Transcripts For CNBC Squawk On The Street 20240713

Spending in france and switzerland neglect any of if january and twos, threes and fiveyears are measured in basis points the dow plummeting 3200 points in the week the worse since the crisis yesterday experienced the biggest oneday point drop ever, 1,109 points as we approach the end of the red february for stocks the dow is the weakest of the three major indices, down almost 9 monthtodate. Goldman again this morning, jim is saying they dont think this is over and that buying the dip is in their words riskier this time theres no doubt about it s theres a part of of the s p and its good to look at individual stocks here that are not buyable and if anything its involved with travel and leisure, autos, housing, because house something sl housing is slowing down and i dont thinkfed cut rates it would matter we do need to talk about something at the cooperman, and ive always talked about which is the algos are in charge i noticed this morning at 3 00, what am i doing up at 3 00 the bond Interest Rates were way down and the futures of course were way down is that what people should be reacting to at 3 00 . And the answer is yes. These guys are around the clock. They dont make any sense to me. They trade almost fanatically of what you heard Warren Buffett say on monday. I want to go against them, listed stocks that do very well when you stay at home. They should be bought. You have a basket of pandemic stocks you rolled last night zoom video, erics company is set up so you can work at home, ring central, set up so you can work at home, teledoc, set up to use at them, exey at home, square is at home, trade desk is what you watch when you cord cut at home. You dont watch and listen like march madness, you dont watch on tv at the office. Shopify is what you buy and make at home. So i dont know there you sell etsy, buy and make at home, all remote, but futures will sell them because we are decoupling from what the market has been like for a long time, and were going back to the market that i remember at glakz which is there are certain stocks that make sense but all taken down by the futures, trade deficits such a good number last night individual stocks is what i do for a living and these companies are not saying we want more coronavirus. No one is really in favor of it. You did the old wewag when i was at Goldman Sachs. Just a little levity here. I had hair. The old wiwag many say its appropriate to have a tenyear yield that is 1. 193, it is still stunning to watch. It is by the way the credit markets were, you always want to take a look im hearing nothing of any great significance choppy in terms of buying and selling perhaps, but new issuance is fine this is just not an issue yet. Im not hearing that at all wait, youre hearing it is an issue . Yes oh, im not oil and gas all right separate separate. Highly leveraged small operators, yes theyre going to go im talking more broadly speaking about it, trying to raise debt for an lbo, trying to, well just if youre trading. Youve got commitments out there. Pe is okay. Youre talking about the one part of the world that but its a domino that is close to a good economy. Lets take a company like chesapeake chesapeake is far ranging. They have a huge amount of pipe. If they file reorganization, theyre not going to need the pipe were awash in oil were awash in natural gas the last few years have been about building a part of the country with the best employment, the permian, and we dont need it. So i agree with you, that overall credit, and Balance Sheet so much bet per. No one wants to admit the Balance Sheets are great were not at the point where thats got to be a concern much more about valuations and stock market, Economic Activity, whats going to be impacted, what we dont know which is so much larger than what we do know in terms of what thats going to end up being here in the United States will it matter to you if say the top five Natural Gas Companies file for reorganization im not going to mention their names. Would it matter to you no, not really. Really . What are the knockon effects . How large is it . Its not going to drill a hole in any of the Balance Sheets headliners. Here is where it gets interesting now. Our capex decisions, in focus, is this journal story about cisco l cisco layoffs a trend . Cisco needed to lay off Chuck Roberts had a couple bad quarters they have to reconfigure remember theyre enterprise and the enterprise strategy for 5g is not til next year. They have very good by the way webex for working at home run by amy chang. I think thats a Good Division you really want to ask is it bought at home, because thats where were going to work from so does that mean the classic Consumer Staples are no longer defensive . No, i think its okay i think that, all right, so my wife yesterday, what does she do she listens to the cdc, not the president , and goes against all the things she needs and i come home and piled high on my counter are all the things the cdc recommends, and when you look at other than ben keiser, they are all the things you want campbells soup. Kellogg nonperishables. So i think nonperishables are great. People are filling up the pantry how can you not the president may be able to be at odds with some of the people who are at cdc and put Vice President pence involved but the cdc page which tells you what to do, im just following them. I understand. Can i come back to oil and gas for a second sure. Youre making, they were walking dead a lot of these names were talking about already, jim it was just a matter of what might knock them off entirely. If you shoot them in the head, david, you know the arrow if or youre probably not familiar with the actual show. I did watch strangely many of the shows a year and a half ago when we were in japan. Remember when they kept hotel room for some reason. Do you think theyre like the president , they kept trying to get to the cdc and when they got there, there was nothing no, my point is that the headline risk of producers that we never heard of down in the permian or somewhere else, going bankrupt, is not that significant. Because these have already been stressed companies for quite some time. Im good to go with you i dont know why i kind of liked my tleheory but Interest Rates just went up again. Bonds just went up again so Interest Rates went down so it does make me feel like okay, theres so many other issues Balance Sheet, Balance Sheet, Balance Sheet. How are the airlines how is the cruise ships . I guess they dont matter to you. This morning deutsche cuts them all to hold they do say even after the declines in the past ten days, we cannot realistically recommend buying them. We wouldnt sell them. We wouldnt short them, but a multiyear earnings risk is becoming a greater threat. I would sell them you would sell them oh, yeah. A lot of people need cash to buy the good Balance Sheet companies. Look, theres not going to be a lot of travel in leisure these companies, they have better Balance Sheets but you have to cut number, every time a number has been cut, i keep waiting for a situation where a number has been cut and a stock stops. The numbers are going to be cut. If you look at steeple today, theyre cutting oil dramatically i was reading that piece about the cruise ships you mean the deutsche talking about cruise ships for three weeks. And ive saved you an absolute fortune thats my job right now. When you look at the cruise ships, they dont come out and tell you what the cancellations are but theyre at ground zero i think that the japanese cruise ship may have been one of the worst things ive ever seen. Reports of another death on that ship today. Really . I want to mention, because there are elements of hope here today. Starbucks came in, Kevin Johnson tweeted 85 open in china. Lets take disney, all right . Number is too high because of the theme parks. Bob iger left. Disney is closed. Disney plus very good do you think disney Balance Sheet good, not as good as it used to be fine, not a concern in any way. So why wouldnt you buy disney all the way back to where it was before they announced unbelievable numbers seven points from there. Youre not that far from buying disney where they first warned about espn, back in 2015. So why not buy it why not start a disney position for your kids . I mean ive got a 25 and 28, now theyre not dependent upon me, and they i think they know i have a show, not quite sure. But i hope that they use their substantial cash position and put it to work how about a quarter . How about a quarter of their money . How about a quarter of their money . Where they first started warning about espn, august of 15. If youre watching this show and your kid is, too, and you know this is going to pass someday, you buy half of disney right now, half, and then you let it go for whatever horrible news and be prepared for a decline of whatever else comes we havent had any World Leaders yet succumb. The iranian iran seems to approach this thing uniquely what anything we mention now i get texts from various Hedge Fund Managers telling me the opposite really . 40 of value of disney is theme parks which could be closed soon. Who is that im not going to tell you that guy 40 okay, that person thinks the theme parks will never open again and they are to be like the diamond princess. People want to pile on, there is a lot of panic out there, man. There is there is panic, so is panic a good strategy . How about this, take a quarter of your money and buy it buy some panic you have to sell some airlines sure. You have to sell some travel and leisure. How many things have you canceled i havent canceled anything yet. You were never going any, where you never do anything. I canceled a trip, im angry about and then i thought the olympics, i was thinking of taking a week off because my show is not on and now im thinking im not you might be here where am i going to go . One of my 12 houses, david i think youll start shoveling amongst the different basements in the houses. Every one of them has to have, you know what theyll have what . Velveeta. Then if it comes through, that stuff works well in a coronavirus. Youre ready, you got your bunker ready im sure. I do have my bunker ready liesman has been on squawk with kevin warsch talking about a 100 cut and news on bullard comments just now on fed policy and the coronavirus sounding as if hes leaning against any nearterm rate cut here is a quote further policy rate cuts are a possibility if a Global Pandemic actually develops, with Health Effects approaching the scale of ordinary fl ordinary influenza this is not the baseline case at this time. He said last years rate cuts still working their way through the u. S. Economy he expects chinas First Quarter growth to be impacted by the virus but the effects on other countries will be smaller. While other officials lean against the idea of immediate cuts futures markets pricing in the cuts much more aggressively. Look at this as carl said, 100 chance of a 25 basis point cut this is new now, a 71 chance the fed actually goes 50 at its meeting next month and then looking ahead, if you take that second cut there, that second cut 60 priced in for april, 59 chance of a third cut in june, 62 chance, now this is also new of a fourth cut in december former fed governor kevin warsch on squawk for coordinated global rate cuts a position not shared yet by current fed officials. This is a biological crisis t is not a financial crisis. What it is coordinated effort and leaders speaking to each other. Its been abysmal. W. H. O. Seems to be owned by china, abysmal i dont care, i dont give a hoot what the fed does its a biological crisis, and thats what youve got im watching what dr. Fauci says, and they could cut rates to zero and it doesnt mean a damn what we need is a vaccine and we need something to get you out of the hospital i care more about gilead than i care about jay powell, because thats what its about its biological and you know, they could take rates, they could give us each 1,000 from bloomberg. You sound like steve. Steve said at what level of Interest Rate, would i be willing, steve, didnt you, to go to a rock concert and risk contagion . I take my cue on the fed from jim a lot, no one has his ear more to the ground and what companies are saying than jim does he was early and right on the reversal last year, and now that jim is not out there calling for the fed to cut rates, that plays very