Steve leishman alongside us helping us make sense of everything going on what the fed is thinking about all of this. The worst week for stocks since the financial crisis the vix surging, bond yields falling the even new lows. Stephanie link, a minute ago the nasdaq was positive. It went from positive to down 1. 5 in about ten minutes, if that. I know. What does that tell you about sort of where we are is that how a bottoming process happens . Doong we are close i hope so i think people are very confused obviously. Right . It is not surprising that the market went down because of this, because the virus has gotten so expanded the surprise has been the speed of the decline to lose 6 trillion in Market Company in six days, thats remarkable i dont know when we are going to bottom. But i am looking at an rsi on the s p at 20. And vix, jon you can talk more about that but a vix at 47, to me it seems a bit extreme. Then i look at what happened in the shanghai index it fell 14 the beginning of the year and then it bounced on february 3rd it is 14 and 2 off its highs that could happen to us. I dont know what the catalyst would be maybe it is a Global Central Bank coordinated evident thats the rumor, i think thats why we are bouncing around a bit today. As you know, i have basketball slowly big i have been wrong. But when i have coke going from 60 to 50 when i have nike going from 104 to 85, twitter from 41 to 38 have you been adding. All three of those. Today. Yesterday. In the same wheel house of what we are going through. Yeah. Do you want to touch doc on this vix. Sure. I asked your brother the other day what was the number to suggest maximum pain i asked if it was 50. Right into we got to 49 as usual. He said 38. But you needed to see something more elevated than where we were. You did. What does it tell you that we hit 49 yeah, 49, 48, or Something Like that so 49. 50, lets call it. That was a huge spike. It happened in the premarket we got to 47 during the regular session as you say we got to 49, 50, or thereabouts. And one thing that really stood out to us, scott, both in terms of the vix and in terms of, to stephanies point a lot of the stocks that she talked about as well as the indexes we had just been seeing selling and volumes accelerating on any rally. People were selling rallies. Now, actually, on dips, we are seeing likewise volume surgeon our excusers we are seeing volume surge like for instance the qqq is this morning. Which is the nasdaq. Which went positive. Right. And the semis are acting like that today today. Surged on volume. Five, six times normal volume. Popped that things up from the lows of the day which was around 199 for the qqqs, drove it all the way up to about 207, and then once again volume surged and this time it was selling pressure so we had seen the selling pressure for six Straight Days every rally was sold right no now, today is the first time after that big pop in the vix when we are seeing buying or volumes increase also on the dip, not just up at the top. Thats a good sign that we are finally starting to get i am not saying it is over, scott. Sure. But to your point and petes point we need to get to that cathartic sort of flush. A vix at 49. 50 certainly feels a lot closer why dont we go to this fed notion that steph mentioned, the market maybe you used the word hoping is the best word to use for the coordinated statement of some find waush is talking, bullard is making comments. The market is looking for a 100 move by march. What do you think is going to happen this weekend, if anything i think it is possible something is going to happen my suspicion here is that the Federal Reserve is looking for some creative responses to this. I think they my best guess is they have internalized this idea that the rate cut has a very limited effect in this environment. And so my guess is that they are thinking about alternative responses here that might mirror some of the alternative responses from the Global Financial crisis for example. When there is a hurricane, scott, the Federal Reserve is there is an enter agency that goes out where they urge banks to give rely to borrowers in the case of difficulty of repaying i think the fed can make a statement that it is ready to provide liquidity, and ready to cut rates. But before i do that, this is now on the screen here what has been coming out of the fed has been the opposite of this they have very much held the line, and really, bullard sort of ups the ante touchdown when he says rate cuts are a possibility if a Global Pandemic actually develops. And they move to the right evans also said it is premature. There is this comment from bullard which i think the market sold off a little bit before he decided to sell off on other thing that were out there. Look at those three statements then lets go to the probability starts it is not a hope it is definitive, we are sure it is going to happen, 100 on a rate cut with a 53 probability of a 50 basis point. There were headlines before we came on from Goldman Sachss expectations they see the fed cutting 75 basis points in the first half. Okay. Four rate cuts built into the structure. All sides and what you just had on the wall there. The reason i asked before the show started what time futures open on sunday which is i think if we open to the downside in a serious way 6 00 on sunday night, i think either because of that, or even if thats not the case you could have some statement from Global Central Banks and certainly an interagency statement. I think it is too long now for the fed leadership not just evans, bullard to have been quiet. My guess is powell is sitting there working with some very good people to have on the fed trying to design some creative responses. Is there a chance that they would want powell would want to do something, make some kind of a statement during market hours today . Is it more likely to wait, digest things a little bit on the weekend, see how futures look, and then do something . I dont think so, skochltcott i tell you, it was walsh this morning who he has been there in the crisis before he said they want to get to the weekend. They want to get to the weekend. And they would