>> i got some salesforce.com calls early tomorrow >> bryn. >> play on u.s. housing, u.s. rates are better if you can get a loan >> the dow right now is 1,000 points been one heck of a session thus far. that does it for us. howard, thank you once again "the exchange" begins now. ♪ thank you, scott hi, everyone, welcome to "the exchange," i'm kelly evans and stocks like scott just said, the dow is down 1,000 points right now. all of the indexes are dow today. bond yields at all-time lows there's fears of economi slowdown growing with coronavirus. let's get to dom chu >> kelly, i was queued up to tell you that the lows of the session was 1,12 f012, except w

taken those out. 1020 plus. down about 11024 the s&p 500 at this level means it's a race for all of its gains for 2020 the nasdaq casing off by 4%. now, a couple of the hot spots we're talking about so far today. check out, first of all, what's happening with regard to the macro picture. ten-year yields, 1.32 perfect. that was the record low for the ten-year note at the end of the brexit deal. we're almost there now also look at what's happening with gold prices hitting seven-year highs pressure seven-year highs you've got to go all the way back to 2013 gold, the last trade there and with markets overall, check out what's happening with crude

oil prices they're down 5% on the downside. technology and materials, i put them up there right now, technology, the worst performing sector after a leadership role in the last year, the worst performing sector, utilities down by a percent over the last week the best performing sector it just gives you an idea, kelly, the market dynamics we're seeing right now over to you, kelly >> dom, thank you very much. the selling pressure taking down everybody from the fang names to nike to tesla. let's welcome in the chief investment officer and and frank kemp is president and ceo of the atlantic council. also a cnbc contributor. it's great to have you here. peter, let me start with you, a lot of jaw-dropping things about the action today what do investors need to know >> it's sort of like a catch-up

trade. the bond market has been telling you they're worried about the economic impact of the sliders even before that >> but the ten-year is always worried. now bad do the growth numbers look today that it justifies everybody else finally catching up to this point >> at least in the u.s., gdp growth of probably less one and likely less. china is going to contract in the first quarter. you're going to have nine out of the ten biggest economies in the world that will show at best no growth in the first quarter. >> and the most important over the weekend, we really saw this move going back to late friday, where the cases outside of china continued to climb and people got the sense that coronavirus is spreading and it may be coming to my door step. this morning, we heard from warren buffett who said you have to take the long-term view of these things, they come and go there's always a crisis. is that not -- can you be that long-term oriented, i guess you

can if you're young enough or made your career like buffett? but on a day like today when people are trying to figure out growth and supply chains, what's your advice? >> i think the market can go low. keep in mind, we've had an incredible year. we have known for a while we have to see a slowdown the coronavirus swing has been going on for a while as peter pointed out there have been a number of markets like the bond market. oil prices are way down. gold is up copper prices are down i think it's been a bit weird that stocks have done so well, compared to everything else. >> when you both say a slowdown is coming, do you mean a first quarter 1% gdp number, or do you mean something more serious than that >> it's an i don't know answer because we don't know how long this goes on last year, growth around 2%. earnings were basically flat so, now you can say maybe at best we'll get 2%, probably less than that. earnings expectations that are still very high relative to what

i think we'll likely see >> and you say the head scratcher, that's why the stock market has done so well. then if the expansion continues, then that's a big question, right. you can say a slowdown is coming, it's priced in but to what extent, how severe >> i always tell people we will definitely have a recession. it's just a question of when >> right >> i'm not expecting a recession, i think the u.s. economy will grow this year. probably less than it did last year but as far as the recession goes, i'm not expecting one this year, eventually, you'll have one. >> let me bring you in and maybe you can help us pinpoint the next hot spots that we could be worried about globally everyone is looking for how this spread in italy. there's a lot of concerns how these different countries are going to manage it now that china so authoriauthoritarian ct it's arms around what do you think of that? >> italy is frightening because

it's no borders. you have a shutdown of carnival in venice. who would have thought that would happen because of something that broke out in wuhan. >> right >> the top three economies in the world, all of them slow, three of them in the recession territory. you know i wrote my cnbc column recently that i thought global investors were overly complacent now, we have to see, are they overreacting but the fact of the matter is it's not just coronavirus, it's the slowing economy. on top of that, global debt, $240 trillion of probably debt that's a record. it's the highest level of public debt since the end of world war ii investors are betting on fiscal stimulus or monetary stimulus to bail them out the way it has over the last decade i just don't know whether the forces that work are going to make that the bail that they get. i agree that tinges are going to go down.