strongly in my view i will also add to that, that a lot of people who i talk to, carl, who would otherwise be on board with the efficacy and the need for a fed rate cut are leaning against that this time because of this idea, if the problem is people are not going to go to concerts, is there a level of Interest Rates that would force me, and you know im a big music fan, to go to a showrisk on the back side of that is the coronavirus. Is there an Interest Rate that would cause those planes that united just said are not flying to tokyo to get back on board . So i take my cue from jim on this not calling for the fed rate cuts. Yes, i dont really care. I do care the chinese who have been i think totally bad actors in this. Theyre doing something that is really unbelievable, which is theyre, on live people, testing vaccines, youre supposed to do that very slowly, because you could kill people. They obviously are in a different kind of situation, and a different country. They are not doing any of the things that is protocol in this country. No, theyre not the fact is if you look at their ability to actually mitigate in terms of new infections, theyve been successful in part because of some of the things you talk about that we cannot do here or that others singapore as well they cant track you with your mobile phone, come to your workplace were a free society. We saw where you were you were with people who might have been infected, leave work we cant do that here. We cant do that, but they are likely to come up with a vaccine instead of 18 months remember, youre giving Healthy People a disease thats not what we do in this country. They are giving it to people who have mono. We dont know how many weeks not months they then give them a total blast of coronavirus we cant do that where are you hearing all this by the way . I spend all my time doing this really . How about it if thats the case . How about mulvaney is interviewed at cpac. Well get to eamon javers in a moment schools may be closed. That would be a buying opportunity for some because thats not the age group and maybe its investors and doctors. Is it too late to travel from italy and south korea and japan . No, you got to do that. The same way we did with china. We are still not at any point were seeing clusters of the virus. Dr. Fauci said from the beginning our goal is to slow how long it takes for that to happen hes never said it wont happen. Thats what the president i think is saying and i think a lot of people are unnerved between what the cdc is saying and the president is saying. And i think that the professionals are cdc. He may think theyre worrying so put it in a different tone but i come back and say look, we are trying to get antivirals and theyre giving people im working on a drug, its a benign drug thats going to help a lot of people. I cant get past, in order to get this thing going, and i think its really well vetted, its already seven months behind these people in china are violating protocol, every protocol we have to give people these viruses, thats like giving the tuskegee soldiers syphilous but in china, theyre not caring lets get some more context on what mulvaney said this morning, we turn to eamon javers eam eamon, good morning. The acting chief of staff at the white house has been speaking at the conservative organization cpac this morning he was asked, he said, about calming the markets today, and heres what he said. I get a note today from a reporter saying, what are you going to do to calm the markets . What i might do is tell people to turn their televisions off for 24 hours so thats mulvaney. Obviously at cpac this is a conservative organization. Thats where youd be expected to throw red meat about the media. Mulvaney appears to be doing that there and tried to put all of this in context in terms of other outbreaks that weve seen around the world here is what he said on that point. Is it real . It absolutely is real. There is no question about it but you saw the president the other day, the flu is real at any particular time 20 Million People in the country will have the flu. This is not ebola. I tell what you that means in a sense. Its not sars. Its not mers. So carl, whats the white houses message for this morning . Im not tracking any sort of major announcement designed to calm the markets today from Administration Officials we expect to see larry kudlow on television at 10 30 this morning. Im not expecting to hear from Steven Mnuchin the treasury secretary in terms of public engagements either no sense theres a hidden announcement about to be unveiled here, but there is a sense were going to get some more messaging like we heard from Mick Mulvaney that this is a seriousissue, they have is under control, but its not as serious as some of the other things that weve seen around the world in the past. Guys, back over to you eamon what bothers me, this astonishes me, its 50 Million People in the company, not 20. The death rate is higher some feel the death rate from the flu is 14,000. This is ten times more likely to kill people who are 80, but it does not that much against younger people its a more nuanced thing. I think that he should be worried about the commerce issue. When commerce slows, there will be companies that do poorly. Maybe they could benefit from rate cut typically not. A biological crisis that turns into an economic crisis is what they should do id like to hear from the treasury secretary, he knows the business very well but just saying listen, we are monitoring and we are talking to other countries. What i dont understand is why the other why were not coordinating with other countries. Right why i dont know the answer theres plenty of questions. People questioning japan certainly in their protocol or lack thereof totally in terms of letting a lot of people walk around consumablely who were on the cruise, had the virus and so forth jim, iwonder to the extent the last three years made the stock market the report card and success something the president has come back to time and again . Is there concern, because ive heard it, that their unwillingness to potentially do something or announce something that would hurt the stock market even though it might be the right thing to do, will get in the way here yes im concerned about that again, just have the pros. We have a great cdc but say listen, well listen to the pros, try to get them measured dr. Fauci has been measured the whole time remember, he is the man who got aids fixed hes measured that total herselavyweight. Do you believe the times piece that hes been asked to clear his comments with the white house before saying them hes a courageous man who will do whats right for the country, and thats all i know, whether it means violating what Vice President pence says or not. Hes a courageous man. Hes a doctor. He wants to help people. I do think there are countries by the way n terms of our rate cut there are countries doing poorly and they should be doing fiscal, a little fiscal spend, germany, this is their chance china should sell china has 1. 1 trillion in treasuries why are they not repatriating that theyre doing great they ought to ring the register theyre being foolish but theyve been foolish the whole way. Turns out they are a second rate communist regime you like to take your opportunities, dont you theyre a paper tiger how about the 50 Million People in the cordon . Whats happening in the cordon the South China Morning Post i think we still have eamon by the way has a piece out china may invoke phase one Administration Officials believe the chinese will hold to phase one and that they havent heard any different, so well see if that changes during the course of the day today and to respond to davids question about the administration and markets, i think you really need to look at what the president is saying here. He said this again last night, asked about this massive selloff weve seen on wall street so far this week. The number one reason for that, that he cites, he said it to me on wednesday and said it again last night is he believes this is driven by the democratic president ial debate. That is the first reason he cites. He does say that the virus is playing a role here but he says that second. Each time hes asked about this over the past 48 hours he cited democrats and Bernie Sanders not necessarily the virus as his First Response i think thats where the white house is looking right now and everything flows from the top in this white house as in any so i think you have to look at that to understand where the administrations head is right now on this. Yes, im not hearing that from any Market Participants not that it isnt part of the mix this morning or the idea, again, the lack of any clarity in terms of the virus, and what it will do and how disruptive it will be. But if it were to extend through the summer or into the fall and election season, does that raise the possibility, in an economic slowcounsel of significance that Bernie Sanders, were he the nominee could win, is that figuring into peoples thinks . No, i think its part of the decline, but lets go back to what Lee Cooperman said. Its happening fast and a lot of that is just ooh, Interest Rates down that means we must sell in the futures, and so we can talk about where stocks could be, but these people go to work like they did in 2008 and that creates nothing to fear but fear itself this is an illness it will pass we have no recorded incidents of coronavirus where you get it, and then it goes away and then you get it again in this country in our country. We lack the clarity of what the chinese are doing. We should be on the phone to the chinese every day talking to them we have to figure out why the w. H. O. Has really been negligent. Why have they dropped the ball, and i think the answer is that theyve somehow become captive to china theyre a little embarrassing. The rhetoric has been slow to ramp up. Theres no doubt but they used to be a very good organization, and they, im really ashamed of what theyre doing. I think thie cdc is good. I hope the president backs off a little the airline continue to cut capacity phil lebeau had the headline earlier and joins us again good morning, phil i know we have the opening bell in a couple of minutes. Let me run down the news this morning. United airlines out with a reduction in schedule for japan, singapore, south korea, no surprise because of a dropoff in demand. Its also extending how long it will not be flying in to china from its hubs in the u. S. Going out to april 30th. When you look at the airline stocks, theyre all expected to open up anywhere between 3 and 4 lower this morning. It brings up the question and jim, you touched on this on your show last night, where is the floor here these may be wellrun companies Southwest Airlines a good example but hunter kaye with wolf research, a bright analyst with airlines out on the street has a note it is difficult to find a floor for these stocks on a valuation basis. Thats where we are with the airlines, guys, as they bring down their schedules for asiapacific and china already cut completely, do they start doing that for transatlantic routes thats the focus over the next few days phil, thank you jim, to phils point, in the past couple of days, nestle restricting international travel, now jpmorgan, the Geneva Motor Show is canceled microsoft canceling participation in the gaming conference i think those stocks should be sold, if you need money i think a lot of people are full up they own a lot of stocks those are sources of fund down here, theyre in what i call the blast zone, down 2 to 3 . Its an interesting opportunity to sell them if i can get microsoft at 125, i better have the cash and if the cash means i have to sell a fine company like Southwest Airlines which is still up a lot from where it was when the president was elected, i would sell Southwest Airlines thats an interesting opportunity to raise capital this is at odds with buffett on monday why . He has a lot of cash many of our viewers full up, own stocks they need to make the sales to buy really high quality great Balance Sheet companies where we, if things do worsen on monday, tuesday, and we come in and some unnotable say has the virus, which is going to scare people someone who advises viewers often not to trade things quickly, this is a sign that you think were going to be living with it for a while. I think theres so many people that dont have the capital to buy att at 32, which is such a buy versus treasuries, i want them to have the capital to do that i would much rather have att at 32, and sell some southwest, and just because only because people if you have cash, dont listen to this youre fine. Then youre Warren Buffett but if you dont have cash, i want you to be able to buy Higher Quality stocks if youre in an oil stock, if youre exxon, geez, would you rather buy apple at 210 or exxon at 45 . Well according to you, you should not buy exxon at all. Not at all. [ cheers and applause not at all lets get the opening bell here its good to hear some applause on this friday morning as we close out a brutal week. Big board Data Center Infrastructure equipment and services [ bell ringing ] all right, sore just yesterday Goldman Sachs 2900 and were going to open really right bethrow. I put some it could be foolish but i have had 401 k money on the sideline, i am trying to get while im on just before i was on of course to find out what i have, so i can put a quarter of my 401 k for the day, onequarter, therefore im expecting things could be worse monday but what am i going to do . We have 101 negative. Well have 101 negative again mark haynes would say it was extreme, i think the late mark haynes had a very good handle but i dont have much choice those of us who have waited and waited and waited, we have no choice but to buy something. We dont have a choice what are we waiting for . A bounce you dont buy the bounce what about the names, theres a piece on the tape today about clorox, kills 99. 