Transcripts For CNBC Worldwide Exchange 20240713

Hour, jp morgan private banks and Asset Management ceo and cnbc contributor we begin with breaking news. Nearly 90 of the s p 500 is in correction territory what is called a move of 10 or lower from recent 52week highs. All the major averages look to push deeper. If these futures moves hold, the dow would be down by 620 points at this stage. The massive move of volatility we are currently just off our worse levels so far. Checking treasuries. The 10year note long bond currently near the 10year note yield 1. 91 . 30year treasury long bonds, 1. 69 . Twoyear note yells below 1 as well we are seeing red across the world as they enter their correction mode. Not a spec of green to be seen global Team Coverage this morning. Matt taylor in singapore and Steve Sedgwick in london matt, well begin with you in asia the route continued there as well absolutely, dom a rough day. Many markets entering correction territory. Falls across the region in the order of 2 to 4 as those virus cases outside of China Australia market falling to correction territory new zealand down about 1. 5 . That country reporting its first coronavirus case we saw the kiwi dollar plunge. South korean market down 3. 3 . This week alone down 8 . Japan down 9. 6 . We are in correction when it comes to the nikkei off 805 points this market at its lowest level since september. The yen, 108 now the money flowing into the safety we are seeing that not helping out the market china, the underperformer. Down 3. 7 . When you look at the week, the china market is holding up okay. Hong kong in correction territory. 2. 4 down 12 off its peek. This week, down around 4 . The latest on the european action turning to Steve Sedgwick in london now focus on what is happening with germany. The area in the country in germany now with concern about contagious from various towns with confirmed cases there is an intellectual debate going on about is the market oversold or should we stand aside. Those people we think were oversold are not getting into the market down around 11 . The dax even worse down 13 bers. Ive been speaking to a lot of companies this week. The market is ignoring and selling down i spoke to the worlds biggest market today no sign of coronavirus in their Trading Operations yet yet that stock getting sold down aggressively defensive sectors. Food and beverage as we know on both sides has been seen as defensive sector they are looking at areas where there could be further infection. The best performing sector is down 3 . Household goods are down resource sectors are down 5 bare market we are seeing travel and leisure are down 20 for the week live on european trade. The global selloff linked to growing fears around the spread of the coronavirus more than 83,000 people in 47 countries are more affected. We have the latest on that front. Good morning thats right. More than a dozen countries reporting their first confirmed cases of Coronavirus World Health Organization officials for the first time are saying the outbreak has indeed, quote, pandemic potential. 40 of the worlds top Financial Officers say the outbreak has caused a, quote, major decrease in demand from china creating supply and or demand disruptions in their business. Moodies say, investors should brace for a global and u. S. Recession in the first half of this year. British airways owner out with earnings this year but it does not know by how Much Airlines have been hit hard since the start of this outbreak shares of iag down more than 7 . Thank you for the latest on the coronavirus. Joining me this morning, our guests, lets start first of all, ill start with you, jenny. What exactly happened yesterday. We were down big and it seemed as though dip buyers came in it just accelerated into the closing bell it was interesting, i think steve who was on used an important word, which is sellings indiscrime nant in 2018, we saw emotional selling, the market just imploded whether it becomes indiscrimate, you know it doesnt really have to do about coronavirus. Like he said about the brick making industry, there is no relation the company put out a really good report on the mortality rate it is bad, sad it is a loss of human life but it is not that bad jp morgan and others like citigroup saying linked directly it may be that the brick makers are not directly impacted but feeling the global we have revised our estimates from 180 down to 174 but still expecting to hit a 3,400 mark by next year. When you say liquidity, does that mean or imply we talk about the sense of the fed and Central Banks but also trading and how much people are transacting and how much it can move a market to have less people participate thats right. Im talking about trading liquidity here when we look at the number of contracts on offer at any given time yesterday, we hit the Second Lowest levels since january 2007 you talk about the lack of liquidity and the lack of systematic selling as the vix spiked, that means funds will have to delever as well you couple that with lower earnings, makes for a pretty bad market day the thing im concerned about in the near future, we are brotheren below 3,000, which is a longterm level. We could see another way of selling. Going through the market