Measures fail to emerge. On the monetary side, the bank of england, becomes the latest to cut rates treasury yields hovering around 80 basis points. Full Team Coverage of todays market plunge. Mike san tolly is with us and meg on the latest on the coronavirus. But well begin with breaking news out of washington major Bank Executives meet with the president today. Well get to wolf at the white house. Reporter the president and the Vice President and the treasury secretary currently hosting in the white house behind me the leaders of the major Financial Institutions of this country in attendance we have the leaders of jpmorgan, bank of america, citigroup, goldman sachs, wells fargo, black stone making it the type of gathering we havent seen since the peak of the financial crisis. Theyre all inside, as we speak. What will be on the agenda well, two main things. Number one, liquidity and the functioning of markets number two, lending to businesses that are most affected by the coronavirus. Weath whether, of course, we see any hard policies that drastically change the equation or a photo open remains to be seen. Most of the ceos were tightlipped as they went into the white house moments ago. I managed to stop a chairman and ceo of bank of america, Brian Moynihan, i asked him whether he expects a recession in the United States. Were here to have a good meeting with the president my colleagues and i have Great Companies. Well capitalizing and doing what we can to support the American Economy and the consumers and companies and were here to help the president support the economy. People have compared this financial crisis. I think the banks are strong. Now, of course, whether or not we see any sharp policies that change the lending environment to Small Business remains to be seen its also the first time weve heard from these bank ceos since the selloff in Broader Markets and their stock prices, in particular, the index down close to 40 since the january peak. Around 37 , i think, with todays news well be listening to hear any comments to say their Companies Remain strong. Guys to your point about the banking stocks were down 5. 5 for banks right now. One month performance just ugly, ugly, ugly down 26 . How negative do you think theyre going to be about what is happening in the markets and with their stock prices . Great question, sara really genuinely a very anticipating anything they have to say on the share price move, i would say two things clearly, the broad reason in which they have sold off so sharply over the last couple of months have been the yields have collapsed as we well know the earnings are closely linked to yields interestingly, they did enjoy a healthy bounce yesterday for the first time a bounce that was larger than the Broader Market rally though today you may have expected them to hold up a bit better than they have done so. Why . Yields held up today but that is not the case again, it just shows that broad risk sentiment we see in markets that banks are always a big part of not least when you have questions about the violent of future of companies, whether its small or medium sized businesses exposed to the virus or Larger Energy companies expose to the oil price selloff well await any comment in this case can give to reassure the market their Balance Sheets are strong and their futures are certain. And maybe they can deliver a bit of a rally to the share prices today. As youre speaking, were seeing fresh session lows for the dow. Now down more than 6 . More than 1500 points on the dow. Putting us in correction 20 from the record high we have 56 minutes left of trade. Another painful day for the bulls, clearly take a look at the price action on the dow as far as who is moving the dow lower, i mean, its 30 out of 30 in terms of dow stocks that have been lower youve seen big moves. United technology is down 9 walgreens, microsoft, United Health group all down sharply. You know, its just a broad swap. You cant ignore boeing, either 17 of the dows decline from the highs. Dow also the Chemical Company down 10. 5 well get to bob at the exchange. Its a broad take down 5 to 6 of the overall market sara is right, there are certain sectors of stocks doing worse than others and theyre outliers we dont often talk about this but this is the big Global Packaging company. They make chemicals used in Manufacturing Processes all over the world. And onethird u. S. Revenues, onethird europe, and onethird asia almost the perfect global company. That stock is down 40 in th last month theres an indication its a company all over the world there is United Technologies sara mentioned that. You can see it down 11 . The company gets about 45 of the revenues overseas. Another company spread out in Many Industries across many countries around the world down much more than the rest of the market finally, any Consumer Companies nike is sort of performing with the market today but 60 of nikes revenues are overseas the implication here, theyre down a little bit more than the overall market the implication here that even consumers may have less money in the Global Situation thats whats been impacting nike you can see the broad tentacles of this Coronavirus Impact on the markets. Guys, back to you. All right, thank you very much josh, what do we make of the price action today and everything we built in in terms of resetting expectations the past couple of weeks theres not a lot of good news on a day like today but im going to say a couple of things i think should be encouraging to people who are long term investors. The first being diversification is working today, finally, bond yields stopped crashing but bond yields have been on this run away train lower which meant that bond prices have been going higher thats across the entire spectrum of fixed income other than jump bonds this week. If you have a 50 50 