Breaking news. U. S. Stock market futures are limit down even as the Federal Reserve slashed rates to stave off recession in the face of a global coronavirus threat. Life in america changing rapidly as governments at every level take drastic and unprecedented steps to try to slow the spread of the pandemic. Major retailers including nike and apple, shutting their doors for weeks. Well talk about the fallout for the u. S. Economy it is monday, march 16, 2020 squawk box begins right now. Good morning im becky quick at cnbc headquarters joe kernen and Andrew Ross Sorkin u. S. Equity futures hitting limit down after dropping 5 that means they cant trade any lower this morning those are the curbs set up by the exchanges. You will continue to watch whats happening with the etfs, however, because they are not held to the same restrictions. Can you see the dow etf is down by 9 . The s p etf down by almost 9 . That gives you a better idea of where the major averages would open if we were open here. There are some Circuit Breakers that could kick in as well once actual trading starts you have a limit of 7 we hit that last week one day. 7 down actually, two days, if we were to get down 7 , you would see a halt of trading for 15 minutes that level today is 135 points level two would be if were to see 13 decline, another halt for 15 minutes if there was a drop of 20 , before the final 35 minutes of trading you would see Trading Halted for the remainder of the day. Last night the Federal Reserve cut its Interest Rate from 1 toer to er near zero. The fed and five other Central Banks are also activating swap lines. The goal is to try to calm disruptions and overseas dollar fund markets well have more from Steve Liesman in a moment. Checking treasuries, which had the yield had gone up above 1 on the tenyear and were still well above the lows that we saw in recent weeks even after the fed action. Lets look at there you can see were just under 0. 8 on the tenyear european markets, take a quick check of those theyre about what you would what you would expect. Not as bad as etfs are indicating here for our markets. Overnight in asia, check that. Asia down not nearly as about half the losses were we saw in europe and less than what were seeing here. Lets walk you through whats going on right now there are more than 153,000 confirmed coronavirus cases globally with more than 3,000 now in the United States the u. S. Death toll is at least 61 cities and states are taking action to encourage social distancing right here in new york city, the city is closing all of its public schools. Also limiting restaurants, bars, cafes to serve only takeout and delivery nightclubs, movie theaters, small theater houses and concert venues are all being or ordered to close starting tomorrow at 9 00 a. M. Local time retailers are also closing apple says its shutting all of its stores outside Greater China until march 27th to reduce the risk of the virus spreading. Its online store will remain open whats taking place in new york may soon be coming to other cities throughout the country and the efforts to slow down the spread of this virus is going to take an economic toll. In washington over the weekend the house passing emergency coronavirus virus, including free testing and paid sick leave. The senate expected to pass the bill this week want to get to eamon javers who has been on this story all weekend. Eamon . Good morning again, andrew. What were learning from the cdc is theyre asking all americans to cancel any gathering larger than 50 for the next eight weeks. So for two months the cdc is saying no gatherings anywhere in the United States of larger than 50 people. Were also getting a new tweet here overnight, this from the National Security council at the white house. Theyre trying to correct some rumors that are running rampant on social immediaty. Theyre saying text message rumors of a National Quarantine are fake there is no National Lockdown. Cdc. Gov will post the late ens guidance on covid19, coronavirus they say no National Lockdown despite what you may have seen on social media. Last night at the white house President Donald Trump said he met with a number of or by Conference Call talked to a number of the top Grocery Store chains and retail chains in the country. Donald trump saying that americans need to hold off on mass purchases hes trying to hold back panic buying weve been seeing in the Grocery Stores. You dont have to buy so much take it easy just relax people are going in and buying more i remember, i guess, during the conversation walmart said that they buy more than they buy at christmas. Relax. Were doing great. It all will pass reporter so, officials last night, andrew, suggesting theyll have more to say this morning. Theres another meeting scheduled at 10 30, a press briefing with the Coronavirus Task force at 10 30 east coast time at the white house. Well bring you that and all the information from it as soon as we have it, andrew. Thank you, eamon. The Federal Reserve taking some extraordinary Emergency Action slashing trits zero in an attempt to stabilize the markets. Steve liesman joins us for more. Hello again, steve. Good morning, joe absolutely historic actions by the Federal Reserve on a sunday, which have echoes of the financial crisis back of 20082009 where the fed tried to take action before markets opened instead of doing things like it did in the crisis over a series of weeks or months, they did a lot all at once here let me go through the things they did in their Emergency Action cutting rates to