that just is how far >> and you wonder why should the federal reserve respond to a disease outbreak i think fred has traced that narrative mark for us. what do you think they're going to do, force the tread to cut rates again? >> in terms what the fed futures are saying the fully cuts and two third of a third they had nine rates to cut assuming they're going back to zero and not go negative they said the first three were insurance to address economic challenges which we now face but if you're the fed, wouldn't it be easier to wait for springtime to see if the virus starts to go away, instead of using them i think the most important thing, central banks including the fed are completely impotent to deal with it. they've expended so many ammunition already that people should not be looking at them

for any type of savior-type behavior >> but they still do, right? >> they still do because they've been conditioned the last ten years and brainwashed thinking that the fed can you're every ill. >> if the verdict is the stock market, they might say the stock market, look, last year, we started out last year worried about the economy. the yield curve was inverted and they cut through ties and the record is at year highs? >> we had a 33% decline in the stock market everybody thinks that's unusual. the thing that's unusual we haven't had more than 3% >> that was quite a year >> yeah. >> we thought europe was going to break up that year. >> that's right, that's right. but this is not that big of a deal when you look at it from the big picture where we are from the highs i think the market could go lower. i'm not suggesting that people jump in and buy today. as warren buffett pointed out, if you're a long-term investor,

you don't want prices to go up you want prices to go down the only reason you want prices to go up is when you're ready to sell >> fred, i'm curious with your thinking on this, obviously the other big news out of the weekend is bernie sanders stepping closer to the nomination of the democratic presidential candidate you have a situation now with the economy that might factor in largely to how that vote goes in the fall goldman, as peter was representing this earlier, thinks is this 0.8 hit for gdp but you'd get bounceback in q2 and q3 this is before the spreading got worse. what kind of economy are we going to have for super tuesday, over the summer and come november, do you think >> well, i think you're going to have a lot of people more worried than they were at the beginning of the electoral process. you're certainly going to have trump putting pressure on the fed. the fed has a little bit of room in europe, you have no room at

all. bog of necessary tiff ragative s you 0.18% growth in the fourth quarter. you have germany at zero in the fourth quarter so europe say real risk area and let's not rule out geopolitical risks we have issues with iran, north korea, china, and venezuela. we haven't even started to price it, and i don't even know how you would do that but in an election year where certain adversaries who might not like things going smoothly for president trump, you have to worry about geopolitical risks >> peter, let's go back to a place like europe, with election consequences there, too, there's not a lot that the central bank can apparently seem to do. right now with the stock market. the dow is down 1045 points right now. it's not that we haven't seen a selloff of 3.5% in one day

it's a question what happens next even with the idea no matter how bad it get, the fed can step up and support things and people should be careful >> right, i can pay 20% earnings because rates are low without asking why are rates low rates are low, earnings growth has slowed cash flows are slowing now, you start to shift to, okay, there's a flip side to why rates are low. and it's not all good. maybe i don't want to pay 20 times earnings or a tech stock, i only want to pay 20 times earnings. i think valuations are really important right now. valuations don't matter until they do. the question is figuring out when do they do. when you start to get a situation like we're in, all of a sudden, valuations matter. i think that's what investors have to re-evaluate. what do they want to pay for things >> is there anything that the two of you would be buying on a

day like today >> i continue to like gold and silver energy stocks, royal dutch paying 8% dividend is attractive >> i have bonds out of favor, one of my out of favor stocks is the anti-tesla, the ford motor company. it's got a dividend of 8%. >> 8%. >> yes i believe they're able to sustain that i also like the energy sector. and i do use it to add to the positions. >> we've got to go fred. we'll give you the final word here you mentioned you're not pleased with what's happening with coronavirus in italy what's the next place you would be watching in terms of whether it's going to get worse or not >> you've got to watch italy, but you've got to watch the border around italy. ohm bord open borders is what it's all about. and the other thing i would really watch, half of the top-20