here. Jenny, you run an Asset Management firm. We talk about dmodity advisors they hit certain levels. Does it worry you now that Market Dynamic is driven so much by levels being hit and causing buying or selling . Does it mean that investors have to then not Pay Attention or Pay Attention more this is where you look at trader versus investor short term versus long term. If you are long term, you dont need to worry. I know it sounds crazy and callus if you have a strategy put in place years ago and that is set up to help someone meet their needs it has an tis pated these kind of events because they just happen you dont need to worry. That buy sell decision is only at the margin. It is just with new cash well have more of this conversation much on the Global Market route and the melt down. Moves you should be making as stocks fall deeper and revealing jp morgans 2020 megatrends as we head to break, some of the biggest dow losers in the premarket boeing down 4 , ldgoman sachs down 4 . Cisco systems down we are back after this mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. The unparalleled landscape of park city, or the famed peaks of whistler, youve faced the hassle of lugging your gear through the airport. With ship skis, youre just a few clicks away from having your skis, snowboard and luggage shipped from your doorstep to your destination. With unrivaled pricing, real time tracking ship skis delivers, hassle free. Ship ahead and go catch those first tracks on fresh snow. Ship skis. Your skis. Delivered. As hard as that is to buy in the past there comes a time to not only buy the dip but to buy the markets that have lacked, just not at these valuations yet. I dont think this is a time in general based on fundamentals that one should have morris being than usual those two voices you just heard, the first one from allianz, and howard marks at Oak Tree Capital highlighting some of our continuing coverage of the Global Market melt down here on cnbc over the past week. Still with me on set here, from jp morgan, also Asset Management ceo and cnbc contributor lets talk about those particular sound bites they both sound very cautious like, hey, this is not the time to be jumping in here. Is that the feeling or sentiment for investing right now . There is both some great fundamental and technical damage the two voices we heard are expressing that concern. We dont know how much, how fast, how negative this will be for commodities. We dont know if this is a onemonth or twomonth event this is maerkt you want to stand back and not get involved. You have to couple this and we are now seeing extremely oversold levels. You look at the vix, it spikes 2. 39 we are starting to get attractive bounceback levels. They sold a lot. There could be another wave of selling. We came into late january, february with positioning for ctas and hedge funds we should note that we dont often bring up the vix but it pays right now to look at it because it did reach the highest level. Using the word capitulation. I was wrong yesterday when the market was down 850. I did see real time really capitulating conversations they were idea call to the conversations i had in december 2018 howard mark said you should not take morris being than usual more than usual. Lets say you already have 85 of equities would that be fine and saying that is not reality for most investors, like retired people it has structure they rely on. Think about each individual situation like this. By the way, i dont think investors need to stand back there are things to do here. Position for a shortterm snap back we have this great technical selling. If you get a fundamental catalyst if you get better communication from Central Banks, by the way, when you look at the markets like this, what is it . Saying, hey, this is the time you want to put things to work im there i have stocks down 25 in a week that make no sense for me, thats pure capitulation the other thing on volatility. I have this Bumper Sticker in my Office Nobody likes that says, i like volatility. There is general stuff to do check out the only four s p 500 stocks still positive for the week clorox, gilead a those tied directly to the coronavirus. Announcer 3,225 thats todays big number the amount of points the dow has lost so far this week. Sales tax, different pos systems in all seven countries. And online sales . Thats a whole other system. And different regulations. Therererealal eate e crits,s,. And we have no way to integrate all that . No. But bdo does. Peopopleho k kno knonow o. A lot of folks ask me why their dishwasher doesnt get everything clean. I tell them, it may be your detergent. Thats why more dishwasher brands recommend cascade platinum. With the soaking, scrubbing and rinsing built right in. For sparklingclean dishes, the first time. Cascade platinum. