You are looking at a live shot from the white house we show that to you because in about 90 minutes, expected around 6 30 eastern time, the president will hold a News Conference on the outbreak we will bring it to you live as soon as it begins. Of course we have a special markets in turmoil coronavirus outbreak all joined in one hosted by the great Tyler Mathison in the meantime, were going to get to the macro market, but we want to begin with breaking news on one of the Biggest Companies in the world, microsoft, warning its windows unit will miss guidance for the quarter because of, what else, concerns about the virus. This is the latest company to cut guidance due to the outbreak microsoft shares down 1. 3 in the after market i would imagine that we had a few united and others, we will probably have a couple hundred more of these is my guess. Mastercard was a huge one as well listen, microsoft on january 29th gave guidance, and this was one of the things. First of all computing is probably 25 to 28 of their overall revenue. There you go and with that said, theyre not going to be able to give guidance, which is fine in this environment. Ask yourself this, though, where should the stock trade down to and weve said this for a while. Weve said it since february 11th or so when they reported around when they reported stocks traded up to 190. 50. 160 is your level. People now look at microsoft on valuations and say, wait a second, maybe 28, 29 times next years earnings. And so more personal computing as guy said, 30 of their operating profit and so for a stock that also with the beneficiary of passive flows, the other thing we talk about with apple and microsoft, they make up more than 23 of the nasdaq 100 so if youre looking for just the market effect, also of what microsoft does, it changes sentiment but it also changes the technicals a little bit when you actually see and a lists if they have to down grade. You start to see investors flow out. As we talked about, theres very little reason for a member to be seeing anything but caution right now. And thats really the case we all sat around here and said microsoft is doing everything right and the multiple is expanding. This was the catalyst we didnt expect i think microsoft, if you look at what this highlights, you have the follow the whole chain down hp will not update as quickly, et cetera, et cetera this starts in china and this continues to trickle all the way down you have to remember everything thats downstream from whats happening. The butterfly effect. You have to watch when a big company says something, watch the companies in that halo, karen. Kudos to you for calling out that day, that reversal that day. One thing to note about the release today, they did say that we are seeing strong demand. Getting production back up and running came more slowly than they thought its really a supply problem rather than a demand problem i would much rather see a supply problem because i believe theyll get the supplies late. I get it. And in no way are we making light of the last three days we do have to take a step back, take a deep breath and, remember, microsoft even with the after hours drop, still up 50 . Karens point is right. Theyve been building out the azur product it is massive and i think you will see demand on that. E produ. It is massive and i think you will see demand on that. You led with microsoft is the third or fourth of maybe potentially 100 companies. I cant speak to 100 but at least a few dozen more and, again, justifiably so. The weekend apple said, hey, guess what, things arent going to be were having a problem here, the market sold off on that monday. Apple down 4 or 5, which is meaningless in terms of where it is and the next day was making alltime highs the point being the market didnt care about anything and now magically the market is starting to care ill go this far if youre a cfo, ceo, wouldnt it be smarter to come out and cut guidance its foolish not to give yourself a path because we dont know what will happen tomorrow, next week or next month. Its all relative to both your guidance but relative to your peer group. And if thats whats going on within your peer group and there are these dynamics within the sector, why not . Im not sure youre going to be encouraging folks to do that back to microsoft, i think the most important thing is how this embodied not only fun flows but sentiment for a market and when you consider its on a 50day moving average, this is a stock that has been on a oneway trip. Its still up 7 year to date. You still have analysts that probably were caught on the wrong side of upgrading into those highs. These are things that dont change overnight i think microsoft is the same Great Company it was two weeks ago. No one was paying attention to the valuations then. If you look at the technicals i dont think today is the day i know its fallen on monday and tuesday but any solis its only down a percent . I think there should be i dont know any company that says we have no effect whatsoever from coronavirus. Something like zoom and clorox will probably be the beneficiary. The market is sort of looking through that and i do think youre going to get a free pass if it makes sense, the magnitude of your miss and what your business is, how you were affected by coronavirus. Lets turn now to the wild ride that was wall street on a wednesday. We started hopeful the worst might be over. The dow was up 460 at one point. And then, what else, more coronavirus headlines out of germany, brazil, and a fear on long island. A quick plunge for stocks down nearly 200 a swing of more than 650 points today. 