9 of jemplz. Right now its beating 99. 9 of stocks do you chase it . My travel trust has a substantial position in clorox when we met this morning i said sell the whole darned thing. Sell it its up so much, but its restricted because we mentioned it, but we were fortunate enough, they have products, i covered a train wreck, chlorine gas, five people died instantaneously. Nothing lives through chlorine because it chokes off any act n oxygen yes i want to sell t now i cant. Im a buyer here, not a seller and unless its up so much like clorox that im just playing with the houses money come on sell clorox and buy some nvidia if you want for heavens sake. Not easy to find anything in the green this morning 9. 5 is the loss for the year, this of course a huge reversal just from where we were a couple weeks ago. Long enough 4 , 5 on the year remember sars, 14 . More lethal, but fewer people, didnt catch it. If you want to use sars as a good example you want to buy some sars was a vshaped recovery we dont know who has a vaccine going on netflix and stay at home p t portfol portfolio. I went with trade desk because they reported a good quarter. Mkm added yelp, activision. Blue apron i am jimmy chill other than to say blue apron, hope to say in business. I own a restaurant yelp yelp i mean, yelp were not even making the playoffs here. Yelp is about going out. Its not about staying what are you like rating your couch my couch is four stars oh, really my chair is five stars netflix is up a percent of the five s pers that are green. I think some of the programs, like i do want to watch that 1 . Look what they did at amc, they cut the dividend in order to buy back stock i dont want to buy that because i dont want to go to the movies amc is in a tough position. Balance sheet zoom live nation is down 20 in ten days hes a good guy but thats the wrong stock to buy zoom is based on the idea that you work at home so even though its up a lot, eric yuan when he came on mad money said the phone is ringing off the hook a highly unusual thing trade desk remember what it is about, staying at home and cutting the cord those are two very large scenarios. What are the hospitals going to say . Theyre going to say could you get teledoc first before you come in . Because we really dont want to you come in to the hospital because its a bad place to be shopify is i get it. Shopify is at home crafts sold even as we all hope we avert the worst or even close to it, people are still going to be encouraged to stay home if they have any symptoms or even if they returned from a vacation somewhere, where there were. The whole idea of going to work when youre even a little bit sick is over no one wants you there, no one wants to see you we need a memo, all Companies Need a know mow saying we will fire you if you come to work and we know youre sick, because those are people who are doing us no favors now Harvard School of Public Health the most bearish person said 60 of us will get it 60 is quite a few people and there again, why i say the fed 60 , lets not worry other countries have to start stepping up, so their businesses dont go out of base i dont want vw to be in trouble because the germans continue to hoard their cash i want the chinese to sell their treasuries and i want Steve Mnuchin to have a behind the scenes Conference Call and come out and say listen, other countries are doing the right thing. If theyre not, were going to urge them toand i think that w do have to worry about the business of other countries. Are you not worried about a buyer . No, listen, a lot of this is a result of concerns about slowdowns in Economic Activity in other countries of course with china, which by the way we dont know exactly what the damage has been there they have 1 trillion in treasury what are they doing . They have an unbelievable win. Are they not savvy at all . I keep hearing about all these institutions lets talk about the idea the chinese stock market barely lost anything shares were up for the week yesterday. My stepson is a great chinese scholar. You have to register with the government to sell what is that call like i got to blow out of a lot of baidu. Ill blow your head off if you buy a lot of baidu thatsmetaphorically speaking. This is the time when where its clearly rigged Henry Fernandez who runs a Great Company has to call them, this is not a real market i was reluck tanctant to do t i blame him, china is a big country. Tell me how they distinguish themselves other than putting a leningrad cord around a part of their country. I have never seen anything like it where you cant get out of an area, where you know youre going to get sick. Thats a remarkable thing. Sacrifice them in order to make it so hewlettpackard is able to make pcs thats remarkable. I reiterate that im a buyer, not a seller right because of the extreme oversold nature and i believe you have to have a leader get sick on monday or tuesday, to make it so we go down substantially. The reversal has been extraordinary. When i look at apple down 10 for the year and can remember, feels like a few trading days ago it was up double digits. Its only back to where it was in november. David thats the problem. Broadly speaking the markets only back to sort of october remember, theyve gone service revenue. They have given up economic xwa gains that were forecast in october, when we were less you want to buy 100 shares of apple, im talking about a robinroad like customer. I would buy 25 right here. Im a buyer of apple, not a seller great Balance Sheet. Doing quite well okay. Here is my reason because there isnt any person in Public Health who says this wont end at a certain point do i have to wait until the day that dr. Fauci says you know what i think weve got or the israelis weve got the vaccine or the moderna in china, willing to risk killing people obviously to find out if it works, that gilead doubling down we have smart people obviously id like to see 100 million prizor someone who comes up like dr. Saul with polio. There is the creation of that, and then you were the first to raise the idea of drug shortages earlier in the week. Mylan is the number one loser today. Where we allowed china to make the ingredients and pills its frightening there i am frightened. There will be testimony on the hill i twewent to duane reed to get months worth of meds the industry have to get their act together if theyre thinking about money, Bernie Sanders is going to win they better take a little longer term view. Its a big hill all i im not going to mention the drugs but i dont know whether they dont have them because of the chinese, or because the Drug Companies are being controlled by these Health Organizations that really have to change their way. Im urging right now, every Health Insurer should give people two months of drugs so they dont have to go out. Im also again insisting that people have not bought anything take a shot and take a shot is too me to ftaphorical were coming off the lows of course only on ten minutes the s p market is off the lows. Theres a Company Called tjx, just reported a truly remarkable quarter. David, after the show well go next door, and let me go why tjx. What merchandise do they have . Good merchandise. Came from highend places came from people who are levered up and needed to get rid of inventory so tjx, i will go as low as alis. I didnt want to do that because mark butler passed away, a tremendous flphilanthropic man u i have to think of places like a tjx where they have inventory from companies that may not make it there are bad Balance Sheet companies in retail. Yes, i think that goes without saying lets vick vm ware. Not a great quarter candidly just not great workday a really good quarter but not able to have their big sales, internal salesman i like workday sales force with Mark Benihoff said theyve been relative will the not bad. I know keith block left and i liked keith block on the fact that hes a patriots fan but here we have a stock at 168 that was at 195 seven days ago, ten days ago thats very intriguing to me what do you make of some of the value hunting going on right now, among the names that are up, hilton, tiffany, viacom, cbs and carnival, all in the green this morning my Charitable Trust owns cvs and viacom we thought about buying viacom, at one point it was down 2 . Some people may be concerned about cvs Balance Sheet hilton is ill advised and the people buying hilton i hope theyre working on a cure. Because youre going to need it. Via com, discovery, netflix via combasical viacom lost the entire market cap of itself. You think its management or pixie dust i think its concerned. For the company to grow. By trade desk opini and to succeed. Travel desk i listen to management and you know what, david from what cap viacom. Sometimes you just get had, a wise man just told me. You made it more than clear about how you feel or much like andy dufresne, im the warden, and hes just asked, told me how obtuse i am yes dont call me obtuse, whatever that means you talking management, i want to talk a little about hp and xerox. Yes, please we cant now . Because were getting to Rick Santelli for chicago pmi in a moment david, its a big we want to hit that so think about it. Well take think about it . Lets go to rick. Let me do some telepathy . Lets go. Live long and prosper yes its a good measure. We are going to get chicago pmi in a couple of moments Rick Santelli will have it at the cme. Good morning, rick reporter good morning, carl. Before we get to that, lets look at some charts. If you look at a 24hour whats going on and twoyear note yields we traded down to 09 basis points, thats basically a 40month low, should we close there, havent closed at these levels since november of 2016. If you open it up to october, you can see what im talking about. Look at a one week of tens, unbelievable the types of drops weve seen from close to 150 to now hovering below 120 its been a breathtaking movement, date with history, and if we look at bund yields currently at minus 62, open that chart, you can see minus 71 is the alltime low closing yield and even though they have moved more slowly down, theyve still reacted as a sovereign safe harbor, but the spread has narrowed rather dramatically to treasuries and in many ways, that has fueled whats going on with regard to the Euro Currency now, whether its rebalancing of dollar longs this week has not been a very good week for the dollar, but its been a huge up week for the Euro Currency, and the yield curve, which now currently at 26 basis points is the steepest its been since midjanua midjanuary, and in terms of chicago pmi, of course, this february read will be important to see how the economy at least from the Vantage Point of chicago was fairing before coronavirus. 49. 0, 49. 0 is our read on february, its three points better than expected and in the rear view mirror were leaving a nasty 42. 