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Lets get a check on some of the stocks on the move this morning. Beyond meat blowing past estimates up 212 but reported a lost one quarter after posting its profit citing temporary disruptions in places like europe and asia. The executive chairman announcing hes stepping down from that role to be nonexecutive chairman. Shares off 15 premarket. Vm wear Fourth Quarter market said higher sales and marketing weighed on earnings. Off 7 premarket. And Amc Entertainment reporting a Fourth Quarter loss, revenues coming in better than expected slashing the Quarterly Dividend in the stock buy back. Shares to the upside another break break alert. Global k pop superstars bts are canceling several shows in south korea. Saying they had to consider the health and safety of the group, fans and concert goers plus, the dow taking another ldide this morning more coming up after this commercial break dont just plan to retire. Plan to live. An annuity helps cover your essential monthly expenses, so youre free to live the life you want. Find out how an annuity can give you Lifetime Income at protectedincome. Org welcome back to Worldwide Exchange. We have megalosses for the socalled maga stocks. Been an microsoft, apple, alphabet, google, stocks continue to slide. All day long. I wake up every morning to see how much weight ive lost and how much better i look. Myww join for free and get three months free want to freshen your home without using heavy, overwhelming scents . Try febreze one; it eliminates odors with no heavy perfumes, so you can feel good about using it in your home. For a light, naturalsmelling freshness, try febreze one. Every time it takes care of something for us, we celebrate. How often does that. Got it. Servicenow the smarter way to workflow. A global stock route taking investors on a very wild ride falling deeper into socalled correction territory wall street coming off the sharpest loss yesterday. It is friday, february 28, 2020. The second half of Worldwide Exchange begins now welcome back to the show im dominic chu. With me on set jp morgan private banks anastasia and cnbc contributor wall street is coming off its worse singleday point loss in history. Down nearly 1,200 points on the day. All the major averages look to push deeper into that corrections territory. The dow indicated lower by 400 points thats about a 350point improvement from where we were about half an hour ago s p down about 50 points implied open the treasury seeing moves toward record lows for the long bond. That 10year note yield below 2. 1 30 year long pond 1. 795. And the twoyear below 1 there. We are seeing red around the world as well. Major averages in asia are entering the socalled correction modes all hit equally hard in trading. Across the screen there with european trading as well we have global Team Coverage live in singapore. Well begin with you starting with the china markets, the underperformer. When you look at this weak, the china markets have been the best performers shanghai down 5 hong kong down 2. 4 . Down about 12 off its recent highs. The market down 3. 67 or more than 800 points. Down by 9. 6 the biggest drop the market at the lowest level since september last year. Money going into the japanese yen at the 108 handle. The topix off as well. In asia, red from every market, new zealand, singapore, australia in connection territory. We heard the first coronavirus case reported in new zealand sending the kiwi down. Heading to willem marx in london dom, you mentioned now some of the u. S. Futures improving. It has been a similar case in europe ftse 100 was down more than 5 down 3. 3 . Stocks like iag reporting there. Expecting to see some adverse impact in germany, the dax down 4 . You have a northern town, 1,000 people under quarantine after they found 14 cases there last night. In france, the number confirmed almost doubling overnight, you see the cac there. And in italy where you have multiple towns under quarantine, 3 lower you see number of airlines reducing flights to italy. That will have a massive impact there. Notable there italian markets are outperforming some other developed ones back home, futures continue to signal a lower open. Look at this, it took only six sessions for the s p to move all the way from record highs into socalled correction mode. Thats the fastest slide from a record high to correction in the history of the markets for more on what this means, we are back with anestasia and jenni jenning harrington how do you navigate these markets . What is the strategy now short term, i think we are positioned in the Options Market i think there is great opportunities to be adding on this pull back opportunities for a stand out. These are the trends that will change and shape the world in the next three to five years not affected by disruption three in particular we are talking about. Digital transportation, health care and sustainability. When you think about the sectors tied to that, it would not only be tech. I would look to Health Care Trading at a 20 discount. And the sustainability with electric vehicles that has gotten pretty tough in china china is recovering there. How do you express those views. Lets say they do end up playing out. There is great opportunities we identify with single stocks we can do this in a variety of different combinations one of the bigger trends is artificial intelligence. One thing that really makes ai more valuable, think about the role now in mitigating and damaging Something Like coronavirus. E commerce to using ai to decode the virus and look for coors we look at 5g and figure out who are the beneficiaries depending where we are in this life cycle. It is