Mark Cuban: No Buybacks; Bailing Out Boeing; Staying Safe
No one likes to feel stuck boxed in or held back especially by your cloud. It's a problem but the IBM cloud is different. It's the most open insecure public cloud for business. It can manage all your apps and data anywhere across all your clouds so it can help take on anything from re booking flights on the fly to restocking shelves on demand. Without getting in your way. Smart loves problems. Ibm Let's put smart to work. Visit IBKR DOT com slash flexible to learn more this squad. I'm CNBC producer. Katie Kramer Today on our podcast airline seeking over fifty billion and government assistance three times the size of their bailouts after nine eleven aerospace analyst. Seth Catholic. This is an industry that thought it had put itself in a position to get through absolutely anything. And you know it will probably wasn't a position to absolute he takes up this mark. Cuban says the US government has taken risk out of the equation but bailouts are needed for workers. When you're really blessed like I am the value of one. Marginal dollar becomes middle. It's not just about how much more money I can make. But what types of impact and I have the latest on staying safe with Dr Scott Gottlieb former FDA chief we're certainly having an impact on this scoping In the contours of the epidemic. It's Wednesday march. Eighteenth Twenty twenty squad. Pod Begins Right now becky by three gene. Good morning everybody. Welcome to Squawk box here on. Cnbc WE are coming to you. Live from all over the place today. I'm becky quick along with Andrew Ross Sorkin and Joe Kernan and again we are making sure we continue to broadcast to you through this pandemic that we're watching at this point. I up on today's pod the US government's plan for economic stimulus. The Federal Reserve has announced measures. That it's taking. We've discussed that here on. Squawk POD now the US Treasury Secretary Steven mnuchin has pitched a one trillion dollar package to Senate Republicans now. This plan includes sending Americans checks to help. Households and businesses stay afloat. The trump administration has backed but other Republicans are split. Here's Andrew ultimately what's going to happen is you're already seeing the Elizabeth warrens and others say we're going to give money. We need to clamp down in executive compensation we have these stipulations these stipulations. Frankly what needs to happen and I think from chronically and the two thousand eight crisis and every other crisis is you just need massive stimulus. You actually don't want strings attached because you want as many people that take the stimulus as humanly possible. Which is antithetical. Yes you're right politically where where you typically base to happen Andrew. You want this to happen as quickly as possible. But you probably want it to be more targeted you start thinking about how to handle that much money away and you know look at it needs to go to the people who have lost their jobs who have been put out of work from the small business owners who are in that position of already having laid them off. I. I saw a letter this morning from a guy. I'm hoping we're going to have on the show tomorrow He's a restaurant tour. He's based in Ohio but he's got restaurants I think in. What is it thirty? Seven restaurants fourteen states on Monday. He laid off four thousand employees. He's saying that it would basically take at least two weeks of revenue to get all those places back up and running because he has to bring and managers and staff ahead of time to get restaurants clean to get everything back up and running. I mean I don't need money you don't need money right now. Joe Doesn't need money right now. I'd like to see that money. Go to the people who need it. I talked to an accountant yesterday in New Jersey. Who says that? He's got about twenty clients that just this week have had to lay off fifty percent or more of their staff. He was talking about cancellations of business. That's been booked out of the next two months and no new business coming in. These are people like caterers. Limo service providers moving companies tree service providers. He said they're all dead in the water. And that's where the immediate incredible shock has come across this country and that's where the money needs to and we're definitely having different hats shifting around I saw. Afc yesterday yesterday said something. About wait. A second Boeing had thirty billion in buybacks over the last hour many years. Now we're talking about sixty billion dollar bailout for the industry and I found myself going. I mean that's I mean definitely. There's some some book political. Nobody was savings as being. I agree with that. I almost agree with that here. You blow all this money up at three and four hundred dollars a share joe suggest that ultimately whatever it is and I'm just going to suggest that whatever whatever stimulus program we're going to have is ultimately going to privatize the gains and socialized the losses. That's what happens in a crisis but when the crisis is over there needs to be a real discussion about financial responsibility in this country which we don't have in the best of times to actually have insurance policies in money on hand when these things happen. And that's that's the probably one hundred thousand people because she used to the crisis to change. The policy in the moment is too painful. The problem is that nobody is