portfolio, and youre within 10 years until retirement, this does not look quite as bad as an entire screen filled with red. Because youre not overlench leveraged in the stock market. Assuming you didnt get out of bonds because you thought there was no juice left to squeeze assuming you kept the Asset Allocation going into 2020, youre not looking terrible from that standpoint. For younger investors, we have 73 million millennials, the majority of whom are in the work force and many are actively contributing to 401 k it doesnt feel good but theyre buying the s p 500 at a 20 or 21 discount to where it was trading a month ago. Its a bigger issue for their parents than it is for them and for people who are first in the accumulation mode. And a couple of other things i want to throw in quickly good news is the white house and Corporate America are now talking. Theyre fully engaged. Theyre taking this as seriously as italy and china have taken this prior and south korea i know it doesnt feel like the market likes that, but in time, the market will come to say this was the week that everyone got serious about tackling the issue. The other thing i want to throw out there is nonfinancial. It turns out we dont have cases of children contracting this virus. We dont have hospitalizations of children. Theres a lot of reporting about that today i do think there will be more school closings. I do think thats on peoples minds that have kids but the good news is that this really seems to be confining itself to people who are older and not younger. I know its were searching for a silver lynning but i thought i would bring that out as kind of my last remark on the topic today. Great point sara and i were talking about that the other day how different if it would feel it were targeting kids. All the more scary. Even more. Josh well get to you in a bit. In the meantime, well get to mike santolli. The key level in the s p 500 that bumped along as the floor for the last couple of days gave away since 3 00. Look at the twoyear of the s p. The csignificance is how far it takes us back in time. 2713 were below from last june around 2730 so weve kind of wiped away, you know, 8 months worth of gains in a pretty good hurry. We had david talking about getting out to the 24s thats over here levels matter but what is interesting is the dynamics here it seems like you had climatic downside flush action on monday. Very washed out and oversold and now were going through the index levels with a little bit less selling intensity well see if it holds up by the close. Clearly the market is struggling to stay ahead of the perception of what the Economic Impact will be of all the measures were taking right now now, the credit picture is another element. Thats been kind of a second order effect its not necessarily been positive this is the etf mode thats high yield junk bonds this is Investment Grade corporates. The latter too acting poorly relative to treasuries here. Thats on the radar. It will restrain rallies if it doesnt around and etf doesnt actually move with the cash bonds. Right now, this is showing derisking happening across the board and were hearing things like, you know, boeing drawing the full credit line it lends to this idea that on the credit front youre seeing some stresses and cracks we didnt anticipate before. Yeah. Well get to the boeing news and what to make of that 6. 3 is the loss on the dow now. 7 would trigger a Circuit Breaker. Right. I believe its up to to 3 25 yeah. Okay all right. After 3 25 let it go. I dont know. I know 20 usually shuts for the day. How much is the market is pricing in a recession its close. A third of the s p is down 30 at least from a high i dont think evaluation wise, though, weve necessarily gone down to some kind of core bedrock level that said we built in 15 earnings declines, which is probably what you see in some kind of a recession. I think were on the cusp of really considering that more deeply in the numbers. I think the problem is we came from a expensive spot to start with. All right there are now more than 121,000 coronavirus cases worldwide with more than 1,000 here in the u. S. The World Health Organization declaring a Global Pandemic. Meg has more at headquarters. Hi, sara. The w. H. O. Making that declaration several weeks after many in the Public Health community thought it should have noting today not just the concerning spread and severity of the disease, but also what he calms, quote, alarming levels of inaction hes seeing in response. Some countries are struggling with a lack of capacity. Sol companies are struggling with lack of resources some companies are struggling with lack of resolve. In the past two weeks, he said the number of cases outside china has increased 13 fold. The number of infected countries has tripled. There are now more than 121,000 cases worldwide, and more than 4300 people have died. In the u. S. , a major shift toward medication today from several areas. Washington state restricting gatherings of more than 250 people and several hardhit counties San Francisco up more than 1 sthourks people. We heard ohio may be making similar moves, too still Public Health experts saying more actions are needed Scott Gottlieb telling us there could be ten times as many cases in the u. S. Than the 1,000 or so already detected here and we have a narrow window to act. How much of that is accounting for additional testing, meg, versus the number of tests were doing now the testing is tremendously important, of course aei are compiling data to track or testing capacity. Right now they estimate its about 16,000 people tested per day. Gottlieb tweeting out the cdc made regulatory changes so samples can be combined and perhaps we can double the capacity based on the regulatory change so that will be important but were also hearing that capacity is really spotty around the country. So even if theres a lot in some places, not everywhere has as much as they need. Thats an ongoing problem. Meg, thank you. Down 6. 