9, that was the lowest read since the end of 2015, so we move higher now the whole gameis how much different will the u. S. Economy be during and post coronavirus than it was before it settled in and that isnt an easy question to answer. The market certainly assume the worst based on outside forces but when the data points start to hit in three six weeks of course well know better back to david, carl and jim. All right rick, thank you. Ill take it lets talk a little hp quickly, specific news story, a battle weve been following since it first became public or before we got a background to the solicitation, is what theyre calling it from hp last might. This involves their wanting to put out everything that went on between them and xerox both that we know about because it was in the public realm but also prior to that offer that was made by xerox. They put it out now because xerox itself is expected to come very soon with its Exchange Offer and youd need that from hp jim, what theyve done is taken a knife and i dont know how you want to describe it. Theyve just come right at them with both guns blaring i use whatever analogy, its just basically saying you guys are not serious. And ill refer to a couple of the Different Things that are in here, and differ in part what what weve heard from xerox in terms of their sberminterpretatn its made its offer and mr. Icahn his role made out in the early days of august and the summer of 201 to have been a fairly significant one september 4th, ill refer you to, though they say mr. Byzantine, ceo of xerox. Was weisel with chip berg no chip berg. There was no chip berg meeting referred to at all strategically xeroxs board believes of it out of Growth Opportunities and growth through st strategic accy significance. The extreme leverage the debt they need to take on to make an acquisition with resulting attempts for a credit downgrade make it preferable for hp to buy xerox. You buy us and they come back to the big synergies, icahn touting this cost savings and just efficiencies to have and hp keeps coming back on that in a big way saying that is not the case and hp could not specify a price to buy xerox even though they looked like they wanted 42 to 46 without this information threshold information is what they call it and they say october 10th xerox was unwilling to provide any substantive information without an offer that was indicative from hp, thats where things stood. Thats not made their move thats not said to me on mad money. He said theyre happy to talk. Well, they are going to potentially talk okay. But one side sees a billion in synergies the other sees s 2 billion publicly the request he could they come to any agreement this will go to share gholders n up to the shareholders to make a decision whether they believe their able synergies when they started this it was before the biological crisis. Yes how irresponsible is xerox . Theyre kind of shameful at this point. Enrique lauris offer to buy half the company back, in light of this, were taking down too much debt and doubling down on declining area, so were going to wait. Thats what you do by the way, merger agreements from here not that that has to do with this are going to be carving out coronavirus. Theyre comical banker at goldman . Xerox . No, hp banker is goldman. Hp is doing the right thing and xerox is kind of embarrassing youve been saying that all along. Ive known xerox from the 1980s when i actually covered the company. Its been a failed company in the 1980s its been failed for a long time they did sell something. Were going to look back in that era and say that was snapple well see watching 2900 here, guys. And the vix still at 42. Down 11 on apple so off the lows but not convincingly so boeing is down 7, jpmorgan down 4. Just want to show you the sectors because theyre all down 12 from highs recently. Banks, a gnaw low for the kbe. Semis worse down 17 from the highs. Utilities, 12 off of their recent highs reits 12 off recent highs Consumer Staples 12 off highs this is what i call the global takedown of the entire stock market system. Take a look at the capitalization in the United States a lot of questions about how much a hair cut weve taken. Here you see the open right here, lows this week, a lot of selling going on in europe you can see the lows of the day. U. S. Stock market capitalization, guess what down about 12 the whole thing here u. S. Values 33 trillion, the u. S. Stock market valuation. Now 29 trillion, down 4 trillion about 12 decline very similar in the Global Market the u. S. Stock market is about half of all the value of the global stock market. 60 trillion is the global value of the stock market. It, too, has dropped about 10 since the february 19th high including the entire global stock market so a real hair cut what is remarkable is you look at the numbers and everything is the same essentially just take a look at the next number hong kong, europe, shanghai, japan, United States, everything down 12 , 13 , 14 lowering the risk overall to the entire environment. Finally just want to point out something. A lot of stress this week. A lot of people, same side of the trade. Everybody has been wanting to sell how has the Market Structure hold up in the United States i think pretty well. I didnt see any Circuit Breakers hit individual stock Circuit Breakers, a few but not that many i did not hear of any notable tape delays, i did not hear of any breakdowns volume much more than usual. I didnt hear of big etf issues. A couple years ago big issues around the volatility etfs this is no the a complete review we have another day to go through. Overall systems held up pretty well nyc sent out a notice yesterday theyre going to have this Disaster Recovery testing in march. That is pretty standard procedure. Guys, back to you. Bob, thank you. I want to point out what you just tweeted, i think that is very wise. I think he is a steady hand. News conference tonight 9 00. Just a steady hand. If you were from mexico and do a lot of business in mexico it is very reassuring. He is just saying look im going to come on every night because i think it is important to show my face. Right he does a morning briefing every day. I like him very much. I think he is trying obviously the cartel is so tough. 3m is the only dow stock higher as the outbreak widens. A shortage of respirator face masks has sparked a global race to fulfill the orders. 3m is in the mix fourday wait to get them you are buying them from third party. Good information. Well go inside the manufacturing plant in aberdeen, south dakota yes hi, sima. Hey, carl fast tracking production of the respirator is no easy task and that is why 3m is ramping up hosting job fairs and making offers on the spot here at one of its largest manufacturing facilities in aberdeen, south dakota more than 650 employees are working additional hours and 3m says they are adding more Assembly Lines to meet the surge in demand for the face masks we immediately ramped up production in this facility. Really from a fiveday week to more of a sevenday week with additional equipment as well weve been able to bring in and turn on. Reporter now, part of the reason there is a shortage in supply of these respirators is the industrys over reliance on china over the past couple of years. The other thing to keep in mind the department of health and Human Services saying 60 of large scale pharmacies are currently sold out of these respirators. You go online whether amazon or alibaba. You cant get these face masks they are in such high demand with no vaccine on the market, experts say medical workers really have to rely on this protective gear to stay safe and protect themselves from infection. It is not just 3m ramping up production kimberlyclark, honeywell trying to meet the high demand for the face masks and in a way their output plays a big role in the speed at which this virus can spread, guys back to you. Seema, well check in with you all morning long jim, from a practical standpoint should people struggle, fight to get their hands on one of these . Yes i think so you can have the masks that, all right. Those 3m masks are capable of stopping small molecules which is what this is unfortunately. The other kinds of masks are very good if you have it and dont want to give it to others. The honeywell is 5,000 and is used on the job site i would not recommend people buy that because that is one, the amazon one, the other ones i think are good but obviously not their enterprise, individual lets not be ridiculous that, you know, should we all walk around with a 3m im debating that. If we have a pandemic that actually strikes here. Amazon told nbc this morning theyve removed a million products on their website for faulty claims about protecting you from the virus only the 3m has been shown. 3m has many other businesses like clorox. You dont want to own 3m for the mask that would be fool hearty. Do you want to buy the mask . Go on amazon its third party remember youre not buying it from 3m. Id like to think that theyre pretty responsible at amazon but very orderly if you want to get it i personally understand why you would want to. Tonight on mad . Yes what is atlassian . Stay at home stay at home and fabulous. Therefore i think it is really good soon enough there will be a stay at home etf i created it this morning with my staff. I wont get any credit for it. Someone will steal it. Like they stole faang. Bunker. Chef boy are de well see you tonight thanks as always for helping us understand this week i dont think itll be up today but you buy a little dow down 850 almost tenyear 117 back in a mint dont get mad. Get e trade, dawg. music playing this is the first day of my life i was born right in the doorway now i dont know where i am, i dont know where ive been but i know where i wanna go apps except work. Rywhere. Why is that . Is it because people love filling out forms . Maybe they like checking with their supervisor to see how much Vacation Time they have. Or sending corporate their expense reports. Ill let you in on a little secret. They dont. By empowering employees to manage their own tasks, paycom frees you to focus on the business of business. To learn more, visit paycom. Com delete it. You metwhy . An app. Hes the one. Awww. Gesundheit. I see something else. A star. With three points. Youre in a. Mercedes. Yeah, we wish. Wish granted. With four models starting under 37 thousand, there could be a mercedesbenz in your near future. Lease the a 220 sedan for just 349 a month at your local mercedesbenz dealer. Good friday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen and david faber at post 9 of the New York Stock Exchange the selling continues this morning unabated dow is down 900 on this last trading day of february and as you know on pace for the worst week since the crisis following the dows biggest one day point drop ever. The World Health Organization holding its latest Coronavirus Briefing in geneva this hour well monitor that and get headlines as they cross. Rick santelli on consumer sentiment. Bittersweet our february final read on university of Michigan Sentiment moves all the way up to 101. 0 which means the 109 mid month read gets tossed why bittersweet . This is the best read going back to march of last year when it was 101. 4 than read was the best since january of 2004. Bittersweet because basically a week plus ago we were at all time highs and the data certainly reflecting it pretty much every day this week has been solid if not better than solid. We all know coronavirus puts huge asterisks on every category one year Inflation Expectations move from 2. 50 to 2. 4. Five to ten year inflation reads remained a lateral move remaining at 2. 