Transcripts For CNBC Squawk Box 20240713

And thats when the Trading Halted it slowed some of the panic selling, the machine selling and at the end of the day, still down more than that for the dow futures for the dow a decline of more than 2,000 points. Youre looking at a big bounceback but only half of the declines from yesterday. Up by 1100 . It found some support and then it was down 5 and then it closed about where it was indicated to open. Right. But we kept saying what if the garden variety correction is 12 we got a pandemic whats a decent where do we got an additional 18 or 19 yesterday. Well, in total. Down down 18 or 19. Yeah. If it goes from here up 1,000 today youll once again be the call of the bottom you will be ill take it. I hope im the call of the bottom. I hope you are too. But its just consensus. Just the feeling that everyone has at the same time that you express. Thats all it is thats many times that is the indicator. Do you think do you think we have more to go . Well, i understand the focus on the equity market it is right. Can we stay focus on oil no, treasury yields treasury yields theyre at zero. They have been the leading indicator of where equities are going. I think yesterday we got by the way, were looking at 0. 4 . We are back to 72 basis points which is where we were on friday. Theres good. So that is a positive indicator and treasury indicators have been leading the markets in all risk assets since the middle of january. Go back to january 14th and the 31st, while the market wasnt concerned about the coronavirus or the spread in the United States, the treasury yields were melting lower and financials topped out thats the first place you have to identify if you see some stability. I like what i saw yesterday from yields well, you need to add oil into the mix because that was a large part of yesterday and it got to 28. Joe, i agree with you. Heres what might happen though putin who is not our friend, hed like to crush shale mbs, no matter what happens, weve backed his moves so he needs to make some type of better arrangement with russia at this point to help us out they need to they need to come together. I dont know whether putin wants to because they want to crush shale, right its in the best interest of the United States, the russians and saudi arabia is to come together and have a dialogue. Back to 35, that would help. Yields back. I would agree with that. Were at 33. Yeah. 40, 35. Its the velocity of the moves thats been so shocking to kind of watch. We were sitting at alltime highs on february 19th. 12 trading days. Yeah. So theres been five instances on beckys point in terms of velocity where you have experienced during the course of one week a decline of greater than 10 obviously, the largest one was you were down 18 from october 6th of 08 to october 10th of 08. The other instances are 87, 2000 and 2001. You lost 11 in the last week of february so the question becomes everyone believes in the recovery if you look back on all of the instances all these instances there is a v recovery. You have to identify is it a lower case v or an upper case v. Thats the question. So i saw some notes yesterday where people are asking is this a u recovery for these particular industries where theres a big fear factor. To u recovery only happened after 2000, 2001 you had the dotcom bubble burst. Do you think theyll start booking cruise ships you had the experience of 9 11 and 87, it took you two years to recover and 08, five years to recover the experience that most people are trying to identity with right now is december of 2018. That took you five months to recover so markets are moving much faster. I think were getting acclimated to the different type of marketplace and lets understand this is biological in nature we never experienced this. Let me ask you the question that we were asking yesterday that i dont know the answer to which is what do you think the markets think in terms of duration and extent and scale of the problem here, not necessity of the health care unto itself which is real but the fear factor and how many people are not going to work, doing to restaurants, getting on the plane . You know markets discount things. But its what we have been talking about for three weeks happening. But i would argue until the past week, there was a view that somehow it was not doing to come here in some meaningful way. We have italy in lockdown. When someone like kyle bass answers you straight up and says its mostly in the market, why dont you accept it or put that into your thinking that someone that smart who had skin in the game because you have to have. But im asking the question of joe, why are we i dont understand. I kind of agree with what joe is saying. I think there will be a point where we see know better. Well see an escalation in the number of cases that are reported here in the United States we see an escalation and the market will desensitize to that. And the market will stop going down i think you have to go back and becky mentioned 12 days ago where we were at alltime highs. Greed takes the form of excessive leverage thats nourished by excessive liquidity. Thats where we were 12 days ago and where we are now and when we get to the point of stabilization will be fear and fear is when you still have that excessive liquidity and the leverage doesnt want it were getting to that point where there are liquidities out there, but speculators are saying we dont want to accept that leverage. We are getting close to that point, but i think for the investor at home theres an interesting perspective here of how you have to treat this because it is happening so fast, you have to have the Warren Buffett mentality and treat this as a passive investment. Let me explain what i mean by that if youre invested in private equity right now, is it visible to you whats going on in the investments . Its not andrew, your house is going to decline 10 over the next week and then in the following three months it could go down at 10 , are you saying, joe, im going to sell my house so i think the investor at home has to understand this and treat it passively and i think were becoming more financially literate. If you own an airline you know whats happening. You dont need it to be or the publicly traded if youre a publicly traded company and own an airline. Are you going to act on it . It was fast on the upside too. If you look at how far this pull back is taken us, for the nasdaq youre still only back at the lowest level that we saw since october 9th of last year the damage is little bit more if you look at the other indices. For the s p 500 it goes everything back to everything we gained from june 3rd of last year and the dow, back to january of last year 14 months. The markets get emotional and we get emotional everybody that walked by me i mean, i dont want anyone coming near me its youve adopted my freakish hand washing and purelling have you seen the toilet paper, whats with think of things that you run out of. There are things make do you know, food, water. Some you know, toilet paper. Because there were shortages in japan. Ill figure something out. The question becomes is there a the warmth to unlock the economy and for there to be on the other side, a rebound. I thought the president lets talk about the president. President trump now says hes going to be meeting with senate and House Republicans today, the ones that arent selfquarantined, to discuss a possible tax relief measure in response to the coronavirus. Are going to be asking tomorrow, were seeing the senate, were doing to be meeting with the House Republicans, mitch mcconnell, everybody. And discussing a possible payroll tax cut or relief, substantial relief, very substantial relief thats a big number were also going to be talking about hourly wage earners getting help so that they can be in a position where theyre not ever going to miss a paycheck. Wall street journal reports that Peter Navorro and Jared Kushner are pushing for a payroll tax cut and larry kudlow and mnuchin are calling for measures for helping those without sick leave. Im in the latter camp. The payroll tax cut does and help anybody who is not getting paid, staying home and their tips have disappeared or anything else. But thats what i saw jason furman making that case yesterday. They tried that back when he was advising president obama. He wished they had done more. I still think well have a conversation about bailouts of industries that hasnt even begun yet. Targeted on the industries and the workers. I agree with becky. I think specifically talking about hourly wage earnersand supporting them, thats priority number one has to be. Look, we should make that people are still incentivized for not going to work, for things not their fault we want them to stay home and not risk infecting more people shouldnt be that they go without pay for that. I think the president s Economic Team should walk in with the dow jones transports and theres the reason that you have to support the travel industry obviously, the market is telling you a story there thats a particularly ominous one i think there are other measures that they need to enact here to make sure that investors are not discouraged to investing you actually want to encourage at this point investing in the stock market you can take the 401 k annual limit, you can raise that to 25,000. You can take the capital loss on an annualized basis thats been 3,000 for a capital loss since the last 40 years raise that to 25,000. You can take s. A. L. T. Limits after raise them to 25 you can target lets encourage investment in the market. S. A. L. T. Limits would help people on the coast where you have seen these things but i dont think thats targeted enough raising the s. A. L. T. Limits on things and if you take the moves that look like youre only helping the stock market. I think, listen, helping the stock market encouraging assets and investment into assets has been part of the story for the last ten years right they also will be part of the reason but youre seeing the inequality effect thats come in i would say that the moves we took during the financial crisis led us to the point that you had many people feeling like they were not part of the system. And i saw i think if you look at some of those things you look at im with becky on this one i have to say only because i dont think its politically palatable to be helping investors at this point. The wealthy, theyre probably going to get through this okay in italy theres no mortgae mortgage payments. But you have to have a broad sweeping measure of policies, they have to come from a targeting specifically main street, wall street, look at yesterday the way that the european bond market rated thats a glaring signal that you need global coordination from Central Banks to support that area of contagion. Three year hour, so just quickly. I was reading ed bastion im not laughing but i couldnt help but think hes like why did i say that the last time why did i do that three weeks ago . How much is that, 1 billion 100 million. But i said it. I know. I said it then. But then the next week its like holy crap i hope we can stay in business, wheres my 100 million what was he doing, carbon okay. Good intentions. Yeah. Good intentions. Theres more of a debate to be had about all of the issues but lets give you an update right now on the coronavirus outbreak in america right here the cdc now recommending the following. Joe, you have to listen to this one. All right go ahead. People over 60 years old how do you know that . You cant tell. Oh, i trust me, i can tell or anyone who has a chronic medical condition, buckle down for a lengthy stay at home youre built like an ox so youre going to be fine, but that means stocking up on medication, Household Items and groceries. The cdc warning people in the at risk categories to avoid nonessential travel. This includes long plane trips and any cruises. Speaking of cruises the grand princess has docked in california after 21 people on board tested positive for the coronavirus. The thousands of people aboard will disembark and will be quarantined for 14 days at military bases in california, texas and georgia. This is one of the issues that President Trump he didnt want the numbers to go up but the numbers are going to go up boston has separately canceled the st. Patricks day parade organizers of coachella are reportedly planning to postpone from april to october and some colleges including princeton now telling students not to come back from spring break and moving the lectures online and delivery fees will be waived, allowing people to stay home and get their medication. Meantime, the white house saying President Trump has not been tested for the virus because he doesnt have any symptoms and hasnt come into prolonged close contact with any known patients. However, president s incoming chief of staff mark meadows is under selfquarantine after possibly coming into contact with someone who did test positive for the coronavirus. All at the cpac. Including the congressman gaetz. And doug collins and gosar. And ted cruz. Ted cruz. My question to you, these conferences, these events, these festivals, all being shuttered how long do they get shuttered for and what is in the market on that the reason i ask you, you look at south by southwest, i dont know if you saw the interview with the ceo of that company, that company had no insurance. Right. They dont do it this year, they probably cant do it next year. Theyre trying not to refund the peoples money but they have tens of millions they they have to pay out there are other festivals, over events and by the way we hit the big one, the olympics. All of the expenses, the sponsors has spent, theres insurance there but not enough to go around it gets complicated very quickly. I dont know if thats baked into the market just yet. I dont think anyone knows if thats baked into the market i go back to what i said before. This is biological in nature how are we to know what the outcome is going to be from two to three months from now were determining if we should be closing schools or not. Its here and here. Really hasnt happened much. Look, the good news, look at the numbers in south korea and president xi yeah, singapore looks warmer. Its possible that things by the way, where they took very draconian measures. Are we six weeks behind, eight weeks behind good example may be whats happening in italy