willing to use not to use the good times to change the policy. And we've had that to be no what's wrong with you. I agree with you. I agree with you but I think that we gotta look at all this. Espn stakeholder stuff that we went through and realize holy cow. We need prophets to do all these great things do. We need profits to share with our stakeholders. And if you if you blow all this money on some CEO's PET PROJECTS VIRTUE SIGNALING. And then you come to a time like this you realize wow shareholders really do need to have prophets share with took satisfy any other stakeholders you need to be profitable and not planning trees and Africa but we will be asking for tens of billions of dollars in government. Aid this coming as treasury secretary. Steve Mnuchin called this crisis worse than nine eleven for the airline industry. Joining us right now to talk about is Kaplan principal at Kaplan research. Good morning to you seth out. Let's talk about the need for these bailouts. What happens to these airlines? Greg suggested that unemployment in this country just on travel alone would go from three point five percent to six percent right that just the travel related job losses would would drive the overall rate up to up to six percent. This as everybody has said is worse than nine eleven in a lot of ways and we do have to sort of try to put ourselves back in that mindset. It's easy now to say well. The thing about nine eleven is that that awful first day was the worst day and then there was recovery. We know that we didn't know that when we were in the middle of that remarkable that these airlines you know nine eleven happened on a Tuesday by that Saturday. They were laying off tens of thousands of people. Seventy thousand jobs were gone within a few weeks this time. These giant airlines laid off anybody in terms of direct employees yet so that speaks to the position. They were in going into this thing but but but obviously window. What's what's the run rate. Keeps you to speak to the run rate in terms of employment costs if if the goal is to keep people employed to keep people on payrolls across the country and this is in all businesses but specifically in the airline business where we could just take a Delta or American Airlines as an example. What what isn't there people. Yes Sir pay people to do to do to stay at home to do nothing yes so for the US for US. Industry just trying to do quick bath. Delta was what is what does six billion dollar profit on forty billion in revenue. And and something. I mean it's it's up for the industry. I have sixty seventy eighty billion dollars or something to you know just paying salaries for you. Yeah I mean that's very very very bad but anyway it's it's not five billion five hundred billion. That's just you know very very roughly. Yes so so. That's you know that might be part of the grand bargain here and that might be part of why I mean. At some point Look People. Running Airlines have this fiduciary responsibility and everybody to save the company but in terms of why they are still paying people to do nothing that might be the leverage here because they know there are people out there saying you know. This industry earn tens of billions of dollars in profits. Last we're good at this becomes a question long-term if there is a targeted bailout. And this goes to whether you wanted to target a ballot or nationwide bail out if you do a target of ballot that the airline industry by default you're going to determine their common carriers. That's what's going to happen right. And therefore you're going to have to put some forms of other regulation on them. Forget about buybacks. It's GONNA be about building this remarkable insurance cushion over the years and it would change the entire dynamic an industry. I'm not suggesting that's the wrong thing to do. I just it's the political thing if this is the way if this is the path they're going to go down especially because I mean as as Greg was talking earlier. Rabbits impacts absolutely everybody. I mean this is the idea of too big to fail. The problem is that it's not a redistribution anymore. Right because everybody's in the same situation so if we're going to say that this industry is special even though you know the the guy at the Greek Deli in my neighborhood is you know is is feeling it just as badly than than than yeah you. It's reasonable save the and you've got the unions saying that of course Unions representing flight attendants pilots and others. That that should be tied to it and and so right today right now. Delta is worth something on the order of twenty twenty billion dollars. Does that make sense to you is that is that a bet that investors are going to be bailed out by taxpayers. Is that what's happening here? Yeah I mean I think yeah. I think that's that's baked in the I mean that's what's all the usual granular stuff. Obviously nobody can look at it now but no I think at this point. Four fifty billion or twenty five billion in grants and loans and and and. Yeah I mean I think at this point. That's the expectation that they said hang on. We got becky. Who's got a question for you becky. Hey if that's baked in how come you're looking at some of the airlines down by another ten percent this morning. My my guess is investors are thinking okay. The the industry may be mailed up. But we're not sure what that means for shareholders shareholders. Know exactly and and and you know you've heard this calls out there