3 carl, sara, back to you. Not doing much to help the market, rick thank you. Joining us with a look at how investors should be putting their money to work if at all during the historic drop, professor of finance jeremy segel. Thanks for joining us. So we spoke to you yesterday after another brutal day on wall street down almost 1200. Were down another almost here we go down 1,000 points if we close down a thousand its the third time this week we have seen a more than 1,000point drop in the dow. What would you be telling investors to do right now . One thing very important for investors to realize, over 90 of the stocks value is its profits after one year after the next 12 months which means even if profits are wiped out after one year and we return to normal after a year that is a hold of over 90 of the value of the stocks should be maintained. Weve already had more than a 10 drop now, that said, we all know from last october and i was on cnbc saying that, we were in a momentum driven market that got too high i said, you know, it was the type of a market that if anything went wrong, a little pebble on the road, it would derail well, we didnt get a pebble we got a boulder with this coronavirus. So a lot of people jumping off were back now to levels that i think are really getting very reasonable again, fear is the greatest motivator for stock prices in the short run and it can out run any of the fundamentals. Im just saying stocks are long term assets. Try to look forward beyond the next few quarters to get the value of equities. It is really important advice, dr. Siegel, but how can you say that valuations look reasonable here if we just dont know the scale of what were looking at in terms of an economic shock from this virus in this country . Well, it is true we dont know what the impact is going to be for 2020. Now, do we think that its going to return to normal in 2021 and 2022 and 2023 . I think the odds are overwhelmingly yes so you have a big question mark for this year. And then we return to normal if you do the math and i teach finance, one year that is bad. The rest years that come back. That doesnt mean stock should drop 40 , 50 , 30 yes, a wobble. To be sure a selloff to be sure. But it doesnt destroy the fundamental values of equities and i think we have to be anchored in that short run uncertainty, a lot of it, but i think we have to think long term uncertainty is not at all increased as a result of this virus all right but in an era in which were used to pretty nice gains almost every year since the crisis, jeremy, are you characterizing 2020 as a lost year of sorts well, listen. Profits, you know, profits were way too high they were predicting 10 , 12 . That was silly i thought 5 with this virus, it could be minus 10 . It could be minus 20, 30 if there is a panic and we just tote slit down the economy totally shut down the economy, look, what happens in china, if it happens here, theyve essentially shut down the country. Yeah, i we could have a 30 drop im not saying we will im just saying its possible. If we do, well have a recession, arent we we might have a recession i dont think were going to have a recession in the United States we could have a recession. Recessions most of the time have been associated with a bear market which is 20 , another 7 or 8 . One of the good things about this again i think this could be really bad in the short run. Really bad but when i look further i have more confidence than like after a lehman crisis which basically froze credit for years right and yeah. Although im listening to you, jeremy, not getting necessarily positive youre talking about 20 or 30 declines in earnings a potential recession yet you seem to want to be positive. Well, i would say the worst Case Scenario where everything shuts down could we have a 20 drop, 30 drop in earnings yes. For one year during the financial crisis we had an 80 or 90 and it went on for several years because the entire Financial System shut down and no one wanted to take risks and all of the over priced assets were in a collapse. This is serious but limited. Serious but limited. It sounds like youre trying to describe the difference between a very large demand shock, very large supply shock, but not systemic risk. Is that where your head is right now . Yeah. Not something that not something that i think is going to persist year after year after year and then maybe well get out of it like the early stages of the financial crisis of the Great Depression or you go back to other crises that lasted a long time. This is a severe, one time shock if it comes to that. But then i see a spring back and that gives me encouragement going forward. That said, by the way, we talked about, i think the fed should lower rates. The fed look at theres trillions of dollars of loans, libor, etcetera, lets lower that rate and make sure there is no financing problem there. Im not going to say that is going to solve the crisis or is a cure all but i dont think it makes sense right now. Cash is yielding 1. 6 you know, we hear the ten year is at 115. That doesnt make sense to me. I think the fed should act again. Just lets make some room there for easing on the financial side i see this as a very severe oneyear shock and then a bounceback that could be extremely rigorous just wanted to mention, jeremy, the former fed governor was on squawk box this morning after he published an oped calling for the fed to lower Interest Rates, calling actually this morning a step further for global coordinated Central Bank Action the sooner they cut the better if i were giving them advice i would say get to this weekend, take stock, reach out, starting at the close of Business Today to the world central bankers and at the very least on sunday night before markets open, have a unified statement from the big central bankers in the world that they are all over this. Its a signal to businesses out there that they shouldnt decide to give up on 2020 would that really do anything to help . I think it will help. Yes. Will it cure everything . No but i think hes right i think we should have a 50 basis point cut and i would like to see other Central Banks around the world do the same it cannot hurt it cannot hurt you just said we might have a recession. Which obviously may be already reflected in equity prices right now to some extent what happens if we do . What are we working with 1. 75 on the fed funds . Something like that, right if we cut the basis point now and then have a recession then we go back down to zero. Thats true. And we were seven years, what, six or seven years at zero in the early stages of the financial crisis and i mean in a way that helped prevent it from going like the 1930s. Well, we were we finally did the right thing which we didnt do back in the 1930s we gave the banks all of the reserves they wanted and lowered Interest Rates as much as we could. That doesnt solve the world but it prevents from a repeat of the greatest Economic Contraction in u. S. History, which was the 1930s so, yes. That helped. It does not solve the problem completely it helps what do the europeans think what are they supposed to do since they are already there . Another thing, jeremy, greek yields, yields in greece are going up because people are now worried about their ability to service debt outright. Correct so we now get the spread between the zofrns, tsovereigns, triple bonds, japanese bonds, which are triplea sovereigns. The rush to safety is going to them and all other credit risks are expanding. So greece, even italy of course has some of the virus. Then you get the single a credits, the b credits well get a widening we wont get a widening like we had over Lehman Brothers but, which was extreme, but were going to get a widening credits. No question about that this is very predictable very normal in this type of crisis. Just to sum up your bottom line, professor siegel, for people watching, and they listen to you, see you on the commercials, are you saying it depends on your time horizon here of what you should do with stocks near term maybe more pain, longer term investors what, sit with what they have . Take the opportunity to buy . Yes, yes. Absolutely i mean, this could be a really tough year but 2021, 2022 onward there is no reason to say were not going to snap back from this we always have go back to 1918. Terrible one year then things got much better economically o youve got to look far forward. If you got some cash now, yeah time to put it to work dont get nervous if it comes down another 5 or 10 10 from now would be the bear market it would take care of that recession. But youre going to get a bounce back in 2021 that i think is going to make a lot of investors glad theydidnt panic and sell out. Were already 15. 5 down from the record high. Professor jeremy siegel, thank you for joining us thank you well, another big story of course that weve been following is bond yields we talked a bit about that with the professor. Their lowest level in years this week were talking about the ten and the 30 year both of which have hit record lows. Take a look at the ten year. 1. 16 hard to imagine. Joining us now to discuss, Charles Schwabs chief fixed income strategist. Let me start there it may make perfect sense, 1. 168, to, you know, lend your money to the u. S. Government for ten years but what does it say and is it sustainable . So what it says is that there is a flight to safety obviously. And people were mispricing risk. There was a lot of complacency in the market. Very tight credit spreads, very high valuations on stocks. People were caught when this happened and have been rushing into treasuries. It also tells us that the market is expecting the fed to cut rates just as everyone is asking them to do the market is building in a couple rate cuts and that is going to work its way through the entire yield curve is it sustainable . Sure for a while. Ive been asked since 19 86 whe the bond bull market is going to end and i keep saying not any time soon. Ill probably be retired every year for the last ten years i think weve started the year saying this is the year when were finally going to see rates rise we did it again this year too. Exactly here we are two months into the year will they bounce off these levels sure it wouldnt be too surprising if things calm down that we get a bit of a bounce. The problem is now if we morph from supply shock to demand decline and to recession and what we have to watch is employment because thats the mainstay of this economy is job growth and decent Consumer Spending if that starts to roll over then we have something to worry about. Some have suggested were already getting there even with the limited data set was it just a matter of time before this jobs cycle rolled . You know, at some point though we have a very tight labor market, between the necessarily looking like it in 2020 until this all happened yeah new job openings had rolled over well have to see if jobless claims start to pick up. That would be a sign but it wouldnt be surprising after ten or 11 years were going to hit a speed bump that sends us into recession. Employment is really for us the key to watch from here do you have a base case as to when we would see the string of monthly increases in employment end . You know, i dont have a base case yet i want to see the jobless things tick up and then wed start to say okay maybe second, Third Quarter, probably Third Quarter and beyond we could see that the yield curve is telling you, you know, Recession Risk has risen. Credit spreads are telling you Recession Risk is rising thats what were monitoring right now. So you mention the market is starting to price in and actually bet on the probability going up of the Federal Reserve cutting Interest Rates as the market does that more and more aggressively were now talking about a potential 50 basis, times two kind of cut, isnt the scope for disappointment even more when the fed actually acts if they do i dont think there is going to be a 50 basis point cut okay because we havent had one and i dont know in 20 years or something. That would almost signal panic and i think theyre trying to take a very cool, calm approach and saying this is the supply shock. We can only do so much with monetary policy, blah, blah, blah weve all heard that from them but i think theyre going to look at some of the indicators and say, if we get financial conditions really tightening as they are with credit spreads blowing up, then theyll say, well, we can mitigate that risk by edging rates lower. I think theyll take the slow approach i dont think theyll come in with shock and awe to the meeting . Or can we get an intermeeting cut . I think they wait for the meeting. I dont think they want to signal theyre panicking, feeling that would probably make it worse theyve gone from extremely low levels back to slightly above normal theyve done it very fast. I think what is interesting about it and david and i were talking about it is that we didnt see that type of reaction when some of the trade war risks for instance were happening. There was a lot more complacency in this market over other periods of market risk in the last few years who would have predicted this right this is not one of those things you put into your forecast and