but it's a loan, and it's for those who are creditworthy and deemed by their banks to be creditworthy. so in that regard, there's limits to who it will help. if you've got a solvency issue or you're in, at risk of bankruptcy or true -- or restructuring or default, this is probable not a program you're going to be able to access because of all the various tests. maria: so there are a lot of relief packages out there. obviously, your relief package at the federal reserve is what we're talking about, but there's also relief in the ppp coming out of the white house. assess where we are, robert. you're talking about $7 trillion plus of stimulus being thrown at this economy, and you also had said in the past that we're talking about a severe contraction in the second quarter. you told me on "morn ifings with

maria" on friday we could see contraction as high as 30%. is this going to be enough, all of this money thrown at the economy in relief, financial aid and stimulus packages? >> yes. we think we're going to see in the second quarter annualized a contraction as much as 30%. we're going to grow, believe, in the third quarter and the fourth quarter. some of the things that have been done, mainly the things by the fed, are loan programs. so i would call those relief rather than stimulus. and you mentioned ppp program, corporate bonds, money market functioning, the main street program, now the muni program that we've announced, and those will help provide a debt bridge for those who have, had an interruption in revenue. in addition, as has been said, we're going to need stimulus, i.e., grants and other things that stimulate the economy that'll have to be done by the fiscal authorities.

but we're optimistic at the fed that we've, we're restoring good market function, we're trying to build a bridge to individuals, small businesses, maybe mid-sized businesses to get through this period. and then we're going to need stimulus as we get into the fall and into next year because we're going to have an unemployment rate at the end of this year as high as 8-10%, and we're going to need to work that down and stimulate growth. maria: yeah. i mean, you're talking about a situation where we've really seen the consumer take a body blow. i mean, consumer spending has stopped, businesses shut down altogether. what is it going to take to get that back? it doesn't sound like this is going to be a snap-back situation in terms of the fourth quarter. this is going to be a slow and gradual comeback because consumers have to also be ready to go out in crowded stores, restaurants, etc. so when do you think the consumer comes back? >> yeah. so it is, as you and i have

talked before, as we headed into this period, we had a solid economy. but it was powered, as you said, by the consumer. fixed investment was sluggish, manufacturing had been sluggish, but the consumer's 70% of the economy. now we've got to find ways to stimulate the consumer. in the short return run, we need -- in the short run, we need to make sure those who are unemployed, which is a substantial amount, we have to sustain them through this period. and then we're going to have to grow -- small businesses are going to have to get back to hiring, businesses generally are going to have to get back to hiring. we want to minimize job losses, and we're going to need stimulus to make sure those who are otherwise unemployed get back to work. and with that, you've got the behavioral issue which you referred to where consumers are not going to feel safe doing some of the things they used to do; going to restaurants, flying, going to large entertainment events. and this is where the health

care part of the policy -- testing, contact tracing, obviously, if there can be drugs or vaccines -- those are going to be essential to making the consumer ultimately get comfortable getting back to doing the things he or she was doing several months ago. maria: yeah. i've got a number of industries that have talked about in terms of being the leadership poised to come back first. like construction or agriculture. are there industries that you could name that you think could be first to reopen? we're talking about reopenings across the country this weekend, but what would be the easiest industry to start getting back to business? >> well, so we already is have some industries that have been running. manufacturing, for example, food manufacturing companies have already been running. they have models for how to run in a safe way. they have a whole series of restrictions, so we're hopefully if -- hopeful manufacturing will get back. obviously, retail will open, but

it's just a question of how comfortable are the consumers to get back. the hardest ones to open will be those that require crowds, individual contact, and those will be slower. maria: robert, want to ask you about rates, want to ask you about the balance sheet on the fed, and i've got to touch on the price of oil, another major issue. let's take a short break, and we've got a lot more with robert kaplan, the president and ceo at the dallas fed. stay with us. ♪ ♪ at fisher investments, we do things differently and other money managers don't understand why. because our way works great for us! but not for your clients. that's why we're a fiduciary, obligated to put clients first. so, what do you provide? cookie cutter portfolios?