that For for shareholders to somehow get Get diluted by all this but but no exactly that's fair fair point that's two separate questions jobs and is they're still something called American Airlines versus. What does that mean for shareholders? And therefore the question. I'd ask you this if you're an investor out there today who actually owns these airline stocks. What are you supposed to think? Well there's opportunity to use you. Buy The stocks and bet. The government's GonNa save you and protect you and protect the shareholders and others might say you need to get rid of this immediately. Because they're going to private they're going to affectionately nationalize the airlines when everything's done and you're going to lose everything. Yeah I mean I you know trying to think of baby bath water with allergies. I don't think I I think. The industry legitimately reformed itself enough. That you that you know that that's probably not not what's going to happen here. But but yeah I mean obviously if you are still holding shares of these airlines. That's your bet that the industry is not going to be nationalized or something like that that that this is going to be the banks just like you know what happened there with the with the ratios and everything that this is an industry that thought it had put itself in a position to get through absolutely anything and you know and it will probably wasn't a position to get through absolute anything except this right and and so. That's that's better I think. If you're holding these now is that. Yeah it's going to look different But but but but they're not gonNA put the equities obviously wiped out a chef. Thank you as always and Stay safe meantime. Nba team owners. Were some of the first people to pledge support for their arena workers as the corona virus hit US shores now Dallas Mavericks owner mark. Cuban says companies are bailed out all employees should have the chance to benefit from apostle turn around in the form of stock compensation mark. Cuban joins us now on the phone. Good morning to you mark. Good morning we've been through these bailouts before and there have been a lot of political fingerpointing afterwards. You have a thought about how this should be done. Yeah we already know what's going to happen. You know a year after this you know plays out and it will We'll look back and say why don't we consider the workers they everyday hourly worker The people making minimum wage. Why don't we reward them as well and so let's get ahead of it and whatever we do in a bail out. Make sure that every worker Get compensated and is treated equally and that the executives don't get rewarded extra stick around because they got nowhere else to go. You know the government's taking the risk out of the equation. Let's treat all workers equally. So but how would we do that? Because one of the things that look there's going to be all sorts of stimulus plans bailouts and the like and one of these WanNa do is get that money into the system as quickly as possible. You don't want people not to take the money and so the more strings that you attached to it and I'm not suggesting you don't but the more that you do the more likely it is that certain people may hold back and so I'm trying to figure out how to how to capture that balance. Okay two different things one getting money into the system as a function of the Fed. And they're obviously taking those steps right now too is when there's a bail out when those bailout in The government comes in and offers assistance to an organization Y. Public Company in particular whether it's an airline. Whatever it may be there there are most likely going to be steps taken by the company and historically this is what has taken place where they reward the executives and then re price their options they give them more stock they give them warrant they give them options whatever. It may be whatever it is that a company does for their executive they should be required to proportionally. Do the same thing for everyone else that works for the company period end of story. Part one part two no buybacks not now not a year from now not twenty years from now not ever 'cause affectively. You're spending taxpayer money to buy back stock and to me. That's just just the wrong way to do that. Do you think that we're going to have a national bailout for for companies across the board? Do you think we should? We should look to airlines or other specific industries for help that we should be helping. How would you approach it I think we have to. I mean look. This is cascading. And it's getting worse by the minute. The number of layoffs is just skyrocketing and so if if if I walked in the door first thing I would do is prioritize and I would create effectively and. This isn't the right word but effectively. Create two buckets budget number one and we have to do with these things in parallel bucket. Number one is how do you? How do you help? Companies of all sizes to keep paying their employees and not. Lay them off or fire because we want to keep people employed even if it's make good work even if this is the Tennessee Valley Authority all over again and we're just Subsidizing companies to keep their employees on the payroll and finding things for them to do because keeping them in the payroll will pay off more in terms minimizing tax payer requirements than releasing them. Fire them laying them off and then having to go find jobs in the future. So that's bucket