right now the country has expanded travel restrictions from just the northern provinces to the entire country at this point. This is part of an effort to try and control the spread of the coronavirus. That means that all of italys 60 Million People have to demonstrate a need if they want to travel outside their home areas. All public gatherings will be banned and restaurants and cafes have to close at dusk. Schools will be closed until april 3rd. Italys premier told people to stay home. He said the severe measures are needed to defend the most fragile members of italian society. I think he specifically told people stay home, you want to make sure you protect your grandparents well bring you a live update later on this morning but these are probably the most draconian measures taken in a western society in peacetime. I date my chronological age of my hair which is about 35. There are questions about how much is age, how much is underlying conditions. And get all your prescriptions filled i need fiber con, i have no high Blood Pressure or cholesterol. I take that probee shouse stuff. You did not take that, unfortunately. Then centrum silver. Anyway do you take any pills at all i takes all sorts of im embarrassed i got to stock up on fiber con the only pill i take every day. Im trying to, you know, keep going. No question. No question. Now e. D. Is not an underlying medical condition, do you know, joe . It just got very up comfortable very, very quickly. Crude is staging a comeback since the first gulf war details next well take you live to china i was looking at, you know, you see these accidental photos taken and people on a bridge, wuhan, its a travel ban, no, i dont think im going there. Well go to china and the latest Economic Impact on the outbreak. Check this out, this was the scene in south korea normally busy airport. I dont think thats like at midnight thats what it looks like. A few passengers were greeted by vast empty terminals and many countries have imposed restrictions on travelers coming from south korea because of the outbreak there i dont know well be right back. The cnbc program is sponsored by baird awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] welcome back to squawk box this morning word from apple this morning that 38 of the 42 stores in china have been reopened after extending closures due to the coronavirus. Chinese president xi flying into wuhan, china, thats good news and a sign to the world perhaps that things are Getting Better there. We want to get to eunice yu in wuhan. Thanks so much. President xi jinping toured a prefabricated hospital, the first one that was debtcaded for coronavirus patients so he rallied medical workers today and greeted patients via the hospitals teleconference conferencing system. His visit coincides with the closure of the last of the 14 popup clinics in wuhan. And as i was saying, state media has declared this as a victory they say that victory against the virus is near. Now, this comes as the country is trying to get the economy back on track and the latest data has shown that the epidemic is depressing prices the prices at the factory gate down by 0. 4 year over year sung guesting weak demand and the core cpi is at a low at 1 food prices were higher at 29. 9 and that was due to transport issues as well as hoarding most likely looking ahead, most Analysts Expect that inflation will continue to face downward pressure because of the falling agricultural prices. And then the slump in oil prices as well as worldwide demand. Guys okay. Eunice, thank you for that report. And oil prices are bouncing a little bit anyway this morning after plunging 24 yesterday, the worst one day drop since 1991 i think that was the first gulf war. Following the failed opec deal i remember where i was it sparked a price war joining us on the squawk news line is our own Brian Sullivan we were talking earlier about whether the key players here have something to gain by maybe not being quite as i dont know, as dogmatic as yesterday do you think that mbs and putin come to an understanding or were on our own here . I think for now were on our own. Good morning, everybody. You know, whether or not the two sides come back together i know the department of energy put out a statement late, blaming foreign actors for everything going on i think that was toward russia maybe this is a payback to us. They know how weak u. S. Shale is, guys they know the debt levels, they know that the majority of all new wells drilled from the last couple of years are done at a loss you couldnt drill a well now unless youre one of the big boys exxon, chevron, occidental can break even or make money in the permian and nobody else can and you have to remember theres the demand side. We can do whatever we want on supply russia and opec can dance around the fire pit in the may pole and come to the conclusion, but if people slow down driving in the United States and china because of whats going on then Global Demand will fall a lot faster than anything some deal could do. So i just were going to be talking about it all day. A 50 retracement, brian where do you think this finally settles . Because that was that seems a bit of an overreaction yesterday. Do you think we settle in the low 40s or down in the 30s again for a while . Yeah. I mean, well, joe, find me the answer to that id be coming on as a guest all the time. Who knows . I heard eunice, you know, she goes to wuhan. Okay i look at the Traffic Congestion indicator its one indicator and ill post it up after the interview is over. Nobody is driving in shanghai and wuhan on the weekends. Like theyre going to work but theyre not doing anything on the weekends. I mean, seattle is down 12 or Something Like this from last years levels. I drove home last night, you know, i did the same commute every time, same time, same roads, the traffic is down it could be spring break, but we dont have a sharp and sudden reduction in output in the United States then i would say were going to go to the high 20s. Mid to high 20s. I hate to say that dan pickering, Energy Executive put out a great piece yesterday saying value over volume the people i talked to estimate 40 of every barrel we pull out of the ground in america right now is at a loss 40 . So 40 of your hamburgers at a loss 40 of your including, brian, all the shale . Theres no shale thats been drilled from the last couple of years with the exception of chevron, occidental, pioneer is profitable. Listen to this, then ill ask you where we need to focus our attention. Whether its dividend cuts from some of the big majors probably, i mean, they wont survive or if we worry about the smaller players that may go out of business because of all of their debt but listen to this the Russian Energy ministry called a meeting with the Oil Companies on wednesday to discuss future cooperation opec countries. We plan to us discuss whether to return to cooperation with opec or not maybe theyre getting the message is that a glimmer of hope right there theyre doing to talk . Yeah, i think so. I mean, they could be floating it everyone is punching each other in the face and nobody is winning. You know, no one is going to have their hand up in the ring at the end saudis need 80 plus a barrel the russians can print money the difference is of course the countries can print their own money and devalue their currency but companies have been living on debt thats owed by somebody else and of course yesterday the heaviest Indebted Companies got hit. You said dividend cuts, probably Capital Spending cuts, they have to come. Its doing to be a lot of jobs lost tens of thousands, maybe more jobs lost because you cant complete these wells you cant complete these projects theres 22 liquefied natural gas projects that are in some form of construction, production, projection or whatever those are going to some of those are going to be taken off the books unless theres a major turnaround listen, its math, right exxon, becky, i saw your great interview with darren woods. Becky exxons stock has fallen 50 basically in just over a year. Which means it has to baseballcally double just to get back to where it was it will be a painful period. In the meantime yeah, the yield for exxon mobil is 8. 3 . Yield for chevron 6. 3 and i guess how long oil stays this low is going to have some determinant on how these things play out. Up 12 right now on that little kumbaya moment to joe mentioned. Where are you what are you doing im sitting in short pants and a tshirt in my office watching the show. I just want to be honest trying to be honest with the viewer here. Youre wearing short pants . I was supposed to be at a Energy Conference my houston so my wife is supposed to be gone with the kids and were trying to figure out the child care like many other americans. Short pants in your office at home not at cnbc, right yeah. No, im at home. I want to be clear, im barefoot, im drinking a grapefruit lecroy, not an endorsement. What is that, vodka no, its a sparkling water. Water, good grief, the vodka comes at 6 01. All right see you later. P. M p. M. Thats what i said, youre well into your second anyway, thank you. Thanks, brian. All right, bye. Talk to you later. In the meantime, the president ial campaign continues. Theres some new analysis of joe bidens tax plan and who would foot the bill. Robert frank joins us right now and he has more details. Good morning. Good morning, well, bidens plan would raise taxes by 4 trillion over a decade with most paid by high earners and companies. According to a new study from the tax policy center. Now biden would hike 8 in total and every income group would see an increase. The top, they would see by far the biggest hike the one percenters would see about 300 hi to dollars a year the top 1 , making more than 3. 6 million a year, they would see their tax rate jump by 60 to 47 and nearly threequarters of the increase in taxes under the whole plan would be paid by the top 1 and the bottom they would bear less than 7 of the total cost bidens plan calls for rolling back the trump tax cuts, bringing the corporate rate up to 28 from the current 21 . And he would tax Capital Gains the same as ordinary income for those who make more than 1 million the year. The Capital Gains tax would go from 20 to 39. 6 and he would apply the payroll tax to income over 400,000. Now his plan is less than a quarter of the cost of Bernie Sanders plan. His plan would total more than 17 trillion over a decade guys, back to you. Yeah. Watching a lot of the predicted stuff. What does it say this morning, joe this morning, trump reelection is at about 50 or 51 cents and biden is about 48 cents. Thats pretty close. The generic even though where is sanders now . Sanders is so down. I mean, from michigan, theyre like hes talking about winning michigan 92 cents for biden in michigan which is today and i think hes Single Digits for the nomination at this point but for generic 2020 who wins republican or democrat, that move that flipped yesterday to 53 cents democrat, 48 or 49 republican and now its back 5150. Its all coronavirus unbelievable. Yeah. You wonder how thats going to shape the primaries and the election and, you know, the tax thing is if you start to have a true economic slowdown you will see a decrease in tax revenues at the state and federal level and what will that do to how are they going to make up . Are they going to raise taxes . I have certain pundits theyre trying to call it the trump virus, katrina theyre working overtime on trying to work it. You know, thats the world we live in. Back to biden for a second. Is there an estate tax involved in that . The estate state is not part of his plan. His official plan but hes going to be clearly looking at that. On the Capital Gains over 1 million or marginal equal to the marginal tax rate and it goes up to 39. 6 they would be equal for First Time Since the 1980s. Thank you. Robin hood investors found themselves on the sidelines of yet another wild market day after the platform crashed for the third time in the last eight days well look at the details after this. Take a look at yesterdays biggest decliners of the s p 500 and the dow. Some significant declines, apache down by 53 well be right back. Executive edge is sponsored by at t business with edge to Edge Intelligence covering virtsually every part of your growing business learn more at att. Com edge to edge to managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoEdge Intelligence. Rowithout the Commission Fees and account minimums. So, you can start investing wherever you are even on the bus. Download now and get your first stock on us. Robinhood. We segetting to patientscines in record time. At emerson, when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. Good morning welcome back to squawk box. Right here on cnbc were at the Nasdaq Market site here in new york things look like we are about to rebound this morning the dow looks like it would open up over 1,100 points higher and the s p up about 125 points higher. Thats great, isnt it . Dead cat bounce, 1,000 points thats where we are right now. I mean, we will see. A little comeback. I was thinking this morning can you imagine going back to moves like the futures are indicated up by 22 points and were talking about the dow. Sure. Percentage term. We should do it in percentage terms because people hear the numbers. The granville crash, 27 points remember him ten year treasury thats important. 72 basis points now. Lets show everybody the ten year treasury right now. See where it stands. Can we flip that board around for the audience to see. I dont think its on the other side of the board. There it is youre not flipping it. Its just a different chart. 0. 