interesting you bring up those trends, there are etfs that identify those things ibm, we know they have initiatives. Watson health are big ones providing that service free around the world one of a number of companies to use their resources. What types of companies do you look at with regard to how you can actually overcome some of these fears and come out on the other end better off for it. I feel like she just served this up for me on a platter. Thanks so much it is really cool, im able to as a Portfolio Manager buy the individual companies that benefit from this. You can buy Companies Like at t that is down 7 in the last five days and has an extraordinary safe dividend yield and hinges on 5g. If people do go home, you know what they are going to do . Binge watch . You can buy ibm, down 12 . It has a 5 dividend yield i can even get into the green stuff if we want to go to sustain ability. What goes on your Shopping List with he know the themes at play. What do you say, hey, if thing gets to this level, im in whats on my, i dont own already are things potentially like ups and 3 m that are just g getting blugonned. Things on the buy list now are companies i own called hand none armstrong that produces clean energy projects. It is down 8 . It has a 4 dividend yield centurylink that owns 500,000s of fiber you can buy that people will be home, on line, doing things i would point out that lets not overlook the chinese stocks. That is the place where cases are dropping and the economy is likely to rebound the most there is a number of china companies. The beauty about china is it is a more dig tiesed economy than europe or u. S. It is trading at a discount to u. S. Tech. I would have that on a buy list. People in china arent sitting home twiddling their thumbs, there on line. Jim cramer has been active on social media this is what he has been saying, he tweeted when sellers sell everything and do well, you can presume they are making a sweeping false judgement about companies in the asset class the thing about baby bath water, i dont know if it is appropriate . What markets are assuming now is that this is going to last a while. This is why when you look at the 10year, we can extrapolate the growth rate from that. It is looking at. 5 that is not going to be the case if coronavirus isnt contained to your point, this is a great opportunity where we bake in this massive fear, it is a great opportunity to execute the Shopping List. Anestasia, jenny, dont go anywhere a look at one often ignore the part of the market well tell you what that is. As we head to break, a look at the worst performing s p 500 stocks today stocks today corning, and non24 can throw my days and nights out of sync, interesting what the gold change is there back after this. Talk to your doctor, and call 8442142424. The Global Market selloff is being fuelled in part by fears of the coronavirus Frank Holland is here with the latest details good morning saudi arabia is pushing for deeper production cuts as the coronavirus has crippled demand. The kingdom is asking producers to agree to a cut of 1 Million Barrels a day. Kuwait, United Arab Emirates and russia would cover the rest. Tokyo disney will limit parks. Canceli canceling or postponing events the first time being closed since earthquake and tsunami hit in 2011. Hyundai factory shuts down in south korea after one worker tested positive. Not giving a time line to reopen shares falling 5 today. Back to you. Investors are moving away from highyield debt riskier assets and junk bonds suffering the worst outflows in more than a year hyg, black rocks high yield etf amidst the market volatility joining me now, Portfolio Manager, we are not paying enough attention to this in my mind the idea that risk is being played out in high yield as well over the last month, that fund has taken a move to the down side as you can expect what is driving a lot of that action first of course is the virus risk in the recent days, it is Liquidity Risk we are probably in a liquidity recession right now. Explain that to us. Anastasia brought that up as well thats right, you have pressure in the etf space but the responds are not as liquid it is creating an air pocket Investment Grade versus high yield return wise. If you look over the last 10 years, high yield has done pretty well. Getting more even here since 2014 since 2018, september, it has been Investment Grade. That is the stand outin high yield. Explain that to us why are people so much more enamored treasuries are the factor here bond yields at at record lows and why they have continued to generate the returns so there has been a divergence developing where Investment Grade debt has been performing so much better than junk rated debt. Double b being junk, triple b being more Investment Grade. Is this enough to signal a bad time ahead given Investment Grade. Clearly the risks are growing ahead this week attractive releva relative to the double b compared to the price of triple bs Investment Grade Corporate Bonds might start to act like highyield bonds Going Forward now you you are going to deal with the spread. Thank you for joining us with your thoughts on the high yield in Investment Grade markets. When we come back, well check out the action since the dow began