economy economies in the world have loosened up their budgets and they're moving to fiscal stimulus look at debt and that is really driving up debt i'm not a trader, so i won't pontificate on stocks, you just wonder how long the market is going to look at the rising levels and not respond to them >> buffett said this morning, he and charlie talk, they don't know the answers thank you. the dow is down 1,037 points right now. just at session lows that's a 3.5% drop for the blue chips. it's the worst thing in two years for the dow and s&p. the nasdaq is a little bit even harder hit, if you can imagine it's down 4% let's get to you the latest in the coronavirus outbreak, 79,000 cases worldwide 2600 deaths. curious, if there's any sign of containment right now where this

all started, eunice yoon is in beijing. hi, eunice >> is there was a message from the u.n. showing that other countries are showing a vigorous approach to fighting the virus they're traveling around the country to get a better handle on the situation around the ground here, including at the epicenter of wuhan officials have agreed that the drop in new numbers is real. and the aggressive approach. and the only drug that works is remdesivir and the virus could be around for months the w.h.o. has been under scrutiny for not being critical enough of the chinese government and didn't do enough urging other countries to lift their

travel and trade restrictions and also praising china for its efforts to stabilize the economy by phasing out some of its own restrictions on the population here kelly. >> eunice yoon live for us in beijing. let's take a look at crude oil. crude is down about 5% right now and sliding into bear market territory. that's a 20% drop. as investors agree that a surge in the number of coronavirus cases could continue to bring the demand for crude this is an ugly looking thing at the start. unfortunately, that's not good news for the u.s. economy. for now i'm join by the founding partner at again capital and brian, why do you think people are so much more concerned about coronavirus than something like the flu which seems, i say in quotes to have a similar deadliness in terms of

cases and mortality this time of year why is it that people are so worried, reacting so sharply everywhere this virus spreads now? >> a headline from michelle the tire company saying that industrial orders are down 30% you look at eunice's awesome reporting, transportation, flights, cars, all down. the country that uses 14 billions or so more of oil, factor that over weeks and days and months what i hear, maybe john can counter this klein is building a lot of oil now because it's trying to fill its coffers while it's cheap that's kind of the point the good news, we're not 50. we're at 30. >> by the way, john, there is obviously a to a u.s. consumer that uses crude. but the u.s. economy, would you say is a net benefactor? falling crude oil prices, i don't know if that helps us so

much >> yeah, it's done a lot no question. tons of great paying jobs and from the pipelines and ports we've built. but i will always remind myself that this is still a two of thirds consumer economy. in a way it's good news. and then you don't even get that positive effect. >> well, there's a difference between the direction it's going and the level it's at. it's one thing if it's falling from 100 of course, that would be $100 a barrel once we're down at 50, what's the danger zone, so to speak, where in the energy producing places which have been under pressure for the last couple of years now, this starts to really mean shutdowns and possibly layoffs. >> $50 this is the line in the sand this is where they start to hurt this is where they begin to not service their debt this is where the expense ratio does not work for wall street or private equity or anybody. you've seen on the chart going

back several years now, $50 has been the savior point. we tested below it any number of times and we keep getting back above it >> maybe, brian, we're not totally down there yet but obviously, an ugly start to the year for anybody in the energy sector who hoped they might finally see a reprieve. >> i was in galveston friday night. it's getting grim. because you've got $87 billion in debt that is due between now and 2024 61% of that is speculative it's junk. the bonds of chesson energy and others they're at 50 and 80 cents. these are once 8 and $10 billion companies. you have hundreds of companies in this space which are public and private. we don't talk about the private one, struggling to meet their debt obligations i've said it before, kelly, oil is a four letter word spelled d-e-b-t. it's the last thing that an industry crushing under the

weight of debt needs the worst performing sector, down 4.5%. the dead-heavy companies like oasis and others down 10%. >> and it's dribbling as part of the overall market you have to go back to the days where it was the biggest sector. '08, '09 everything was collapsing. it's a very different story. probably the most important short term to put aside the environmental issues the fact that there's nowhere to send it because it's so cheap. why not just the global gdp picture? what do we have to see in order to recover the losses here >> so there was talk that liquefied cargos were rejected on friday. on customer transaction. so reached out to them if we start to see big cargos start do get turned down because they don't need it, then you start to see sort of the virus, sort of move around affecting gdp. not just in china.