22 dow stocks fell led by nearly 4 drop in disney. A sudden ceo change last night exxon and chevron, dow components, slammed as oil closed under 49 a barrel. Guy adami, we thought, i guess, some thought this morning when the markets opened we had a bit of a rally, maybe this would be the day we turned it around. What does that intraday reversal tell you, if anything . We talked yesterday about the potential for today being the bounceback day for a few hours this morning it looked exactly like that i can make an argument and we could have a debate today might be the worst day out of the last three given the huge reversal on the back of a 1,900point move in the dow i think thats speaking volumes. The one thing that was interesting most of the day, the vix never gave it back and was hanging in there which should have been a telltale sign. Gold had a bid i think today, again, its not a great day if youre bullish. Six months ago this day would have closed on a high and we would build on it again tomorrow you have to think about where weve come from, though. First of all, weve had excessive moves by any measure if you look at the market, this looks a lot like the move into brexit back in 2016. Youve had north of it 2. 50 , a standard deviation move. If you think just where the market really has been reacting over the last couple days, i think thats where we are. I dont think the market has to go down in a straight line, but to look at relative strength indicators and things that give you the sense of the momentum of what has happened were, again, back to a level in august and before that takes you back to the First Quarter of 2018. We talked about it the other night and the special with dan and josh brown, that failed rallies might be worse, to your point, than just falling gina what do we want to see . Do we want to see another 1,000point down day do we want to see a day where its 151 decliners to advancers . What do we need to know to know that the flush has occurred . Well, look, right now the market is going to continue to be sporadic because we still dont know what were dealing with honestly its not about looking for how many people get fleshed out of the market as much as we need to see signs this is a line in the sand and we dont yet have a line in the sand. I dont know how you can say 1,000 plus will draw a line in the sand we still dont know. Scott minerd called in to closing bell. He thought markets could fall another 15 to 20 stocks if we see more headlines is that extreme or do you agree . That sounds extreme to me actually i mean, of course if we have a terrible outbreak here and hundreds of thousands of cases, which i dont im not saying that, i do think a 1,000 point flush would bring people into the markets. I think this would bottom before the end of the coronavirus pandemic right i think where minerd is coming from, the idea we kick off the valuations there are really strong there are really expensive if you pull some of those off the table and get us back to more reasonable valuations you could have a big drop before youre there lets bring another voice into the conversation and talk about the impact on your money and investments. Joining us is black stones chief investment strategist and has been on the mark about this probably, unfortunately, with all due respect, on that is now the time for our viewers to buy stock no, i think well see more downside volatility, unfortunately. I think whats happening here is investors are struggling with risk versus uncertainty, and theyre two very different animals. If you think about the idea of pricing and risk, when you have risk, you have some known outcomes and can assign probabilities to those outcomes and start discounting them the coronavirus was known to the market as early as, like, late december and yet markets perform pretty well because they viewed it as a risk they could estimate probabilities of china gdp, of supply chains, et cetera, but that all changed last week when the Coronavirus Spread to 28 or 29 Different Countries now investors are dealing with how do we price in uncertainty we dont know what the range of outcomes are at this point so we cant even begin to discount them in no way am i trying to say toot the horn or whatever, but three weeks i went on the exchange and did some math, these are the early days, oil demand could fall 2 Million Barrels a day. I got nasty grams. Youre a fearmongerer, et cetera that seems to be the base case im not saying that i knew more than anybody else, just aggregating information. My point is what we thought and what we know then and now is very different couldnt that be the same thing now versus three weeks from now . Yeah, i think it is a fair point and, again, at this point i would hesitate to endorse any estimates on the impact this might have on gdp growth or on companies. My own view is that were going to face a series of mini rolling recessions especially among those countries most trade exposed, the countries your singapores, hong kong, japan and even in europe or germany. Their net trade of gdp about 90 . Growth was already weak. I think well see many rolling recessions they are transitory. Global health emergencies, the history on these is clear, that they are transitory. It might take several more quarters from here but it will go past. From a company perspective, i think earnings estimates are still going to have to come down pretty substantially the market the street started the year looking for 10 eps growth the year 2020 now we might be down to about 7 eps growth on the year i think that will have to come way down and two to three quarters were not going to be able to handicap this. I do think there will be a period we are going to want to go and deploy capital. I just think were going to see more volatility until then you were talking about a move to the down side in the fall a lot of usstarting to come to fruition the coronavirus are using that as an excuse a lot of the reasons were lower are far more, i think, far reaching than just this. So is this just the final straw and the fundamentals were sort of in place for this move all along . I think thats a really good point. In september the fed reversed position with respect to its Balance Sheet and started expanding in ways we hadnt seen in a long time with that you had a massive move up of risk asset in equities among disruptors up 50 from midseptember until last week. You saw it across the range of fixed income where a lot of countries started moving back, and what you had was this feedback loop that i had never seen before in my career where good news was good for the markets, i. E. Trade resolution, a phase one trade deal, news of brex brexit bad news was better, the u. S. Taking