say, well, if this happens or that happens, we knew about the trade war. We knew about some of the other risks. This afs risk that came out of the blue so it wasnt priced in at all a lot of liquidity in the system isnt there ample liquidity in the system but again, if financial conditions start to tighten we saw this in 2018, now, there were other things going on the fed was raising rates and signaling more rate hikes, so that was a problem but when you saw financial conditions really tighten in the Fourth Quarter of 2018 they did pivot and switch to an easier policy saying if we get to that situation again, a pivot to slightly easier policy is probable but again, as everyone has been saying, it can only do so much warsh this morning on our air suggested that the argument for this cut which he has made in the oped earlier in the week is stronger than the ones for the last three do you agree no, i dont think so. Were not at that point in terms of Credit Conditions and also the signaling. They have been signaling easier policy for quite sometime. The last three they have been signaling tiger policy so they needed to reverse that this time theyre already on an easing path so i think this was just an incremental change so if im in stocks should i be moving money to bonds or is it too late . Well, we always advocate people having assets, Strategic Asset allocation that is consistent with their Risk Capacity and their risk tolerance. And if you find that youre really nervous right now it means you didnt have the right allocation so, you know, i talked to a lot of investors who say they dont want to buy bonds because yields are too low. I told them that is not the only reason you buy bonds you buy them for times like this because they provide the best diversification from stocks. So if youre uncomfortable with where you are then you need to probably think about making some changes. Kathy, thank you. Thank you were going to i think monitor larry kudlow who is about to make comments in the Briefing Room in a few moments are we seeing him yet . Not yet i think its important to hear from him i think it is important to hear from the white house because there is this feeling right now that the communication from the white house, from the Federal Reserve, i mean, im thinking about jim bullard st. Louis fed chair comments in the last hour that their urgency is not matching what we are seeing in the market this is our third day of a thousandpoint declines potentially in the market. This has been sharp, brutal, and severe what were getting from the white house, President Trump, to his credit closing flights from china early, that is the sport of action i think was applauded by investors now saying everything is okay and im going to a rally tonight, that is not the sort of action i am not trying to make it political but in these times of market panic people look for their leaders to have calm and show theyre on top of it. Were not really seeing it from the fed yet or from the white house. It is definitely a test of confidence the market craves some have suggested daily briefings from cdc, same time same place where you can check in and understand where we are in this whole arc detection and testing efforts are taking center stage as well as the spread continues around the world. One company in the spotlight is diagnostics company, i hope i get this right, ciagen announcing a plan to submit one of the first commercial test panels for coronavirus to the fda by monday with the company sending test kits to four hospitals in china earlier this week joining us to discuss is ciagens interim ceo terry bernard. Meg . Thank you so much for being here this morning. Plans to submit for emergency use authorization by monday . Tell us how quickly your test could be available here in the u. S. Good morning first of all and thanks for having me again we are currently gathering data to be able to submit to the fda as soon as possible. As you know, the fda has introduced an emergency approval channel where we want to submit our data so fast what we have to do because you can imagine, meg, we are submitting our solution to many countries around the world in europe but also in asia and, therefore, any time you want to get approved you need to adjust your solution to local Clinical Data and patient data andthis is what we are doing currently in the u. S we want to bring that package of data as soon as possible to the fda here i expect that test to be available in the first 15 days i would say of the month of march. So the first two weeks of march youd expect the fda to give you the clearance to or give hospitals and users the clearance to start using your test in the hands of the fda but this is our objective and we are really ramping up as we did in europe, as we did in asia pacific, to meet the challenging timeline obviously and bring that solution because it is a key solution to the u. S. Hospital as soon as possible right i know there are a lot of great things about this potential offering one is that the results can come back and in just about an hour and also that it is on a panel of other respiratory viruses that youd be testing for. Is that right . And i also understand it does require some specialized equipment, so how widely available is that equipment right now . So you are perfectly right, meg, what i would like to say first is that any time you see the apparition of the path generpathogen, the first solution always comes from the Reference Lab this is what happened here in the u. S. Like in other countries, the cdc has started to develop a test and then developed and provided that test to science in the u. S. But now, i mean, we are at the stage because of the progression of the contamination that we need to be able to test much more many people and in a faster time this is exactly what our solution is providing. As you said, the result is coming in less than an hour and at the same time the test is extremely easy to use. Its a simple swab that you put in a cartridge which is as small as this. It is half the size of your iphone for example and you introduce the swab into the cartridge, break the swabs, put the swabs into something the size of your laptop and so basically you have no real technician intervention. You dont need to have a lot of expertise to process the test. So fairly easy to use and extremely fast the test and the system is already available in the u. S. As you said, meg. We have basically taken the cartridge we cleared with the fda a year ago in the u. S. And we added two genes to detect that specific coronavirus. Those are the two genes that are recommended either by the chinese cdc or by the american cdc. And therefore, the value also of the test is that not only you can detect that coronavirus but also you can differentiate it against different respiratory syndromes be flu, for example, rsv, or other coronaviruses. Thierry, we know also that kiagen provides the reagents, the chemicals used for tests, Lab Developed tests for example to be able to run their own diagnostics. Are you seeing the ability to provide those reagents as we have heard of some issues with the cdc developed tests and we know labs and hospitals want to offer their own tests. What can you say about the ability of hospitals to be able to do that themselves, develop their own tests and use potentially your reagents . So the strength of ciagen is we are a molecular diagnostic company. The component of the tests that laboratories will be able to use to develop their own tests to final analysis if you look for example at the least recommended solution what we call the cdc protocols you will see many of the ciagen products so by delivering components of the tests in the u. S. We are already helping them develop their own what we call Laboratory Developed tests internally all right thierry, thank you so much for being here this morning. We look forward to talking with you again soon as this develops. Thank you so much for having me carl, back over to you. All right meg, our thanks to you meg terrell back at headquarters dow down 930 mike santoli joins us on set our senior markets commentator i noticed one of our statisticians says the low today, dow wiped out all of last years gain. Yes and, as a matter of fact, the s p is back to the highs of january 2018 that was that big, steep rally we got after the tax cut was passed so youre going back in time as well as going down in price. I think that is something to always keep in mind. Youre running out of superlatives in terms of talking about how indiscriminate the selling has been, how intense, how concentrated these losses have been. So what it does in part is tell you exactly how off side, mispositioned, over committed investors were in aggregate a month ago. I think a lot of the kind of mechanical, systematic huj fund type strategies that were a bit over their skis, thats been i think cleared through the market thats what weve been seeing this week largely. But you have retail outflows that is happening today. You dont really have nearby, rock bottom valuation support. And i think thats something that were going to have to contend with for a while even after we get a rally that was goldmans point this morning. Positioning and valuations not yet depressed enough yes i think that is fair i also think that in terms of the markets ability to absorb and shrug off incrementalnews about the virus spread, about economic impact, about all of these measures, im not sure weve been living with it for long enough. So, yes. The market has rushed to a place pricing in a severe deceleration of activity and some stress on Corporate America. But have we gotten to the point where were saying oh, yeah. We knew that already i dont know how to test that exactly. And i keep going back to the post 9 11 scenario we were already in a bear market, already in a recession, but the shock of it and the expansive speculation about what it was going to mean for long term in terms of travel, consumers, corporate behavior, confidence, employment, everything, that was a complete fog, right the market repriced radically lower. You did get some fed help. Then you kind of found a way by the way, after that, all of the straight reports of a bomb threat or suspicious activity the market just didnt care after a while. I dont know where we are in that process were at the point where it seems like headlines are still very sensitive were down another thousand points on the dow. The w. H. O. World Health Organization is conducting a News Conference right now saying theyve increased their assessment of the risk of spread and risk of impact of covid 19 to a very high global level stopping short of calling it a pandemic they update the numbers. They do say, though, they can trace most cases to contacts or clusters of cases. They dont see evidence as yet that the virus is spreading freely in communities in the past 24 hours. Seven countries have reported cases, though, for the very first time it feels like this is still a market that is very focused on these types of headlines yes and reacting. It is focused on those headlines. Its focused on is the response going to be sufficient or reassuring but i also think its focused on when does china come back . What are companies doing on a preventative basis to try and stay out of harms way what does that mean for spending well, that is the point jpmorgan made this point earlier in the week that the fix or the attempts to arrest the spread are in itself economically submissive, right . They depress Economic Activity they absolutely do. I think for an investor right now aside from trying to tactically say, wow. We really have the makings of a crazy rally off the lows even though it is not going to be the low, thats the tactical side. But step back and say, does it make sense that 1 6 of the value of Corporate America is gone in seven days does that make sense was 1 6 too expensive a month ago . That is what you have to figure out. Then you look at historical experiences when the market is exactly this depressed and over sold in a short period of time if you look at a few months it has usually found footing and picked up a little bit if you look at the spread of dividend yields to Corporate Bond yields not even treasuries theyre looking very dramatic in terms of how much of a buffer might have been starting to build in equities but, you know, we over shoot to the upside and you overshoot to the down side so Bernie Sanders chances are