740 . Vanna white. Like vanna white, joe meantime, this one baffles all of us. Investment platform robin hood suffering the third outage in eight days during yesterdays market turmoil angering investors who couldnt trade during a wild day in the markets. It was down after the opening bell and it was partially restored by 10 30 and then around 3 30 p. M. We had problems all over again this is one of the more baffling things thats happened in the marketplace. Especially during the volatile times. You have young people who used this to get into the market and we thought it was a great thing, because it was bringing Retail Investors in the game and now they cant trade im worried that its going to push that whole group out of the market theres going to be lawsuits left and right. Lawsuits are the key. Theyre going to get pushed out of the market to somewhere else. So whats interesting theyre everywhere. Its business but free trade, and this business couldnt do it. Okay. But thats a great environment for investors. If they cant execute on the Business Model then they face the challenge of significant lawsuits and the customers will find a home to beckys point to somewhere else. Theyll be at etrade or together with Morgan Stanley and theyll be welcomed with wide open arms the broader markets endured big losses yesterday that im sure you heard about the dow suffered a more than 2,000 point drop worst ever point drop but next guest says that theres some companies that are in his words on sale. And they have amazing prospects. Hes the Portfolio Manager from the barron discovery fund. Some of the going to the individual picks that you have, randy, some are definitely cheaper than they were, but these are the same ones we had highlighted had run up so much is that does that give people another chance to buy in or had they already run up too much anyway well, we have a number of companies that have run up this year, tell dock is a good example and with good reason so teladoc, is a 10 million Market Health company and they provide more than calling in when you have a cold its everything from that to expert opinions, second opinions Even Mental Health so its a very exciting kind of company. We think revenues can more than double over the next few years and they have membership that is about 15 million now, can go up to 65, 70 million even more. We found it there it is. So it ran up and it doesnt even look like its pulled back in fact, this it might be seen as sort of a yeah, teladoc is very specifically, you know, kind of of interest to people with cv 19 there are other companies that we own as well that are under the radar but can have secondary effects from cv 19 so its everything from you want toensure that people arent taking advantage of by cyber hypesters rates so we have Cyber Security companies and also Companies Like Ping Identity ping is a company that kind of secures logins and does multifactor authentication and its both for employees as well as customers of companies so they have the largest Financial Institutions and Pharma Companies that should be going up because theres more Remote Access correct. Thats cheaper for you. So these companies are more than doubled over the next three to four years. Another one is called emergent bio solutions. What emergent does is they create vaccines and stockpile them for big pandemics around the world or bio weapon issues so for anthrax, you may remember we had that scare back in 2001 since then, we have been stockpiling vaccines for anthrax, smallpox and others very few companies can do this its very unique theyre working on an influenza a kind of antiviral which would be in addition to typical antiviral therapies and hospitals. It may have application to coronavirus and other things, we shall see. But its in phase three trials right now. So thats kind of interesting. Not as flashy as gilead or the other companies, but this is a company that has a lot of room to grow. What about zoom video we dont own it but its a telepresence, telehealth and the more we want to do social distancing for cv 19. It can change Consumer Habits too. This is a thing that make them adopt things thats exactly right. Its accelerating telehealth is interesting because even a year or two ago people said, well, ill never im not going to use the phones to talk to my doctor i want to be there in person and then all of a sudden you have Something Like this it gets people to use the service. They realize how good it is. Then it pulls forward that demand it accelerates that adoption. Do you think well change anybodys habits, like telehealth do you think more people will work from home when this saul over good question between outsourcing, off shoring, all the other things that companies do, we have become much more virtualized from the i. T. Perspective down to the human perspective i think its good that we do Emergency Planning at barron, you want the scenario ready. We are set up to work from home and off site so we can do it. I think youll see this more and more with a lot of Different Companies being prepared for this sort of thing. Im optimistic though. Not for us. Do you think were stuck here together maybe if were not, home going to be home is going to be where you know . Going to florida for taxes. For the s. A. L. T. Talk about a s. A. L. T. Problem, anyway, thank you. Thanks virtual joe. Virtual joe. Youre not a florida guy. Why not hes not a florida guy. No . Wyoming. Less of wyoming but then theres all the rednecks, gun owners you dont need that. All right when we come back, take a look at the futures this morning. They are indicated sharply higher after President Trump floated the idea of payroll tax cuts well have the latest details on that and how the markets are ereacting after the huge drop ups. The dow futures are indicated up 1,066 points at ameriprise our Financial Advisors can not only recognize you in a crowd, but recognize whats important to you in terms of your goals get 1to1 goalbased advice where and when you want and realtime goal tracking online. Ameriprise financial so it doesnt make a whole lot of Financial Sense for them to stay in this great big house. But, well, this is home. Its where they raised their three boys. Could they downsize . Sure. Will they . Not as long as thanksgiving is a holiday. Planning for the future is about more than just money. Let equitable be your guide. All right. An update right now on the coronavirus outbreak in america. The cdc is recommending people over the age of 60 or anyone who has a chronic medical condition buckle down for a lengthy stay at home. Joining us to talk more about it is dr. Marty mccari. He is professor at Johns Hopkins school of Public Health. The author of the price we pay. Thank you for being with us today. Good to see you. Good to see you, becky. I know youve been worried about the amount of misinformation thats out there. Weve been interviewing people who are not doctors who do not look at social policy. You are. Why dont i hand the reins over to you what is happening and what should we be doing i am concerned about what we saw over the weekend on cable news a lot of legacy pundits talking about their opinions weve got some data that we have to act on. We need to prepare for the worst and hope for the best. What we know is that china and iran have not been straightforward. Those numbers are not reliable we have talked to doctors over there and they say hospitals have been overrun, but italy and south korea have been very transparent and what were seeing over there right now is that theyve taken drastic measures and even with that, the hospitals in northern italy right now are over run weve seen a doubling of cases and deaths nearly everyone to three days and although weve been under testing, weve seen 10 fold increase in the last ten days and thats not even really, you know, testing everybody. So, look, i dont like the idea of talking about contingency plans, but weve got to start making these plans weve got to get restaurants to get into the Delivery Business right now. Weve got to brace for a threemonth problem because you know what . What happened in wuhan could happen here. Why do we think otherwise . So you think are we not doing enough at this point in terms of making sure schools are closed, making sure people that theyre working from home, not going to work . What is your thought yeah. We need to tell people right now to stop all nonessential travel i feel strongly about that simply saying that highrisk people should not take cruises is not enough. I mean, look, weve got, becky, 100,000 icu beds in the United States that operate at full capacity or near full capacity if we get 200,000 Critical Care cases as i outlined in med page today, were going to be overrub. Seattle hospitals are on the brink of being over run. So we need to do more. The american immune system is not stronger than the chinese immune system. I think this idea of american exceptionalism is crossing over into some arrogance when it comes to viruses viruses dont care about politics they dont care about location. So, doctor, just help us understand this. I think a lot of people this morning, i mean, from a market perspective things are coming back a rebound. Part of it is people are looking at whats taking place in china, whats taking place in south korea and theres a view some of that has turned a little bit do you think thats a fair model for what can happen in the United States given the steps that they took relative to the steps that we have taken thus far . Well, first of all, china has not reopened their schools one thing we know about china is they always project strength i mean, look at what happened in wuhan. They had 19 field hospitals and they were overrun. Why do we think were going to be fine without any increased capacity the American Hospital association is saying we need to expand, get ready, build out and staff up look at south korea and you may see one of the most modeled Public Health responses out there. Early testing. Early tracing. Everyone who wanted a test got a test early i mean, we might be a little bit behind the 8 ball but theres time to prepare. If we look at whats happening in italy, sure, those hospitals are getting overrun but theyre taking drastic measures and also its too early to conclude the trajectory why dont we bank on the worst possible scenario . That is, the same trajectory in china happening here. Just to be clear, youre talking about people outside of the most affected areas, lets say seattle, westchester county. Youre talking about people outside of that, changing your daily routines and not traveling if its not essential . Yes im talking about working from home im talking about abandoning this idea that this virus is contained. And i think because look, it is very low risk for young, Healthy People and i think we look at people like ourselves and say, hey, this doesnt seem like a big deal, but the reality is were carriers for those at high risk. Were carriers for older folks, people with organ transplants, lung disease, people with disabilities weve got to think about the overall possible scenarios here and they range from a really bad flu season to very grim. That is, the projections from harvard, 40 of the population can get this. Dr. Makary, thank you for your time. We will have you back. Appreciate it. Thank you. Coming up. A lot more on squawk. Two big hours ahead. Big market swings makes investors look for a safe han. Ve well talk to a black swan squawk returns right after this dont just plan to retire. Plan to live. 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Com tv and get 2 months free. Stocks coming off their worst day since the financial crisis the dow falling more than 7 in yesterdays trading. Today a tuesday turn around. The latest on the market whip saw and what it means for your investment is straight ahead. On lockdown. Italy taking drastic steps to help stem the spread of the coronavirus. Meanwhile, numbers rising in the United States. The latest on the Economic Impact is coming up. And Major Economic steps what the white house is planning to prevent the u. S. Economy from sinking into recession as the second hour of squawk box begins right now. Good morning welcome back to squawk box right here on cnbc im Andrew Ross Sorkin along with becky quick and joe kernen. In the studio, joe taranova. U. S. Equity futures, you were mentioning, were limit up we touched it. We touched it 2879 we got there touched it. 4 1 2 for the last hour. The gains were steadily building throughout the morning up 800 points, 900 points. Almost 1100 points. Looks like 4. 5 across the board. This is the opposite of what we saw yesterday we saw it down 5 . We saw what happened at trading. As we said, u. S. Stocks will rebound. Yes the steepest single rate decline since the financial crisis the dow has dropped 3240 points. To keep everything in perspective, we had the first really tough week. Last week in their minds i think people think we lost but we bounced a little bit, 2 or so now weve got yesterdays big, what is that, 7. 5 loss. 7. 