number one. Do all you can keep people employed bucket number two. We've always seen significant layoffs. There are people who are already unemployed. That's where we might consider helping people whereas if you're going onto unemployment or any type of government on federal government assistance then maybe we pay them a bonus and that's the not a good word for this but give them check for the thousand dollars to help them get through the immediate need Because they've just been laid off or they don't have a job and that helps people get through these problems times but they should be just two very distinct buckets but the priority has got to be working to keep Working to help people stay employed. I actually don't like the idea of just giving everybody a thousand dollar check because for a lot of small businesses you know if they know that their employees are going to get a check in that. Business is struggling. They may say you know what I'M GONNA release. I'm GONNA lay off or fire them because I know they have a backstop but some sort and when this is hopefully all over in three or four months like people are predicting we'll we'll figure it out then that creates a far greater stress on the system. So I really think that the priority needs to be one keep people employed and to those who have lost their job. You know. We've seen the entertainment industry. We've seen the hospitality industry the the airline industry the transportation industries all decimated and where there have been layoffs. I don't have a problem with those people as they get onto federal assistance giving them a check upfront to help support them and the economy. But we've got to deal with both and I think the priority needs to be on helping people keep their jobs okay Mark. Hang on for a second. We could joe into the conversation. Joe You there sure. Hey Joe Hey mark how are you I you know? Nobody likes any of this stuff but all bets are off aren't they? I mean these are anytime we think you know. We don't want to do this moral the I mean. Do we really do. We need to talk about moral hazard when you're talking about a deadly virus. I I don't know it seems like any other time. I understand but I agree. Joe Perfection is the enemy of progress. You know in normal times you WanNa look at all the distribution of outcomes and try to do the best thing that helps the most number of people but this is. This is a new world literally. This is this is the new normal and we have to just look at. What's in front of us and deal with it You know and yes. There's going to be people. Who Scam the system. But you can't hurt. You hurt the people who need it and risked arrest supporting the economy and and the tragic things that can happen there. Because you're trying to avoid some people scamming the system but you do bring up a good point in terms of moral hazard what we can do is increase penalties. And so like you know when we went through the financial crisis you know people talk about how no one went to jail. Well as part of all of this you know whether it's a bailout whether it's a thousand dollar check For those who have lost their jobs we should add if you try to scam the system in any way shape or form. There is jail as your penalty because we wanted to introduce a moral hazard. I'm GonNa talking about something ridiculously draconian but still there. There should be something. It shouldn't be a civil issue. It should be fully a criminal issue and everybody should know that going in and mark. I I I just if we have to decide. What kind of snapback we're GONNA get when we do get through this and I pray that it sooner rather than later. How are you going to be sit on the side? I mean did you. Did you appreciate it enough when you're sitting there? What I'm Joan draft kings. I'm like I'm going to bet on each sports but I don't think he can do that either but I mean but missing the fun that's GonNa snap back. You know we all we all use sports as a way to celebrate the way to get excited to way to come together. throws a parade when apple or Google. We'll have the most amazing quarter they've ever had but when the team wins the championship they throw a parade and so hopefully we'll have the Olympics and we'll be able to come together as a country around our team are you know the US Olympic team and that'll be great for us. We'll all get out out of the House while all celebrate together hopefully when the NBA NHL Major League Soccer Major League Baseball Football all start to really happen again. All get excited about our teams and as communities will come together. Sports will be a vital mechanism for bringing people back together when this happens. And so yeah. I'm excited for that. But in reality basketball is the last thing on my mind right now but I will say that we're using the mavericks to try to do as much as we can to keep. People energized engage while everybody stuck home. Hey Mark I. Hey Market's GonNa talk to you. I I saw your reaction. I think we all did the cameras. Were on you when you're on the sidelines of the game to find out that the NBA was shutting things. Down your reaction. I think at that point was something like are you kidding me or something along those lines. Maybe changed your tune really quickly. What what kind of walk us through your emotional You know the hill time on the other side. Yeah I mean we had considered all the potential options the mavs management and and really it would really a knighted. My