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say interest rates are going to stay at these levels until 2023. does that sound right to you? >> it's possible. i think interest rates are going to stay low until we've reached our full employment price stability objectives. and as i mentioned, it's going to take some time to get back down to full employment in light of this crisis. maria: are there inflationary worries in that scenario with rates so low? >> i think in the short run we're more likely to have disinflation, and there'll be deflation their pressures. in the longer run, once we get back to full employment with the size of the fed balance sheet, a substantial amount of stimulus, you need to at least worry that there might be inflationary pressures. but i think that's, that's for down the road. in the short run, in the next year or two, we're more likely to see disinflation than inflation. maria: isn't it interesting that

it was just, what, a year ago that we were talking about unwinding the federal reserve's balance sheet. how big is the balance sheet at this point, robert, and what's your vision? do you have visibility in terms of how you start winding that down at some point? >> yes. listen, in the near term the fed balance sheet is more likely to get bigger. it's already in excess of $6 trillion. and we're going to need, we're going to need to keep buying -- we've got these special programs that we stood up which i hope we will begin to phase out at the appropriate time. but then you will have our large asset purchase programs, quantitative easing that we'll be likely to do while rates are at zero because we're going to want to stimulate the economy in order to drive the unemployment rate down so we can get to full employment. more what do you say to those -- maria: what do you say to those

people who say, look, you've used all you can use, you used the big bazooka, if you will, there aren't any other tools to relieve or stimulate this economy if we do see another leg down? >> so i would say i think we've shown in this crisis that, at least in terms of lending authorities and using our balance sheet, the fed has a broad range of tools that we've used and that we can use, and they're very potent. the one thing i'd caution though is most of what the fed does, has done i would call relief. it's not stimulus. stimulus has to come from fiscal authorities, not from the fed. the fed is a lender. and so that's the caution, is to to the extent we're going to get more stimulus to help the economy grow faster, that's going to have to come from congress, the treasury and fiscal authorities. maria: so what about the oil sec or? that's one area that has pushed

back on any stimulus from the government, and yet i spoke with the ceo of chevron which has a fantastic balance sheet, but there are a lot of smaller oil companies, shale companies that are the job creators in this country. but with oil prices where they are, we are worried that they may not make it out of this. what's your take on the present state of oil and the impact to really what was the growth area of the economy for so many years, robert? >> so we've got dramatic oversupply to the point where there's so much oversupply, we're getting to the point there's no place to store it. which is why you're seeing these strange movements in oil prices. there are going to be a number of companies that are going to fail, going to be restructured or go bankrupt. we're already seeing it. you'll see a substantial amount of production shut in, we're already seeing that. you'll see that here and globally. we think u.s. production will decline. it reached a peak of 12.8 million barrels a day at the end of '19. by the end of this year, it'll

be closer to 10.8 million barrels a day, so we're in a decline by 2 million barrels a day. some of that is necessary. you're going to have a consolidated industry, a number of service providers will also fail. the industry will still be alive and well and vibrant, but for players that were leveraged going into this, this is going to be a challenge. and the key is, is to have enough of an industry swact so that when -- intact so that when demand returns, which it will, we will work off this excess supply by the end of 2021, '22, and we'll resume growth and, ultimately, production. maria: all right. cautionary tale this for those indebted companies, for sure. robert, it's good to see you this weekend. thank you, sir. >> good to see you, maria. maria: we will see you soon, robert kaplan. don't to go anywhere, more "wall street" right after this.

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maria: welcome back. that'll do it for this week. we've got a whole bunch of big earnings next week. do join us every friday for "wall street," 9 p.m. eastern on friday night for another edition. meanwhile, this weekend on fox news channel for "sunday morning futures" live sunday is morning at 10 a.m. eastern. my special guest, texas senator ted cruz, south carolina senator lindsey graham my special guest as well as the above of florida, ron desantis. a.m. -- 10 a.m. eastern.

start smart every weekday, 6-9 a.m. eastern for "mornings with maria," right here on fox business. that'll do it for us for thiswe. thank you for watching, have a great rest of the weekend, everybody. i'll see you again next time. ♪ ♪ gerry: hello, and welcome to the "wall street journal at large." more of the familiar bad news but also some good news this week, three months into our struggle with the coronavirus. total confirmed cases have topped one million, deaths over 60,000 and still rising. but there was encouraging medical news on a number of fronts. one biotech company, bill idea, announced a drug -- gilead, announced rem remdesivir has shn real progress on