rising if you look at some of the betting odds and some of the polls in fact a california poll showed he is in the lead there ahead of super tuesday is it a coincidence that this is happening at the same time that the markets are tanking . Or is it part of the narrative it is hard to tease it out only because the pattern has been as sanders nomination odds have gone up, President Trumps reelection odds have gone up. It has been in lock step maybe thats relationship is going to change. I do think its definitely a factor in Retail Investor sentiment. Maybe professional Investor Sentiment to just say, look. We kind of thought the market was going to at best go to sleep for a few months during the campaign and maybe itll go to sleep at a much slower level and what is the rush to do any buying here we have the big unknown. And of course as i said, maybe that relationship is going to change in terms of reelection maybe in connection with the coronavirus its hurting the Economic Outlook and that raises bernies chances in a general election thats right. Oddly enough the betting odds are not yet showing that but who knows if its accurate finally you mention of course comparisons to many years ago at this point 19 years ago sure. The Market Dynamic has changed dramatically we didnt have ail goe rhythmic trading as we do now i dont know how it impacts things yes i know there are headlines that can trigger ail g can trigger things because they say this then this. It plays a factor in the velocity and how comprehensive the selling is in a short period of time. If nothing else it is exactly doing that so this very old time rules of thumb, right on a given day, few days in a row if you get 90 of all volume to the down side that is usually a market getting sold out and washed out well, when you are essentially trading the indexes all the time, you know, that is exactly more likely to happen if youre going to have the most stocks down another thing is, you didnt have certainly in previous periods these big, Systematic Strategies that essentially take their cues from what the level of volatility is and so if the volatility level is low, were going to take more risk well add it on. We have, you know, the math works in our favor in that way and it unwinds just as fast. And so again, i do think its changed the rhythm and the pacing of how these things go. Im not sure it has changed kind of the human psychology of how people react to sharp moves in prices and what that means for kind of the bottoming process with regard to psychology and price. Yeah. Mike, thank you. Speaking of bottoming process, the s p right now down about 3. 3 were down 10. 8 for the year. Lets take a break from the markets for one moment and get back to our headquarters sue herera joins us for a news update good morning, everyone here is what else is happening at this hour the Turkish Military saying it has struck 200 Syrian Government targets, killing more than 300 syrian troops. This is in response to syrian attacks that killed 33 turkish soldiers on thursday france, germany, and nato are among those calling for a deescalation of that situation. Natos secretary general saying peace in afghanistan is, quote, closer than ever before. He is commending the Peace Agreement between the u. S. And the taliban set to be signed tomorrow the government of iraq has confirmed to us their desire for a continuation of the nato training, advising, and stabilizing activities for the Iraqi Armed Forces and we will only stay in iraq as long as we are welcomed. And a highspeed chase in los angeles ending with a violent crash. A warning that what you are about to see may be disturbing to some viewers Police Following a driver who clipped another car, spun out of control, ejecting three passengers before slamming into a light pole fire Officials Say four people were injured one teenager is in critical condition. You are up to date that is the news update outside of the business world. Back downtown to you, carl all right, sue. Thank you very much. Dow down 958 or so we would remind you the s p and the dow are basically back to levels that we last saw in august were monitoring headlines from the World Health Organization briefing the wires are saying that fauci of nih is briefing lawmakers well watch for that as well for more on the spread of the virus and how the u. S. Health care system is set to deal with it, lets bring in the former athena Ceo Jonathan Bush here at post 9 nice to have you glad i was in town. How would you grade our infrastructure right now in terms of response . I would say what were building is really great how built it is and how ready people are to use it, you know, well see. Obviously in a situation epidemic or pandemic going into a place with lots of other infected people is a bad idea. Especially if you can be treated virtually so folks that are members of firefly or teledoc or other stocks you talked about earlier, theyre going to do better and our infrastructure can flex, Virtual Infrastructure can flex up much more easily than hospital beds and Emergency Rooms can flex up. And most of the treatment is stuff that can be delivered at home as well things we can do right now of course we can get flu shots and wash our hands and fist bump that consultation that is digital now, this will be the first real test of that scale. Thats right. I am very interested in digital care delivery. I think we have enormous bloat in terms of Physical Plant as we look around that beautiful old building hiding behind the, you know, the screens here you know, sort of an obsolete thing. Were in it for the show piece hospitals in many ways have a similar kind of sweetness but uselessness in especially areas of low grade Infectious Disease that swell up and contract in emergency situations its another thing. Even in an emergency pandemic, when we go from epidemic to pandemic which very likely we will it is a matter of terminology. Its in the u. S. It is silent for 14 days before it speaks. It is very hard to imagine not so far we dont have a lot of cases. But virtual medicine what you get in a hospital, the diagnostic equipment is increasingly small and digital your last guest talked about the test which could be administered, literally, delivered on amazon. There is more and more of that really which allows us to unbundle what we think of as the hospital not today. Not for everything certainly not for a bombing which id want to be nowhere else but boston mass if im in a mass casualty or new york because of those hospitals but most of what we face are socially determined or affect n Infectious Diseases better treated virtually. You come from the health care world. Youre in the health care world. What are folks around you in that environment, ceos or, you know, doctors that youre talking to, saying about the risk here in the u. S. Of coronavirus . Well, i think, you know, the one thing everyone does is sort of go to worst case and say, how resilient are we to that it is sort of a really bad flu and we do that every year. And the basic attack pattern is a known one. Try to encourage people to get flu get flu shots and disinfect themselves this is sort of 10x so maybe try ten times harder but the same message. Do a lot of biosurveillance in the beginning. If somebody might have it send them for testing not because itll make them any better but because it will a stock went up. [ applause ] the applause is a 44year veteran is retiring today. Oh, beautiful yes he made it. Your point though about virilence and washing hands. And getting the flu shot. So youre not in the hospital to begin with. Exactly then we send people for testing early on and we do that with every flu cycle to make sure we can track it, check its type, see if our virus, if our antivirals are working for it. Once it is spread and were all getting the flu the test doesnt matter similarly with the stock market. Once we sort of have it and were all infected and we know weve kind of used stimulus as a lifestyle drug of late the margin calls and the debt calls hurt us more than we thought . Or do we absorb that then like all right. Its coming through. Itll go through itll go through again next year and okay that is why our market is reacting in large part to the uncertainty. Right at what point do you think were going to have more certainty i would assume you have a lot of questions as we all do just about simple facts about the virus. Sure. That are yet to be fully understood right it is funny. Osama bin laden and well known attackers all over the world try to do threes the first one i got that the second one whoa. By the time the third punch comes youve had enough. So i keep thinking, you know, first one is just the supply chain. Second one might be margin or debt calls what might that third punch be one thing you guys can do is really think it through so that we feel resilient. It is not the first time were having that thought. Not having a black swan moment when that third one comes. The two i think are supply chain, not the disease itself, supply chain and debt on margin calls. And then not a lot of room to land left on the back side because weve been playing with debt like a lifestyle drug how much does the asymptomatic nature of this one change the game . Being able to spread having no clue youre sick there is the spread rate like ebola is a 50, this one doesnt have to have as high a spread because it can stay, uyou know, can have a really hi spread because it can stay quiet for so long before it speaks up that will become more relevant the good news is on the back end it is a really bad flu not bleeding out of your eyes. Right when mull vainliy vaney is sayi not a death sentence thats true the death rates weve been seeing are in china but with all due respect to china, whole Different Health care infrastructure than we have. Seeing them frantically build these tombs, that is not the kind of hit rate that disease will have here do you have concerns about sub Saharan Africa sure. Every fragile ecosystem when an Invasive Species of any kind comes in, you know, my heart aches a little and certainly every fragile ecosystem in the world including china, theyre not down below the level of the roaring economy which largely is codependent with us, its a fragile billion people or couple so obviously, sure places that get that and arent ready, dont have a lot of infrastructure to absorb it, i spent most of my life complaining about the excess capacity and bloat in medicine now im like a little bloat, not so bad these kinds of things can change behavior. It may be that we stop shaking hands for example. I had my meeting this morning with a longtime friend, went in for the hug and got a fist bump. At the same time you wonder if youve entered a market in which your product may be particularly well suited will there be even more growth and changes in behavior that potentially help right when people actually break down disease and the drivers of health care spend in the country it is, you know, we built this system around traumatic injury and Infectious Disease but most of the stuff we have is behavioral determi nants of health where the doctor is helpful but the stethescope as complete artifact. Over time as we go through the cycles and realize how much was treated digitally, oh, yeah, it becomes the new normal these are horrible i wouldnt wish this on us or anyone when you take a blow and recover and realize what worked your acceptance the next time around goes up. So do you have any opinion or things that youd like to hear from our Public Health authorities from President Trump as the nation braces for this coronavirus . I mean, obviously really candid and real time, john hopkins has a great tracker i look at every morning. Being really real about it so we wh we know which part of the journey were on, denial is a terrible part of every journey every chapter of my life ive found denial was not helpful probably necessary obviously china has been struggling with denial two epidemics in now we dont want our government to do that. I dont think this is anybodys fault here and being radically candid right away, and letting the hits come and letting people absorb and then go okay. That was it. If youre framing this though as somewhat of an inevitability, the spread nonscientific, two bit entrepreneur pretty close were going to live with it yes what do you make for exampl of this morning the swiss government looking to put a stop to gatherings of a thousand plus