5 yesterday. This morning if youre up 5 at the open. Well see what happens the rest of the week right. Its not out of the realm of possibility to think still talking down 12 . Right if we were to add these gains to yesterdays you broke even this week, which is a stretch from where we are, but if you did, that would be two weeks of just consolidating that victory winning. That would be their first dont bring up Charlie Sheen now. Lets talk about the markets this morning 10 of the s ps 11 sectors are down by 10 or more from their most recent highs. A handful of the sectors are down 20 talking about energies, financials, industrials and tech meaning that they are in bear market territory joining us is joe tannius. Also brian leavitt, Global Market strategist at invesco joe, let me start with you are you hearing from panicked customers at this point, people who worry about things what do you hear when youre walking down the street . I wouldnt say panicked but any time you have this type of volatility and volatility in the markets, its unsettling yesterday was the perfect storm of events. Not only do you have the lingering uncertainty around the coronavirus and questions around its impact on Economic Growth more broadly, but you couple that with a disruption in oil prices not only on the demand side as a result of weakened demand, but all of these things coming together leading to uncertainty. A difficult time in terms of pricing. The end result is a massive selloff like what weve seen. I asked this because i heard it everywhere yesterday. Are we okay . I think weve done a very good job as an industry reminding people that its time in the market that matters timing this is very difficult. If youre out of these markets youre going to miss the best days which group with the worst days i think people are confused, i think people are concerned, but i get the sense from the people i speak with and the clients i talk to, they understand that they cant try to time this. They understand that its a fools errand. So i think weve done a reasonably good job as an industry i think what people are most concerned about right now is obviously its not only the coronavirus. They hit the oil prices. What does that mean for the Energy Companies what does that mean for the Banking System. The broader company, what happens if they have a panic exactly theyre looking for the reason markets are up this morning is because youre getting a response from the administration theyre looking for a better response from the medical community and looking to see what the Federal Reserve does. Thats what makes this challenging. Its a threefold approach this isnt december 2018 or february 2016 where all we needed was the Federal Reserve to back off of a tightening stance. Do you think the industry has done a good job of preaching this is why you want to have a diversification. You look at the performance of Corporate Bonds coming into this week its obvious thats the right strategy right, it is. Investors have been putting a lot of money into bonds. Youve seen a couple of trillion dollars in bond strategies when we use the cliche that this is among the least loved bull markets on record, its not just a cliche money has been there so i think investors are probably better positioned for this than they are at different points when the euphoria led to significant exposure diversification, rebalancing works. At least the investors i talk to seem to be getting that message. Joe, what do you do today well, i think for one its recognizing that the worst of it may not be behind us yet futures so far pointing to a pretty strong open as you mentioned earlier, which i think is encouraging, especially after yesterdays carnage. At the end of the day, the coronavirus and the impact on the economy, theres still a big question there we have to see growth in the virus stabilize certainly here in the u. S. Before we put pen to paper and say this is going to be the impact to the economy. This isnt enough for you because theres too many unknowns too many unknowns i do think, however, to kind of comment on what you just said right there, do take advantage of these pullbacks in the market recognizing youre never going to time it perfectly this is an opportunity to put money to work. To the extent you are sitting on dry powder, take advantage of these pull backs. When you are putting the money to work, we have not seen the suggested shift from growth to value that can happen during this selloff and people have believed that it would this emphasizes once again the premium valuation that you should pay for the Megacap Technology names, the amazons, the microsofts, apple. Are those the places youre identifying as a first opportunity . Yeah. I think were going to be in a growth driven market for a lot of the rest of our lives you would need a value oriented parts of the market need a catalyst. Thats not to say when we bottom and get back to stabilization that value oriented parts of the market might not outperform for a brief period of time, but this event and everything weve lived with over the last 11 years reminds us this is a growth starved world i suspect thats with us for a lot of the rest of our careers. All right so what would make you feel better aside from hearing a plan for some fiscal spending i mean, thats why were seeing the bounce today perhaps what else do you need . Some fiscal spending would certainly be encouraging i think were going to hear more in terms of monetary accommodations thats not going away. Ultimately i think you want to see a growth rate in the spread of the virus begin to stabilize. You have to see signs that we are in fact getting near the end of it or the worst is in fact behind us. Until that happens, unfortunately i think were in for a period of volatility. Did you think we were over valued on february 19th . When you have them hovering around 19 times, its safe to say we are above the historic average. What exactly is going to be that catalyst that leads to multiples contracting again, we have one now. I think were living through that today but i think the question is if you say the first 10 down, was that a function really of corona or was the first 10 just a correction as to where we really were with valuations . Then the question is whether you add corona on top of that or not. Thats fair remember, 2019 the s p 500 returned over 30 and earnings grew at a rate of about 2 so we were due for some kind of a pull back. I think the coronavirus thats the question the question is was it a 5 correction and a 10 coronavirus correction i would say its corona were always waiting for corrections and investors think they do happen but you need a catalyst they come with policy uncertainty or economic volatility or Economic Uncertainty. Coronavirus was the class i mean, that is real Economic Uncertainty and thats what you know, markets had to adjust their growth rates they had to adjust earnings he can peck tags. Stocks are meaningfully cheap compared to treasury thats hard to separate it out. If it was that simple. Obviously if we get a 12 every year and we only get 17, then youre valuing the coronavirus at 5 what if you would not have gotten the 12 . The conversation is happening its your conversation. Trust me, this conversation is happening everywhere. But its a leverage conversation thats exactly the last week of february what was going on it was, okay, how levered are we and how quickly can we delever . Thats the story the question now becomes when is the market comfortable leveraging up again . Thats when you get the stabilizati stabilization. Gentlemen, i want to thank you for being here today. Thank you coming up, a lot more on squawk this morning. A number of big events canceled. We talked about this due to the coronavirus outbreak and its having an impact on state and local government budgets scott cohns going to bring us the details. Austin getting hammered. Well talk about it. Before we head to the break, lets get a check on the markets. Squawk box. The dow up close to over 1100 points squawk box returns right after this things you can do with schwab you can earn more when you invest your cash. You can get a satisfaction guarantee. You can also wonder why our competitors dont offer that. Schwab, a modern approach to wealth management. Shouldnt you pay less when now you can. Data . Because Xfinity Mobile gives you more flexible data. You can choose to share data between lines, mix with unlimited, or switch it up at any time. All on the most reliable wireless network. Which means you can save money without compromising on coverage. Get more flexible data, the most reliable network, and more savings. Plus, get 300 off when you buy a new Samsung Galaxy s20 ultra. Thats simple. Easy. Awesome. Call, click or visit a store today. Welcome back, everybody. The spread of the coronavirus is forcing the cancellation of events from coast to coast scott cohn is in chicago he has more on this front. Scott, good morning. Reporter good morning, becky. Behind me, the giant Mccormick Place Convention Center which would normally be a behive the house wear show is canceled. Thats 56,000 people who wont be here. Cardiologist convention later in the month has canceled a couple of smaller conventions. In all, 92,000 people who will not be coming to chicago for an economic hit to the city of about 184 million just in the month of march at the chicago city treasurers office, they run a small trading room where they manage the 8 billion of operating funds in this crazy market. The thing about our current policy, were talking about if we need to make any changes, what we need to do to make certain we protect taxpayers dollars and make certain were able to withstand whats going on in the market today reporter now convention and tourism revenue is a small slice of the citys overall revenue. A bigger concern, the citys four Pension Funds are just 23 funded the lower Interest Rates dont help them make up that gap and it means that the treasurers going to have to look to what contributions they have to make to keep those funds going. While the Municipal Bond market has been a pretty friendly place for investors and cities, take a look at this the agency that runs the Convention Center separate from the city warned investors if these cancellations continue, it could be an issue. The citys four pensions are 23 funded based on what numbers . Is that before the losses weve seen the last few weeks . Reporter thats before all of this scare that they are like 28 billion or something shortfall. There is a legislature has mandated by Something Like 2050 theyre supposed to have these Pension Funds funded or substantially funded no ones quite sure how theyre going to get to that and when you have this low Interest Rate environment and you have this pinch to just the tax revenues, this creates all sorts of issues for that its really just a massive issue in chicago, in illinois and across the country. Are you going to be doing a tour around the country with some of these things i start thinking about other places where its a bigger impact, florida reporter yeah. Its certainly something well look at our top states for business Coverage Later on this year you look at the oil states one of the things we want be to look at. Texas. Alaska has taken a big hit to their Permanent Fund which is based on their oil wealth in the state. New mexico, north dakota when you have the situation going on with oil prices on top of the coronavirus. A lot of states and a lot of cities are going to be looking at this. So while so much of the crisis with covid19 is sort of fears of whats going to happen, theres some real Economic Impact going on, as south by southwest is going on. Scott, thank you. Look forward to seeing more. Okay. Coming up when we return, erroll investments chairman, john rogers oversees 13 billion in assets. Then later coronavirus cases growing across america well get the latest impact on our economy. Well return in st menju aomt. Apps are used everywhere. Except work. 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 welcome back, everybody. Italy has expanded travel restrictions to the entire country. Lets go live to rome. Nbcs claudia lavenga is standing by and joins us right now. What can you tell us about the difference between today and yesterday . Reporter well, theres a massive difference, of course, until last night the only section of italy that had these massive restrictions of movement was the north. While last night the Prime Minister in a Dramatic Press Conference said the restrictions would be applied to the whole of the country, including rome. What does that mean . The Prime Minister is telling all italians, all 60 million of them, not to get out of their houses unless they have a real emergency, either for work or medical emergency. They have to prove that if somebody stops them by having a certification form that says who they are, where theyre coming from, where theyre going and why. The fine if you break the rules is 250 or even three months in prison but thats during that press conference the Prime Minister said that these are desperate times, that the future of the country depends on italians and the sense of responsibility. Right now it looks like they paid attention i am standing at the coliseum, it is fairly quiet and empty tourists are here. You can see it with your eyes. There is a big difference. Theyre staying put. Theyre staying at home unless its truly necessary for them to get out. Claudio, thank you very much. Good to see you. Meantime, back home here we have some news billionaire investor steve cohns firm has found itself at the center of the outbreak in new york city an employee has tested positive for the virus. Earlier report suggested the employee has been selfquarantined since last week and has not come into the office since. Theyre saying the company is taking precautions and preventive measures. They have extensive continuity plans in place to ensure it can continue to operate. Were hearing lots of different stories throughout wall street. The u. S. Equity futures this morning weve been watching closely. After yesterdays biggest decline since 2008 with the markets with the dow down by more than 2,000 points yesterday, you are seeing a bounceback today for about half of those losses at this point. Dow futures indicated up by 980 points s p indicated up by 180 points these are all gains of better than 4 . Yesterday it was limit down. You saw what happened at the open after that. Big part of the story is whats happened at the treasury market. Tenyear back up to a yield of 0. 688 , which big move after we got down below 0. 4 for the ten year yesterday well talk about european equities and what were seeing there. Green arrows across the board. Gains are a little more muted than what were seeing here. Ftse is the gainer up by 3. P squawk box will be right back. At todays best western, stay two nights and get a free night for your next stay. One night, two nights, free night. Book now at bestwestern. Com. Markets are bouncing back this morning after yesterdays big losses mike santoli joins us now with more hey, mike. Yeah, pretty strong bounce, joe. Lets take a look in context over the last two years. The s p 500. Put this bounce in a little bit of perspective if we open up around the 5 number, it will be around 2880 that bounce would take you up here i think a lot of people are wondering if we could have some version of a v this market the fastest move down, 18 or 19 , weve ever seen arguably we had another very quick repricing there in december take a look at the washed out levels that we reached yesterday. We went to further extreme extremes if were looking at the amount of breadth to the down side this is the number of put options bought as opposed to call options when this number spikes, you know people are very, very worried about the down side risk, speculating on further declines so we got this number yesterday right up close to 2. 