Of yesterdays huge gains. We are near the lows with the tou down about i8 0 points we went lower as the ten year yield hits a fresh record low as kelly just reported. Braeg i breaking below 1 for the First Time Ever now at 0. 972 . Lets get to Steve Liesman for the more on the feds emergency rate cut thanks very much. The historic 50 basis cut emergency cut, the first since the financial crisis, not greeted warmly by the market critics condemning the rate cut bringing the rate cut to a new range. Wont do much good to combat the economic effects of the virus u. Hfe writing they dont believe its constructive in the supply shock induced by the coronavirus outbreak and responses to it jay powell in his press conference pushed back against the criticism. We do recognize that a rate cut will not reduce the rate of infection, wont fix a broken supply chain we get that. But we believe our action will provide a meaningful boost to the economy. More specifically, it will support accommodative Financial Conditions and avoid a a tightening of Financial Conditions which can weigh on aungtivity and help boost household and Business Confidence of course the downdraft could be u a sign that the fed needs to do much more. They hope to have an effective Interest Rate and one sign could be the rise in Home Building stocks what the fed does next depends on the data. If the situation worsens, more rate cuts could be expect d. Remains to be seen if the president and Congress Step up to write any fiscal what does history tell us when the fed makes a dra mmatic cut like this of half a point intermediate what happens next . They cut me . They have tended to cut more. There was a 75 basis point cut after 9 11 and that was just in response to that i believe they had cut earlier then they went to a series we have some historic charts in the back i dont know if theyre loaded into the machine there same thing happened with the initial rate cuts from the financial crisis there were a few i think they went from 3. 5 down to zero and stayed there for a long time. In general, look, i dont think history is instructive, but not necessarily showing the exact way here in part because there are some of the ore emergency cuts the fed has done in the past, but those have all mostly led to additional cuts after that yeah. All right steve, thank you very much it has been a wild day in these markets. Whether the its the stock market or treasury yields, after that emergency fed rate cut, the dow has swung u more than 1,000 points today bob pisani is at the New York Stock Exchange with the latest a lot of confusion about the right way to move the movement here you see the move. Its a 700 point move. Thats that crowd. Then another opinion came in down here as we move down over 1,000 points, people saying theyre maybe overreactinging or panicking. But for the moment, the Second Opinion is whats winning. Its not just to fight the quality in bonds theres a whole lot here the gold stocks for example, golds having another great day. Back up to where it was near the highs. You see the move up in the gold names. Another group is the Home Builders thats understandable. Home depot was up, but slight moves up here. These were up earlier here elsewhere, what else could you do theres a lot of talk about fiscal stimulus. Infrastructure programs. So weve seen a little bit of a move up in these infrastructure plays. Martin marietta, vulcan, Jacobs Engineering was up earlier, flat here, but those are interesting theyre holding up well. Elsewhere, banks doing nothing never really rallied here. But you can see it right near the lows of f the day here, but what is the market trying to tell us . You should hear some of the conversations ive had with confused traders the shock and awe from the fed is going to be limited not going to get the response they wanted here how long until we get an earnings rebound is this a second half of 2020 phenomena or are we way into 2021 because this gets a lot more serious thats what the market cant answer right now and thats what everyone is grappling with guys, back to you. Thank you very much, bob pisani the tenyear yield sinking the record lows. Dropping below 1 for the first time in history. Rick santelli tracks the action for us as he always does at the cme. Hi, rick hi, tyler just to give viewers and listeners a little perspective, right now, a twoyear note yield is down 24 basis points and a tenyear note is down 21 basis points today it settled at 116. Its at. 95. Earlier today, it was at 114 before the fed cut Interest Rates and obviously the rest is history. So you see the intraday chart there. 95, 94 now 94 basis points. Its out of control. Look at a longterm chart going back to july 2012 that was the first of the two double bonds in the mid 130s wasnonce we went through thoughi know i was on the air many times trying to warn people how significant that was look at the 20 year chart just to see how we fall off the ski slope. Tens minus twos. Yes, thflatten the curve. With rates going down, thats not as interesting for banks and finally, nobodys mentioned the dollar index i hope the administration isnt dancing over the fact of how weak it is and the eight sessions since it made its high going back the may of 2017 just eight sessions ago, it has gone from basically a whisker under 100 to now briefly today below 97 so if youre a middle class guy looking to buy anything made outside the country, which in certain sectors like electronics, theres a lot of things youre going b to be paying for not less tyler. Rick, let me just quickly ask you to clarify you said the two year yield has dropped basically a full quarter point just today when is the last time we saw that it settled at 90 basis points wow 90 basis pointed. Here we are in 63. So it makes sense. You know the fed wanted to ease. I get it but the point of the matter is the