maybe in italy, parts of europe as well. and that comes back to the united states which is now one of the biggest exporters of petroleum products in the world. >> exactly, that was the saving grace that, hey, we can support more of this, john, as well lons somebody takes it. >> i'll tell you, kelly, the one country i haven't talked about in a while here, south korea is reeling from the coronavirus now. that is like the next -- if you could make a parade of horribles for crude oil. south korea, japan and china, they are the buyers of liquefied. let me give you good news because i don't want to be the black oil swan, if you will, up here >> right this in some semi perverse way, a pod for the universe if we start to see capital spending slide which we are, maybe production levels will

come down, firming up prices which will enable those who are sort of in the middle. there are companies that are going to go away, kelly. period the middle ones maydo better i we see capital spending and production slide >> john, final word. you're an investor here. let's put our investor hat on here before we close this out and say do you look at this as a massive opportunity? or is it just the whole sector is going out of business slowly? >> it's always darkest before the dawn i thought this was a much better year for the majors. particularly chevron and exxon mobile and we've done some work besides everything else he does, okay? >> if they just cut back on it, they can preserve the dividends. that's my biggest worry. on that basis, shell, chevron, exxonmobil they're also going to have the deep pockets, to brian's point to be able to pick up -- >> opec is supposed to meet in two weeks. dan pickering put on a tweet

saying i wonder if opec is going to be nervous for me do you really want to be around executives from all over the world and country? >> are you going >> i can't because the sewheat conference is -- >> i heard the foreign minister is not going to opec because of the coronavirus. >> thank you john, we'll see you soon how about a market check for you. the dow hit a new session low, down 1073 today. we're down 1024. again, 3.5% declines for the major drop ten-year yield, closed at a record low today, right now just under 1.36%. the 30-year, also a record low, 1.817. and apple, one of the most

widely exposed stocks to the coronavirus down 1.4% now. look at the major casinos, as you can expect, anyone with exposure, all lower. as officials around the world battle to contain coronavirus, infrared checks have become the practice >> reporter: it's become one of the many striking images to come out of the deadly health crisis in asia. a masked official aiming an an infrared thermometer at travelers to screen for coronavirus. it's all in an effort to curtail the deadly various that has now killed more than 2,000 people. experts say these devices can not be so accurate >> i think the harm comes in mig the person who could actually be sick >> reporter: and saying that officials are using

industrial-grade thermometers meant for testing machines, not people >> these thermometers are not appropriate for human body temperature because they can be off by as muff as seven fahrenheit degree. which is way too inaccurate. >> reporter: we see infrared thermometers to see how different therm meters can mean inaccurate results >> this says 98.4. this medical grade infrared thermometer said i was 98.9. now, let's see what does the industrial grade thermometer say, the way they've been doing measurements >> sure. >> 94.6. >> wow >> not even close. this has been consistently off by four or five degrees? >> correct >> does this surprise you? it's not made for this application of work. and it's not something that i would suggest anybody use. >> reporter: he says lack of education and training is the main problem >> it said that drastic times

call for desperate measures but not something that's inaccurate. er eric joins me now. >> they're both infrared and industrial grade which what i'm holding right now and medical grade. the benefit is accuracy and the downside, it's a tight range for medical grade, we care about 95 to 105 degrees but we can get it down to the correct temp. this is meant for a building on fire >> is there any way to get a medical grade reading with this kind of equipment? >> this equipment, you're not going to get the correct reading. this is what we had in the package. the others around the table were medical grade. it's just a matter of buying the correct thing. having the training to know how to use it. and knowing when it has a laser dot on your forehead it's actually getting a cone base

temperature. depending how far away you are, you might mess it up his point is some. devices are accurate, but in the photos that we showed they were all using the industrial grade time not the medical grade. >> that is so important. >> a lot of people in america are buying this thing thinking they need to get it. but it's the wrong kind. coming up, the retail etf is having its worse day, ahead of the trade war, and the workers performing sectors, energy which we just discussed. and tech, consumer discretionary. 're dow is down 1025 weback in two minutes with a lot more on the selloff.