like to make the decision in the absence of this strong downdraft out there although, you remember and you guys are old enough to be there, maybe not everybody on my left here, the women of course but when all it took was greenspan in 1987 to say we are there to provide liquidity. Thats it in a nutshell. That was a big deal he didnt have to do anything. I couldnt agree more you need a plan of action, not action so far there has been a vacuum of information i dont care if thats monetary policy, fiscal policy. I actually think there is some risk of action too early when it is not supported by the Economic Data i just think if you start to treat a patient thats not critically sick yet just because the markets are pressuring you into doing that. Everybody is saying the fed is behind the surf. The patient may be totally happy with an ice cream cone. Correct. Rather than the actual medication. Exactly right. Makes you feel better. Exactly right i think there is a number of catalyzers one is progression in containment. You get some progression in contain tent there could be a valuation catalyzer here typically, markets are over sold i talked to Lee Cooperman before coming on the show today he spent a lot of time on the structure of the market. This is not fundamentally based. It is headline based it is the elimination of the uptick rule and you have got the downward momentum being sold i think thats a really bad thing. When you have fear gripping the market like we have today. Any time somebody is fearful, public speaking anything like that, they are not going to make decisions rationally i think we have to make rational decisions right now is this lets try to hag some rational discussions. Can i make a simple point, which is important to the fed . Which is the market has cleared to the downside. There has not been disruption in the market, which is the kind of thing that would bring the fed in for sure. Uhhuh. But as we have gone down, nobody is happy that it has gone down but you have to be at least somewhat whats the right word becalmed the idea that it has gone down in an orderly way without disruns i am sorry to interrupt i take total issue with the fact this has been orderly. Three to five days, i am sitting on the desk, watching the screens. The only word you could use i would argue is crash whether it is justified or warranted or not aside the market is effectively crashing i would take issue with characterizati characterization. It is different than you cannot buy or sell a security. Thats what i am talking about that was when you had real plaque in the arteries of the financial step and the fed had to step in and provide liquidity to those markets i am not saying it is not serious. I am just saying in the way it has happened it is in a way that does not engender fear so far of the market. When the parent was very sick right, when the patient was very sick wooshs definite essentially a healthy patient. In 08 when we saw that same type of price action i think it was justified. You said whether justified or not, dan i agree. We are having major price moves completely fear based. I think if we have a catalyzer it is going to be a totally different situation than 08 you dont have the same forced selling that you do in 08, which i think is your point, steve. Into what i want to know and what people are trying to figure out, the biggest of the big investors i have been speaking to, to the smallest of the small, who i am thinking about, whether you should feel comfortable enough yet to buy, shannon, the dip, so to speak, right . Goldman sachs says today it is too early to add risk tactically there is a lot of commentary out. Barclay says it is too early Morgan Stanley says we are sellers of rallies which seems to be some of the action we have seen in the market as i said when we started that real rip in the nasdaq to get it positive was sold immediately i mean it barely lasted longer than i have been speaking now. What do you think we should be thinking about, telling people what are you thinking yourself i think you have to consider why we are selling and why the uncertainty is different than, say, the financial crisis or what we are facing now the uncertainty is that we have something that we cannot anchor to a particular situation. And so that creates a lot it creates a lot of difficulty when you are thinking about your overall Asset Allocation and you are thinking about whether it is time to add risk or decrease your risk to the overall portfolio. If your expectation was is that we were going to continue to garner the gains that we had last year into this year, then it is difficult to add here. If your expectation was that we were going to have muted Global Growth and that we potentially have strength in the back half of the year based on a reexcelation of manufacturing then there is still an opportunity here to add to stocks you think about the alternative. If you didnt like the ten year at 155 you certainly dont like it at 117. And you are not earning any money. If you think about it in just a short whether it is a shortterm perspective or a longer term perspective, if you need to gain if you need to have money thats garnered from your portfolio you are not getting it in bonds. For me, i feel comfortable adding to stocks here. I think that based on our expectations for the next five to ten years we believe that stocks will continue to move higher our view is that this is probably overstated. I went on you know, i went on a show last week and said that i thought that a fed cut would be an overreaction. I certainly think two or three will be an overreaction. I believe you can add to risk thoughtfully thats how we have done it you really need to think about where you are adding. What does thoughtfully mean, to where, where have you added we have taken our more cyclical names, we realized the rotation to value we were anticipating would be later in the year if not happen at all. We have taken the cyclical names and concentrated our positions in Higher Quality, good balance sheet, higher dividend paying names. Stephanie was talking about some of the names that pulled back. They are Great Companies that are going to be insulated that that are going to grow their business outside of gdp that you can add to your portfolio. With good Balance Sheets and dividends that are strong and safe. Sustainable. Not tied to a commodity you cant look to the Energy Stocks for yield although i own a few of them because they have gotten just hammered i think if you are looking at Higher Quality companies, the blue chip names that are starting to yield 3. 