market was doing the heavy lifting. Now you throw another reason, the rest of the curve has to readjust and its readjusting in the middle of the whole globe being so their emergency cut, lets see if we can do a tight back like they did with the bailouts in the last crisis. Rick santelli, thank you rch. Appreciate it. Lets move along to ask the question, did the fed do the right thing and is it enough to keep the economy afloat . With us now is michael, jpmorgan, the chief u. S. Economist at oxford economics. Welcome to both. Let me ask you, what does a fed rate cut do right now and how does it help whats the transmission mechanism . Well, the hope was that this would ease Financial Conditions. The result today suggested that perhaps the market was looking for more than it got at least this is a god first step i think if the fed had done nothing between now and the march meeting, i think the action in stocks could be worse than what youre seeing today. So we think easier policy is warranted. Certain ly the market isnt telling us inflation is a risk so theres no real issue holding the fed back from divides easier policy and we suspect that this may be only the first of more ease at least once more perhaps even more than that given the situation developing in the economy. Gregory, as we go down 900 points just a few u moments ago, id like to get you to react to what michael just said is the stock markets reaction a function of the fact that they expect more and are disappointed that they think the situation is going to get worse and that this isnt going to help i think its possibly a combination of both. We have the fed reacting to what is an environment of rapidly tightening Financial Conditions. And not doing anything is is actually worse than providing easing so this view that the fed wont resolve the supply Chain Disruption and wont be able to stop while it is correct, missed completely that by not loosening Monetary Policy, the fed would actually lead to a further tight ping of Financial Conditions which would have adverse effects. So if we lock at the broader pick chu, we have to remember this virus has yet to have significant economic damage. We have a fear shock, but yet to see much of the economic damage and the fed easing now is the right approach into providing further easing or preventing at least a tightening in Financial Conditions ahead of what could be a serious outbreak. Let me bring Steve Liesman back in. Steve, theyve just tightened Financial Conditions considerably more in the wake f f this than they were this morning. If you lock at the drop, stock markets down almost 1,000 points now the bond yield, i mean i dont think this is the reaction that they wanted. Right . Wouldnt they want a reaction that said thats right, but i see the premise of your question that they tightened Financial Conditions the one thing that happened today was the emergency rate cut. This is the markets response to that it could well be what mike said right off the top, which is that the market wants more of this that the fed let me finish my answer that the fed has not done enough here and may indeed need to do more here. The idea that fed cuts rates tightens Financial Conditions is hard to stomach. You have u the decline in the market, but as gregory said, hard to imagine where we would have been, remember, at 7 30 this mortgag morning, the headline on b cnbc. Com was the g7 viding no pd the market was starting to trend downward because of there was no action out of the g7 10 00, the biggest central bank in the g7 comes along and provides policy action of course you had initial bump right there. So you can imagine what might have happened had we gone on the rest of the day with no policy action at all. Mike, i dont know that it matters one way or another, but the president has been calling for lower Interest Rates for a long time. And today, he has called for even more cuts does the fed listen to the president . I dont think so. No, i think all that it is worth, the fed is operating politically independent here for the best of the economy and one thing i would kind of reiterate in different way what i said earlier, if one thought that the fed was undually providing overly easy Monetary Policy right now, i think the market would be responding by expecting higher inflation or inflation that is inconsistent with our 2 target if anything, the market is still expecting inflation to come in below that target. So i dont think what the market is saying that the fed is act ing in way that is being strong armed by the president in any manner so i think what theyre doing is appropriate for the economy. I just think perhaps they need more if anything it seems to me were in a period where were anticipating what is to come. We are concerned about the spread of this virus getting into the earnings warnings season and then a couple of weeks after that into the First Quarter earnings season ultimately, corporate profits drive stock prices what do you expect when we get to that point . When we get this data, well probably be disappointed in terms of whats happening on the economic front i think theres been a front run of Financial Condition tightening ahead of the real Economic Impact. To steves point, hes correct that the g7 joint statement was understo under wheming. So far, weve only seen the fed cutting rates, but there are questions about fiscal policy to try to alleviate some of the head wind caused by this virus and when we look at the economic damage more is yet to come. The real risk is not contagion its the fact that local and National Authorities are using lockdown mechanisms to try to prevent the spread and that lockdown leads to a severe cutback in action. I just want to follow up, which is yesterday, eamon javers our colleague in washington says it wasnt needed because it was so Strong Congress is talking about an 8 billion prak, a tenth or less response to katrina. Meanwhi meanwhile, there are more to come from other central banks. I believe the bank of canada meets tomorrow i believe expectations are that youll get a rate cut out of them ecb would be a week from thursday i dont know theyll wait until then, but they may provide another rate cut then in addition to other measures so i dont think the last shoe has dropped in the policy response from the g7 nations thank you very much mike, gregory and Steve Liesman. Appreciate it. With stocks near the lows of the session, weve seen some extreme moves in ten year yields as well. Moments ago, it was 0. 