people sports events, concerts, what have you . Reasonable or not . It is a eun yang based on your values, right sure i want to put it off. I dont want to be the guy who falls next i want to be on record as doing the best i can if this was a something with an ebola like output on the end you betcha right . But because of the fact that the economic consequences are so vast, right, and the clinical consequences are problematic but not devastating well, relative to ebola right exactly. There is a legitimate balance there that i think and the thing that governments might really avoid doing i hope is thinking one and saying the other. Saying everything we can but saying i dont want a drop in the economy and then the disdense that takes our already poor trust leflts and when you have distrust what else do we not know that is when markets collapse. Just get it out. Get it real. Say what you want about our president. He doesnt have a hard time saying what he thinks. Maybe that wont be the thing that goes wrong. He is very focused on that. As long as he says what he is thinking i think thatll be fine in switzerland as long as they dont have two tracks speaking of the stock market were watching tick by tick down a thousand points to 1,085 was the low. Health insurers have had a really rough week. Looking at their worst weekly loss in two decades. Sure. Who gets sick, you know, they file claims. Everything has a claim with it they are all moving to risk contracts where the risk will move down on to things more scaleable and more able to absorb pulses. Insurers paying for firefly wont pay more when suddenly all of fireflys members hit the care team and say what do i do, do i stay home today everything in medicine even a flu shot turns into this ridiculous Insurance Claim that works its way up through athena net and into the Insurance Company and gets turned around if there is going to be a pulse in that that is going to hurt for a while. You dont see it as political. Heck no if you think there is a chance a lot more people are going to file a lot more claims maybe you dont want to buy a lot of Insurance Company stock in that moment really good insight thank you very much. Good to be here good to see you guys lets check on where the major averages stand at this point trading right around the lows of the session. Dow is down 943 points we were down over a thousand just a second ago. S p 500 looking at a decline of 3. 4 on top of the sharp losses weve already seen this week the nasdaq down a little bit less than the others weve got every sector down within the s p 500 and were looking at a more than 15 slide off those record highs where we were just a little over a week ago. The st. Louis fed president James Bullard weighing in on the virus concerns this morning. Our Steve Liesman is back at hq and has that along with the moving target that is where the market thinks the Federal Reserve rate is going. Steve . Really good way to characterize it, sara. Lets talk about the market reacting to comments from the st. Louis fed chairman where he appeared to lean against any near term rate cut here is a quote from his speech. Further policy rate cuts are a possibility if a Global Pandemic actually develops with Health Effects approaching the scale of ordinary influenza but this is not the baseline case at this time the fed is monitoring the virus but is in a good position because previous rates are working through the economy. And to affirm the very aggressive pricing in the market for the fed to act and act soon, here are the probabilities sara was talking about. These are within the last half hour as she said they have moved around 100 chance of a march cut which is the meeting in a couple weeks. But63 chance of a 50basis poin cut at that meeting. If it doesnt happen at that meeting, the next screen shows that second cut would come in april with a 70 probability now. June, a third cut, 51 and this is new today, guys, a 57 chance of a fourth cut in november so far, fed officials have pretty uniformly sung the same tune of waiting and seeing until the impact of the virus shows up in the data. Is theres some support for that among fed observers who question what would a kate raitt cut too, but the other side a market in freefall creates its own economic reality and rate cuts could stem that route, sara. Ive been listening to your debate all morning long on this subject. Feels like the fed, at least james buller, and i dont know where the center of the fed is these days, is not at the place that the market is at. No. Thats going to be a bigger problem for the market and they miss making the selloff worse if they dont step up and say weve got it under control, were on top of it and looking at action. They always say that, sort of. As eachday goes by, the numbers of those probabilities seem to get further away from what the fed is saying i have been struck by how uniform those comments have been bullard today, evans yesterday, clarita earlier in the week. They do not want to say to the market, yes, were going to cut in two weeks it wasnt a problem for the fed two days ago when the cut was priced in in april, because the fed had time to figure that out. I think in the next couple weeks if they dont say anything, theyll be affirming what the market is pricing, or at some point Say Something to try to get in line with them. But the goal for the split between the market and the fed rhetoric, thegulf seems to get wider by the hour. Steve, youve been making this point all morning a fed cut does not get people to go back to factories or no. The line doesnt have people go on airplanes or go to concerts as you pointed out. It doesnt do those things it doesnt bring supply in from over in china thats the reluctance im talking about. Like i have been reporting, there are many people who normally would be on board with a federate cut here that seemed to have their misgivings about this i think the issue becomes the stock market i think the issue becomes the alignment of where the premarket activity is priced, especially in the bond market, because, david, theres this term we call behind the curve, which usually is a metaphor, but in the case of the fed its actually literal in the sense that the twoyear bond now is priced i dont know how many rate cuts, maybe sara has that in front of her right there, but trading substantially below where the fed funds is right now i think it was 0. 9 earlier today. How many rate cuts is that the fed is literally behind the curve of where the market is and you expect over some period of time, david, that those things have to even out a little bit. The other thing i would say to that argument, david and steve, is that at this point, with the market dropping so far, so fast, that in itself can become a vicious sort of spiraling selffulfilling prophesy of economic pain. If the fed shows theyre on top of that aspect of it, at least, theres something they can do. I think thats absolutely right. If i could throw this back to faber and among his areas of expertise is debt and hedge funds and those sorts of things, nobody has said thats an issue yet, but at some point you have a drop in the underlying equity or the collateral to the loans and the ench will leverage out david. There have been some spread blowout, the etfs, the junk bonds have been trade do you think quite a bit. At some point do you start to ask a question about that . You do. But i dont think were there yet in termings s of being a re problem, not in the credit markets, yes, high yield has moved up that is a result of a number of things, but not hearing much in terms of any blowups in hedge fund land or anything of great significance that can change quickly, steve, and well keep an eye on it. Exactly well wait for you to report that, david. You have to keep your ear to the ground on that i think the issue sara brings up at some point does the fed need to step in simply to stem the route v rout in stocks steve, thanks for the good conversation Steve Liesman. Meg tirrell has the latest on the coronavirus headlines. The World Health Organization raising its global Risk Assessment for the Coronavirus Spread and impact to very high, the same level its had for china since late general the director general says there are more than 20 vaccines in development globally with several in Clinical Trials and the first results are expected in a few weeks, as the virus has reached more than 50 countries with more than 83,700 cases and 2,860 deaths an italian patient in nigeria was the first case case numbers declinis climbing korea to more than 2,300 in italy, more than 650 cases, the u. S. Getting prepared as well, the cdc expanding testing criteria to include travel history to more affected countries or severe respiratory disease with no other explanation. 11 sectors down in the s p im looking at the week to date declines because we are in our first week for stocks since the financial crisis all groups are down double digits, energy by far the worst performing sector, down 18 , real estate and technology right behind it. Health care and industrials and staples have held up a little better staples, the only one positive for the week is clorox off the lows by about 200 points kudlow is on the tape. He has said that supply chain problems in the u. S. Have not yet surfaced doesnt mean they wont. And also alded that other geshgs7 kgeshg g7 countries have not seen economic breakdowns over the virus. We did see Consumer Spending in france and switzerland this morning negative by about a percent, worse than expectations northern italy has come to a sort of standstill, i think. The problem is, you know, the data looks old right now and the market is obviously leaps and bound ahead of the data, but maybe its good that the Consumer Confidence number here in this country is strong, and weve got a good footing if this doesnt come out to the worst fears of the market, then, you know, you listen to dr. Jeremy seegal of wharton we dont know the trajectory the virus is taking and what kind of economic shock that will bring gold is getting a lot of peoples attention, down almost 60 bucks lets get to the cme group and get the santelli exchange. Good morning, rick good morning, carl. Jim karen, investment manager with morgan stanley, Global Fixed Income jim, lets get right into it if we did 50 basis points yesterday or the day before and today and the market proceeds to go down triple or four digits, thats like throwing it into the wind the fed should never throw in 50 we have to go. Sara, sara, sara, back to you. Rick, afpolapolyjis Lawrence Kudlow at the white house. Millions of people trading around the world i think everybody, whether youre an investor or whether youre an ordinary main street person, people should not overreact. Thats the important thing in america, we have an incredibly strong Public Health system and as i said to stu barney, the president has taken rapidfire, unprecedented actions to help protect in the event of an emergency or further deteriorati deterioration. These are very good things and very constructive. On wall street for several days now the president would consider more extreme measures to respond to this, potentially up to suspending the tariffs on china as one emergency measure is the president considering that or any other response measures eamon, theres nothing definite that i can report theres lot of conversations in and out of the oval office i was with him yesterday for quite a while talking about one thing or another were dealing with almost a day at a time, and we have no precipitous actions right now. Again, you know, its sometimes a hard case to make in the middle of one of these crises, which is part psychology and part fact. I dont think anybody should panic. Its worked and the economy is sound. Im still watching china people have moved from china to italy or other places, but im still watching china, and ive gotten to know tim cook very well, ceo of apple hes a great man i was just really interested in the interview with him yesterday because he was rather optimistic about reopeni ing factories and starbucks feels the same way on the stock part, it may change and it may worsen, but right now these sort of realtime Regional Bank surveys, people should pay atengtention to them. Theyre sending off good signals on the economy and the numbers in january exceeded expectations. Thats why the atlanta fed thing is at 2. 7. Now, we have another month to go for the quarter and afte