response was prior to the game. I met with the players and one of the players that what are the chances. The season gets this show Suspended or postponed and I said five ten percents most and considered it. But I really didn't consider it likely. Based on the information we had at that time and then when it came across that rudy go bare at been sick that one game has been canceled into season cancelled it. I was just stunned and you know then my mind started thinking. You know the entrepreneur. He took over. Okay what are the elements that are that? I need to consider going forward you know. What am I responsible? Who's going to be helped? You know what are the opportunities and who's going to get hurt and this was so drastic and so outside the realm of anything. I really considered likely that's when I started thinking about okay. Who's going to get hurt? The most and what can I do? And and how? Can we make sure that every everybody lands on their feet? Because you know let me just say that you know when when you really blessed like I am. The value of one marginal dollar becomes minimal. And so I've gotten to the point in my life where it's not just about how much more I can make. But what else? What other types of impact and I have and and so that literally was the one that first thing that crossed my mind. What can I do to try to help people and try to make it better and starting with the mavs employees arena employees? That was my focus. And so you know that that's so when I did that interview. That's what I was thinking about. And then obviously my family and my mom is eighty. Two and other people like what what happens next because it was a complete uncertainty. Then you invest in the markets Yes what do you thinking what would you do? You know I've been putting in you know one one and a half percent to work on every down day By mostly espy wise and dipping. My toes I bought a little live nation. I actually sold some puts And sold some calls on some things I had because just the premiums are just incredible. I mean it's stunning. The premiums that are in place right now but it looks like we're starting to get into a training trading range. You know a five percent down. Five percent up five percent down five percent. And I'm not quite sure why. And I'm not quite sure. If the Quanta kickback in yet and feel like they have good data to start making a lot of trades. And so you know I. It felt like for a while. We had active management doing all the work and try to figure things out and now over the last three days. It feels like we're starting to get more rhythmic trading coming into the market and now today based off of the you know being up yesterday and being down about the same today it looks like we may be starting to fall into a range so you know I'll act accordingly but it's just every day this is just like how much information can you acquire and what was coming along. And how does that change things? So I'm like everybody else okay. I'll get my toe in the water hoping that two years from now. You know this all be a nightmare that we put behind us. And the market will be much higher Let's hope you're right mark Cuban Thank you so very much. Please say stay healthy and keep working. I mean it. It's it's good. It gives us all sense of normality when we're stuck at home and we get to turn the squawk box on CNBC all all day long for that matter. Pillow better thank you. Very much really pervaded coming up on. Squawk pod more ways to curb the spread of Corona Virus Dr Scott Gottlieb squawk regular and former head of the FDA. You hear from him a lot suggests there could be more to come. Do we require people to wear not in ninety five mask which are in short supply but procedure mask if we know there's asymmetric spreader Marley medic young people training environment. We'll be right back. No one likes to feel stuck boxton or held back especially by your cloud. It's a problem but the IBM cloud is different. It's the most open insecure public cloud for business. It can manage all your apps and data anywhere across all your clouds so it can help take on anything from re booking flights on the fly to restocking shelves on demand without getting in your way. Smart LOVES PROBLEMS IBM. Let's put smart to work visit. Ibm DOT com slash flexible to learn more this pod from CNBC years Andrew. Ross sorkin up and enter hugh worldwide coronavirus infections have now topped two hundred thousand. Almost sixty five hundred cases have been confirmed in the United States. Nearly two thousand more than at this time just yesterday hundred and fourteen people here have died his latest op Ed in the Wall Street Journal. Cnbc CONTRIBUTOR DR got Lebed talks about the capacity of the US hospitals. And how they're still could be time to flatten the curve of the rising number of cases. Dr Gotlib joins us now on the phone. He's also the former. Fda Commissioner of course and serves on the boards of Pfizer and alumina and we are always grateful to have his expertise with us. Good morning to you Dr. Let's talk about flattening the curve for a second because there have been lots of steps that have now been taken over the past several days across this country and in this state and city where we are right now in New York and as people are trying to look at the time line of what this May or may not be the present of course mentioned July and August. Recently investors are trying to figure out what this time line looks like. Of