2 to 1 ratio the last time we were here was around the low of december of 2018 these numbers exside what weve gotten in the last half decade, and we got to over sold levels and primed to a bounce the question is do we pick it up from here and have a handoff to a bullish tone or is it going to be a bounce that is suspect on the first time it seems as if the jumpiness of the market is here for the moment well see if yesterday was climatic. Thank you for that. Were going to continue this conversation right now we are joined by Ariel Investments coceo john rogers our guest host all morning joe taranova do you think a bottom is in place . This is unpruss dented, crazy, crazy times it does feel like theres been some type of capitulation. So much volatility so much fear it makes you feel like youre getting toward a bottom. What have you been doing about it what do you plan on doing today. Get as many Company Visits as possible we want to take advantage of the volatility. Have you been buying . Have you been legging in we have within. I wish i could say weve been doing it for the past few weeks. What do you think is baked into the market i think people are seeing all the bad news i think its pretty well incorporated people are extrapolating this and seeing it getting like italy. People are talking about cutting all of the things that could go wrong here. You think thats all in i think its all in i really, really do. Interesting. Great opportunities out there. You disagree with andrew. You say that you see bargains amazing. Where are the areas that you think sectors or individual stocks that you think are really oversold . We have two sectors that weve been focused in on one is the financial services. Largest position is kkr. We think that private equity is an extraordinary place to be more and more are allocating theyre in a position to take advantage of the bargains because theres so much cash. Thats interesting thats waiting because prices have been so high. This is a time to deploy exactly this is something thats very helpful for them i also strongly believe that Northern Trust, the old gray lady of chicago, real anchor institution is selling at ten times earnings unprecedented cheapness for the brand and strength that Northern Trust represents. Private equities have become repriced at a lower level. Let me ask you about the strategy of passive investing and the environment were in now. Do you think the passive investing is contributing to an acceleration in the volatility and the leverage liquidation were seeing do you see a return to more active Management Strategies i do believe that the passive management phenomenon is exacerbating whats happening in the markets and the etf markets have become so prominent in tanh volatility increases with regular trading in the passive area we do believe strongly that active management will be making a comeback us old dinosaurs will have our day in the sun, and theres real opportunities. When the markets are trading for reasons that are not fundamental. Stocks are trading because theyre part of an inbe decks. Theyre getting thrown away at bargain prices, it gives you an opportunity to be selective and t gives you an opportunity. Im going to argue your side. Were going to have el erian on. He said 20 to 30 were possible. There are other people given the move weve seen from 16, 17, 18,000 all the way up to 30,000, some of them for a while have been saying this thing needs a 40 correction to get back to where long term you get down to single digit multiple on some of this thats what weve seen in 74 in some of these bear markets i just wonder if with professionals like you, john, whether there is a complacency that we assume 20 is this and it could be30 or 35 given tha this is so different than anything weve faced before. How is that, andrew . Now youre im just saying the issue ive been raising all day is the idea you can have a 10 correction on where it was and then you add in corona. I think the reason you get a 20 is because the worst case scenario, people in traders minds, theyve already got that. Then again technically i think we havent had a true washout. I dont think you tell me. I dont think a lockdown of london, new york, l. A. , chicago, atlanta that is baked in, right . Now he sounds like a complacent professional money manager and that scares me. Cbs viacom selling at four times, three times earnings. Theyre going to sell 3 billion worth of assets. They have such extraordinary content. It doesnt make sense at three to four times earnings meredith, it has a 10 yield in an environment we have less than 1 on our treasury bills i think these stocks are already baked in a lot of, lot of bad news. John, let me ask it this way. December of 18, six months basically to recover 87, two years to recover. In 87 we think this is an opportunity. How long the last centuries 66 and something that theyve already talked about did you have a lot of passion for boarding what is that, 10 6 to 7 now weve been able to do that its a bargain its a different issue. Theres a report out. Unexpected. Obama believed in im supportive. That whacky prediction. Pence will be president. He will be a reliable candidate. You just took a shot that something might be what we were saying, we have to prepare for all eventual no, you said thats going to happen let me ask you a question how much do you think that this whole episode, both between the markets and whats happening with coronavirus more broadly is going to have a demonstrable impact come november given that you think a bottom is in it sounds like. Right. And that this may or may not be behind us but is looking more rearview mirrorish than forward mirror, does it impact the election six months is my time frame as we get towards november i think this will be kind of ancient history. Well be on to some other issues in our country at this point. You dont think that biden would be able to take advantage of this and hell say this was mismanaged. It will be a mosaic so many people that have come and gone and so many different leadership roles hell be able to create a narrative there. I think this virus challenge will be done by november. John, the president had a story to tell about the stock mark market even on friday we got the great jobs number. Unemployment and wage hit. Until this came along, it knocked the stock market down almost 20 well see what happens with the job numbers, but the mosaic youre talking about got a lot better for your side in the last month. Theres no denying that, right thats why maybe the polling numbers are very good. Hearing you say bottoms, it made me rethink everything with andrew, that scares me when i think too many people think a bottom is in. Any time im supposedly consensus. Seinfe seinfeld, the opposite desk. We have news breaking i want to mention to our viewers. American airlines out with an additional announcement of capacity reductions. The airlines saying it will reduce International Capacity by another 10 for the Summer Season this includes a 55 reduction in trans whoa. Reduce domestic capacity by 7. 5 for the month of april. All of this due to falling consumer demand. That has to be spring breaks canceled left and right. 10 sounds like nothing. 55, thats a number, isnt it, for transpacific. Thats a huge number. Philadelphia to rome. This goes back to how far out you think, and the containment issue. How far out you think if you want to read into anything not containment, mitigation. The actual economy and the pull back, that april number, a decline of 7. 5 in terms of what theyre going to be scheduling, april capacity that tells you that they are seeing the cancellations right now. The other is can you make an announcement like this, and i think you can, and two months later to the extent demand comes back online oh, sure. You should be able to flip the switch relatively quickly. Did american say anything about the footprint, carbon neutral. Not in the headline. Oh, okay. Maybe next time. Worry about the real important things. They do say about taking care of customers, they will as the situation develops, recently announced the change fees will be waived for customers who purchase tickets prior to march 1st. Prior to march 1st. For travel through april 30th if you book in advantages, youre still should be a great opportunity for warren buffet. Buy more of the airlines. You think the government is going to come in to help them . Do you think theyre going to need to . I dont know the answer to that. No, no, post 9 11, 15 billion went towards the airlines. But that was for security measures for them to change the way they operated, not to pay them for flights they werent running. Some of those airlines rushed to washington to say that they were in dire straits. At that point in time more liquidity in the market but there were many more security issues. Were up on a break. It could be like the auto industry. This is what im saying then youre going to get into a question of what kind of pound of flesh do you want for that. When we come back, well talk about oil prices which have a very direct impact this morning, bouncing back after its biggest one day route in 30 years. Wti up by 10 . 34. 22. John, thanks for coming in Danafarber Cancer Institute discovered the pdl1 pathway. Pdl1. They changed how the world fights cancer. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. You should be mad that this is your daily commute. You should be mad at people who forget theyre in public. And you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Crude oil plunging 24 yesterday in a single day. It was the worst single day since the gulf war started coming in the wake of saudi arabias split with russia joining us right now fresh off a trip to riyadh is helima croft the markets are rebounding whats happening with this rift between russia and saudi arabia and should we anticipate there will be any coming together any time soon . The saudis have made it abundantly clear that unless russia returns to the opec bargaining table, they will take production up to potentially new highs. They were indicating they would take it to 12. 3 Million Barrels a day. That would be a record high for saudi arabia this is a situation right now where its really seeing if russia will come back to the table. There were reports that the russi Russian Oil Minister saudi arabia goes ahead if they do not. Its a selloff i think we will be there we are in russia we could be in a situation or a situation so yesterday was not a selloff. Its a bounce back the saudi statements are going to be backed be very concerned. So while demand is this fragile. How long could saudi arabia each carry out that strategy particularly with the fall after 2014 russia says they have more band width and both countries theyre looking. Almost indefinite. There are signals again if you look at that ceo. Helima, oil output. Its a tactic. When i was in the kingdom i was really struck by it. At these levels. Should we comply with 2018 which is over no capacity. Every country produces it. Theyll reserve in the market. Done deal coming up when we return. A tax cut is the white house agreeing to offset the Economic Impact of the virus. Well discuss options on the table. Its pretty good the barkins are empty nesters now. Should they downsize . Probably. Will they . Not as long as thanksgiving is a holiday. Planning for the future is about more than just money. Let equitable be your guide. Wewithout the planet cooler getting warmer. At emerson, when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. Sales tax, real estate credits, solar incentives. And we have no way to integrate all that . No. But bdo does. announcer people who know, know bdo. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] welcome back, everyone the futures this morning are indicated sharply higher the dow futures indicated up by almost 1,000 points. Lets get the latest on the coronavirus outbreak well get over to meg terrell. Becky, case counts are more than 4,000 italy has the most cases outside of china at 9,000 and the most deaths at 463. The country extending the lockdown on the Northern Region to all of its 60 million citizens in an attempt to slow the viruss spread in the u. S. Cases reaching 755 with 26 deaths new jersey and florida the latest states to declare emergencies. In seattle, drive through testing for covid19 has begun at the Washington Medical Center the testing is for staff and faculty and the results are available in one to two days this as the cdc warning of the risk of Older Americans and those with underlying conditions its likely many will be exposed to the virus this year and next. The threat of a pandemic has become very real but it would be the first pandemic in history that could be controlled joe . Interesting way of putting it, meg. Thank you. For more on the fight of the coronavirus in the u. S. Lets welcome michael osterholm. Director of the university of Minnesota Center for Infectious Disease research and policy. Thank you for joining us weve been going back and forth, containment versus mitigation. Just to define those terms, how would you characterize it . Are we past the point of containment do you think at this point, sir first of all, good morning. Containment implies that somehow youre going to take and not only stop additional transmissions from occurring now but youll do that well into the future, meaning you literally put out the viral forest fire. Mitigation is saying, well, you know, were going to have this thing burning and burning for a long time. What can we do to reduce it . We also think theres something in between which many of us call suppression. What youre trying to do is really hold down the number of cases today as opposed to tomorrow or later on in fact, were overwhelming our Health Care System if you have 100 cases that all come to the hospital today, thats one thing if you have 100 cases and a week comfort next ten weeks, you do a great job. Were in the suppression stage were not really containing this surely were not going to stop a lot of the transmission. The most important thing i mimagine its pretty obvious, people that need to be tested need to be able to be tested and do you have yes. Do you have knowledge about where we stand there there was supposed to be a lot more test kits shipped out yesterday, today, all this week. Is that happening . Testing obviously is important for any one person to know should they get sick or know what theyre actually up against and know what the Health Care Needs will be i think that testing in and of itself will only have a limited impact on what really happens with this outbreak what i mean is two weeks ago on this very show there was a challenge offered to me, is this really going to spread or not . Weve not seen cases in the United States that are spreading in our communities and now two weeks later with what limited testing we have, we know its there. This virus is a highly infectious virus theres a study showing people are