welcome back to "the exchange." not many days i can say were 100 points offer the lows but that's where we sit right now at its low a few minutes ago, the dow down 1073 points down 983 right now. the dow and s&p and nasdaq down 8% right now

let's get you caught up with every angle. phil lebeau is watching the skies, wilfred frost has a beat on it. you might be surprised how poorly they're doing seema mody looking at travel stocks and robert frank has a look at how bad luxury is being impacted phil lebeau, a bad day across the airlines today >> a terrible day, kelly this is all about the fear that we're going to see clusters of coronavirus like we're seeing in south korea and italy pop up in other regions around the world and that might hurt demand which is why you're seeing almost every airline stock around the world under major pressure the big three, delta, american, united, down 9.5 to 10% in the case of american ryan air, it's under pressure. there's a travel warning that's

been issued for northern ireland for people going to italy. it's that kind of thing that have people saying, wait a second, what do you think demand is going to be like, aig, the parent of british airways. if you think it's just exposure to those -- no, those oriented as well. spirit which only flies here in the united states, down more than 10% kelly, this is a case where anybody is looking at the board and saying there's no place to hide right now >> phil, that's a great point. so much discussion about these conferences. we just talked about the energy conferences. >> sure. >> everybody around the world is talking about the singapore conference where coronavirus has spread around the world. what if airlines are facing 10%. >> kelly, i was supposed to go to the beijing auto show this year i'm not going.

we don't even know if there's a beijing auto show this year. might not be that. that's the kind of thing we're seeing across the board. that has people worried about the international impact you look at what's happening with the airlines primarily domestic oriented they're getting basically chopped down today. that's because people are concerned overall, there will be less travel going on there's no indication at this point, kelly, but that's the fear >> that's the conversation phil, thank you, phil lebeau let's talk about the thanks which are reacting to sharp drops in yield the ten-year a record closing low. wilfred frost, these banks might have thought they were turns the year these banks had 1.9%, already a big dropoff. >> absolutely, kelly big banks, the three selling off the most, morgan standing, the bank with the highest exposure to asia, cita and in, bank of

america. all of the banks selling off because of that last point you alluded to, kelly. fears about net interest income because of the falling yield curve. yields have collapsed year to date the ten-year from 190 to 140 and guidance given off the q4 earnings when earnings were might higher last year, james gorman told me that china will, quote, bounce back out of this we're going to hear from jamie dimon tomorrow banks down nearly 4% today and over 8% year to date, kelly. >> willf, what i hear from the bank investors guys i really respect interest rates don't matter as much, that spread is not as important as it once was. do they have a point or at some level do you have to

take that into consideration and say it's hard to be in these stocks? >> they have a point in that it collapsed from 1.9% in the ten-year to 1.4. it's as big a move in the crisis and collapsed aggressively down to zero. it's also true that last year, most of the pressures that we saw on that debt interest margin was offset by loan growth. towards the latter part of the year, we saw fee income offset pressures in net interest income partly of course for markets record highs for things like wealth management earnings are very strong. remains to be seen this quarter if rates stay where they are remains to be seen whether there are that many upsets we'll hear from jamie dimon if he updates any guidance. >> true, it would be nice to hear from him. well always look forward to hearing from those who have weathered crises when another one breaks out wilf, thank you so much.

next up, the french finance minister telling cnbc, his country has already seen 30% to 40% drops in tourism following the coronavirus outbreak to talk about the impact on the travel sector, seema mody is here >> prior to this weekend, kelly, the expectation was that the virus and drop in bookings was confined to asia, but with the developments in italy, you ha y analysts wondering about europe. 2 1/2 months away until tourism kicks into high gear in big cities like milan and rome it is a big revenue driver for big countries like italy and germany. two important reads on the travel sector, marriott, the largest hotel operator on wednesday. and bobbi ibookingsholders.

and it will give us color to see how the demand is being affected >> it's interesting, there are folks out there saying how could anybody take a cruise again when it seems one headline after another. when we talked to phil, why even have this conference when the risk doesn't seem worth it what is it when people say, you know what i'm still going to get out there and travel you had the renaissance after the bubonic plague, maybe after the coronavirus in china, the chinese that were going to make these visits maybe even have more money to spend this year. that wishful thinking? >> it could potentially be it's interesting, you look at the effect of "diamond princess" on consumer sentiment. when it comes to royal caribbean, they just issued a new travel restriction today, kelly, they're not only denying boarding to travelers through the mainland china and hong