7 now on the dow, guys new lows down more than 1600 points one thing to watch for, if we want to do the score keeping of it, if the s p closes under 2709 thats your 20 loss from a peak, which you can basically decide to label it a bear market and why are you a fan of that umm, its fine. We have to draw the line somewhere. I think that a real bear market applies duration and a longer term reckoning, which maybe were in for i think its not as if you ring the bear and say we did it you have to see where it goes from there. Speaking of trying to ring bells, the dow falling down 20 from the highs a month after hitting the record after goldman did say in a note earlier this morning that the end of the bull market would be coming soon. David coston talked to us earlier and said despite that forecast, things could turn around later this year. If it takes some negative assumptions, we have Energy Prices down. We have, which is obviously affecting energy earnings. We have lower bond yields across the yield curve. Thats, you know, a pressure on the day. We have lower earnings in the bank sector. You have negative, you know, consumer is also pulling back. Those are the drivers of why we have Overall Properties coming down and so the question is, how will it be distributed across the course of the year and our estimation is the second and Third Quarter. Later in the year, as the market is looking forward, investors look forward until 2021 a positive Earnings Growth in the next year. Lets bring in liz young. Good to see you. Davids point is that big mid year slump but end the year at 3200, as youve drawn assumption this ends within a couple of quarters and you make it up in q 4. Lets start with the definition of ending a bull market right. We can call this a 10 year bull market or we can look at the fact we have touched in the bear territory, depending on the index youre looking at. A few times in that period so im not convinced we havent already ended the bull market a couple of times. If the definition is we go into a bear market and stay there for awhile, then, yes, i think thats plausible here. I think if you look back at 2008 2018 we crossed into a bear market for a whisker of time and the market decided we dont deserve to be here it was no our control to pull out and the fed changed their language we had other things happening in the trade war that kind of pulled back. These forces are outside our control. And i want to go back and reiterate something that josh said at the top of the show, this is why diverse indication has been important this is why weve been preaching that especially along the treasury yield curve. You dont want to be in short duration you need Long Duration to offset this hopefully people are positioned that. How would you advice investors to position around equities now i would say number one, especially on traumatic down days like this this is not a time when you knee jerk react and do anything about it in the equity market. If history is any guide and history being the last seven or eight trading days after a down day, i have a little bit of a prop who knows what happens tomorrow. If youre overly exposed to passive equities, if youre overly exposed to market risk, i think some of those days trim it back a little bit. You dont want to be overly e posed to the emotion. Index etf. Particular if i in the e marging market pace. If we close here in bear market territory, viewers will get hammered with headlines that say the average bear market last 13 months. Its down 30 what do they do with that . Well, so this is what is interesting. And mike made this point earlier. Lets assume it is a recession pretty hard to see how we escape that, at this point. Even everything closing. First of all, its not caused by financial conditions like 2008 its not being caused from within the financial and housing sector the banks are as well capitalized as theyve ever been so were not talking about the Financial System cratering are there credits we should be worried about like energy and industrial absolutely not everybody survives recessions we know that if it is to be a recession, and if thats the viewpoint were go to coalesce around, a lot of stock market damage has been done were not starting from a stand and stop in terms of the stock markets reaction to a potential recession now. We can debate, other only 10 of the way. Or were half the way there that we need to be. Important thing to remember about the recessions, they cannot be called in real time officially theyre called after by the nber by the time its official, stocks are already usually recovering so i want to be clear here, this doesnt at all remind me of 2008 not every recession is a global destructive moment weve had regular recessions along the way. It looks a lot more like post 9 11 environment where we didnt know what the next thing would be anthrax in a letter . An un, you know a suitcase in a train station . We have that moment then this feels more like that with every new case being reported, with every new event being cancelled, we should get used to tape bombs when we cides like yesterday, and well see more, classic bear market rally up a thousand points on very little news. Yeah. Those are the moments where we say, okay, if yesterday felt bad and today feels great, let me use the opportunity to make sure im taking the appropriate amount of risk. Market doesnt feel comfortable yet. Seems like with the tape bombs the headlines that are out there and scary. I mean, a 20 down close a bear market does that become selfperpetuating . You know, where people, you know, want to derisk where it hurts the economy what is happening in the market and not just, you know, consumers raising u