highly infectious before they ever get sick the virus level is over 1,000 times higher in their throats than with sars in a sense, this will keep spreading. We have to stop fooling people this is only by close contact or i have to be within two or three feet well see much more transmission our job is to get the country through this, make sure they understand there will be widespread transmission of this virus around the country and that what we have to do is keep people who are at high risk of having bad outcomes, older, Underlying Health conditions from being exposed. Doctor, the cdc put out new guidelines it now says people at extreme risk of serious illness, they include people over the age of 60 or with Underlying Health conditions theyre telling them to stock up on groceries and be prepared to stay at home for a long period of time. How should the average american be reading that . Well, first of all i think its surely something you can do, but, you know, what i find really concerning is weve really not set the agenda here for the American Public i think in a realistic way. Like a crazy person to decide youre staying home from now on. No, no, no, let me just back up right now were approaching this like its a washington d. C. Blizzard for a couple of days were shut down this is a coronavirus winter and were in the first week. Were going to see transmission for many, many more weeks to come we have to prepare for that. All right appreciate that. Thank you. We want to thank you, joe, for hanging out with us. A lot more coming up in just a minute, but thank you for helping us with it. Meantime, global stocks being hit hard by the coronavirus fears, but coming back this morning, were going to talk to veteran emerging markets investor mark monbius fr another hour ahead robinhood believes now is the time to do money. Without the Commission Fees. So, you can start investing today wherever you are even hanging with your dog. So, what are you waiting for . Download now and get your first stock on us. Robinhood. Wenot the exception. Sh food being the global norm, at emerson, when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. What a difference a day makes. Stock futures surging following the markets worst day since the financial crisis. Helping this mornings rally. A potential payroll tax pit floated by President Trump. Thats a big number. The latest details just minutes away. And an investing legend on the extreme volatility on stocks we have a special interview with emerging markets mark mobius for the final hour of squawk box which begins right now good morning welcome back to squawk box here on cnbc live for now from the Nasdaq Market site in times square. Start doing this taped from home. Im joe kernen along with becky quick and Andrew Ross Sorkin u. S. Equity futures this morning are snapping back a little bit were up about 980 points after a big market selloff, which youre aware of yesterday. Were also seeing a bounce in treasury yields. We were over. 7. Surreal, isnt it . We were over. 7 earlier. We are below that on the ten year. 685 it used to be basis points we didnt even want to talk about them when its 100 move, suddenly i guess it matters also helping stocks you would think today because that was one of the big movers, big down draft movers was oil were up 10 on crude. Almost back to 35 a barrel. Check out some of the premarket movers were seeing from yesterday. Those hardhit energy producers. You can see occis up 27 . Apache up 17. 5 marathon up 19 . We should be looking at twoday totals because maybe thats half the ground they lost yesterday. Yeah. Which is a lot of times the way things work. 19 on marathon totals about 69 cents. Welcome to tuesday, and what a difference 24 hours makes. Yesterday at this very time the combination of the coronavirus fears and of course developing Oil Price Wars in asia had futures pinned at their lower limit. Projected 5 loss at the opening wasnt really accurate thats simply as low as the futures were allowed to be premarket it didnt mean stocks couldnt open up deeper in the red and thats exactly what happened well show you that right now. There it is there it is yeah. Yeah, there you see you see the cessation in ticks the s p. Means the First Circuit breaker the bell tolls. Has been triggered. The s p 500 dropped 7 in the first few minutes after 9 30 and then all trading was halted. The first time the market Circuit Breaker triggered in 20 years after a designated 15minute cooling off period trading resumed normally but stocks continued to fall throughout the day the dow eventually ending the day down almost 7. 8 its worst day since the financial crisis and its worst point loss ever. Yesterdays market turmoil brings us to today and some possible help from washington for an economy hard hit by the coronavirus fears. President trump floating the idea of a payroll tax cut. Eamon javers joins us. Where do these plans stand what kind of reception would it get in congress for this reporter good morning, becky. You heard the president last night in his press conference at the white house suggests hes going to have a press Conference Today to announce what he called dramatic and Major Economic policy items in order to address the economic fallout here from the coronavirus. But white house officials tell me that there is no finalized economic plan inside the white house right now. Im told that its not there right now in terms of the specifics. An official telling me there are a lot of details there that need to be worked out as you look at that picture of the president in the press office last night. When the president announced he was going to have this press conference tonight, im told that officials were stunned because that had not been the plan they were not expecting that the president would announce he would be holding an Additional Press Conference Today to roll out those economic details because the economic details very much still in flux at that point last night a lot is going to depend on mnuchin and kudlow, the treasury secretary and the National Economic Council Director are going to be going to the Senate Republican lunches on capitol hill to roll out some ideas to Senate Republicans and take their temperature and see what politically might be possible here after that the white house might be able to start narrowing down what items it can include in this package and what items it cant include in this package. To give you a sense of how freewheeling things were last night at the president s press conference, im told that peter navar navarro, the trade advisor at the white house, who is not on the Coronavirus Task force nonetheless attended that Coronavirus Press briefing last night. Officials described themselves as surprised to see Peter Navarro show up on the podium and say he simply trailed the other officials into the Briefing Room in order to attend that the picture you get here in talking to officials last night and this morning is that this is very much a moving target and although the president promised last night that these would be dramatic and Major Economic items that he would be unveiling today, that is very much not in place as of right now. We do have on the schedule a press conference for 5 00 this evening. That will be after the Senate Republican lunches by that point it may be the case that the white house has gotten its proposal fine tuned enough to roll something out publicly officials, im told, were surprised the president announced that last night. Pack over to you. Eamon, thank you very much. Weve seen the toll the coronavirus has taken on the u. S. Markets other countries are getting hit hard joining us on the phone is emerging markets investor mark mobius hes the Founding Partner of mobius capital partners. Thank you for taking the time to talk to us today. Pleasure. The moves weve seen in the markets, do you think its been an over reaction, an under reaction or maybe just right as what we know right now about the coronavirus . I dont think its been an over reaction simply because theres so much uncertainty out there. You know, i thought being here in south africa and before this in latin america id be safe no announced coronavirus victims, but now we have it here we have it everywhere. So the uncertainty is definitely a big, big factor which causes fear and of course causes people to sell out and to go to safe havens like gold or treasuries or Something Like that what have you done . Ive been actually adding im trying to add to our Investment Trust now i hope i can get it at the right price. So thats my strategy is to consolidate. In other words, i have some holdings which were not the greatest theyre the ones to sell and add to those that look good. So i feel like this is in some directions a buying opportunity. Of course, you can always go in too early. This happened before but i think it makes sense to put some money in and continue to put in as the markets come down, if they do come down when you talk about markets that look good, areas that look good, are those the areas that maybe have already dealt with a big part of the coronavirus and maybe were seeing them come out the other side im thinking specifically of china. Well, you know, if you look at the key is oil prices, thats a big, big factor. If you look at the impact of Lower Oil Prices, youve got to be look at south korea, at india, at south africa south africa, turkey, indonesia. These are countries that have 3 to 5 of gdp into global imports. Of course saudi arabia, you know, russia not going to be doing too well in this environment, but there are countries that will benefit. Another factor i think is important to remember is that, you know, the detection of this coronavirus in some of these countries has not been fully utilized in other words, the number of test kits are not available and i think one of the reasons why south korea has such high numbers is that theyre doing a very, very good job in testing people they have enough test kits and theyre out there testing many, many people. Well, thats an interesting point. Going back to china, we have seen the reported number of cases drop weve seen them close some of the temporary hospitals theyve set up, but i guess now that theyre going back to work we get the next question in what happens now once you lift some of those severe restrictions exactly and thats i mean, i know the chinese authorities are very, very eager to get production going again because chinas manufacturing system is going to be losing market share to other countries around the world so theyre very eager to get going again. Of course, the next question is when are we going to see another outbreak, a secondary outbreak we have to watch this very carefully. I guess the thing that really catches my attention that you just said is youre looking at markets where youre not so much factoring in coronavirus as much as you are oil prices. Countries that have 3 to 5 of their gdp in oil inputs that theyre bringing in, youre not going to make any bets, youre just going to go to the things you know will help. Exactly and i think another factor here is the impact of low oil prices on inflation this, again, enables the Central Banks in these countries to lower rates in line with what the u. S. Is doing. So i think thats a very, very important point. And of course with lower inflation you get lower Retail Prices which encourages people to buy and you see a recovery in these economies. It wont happen overnight, but in the next few months you probably will see that. What did the feds recent 50 basis point cut mean through the view of what it means for emerging markets, those that youre focused on . It means a lot. I mean, you pick up a newspaper anywhere in these emerging markets, here in south africa, you pick up a New Hampshire and its the fed has done this and done that. People are watching this very, very carefully of course, with the big etf activity in emerging markets as well as developed markets, the correlation between whats happening in the u. S. And the emerging markets increases so a downturn in the etf space in the u. S. Has an impact on whats happening in emerging markets. Mark, you said youre buying at this point. When did you start what was the selloff that made you think this is enough to start jumping in well, just yesterday. Just yesterday. We started, yeah. Youre in south africa. Are you there for business or are you there because you were concerned about what was happening in singapore and other places well, i came here for business first, but then i was planning i actually had to attend a Board Meeting in romania and another talk in russia in the next few weeks and i decided to cancel those and stay here, not do much traveling until things begin to quiet down. Mark, after having been active for so long, you know, globally in all of these different markets, do you think in a couple of years this will be an instance of, well, there was this in the 70s, then there was something in the 80s, then we went through this in the 90s, then in 2020 we went through the coronavirus . Will it will it be like that or will it be, you know, actually something qualitatively different from all of those other breaks or crises that weve seen globally . Well, it will be like, you know, what weve seen in the past the difference i think is going to be that the variation will not be as extreme. You know, i remember being investing in argentina and brazil where inflation was 2,000, 3,000 . Its unlikely were going to see those extremes in the future, but at the same time youre always going to see these ups and downs, these bear markets, these panics, et cetera, et cetera but the nature of them will be much different because right now with the internet and with incredible communications, things will happen much faster and it will spread around the world much quicker. I guess the question that none of us can really answer, is it going to be in hindsight like a really nasty influenza season or is it going to be a pandemic akin to something that hasnt happened in a century . We dont really know which it is at this point. And are we able to deal with it better with modern science, modern technology or does the whole Airline Issue make us even more susceptible since it spreads so quickly we dont know any of the answers to these things now i dont think. Well, thats really the difference that we have now is that with incredible travel, i go to these