kong, but also to italy as well. the italian regions of lombardi and reneta, where you've seen that that plays a role of how travelers will experience that >> and the luxury retailer like we've just alluded to are definitely becoming with that. >> talk about tourism all wrapped together with the luxury fashion shows. the outbreak in northern italy threatening milan that is one of the world's capitals of fashion and luxury milan's fashion week cut short sunday night when authorities restricted all public access to events, giorgio armani holding his show to an empty theater and you've got dolce and gabbana

and all others wondering how they're go stog staff. and ferrari is announcing closing two museums, suspended all factory tours. that's down 5% today shares of lvmh and tapestry. luxury was dealing with the china problem. chinese consumers accounting for a third of luxury spending that was phase one now phase two, where luxury brands make stuff in europe. high end you're talking production. how are they going to get workers to the plant especially in the towns quarantined in italy. >> i wonder if people are going to be overly cautious, in retrospect, china does not seem to be cautious enough. >> exactly, it's fashion week in

paris starting tomorrow. that's already a massive effect where people are saying they're not going. and the auto show of the season coming up, and the economic impact from all of that throughout europe. >> i wonder, robert, if one of the consequences of all of this, if pricing will come down? although we know in the past, luxury retailers they just don't -- >> yeah, might >> well, the challenges, let's say in the u.s. which is still the largest luxury market, maybe not in terms of growth, getting production to the u.s. if you're factory in milan is not working that's going to be the problem so, i think it's going to be a constraint in terms of supply, as opposed to too much supply and not enough consumer demand >> it's ironic that the two places relies on for a lot of this product are china and not just the lowlow-end. you talk about how irreplaceable and italy, especially high-end

stuff. >> right 8% of the growth from asia and the production now those two places >> thanks. coronavirus contagion fears are striking fears in wall street the dow is down 986 points we'll get a live report from the ground don't go anywhere. as we head to break, here's a look at some stocks in the green today. including clorox, up 1.5%. and gilead, one way of possibly treating this, united therapeutics we'll be back with a lot more on "the sell-off.

welcome back the dow posting its biggest drop in two years today, down 990 points right now down 1074 with the lows this as coronavirus fears are spreading. let's get to meg with the latest

numbers. what do we know, meg >> well, kelly, it's a spread that's appearing to improve in china while spread increases elsewhere. the world health organization said that it found that the disease peaked and plateaued there and has been declining steadily since then. a sudden increase in other countries, italy, south korea and iran, deeply concerning. but he as noted the organization believes it's still too early for the situation to be a pandemic saying, quote, for a moment, we're not witnessing the uncontained global spread of this virus and large-scale severe disease or death. case count stands at 75,000 worldwide. and 2700 people have died, kelly. >> meg, how deadly is coronavirus relative to the flu? can you explain the similarities and differences? especially as it spreads worldwide, how concerned do people have to worry about it coming to the neighborhood

>> right now, in the case fatality rate. the closer to epicenter the higher it gets, 2.2% in wuhan, china. outside of china, 0.7% but that's much higher than flu. flu affects a great number of people and killed a much larger number of people than the coronavirus right now. what's scary about the coronavirus, we don't know what the trajectory is going to be. right now, the w.h.o. not using the word "pandemic." but a lot say we should be using that word. >> it's interesting a lot aut oe pinning their hopes on the warmer weather is there any science behind that for something like coronavirus could that help the spread >> yeah, some people say, yes we don't know how this is going to act. if you look around the world there are countries that have

spread that are 85 degrees like singapore. it's impossible to tell from this one case whether it will be stopped here or other places with warmer weather, but you certainly hope >> meg tirrell with the latest for us let's drill down on what's happening in italy joining me on the phone is claudia penostti we appreciate you being here meg gave an update what's happening with the virus itself. what did you tell us at this hour is the latest in italy? >> reporter: well, kelly, at this point, the situation is obviously, everybody is monitoring very carefully these numbers as they escalate they seem to be escalating slower than expected last night, the number was 152 people infected. now today, it's up to 230. the deaths at this point are six. five of which are in the lombard region which is the region where you do have a lockdown

situation. and about ten small towns make up a radius of about 10 kilometers 60,000 live in that area 8 million live in the lombard region and 7 million people in the veneta region. 6 million people are affected by the stringent measures out there. it's not a lockdown for the rest of the region. it's a lockdown where the main cluster is but all of others, the measures include closing schools, universities, movies, theaters theaters, museums, the cathedral, masses, any situation where you have multiple people gathering, they have asked for those to be stopped. now, the news in milan is actually pretty subdued. more traffic than usual because people aren't taking, obviously, the public transports. there was less traffic in terms of trains. almost 40% less traffic is registered in terms of trains.