out general soleimani and the spike in prices. The coronavirus drove markets higher up until last friday in 35 trading days 18 new highs. The good news was good, the bad news was better. Herbert stein is famous for saying that which cannot go on forever wont. I think thats an example of what were seeing. I dont know if the coronavirus will be enough to break the feedback loop because were going to see Central Banks flooding the markets with liquidity. The fed will have to cut twice, maybe three times. We could be back in the feedback loop but its the story of liquidity. Thats been the main driver since the fall one of the points you made was this idea once it flushes itself out, we should see a recovery from this and if you look at studies of global pandemics, and we dont have that many to study, but st. Louis did a study of the spanish flu and said after about six months of pain you saw this boost in productivity across the economy and the Economic Impacts are actually quite positive 12 months and 18 months out the problem we have these massive valuations to guys point i think a lot of the underlying fragility of the economy is really starting to flush itself out how do you play that knowing the economy might suffer for six months and then get better, but we are at such valuations . You raise a great point and the idea and the way ive thought about this, the trend in a Global Health emergency are the trends coming out of it. Our sympathy with everybody impacted here. From an Economic Perspective the trends going in will be trends coming out the big question, what are the trends were looking at six months or a year or two from now . Were looking at a Global Economy suffering from diminishing returns of debt. The last decade produced record high debt, record low Interest Rates and ever increasing multiples. I dont know that we repeat that i think it will be a lower return environment it will require higher conviction investing joe zidle, blackstone, thank you very much. Following up on that, when this is over we dont know when that is, but lets hope sooner than later do stocks just resume their upward momentum they were on for three years, four years before this . So we have to balance the two portions we talked about which is that you had an immature and fragile recovery that was something we were questioning recession, six to nine months ago. If i think about the market right now, yes we want certainty. Joe talked about the lack thereof and something the markets cant handicap i do think were still going to have the fed throwing everything they can there will be talk with fiscal and will get fiscal around the world and youregoing to get t a place where valuations do matter and in a zero rate environment are going to be more compelling faster than they might have been otherwise. Back to the market, you want to look at where we have taken out the last run, it takes you back to the 200 day 3035 on the s p or if you want to get back to what was the highs of january 28 or where we got to in the fall before we took off on that run around 2900 on the s p and then i think you have people able to make changes on valuation and where the market has taken off that last round. I just think spot on the fed. They were maybe out of the game when the market was doing better its only, what, 12 days ago maybe, and even with economic numbers being okay, they were out of the market. Theyre not anymore. Without and, by one quick comment on this. I know we have to get to meg we had the democratic debate last night were not going to get political. But when people are throwing around numbers you have to dive in is there any part of this which is related to the fact there are people on stage that are very possibly going to be the next president or at least in the running that are suggesting we do away with Certain Industries and throw Oil Executives in jail weve mentioned Bernie Sanders by name so we can say it we should send fossil fuel companies to jail. When he was doing very well, people took that as a positive because theyre like donald trump is going to annihilate him in the general election. Now i think people are saying, you know what, maybe thats not a complete certainty maybe there is some of the Bernie Sanders factor. All right, guys we do have the market flash on gilead gilead says its starting two latestage experimental trial for covid19 they expect data by april and a new trial run by the u. S. Government they will run the trials in 1,000 patients mainly in asia and other countries. This will give them information how well this drug words this is the one drug the w. H. O. Said had the most promise for treating this disease up 3. 6 for gilead after hours. Meg, thank you very much. Big news for gilead. Maybe big news for people all over the world suffering from the coronavirus or are afraid of it a lot more on the coronavirus and the impact on your money and the markets catch our cnbc special report markets in turmoil a special twohour edition hosted by Tyler Mathisen, jim cramer, the entire gang its one you cannot fo tafrdo miss especially with the markets the last couple of days. Were going to be back right after this with some homemade biscuits oh, thats so nice and a little tip, geico could help you save on homeowners insurance. Hmm cookies uhh, biscuits. Mmmm, is there a little nutmeg in there . Oh its my mums secret recipe. You can tell me. Its a secret. Is it cinnamon . Its my mums secret recipe. Call geico and see how easy saving on homeowners and condo insurance can be. Ill come back for the plate. Saving on homeowners and condo insurance can be. I am totally blind. And non24 can throw my days and nights out of sync, keeping me from the things i love to do. Talk to your doctor, and call 8442142424. [ fastpaced drumming ] Bookings Holding and marriott reporting numbers after the bell stocks going in Different Directions lets find out what they said. Seema . Booking guidance was worst than expected, revenue falling 3 to 7 in the First Quarter, much of that due to an increase in cancellations in asia, pressure to its average daily rates. And with the coronavirus reaching italy the company is accounting for the pos