airports brandnew airports and all of these emerging markets filled with people. Theres definitely going to be a spread of anything that hits any individual country, it will spread around the world. Yeah. The difference, of course, this time is that we now have much Better Health care, we have much better scientific information about the viruses so im quite optimistic that we can conquer that as i said, anything that happens is going to happen on a global basis. Okay. Hey, mark, thanks for talking to us today we hope we can check in with you again soon thank you very much take a look at the shares of the Major Airlines this morning. Heres some news at american and delta announcing capacity cuts as travel demand drops american capacity american cutting capacity by 10 , delta by 15 americans cuts include a 55 reduction in transpacific capacity southwest airlines, ceo gary kelly, will take a 10 pay cut to help what to help deal with what kelly calls an alarming drop in bookings. I just wish that if i took a 10 pay cut i could help all of nbc, you know what i mean if my i mean, is he serious a 10 pay cut. Now only you, your salary its a sign of leadership if you said we could divvy up a 10 pay cut across the company and help people look, its a sign of leadership. Im thinking about what i can do for the people. You have pilots who are not going to be flying so theyre not going to be getting as much much their salary either this is important for Delta Airlines if youre wondering how severe this is, Delta Airlines says theyre suspending their Share Repurchases right now. Theyre delaying half a billion of voluntary Pension Funding theyre deferring 500 million keeping their carbon stuff . They dont say that the recent fuel price decline provides 2 the hell with the pension plan. Get our cot. Stop. Thats great. Way to go, ed we are putting off half a billion dollars in cap ex spending theyre suspending their share of repurchases even with the shares down considerably half a billion of pension. That tells you how seriously the airlines are taking this. They should. The other issue is, remember, the airlines use bookings almost like float if there is a halt in that, it means theres no money coming in to fund some of these things thats why youre seeing i thought about the government assistance for the airlines i wasnt going to mention cash for klunkers one of my twitter people said we should to cash for klunkers, 737. Heres a billion dollars well buy back your 737 max. Max we havent even started we havent even started the bailout debate. Yes, we have. Youve been saying it all week so we have started it. Believe me ive been sitting here getting pelted with it nonstop. Its tuesday. Its only tuesday. Will bank pain turn into financial gain we hope. Well talk about signs investors should look for to signal a turn around might be coming as we head to a break, take a look at the price of oil you can buy it by the barrel its a lot choeaper than it used to be. 33. 23 is the price on crude. Youre watching squawk box on cnbc the design thinking, the digital engineering, security, blockchain, and we will be first to market yes. When we do we launch . Unfortunately, in 2 or 3, hours. Why the delay . Cognizant is helping banks use Digital Technologies at scale to advance speed to market. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] welcome back 858. Weve had quadruple digit gains. Under 900. 879. A bounce back on the yield with the ten year weve had some other notable moves yesterday and crude up not quite 10 . In fact, theyre the low to mid 30s at least not in the high 20s. So there are some reversals happening. Well see if they hang on. Well see if it hangs on all the way until 4 00 today i dont know how much money id put on it. See where we are at 9 30. Meantime, the Banking Sector has been suffering a beatdown. The bank etf lost 15 . That happened yesterday. Its worst day in a decade. Down 30 so far. Joining us for more on the carnage and what we can look for potentially as a signal for turn around, marty mosby. Vining sparks. Good morning to you, marty the Big Bank Ceos are all heading to washington tomorrow to meet with President Trump who is likely to put the arm on them to extend loans to Small Businesses potentially at even lower rates. How should investors be thinking about all of this . Well, the first thing is the market has this volatility, especially for the banks built in since 2008. Since 2008 every Institutional Investor told themselves that they did not want to invest in banks when you went into the next recession so any inkling that were going into that next recession draws us down to levels that were now seeing this level of pricing tangible value is very similar to where we were in 2011 just coming out of the last great recession. So thats built into the market. This is a reaction that weve seen in 2016, in 2018 and now were getting in in 2020 to put that in context, in 2018 the bank stocks were down 22 . 2019 they were up 29 . And then in 2020 for now were down 34 right back to where we were kind of at the lows of 2018 at this point. Marty, clearly, look, if youre a longterm investor, you have to imagine the banks are going to come back the question is is there more to go on the down side before we really get there or not . Yeah. So what we have to kind of put in there is this wild card we have a new accounting method okay called cecil. When we talked about this last week, we talked about two cyclical events. Interest rates is fully baked in to the numbers the market expects 20 basis points compression where were at which will take us 15 basis points below our low where were at when rates were at zero that is already baked in if you look at the credit side, thats the dynamic thats going to change this and when thats going to change. When were looking at this, this cecil accounting methodology could make the credit losses look a lot worse because theyre going to have to create this provisioning first quarter, we need to get through that in the meanwhile, you want to focus on the financial sector, Northern Trust, state street you could look at Goldman Sachs or Morgan Stanley, which dont have the same exposure to the particular accounting methodology. Marty, beyond the exposure to accounting, what i also want to know is the credit exposure perhaps to some of the Energy Companies that are going to be likely hit by the price of oil and others well, we went through this in 2016 you actually saw the banks perform really well. A lot of the pressure was outside in private he can at this time at this firms that had over extended into the oil and gas industry but the banks were the senior positions the banks actually positioned very well. If you look at what the market has on credit, weve got priced in 100 basis points of increased losses we didnt see near that in 2016 when the oil prices were exactly where they are right now if you look at the 100 basis points, that would exceed the recession that we had in 2000 and the recession we had in the 1990s. So the overhang were seeing on these valuations which pushed it up to 4. 5 is completely predicated on what happened in 2008. When you look at whats happening in italy where mortgage payments have been suspended, is that right, joe . Thats the headline. Some reporting from reuters and others, is that something you think could come to the United States . And even if it doesnt, is that something you think could cross europe and if that does, in terms of just market efficiencies and structured market between our relationship and the u. S. Banks with banks in europe, whats the impact well, im here in orhlan detoday at the icba conference where were talking to Community Bankers across the country you just talked about the large banks going and talking to the president. What we need to be focused on is how do we help our businesses and our households through this process. So if we have to give up some earnings, we have to have something thats going to happen to our chargeoffs in this short period to get through a period of time where theres economic disruption, thats really what were talking about down here. What are the decisions that can happen that can help the economy kind of make it through this period of time thats what the banks can really be focused on and make a difference. Talking about that, we have to run, real quick, what are you expecting the president to tell these bankers tomorrow and the impact of that again, its going to be disconnecting from the market for a period of time where youre going to have to be focused on a bigger picture. Its not about Quarterly Earnings, which is why were saying we cant run into this thing before we get into april and we get some information about that but it really is going to be how can we help the economy . How can we help these businesses that are going to be at risk because were going to have economic disruption for a short period of time. Finally, marty, if you could own one bank, which would it be . I think right now its got to be Morgan Stanley. The recent acquisition got significantly discounted they already had that discount in what you have is the discount from what were seeing in the Financial Impact what we will see is the trading gains and the activities with all of this movement in the market can generate some revenue. I think thats a good one. Marty, thank you very, very much appreciate it. Thank you. Still to come this morning, well be talking much more about whats happening in the markets. What this weeks volatility in the Energy Sector means for the economy, u. S. Crude Oil Producers and your wallet. Commodity veteran gary ross will be joining us to make sense of oils worst day in nearly 30 years. Later, well be speaking with allianzs chief investor. And take a look at the faang stocks gains of 3 1 3 to 3 1 2 well be right back. Love to give ive got so much more to give, baby to start your retirement plan, find an advisor at massmutual. Com [sfx mnemonic] 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. All right. Welcome back to squawk box, everybody. The futures decidedly higher than they had been yesterday were off the highs of this session. We had been watching the dow futures up by over 1,000 points which would have made back about half of the losses that we saw yesterday. The dow futures are up by 755 points s p futures up by 82 the nasdaq up by 248. A few stocks this morning. Shares of Dicks Sporting Goods are higher they reported Quarterly Earnings of 1. 32 ten cents above estimate 13. 7 increase in the Quarterly Dividend look what its done though thats a rebound from where i was wondering why would they be doing that much better given that its going to everything is had, you know, at least in the down draft of the overall market or concerns about consumers being out and about. Could be Holiday Season numbers. I think its got to do with whats happened, dont you, in the last two weeks vail resorts is moving lower resort operator missed estimates on the top and bottom lines for its latest quarter it also withdrew its annual guidance it sees business continuing to decline. Thats a big mover 12 . Those are bad numbers. You can see its been coming down, travelrelated stock obviously. The epic pass is not doing maybe as much as we expected. Coming up when we return, an inside look at what a return to ultra low oil prices could mean for wall street. Dozens of Energy Players already on the bubble, and well also talk about the average investment on the bubble crude trading right now at 33. 67. By the barrel, yesterdays 25 slide. Jump in oil this morning being reflected in the biggest premarket gainers in the s p 500. All are oil related. Looking at marathon up, occidental up. Yoreatinsawht now u wchg quk right here on cnbc but support the leg when i started cobra kai, the lack of control over my business made me a little intense. But now i practice a different philosophy. Quickbooks helps me get paid, manage cash flow, and run payroll. And now im back on top. With koala kai. Hey more mercy. vo save over 40 hours a month with intuit quickbooks. The easy way to a happier business. We see hat emerson,kthroughs when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. Should they downsize . Nesters now. Probably. Will they . Not as long as thanksgiving is a holiday. Planning for the future is about more than just money. Let equitable be your guide. Welcome back to squawk box here on cnbc were live from the Nasdaq Market site in times square. Lets get you caught up on stories investors will be talking about. Check out shares of novavax. It may be providing a solution to the coronavirus outbreak. Its been awarded 4 million by the coalition for epidemic preparedness and it may receive additional funding in the future. Coalition was founded by the bill and Melinda Gates foundation that stock up by 18 fin finra is temporarily allowing traders to operate from home its taking that action to deal with the possible spread of coronavirus. It expects member firls to establish supervisory systems to make working from home possible. And fifth third is accused of opening unauthorized accounts. They opened deposit and credit card accounts to help meet ambitious sales goals. They call the allegations unnecessary and unwarranted although it sounds a lot like wells fargo. Cincinnati member, too. Dont know the extent of it they seem to be fighting it right now. That fifth third does not intersect. Its fifth and. Third national and fifth national bank. Wheres first, second, fourth i dont know where those are. Meantime, lets talk oil oil saw its worst trading day in 29 years yesterday both wti crude and brent crude lost nearly 1 4 of their value in the s p Energy Sector off 52 highs. Saudi arabia launched a price war. Oil prices bouncing back a bit wti crude right now at 33. 