but still, people were going to work the big businesses here have taken measures to allow smart work so people can stay home and work from home they have cancelled any big events as you were talking a few minutes ago about the fashion week, well, that was actually close to ending. so the last fashion shows were held behind closed doors some events have been -- some big fairs have been cancelled that they usually have this time of year in milan clearly, the concern is how long will this last what kind of impact will it have on the longer term to give you an idea about what happened with markets, we did see the markets have its seventh worst day since september 11 the strong decline over five percentage points with, of course, luxury suffering and banks, clearly gives you an idea that this is a very emotional day for this market and represents in this area almost

30% of gdp >> 30% of gdp in the lombardi and what ore region? >> and veneta region yes, where they have cancelled carnival this is normally a high time in italy, this carnival week. this has been cancelled. >> ash wednesday and on wednesday, those masses being cancelled. almost unthinkable it tells you how seriously people are taking it we appreciate it, claudia. those virus fears are hurting more than just oil prices copper a good gauge of growth is having its worst day of the year we want to bring in jim yuri with reaction on this. he's a cnbc managingcme. jim, it's good to hear from you, it was fascinating hearing from claudia what's going on or not

go on in italy what do you think is happening and where this is priced in? >> what's interesting to me, copper is a proxy to china including getting hit much worse. then i realized that we learned that the situation in china is relatively dire. and that's priced into the equation as well perhaps, not ready to panic yet, perhaps it's jumbling oe in jum china. and that's why crude which is viewed as a more global commodity is getting hit harder today. but the last two or three weeks, the story was, the virus up against either central bank stimulus that's why copper had rallied since february 1 but now we're calling into question whether or not that's going to work. crude, you have throw in opec going higher, too. but now if it's starting to spread to the globe, the market is going to wonder can they really save the commodity prices my answer to that, by the way, is yes

but as of today, it doesn't feel like people feel that way. >> i love that compare and contrast between copper and crude, jim jim bitcoin is not up today. gold is. it was up even the move. if you want to go forward and take a different point of view, i expect a lot of central bank action of none of it how should you be placing your betds? >> i expect a lot of central bank action. i've expected that for about a month. that's why i've been long gold i've been talking about buying ten-years, too i'm still comfortable on those months ago, i thought people thought maybe it was a store of value when when you loob at it, it has 30% moves every couple of days on occasion to me, it seems like something that volatile doesn't belong where i go to main times of pan. steve mnuchin mepgsed this yesterday and i think the market

is ignoring that i think that's where they'll respond. l they'll throw more stimulus at the problem. not sure it's going to work, but i'm sure it's going to end up in some of these assets >> thank you, sir. we'll let you get back to it how about retail where the etf is on pace for its worst day since last august and companies like nike and tapestry are seeing some of their worst single day losses since the trade war with china joining me now, an analyst at oppenheimer and courtney reagan is here with me as well. courtney, i'll first start with you on the news itself is this more a supply story or a demand story r or is the problem both >> it could be both, either/or, neither. this is so company by company much like the tariff exposure was. how much do you produce in china and how dependent upon your customers in china and customers traveling out of china in other

places canada goose was probably the most severe in their commentary on the earnings call this isn't a supply issue, but demand, you bet. we also really count on the chinese tourist traveling around the globe ft that's going to be trouble for us if they're buying in other regions and they noted even t mall, so online, their sales had already taken a hit. if you're not buying in stores, in some cases for some of these, you're not buying in store then you look at some other names like a guess we may not think about guess as a luxury name, but italy and south korea really important markets for them shares of guess are taking a pretty big hit today >> brian, let me bring you in on that and for the coverage universe you have, who do you think is being unfairly sold and is there anyone who isn't being sold enough? >> i think it's really important