selling last thursday. Total point losses 3,979 points in total watch or listen to us live or on a b a on the cnbcpp wereack after this when you consider the skacae of the epidemic at this point, it is hard to believe we are not going to start running into major supply chain interruptions and start seeing more pressure on earnings and Free Cash Flow if we cant get this thing contained soon, that is probably sometime this week, it is probably going to come to america. Once it comes to america, we have an even more severe problem on our hands in terms of earnings and employment. We dont know how these double and triple etfs will work and how the shut down with safety and the shut down to the United States with Global Supply chains thats good. It creates uncertainty that creates opportunities i just say, be patient those two voices you heard were comments all speaking earlier this week during market turmoil. Joining us from meet life investment management. Anastasia and jenny are still with us breaking down all of the Market Action. Lets bring you into the conversation, drew this is very much about the Global Economy will it slow down enough to warrant the kind of moves weve seen in the marketplace . I dont think so. The Global Market is slowing and have to be taking down the growth forecast. Weve seen a heck of a lot selling. Relative to i forget who you had on earlier, they were noting that the selling was completely random when people are thinking about liquidity, maybe thats a sign things have gone too far it has been brought up today. How much do you think the Market Action has been brought by liquidity as opposed to issues there is a decent chance that some of what we are seeing is that equities are liquid it might not be the asset you want to get rid of you take some time to rotate out. Given the liquidity at the time. Do these accurately reflect in your mind what is going on with the ripple effects or is it too central bank intervened . Our view is that a u. S. Recession was going to be coming in 2021. Maybe you are pulling that forward a little bit because of the impact to the virus. I think it is a little too early to say that this is a done deal. Lets bring in jenny and anastasia, as well one of the reasons why many banks, including anastasias are looking at lower terms has to do with Interest Rates. With low rates moving the way they are and rebounding a bit, how much do rates factor to the thought process. I would say they weigh in a positive way as someone who looks at dividend income, suddenly bonds are way less attractive. If im constructing a portfolio, what are they going to get 1 . Suddenly, 5 on Something Else to me looks attractive. The trade ideas have to be flowing for you. Thats right. Im looking for two things here. Youve noticed curve has started to stephen you think flight to safety, the curve flattens the reason the curve starts to move higher, youve got expectations for the Central Banks to make cuts now on the one hand, if you have this thing for those plausible, the fed is likely to cut rates if this is contained in a month or so, you could have a yield curve stephen out. Well reprice the probabilities so the long end of the curve will go higher this is a little too late to be adding protection with the volatility there if you look at the credit markets, there is a wider protection if you look at that chart. Yes, that swap spread has widened. It is not where it was 2015, 2016 those have been behaved too well they could go wider. One of the things we didnt point out is that the spreads were more. Does it worry me on that front it doesnt worry me at all. Can i ask drew a question . For sure. Assuming the consumers are going to shrink. If people are sitting home, you think of the bricks and mortar, do you think there could be a positive surprise that actually consumers continue to spend and super low Interest Rates mean people are shopping for cars from home. Do you think that is a Silver Lining i think what you you are seeing is the concern that will stop working the reason we dont think the fed will move yet is because if people are afraid for their lives, they are not going to go out shopping they are not going to stay at home and shop. They are going to bunker down and buy only what they need to buy because they are afraid they cant get to work. I think thats what we are worried about. We havent seen it yet factories had shut down. Im out of work and i dont have the cash flow we need. To our panel, guest hosts this hour. Anastasia and Jenny Herrington we appreciate all of those thoughts that does it for Worldwide Exchange this morning squawk box picks that up and it begins right now. Truly a history making week on wall street not over yet the february selloff intensifying with the biggest oneday point drop ever. The total loss of the week down. Helping you navigate this selloff with insight you can only find here on cnbc friday, february 28. The special edition of squawk box begins right now. Good morning im becky quick along with joe kernen and andrew ross sorkin. Lets get to the markets because the dow just had its biggest point drop in history falling 1,191 points the s p 500 had its worse day since august 2011. 10 drop from the highs in just about six days showing you where things