course the time I gets extended out the better. We do in terms of flat curve to some degree what are you. What are you seeing in? Terms of estimates in how that flattening is changing or is it. Thanks for having me this morning. We're certainly having an impact on the scoping epidemic in the contours of this epidemic. And how how? Many cases we're going to get at the peak and how long it's GonNa last the steps. We've taken the last two weeks very aggressive. I think I'm heartened by what. The mayors and the governors have been willing to do. These are strong actions. I think the president's references probably to the analysis that's that's circulating in Washington and the White House. It shows US peaking out late. April early. May remember if you peak and in April in the end of April seven weeks from now. You still continue to accrue cases for another seven weeks. That's just the peak. It comes down so that analysis would show this epidemic continuing course into late June. And that that gets you into July so I think that might have been what he was referring to. I'm not sure on that peak issue though. So let's say we're in late. April early May situation gets extended out through the end of June. And maybe that's the way businesses should think about this investor should think about it if that's the case though the social distancing steps and everything else that we're taking today in your mind they need to last through the end of June. I mean I'm trying to understand. People look at the peak and because people look at what took place in China and elsewhere and after it started to peak out his you know at least in China some people started to go back to work and starting start to see an increase of business again. Is that the right way to think about it or not so much. I think it's going to be very hard to take foot off the brake if we're still accruing cases And that's why I think a lot of school closures are going to be in perpetuity. Probably the school year is lost for these districts where there is community transmission Because you don't want to lift the restrictions too quickly and then have another resurgence in cases. But you can you can lift them. And then put in place other measures and so for example you know one of the things we might contemplate is do. We require people to wear not n ninety five masks which are in short supply but procedure mask. If we know there's as symptomatic spreader mildly symptomatic young people spreading this virus. The procedure masks aren't in short supply. it's ninety five mask so that the health care workers need so there might be other things. We can substitute in That could provide some protection as as transmission. Slow down and the risk isn't as great doctor in terms of we've been talking you literally daily and try to understand the progress that's being made one way or the other if you look at. What's taking place in Italy? The numbers continue to ramp. How much should the United States take away from that experience relative to the experience of South Korea? I think one of the other things investors. And frankly policymakers are trying to do is look at these different models and it's very hard to ascertain why certain things are happening in certain regions. Well I think what? South Korea did was very aggressive testing right at the outset. And and Make an effort to contain isolate people They tested one in two hundred people in South Korea and they even tested. You know young people right right now in the US even though we have more testing capability in terms of platforms. We're still not able to test everyone. Certain people are being told to just stay home and assume you have corona virus. The problem with that is that. If you don't have a positive test result you probably less likely to self isolate and take it seriously. And you also can't enforce the quarantine without a positive test result most cases so testing people telling them they have it could be very helpful In Italy the there were a couple of things that went wrong number. One people showed up at the hospitals when they were sick and they spread the virus in hospital setting. It's an older. Population is higher smoking rates. For those reasons why Italy the background in Italy was more conducive to a bad outcome relative to what I experienced could be. We do the right things. Okay Dot. It's always good to speak with you and please stay safe out there. And I'm sure we'll be talking to you later this week and that Squawk pod for today. Thank you for listening. Squawk box is hosted by Joe. Kernan becky quick and Andrew. Ross sorkin together in spirit if keeping social distance please continue to tune in weekday mornings on. Cnbc at six am eastern to get the smartest takes and analysis from our TV. Show right into your ears. Subscribe to Squawk Pod. We're on Apple. Podcasts stitchers spotify. Wherever you are listening these days we are working so hard to be there so stick with us and we back here tomorrow clear. Thanks guys no one likes to feel stuck box stand or held back especially by your cloud. It's a problem but the IBM cloud is different. It's the most open and secure public cloud for business. It can manage all your apps and data anywhere across all your clouds so it can help take on anything from re booking. Flights on fly restocking shelves on demand. Without getting in your way smart loves problems IBM. Let's put smart to work visit. Ibm DOT com slash flexible to learn more.