to keep in mind how fluid is situation really is. what i'm hear iing from my companies like nike, lululemon and the handbag companies, there's been an impact upon demand just like courtney said, in china. but other than that, there hasn't been an impact. what i'm hearing is that will supply chain disruptions >> you're not hearing that >> i'm not what i've heard from and again, this could change quickly. what i'm hearing is that ahead of chinese new year, there was a lot lot built so right now there's not been a disruption. that's going to depend upon how long it lasts and spreads. i was read iing stories of peop who are quarantined to their homes and hotels, they can't get

from one province to the next. do you think the effect won't be there? >> it's going to depend on how long it lasts. the information we're getting is piecemeal, but what i've heard from the companies i've been speaking with is that production in china is coming back online in limited capacity. then they have these inventories built. that implies that right now, they're not having the con b strants. if it were to last for a long period of time, then supply constraint is could become an issue. >> that's why it was so interesting. now it's rest of the world we're going to be watching for the numbers to climb even if china's aren't the pace. >> absolutely. we focus so much on the luxury consumer in china. that's why i bring up that guess example because guess is so important or italy is so important for guess as is is south korea so we're going to have to dig into some of these

revenue regions and figure out what's important to what company where and brian i know also covers best buy and we talk awfully lot about especially during the tariff situation, brian, about best buy being so exposed because of their vendor based manufacturing in china and those shares are selling off shortly today. >> wayfair today is getting hurt >> quick last word on that are you stick wg the buy on best buy among others >> we have i just reiterate my comment on best buy looking for a positive out there, especially on a day like today with the market down as sharply as it is one of the comments i've been making to our clients, if i look at the whole picture and take a step back, what's happening now, rates have come down substantially. i see the ten-year is 1.37 that's a big positive for rate dependent retailers like the home improvement centers those companies don't source much from china.

china's not a big factor in their demapd so they could benefit here >> brian, appreciate it. courtney, thank you. now to contessa brewer for a look at the insurers >> kelly, no big surprise. insurers are down across the board. i want to focus on the peopleo the insurers rather that have exposure for instance, american international group, which has exposure internationally you're seeing those shares off almost 6%. prudential financial, met life down big they're underperforming the insurance group and why? we'll talk b about business disruption you just heard about the supply chain disruptions and whether those are happening. expect those companies to be alying pplying to their insurer, making claims for business disruption and there may be lawsuits here as insurers try to claim they're not responsible because of a viral outbreak. >> thank you, contessa now today's losses are testing

key levels for the averages. here to drill down, katy, take us home. we've heard a lot this hour about the fundamentals, about the disease characteristics, about different parts of the world and the supply chain you look at simply the charts and what are they telling you about this market? >> well, this morning, we did see a lot of gaps down and that doesn't just go for the u.s., but also overseas. that's a b problem it reflects a loss of short-term momentum and comes from what was an overbought condition. so i think we assume the pullback will keep its hold here in the near term, but not to pan irk. when you get these emotionally charged down days, they are often yielding these extremes in market sentiment things like the vix popping up to its highest level in more

than a year. those types of readings are associated with tradeable lows for the s&p 500 and other indices. so that's the kind of action that we actually pay attention to and get excite d about. but we don't act on it until we actually get upturns, a short turn uptick in momentum to be more convinced those extremes are going b to be meaningf fumel >> this hasn't been that long, but are you saying we could be approaching the end of it? >> we could be so what we look for, the oversold extremes and getting more widespread than they were going into this morning. we have to see if it's short material or intermediate we're not getting sell signals if our intermediate trend

following gauges that's what we would worry about. we're also watching support levels not just for the major independent sees, but on the individual stock level so if we started to see a lot of breakdowns that are then confirmed by more than just one down day but a couple, in some cases, a couple of down weeks, that's where we get nervous. i'm looking at support >> 3030. taking notes furiously

appreciate it. good to see you. thank you for your time. i'll see you on "power lunch." >> over to you >> we'll see you in a moment i'm brian sullivan welcome, everybody and we begin with the market sell off stocks, they are getting slammed across the board one of the biggest point drops of all time. for the dow. as the coronavirus virus spreads to south korea and italy the dow down 975 points. s&p, down 3% nasdaq down near 4%. market on track for its worst two day stretch since december of 2018 when the market fell 15% in the month stocks sell, buyers rushing into bond yielding falls into 100 year lows on this busy day, we've got full team kovrnl likeou