9 flat. The dow has eraseded much of yesterdays snap back. Lets bring in david and mychal bell a with cue investors. David, what is your reaction what do you think its telling us hi, kelly look i think the fed was right to take the action given the uncertainty. The Market Selling off is a reflection that between 2950 and 3,000 on the s p, its fair value m the correction is just fine the earnings outlook has been impacted by the situation in asia and now the European Tourism industry is basically getting shut down for the spring so the Market Selling off but not because of what the fed did. Its selling off because of a lot of investors knew they needed to derisk and they were looking for a better opportunity to do so and figured that opportunity would come when policymakers took action that came. Neither derisking. My advice would be dont panic there will be more volatility in markets for the remaining weeks and possibility months i would invest that investors buy the stocks they wanted to buy or should have bought a few years ago but dont by the things they should have bought energy, industrials, still a lot of concerns. Tech, health care, thats my preference i would only point out that focussing on financial, look at Interest Rates these are good for consumers and households and maybe real estate virtualues, but a challenge for banks. Michael, what would you add to that . We live in a world where we auch price stocks off the level of Interest Rates so today, stocks are selling off, rates are moving lower, but tomorrow do we shake thing off and have a different view of the world . If youre a longterm investor, you should be viewing this as an opportunity to buy in this is one of many reasons on why potential panic is going to look back five years from now as an opportunity, but be no qualms about it, theres going to be significant volatility in the short the median term because this is unlike a financial crisis where fed action or policy action can fix this coronavirus is going to be waiting for a vaccine. About rates of contagion having to slow and theres too weak incubation period. This is not a made prt 24 hour news cycle process the market is going to have to digest that information. Thats going to bring a lot of ups and downs to the market for the remains months, not weeks. Talk to me b about the earnings i just mentioned with our prior guest as we get into the warning season then into the earning season in early prescriptiapril. Its company specific. Airlines are clearly on the front line of this what kind of haircut do you expect most Industrial Companies are on the front lines of this and yes, youre right. Travel certainly earnings growth, 5 , which we consider healthy and normal, but we continue to point to the risks out there. At this stage, we cut our earnings estimate. Only expecting 2 growth now 168 out of s p in 2020. And we made cuts to our first and Second Quarter earnings estimates leave iing the back h of the year in tact. Well see if we can recover but recooping earnings that are lost in the first half, thats unlikely recovery were watch were watching the data. At this stage, its best to think of 2020 of being another year of flattish earnings. How earnings will be affected until we know how america has to address the issue here if you imagine a kind of china type response where they are cities that are quarantined, travel shut down, that is one impact if for example, and im speaking a little bit about a school, but only because you have to think about it for the economy if for example we find out that the infection rate is lower or death rate is lower, we may go about our business in ways we havent thought about and live with this thing and find ways to limit the effects of it. And the economic effects would be another the issue now is that there is very little visiblility past the next cowell of quarters tapd market will fibd its leg i imagine. In terms of the national response, theres little vizab e visibility beyond the next couple of days,really. In terms of what consumers are going to do. Or what government is going to do. Were already hear iing abou flights that are going to the west coast and reduced numbers of people going out to ball games. Presumably a reduced number of people are going to restaurants. Maybe people are going issue mass transit having a conversation with the organizers of a conference speaking out on monday in orlando. Yeah, i dont know if im going. Right now, but i intend to go, guys, but theres some issue as to whether we should but people will come out to see your band play march 24th. Capital theatre. I am up in world bank doing virtual format for their 2020 spring meetings. If you think about how that ripples through and he can talk about this better than i can the earnings of marriott, all of these hotels and airlines. If you know the answer to that, whether or not that travel is going to happen, you can know the answer to the earnings were about to fall 11,000 points here. 996. Michael, i just wanted to ask you and this is what i thought was an interesting question earlier. If Coronavirus Spread and the e reaction isnt as bad, would you raise rates again. Has the market with this onetime repricing priced in th