zero. A full 100 basis points or one percentage point that was the first thing second, 700 billion of asset purchases, 500 billion of treasury, 200 billion of assetbacked mortgages agencybacked mortgages. Theyll come in for the first time this morning with a 40 billion purchase they slashed the reserve requirement for thousands of banks to zero. Gave some guidance, by the way, on liquidity coverage ratios that might create Additional Space on dealers Balance Sheets well see. Finally, they ease the terms on discount window lending and on those dollar swap lines. Now, i asked during the Emergency Press conference that jay powell held about the Economic Outlook whether or not recession can be avoided. Lets listen to what he said well come back and dissect it in just a second heres what powell said yesterday about the Economic Outlook for the next couple of quarters the Second Quarter its probably going to be weak. In fact, in the view of many output declining, output lower in the Second Quarter than it was in the First Quarter after that, its very hard to say how big the effects will be or how long they will last and thats going to depend, of course, on how widely the virus spreads, which is something that highly uncertain and i would say, in fact, unknowable so, lets go back now and talk about the way we were talking about this virus a month ago. It was a First Quarter event with some spillover. Likely rebound in the Second Quarter. The fed chairman just essentially wrote off the Second Quarter. He used the phrase, output decline, which suggests the possibility of a negative Second Quarter. So, everything that weve been talking about, and i dont know when this actual transformation happened maybe in the last week maybe in the last couple of weeks. The market might have sniffed this out much earlier, has been pushed ahead or forward at least three months now, where i think a best Case Scenario is some form of a rebound in the Third Quarter now and then you heard that he was very uncertain about that so, guys, theres been a big transformation in the Economic Outlook. A big transformation in the earnings outlook is what the fed did enough powell was very clear. They have additional tools they may use. They may be talking with the treasury he talked about using the Emergency Powers i think what the fed wants to see is how markets clear this morning. Becky, in answer to the question you asked in the last hour, i still have to wait a little longer to see how spreads are trading this morning i do have some information from one market person who said things are a little better this morning. Market Mohamed El Erian will be joining us he said the market technicals will be flashing red here. I guess thats what he kind of wait to see. Steve, what time do you think before you really have a better idea of whats happening well, one dealer just told me 6 30, and i can get on the phone and talk to a couple of folks who are up and watching screens this morning im wondering whether or not, if there is a response, is going to happen when the fed actually comes in remember, they said theyre going to do 40 billion of outright purchases interesting what powell said yesterday. He said, we no longer can be an intermediary here. In other words, lending money to people who can then go in and borrow and do repo the fed is doing direct purchases here powell said that came from their observation of what kind of effect they had with their friday action and earlier on wednesday, that it wasnt enough and theyre finding they have to do more and more and more. Its a matter of confidence here do you think the fed can go in and make the treasury market right . Thats the bet you have to make this morning, that they can make this very, very important market work i dont think very much matters to them beyond that right now. Steve, can we talk about the Treasury Department and some of the comments that Steve Mnuchin made yesterday one being about the view he doesnt think hell see a recession. Lets talk about some of the policy responses, both of us and everybody at this table and becky in new jersey, we all covered the financial crisis one of the things theres only two of us. One of the things that took place there was cheerily the treasury stepped in in a very big way. Mnuchin said yesterday he wanted to go back to congress this week and ask for powers that he thought were taken away after the crisis as part of dodd frank what kinds of steps do you see the treasury taking over the next week or two because i think, in large part, investors are going to be betting one way or another at this very point on the policy response so, theres a couple things here the first one ive been talking to people about is a backstop for the commercial paper market. I believe the fed needs the help of the treasury to do that theres also discussion about whether or not the fed could accept other assets from nondealers or nonprimary dealers. That would be something that the fed would provide additional backup to assets in the economy. I dont know right now whether or not well, you would, actually, have to go to congress probably and get approval to do things like lending directly to banks. The change in 133, or the Emergency Powers act of the fed, said the fed can still go in and do that stuff but it needs now the approval of the treasury to on provide that kind of directed that direct let me ask you a different question and i dont know the answer. So, im asking out of ignorance. At this point, given the rules that were put in place after dodd frank, if the