5, 4 it is almost a no brainer to me to b picking way at those kinds of names. Cramers perspective, too. I agree. Some of these things he didnt use the words no brainer but the message was almost the same that some stocks have gotten decimated to the point that if you have some cash to put to work that you have got to put some to work i am paraphrasing what he said i think the spirit of what he was saying is that easy for me to say. It is not just coke and p and g though both are more attractive it is like a cisco, like a caterpillar. It is some of the cyclicals i got it, i understand why you are reducing exposure there, but some of the stocks not only are they hit on valuation but they are also yielding 3. 5, 4 . Thats attractive. The goldmans dont buy the dip, dont add to risk from another firm there is another side this that says we are going to get a v shaped bounce. Tom lees word today. Doesnt say where the bottom is but they believe a v shaped bounce is coming. I think we can all pontificate what we think might happen and nobody knows exactly what is going to happen. But i think if you have a long term view and as shannon was saying if you look at where bonds are today, for people with a diversified allocation what is going to work over the next 1 months, stocks versus bonds, if you are putting a dollar to work today . Our view is it is likely to be stocks that outperform bonds over that period assuming that this overall panic sub sides i dont know if it is really going to be fed action that causes it. I think it is going to be probably an announce men from the World Health Organization calling this officially a pandemic and you get a max fear moment and maybe thats the moment where the line in the sand is drawn and we get more constructive buying. Has anybody come on your show and said over the next 12 months we think bonds will outperform stocks it came out derogatorily but i didnt mean it that way. It just hasnt we were talking about orderly, disorderly. Other thing worry watching closely to see if things are spreading outside of the norm. High yield is a place that people are watching. I know you are you have been talking about it already on the air bank of america is certainly thinking about it today. You have had the Third Largest outflows ever this week out of high yield they say the risk of a credit event is, in their words, surging. Maybe thats overdoing it a little bit yeah. I dont know. But there is activity taking place in high yield that is making some at least nervous your eye is on the right ball there. Thats the thing that changes this dynamic here. This is one of the situation where is the tide is rapidly going oumt we are going see for lack of a better metaphor who has a swimsuit on and who doesnt. We know we have been living in a very low rate environment and it is something that the market has learned to rely upon in such a way that perhaps some of the lending criteria out there was not as strong as it might have been and perhaps banks begin to be concerned about these things i dont want to be the one to start this bing before it is out there but the fact that bank of america is looking at it. It is out there. The fact we are thinking about it and i have to just question the panel a little bit on this, scott, in that underlying all the talk is that somehow this all goes back to normal. I am trying to think of a person who is 75 years old that has been running a portfolio like a 35yearold because they have been allowed to for the lack of risk thats been out there they look at this now, and they say wait a second. A 10 in three days means i really cannot get out of the way of this. My portfolio is for lack of a better term, misshapen for my age. And i just wonder if this is a humpy dumpty case where maybe you cant put all of this back together again let me finish this thought real quick. There are times that come along where there is a trend perhaps the trend is lower rates or whatever it is. And the shock comes along and accelerates your move to that moment lewis banking used to say that oftentimes when you are a trader something comes along and noxious into a different atmosphere meaning it is totally changed the game 2008 being an example of how people think, how people allocate i do not think this is that event. I just cannot see that playing out. You know, when somebody is sick they get a kidney stone, they go into the hospital, a relatively healthy person they get addressed they resume normal activity. If they have a bad case of it they stay in the hospital for a hoang time, their muscles atrophy and you have significant damage thats sustainable. I think there is something about the pace of this transition and whatever the catalyst may be, hopefully it is a progression towards containment in the markets that it started. You can start to see it play out in other markets but if it is not, there is going to be other possible catalyzers, whether it is the fed providing liquidity, not cutting rates to me, i dont know you are pushing on a string there in some regard. Or its some fiscal policy response or effort that is at least talked about. Let me do this. Mike santoli is at the stock he can change again today listening the all of this. I know you have opinions on what you heard. What stands out the most i guess first of all on the whole question of is it time, are we oversold enough i do think it is always mart to kind of excuse yourself from the idea that you are going to catch it right and essentially assume that this kind of movement is highly stress markets that are going to be Spring Loaded in their moves. Her going to make almost everybody on every side feel stupid periodically as you go along. If you kind of give yourself permission kind of not the try and get e