65 thats up about 8 joining us for a look at the impact this price war will have on the Energy Sector, gary ross, ceo of black gold investors. Good morning to you. Good morning. A little bit of a nice i dont want to call it a rally. A little bit of anything is better than where we were before the question is where you think this is a bottom, where this is headed next. I dont think its a bottom because we havent really seen the supply saudi arabia is increasing supply to 12 Million Barrels plus in april. Thats april that wouldnt arrive in the United States until june basically we havent seen the huge surge in supply theres been stock building across asia because of the very sharp demand drop from the virus but were going to see this supply coming in the next few months so i dont think weve seen the lows yet okay. We havent seen the lows talk about the fallout in terms of what you think the Economic Impact is. Where you think the fallout will be well, i think its going to have a dramatic effect mostly on u. S. Shale producers right. Were going to see production in the United States plateau and then begin to decline, and thats, of course, assuming this continues, which i think it will. Thats the question what could be done if you were in charge here, is there anything that could be done to end this stalemate i dont know if we call it stalemate might be a nice way to put it. Its the right thing to do from an economic point of view. The right thing for saudi arabia. They cannot manage the market themselves there was a 1. 7 Million Barrels a day official cut the saudis went from 10. 6 to 9. 7. Who could cut in opec. Saudi arabia, kuwait, uae, maybe iraq they cant do it alone thats 14 Million Barrels. They have 102 Million Barrels a day global production. They need not opec, they need russia and russia was really not doing anything theyre a free rider in this whole cut so the saudis just said enough is enough. Do you think theres any pressure to be put on russia do you think theres any pressure to be put on saudi over the next few days here i think theres been some pressure put on them i wouldnt be surprised the u. S. Administration hasnt tried to put some pressure on them. At the end of the day, saudi arabia, you can manage these your own you have venezuela out of the market you are talking about a huge potential supply when you look out the next year. How do you make room for all of this potential supply . You have to get shale to start slowing down and start declining. 35 wti will lead to a 2, 3 million barrel drop production of shale next year. If youre a public investor out there, Retail Investor looking at this situation today you would do what . Given what you know. Well maybe you own some of the big Public Companies maybe you own mmps i dont really own anything im a cannabis guy. No, im saying if you are looking at this and watching this, you would tell our viewers what well, i would say consumers are going to benefit from lower prices. Right. There will be a period where refiners will benefit from the fact that the feed stock will be relatively inexpensive inevitably though cheap crude will become cheap product and put some pressures on margins down the road. I think all industrial complexes that use energy are going to find that their costs have come down look, you were just talking about the airlines it hasnt helped them all that much given all the cancellations that theyve seen. The jourge lenal lead up says putin shows that hes not his friend what about mbs President Trump may need to remind them which country stuck behind him and missile attacks from iran. Do you think President Trump calls mbs and says, help us out . I bet you he already called him. You think hes already called him and said, wtf . What did he say when he called him . I think he probably called him and said, look, this is creating a disequilibrium in the market, its causing the stock market to go down. We need you to stabilize the oil price. Did he say that it wasnt exactly what you heard this morning what you heard this morning from the ceo of aramco was were going to 12. 2. Thats a tremendous increase in sales. Think about it, theyre only selling 400 a day to the u. S. Market the way theyve lowered prices, they went from 3 overpriced to 4 under priced in the u. S. Market their sales in the u. S. Are going to go from 400 a day to a million and a half, 2 Million Barrels a day come april so were going to see a huge increase in the u. S. Where does the president come down just in terms of we want lower gas prices for americans but all of a sudden its so low its threatening jobs in the industry. He wants it both ways he wants texas, louisiana, new mexico north dakota. Exactly to do well. But you cant have it both ways at the end of the day it all comes down to fundamentals, supply and demand. Its a weird thing to think of the american president saying, hey, we want you to stabilize and not let prices fall lower its a weird twist tells you where we come because were doing so much Oil Production ourselves exactly exactly. Gary, thank you appreciate it. Thanks thanks for having me. All right. Earlier this hour we talked about what weve been hearing from delta, from other airlines. Delta is announcing a 15 capacity cut as travel demand drops amid the coronavirus outbreak ed bastian is presenting to the virtual jpmorgan conference. Heres part of what he had to say there. Two weeks ago our revenue trajectory changed dramatically as the virus spread meaningfully outside of asia. Since then we have seen a 25 to 30 decline in net bookings and are prepared for it to get worse. We expect demand erosion will continue in the near term and have built a plan that prioritizes Free Cash Flow and preserved liquidity. Talking about the steps that theyre taking as a result delta is also implementing a hiring freeze and offering voluntary leave. Its deferring half a billion in cap ex spending, half a million of voluntary Pension Funds that they were going to put in. Its suspending buy backs and the stock is up 2. 4 this morning after the massive declines you were seeing if you were looking at a chart you would see how far and how quickly delta and other airlines have dropped all of the airlines, whats most shocking about this, they are anticipating for the full year theyll be seeing a 2 billion advantage because of the Lower Oil Prices that translate into lower jet fuel prices. Even with that theyre talking about a 25 to 35 decline in bookings over the last two weeks. They expect that to accelerate. Come on youve got to realize the irony in this. Youve got to at least how long ago was that when he was on and just just telling us all about buying his Carbon Offsets. How much did you say it was a year 100 million a year. What is wrong with you youve got to see whats wrong with you youve got to see the irony the virtue singing. Everybody said it was marketing and it meant nothing. I said on the air now hes not contributing to the pension but hes buying Carbon Offsets i said that when and if this became but for you to just youve just got to admit the timing thats because of the you laugh at this is okay. All right. Im not laughing at the situation. Im laughing that he that the timing of doing this feel good esg marketing virtue signaling and then a week later hes cutting pensions youve got to admit thats rich. Hes trying to do the right thing. I think hes a wellintentioned man, i do. Im not going to laugh at him. All right coming up, what investors need to know about surviving what investors need to know about surviving no, in the extreme gripping market. Allianz chief Economic Advisor Mohamed El Erian were off the highs. Stay tuned, youre watching squawk box on cnbc our next guest told us multiple times over the last month not to buy the dips. After yesterdays market rally lets talk about whether things are any different. Joining us Mohamed El Erian. After your last appearance we put out a tweet that said 20 to 30 . Was that your intention of saying the market could eventually be down 20 to 30 is that still your feeling is it likely or is it just possible or yesterday did you feel any capitulation, mohamed did you feel any better after that big route not as of yet, joe. I said 20 to 30 from the high. I know. Okay were down about 18 now. Right so were looking at 2 to 12. Wed feel another 12, mohamed. Yeah, look, there is you have to understand that what were going to feel first and foremost is volatility thats what ive been saying for the last week. Thats why there are opportunities for certain investors. Not the long only investor were going to sense volatility because of three things. One is policy versus more demand than supply destruction. And the american and delta news you reported shows you what supply and demand destructions feed on it self. Two, were going to have conflicting medical news. China containment is possible italy, this thing spreads quickly. Finally the technicals are fascinatin fascinating. You have people long still trapped looking to go out and people looking to cover shorts its going to be very volatile but around a downward trend for now. So it sounded like you were switching to, im not sure about more down side but im sure about volatility youre saying theres more volatility and it wouldnt surprise you youre talking 2 to get to the lower bound of 20 you think its less likely we get to 30 or 20 to 30 is still possible because we dont know what we dont know about how this pandemic, if you want to call it that yet, but how the coronavirus situation, we want see into the future of how it plays out. You think we have to the made the lows i dont think weve made the lows yet but it is going to be incredibly choppy and youve got to be aware of your behavior when you are taken out of your comfort zone investors make mistakes when theyre taken out of their comfort zone its important to understand whats facing you so you dont get unsettled and do the wrong thing. There is a whole host of uncertainties out there. The biggest uncertainty is what i call the economics of fear how will you and i react are we going to exaggerate the downward trend are we going to deengage from the economy at a faster rate if we do, then, you know, its going to be messy. The hardest thing to predict is the economics of fear. I dont think any of us can deny weve at least done a few things differently a few exactly so, do you see any glimmers of hope in the tenyear or do you think oil prices will continue to be a major story in terms of being much lower than people thought they would be . Do you think that both of those reverse some of the recent panic selling or whatever you want to call it . Panic buying in the bond market . In the tenyear, i was encouraged on the way it behaved yesterday. It behaved well. Thats good for the market as a whole. I remain concerned about the Corporate Bond market, keep an eye on that. That is where the canary in the coal mine is, if youd like. Im worried about what happens in that bond market, it will contaminate new issuance on oil, i think the worst is behind us. It was the shock of saudi arabia abandoning the swing producer role today the reaction of the market has been muted given that we got a second signal out of saudi arabia on saturday, the signal is price war. Today the signal was price war and production war theyre increasing production by 20 . The market internalized that well the biggest shock is behind us it was this change in regime from stabilizing prices to, you know what, im not playing this role of swing producer anymore so, many im saying so now. I dont want to start every sense with a so. So there you go. The fiscal stuff you always wanted, and the fed stuff that i dont know what theyll do now maybe some qe or something what would you like to see fiscally and from the fed at this point to try to stem the damage so to use your phrase on the fiscal side, i think we need targeted measures ive laid out in todays Financial Times the sequence for how you do that. I think we have to be careful not to throw everything at it. We will Waste Limited ammunition that concept is especially important when you turn to the fed. You heard me last week worry about the 50 basis point cut they should not be doing general policy responses yet lower funding, lower Mortgage Rates wont make us take a cruise thats wasting valuable ammunition, but they should focus on market functioning. They should understand better the technicals of the market and be there to counter market malfunction. This is not about them supporting asset prices. This is them making sure the market functions well. Thats what they should be doing, laserlike. So you would disagree with our earlier guest host, joe, about theres still a place in the feds playbook to try to boost asset values in the wealth effect you dont think thats part of it how much would you want you always you always liked fiscal help. How much would you want to do . Payroll . More than that i would like do two things. One is give the medical profession more financial support. Two, is protect the most vulnerable segments of society that are being hit hard for no reason on support asset prices and the wealth effect, are we really going to take a cruise because we feel wealthier . We have to be honest as to how we change our behavior support Balance Sheets, but be clear thats what youre doing you wont reactivate the economic activity. We need medical advances for that thank you thank you lets get down to the new york stock exchange. Jim cramer joins us. The headlines out of delta show you how drastically and how quickly things are being impacted i think ed bastian said they have seen a 25 to 30 decline in bookings. They expect that to accelerate how do you play that out i do think that both the cruise lines and the airlines are being watched closely by treasury, by white house nothing to do yet. They do for the most part claim their Balance Sheets are stronger at the airlines the cruise lines are a definite problem. As Mohamed Elerian said, nobody will take a cruise youre going against dr. Fauci dr. Fauci a lot of people thought would be silenced. Hes anything but silenced hes doing a fantastic job hes making it clear, if you take a cruise, youre doing it at your own risk i do think that the oil was a major part of what caused yesterdays decline. We had these huge cutbacks in drilling diamondback being the best one it cut back so aggressively. Occidental being the worst you get an opportunity to sell that im not sanguine, but i do know the Banking System is much better than i thought at this point. Jimthk , anyou. Well see you in a couple minutes. Good Tuesday Morning welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber futures are off the highs as we get the first real examples of Corporate America taking defensive measures against a drop in demand, most notably from the airlines. Europe is up 2 , 3 . Tenyear yield got to 74 basis points but now 63. A day after the dow tumbled by more than 2,000 points and all three major indices fell 7 , stocks are looking to recoup some of yesterdays big losses todays