Treasury Department were to decide it wanted to or needed to bail out the airlines, for example, which would have a huge impact also, for example, we were mentioning boeing, or becky mentioned boeing, all of these things would have to happen collectively could treasury do that today without the approval of congress i dont think so. The question becomes thats where i think we have to Start Talking about no well, i dont think so, because i dont think treasury has a pot of money it can allocate for that. I think its going to have to go to congress. There might be some capacity, for example, for the treasury to give the Federal Reserve approval to lend to the Airline Industry and then i have to go back and reread 133 as to whether the fed could actually do a loan directly to a company. I do want to point out that over the past, i dont know, five years or so, i have been reporting comments from people that said, hey, you took away powers from us to deal with these crises that are going to be a problem if we do have another one. There have been warnings about that from several senior fed officials and former fed officials. We heard it from ben bernanke, paulsen and those folks im curious where you land on this i dont you know, the financial crisis was arguably a manmade crisis. I think today this is going to look much more like a Natural Disaster with manmade mistakes. Unfortunately, its not ruling out across the entire country at the same time unfortunately pfl from the policy perspective youll have people in congress who dont think its that big of a deal yet, who have not seen it in their own districts. Andrew becky is absolutely right. They have to go to congress for t. A. R. P. Twice before they got it it doesnt matter the source of the problem in that whats happened now is creating a manmade crisis in the sense of markets being seized up. In that respect, the playbook is very much the same, which is job one is get markets to work it took some time last steve, the difference is, were talking the difference is, this is actually a main street crisis, not a wall street crisis yet you almost have to save main street to protect wall street. Meaning if, in fact, the Companies Run into material problems, then it becomes a wall street problem you want to prevent that from happening. I dont agree well, look, i agree. Look, they have to come back and help main street helping main street, though, is an be issue actually for down the road, andrew do you really want to help people right now to go out and do more things no, but there is there is another idea let me tell you about a piece that you may not have seen yet former fed governor has a piece in the journal today he lays out this entire situation. He says that that jay powell, what he did last night, he filed a 2008style barrage that will lylely be only modest help for the crisis at this point hes calling on the if ed to establish a new Credit Facility to ensure sound businesses and households have ready access to cash to get through the crisis under his plan, borrowers would have to demonstrate theyre able to obtain that theyre this unable to obtain credit elsewhere but they were solve ant january 1st before the crisis began what do you think of that, steve . I havent read kevins piece. Hes a smart guy that sounds like something well beyond the feds capacity in terms of being able to implement it yes. This goes back to the bridge loan idea. You talked about people getting a loan from the Small Business administration. Its not an easy process the Small Business administration will make dollars available. It is not an easy process. The ability of the bureaucracy to get this money out there, really unclear at this point we just set up Testing Facilities were just trying to figure out how widespread the virus is. My faith in government, perhaps, is a little less than kevins, which i would find unusual because i know he has very little faith so, you have to be careful here. The 133 authority, if im not mistaken, would have to come from the treasury and treasury may have to go to congress for this sort of thing i do think, andrew, you have to triage this situation here job number one is get the markets to function. Id say job number two and you have time for this is to deal with the wall street fallout. I think a lot of this comes down to your faith in the fiscal authority. Can congress and the Administration Come together to provide meaningful economic aid that can avert worst case outcomes in thats really the question. The question is, what form does that take, right . And this goes back to jason furmans idea of literally helicopter money, sending everybody 1,000 a check maybe thats the easiest way to do it. Its not to spend that money we dont want people necessarily running out on the streets and going to bars and restaurants. Thats not the objective but the objective is to pay their mortgage. The answer is very easy. And their rent. The answer is very easy after exhausting all other alternatives, well finally figure out the right thing to do. In the process it could be a lot of pain. Look, theres time on this. People need to hunker down right now. Economic activity needs to come down that is a positive aspect of dealing with this virus. Over that period of time, there will be some pain out there. It will be the job of the government to see and find a way to address that pain in terms of paid sick leave, in terms of loans to Small Businesses to get them through again, andrew, in the middle of the hurricane the government cannot be out there providing loans to